TMI Blog1974 (8) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... nces: The respondent-assessee, M/s. Gagalbhai Jute Mills Ltd., runs a jute mill and owns machineries of different kinds forming part of its assets. During the relevant accounting period from April 1, 1956, to December 31, 1956, the assessee sold some items of machinery on which it earned profits, part of which related to machineries actually used during the relevant previous year, but the major part arose in respect of items of machinery which were admittedly not used for its business during the relevant account year. The profit in respect of items of machinery not used during the said period amounted to Rs. 2,70,593. The ITO held the said amount to be liable to tax under the second proviso to s. 10(2)(vii) of the Act, but on appeal the AAC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal held that the two conditions that were required to be satisfied in order to attract the provisions of s. 10(2A) were not satisfied in the case, and, therefore, the sum of Rs. 2,70,593 could not be brought to tax under the said provisions. At the instance of the Commissioner, the question set up at the commencement of this judgment has been referred to us by the Tribunal for our determination. Incidentally, it may be mentioned that the Commissioner by filing a revised application also sought to expand the question that was to be referred to this court by including in it the question of assessability of the profits under s. 10(2)(vii) of the Act, but that attempt did not succeed and the Tribunal has not referred the question of assessabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance could be treated as a loss suffered by the assessee in terms of s. 10(2A), then the proceeds out of the sale of such assets could be considered to be receipts in the hands of the assessee in respect of such loss and, therefore, the amount of Rs. 2,70,593, which represented the profits which arose in respect of items of machinery that were sold in the relevant year of account, items of machinery which were not used during the said period, should be held to be liable to tax under the aforesaid provisions. In support of his contention Mr. Joshi relied upon the decision of this court in CIT v. P. K. Badiani [1970] 76 ITR 369 (Bom), where the true nature of depreciation allowance has been clearly indicated. It has been held in that ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Mr. Joshi urged before us that the provision of s. 10(2A) of the Act could be said to have been satisfied in the instant case and, therefore, the amount of Rs. 2,70,593 should have been held to be liable to tax under s. 10(2A) of the Act. As the Tribunal has pointed out in its order, two conditions have got to be satisfied before the amount of Rs. 2,70,593 could be brought within the purview of s. 10(2A) of the Act, viz., (1) that a loss must have been suffered by an assessee because of an allowance or deduction that has been made in the assessment for any year, and (2) that there must be a receipt, whether in cash or in any other manner whatsoever, of an amount in respect of such loss in the year of account relevant to the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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