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Issues:
1. Interpretation of section 41(2) of the Income-tax Act, 1961 regarding the taxability of a sum received from the compulsory acquisition of assets. Analysis: The case involved the interpretation of section 41(2) of the Income-tax Act, 1961, in the context of a company whose transport undertaking was compulsorily acquired by the government. The assessee's buses and automobile shed were taken over by the government under the Tamil Nadu Fleet Operators Stage Carriage (Acquisition) Act, 1971. The consideration received exceeded the written down value of the assets, resulting in a difference of Rs. 5,37,359. The Income-tax Officer brought this amount to tax under section 41(2) for the assessment year 1972-73. The Commissioner of Income-tax held that the compulsory acquisition fell within the purview of section 41(2) as it was a case of compulsory acquisition. Both the assessee and the Department appealed before the Tribunal. The Tribunal, relying on a previous Special Bench order, upheld the applicability of section 41(2) to the case, dismissing the assessee's appeal. The High Court, in its judgment, considered the arguments presented by the assessee's counsel, which were similar to those made in a previous case. The Court referred to its earlier judgment in a related case and held that since the compensation was determined after considering each asset of the undertaking, it did not constitute a slump sale exempt from section 41(2). The Court affirmed the Tribunal's decision that section 41(2) applied to the case, answering the referred question in the affirmative against the assessee. The Court directed the Tribunal to verify the cost fixed for each item of the undertaking taken over by the government to ensure proper application of section 41(2). The decision was made in line with the arguments presented by the assessee's counsel. No costs were awarded in this matter.
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