INDIAN BANK LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) SINCE the assessee in all these cases is the same, they are dealt with together.

(2.) THE assessee is M/s. Indian Bank Ltd., which is one of the banks taken over as a result of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, as and from July 19, 1969, and the assessee was paid a total compensation under the provisions of the said Act of Rs. 2,30,00,000. For the assessment year 1970-71 corresponding to the previous year ending December 31, 1969, the ITO determined the net capital gains arising out of the taking over of the bank at Rs. 55,166 after determining the cost of the banking undertaking at Its. 2,29,44,834, THE order of the ITO computing the net capital gains at Rs. 55,166 for the assessment year 1970-71 was questioned before the AAC who took the view that the total cost of the undertaking at the time of the taking over was Rs. 2,36,61,702 as against Rs. 2,30,00,000 being the compensation received for the taking over of the undertaking and, therefore, there was no capital gains at all. Aggrieved by the order of the AAC, the Revenue filed an appeal before the Income-tax Appellate Tribunal. THE Tribunal allowed the said appeal and upheld the order of the ITO computing the capital gains at Rs. 55,166.

(3.) AGGRIEVED by the order of the Tribunal, the Revenue has sought and obtained a reference to this court on the following questions of law: