Skip to content


Dollar Company Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 306 of 1969 (Reference No. 117 of 1969)
Judge
Reported in[1977]107ITR280(Mad)
ActsIncome Tax Act, 1922 - Sections 12B, 31 and 34(3); Land Acquisition Act, 1894; Income Tax Act, 1961 - Sections 2(47)
AppellantDollar Company
RespondentCommissioner of Income-tax
Appellant AdvocateS.V. Subramaniam, Adv. for Subbaraya Ayyar, ;Padmanabhan and ;Ramamani, Advs.
Respondent AdvocateJ. Jayaraman, Adv.
Cases ReferredNonsuch Tea Estates Ltd. v. Commissioner of Income
Excerpt:
(i) direct taxation - compulsory acquisition - sections 12b, 31 and 34 of income tax act, 1922 - whether compulsory acquisition of lands constitute transfer as contemplated under section 12b to attract capital gains tax - modification made to third proviso to section 12b show that compulsory acquisition was not intended to enjoy exemption - question answered in affirmative. (ii) compensation - whether compensation to which assessee became entitled by order of court subsequent to previous year ended 31.12.1960 could be taken into account for determining capital gains under section 12b for 1961-62 - right to compensation arose in year in which transaction took place - circumstance that subsequent amounts were awarded in later years does not affect assessability of amount in year under.....sethuraman, j.1. at the instance of the assessee three questions have been referred to this court under section 66{1) of the indian income-tax act of 1922. the assessee is a registered firm carrying on business as chemists and druggists. the firm purchased on 17th october, 1958, 134 grounds along with a house. out of the said 134 grounds, 127 grounds were acquired by the government under the land acquisition act for the purpose of construction of quarters for the employees of the port trust. the cost of 127 grounds to the assessee has been arrived at at rs. 89,698. a notification under section 4(1) of the land acquisition act was made on 12th august, 1959. even before the award, possession was taken by the port trust authorities on 27th january, i960, under the provisions of section 17 of.....
Judgment:

Sethuraman, J.

1. At the instance of the assessee three questions have been referred to this court under Section 66{1) of the Indian Income-tax Act of 1922. The assessee is a registered firm carrying on business as chemists and druggists. The firm purchased on 17th October, 1958, 134 grounds along with a house. Out of the said 134 grounds, 127 grounds were acquired by the Government under the Land Acquisition Act for the purpose of construction of quarters for the employees of the Port Trust. The cost of 127 grounds to the assessee has been arrived at at Rs. 89,698. A notification under Section 4(1) of the Land Acquisition Act was made on 12th August, 1959. Even before the award, possession was taken by the Port Trust authorities on 27th January, I960, under the provisions of Section 17 of that Act. On 10th February, 1960, there was an award offering compensation of Rs. 1,17,715. The assessee did not accept the compensation so awarded and there was, therefore, a reference to the City Civil Court, which granted further compensation of Rs. 29,264 on 28th November, 1961. The assessee appealed against the order of the City Civil Court contending that the compensation awarded was inadequate. By an order of 31st January, 1967, the High Court granted further compensation amounting to Rs. 1,17,458. The assessee was not content with the compensation given by the High Court and the matter was taken to the Supreme Court in C.A. No. 667 of 1968 ; the Supreme Court dismissed the appeal on 1st May, 1975 (Dollar Company v. Collector of Madras : AIR1975SC1670 .

2. The assessee-firm included in its return of income for the previous year ended on 31st December, 1960, relevant for the assessment year 1961-62, a sum of Rs. 28,017 as capital gains, which was arrived at as follows:

Rs.Compensation awarded on 10-2-19601,17,715 Less cost of the lands89,698

Balance28,017

3. The Income-tax Officer came to know, during the assessment proceedings, of the additional compensation received consequent on the order of the City Civil Court dated 28th November, 1961, amounting to Rs. 29,264. He, therefore, added this sum of Rs. 29,264 to Rs. 28,017. As the assessee had not accepted even the judgment of the City Civil Court and had claimed further compensation before the High Court the Income-tax: Officer added also Rs. 2,69,497, which according to him would represent the net excess compensation further demanded by the assessee.

