SYNDICATE BANK LIMITED Vs. ADDITIONAL COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has, under s. 256(1) of the I.T.Act, 1961, referred as many as nine questions, all realting to the question of capital gains which accrued or arose to the assessee as a result of payment of compensation of Rs. 3.6 crores by the Government of India for having taken over the assessee's business undertaking.

(2.) THE assessee is a public limited company under the name "Syndicate Bank Ltd.". It was carrying on banking business with its head office at Manipal. THE business undertaking of this company along with 13 other like undertakings were first nationalised by the Government of India by promulgating an Ordinance called "the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance (8 of 1969)". THE validity of that Ordinance was challenged before the Supreme Court, and when it was pending consideration, the Ordinance was replaced by an Act called "THE Banking Companies (Acquisition and Transfer of Undertakings) Act (22 of 1969)". THE Supreme Court struck down that Act as unconstitutional in Cooper v. Union of India , on the ground that while determining the compensation payable for compulsory acquisition of the undertaking, the Government of India did not take into consideration the important components of the undertaking, such as, the goodwill and the value of the unexpired period of lease.

(3.) SECTION 5 of the BCATU Act provides that the undertaking of each existing bank shall be deemed to include all assets, rights, powers, authorities and privileges and all property movable and immovable, cash balances, reserve funds, investments and all other rights and interest in, or arising out of, such property as were immediately before the commencement of the Act in the ownership, possession, power or control of the existing bank, in relation to the undertaking, whether within or without India, and all books of accounts, registers, records and all other documents of whatever nature relating thereto and shall also be deemed to include all borrowings, liabilities and obligations of whatever kind then subsisting of the existing bank in relation to the undertaking, etc.