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TMI Blog1987 (3) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1941, as well as all titles, rights, properties and interests acquired in such territory since that date by the Siamese State and subjects. The Siamese Government agreed thereunder to take necessary legislative and administrative measures, inter alia, to compensate the loss of or damage to property, rights and interests in these territories arising out of the occupation thereof by the Siamese. The Siamese Government also agreed to assume responsibility for safeguarding, maintaining and restoring unimpaired British property, rights and interests of all kinds in Siam and for the payment of compensation for losses or damages sustained. Pursuant to the said agreement, claims were invited against the Siamese Government. The date of the notice inviting claims was July 7, 1948, and the claims in respect of property were required to reach the Siamese Government on or before March 31, 1949. A note in regard to the procedure to be followed by the claimants was issued. Clause 15 read thus : " The appropriate British Commonwealth governmental authority, after receipt and screening of a claim, will present it to the Siamese Government for consideration. Where the Siamese Government admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsation under the award received by the assessee in respect of mill and machinery stores (23,756 pounds), sawn timber (1,10,125 pounds) and logs (5,11,582 pounds) represented a revenue receipt and was taxable as such. This finding gives rise to the second question posed to us. Arising out of the finding that the aforesaid was a revenue receipt, it was contended by the assessee before the Tribunal that, in any event, the amount of Rs. 21,58,867, which was the unabsorbed portion of the loss of Rs. 41,75,388 admitted for the assessment year 1942-43, could not be taxed. This contention of the assessee was turned down and it gives rise to the third question posed to us. The three questions read thus: " (1) Whether the Tribunal was right in holding that the assessee's right to the compensation arose only on May 18, 1951, on which date the award was given ? (2) Whether the Tribunal was right in holding that the compensation of 23,756 pounds (in respect of mill and machinery stores), 1,10,125 pounds (in respect of sawn timber) and 5,11,582 pounds (in respect of logs) received in terms of the above award represented revenue receipts ? (3) Whether the earlier years' losses of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee's right to compensation arose only on the date upon which the award was made. The Tribunal was, therefore, right in so holding. This brings us to the second question. It will be recalled that the Claims Committee awarded to the assessee an aggregate sum of 5,04,743,9,0 pounds in this manner: " The above mentioned claim has now been duly examined and compensation has been awarded as follows: ------------------------------------------------------------------------------------------------------------------------------------------------ Heading Amount awarded ------------------------------------------------------------------------------------------------------------------------------------------------ Heading 2 (compensation in lieu of restoration of property) pound 4,80,771.0.0 Heading 3 (compensation in respect of damage to property) pound 35,990.0.0 Heading 4 (compensation for loss sustained through deprivation of property) pound 2,409.0.0 ------------------------------------ pound 5,19,170.0.0 Less : 1. Proportion of assessment and administration expenses pound 1,624.18.8 2. Pro rata scaling down pound 12,801.12.4 pound 14,426.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that arose was whether this was a revenue receipt. It was urged on behalf of the Revenue that the said sum was the stock-in-trade of the bank and the increment due to the fluctuation in the exchange rate had to be treated as incidental to the bank's business. The Supreme Court assumed that the said sum was the bank's stock-in-trade, but it observed that it did not necessarily follow that the increment due to the fluctuation in the exchange rate was due to trading operations in, the carrying on of banking business. It had been found by the Tribunal that the said sum was a " blocked and sterilised balance " and the bank was unable to deal with it or use it between September, 1949, and July, 1953, when it was finally remitted to India. In the Supreme Court's opinion, the said sum changed the character of stock-in-trade when it was blocked and sterilised and the increment in its value due to the exchange fluctuation had to be treated as a capital receipt. Mr. Munim also drew our attention to the Supreme Court judgment in Senairam Doongarmall v. CIT [1961] 42 ITR 392. This was a case in which the assessee owned a tea estate consisting of tea gardens, factories and other buildings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vene. Mr. Jetly drew our attention in this regard to the judgment of the Supreme Court in Sutlej Cotton Mills Ltd. v. CIT [1979] 116 ITR 1. The Supreme Court there observed that the law may be taken to be well-settled that where a profit or loss arose to an assessee on account of appreciation or depreciation in the value of foreign currency held by him on conversion into another currency, such profit or loss would, ordinarily, be trading profit or loss if the foreign currency had been held by the assessee on revenue account or as a trading asset or as part of circulating capital embarked in business. If, on the other hand, the foreign currency had been held as a capital asset or as fixed capital, such profit or loss would be of a capital nature. In the case before the Supreme Court, there was no finding by the Tribunal as to whether the foreign currency had been held by the assessee on capital account or revenue account and whether it was part of the fixed capital or of the circulating capital embarked and adventured in the assessee's business in West Pakistan. If it had been employed by the assessee in its business in West Pakistan and had formed part of the circulating capital of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note shows that the form required particulars of the property that was the subject-matter of the claim. The award specifies that the compensation was awarded to the assessee under three broad heads: in lieu of restoration of property, in respect of damage to property and for the loss sustained through deprivation of property. In these circumstances, the Supreme Court's observations in Senairam Doongarmall's case [1961] 42 ITR 392, are relevant; it is the quality of the payment that is decisive of the character and makes it fall within capital or revenue and not the measure of its payment. The particulars were required to be given and compensation noted there against was only as a measure of the ascertainment of the total compensation payable to the assessee. The fact that, in such circumstances, compensation was noted against the items of mills and machinery stores, sawn timber and logs does not make the compensation quantified in respect of these items a revenue receipt. It is necessary to remember the peculiar facts. Upon the invasion of Siam by the Japanese forces late in the year 1941, the assessee's business and property in Siam had to be abandoned. No one could then forecast ..... X X X X Extracts X X X X X X X X Extracts X X X X
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