Law: Income Tax Act, 1961

Section: 256

Income tax---Capital or business receipt Excess receipt on devaluation of currency Import of goods from abroad Goods insured Goods seized by Authority of other country while in transit Claim settled by insurance company Amount received from insurance company, was in the nature of compensation for goods lost and compensation represented price of stock in trade which was insured Excess amount received by assessee was business receipt, liable to tax. Calcutta Jute Agency (P.) Ltd. v. C.I.T. (1979) 117 I T R 741 (Cal.); C.I.T. v. Canara Bank Ltd. (1967) 63 I T R 328 (S C); C . I . T . v . U niversai Radiators (1979) 120 I T R 906 (Mad.); Davies v. Shell Co. of China Ltd. (1951) 32 T C 133; (1952) 22 I T R (Supp.) 1 A C; Hindustan Aircraft Ltd. v. C.I.T. (1963) 49 I T R 471 (Mys.); I. R .C.v. J. Gliksten & Son Ltd. (1929)1'4 TC364(HL); Landes Brothers v. Simpson (1934) 19 T C 62 (K B); M. Shamsuddin & Co. v. C.I.T. (1973) 90 I T R 323 (Ker.); Sree Hanuman Trading Co. v. C.I.T. (1980) 125 1 T R 1 (Ker.); Subramania Iyer (S.G.R.) v. C.I.T. (1979) 116 I T R 746 (Mad.) and Sutlej Cotton Mills Ltd. v. C.I.T. (1979) 116 I T R 1 (S C) fol. C.I.T. v. Union Engineering Works (1976) 105 I T R 311 (Ker.) distinguished. JUDGMENT CHANDURKAR, J. In the accounting year 1966 67 for which the corresponding assessment year was 1967 68, the assessee firm, which is a manufacturing concern, had indented for import of 2,502 ingots of fire refined copper from the British Metal Corporation Ltd., England. The goods were despatched to the assessee by S.S. City of Pretoria and the invoice dated 3rd August, 1965, showed the value of the goods at £.14,732 10.5. The documents including the bill of exchange were presented to the assessee through the Canara Bank Ltd., Bombay, for payment. They were honoured for Rs.1,98,696.63 and were placed with the bank. When in the course of transit the goods reached Karachi Port they were discharged between 6th September and 3rd October, 1965, by the order of the Government of Pakistan, who, on 21st September, 1965, served a writ on the carrying vessel in an action in prize instituted on 20th September, 1965, in the High Court of West Pakistan, Karachi…

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