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TMI Blog1994 (12) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... xable in the assessment year 1969-70 and in cancelling the order of the Additional Commissioner of Income-tax passed under section 263 of the Income-tax Act, 1961 ? " The relevant facts could be repeated from the statement of the case referred to us as follows : (i) The assessee-company was granted a licence by the Government of Punjab in 1934 to engage in the business of generation and distribution of electricity in Moga Town for a period of 15 years with an option to purchase the undertaking after the expiry of the said licence. The Government exercised its option on the date of expiry of the licence, i.e., on February 20, and purchased the undertaking under section 7 of the Indian Electricity Act, 1910 (as adopted by the Punjab State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccept the said judgment and went in appeal to the High Court. Thereafter the parties compromised and the company forwent a sum of Rs. 5,000 out of interest awarded by the arbitrator and the balance amount of Rs. 2,24,000 on account of interest and the amount as per award of arbitrator was paid by the Punjab State Electricity Board by cheque dated October 29, 1968. The Income-tax Officer while completing the assessment for the assessment year in question, i.e., 1969-70, held that the profit estimated under section 41(2) shall have to be taxed during the earlier year on accrual basis. In other words, he held that the said amount was not taxable during the assessment year 1969-70. This order was reversed by the Additional Commissioner unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be disregarded, but the remaining excess has to be charged as income pertaining to the previous year in which the ' moneys payable ', i.e., price, became due. The words that need to be construed here are : ' became due '. The question to be asked is : When did the price become due ? On applying Mr. Jain's contention based on the parallel of accrued income, the price became due when the property was taken over by the Government. According to Mr. Sharma, the price cannot become due till it becomes ascertained. In applying a provision like the present, we have to make a reasonable construction based on the practical method by which the assessee can claim a deduction. If the property is compulsorily acquired for less than its written down va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous amounts were paid for the acquisition on several dates, however, this court held that the money became payable, i.e., the balancing charge, having determined in the previous year relevant to the particular assessment year, it was in that year the question of its inclusion in the total income of the assessee would come up for consideration. The Bench also clearly stated that the year of inclusion of the balancing charge as per section 41(2) had to be on the basis when the money payable became due and not on the basis of the date of sale of the assets and that the money payable could be held to have become due only when the same was ascertained. In view of these two decisions of this court, it is unnecessary for us to consider the questio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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