Sabyasachi Mukharji, J. - (1.) The assessee is a private limited company and the relevant assessment year with which we are concerned is the assessment year 1962-63 for which the previous year ended on 31st of March, 1962. It maintained accounts on the mercantile system. About this there has been certain arguments and we shall deal with this argument later on, because the ITO's order appearing at page 30 of the paper book describes the method of accounting as mercantile. The Appellate Tribunal had held, in respect of the compensation money with which we are concerned in this reference, that the assessee was treating the said types of income as receipts from other sources and was following the cash system. Apart from income from house property and business, the assessee had also income from interest and dividend under the head "Other sources".
(2.) In the course of the relevant assessment proceedings the ITO noticed that the assessee-company had received a sum of Rs. 91,062 during the previous year from the First Land Acquisition Collector, Calcutta, being the compensation for the occupation of its land at Chowringhee Road. He found that the compensation was related to the period from 27th of May, 1947, to 4th of January, 1954. It was submitted before him, on behalf of the assessee, that the amount of compensation was not liable to tax being a receipt of a casual nature and not a recurring income. This was rejected by the ITO on the ground that the compensation was received by the assessee for the user of its land. Further, it was observed that though the amount was relatable to the period anterior to the relevant accounting year, the same was liable for inclusion in the total income of the instant year having been received during the relevant previous year. The sum of Rs. 91,062 was accordingly included in the income of the assessee. Dealing with this aspect the ITO observed, inter alia, as follows: "The assessee is an investment company deriving income mostly from house property. During the year under review the assessee-company received a sum of Rs. 91,162 from the First Land Acquisition Collector, Calcutta, being the compensation for the occupation of its land at Chowringhee Road. The compensation was for the relevant accounting year. It is submitted on behalf of the assessee-company that the said compensation is not liable to tax as it is a receipt of a casual and non-recurring nature. I am unable to agree with the submissions of the assessee. The receipt is definitely liable to tax as it is the compensation received by the assessee for the user of its land."
(3.) It is not necessary for us to deal with the other aspect of Rs. 15,094, as the question relating to this was not pressed before us.;