Pathak, J. - (1.) This appeal is directed against the judgment of the Allahabad High Court answering the following questions in the negative:"1. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the provisions of S. 10(2)(vii) of the Income Tax Act, 1922 were not attracted 2. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the sale had taken place before 1-4-1956 and, therefore, the provisions of section 12B of the Income Tax Act 1922 were not attracted -
(2.) The assessee, a public limited company, was put into liquidation under the orders of the Allahabad High Court. An amount of Rs. 8,58,893/5/6 was payable by the assessee to the State of Uttar Pradesh on account of arrears of cane-cess. In proceedings for recovery of that amount as arrears of land revenue, the Collector of Deoria attached the assessee's mills and put them to auction sale on November 10, 1955. The land, building, machinery and parking grounds were sold for Rs. 24,00,000/- while the moveable properties including mill stores, spare parts, tools and equipment were sold for Rs. 1,80,000/-. All the properties were purchased by the Kanpur Sugar Works (P) Ltd., Although the sale was held on November 10, 1955, the sale certificate under R. 285-M of the U.P. Zamindari Abolition and Land Reforms Rules, 1952 could not be issued till July 4, 1956 on account of objections raised by the assessee, in spite of the fact that the entire amount of purchase money of Rs. 25,80,000/- had been paid by the purchasers on December 8, 1955. During the, period in which the objections were pending, i.e., November 10, 1955 to July 2, 1956, the Government of India appointed an Authorised Controller to run the sugar mills by a notification dated November 25, 1955.
(3.) After possession of the mills was given to the purchasers, a suit was filed by them against the assessee claiming damages for loss of profits on account of the possession of the mills not having been delivered to them immediately after the auction sale. In the suit the purchasers claimed, in the alternative, compensation for loss of interest on Rs. 25,80,000/- from the date of deposit of the sale price to the date of delivery of the mills. The claim of the purchasers Was ultimately settled by compromise for a sum of Rs. 1,25,000/-.;