Taxability of compensation for requisitioned land use upheld as business-derived profit, not capital sterilisation.

Compensation received from military authorities for use of requisitioned land as a store-yard was treated as taxable income under the Income-tax Act, 1922. The court distinguished cases where compensation sterilises a capital asset or is paid for leaving mineral or other assets unworked, and found that those principles did not apply here. The receipt was also not comparable to damages for wrongful detention of property. Instead, it arose in the course of the assessee's dealings with the land and represented profit derived from it. The amount was therefore held taxable and the reference was answered against the assessee.

---

---

Issues: Whether the sum received from the military authorities as compensation for use of the land was taxable under the Income-tax Act, 1922.

Analysis: The compensation was received in connection with the requisitioned land used as a store-yard, and the facts did not show a sterilisation of the capital asset in the sense applied to compensation received for leaving mineral or other assets unworked. The receipt was not analogous to damages for wrongful detention of property, but arose in the course of the assessee's business dealings with the land and represented profit derived from the land.

Conclusion: The amount of Rs. 9,699 was taxable and the reference was answered against the assessee.

---