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TMI Blog1961 (3) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... ohtak and Hissar Districts Electric Supply Co. Ltd., Rohtak (hereinafter to be referred to as the assessee) carried on the business of generation and supply of electric energy at Rohtak, Bhiwani Hissar and Hansi. This was under two sets of licences, one dated April 9, 1932 (the date of this licence has been wrongly given as April 30, 1934, in the order of the Income Tax Appellate Tribunal) was for the generation of electricity. In the second set were included four separate licences for the distribution and supply of electric energy to the consumers at Rohtak, Bhiwani, Hissar and Hansi respectively. The assessee thus came to generate electricity in accordance with first licence and distribute electric energy in accordance with other four licences. The account books relating to the two activities, i.e., generation and distribution of electricity, were kept separately. Sometime in 1954, certain shareholders of the assessee floated a private limited company known as the South Punjab Electricity Corporation (Private) Ltd. (to be referred to as the newly floated company) with the object of transferring to it that side of the business which concerned the distribution of electric energy. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be deemed to be profits of the previous year in which the sale took place : Provided further that where any insurance, salvage or compensation moneys are received in respect of any such building, machinery or plant which has been discarded or demolished or destroyed, and the amount of such moneys does not exceed the written down value, the amount allowable under this clause shall be the amount, if any, by which the difference between the written down value and the scrap value exceeds the amount of such moneys :...... The arguments on behalf of the assessee before us, as before the Tribunal, are two-fold : (1) That the assets so far as they pertain to the distribution of electric energy to the consumers were sold to the South Punjab Electricity Corporation before the commencement of the relevant accounting period and as such would not be comprised within the term, such plant, machinery, or building as used in clause (vii). (2) The business activity of the assessee so far as it concerned the distribution of electric energy to the consumers had ceased before the commencement of the relevant accounting period. Mr. S. K. Kapur on behalf of the assessee has placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee does not appear to have been cited before the Appellate Tribunal. Reliance was, however, placed on an unreported ruling of the Bombay High Court in Gujerat Ginning Manufacturing Co. Ltd. v. Commissioner of Income Tax. This is published at page 340 of unreported Income Tax judgments of the Bombay High Court, Book One, as published by the Western India regional Council of the Institute of Chartered Accountants of India, Bombay. The Bench of the Bombay High Court consisting of Chagla C.J. and Tendolkar J. relied on the case of Liquidators of Pursa Ltd. v. Commissioner of Income Tax as being a direct authority for the point before them and if the learned members of the Appellate Tribunal had cared to read the judgment of the Bombay High Court based on the authority of the judgment of their Lordships of the Supreme Court, they would not have ignored the judgment of the Bombay High Court. The facts of the case before the Bombay High Court were stated as follows : The accounting year is the calendar year 1948 and the assessment year is 1949-50, and the assessee company ceased to do business on March 20, 1946, and on December 14, 1946, it entered into an agreement for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ewly formed company the licences for distribution of electric energy to consumers, it retained its licence for distribution of electricity in the initial stages to the licensed distributors. The Tribunal considered that it would be wrong to say that the licence of the assessee so far as it pertained to the distribution of electricity had ceased to exist. This appears to be contrary to the finding of the Tribunal as it appeared in the earlier part of its order to the effect that the activity of distributing electricity along with the assets and liabilities of distribution business were sold to the newly floated company before the commencement of the relevant accounting year. The four licences for distribution were quite distinct from the licence for generation. According to the conditions of the four licences for distribution, the licensee was not to generate the energy but to only distribute energy received in bulk. After the transfer of the four licences for distribution to the newly floated company, that company had to receive energy in bulk from the assessee but this would not mean that the assessee carried on the business of distributing electric energy under the four licences ..... X X X X Extracts X X X X X X X X Extracts X X X X
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