Law:

Section:

Section 4 of the Income-tax Act, 1961 - Capital or revenue receipt - Assessee-company, a dealer in lands, was awarded compensation by government for requisition of a land belonging to assessee - Whether such compensation for requisition could be treated on the same footing as compensation for acquisition - Held, no - Whether said compensation was a revenue receipt in assessee's hands - Held, on facts, yes Section 56 of the Income-tax Act, 1961 - Income from other sources - Chargeability Of - Assessee-company, dealer in lands, received compensation for its land requisitioned by government - Whether such compensation taxable as income from other sources - Held, on facts, yes Section 256, read with section 145 of the Income-tax Act, 1961 - Reference - Tribunal's finding of fact - Tribunal found that though assessee-company was following mercantile system, certain compensation received by it had been credited by it in its books on receipt basis - Tribunal concluded that assessee was following cash system of accounting in respect of compensation and hence the same was taxable in year of receipt - Whether tribunal's impugned finding was based on no evidence and was perverse - Held, on facts, no FACTS The assessee-company was an investment company, deriving income mostly from property. It maintained accounts on mercantile system and adopted the financial year as its previous year. It bought a certain land which was under requisition by the Government. The land was subsequently de-requisitioned. At the instance of the assessee, the Land Acquisition Collector made a reference to the arbitrator for the award of compensation for the period of requisition. Eventually, the assessee was awarded compensation on 2-3-1960 at the rate of a fixed monthly rent and interest thereon. The assessee withdrew the amount of compensation and credited the same in its books, in the assessment year 1962-63. For the assessment year 1962-63, the assessee-company claimed that the impugned compensation was not taxable as it was a receipt of a casual and non-recurring nature. The ITO negatived this claim on the ground that the same, being for use of the land, had been received during the relevant…

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