TaxTMI 
TaxTMI 
1981 (10) TMI 23
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.... receipt during the year 1975-76 ? " The assessee is a registered firm carrying on business in the purchase and sale of tyres. The assessment year in question is 1975-76, for which the relevant previous year was the year ending Diwali 1974. During the previous year the assessee's business premises were acquired for the purpose of construction of an overbridge at Siyaganj Indore. The assessee received compensation amounting to Rs. 55,291 from the Government. The break-up of this amount was as follows : Rs. (i) Cost of structure acquired 3,924 (ii) Cost of the structure (which) remained after the portion was acquired, i.e., the portion which became out of use 2,376 (iii) Loss of goodwill due to change of place of business ....
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.... show that the business premises of the assessee were acquired resulting in a closure of the assessee's business after the acquisition. It is clear that the assessee was unable to carry out its business of purchase and sale of tyres, even partially or on a reduced scale, after the acquisition of the premises. Section 28 of the I.T. Act charges the income received under the head " Profits and gains of business or profession ". The first postulate for this charge is that the profits should have been received from business which was carried on by the assessee during the previous year. In other words, if the business was not carried on and the profits did not arise out of the business carried on during the previous year the same shall not be ch....
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....see continued to be in possession of the tea gardens and tended them to preserve the plants, the manufacture of tea was stopped completely. The assessee was paid compensation for the years 1944 and 1945 under the Defence of India Rules calculated on the basis of the out-turn of tea that would have been manufactured by the assessee during that period. The question was whether the amounts of compensation were revenue receipts taxable in the bands of the assessee. The Lordships observed as follows (headnote) : " (i) That the first consideration before holding a receipt to be profits or gains of business within section 10 of the Income-tax Act was to see if there was a business at all of which it could be said to be income. The primary conditi....
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....urt should be treated as no longer good law. Facts in Manna Ramji's case were as follows: The assessee carried on business in timber and had an office and six sheds for storing timber. The premises were requisitioned by the Collector in 1944. On assessee's request the Collector allowed it to remain in possession of the office premises. The Appellate Tribunal had recorded a finding of fact that the business bad not come to a standstill altogether, and that the assessee continued to carry on the business, though at a reduced scale, after the acquisition. In these circumstances, the amount of compensation paid as loss of earnings was treated as a revenue receipt. Their Lordships observed that the statement of the case as found by the Appellat....