D.S.TEWATTA,J. - (1.) IN the two references, R. A. Nos. 15 and 16 of 1972-73, arising out of I. T. A. Nos. 325 and 331 of 1969-70, relating to the assessment year 1964-65, the following three questions have been referred for our opinion under Section 256 (1) of the I. T. Act, 1961 : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was light in holding that the sum of Rs. 39,341 representing retrenchment compensation, was not an allowable deduction either under Section 28 (i) or under Section 37 of the I. T. Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, there was sale within the meaning of Section 41 (2) of the I. T. Act, 1961, even though no sale deed was executed or registered on the date when the undertaking was taken over and stood vested in the Board ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 23,534 was a part of the purchase price and would, therefore, go into computation in working out the profit under Section 41 (2) of the I. T. Act ? "
(2.) THE facts in the context of which the aforesaid three questions are to be considered are not in dispute and can be stated thus : The assessee, a limited company (hereinafter referred to as the " asses-see-company "), had supply of electricity as its business. The Punjab State Electricity Board (hereinafter referred to as " the board "), exercised its option to purchase from the assessee-company the said undertaking, vide the board's letter, by way of a notice, No. 5015/lb-3 (32)61 dated January 16, 1962, under Sub-section (1) of Section 6 of the Indian Electricity Act, 1910, as amended by the Indian Electricity (Amendment) Act, 1959 (hereinafter to be referred to as " the Act "), read with Sub-clause (1) of Clause 9 of the Bhatinda Electric-Licence 2003 (Bikrami) on the expiry of the period of licence on 7th and 8th June, 1963 (midnight falling between 7th and 8th June, 1963 ). The assessee-company was required by the said notice to deliver the aforesaid undertaking including the land, building, works, material, equipment, machinery and plants, etc. , pending determination and the payment of the purchase price in accordance with law. The said notice also notified to the assessee-company that the undertaking shall vest in the board as its absolute property as laid down in Section 7 of the Act (as amended) and the licence of the company shall cease to have any further operation. The assessee-company, in view of the impending transfer of its undertaking in question, served notice of termination of services of its employees on May 6, 1963, stating therein that the assessee-company shall not require their services after the expiry of the licence, i. e. , midnight of 7th and 8th June, 1963, and their services would stand terminated from June 8, 1963. It was further mentioned that the said notice be treated as one month's notice under the provisions of the Industrial Disputes Act, 1947 (hereinafter referred, to as the "industrial Disputes Act"), The period of the said one month's notice expired on June 6, 1963. The assessee's said undertaking was duly taken over on the midnight of 7th and 8th June, 1963, and a token payment of Rs. 1,50,000 was made to the assessee-company at the time of taking over of the said undertaking. The taking over of the said undertaking was expressed in the following language ; " Consequent upon the expiry of the Bhatinda Electric Licence No. 1992 (Bikrami) the assets (as per joint enumeration) of the undertaking of the Modi Electric Supply Co. Ltd. , Bhatinda, have been handed over by the company to the Punjab State Electricity Board on the midnight falling between the 7th and 8th June, 1963. Token payment of Rs. 1. 50 lakhs (one lakh and fifty thousand) made by cheque by the Board to the company. " The assessee-company paid on July 6, 1953, Rs. 39,341 to its employees by way of retrenchment compensation in pursuance of their services being terminated by notice dated May 6, 1963.
(3.) COMING now to the question posed, it may be observed that the matters involved are not res integra as the subject-matter of each question stands covered by an authoritative decision of the Supreme Court and what the learned counsel for the assessee-company has sought to do is to point out certain features which according to the learned counsel made the ratio of those decisions inapplicable to the present case. We, however, are of the opinion that the questions are squarely covered and there are no such distinguishing features as to take the matter away from the cover of the ratio of those decisions as would be presently shown.;