4. The assessee appealed to the Appellate Assistant Commissioner contending that the compulsory acquisition did not come within the scope of the provision of Section 12B of the Indian Income-tax Act, 1922. In other words, the assessee went back even on its own return. Alternatively, it was contended that the further compensation granted by the City Civil Court or the claim made in the appeal before the Supreme Court could not be brought to tax in this year. The Appellate Assistant Commissioner did not accept these submissions in principle. He held that a mere claim could not be equated to income or profits and that, therefore, the sum of Rs. 2,69,497 could not be brought to tax. He pointed out that it was impossible to predict the outcome of the proceedings pending in the High Court. He, however, agreed with the Income-tax Officer in holding that the capital gain on compulsory acquisition was liable to be brought within the scope of Section 12B and that the entire compensation whenever awarded would have to be brought to tax in the year in which the acquisition took place. He, therefore, set aside the assessment with the direction that the Income-tax Officer should re-do it after ascertaining the correct amount of further compensation that may become due to the assessee and substituting it for Rs. 2,69,497 included by the Income-tax Officer. In other words, the Appellate Assistant Commissioner upheld the assessment of Rs. 28,017 and Rs. 29,264 but as far as the assessment of Rs. 2,69,497 was concerned, he set aside the assessment so that the correct figure that may be awarded in the appeal could be brought to tax.

5. The assessee appealed to the Tribunal contending :

1. that the compulsory acquisition was not transfer within the scope of Section 12B(2);

2. that, in any case, only the profits of Rs. 28,017 arising in the accounting period ended on 31st December, 1960, could be brought to tax ; and

3. that the Appellate Assistant Commissioner was not right in setting aside the assessment with the direction for re-doing it by including the amount that may be finally awarded in this case.

6. The Tribunal, following a decision of this court in Wilfred Pereira Ltd. v. Commissioner of Income-tax : [1964]53ITR747(Mad) , held that the 'transfer' included both a transfer by act of parties and a transfer by operation of law and that a compulsory acquisition by the Government of property constituted a ' transfer' so as to subject it to capital gains. On the question as to whether any compensation awarded in later years could be assessed in the year under consideration, the Tribunal pointed out that if Section 12B(1) was analysed, it would be seen that there must be a transfer of capital assets, that the transfer must have been effected after 31st March, 1956, and that profits must have arisen from such transfer. In that event, such profits would be deemed to be income of the previous year in which the transfer took place. The Tribunal was, therefore, of the opinion that* apart from the amount awarded by the Gty Civil Court, the further sum awarded by the High Court, viz., Rs. 1,17,458, particulars of which were available to the Tribunal by the time it heard the appeal, should also be brought to tax. On the question of the setting aside of the assessment, the Tribunal relied on Section 31(3) of the Act as giving the Appellate Assistant Commissioner the necessary authority. It, therefore, held that the Appellate Assistant Commissioner was perfectly within his powers to set aside the assessment directing the Income-tax Officer to re-do it after ascertaining the correct amount of compensation that may be finally determined by the court.

7. At the instance of the assessee the following three questions have been referred td this court:

'1. Whether the compulsory acquisition of the lands constitute atransfer as contemplated under Section 12B of the Indian Income-tax Act,1922, so as to attract capital gains tax?

2. Whether the compensation to which the assessee became entitled by orders of court subsequent to the previous year ended December 31, 1960, could be taken into account for determining the capital gains under Section 12B for the year of assessment 1961-62 ?

3. Whether the Income-tax Appellate Tribunal is right in law in holding that the Appellate Assistant Commissioner of Income-tax had power to set aside the assessment with a direction to the Income-tax Officer to re-do the assessment after the claim for compensation is finally settled through future orders of courts

8. The answer to the first question is quite simple. Section 12B in so far as it is material runs as follows :

'12B. (1) The tax shall be payable by an assessee under the head 'Capital gains' in respect of any profits or gains arising from the sale, exchange, relinquishment or transfer of a capital asset effected after the 31st day of March, 1956, and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange, reliquishment or transfer took place.' .

Though compulsory acquisition would not come within the scope of the expression 'sale, exchange or relinquishment' it has to be considered whether it comes within the scope of the expression 'transfer' used in the above provision. The Madhya Pradesh High Court in Commissioner of Income-tax v. Shrikrishan Chandmal : [1963]47ITR833(MP) held that though a compulsory acquisition by the Government might no't constitute a sale, it would still be a 'transfer' and the profit obtained by the transferor on such transfer would be capital gains. This court in Wilfred Pereira Ltd. v. Commissioner of Income-tax : [1964]53ITR747(Mad) came to an identical conclusion and held that the word 'transfer' in Section 12B included both a transfer by act of parties and a transfer by operation of law. At page 753 it was observed as follows :

'In our opinion, any divestiture of title would amount to a transfer. The transferor may not be a willing party. But nevertheless his title to the property is divested from him and the result is, the title is transferred. There is nothing in the context of Section 12B(1) of the Act to indicate that the word 'transfer' should not be interpreted in a comprehensive meaning including both a transfer by act of parties and a transfer by operation of law.'

