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TMI Blog2003 (3) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case, the Appellate Tribunal was correct in law in deleting Rs. 55,21,856 being profit under section 41(2) from the total income for the assessment year 1972-73?" The assessee was running a passenger bus service and owned 346 buses, 16 other vehicles, lands, buildings, premises, spare parts, machinery, etc., all of which were acquired by the State under section 3 of the Tamil Nadu Fleet Operators Stage Carriages (Acquisition) Act, 1971 (Tamil Nadu Act, 37 of 1971). That Act came into force on December 7, 1971. The assets of the assessee relating to its bus transport system were taken over on January 17, 1972. On March 21, 1972, the Government issued an order in which it was, inter alia, stated thus: "The bus transport system of Southern Roadways Private Limited, Madurai, has been taken over by the Government on the January 17, 1972, and transferred to the Pandyan Roadways Corporation Limited, Madurai, on the same date. The Government have decided to pay to the Southern Roadways Private Limited, part compensation of Rs. 51.50 lakhs (Rupees fifty-one lakhs and fifty thousands) in cash in two equal instalments in March and April, 1972, for their properties which have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer held that as the money had been paid by the Government as compensation, that amount was includible in the assessment year as part of compensation for the assets acquired from the assessee, and that as to the amount that had become due to the assessee in terms of the Government Order of March 21, 1972, the same was required to be included in the assessment for the assessment year 1972-73. On appeal by the assessee, the Commissioner held that this amount is not includible in the assessment for the assessment year 1972-73 as the total amount due had not been finally determined under the Notification of March 21, 1972, but was only determined under the Notification of September 7, 1972. He also in the course of his order held that this amount is to be included in the assessment for the assessment year 1973-74. Appeals were filed by the assessee as also by the Revenue against the order of the Commissioner. The assessee's contention was that no tax could be levied as section 41(2) had no application to the facts of the assessee's case. An additional ground was subsequently raised during the pendency of the appeal with regard to the direction given by the Commissioner in the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order." Thus, the legal effect of the order of the Commissioner directing the deletion of this amount from the scope of the assessment for this assessment year would be the same, whether or not a direction for including this amount in the succeeding assessment year is included in that appellate order. Moreover, it is within the jurisdiction of the Tribunal to permit the parties before it to raise additional grounds if the additional grounds can be considered and decided on the basis of the materials already on record. Whether or not to allow additional grounds to be raised is a matter of sound discretion of the Tribunal. The Tribunal had the jurisdiction arid had exercised its discretion properly in permitting the assessee to raise the additional ground. We answer the first question in favour of the assessee. No answer need be recorded for the second question having regard to section 153 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er amount was payable to the assessee and was, in fact, paid in the subsequent assessment year. The material word" due" which requires consideration is to be found in section 41(2) of the Act:"Section 41. Profits chargeable to tax.-... (2) Where any building, machinery, plant or furniture,- (a) which is owned by the assessee; (b) in respect of which depreciation is claimed under clause (i) of sub-section (1) of section 32; and (c) which was or has been used for the purposes of business, is sold, discarded, demolished or destroyed and the moneys payable in respect of such building, machinery, plant or furniture, as the case may be, together with the amount of scrap value, if any, exceeds the written down value, so much of the excess as does not exceed the difference between the actual cost and the written down value shall be chargeable to income-tax as income of the business of the previous year in which the moneys payable for the building, machinery, plant or furniture became due." The word "due" has several shades of meaning. As explained in Words and Phrases, Permanent Edition, Volume XIIIA, that word is used to refer to the debt or obligation which has become immediately p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequent instalments even before they became due for payment. In this case, the amount payable to the assessee for the compulsory acquisition of its buses and other assets relating to the passenger transport buses, was required to be determined by way of agreement, and in the event of agreement not being reached by reference to arbitration. The assets were taken over in the month of January, 1972. In March of that year, when the Government decided to pay a part of the compensation payable for the acquisition of the assessee's assets, there was no determination of the total amount payable, as such determination could only be the result of an agreement and no such agreement had been reached at that point of time, neither party having sought arbitration. What was disbursed by the Government, therefore, was an amount which was to be adjusted against the amount which was required to be determined either by way of an agreement or by recourse to arbitration. The parties did reach an agreement some months later during the assessment year 1973-74, and it was at that point of time there was a determination of the amount payable for the assets which had been taken over. The amount, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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