Law:

Section:

Section 279 of the Income-tax Act, 1961 - Repeals and savings - Assessment year 1961-62 - Whether where assessee held after 1-4-1962, i.e. date of commencement of New Act, revised return which was not in pursuance of any notice under section 34 of Indian Income-tax Act, 1922, assessment for year under consideration could be made under provisions of New Act - Held, yes Section 5 of the Income-tax Act, 1961 - Income - Accrual of - Assessment year 1961-62 - Suit for damages alongwith interest was decreed in favour of assessee in 1953 - Assessee could realise decreed amount only in relevant assessment year - Whether for purpose of assessment, year or years in which several items decreed in favour of assessee became due were alone relevant and not year in which they were actually received - Held, yes - Whether since assessee was following mercantile system of accounting, whether or not assessee had actually entered any of those items in its books of account in year in which they accrued was wholly immaterial since what determined liability to tax was accrual of income and not entry of such income in books of account of assessee - Held, yes Section 256 of the Income-tax Act, 1961 - High Court - Reference to - Assessment year 1961-62 - Whether where ITO himself held that amount in question was not assessable to tax being a receipt of capital nature, question of assessability of that amount did not arise before AAC or in further appeal before Tribunal and as such no question of assessability of that amount would arise from order of Tribunal requiring reference to High Court - Held, yes FACTS The assessee-company purchased an engine from a foreign firm for use in its mill in 1932 but it was actually delivered late. In the year 1935, the assessee filed a suit against the foreign firm for a sum of Rs. 2,05,000 on the ground that the machinery was delivered late and in a defective condition. The suit was decreed in favour of the assessee in December, 1953, for a sum of Rs. 2,05,000 together with costs and interest from the date of the suit till the date of realisation. After protracted negotiations with the Government and the Custodian of Evacuee Property, the assessee was…

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