9. To the same effect is another decision of this court in Commissioner of Income-tax v. United India Life Assurance Company Ltd. : [1966]62ITR610(Mad) , wherein Wilfred Pereira Ltd. v. Commissioner of Income-tax : [1964]53ITR747(Mad) was followed. The Gujarat High Court has followed these decisions in Vadilal Soda Ice Factory v. Commissioner of Income-tax : [1971]80ITR711(Guj) . Therefore, the conclusion of the Tribunal that the compulsory acquisition would amount to a 'transfer' within the scope of Section 12B is perfectly justified.

10. The learned counsel for the assessee sought to contend that 'sale, exchange, relinquishment or transfer' would comprehend only cases of bilateral transactions and not a compulsory acquisition which was a unilateralone. This point has been considered in Wilfred Pereira Ltd. v. Commissioner of Income-tax : [1964]53ITR747(Mad) . We do not, therefore, see any substance in the submission, as if the earlier cases had missed to notice this aspect.

11. It was next submitted that having regard to the history of the provision, as it was prior to 1956 and as it was enacted subsequently, in 1961, it would be seen that Parliament did not intend to tax compulsory acquisition.

12. For examining the correctness of this submission, it is necessary to go into the statutory history of the provision and also its successor in the Act of 1961. Section 12B was brought into the statute book by the Income-tax and Excess Profits Tax (Amendment) Act XX of 1947. The third proviso to Section 12B provided that any transfer of capital assets by reason of the compulsory acquisition thereof under any law for the time being in force relating to the compulsory acquisition of the property for public purposes shall not be treated as sale, exchange or transfer of the capital assets. Levy of capital gains was in force only for a short period and it was discontinued with effect from 1st of April, 1949. The levy was revived by the Finance (No. 3) Act of 1956 with effect from 1st of April, 1957. By the said Finance Act of 1956, certain modifications were made to the provision as it existed, one of the modifications being to bring within the scope of this provision any gain resulting from the relinquishment of a capital asset. The third proviso to Section 12B(1) was re-enacted, but there was no reference to the compulsory acquisition not being treated as sale, exchange or transfer of capital assets. When the Income-tax Act of 1961 was enacted the provisions of Section 12B were substantially adopted, but with some modifications. In order to avoid the repetition of the words 'sale, exchange, etc.' in the provision it was thought desirable to use the word 'transfer' and Parliament defined it in Section 2(47). Section 2(47) provided that transfer relating to capital assets included the words 'sale, exchange, relinquishment or extinguishment of any rights therein or the compulsory acquisition thereof under any law.' (Underlined by us). On this provision the notes on clauses appended to the Income-tax Bill stated as follows:

13. 'The definition has been expanded to include extinguishment of a right in and the compulsory acquisition of the asset.' (Underlined by us) Resting his case on the contrast between the third proviso to Section 12B of the Indian Income-tax Act, 1922, as it was in 1947, and the language of Section 2(47) of the Act of 1961, and on the aforesaid notes on clauses it was urged on behalf of the assessee that any gain resulting from the compulsory acquisition was not intended to be charged under the provision, as it was under the Finance Act of 1956.

14. This submission has to be rejected. The Supreme Court has pointed out in Commissioner of Income-tax v. Sodra Devi : [1957]32ITR615(SC) and Prashar v. Vasantsen Dwarkadas : [1963]49ITR1(SC) that aid can be obtained from the statement of objects and reasons, etc., only for the limited purposes of ascertaining the conditions prevailing at the time and the extent and urgency of the evil sought to be remedied by the amendment. The notes on clauses cannot, therefore, be utilised for the purpose of interpreting the provision.

