1984 (7) TMI 116

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....2. The assessee is a company deriving income from business in the manufacture and sale of tea. There was another tea company named Chulsa Tea Co., also doing business in the manufacture and sale of tea. That was a Sterling Company which was required under the Foreign Exchange Regulations Act to dilute its equity capital. Hence, the said Chulsa Tea Co, amalgamated with and merged in the assessee company with effect from 1st January, 1978. Prior to this amalgamation there was a fire in the premises of Chulsa Tea Co. and certain assets were damaged. The matter was settled with the Insurance Company which paid a sum of Rs. 19,14,670 to Chulsa Tea Co. giving rise to a profit under section 41(2) of the Act of Rs. 6,98,750 on that account alone. T....

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....d the sale proceeds of those damaged assets, he urged that the assessee should be deemed to have realised a further instalment of profit under section 41(2) of the Act in addition to what was realised by its predecessor-in-business in the earlier assessment year. He urged that the burden to show that the amount under consideration was not liable to tax was on the assessee and the learned Commissioner (Appeals) erred in deleting the said amount even though the assessee had not discharged that burden. 5. Sri P.K. Chatterjee, the learned representative for the assessee, on the other hand, supported the order of the Commissioner (Appeals). He stated that the ITO has assessed the amount under the head "other sources" and so it could not be pr....

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....t be so, the assessee also could not be the owner of those assets. Those assets belonged to the Insurance Company of which the assessee just like its predecessor was a mere bailee. However, the assessee has treated those assets as if they were its own during that year under consideration by selling them and appropriating to self the sale proceeds. It is not clear from the record as to whether the assessee acquired the ownership of those damaged assets during the year under consideration as a part of the insurance claim of its predecessor or otherwise. If the Insurance Company gave up its ownership of those damaged assets during the year under consideration in favour of the assessee in settlement of the additional claim made by the assessee,....