(1.) This reference relates to the assessment year 1971-72. Under Section 256(1) of the I.T. Act, the Tribunal has referred to this court the following question:
(2.) It appears that the assessee is an individual. The assessee had taken on lease a plot of land at Worli, Bombay ; the said plot of land was acquired by the Government on 12th May, 1961, and the assessee received a sum of Rs. 2,55,645 as compensation. The ITO brought this amount to tax in the assessment year 1971-72 as the income received under the head "Other sources" in the previous year relevant to this assessment year. The assessee had appealed to the AAC and had contended that this amount was not taxable as it was a windfall and, alternatively, it was not taxable in the assessment year in question. The AAC accepted both the contentions of the assessee and he was of the view that the amount received was the price of the leasehold right which was extinguished and, therefore, should not be taxed as income. He was also of the view that as capital gains it was to be taxed in the assessment year 1962-63, relevant to the previous year in which the transfer took place and, therefore, could not be assessed in the present assessment year. We may incidentally point out that we are not concerned here with the controversy whether there could be a transfer of the property before the receipt of the compensation under the Land Acquisition Act, or whether the possession of the property was taken before the receipt of compensation. The AAC was of the view that, as capital gains, the amount was to be taxed in the year 1962-63, relevant to the previous year in which the transfer took place and could not, therefore, be assessed in the present assessment year and he, therefore, deleted the addition in this assessment year "but directed the ITO to bring it to tax in the correct assessment year.
(3.) The Revenue appealed to the Tribunal and it was contended that the amount received by the assessee was really a business receipt, considered as the sale of a commercial asset. It was argued that the amount was correctly brought to tax in the year in which it was received in view of a certain decision; it was submitted that the order of the ITO should be restored.