V.G. Oak, C.J.
1. The question for consideration in this reference under Section 66 of the Indian Income-tax Act, 1922 (hereafter referred to as 'the Act') is whether a certain amount of compensation paid to an assessee constituted income under Sub-section (2A) of Section 10 of the Act The assessee is a Hindu undivided family. It owned a certain building at Hathras, known as Chhittermal Dharinshala. The building was being used by the assessee as a godown for its business till the year 1947. In 1947 the building was requisitioned by the State Government for storing foodgrain An order was passed under the U.P. Accommodation Requisition Ordinance' 1947. The assessee claimed compensation for the loss of the Dharmshala! The parties could not agree as regards the amount of compensation payable to the assessee. The dispute was referred to the munsif of Hathras. On September 22, 1956, the munsif, Hathras, decided that the assessee was entitled to receive from Government compensation at the rate of Rs. 250 p.m. from the date of possession till the date of restoration of possession. Under that direction, Government paid the assessee a sum of Rs. 23 840 as compensation. In the meanwhile, the assessee took up another build'ing for use as a godown at the rate of Rs. 250 p.m. When the Income-tax Officer, Aligarh, took up assessment for the year 1959-60, he concluded that the sum of Rs. 23,840 received by the assessee as compensation should be treated as its income for the relevant assessment year. This view was confirmed by the Appellate Assistant Commissioner. The assessee claimed deduction of an amount of Rs. 7,697 on account of expenses incurred in the litigation. The assessee's claim was partly accepted by the Appellate Tribunal. The Tribunal agreed to allow expenditure to the extent of Rs. 7,697 towards litigation expenses. But the Tribunal held that the balance must be treated as income of the assessee under Sub-section (2A) of Section 10 of the Act.
2. At the instance of the assessee, the following questions of law were referred by the Tribunal to this court :
'(1) Whether, on the circumstances of the case, the net surplus of Rs. 16,143 received as compensation is assessable under Section 10(2A) of the Income-tax Act, 1922 ?
(2) If the answer is in the affirmative, then, whether the aforesaid surplus has properly assessed in the assessment year 1959-60?'
3. The department relies on Sub-section (2A) of Section 10 of the Act. Section 10(2A) states :
'Where for the purpose of computing profits or gains under this section, an allowance or deduction has been made in the assessment for any year in respect of any loss, expenditure or trading liability incurred by the assessee and, subsequently during any previous year, the assessee has received, whether in cash or in any other manner whatsoever, any amount in respect of such loss expenditure or has obtained some benefit in respect of such trading liability by way of remission or cessation thereof, the amount received by him or the value of the benefit accruing to him shall be deemed to be profits and gains of business, profession or vocation and to have accrued or arisen during that previous year.'
4. It will be seen that Sub-section (2A) of Section 10 consists of two parts. The first part of Sub-section (2A) contemplates loss, expenditure or trading liability in some former year for which allowance or deduction has been made in a certain assessment year. The second part of Sub-section (2A) contemplates compensation for such loss, expenditure or trading liability in some subsequent year. The word 'such' appearing in the second part of Sub-section (2A) is significant. The word 'such' signifies that compensation must be paid for the loss, expenditure or trading liability mentioned in the first part of Sub-section (2A).
5. In the instant case, we have to take into consideration two separate buildings. The first building is Chhittermal Dharmshala owned by the assessee. The second building is the godown taken by assessee on hire during the period the Dharmshala had been requisitioned by the authorities. It will be convenient to refer to the first building as the Dharmshala, and the second building as the godown.
6. The Tribunal was impressed by the fact that the rate of compensation fixed by the munsif of Hathras was the same as the rate of rent paid by the assessee for the godown. But that was just a coincidence. It was quite possible th at the rate of compensation might have been higher or lower than the rate of rent for the godown. Oral evidence was produced before the munsif on the question of fair compensation for the Dharmshala. It was further brought to the notice of the munsif that the assessee was obliged to take the godown on hire on a monthly rent of Rs. 250. Upon considering the entire evidence on the record, the munsif observed :
'When the opposite party took the alternative accommodation at the rate of Rs. 250 per month and no alternative accommodation is proved to have been given to him by the requisitioning authorities then surely the opposite party deserves compensation at the rate of Rs. 250 per month at least.'
7. It was under these circumstances that the munsif thought it fit to award compensation to the assessee for the Dharmshala at the rate of Rs. 250 per month.
8. The Tribunal appears to have proceeded on the footing that compensation was allowed to the assessee on the ground that he had to pay rent for the godown at the rate of Rs. 250 per month. The assumption is not correct. Compensation was awarded to the assessee on the ground that he was deprived of the use of the Dharmshala owned by him. For certain years the assessee paid rent for the godown taken on hire by him, For those years allowance was made to the assessee for the expenditure incurred by him in taking the godown on hire. On March 26, 1958, the assessee was awarded a sum of Rs. 16,143 as compensation for deprivation of the use of the Dharmshala. It will thus be seen that, on the one hand, allowance was made for the expenditure incurred by the assessee for the godown. On the other hand, compensation was awarded in 1958 on the ground that the assessee had been deprived of the use of the Dharmshala. Under these circumstances, it cannot be said that compensation was awarded to the assessee for the same expenditure for which allowance had been made in former years. The case is not covered by Sub-section (2A) of Section 10 of the Act. The Tribunal was wrong in holding that the compensation awarded to the assessee to the extent of Rs. 16,143 constitutes income under Sub-section (2A) of Section 10 of the Act. Since the answer to the first question is in the negative, the second question does not arise.
9. Our answer to question No. 1 is in the negative, and in favour of the assessee. The second question of law does not, therefore, arise. The Commissioner of Income-tax, U.P., shall pay the assessee Rs. 200 as costs of the reference.