Law:

Section:

Section 28(i) of the Income-tax Act, 1961 [Corresponding to section 10(1) of the Indian Income-tax Act, 1922] - Business income - Chargeable as - Assessment year 1947-48 - Assessee took on lease premises to run hotel business - By a requisition order, Government requisitioned and direct delivery of possession of property to army authorities - Catering contract was entered into by assessee with army authorities - Later by another order, entire premises along with equipment for catering was taken over by Government - Thereafter assessee sold all equipments that he had purchased to run catering business to landlord of premises and lodged compensation claim with Government - Under settlement certain amount was paid to assessee - Whether compensation received by assessee did not relate to or connected with any business or trading activity of assessee and was, therefore, was not assessable in his hands - Held, yes FACTS Under a lease agreement the assessee agreed to become a tenant of certain premises for using the premises as a boarding and lodging hotel. The lease was for a period of five years and the possession of the premises was handed over to the assessee. By a requisition order dated 25-4-1942, the Government of India requisitioned and directed delivery of possession of the property to the army authorities. The requisition was to continue for the period of the war and six months thereafter. The assessee, thereupon, made certain representation and the army authorities then made a catering contract with the assessee. He carried on the business of this catering contract and served the army authorities thereunder. The contract was then terminated and from 1-11-1943 the premises continued in the possession of the army authorities. The catering contract was from that date given to the landlords of the premises. In this connection another order dated 13-11-1942, was passed and under that order the entire premises along with the equipment for catering was taken over by the Government. Having regard to the above situation on 31-10-1943, the assessee sold away some equipment that he had purchased for running the catering business also to the landlords of the premises.…

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