15. It is now well settled that the provision has to be interpreted on its own terms. The notes on clauses, relied on, would, in the submission of the learned counsel, proceed as if the Section is for the first time being expanded so as to bring any compulsory acquisition within the scope of the word 'transfer'. This assumption has absolutely no force. The High Courts of Madras, Madhya Pradesh and Gujarat have in the cases already noticed, uniformly taken the view that the word 'transfer' would comprehend a transfer by act of parties as well as by operation of law. A compulsory acquisition is a transfer by operation of law. Therefore, the provision, even before 1956, was wide enough to rope in gains on compulsory acquisitions. Thus, even proceeding on the basis that the legislature should be taken to have assumed that the transfer did not include compulsory acquisition until the Act of 1961, still it would not be a proper assumption. The very fact that the exemption originally granted in the third proviso was taken away in 1956 clearly goes to show that Parliament intended to tax gains on compulsory acquisition. Further, as pointed out by Lord Radcliffe in Inland Revenue Commissioners v. Dowdal O' Mahoney & Co. Ltd. [1952] 33 TC 259 the beliefs or assumptions of those who frame Acts of Parliament cannot make the law. The modification made to the third proviso to Section 12B when the provision was being re-cast in 1956, goes to show that the compulsory acquisition was not intended to enjoy exemption under the 1956 Act. If the draftsman in 1961 assumed that it did enjoy the exemption even after 1956, it would be contrary to the provisions and the consequence following the amendment in 1956. There is no substance in this submission of the learned counsel that compulsory acquisition was brought within the ambit of 'capital gains' only in 1961. The first question is, therefore, answered in the affirmative and against the assessee.

16. The second question is now taken up for consideration. We have already extracted Section 12B(1) as it was in force in the relevant year. The contention of the learned counsel on the language of this provision is that only the amounts that were awarded as compensation during the relevant previous year could be brought to tax under Section 12B. In other words, the learned counsel would accept for assessment only the sum of Rs. 28,017 and not the other two sums, which were brought to tax by the Appellate Assistant Commissioner and by the Tribunal. Taking the language of Section 12B it would be found that it provides for tax on capital gains. Such tax has to be levied on the profits or gains arising from certain stated transactions after a particular date. Such profits and gains are to be deemed to be the income of the previous year in which the sale, exchange, relinquishmcnt or transfer took place. There is, thus, a statutory fiction introduced in Section 12B. The fiction overrides all other considerations. For instance, under the Income-tax Act, the question of method of accounting would be relevant in the matter of arriving at the taxable income under certain heads. That would not be relevant to Section 12B as a statutory fiction has been introduced. Under the provision, as it is, we have to find out what are profits and gains in the transaction. Such profits and gains would then have to be deemed to be income of the previous year in which the relevant transaction took place. There is no warrant for splitting up the profits and gains. In order to arrive at the profits and gains, one has to take the totality of the receipts of one or more years, and then subtract therefrom the deductions authorised by Section 12B(2). Considered in this light, whatever be the year in which the further compensations were awarded, the amount would have to be brought to tax in the year in which the acquisition took place. What gives rise to the compensation is the taking over of the property. It is not disputed that this taking over .happened in this year. The further amounts given by the City Civil Court and by the High Court have all their origin or root in the acquisition which took place in the material year. Importing the statutory fiction the amounts subsequently awarded would have to be retrospectively attributed to the year in which the transaction took place.

17. In the case of sale of goods a question arose as to whether any subsequent receipt could be related back to the year in which the profit took place. In Commissioner of Income-tax v. A. Gajapathy Naidu : [1964]53ITR114(SC) the assessee supplied bread to a Government hospital under a contract between 1st April, 1948, and 31st March, 1949. He made certain representations to the Government after the close of the year that he had incurred loss and wanted further amount to be paid to him. The Government directed payment of Rs. 12,447 to the assessee by way of compensation for the loss sustained in respect of the supply of bread. That amount was received in the year 1950-51. The question was whether the amount could be included in the assessment of the year of the actual receipt or of the year in which the transaction took place. The Supreme Court held that the amount obtained in 1950-51 could not be related back to the earlier year during which the assessee actually supplied bread to the hospital. This principle would apply ordinarily where the statute had not intervened.

Parliament has, however, ruled out the application of this principle to the assessment of capital gains. The statute provides for a fiction so as to enable the amount received at any time being taken back to the year in which the transaction took place. The learned counsel for the assessee submitted that there must be a right to receive the amount in the relevant year and that in the present case the right arose only when the compensation amounts were awarded either by the City Civil Court or by the High Court, In our opinion, this contention overlooks that the root of the right for the compensation is in the compulsory acquisition. What the courts did was merely to quantify the compensation. The right arose in the year in which the transaction took place. The right to the correct amount of compensation had already accrued to the assessee. The date of taking possession is only relevant for the purpose of taxation under Section 12B.

