Shah, J. - (1.) The Bangalore Transport Company Ltd. hereinafter called 'the Company'- operated a public motor transport service in the town of Bangalore for several years. The Legislature of the State of Mysore enacted the Bangalore Road Transport Service Act, 1956 (Mysore Act 8 of 1956) with a view to provide for the acquisition of the undertaking of the Company. By virtue of Section 3 of the Act the undertaking, assets and documents of the Company vested in the Government of Mysore, on October 1, 1956, and the Company was paid Rs. 15,50,000 as compensation for loss of its undertaking assets and documents.
(2.) In respect of the previous year ending March 31, 1957, the Company submitted a return under the Income-tax Act claiming that it had earned no income from its business since its undertaking and business was taken over by the Government of Mysore on October 1, 1966 The Income-tax Officer, Urban Circle, Bangalore, brought to tax Rs. 4,01,954 disclosed by the Company's audited accounts as its taxable business income. This order was confirmed by the Appellate Assistant Commissioner in appeal. The Income-tax Appellate Tribunal modified the order of assessment and allowed Rs. 97,208 as development rebate for the previous year and after making certain adjustments brought to tax an amount of Rs. 3,16,439 a taxable income of the Company in the previous year.
(3.) At the instance of the Company, the following question was submitted by the Appellate Tribunal to the High Court of Mysore under Section 66 (1) of the Income-tax Act, 1922: "Whether the sum of Rs. 3,16,439 was income and liable to tax on the assessee for the year 1957-58 - The High Court answered the question in the negative. Against that order this appeal is preferred with special leave. ;