TMI Blog1983 (8) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... iod relating to the assessment year 1976-77, and that profit under s. 41(2) of the I.T. Act, 1961, cannot be computed for the assessment year 1976-77 ? " The facts in brief are as follows: Two contract carriages bearing Nos. MYZ 5687 and MYZ 6887 owned by the assessee, Sheshappa Hegde, were acquired by the State of Karnataka under the Karnataka Contract. Carriages (Acquisition) Ordinance, 1976 (Karnataka 'Ordinance No. 7 of 1976), which was later replaced by the Karnataka Contract Carriages (Acquisition) Act, 1976 (Karnataka Act 21 of 1976) (hereinafter referred to as, " the Acquisition Act"). The said Ordinance came into force on January 30, 1976, and the vehicles were taken over on the same day. The assessee had purchased the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits under the provisions of s. 41(2) is sustainable in law on the facts stated by the Tribunal. For this purpose, it would be necessary to examine the provisions of s. 41(2) of the I.T. Act vis-a-vis s . 6 of the Acquisition Act. We shall first examine the scope of s. 6 of the Acquisition Act, and it provides: 6. Determination of the amount.-(1) For the vesting of the acquired property under section 4, every person interested shall be entitled to receive such amount as may be determined in the manner hereinafter set out and as specified in the Schedule, that is to say, (a) where the amount can be fixed by agreement, it shall be determined in accordance with such agreement; (b) where no such agreement can be reached, the State Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Acquisition Act is thus required to be determined and quantified under an award by the arbitrate or and it becomes due only after such determination. Section 41(2), so far as it is material, provides: "(2) Where any building, machinery, plant or furniture which is owned by the assessee and which was or has been used for the purposes 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refers to that which is to be paid, justly due, or legally enforceable, and a sum of money is said to be " payable " when a person is under obligation to pay it. Vol. 13A, page 80 " due": The word " due " may mean that the debt or obligation to which it is applied has become immediately payable or that the debt has become ascertained and fixed although payable in the future". (ii) Black's Law Dictionary " Payable " : Capable of being paid, suitable to be paid, admitting or demanding payment, justly due, legally enforceable. Payable signifies an obligation to pay at a future time, but when used without qualification, the term normally means that the debt is payable at once. " Due " : Owing, payable, justly owned, that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed, it is the rate proposed in the Finance Bill pending before Parliament or the rate in force in the preceding year, whichever is more favourable to the assessee. All the ingredients of a debt are present. It is a present liability of an ascertainable amount." In the light of these principles, the words " payable " and " due used in s. 41(2) could only mean that such amount payable would be subjected to charge in an assessment under the I.T. Act during the year in which it becomes due. Money payable occurring in s. 6 of the Acquisition Act thus becomes due only on its determination by the arbitrator appointed for that purpose and as per law. The profits that are exigible to tax under s. 41(2) are those that become due during the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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