Shah, J. - (1.) The Income-tax Appellate Tribunal referred under section 66 (1) of the Income Tax Act, 1922, the following question for the opinion of the High Court of Judicature at Madras :"(1) Whether the war damage receipts of Pound 13,889 and Pound 85,479 constitute income of the assessee for assessment in the years 1954-55 and 1956-57 respectively (2) Whether replantation dividend receipts of Pound 20,272 and Pound 14,408 constitute income of the assessee for assessment in the years 1954-55 and 1956-57 respectively
(2.) The answer to the second question will be governed by judgment in Civil Appeals Nos. 157-158 of 1965, V. S. S. V. Meenakshi Achi v. Commissioner of Income-tax, and need not be considered in these appeals. The only question which has to be decided is the first question.
(3.) Facts which are material are briefly these. The assessee is a firm carrying on business in real estates at Kualakangsar in the Federated States of Malaya. Some of the properties belonging to the assessee and which constituted its stock-in-trade suffered damage during the second world war. On August 14, 1947, the Government of India notified a scheme to give relief to Indian nationals doing business in the Federated States of Malaya who had sustained loss when the territory was under Japanese occupation. An assessee who opted for the scheme was entitled to have his losses incurred or suffered during five years relevant to the assessment years 1942-43 to 1946-47 to be aggregated and to set off the losses against his profits for the two years relevant to the assessment years 1942-43 and 1941-42, and to claim refund of any excess tax for those two years after adjustment. Under the scheme, losses suffered by the assessee in Malaya during the war period were allowed to be set off against the assessment year 1942-43 and 1941-42 and the assessee obtained the benefit of Rs. 65,197 and Rs. 1,29,028 in the two years in reduction of tax liability. The Government of Malaya set up war damage commission to compensate persons whose properties has sustained damage due to war conditions, and under the scheme devised by the Government of Malaya the assessee received compensation amounting to Pound 14,169 and Pound 5,479 in the previous years relevant to the assessment years 1954-55 and 1956-57.;