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TMI Blog1972 (10) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... are, glassware, napkins and such other things for running the business of the hotel. The lease was to be for a period of five years from the date of delivery of possession of the building for running the hotel. By a requisition order dated 25th April, 1942, the Government of India requisitioned and directed delivery of possession of the property to the army authorities. The requisition was to continue for the period of the war and six months thereafter. The assessee, thereupon, made certain representations and the army authorities then made a catering contract with the assessee. He carried on the business of this catering contract and served the army authorities thereunder from 1st January, 1943, to 31st October, 1943. That contract was then terminated and from 1st November, 1943, the premises continued in the possession of the army authorities. The catering contract was from that date given to the landlords of the premises. In this connection another order dated 13th November, 1942, was passed and under that order the entire premises along with the equipment for catering was taken over by the Government. Having regard to the above situation on 31st October, 1943, the assessee sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled as above shows that out of the above sum of Rs. 1,15,610, Rs. 33,150 were paid in respect of the rent that the assessee had to pay to the landlords. The question raised in the present reference accordingly relates to the balance of Rs. 82,460 paid in the above manner by the army authorities to the assessee. In connection with the sum of Rs. 40,000 which had already been paid to the assessee on 6th May, 1946, on behalf of the revenue, it was contended that it was trading receipt and liable to tax. The Income-tax Tribunal negatived that claim by its order dated 13th February, 1953, by holding that the business which the assessee had carried on after the requisition order was served as up to 31st October, 1943, was not the hotel business. It was a catering business carried on under the directions and on behalf of the military authorities. That business was not the same business as the assessee had intended to start, namely, running of an upto date hotel. The Tribunal also found that as a result of the requisition the assessee had not remained a tenant of the building. The assessee had in fact sold away about November, 1943, some equipment he had purchased as a caterer to the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts which had accrued by reason of the requisition orders. These orders were a temporary interruption to the assessee carrying on the business. By these orders the capital assets of the assessee had not been permanently sterilised. By the requisiton orders the assessee was not permanently deprived of any source of income. The amount was paid as compensation for temporary interruption of his business activities and was accordingly profits and/or revenue receipts. Now, these submissions are not justified having regard to the findings of facts made by the Appellate Assistant Commissioner as confirmed by the Income-tax Tribunal. It is abundantly clear that the hotel business which the assessee desired to start by occupying the leased premises could never be started by the assessee because of the first requisitioning order dated 25th April, 1942. Even before he had completed equipping of the premises of the building (structure) to use them for carrying on the hotel business he was deprived of the possession of the premises. Under those circumstances under a catering contract he acted as caterer under the directions of the army authorities up to 31st October, 1943. The business that he i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were revenue receipts the Supreme Court examined several decisions of different courts. The court noticed that in the case of Commissioner of Income-tax v. Shaw Wallace & Co., their Lordships of the Privy Council had observed that, "income meant a periodical monetary return coming in with some sort of regularity or expected regularity from a definite source and in business was the produce of something loosely spoken of as capital. In business, income is profit earned by a process of production, or, in other words, by the continuous exercise of an activity" and they have held for that reason that "the sum sought to be charged could not be regarded as income". The observation was that the compensation paid in that case "was not the product of business, or, in other words, profit, but some kind of solatium for not carrying on business and, thus, not revenue." Dealing with the facts before it, the Supreme Court noticed that "the tea was grown or that the plants were tended did not mean that the business was being continued. It only meant that the source of the raw material was intact but the business was gone". That the compensation was necessarily measured by reference to the outturn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Senairam Doongarmall v. Commissioner of Income-tax, and the observations made in that case by the Supreme Court can be distinguished in their application to the facts the present case. Each and all observations of the Supreme Court in the case of Senairam Doongarmall are wholly applicable to the facts of the present case. The sum of Rs. 82,460 could in no event be treated as partaking the character of profits, because business never existed and the question of profits taxable under section 10 could not arise. This amount was " solatium for not carrying on business and thus not revenue " as mentioned by the Privy Council in Shaw Wallace's case. Having regard to our above finding it is not necessary to refer in great detail to the two cases on which reliance has been placed by Mr. Joshi. It is sufficient to state that in the case of Shamsher Printing Press case, the assessee had continuously carried on his business during the relevant assessment year. A part of his business premises was requisitioned. On the facts and circumstances of that case, the court held that the compensation paid to the assessee was in fact towards loss of business and accordingly held the compensation as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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