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TMI Blog2010 (4) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... nstallments received by the petitioner under the bonds was in the nature of capital receipts and was not taxable. X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax proportionate realisation of amount of compensation over and above the cost of the purchase of the aforesaid bonds. The said order was assailed by the petitioner in revision under section 264 of the Income-tax Act which was disposed of by the Commissioner of Income-tax vide judgment and order dated January 20, 1982 and the matter was remanded to the Inspecting Assistant Commissioner who again vide order dated February 2, 1982, affirmed his earlier view. This order was again challenged by the petitioner in revision under section 264 of the Act which has been dismissed vide order dated December 17, 1982. 3. The aforesaid order dated December 17, 1982, and the order dated February 2, 1982, have been impugned by the petitioner in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity below relying upon the decision of the Bombay High Court in CIT v. Scindia Workshop Ltd. [1979] 119 ITR 526 wherein it was held that the amount received by the assessee in excess of the capital investment amounts to income for the purposes of assessment in each year, dismissed the objections as well as the revision of the petitioner. 9. In the aforesaid case before the High Court the assessee was doing business of purchasing and selling of securities and bonds of the like nature. The assessee had invested large sums in the said business and, as such, was commercially involved in the activity of earning profits through sales and purchases of bonds. In the above circumstances, it was held that the investment made by the assessee in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the said bonds. Accordingly, the said finding is not sustainable and is apparently perverse in nature. 12. The Karnataka High Court in an identical case concerning the U. P. Zamindari Abolition Bonds in the case of Addl. CIT v. Maharashtra Apex Corporation Ltd. [1979] 116 ITR 616 (Karn) held as under (page 619) : ". . . .the annual payments received by the assessee in respect of these bonds, represent partly capital and partly interest and income-tax is payable only on the portion representing interest." 13. The Division Bench of the Karnataka High Court in laying down the above principle relied upon the ratio of the law laid down in Andrew Scoble v. Secretary of State for India [1903] 4 TC 618 wherein Lord Lindley of the House of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or of the original bond holder and has become entitled to receive the compensation. The purchase value of the bond paid by the petitioner has no relevance for the purposes of determining the nature of compensation so received by the petitioner even though the same was in the nature of investment by the assessee. The purchase of the bonds by the petitioner at a lower price than the face value of the bonds would not be the proper test for determining the nature of compensation so received as the petitioner not being a dealer in securities by virtue of transfer of the bonds in his favour became entitled to receive annual instalments which were payable to the original bond holders as the said right stood assigned to him. 16. In view of the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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