DOLLAR COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee three questions have been referred to this court under Section 66(1) of the Indian Income-tax Act of 1922. The assessee is a registered firm carrying on business as chemists and druggists. The firm purchased on 17th October, 1958, 134 grounds along with a house. Out of the said 134 grounds, 127 grounds were acquired by the Government under the Land Acquisition Act for the purpose of construction of quarters for the employees of the Port Trust. The cost of 127 grounds to the assessee has been arrived at at Rs. 89,698. A notification under Section 4(1) of the Land Acquisition Act was made on 12th August, 1959. Even before the award, possession was taken by the Port Trust authorities on 27th January, I960, under the provisions of Section 17 of that Act. On 10th February, 1960, there was an award offering compensation of Rs. 1,17,715. The assessee did not accept the compensation so awarded and there was, therefore, a reference to the City Civil Court, which granted further compensation of Rs. 29,264 on 28th November, 1961. The assessee appealed against the order of the City Civil Court contending that the compensation awarded was inadequate. By an order of 31st January, 1967, the High Court granted further compensation amounting to Rs. 1,17,458. The assessee was not content with the compensation given by the High Court and the matter was taken to the Supreme Court in C.A. No. 667 of 1968 ; the Supreme Court dismissed the appeal on 1st May, 1975 (Dollar Company v. Collector of Madras AIR 1975 SC 1670).

(2.) THE assessee-firm included in its return of income for the previous year ended on 31st December, 1960, relevant for the assessment year 1961-62, a sum of Rs. 28,017 as capital gains, which was arrived at as follows: <FRM>JUDGEMENT_280_ITR107_1977Html1.htm</FRM>

(3.) AT the instance of the assessee the following three questions have been referred td this court: