Law: Income Tax Act, 1961

Section: 32,32(1)(iii),Expln.(2),(IA),Expln.,41,4 1(2)

Income-tax----Business income---Profits chargeable to tax---Balancing charge---When moneys payable "become due" ---Acquisition of electricity undertakings--­Compensation determined and paid by Government---Moneys have "become due"---Profits chargeable in year of receipt ---Pendency of arbitration proceedings for determination of compensation under Electricity Act---Will not affect liability---No provision that compensation must be finally determined---Indian Income Tax Act, 1961, Ss. 32(1)(iii), Expln. (2), (IA), Expln. & 41(2)---[CIT v. United Provinces Electric Supply Co. Ltd. (1987) 166 ITR 565 reversed]. Section 41 of the Income Tax Act, 1961, makes it abundantly clear that income arising as provided therein is to be considered as income of business or profession and is chargeable to income-tax as income of business or profession. Once it is held to be business income, unless provided otherwise, it would be taxable in the previous year in which the same is received. In a case of acquisition of the assessee's undertaking by the Government, determination of compensation and its payment by the authority would certainly mean that moneys payable "became due' within the meaning of section 41(2) and the Explanation thereto. In a case of dispute or difference in the determination of the market value, pendency of proceedings for additional moneys payable would not be relevant so far as taxability of the compensation amount received is concerned. If any additional amount is received in a subsequent year it would be business income in that year. This interpretation is in conformity with subsections (1) and (4) of section 41, under which also, the receipt is to be taxed in the year in which it is received. The likelihood of the income being reduced in the subsequent assessment year as a result of the litigation may give rise to resort to other remedies available in the Act for rectification and refund of the tax, but on that ground also it cannot be held that no income had accrued to the assessee for the relevant assessment year. Section 41(2) nowhere provides that such balancing charge would be taxable in the year in which the "moneys payable" are determined…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492