Law: Income Tax Act, 1922

Section: 12-B

Law: Income Tax Ordinance, 1979

Section: 136(2)

 Income Tax Act, 1922. (XI of 1922)-- —-S.12-B read with Income Tax Ordinance, 1979, Section 136(2)—Insurance claim of ship-Difference of claim and cost of ship-Whether taxable-Question of-To bring  rofit or gain within mischief of Section 12-B, it is necessary that such profit or gain should have arisen from sale, exchange or transfer of a capital asset-Held: Tribunal was  ight in holding that difference between original price of ship in question and amount received by assessee from insurance company under insurance policy on account of   ss  f ship, is not profit or gain on account of sale, exchange or transfer of said ship—Application dismissed.          [P.58]A,BC   JUDGMENT Nasir Aslam Zahid, J.~The application under Section 136(1) of the Department moved before the Income-Tax Appellate Tribunal for reference of the question referred hereinbelow was dismissed by order dated 9.2.1982 of the Income-Tax Appellate Tribunal. In the circumstances, the Department has filed this application under Section 136(2) of the Ordinance seeking opinion of this Court in respect of the following question for assessment year 1973-74 of the assessee: -Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in holding that the excess over the cost of the ship amounting to Rs.15,35,073/- received by the assessee from the Insurance Company was not taxable under Section 12-B of the Income-Tax Act? 2. We have heard Mr. Nasrullah Awan, learned counsel for the Department and Mr. Ali Amjad, learned counsel for the respondent/assessee. 3. The relevant facts are that the assessee had purchased a ship for Rs.28,50,048/- and after allowing depreciation for a number of years, the ships value, as per the books, became nil. During the 1971 War with India, this ship was lost and as the ship was insured, against a claim made by the assessee under theinsurance cover, an amount of Rs.43,85,121/- was received by the assessee from the insurance company during the year in question. The difference between the original price, that is, Rs.28,50,048/- and the amount received against the claim made by the…

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