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Interpretation of income under Indian Income Tax Act regarding excess compensation received for acquired land. Analysis: The judgment involves a reference under Section 66(1) of the Indian Income Tax Act concerning the treatment of excess compensation received by an assessee for acquired land. The Income Tax Officer considered the surplus compensation as the assessee's income for the relevant account year, a decision upheld by the Tribunal. The key question referred to the Court was whether the excess amount constituted a revenue receipt for the relevant year. The appellant's counsel argued that the excess compensation should not be categorized as "profits and gains of business" as it did not result from a voluntary sale transaction. Reference was made to a case involving requisitioned property to support this argument, emphasizing the distinction between compulsory acquisitions and voluntary sales. The judgment delves into the concept of profits, emphasizing that it encompasses the arithmetical excess of price received over total costs incurred by the seller. Various precedents are cited to illustrate instances where receipts in lieu of items that would have been revenue or trade receipts were considered as profits. The judgment also discusses a case involving compensation for requisitioned rum, where the House of Lords deemed the payment as a compulsory sale and part of the appellants' profits. Additionally, a Supreme Court case involving insurance payouts for loss of profits was cited to highlight that such receipts are considered income and taxable. Furthermore, a subsidiary question arose regarding whether a specific 15% amount paid should be considered as part of the business's profits or gains. However, the Tribunal did not refer this specific amount for consideration. Ultimately, the Court concluded that the excess compensation received by the assessee should be treated as profits or gains of the business, affirming the Tribunal's decision. The respondents were awarded costs, and the judgment was agreed upon by both judges involved in the case.
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