- (1.) This is a reference made at the instance of the assessees by the Income-tax Appellate Tribunal, Calcutta Bench, under Section 66(1) of the Indian Income-tax Act in which the following question is framed for the opinion of the Court: Whether the sum of Rs. 3,27,840 received by the applicant company from the Government of India in the circumstances of this case is taxable as profits under Section 10 (2) (vii) of the Income-tax Act
(2.) The assessees are the well-known Electric Supply Company which provide this city with electricity. The assessees had a stand-by electricity generating plant at Bhatpara about sixteen miles from Calcutta. The plant was not in use, but it was kept as a stand-by or reserve in the event of the main generating plant breaking down.
(3.) It appears that the Government during the war desired to acquire this plant, but the company did not want to sell. Eventually the Government on 10th April, 1942, served a requisition order upon the assessees under the provisions of Rule 83 of the Defence of India Rules. A letter accompanied the requisition order in which it was stated that the price to be paid for the plant requisitioned was to be determined by Government and the writer had been instructed to make an advance payment of Rs. 5,00,000 without prejudice to any subsequent negotiations. The company were informed that arrangements had been made to issue a cheque for this amount without delay. The Government also informed the assessees that it was intended to dismantle this plant and they asked the assessees for their co-operation.;