18. The learned counsel brought to our notice the decision of the Supreme Court in Nonsuch Tea Estates Ltd. v. Commissioner of Income-tax : [1975]98ITR189(SC) . Under an agreement Harrisons & Crossfield Ltd. were the managing agents of a tea estate. They were entitled to a commission of 1 1/2 per cent. on all sales and a sum of Rs. 12,000 per annum for secretarial work. After the Companies Act, 1956, came into force, a new agreement was entered into for the reappointment of Harrisons & Crossfield for a period of 10 years, on a remuneration of 5% commission on the net profits of the company. Approval of the Central Government was applied for in August, 1957, as required by the company law. By a letter dated 2nd September, 1957, the Central Government gave its approval for the reappointment of Harrisons & Crossfield for a period of 10 years with effect from 1st April, 1956. In its accounts for the periods ending on June 30, 1956, and June 30, 1957, the assessce-company had credited the account of the managing agents with the commission payable under the new arrangement which was pending approval. In computing the income for that year, it added back the amount shown in the accounts and the amounts were claimed as deduction only in the year in which the approval was communicated. The Supreme Court held that in view of Section 326 of the Companies Act, 1956, which contained an absolute prohibition against the appointment or reappointment of a managing agent before approval of the Central Government was obtained, the assessee-company's liability to pay the remuneration of the managing agents arose only when the Government conveyed its approval by its letter dated September 2, 1957, and not prior to that date. It was, therefore, held that the sum was deductible in the year in which the decision was communicated. Our conclusion is not inconsistent with this decision. The root of title to the remuneration would, in that case, be the approval of the Central Government. Until and unless the Central Government communicated its acceptance or approval, the remuneration would not have been payable to the managing agents. Thus, the right to the remuneration arose in that case only when the Central Government accepted or approved the proposal of the company. In the present case, the right to compensation arose in the year in which the transaction took place and what happened subsequently is only a quantification thereof. Section 12B has, by importing a fiction, rendered the sum liable to tax in the year in which the transaction took place. The circumstance that the subsequent amount's were awarded only in later years does not affect the assessability of the amount in the year under consideration. We have, therefore, to answer the second question also in the affirmative and against the assessee.

19. We now turn to the third question. This question has in a way become academic, because the Tribunal has already taken into account the compensation awarded by the High Court and no further compensation was awarded by the Supreme Court. We would, however, consider this question as it has been referred. The contention for the assessee is that the result of the order of the Appellate Assistant Commissioner is to take away the period of limitation prescribed in Section 34 of the Indian Income-tax Act of 1922, which was in force in the relevant year, or the corresponding provision of limitation found in the Act of 1961 whichever Act is taken to govern this case. For the department the submission was that the power of the setting aside or remand available to the Appellate Assistant Commissioner was a comprehensive power and that when the Income-tax Officer worked out the order of the Appellate Assistant Commissioner he was not bound by any peried of limitation prescribed in the Act. Any other conclusion would, it was urged, practically result in the stultification of the power of remand.

20. Section 31 deals with the powers of the Appellate Assistant Commissioner in the matter of disposal of the appeals before him. Section 31(3)(b) provides that in disposing of the appeal the Appellate Assistant Commissioner may, in the case of an order of assessment, set aside the assessment and direct the Income-tax Officer to make a fresh assessment after making such further inquiry as he thought fit or the Appellate Assistant Commissioner might direct. Section 34 provides the period within which assessments have to be completed or reopened and completed. Sub-section (3) thereof provides that no order of assessment or reassessment, other than certain types of orders referred to in the Section could be made after the expiry of four years from the end of the year in which the income, profits or gains was first assessable. But, under the second proviso thereto, nothing contained in the whole of Section 34 limiting the time within which any order may be passed would apply to the reassessment made on the assessee in consequence of or to give effect to any finding or direction contained in an order, inter alia, under Section 31. Thus, where the Income-tax Officer acts in pursuance of a direction of the Appellate Assistant Commissioner, among other authorities, he is not bound by any time-limit provided under Section 34.

