TMI Blog1984 (3) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... r's notice in writing of its election to acquire was served upon the supplier by the Provincial Government. The price to be paid to the supplier for such lands, buildings, works, materials and plants as may be acquired by the Provincial Government was to be the fair market value at the time of the purchase. In case of difference, such value was to be determined by arbitration. The Provincial Government was to pay the price of the property acquired within a period of six months after the price had been determined. The assessee company was served with such a notice on January 3,1958. On January 4, 1959, the Government took over all the assets of the undertaking. A sum of Rs. 60,000 only was paid to the assessee company in that regard on June 3, 1959. There was a dispute about the valuation of the assets acquired. Ultimately by a memorandum dated November 18, 1963, the Chief Engineer, Punjab State Electricity Board, evaluated the assets of the undertaking at Rs. 2,02,781. Against this, the company had received Rs. 60,000 on June 3, 1959, and a further sum of Rs. 35,215 on January 8, 1963. A sum of Rs. 70,388 was due to the Government from the company on account of sale of power, consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al facts regarding the assessment for that year, income for that year had escaped assessment with reference to the balancing charge in respect of the assets taken over by the Government. The ITO then revised the assessment for the assessment year 1959-60 by adding a sum of Rs. 1,34,390 to the income of the assessee. This assessment was upheld by the AAC on appeal by the assessee. He, however, directed the ITO to verify from the records the original cost of the assets and also the written down value and to verify the figure of profit under s. 10(2)(vii) of the Act of 1922. Against this order of the AAC for the assessment year 1969-70, the assessee preferred a second appeal to the Tribunal. Both the appeals, i.e., one by the Department against the order of the AAC for the assessment year 1966-67 and that of the assessee for the assessment year 1959-60, were heard and disposed of by the Tribunal by its combined order. At the hearing of the appeals before the Tribunal, inconsistent pleas were raised on behalf of both the sides. On behalf of the assessee, it was contended that so far as the assessment year 1959-60 was concerned, this being a case of compulsory acquisition of the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en, on the view that the amount of compensation became due only in the previous year relevant to the assessment year 1966-67 held that the balancing charge was not includible in the assessment year 1959-60. In the assessment year 1966-67, it was held that the amount of balancing charge became due to the assessee on the amount of compensation being ascertained in the previous year relevant to the assessment year 1966-67 and on that basis, the Tribunal reversed the appellate order of the AAC for the assessment year 1966-67 and held that the amount was includible in the total income of the assessee for that year. Shri K. P. Bhatnagar, learned counsel for the assessee, submitted that the assessment for the assessment year 1959-60 had been held by the Tribunal to have been validly reopened with the aid of s. 297(2)(d)(ii) of the Act of 1961, and that the question as to in which assessment year the balancing charge was includible had to be decided with reference to the provisions of s. 10(2)(vii) of the Act of 1922 and not with reference to s. 41(2) of the Act of 1961. It was submitted that the question as to in which particular year a particular income is includible in the total incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 1966-67, the Tribunal was thus right in holding that the entire amount of balancing charge was includible for the assessment year 1966-67 only. Shri Wadhera also submitted that the assessee company was taken over by the Government in accordance with the terms of the grant of sanction by the Government to the assessee and that acquisition did not amount to a, sale as contemplated by s. 10(2)(vii) of the Act of 1922. He went on to say that " sale " can take place only by a voluntary act of the seller and the purchaser as per contract between the parties and the present being a case of acquisition by the Government by invoking its statutory rights, the transaction did not amount to a sale. However, after the coming into force of the Act of 1961, the transaction in question was a " deemed sale " in view of the provisions of the Explanation to s. 41(4) read with s. 32(1) of the Act of 1961. The transaction not being a sale as contemplated by s. 10(2)(vii), the question of the balancing charge being includible for the assessment year 1959-60 did not arise for that reason also. It was next submitted by Shri Wadhera that even under s. 10(2)(vii) of the old Act, the balancing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be the only other year in which the amount of compensation could be said to have been ascertained. On pointing out this position regarding the year of ascertainment of the amount of compensation, Shri Bhatnagar did not pursue his submission that the money payable could not be said as having been ascertained in the previous year relevant to the assessment year 1966-67 in question. Now, the money payable, i.e., the balancing charge, having been determined in the previous year relevant to the assessment year 1966-67 in question, it was in this year that the question of its inclusion in the total income of the assessee came up for consideration. The I.T. Act, 1961, had come into force long before that on the repeal of the old Act of 1922. Thus the basis as to how and in which year the balancing charge was includible was clearly to be determined with reference to s. 41(2) of the Act of 1961, and there was no question of the Revenue looking back to the provisions of the old repealed Act of 1922 in that regard. That being so, the year of inclusion of the balancing charge as per s. 41(2) has to be on the basis when the money payable became due and not on the basis of the date of sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to ask for a deduction or whether he is liable to tax till the amount is actually ascertained. An amount can be said to be payable when a definite amount is ascertainable as being due. In the instant case, the suit filed by the company claimed an amount of over Rs. 13 lakhs, but the final payment received after the compromise was much less. No amount could be said to be due till it had become ascertained. This seems to be the only reasonable construction that can be made on the words became due occurring in the provision we are called upon to construe. " The Bombay High Court in the case of Akola Electric Supply Co. Pvt. Ltd. v. CIT [1978] 113 ITR 265, in a similar case of acquisition of assets of an electricity undertaking, followed the said decision of this court and held that even for invoking the proviso to s. 10(2)(vii), it was necessary that the amount for which the building, machinery or plant was sold must be known. In that case, the electricity undertaking was purchased by the State Electricity Board in 1959. The possession of the undertaking together with the assets was taken over on December 6, 1959. The amount payable was, however, ascertained only in March, 1962. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [1982] 138 ITR 195, and respectfully follow the same. Shri Bhatnagar was unable to cite a single authority in which a contrary view may have been taken on the aforesaid proposition, viz., as to when the money payable in respect of an asset which is sold or acquired becomes due, when the same is not ascertained or is not ascertainable at the time of the acquisition or sale of the assets, but is ascertainable only subsequently. There is also no merit in the submission of Shri Bhatnagar that even though the sale price may be ascertainable subsequently, it is to be deemed to become due on the date on which the sale takes place and that, therefore, the date of sale in every case is to be held as the date on which the sale price becomes due. Shri Bhatnagar was unable to refer to us any provision in the Transfer of Property Act or to any judgment in support of this contention. In any case, the words " becomes due " as occurring in s. 41(2) have to be construed in the context of that provision. As pointed out earlier, the provisions of s. 41(2) are not workable if the aforesaid words are construed as suggested by Shri Bhatnagar. Shri Bhatnagar's submission drawn to a logical conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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