Suhas Chandra Sen, J. - (1.) The following question of law has been referred by the Tribunal to this court Under Section 256(1) of the I.T. Act, 1961 : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the rents receivable by the assessee-company in respect of the requisitioned premises of which it was a monthly tenant, as per the award of the Land Acquisition Collector, could not be assessed in the hands of the assessee-company maintaining its accounts under the mercantile system ? "
(2.) The assessee is a private limited company. It maintained accounts on the mercantile system with the previous year as the calendar year. The relevant assessment year was 1970-71 and the total income was assessed by the ITO at Rs. 1,44,437 inclusive of Rs. 45,996 as income from other sources in respect of the requisitioned portion of the premises at "Stephen House". The ITO observed that the circumstances being the same as in the last year, the rent receivable from the Govt. of West Bengal in respect of a portion of the 4th floor of the " Stephen House " requisitioned by the West Bengal Govt. was assessed as income of the assessee from other sources.
(3.) Being aggrieved, the matter was taken in appeal to the AAC. It was contended before him on behalf of the assessee-company that the ITO should not have included any amount of rent in respect of the portion occupied by the said Government in its assessment. The AAC disapproved the contention and held that as the assessee had been following the mercantile system of accounting and as the rent was receivable during the previous year the contention that there was an injunction under the orders of the High Court could not be a ground for exclusion of the income from the instant assessment. He, however, directed the ITO to substitute the figure of rent by the amount, as determined by the High Court.;