Full Judgment Text
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PETITIONER:
MARYBONG & KYEL TEA INDUSTRIES LTD.
Vs.
RESPONDENT:
COMMISSIONER OF INCOME TAX. CALCUTTA
DATE OF JUDGMENT: 13/02/1997
BENCH:
S.C. AGRAWAL, K.S. PARIPOORNAN
ACT:
HEADNOTE:
JUDGMENT:
[WITH CIVIL APPEAL NO. 3910 OF 1983]
J U D G M E N T
In these appeals, the appellants (assessees) had
received compensation from the Insurers under policies for
insurance against fire and the question that was referred
for opinion of the High Court was whether there was a
"transfer" as defined in Section 2 (47) of the Income Tax
Act, 1961 and the excess sum of compensation after deducting
the original cost of the assets destroyed by fire had been
properly brought to tax as capital gains under Section 45 of
the Income Tax Act, 1961. By the impugned judgment in Civil
Appeal No. 3909 of 1983 the Calcutta High Court has answered
the said question against the assessee and has placed
reliance on the decision of the Gujarat High Court in
Commissioner of Income Tax v. Vania Silk Mills 107 ITR 300.
The said decision in Civil Appeal No. 3909 of 1983 was
followed by the said High Court in the Judgment which is
under challenge in Civil Appeal No. 3910 of 1983. The
decision of the Gujarat High Court in Commissioner of Income
Tax v. Vania Silk Mills (supra) came up in appeal before
this Court and has been reversed in Vania Silk Mills v.
Commissioner of Income Tax, (1991) 191 ITR 647, wherein it
has been held that in cases where an Insurance Company pays
for the total loss or damage of the property and takes over
the property or whatever is left of it there is no transfer
for the purpose of capital gain under Section 45 of the
Income Tax Act. This matter if thus fully covered by the
said decision of this Court reported in 191 ITR 647. For the
reasons given in the said judgment, the appeals are allowed
and the question referred in both the cases is answered in
favour of the assessee and against the Revenue. No order as
to costs.