COMMISSIONER OF INCOME TAX Vs. N J NAIDU

JUDGEMENT

(1.) THE following question was referred under s. 66(1) of the Indian IT Act for our opinion : - -

(2.) THE assessee is carrying on the business of exhibiting cinema pictures at five theatres in Nagpur. One of them was known as Saroj Talkies. The assessee held a lease of the premises for a period of ten years commencing from 5th Oct., 1937, equipped the premises with machinery and furniture and carried on his business of exhibiting films there. The permises were acquired for the Nagpur Improvement Trust and the assessee handed over possession of the premises on the 1st Oct., 1945. The Land Acquisition Officer paid a sum of Rs. 26,700 -0 -0 as compensation to the assessee for acquiring the assessee's interest in the Saroj Talkies. This amount was received in the account year 1946 -47 and was sought to be taxed in the asst. yr. 1947 -48. This amount of compensation was in addition to the sum of Rs. 55,000 -0 -0 payable to the owner of the premises. The award of the Land Acquisition Officer, giving compensation to the assessee states that he will be given a sum of Rs. 26,700 -0 -0 in cash "by way of compensation for requiring the said Rai Bahadur to give up his lease hold interest in the cinema, viz., the Saroj Talkies, which is a part of the subject -matter of acquisition in these proceedings by terminating his lease of the said Saroj Talkies before the expiry of the said lease which is upto the 30th Sept., 1947."

(3.) THE Tribunal held that this compensation was a capital receipt as it was a compensation for acquisition by the Nagpur Improvement Trust of the lease -hold interest of the assessee in the Saroj Talkies.