21. Section 34(1)(a) as it was in force in the relevant year would apply only to cases where the assessee had omitted or failed to make a return of his income or to disclose fully or truly all material facts necessary for his assessment. In such cases there was no time-limit. The rigour of the absence of any time-limit was mitigated by the proviso. In substance, under the proviso, no assessment prior to the assessment year 1940-41 could be reopened and further no assessment could be reopened if eight years had elapsed if the income that was believed to have escaped assessment amounted to less than one lakh of rupees in the aggregate either for one year or for more than one year for which the assessments were sought to be reopened. This is not a case where Section 34(1)(a) could be applied because the assessee was not guilty of either an omission to file a return or an omission to disclose fully or truly all material facts. This is a case which would ordinarily have come within the scope of Section 34(1)(b) if the order of the Appellate Assistant Commissioner had not intervened. In such a case there is only a time-limit of four years within which proceedings to reassess could be taken. We are concerned with the assessment for 1960-61 and the period of four years would have elapsed by 31st March, 1965. As the High Court has awarded the compensation only on January 31, 1967, that compensation could not have been brought within the scope of a reassessment if it were to be made under Section 34(1)(b). The submission on behalf of the assessee is, therefore, that the order of the Appellate Assistant Commissioner keeping the assessment open till all the proceedings relating to the compensation got terminated would, in fact, enlarge the time-limit provided under Section 34(1)(b),

22. This submission overlooks the scope of Section 31(3)(b). Section 31(3)(b) confers power on the Appellate Assistant Commissioner to set aside the assessment and direct the Income-tax Officer to make a fresh assessment. The power is without qualification. This contention further overlooks the second proviso to Section 34(3) which is a proviso for the whole provision and not merely for Section 34(3). The second proviso lifted the time-limit in cases where the Income-tax Officer acted in pursuance of a direction given by the Appellate Assistant Commissioner. The provisions of Section 34(1)(b), the second proviso to Section 34(3) and Section 31(3)(b) have to be harmoniously construed. In construing these provisions we must see that each one of them is given scope to operate and is not stultified. If no appeal had been filed by the assessee in this case, it was perhaps possible for him to escape assessment on the amount awarded by the High Court as compensation. As compensation was awarded only in 1967 beyond the reach of the four year time-limit contemplated by Section 34(1)(b), it would have escaped assessment. But when the assessee filed an appeal the appellate authority could exercise its powers to set aside the assessment with a direction to re-do it after ascertaining the correct amount of compensation in view of Section 31(3)(b) read with the second proviso to Section 34(3). Section 34(1)(b) would have no scope for operation in such a case as there would be no need to invoke the power conferred thereunder.

23. As pointed out by the learned counsel for the department the whole power to set aside the assessment with a direction to re-do it would be set at naught if we accept the submission on behalf of the assessee. Taking an ordinary case let us suppose the assessee had come forward with all the materials but the Income-tax Officer had completed the assessment just towards the close of the fourth year. In such a case if the assessment had been made without due or proper enquiry, then, if we are to accept the assessee's submission the Appellate Assistant Commissioner would not be able to exercise his powers to set aside the assessment and re-do it. In the example taken by us, as the assessment itself came to be made towards the close of the period of limitation of four years, the appeal would have been preferred only after the period of four years. The Appellate Assistant Commissioner would have to act only thereafter. If the Appellate Assistant Commissioner were bound by the time-limit of four years even in exercise of his own powers, the result would be that he would not be able to direct the Income-tax Officer to make a fresh assessment after making due enquiry. The learned counsel for the assessee submitted that in such cases the Appellate Assistant Commissioner would have only to call for a report from the Income-tax Officer and then exercise his own powers for enhancement. That would only partially give effect to the powers available to the Appellate Assistant Commissioner. The power to set aside the assessment and remand it not being circumscribed by any consideration of limit of time should be given its widest possible amplitude. Otherwise, one would be introducing into the provision some limitation which is not there. The terms of Section 31(3)(b) read with the proviso to Section 34(3) clearly, in our opinion, contemplate that the Income-tax Officer can be directed to make further enquiries in order to ascertain the actual amount of compensation ultimately received so as to make a proper assessment in accordance with the provision of Section 12B. There is, therefore, nothing wrong in the manner in which the Appellate Assistant Commissioner had exercised his jurisdiction.

24. If there is any anomaly which arises as a result of a person not having filed an appeal escaping assessment of the further amount of compensation, that would not, in our opinion, come to the rescue of the assessee here who has filed an appeal which has to be disposed of in the manner contemplated by the provisions of the Act. The third question is also answered in the affirmative and against the assessee. The department will have its costs. Counsel's fee Rs. 250.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //