TMI Blog1951 (4) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... d 9th July, 1948, in full settlement of all his claim for compensation for the use of machinery, was income liable to income-tax? The assessee, S.Rm. Sathappa Chettiar, and another one P.S. Sathappa Chettiar, entered into a partnership to erect and establish a spinning mill at Pollachi. A building was erected, it is stated, at the expense of the assessee, and P.S. Sathappa Chettiar, the other partner, purchased machinery of the value of ₹ 79,155 for installing it in the factory which was then under construction. The machinery seems to have been imported by the year 1941. P.S. Sathappa Chettiar was connected with a mill known as the Somasundaram Mills Ltd., Coimbatore. After the factory was constructed, it became difficult for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this sum also as part of the income of the assessee but exonerated the assessee from liability to pay tax on the sum of ₹ 75,000 received by him as value of his share of the properties on the ground that it was capital and not income. The decision of the Income-tax Officer was upheld on appeal by the Appellate Assistant Commissioner but was reversed by the Appellate Tribunal. The simple question for consideration therefore is whether the sum of ₹ 75,000 received by the assessee from Somasundaram Mills Ltd., as compensation for the use of the machinery by Somasundaram Mills is income assessable to income-tax under the provisions of the Indian Income- tax Act. It would be seen that this amount was directed to be paid by Somas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciation in its value. That is not the basis however on which the award proceeded and we are not able to find in the whole course of these proceedings any justification in support of that view. It is definitely stated both in the reference to the Arbitrator and in the award that the claim made by the assessee was that he was entitled to compensation for the use of the machinery by Somasundaram Mills. This contention of his was upheld and Somasundaram Mills was directed to pay to the assessee this sum of ₹ 75,000 which represents compensation for the use of the machinery not merely in the year of account but also for a period prior to it. The decision in In re N.S. Mundy [1930] I.L.R. 57 Cal. 1330 does not at all support the argument o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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