1978 (2) TMI 98

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..... hat the machine in its best condition was not producing more than 12 tons in 24 hours though the guaranteed production was 20 tons in 24 hours. This letter was followed by a telegram from the assessee reiterating the complaint. The assessee also asked for free and immediate supply of parts of the machine. The German firm by their letter dated the 10th January, 1955, undertook to supply, free certain parts of a specified value. In spite of the replacement of the parts, the output of the machine did not increase. By their letter dated the 17th September, 1956, the German firm admitted that there was complaint of low output. Finally, by its letter dated the 7th July, 1958, the German firm recorded that by way of settlement of the assessee's cl .....

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..... of the assessee and confirmed the order of the Income-tax Officer. He held that the effective price of the machine had been reduced by the amount received back from the German firm and the rebate earned was solely related to the purchase price of the machine. This rebate was allowed because the machine supplied was not up to the standard. The assessee preferred further appeals to the Income-tax Appellate Tribunal. Before the Tribunal the assessee produced the correspondence it had with the West German firm and relied on the judgment of the Supreme Court in S. P. Jain v. Directorate of Enforcement, New Delhi ; Union of India v. S. P. Jain [1963] 33 Comp Cas 231, where the very same transaction was, inter alia, considered by the Supreme Co .....

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..... n the other hand that the Tribunal has found : (a) that this amount was received as compensation for low output of the machinery leading to loss of production and loss of profits, and (b) this amount was a revenue receipt. These two findings of the Tribunal have not been challenged and, therefore, the question must be answered in favour of the assessee. In support of his contentions Mr. Patel cited Commissioner of Income-tax v. Shamsher Printing Press [1960] 39 ITR 90 (SC). In this case the facts were that a premises containing a printing press was requisitioned by the Government and the business had to be shifted. The Government paid various sums by way of compensation one of the amounts paid being on account of the compulsory vacati .....

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