1. The following question is involved in this reference under Section 256(1) of the Income-tax Act, 1961 :
'Whether the Tribunal was right in holding that the items that were not fully destroyed in the lire and which had been retained by the assessee and had not been discarded would not come for consideration in determining the profits under Section 41(2) of the Income-tax Act, 1961 ?'
2. The statement of the case relates to the assessment year 1961-62, the relevant accounting period ending on June 30, 1960. The assessee carries on business as a manufacturer of electrical goods. Its fixed assets, finished and unfinished goods, stock-in-trade, raw matrials and stores were covered by several fire insurance policies, A few days prior to the commencement of the accounting year a fire broke out in the business premises of the assessee. Thereafter, on the survey report dated October 26, 1959, the insurers paid certain sums of money to the assessee including a sum of Rs. 3,39,327. The assessee also realised Rs. 1,525 on sale of certain electrical installations. Thus, the assessee received a total sum of Rs. 3,40,852 apart from the other sums of money with which we are not concerned.
3. In this reference, as we are only concerned with the items that were not fully destroyed in fire and were retained and not discarded by the assessee, it is unnecessary for us to refer to the other facts which are not at all relevant for our purpose. The Income-tax Officer, after deducting the written down value, determined Rs. 1,76,208 as profit earned by the assessee under Section 41(2) of the Income-tax Act, 1961. This amount includes the amount paid by the insurers to the assessee in respect of the items not fully destroyed and not discarded but retained by the assessee. The first appeal filed by the assessee has been dismissed by the Appellate Assistant Commissioner, but the Tribunal has allowed its second appeal by holding that the items that were not fully destroyed nor discarded but retained by the assessee should be excluded from the computation of profits under Section 41(2) of the Act.
4. Mr. B. L. Pal, the learned counsel for the revenue, has contended before us that the amount representing these items should be taken into consideration under Section 41(2) of the Act, for, the word 'destroyed' used in this section is wide enough to include the items that are partlydestroyed or partly damaged by fire. But we are not impressed by his contention. Section 41(2) of the Act reads as follows :
'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 monies 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 of the business or profession of the previous year in which the moneys payable for the building, machinery, plant or furniture became due.'
5. The section uses the expression 'sold, discarded, demolished or destroyed' and not the words 'damaged' or 'partly damaged' or 'partly destroyed'. Further, the items in question were not sold, transferred or discarded by the assessee. In the Shorter Oxford English Dictionary (volume I) several meanings are assigned to the word 'destroy' and they are as follows :
'To pull down or undo, as a building ; to demolish. To lay waste ; to ruin. To undo, break up, reduce into a useless form, consume or dissolve. To render useless. To deprive of life ; to kill. To put an and to ; to do away with. To counteract.'
6. And in Chambers' Dictionary (1939 Edn.) the meanings ascribed to the word 'destroy' are as follows : 'To unbuild or pull down ; to overturn; to ruin ; to put an end to.'
7. Therefore, in view of the ordinary meaning of the word 'destory', we are of the opinion that this section does not cover the items that were not fully destroyed in fire and has been retained by the assessee. Hence, the contention of Mr. Pal must fail and we return our answer in the affirmative and in favour of the assessee. As no one has appeared for the assessee, we make no order as to costs.
8. I agree.