TMI Blog2003 (7) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the court was delivered by S. SANKARASUBBAN J.-This income-tax reference under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") is at the instance of the assessee. The assessment year in question is 1980-81. The question of law referred to us is as follows: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law and facts in holding that the ship which has disappeared could be considered as destroyed and consequently the provisions of section 41(2) of the Income-tax Act, 1961, could be attracted?" The facts of the case are as follows: The assessee is a public limited company engaged in the business of operating ships. The assessee-company owned a ship by name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act is as follows: "Where any building, machinery, plant or furniture which is owned by the assessee and which was or has been used for the purpose of business or profession 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, exceed 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 or profession of the previous year in which the moneys payable for the building, machinery, plant or furniture became due." The Tribunal has now held that the ship has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for the assessment year 1969-70, the assessee disclosed a profit of Rs. 17,24,591 under section 41(2) of the Income-tax Act, 1961,on the basis that the insurance amount received by the assessee had exceeded the written down value of the 14 vessels." When the matter came before the High Court, the High Court held as follows: "the assessee did not sell or discard its assets. The concept of sale or discard involved exercise of volition on the part of the assessee which was totally absent. The expression 'sold' in section 41(2) must be given its meaning under the general law. The property of the assessee was not acquired by any authority compulsorily under the provisions of any particular law in force in India nor was compensation received by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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