9911796707
TMI Blog1975 (10) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ry covers. The reference case relates to the assessment year 1968-69. For the accounting year relevant to the said assessment year, the assessee had shown a sum of ₹ 13,455.75 in its profit and loss account as profit on devaluation . The question that arises in this case is whether the claim of the assessee that this amount represented a casual and non-recurring receipt coming within the scope of section 10(3) of the Income-tax Act, as it stood at the relevant time, can be accepted. The assessee imported 57,694 tonnes of tin sheets from London. These tin sheets were imported for the purpose of manufacturing tea-chests. Upon the arrival of the goods at Quilon, it was found that a quantity of 37,140 tonnes of tin sheets was rusty va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as per section 10(3) of the Income-tax Act. The claim of the assessee was rejected by the officer by his order dated March 23, 1970. He held that the excess amount formed part of the receipts arising from the assessee's business transactions and, therefore, it could not be considered to be a mere casual gain. This order was confirmed on appeal by the Appellate Assistant Commissioner. The appellant filed an appeal before the Appellate Tribunal, Cochin Bench. Allowing the appeal the Tribunal held : The transaction had thus been completed and there was nothing more to be done in pursuance thereof. In these circumstances, we are of opinion that the profit of ₹ 13,455.75 got by the appellant on account of devaluation by reason of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case is covered by these two decisions and the Tribunal was, therefore, wrong in holding that the excess amount was not, chargeable to income-tax. In the present case the cheque was received by the assessee from the insurers as compensation for goods damaged in transit. The facts of the case in Shamsuddin (M.) Company v. Commissioner of Income-tax are not similar. In that case the amount received represented the sale consideration of the goods in respect of which the assessee was carrying on a trade. It was therefore held by this court that the excess amount received by the assessee as a result of a devaluation was, a receipt arising from business, and consequently a trading receipt, which was liable to be assessed as a trading profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s admitted on both sides, capital gains. This was part of the compensation received by the assessee from the insurer for damage caused to its goods. The claim for compensation for damage caused to the goods had been settled with the insurer and the sum so settled did not include any excess profit. The excess profit arose entirely due to the devaluation. This excess amount was in the nature of a windfall, being the unexpected fruit of devaluation, and it cannot, therefore, be regarded as a receipt arising from business though it may be said in a sense to be a receipt in the course of business. We hold that the Tribunal had correctly held that the sum of ₹ 13,455.75 received by the assessee was not a receipt arising from its business wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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