1. K. A. THANIKKACHALAM, J.---At the instance of the assessee, the Tribunal referred the following question for the opinion of this Court under section 256(1) of the Income Tax Act, 1961: "(1)Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that a sum of Rs.5,37,359 or part thereof was assessable to tax under section 41(2) of the Income-tax Act?"
2. The assessee-company was carrying on the business of operating buses, lorry service, etc. The Tamil Nadu Government enacted the Tamil Nadu Fleet Operators Stage Carriage (Acquisition) Act, 1971, by which the Government had taken over all the buses of the transport operators who were holding fifty or more stage-carriage permits. Since the assessee had fifty and routes with sixty-five buses plying, the transport undertaking of the assessee was compulsorily acquired by the Government. The buses were taken over at the value of Rs.12,80,000 and the automobile shed was taken over for Rs.29,700. The written down value of the buses was Rs.7,53,836 and that of the shed was Rs.19,555. The difference between the consideration received by the assessee and written down value amounted to Rs.5,37,359 which was brought to tax by. The Income-tax Officer under section 41(2) of the Act for the assessment year 1972-73. On appeal, the Commissioner of Income- tax held that this was a case of compulsory acquisition and hence section 41(2) is clearly applicable.
3. There were appeals both by the assessee and by the Department before the Tribunal. In the assessee's appeal, the first question was whether the sum of Rs.5,37,359 could be assessed as profit chargeable under section 41(2). The Tribunal upheld that order of the Commissioner of Income-tax (Appeals) on this point following the order of the Special Bench (Madras Bench-B) of the Tribunal, dated November 26, 1981, in I.T.A. No.855 (Mds.) 77-78 in the case of Southern Roadways (P.) Ltd. v. CIT. Accordingly, the assessee's appeal was dismissed.
4. The arguments advanced by learned counsel appearing for the assessee before us are similar and identical to the arguments advanced by learned counsel appearing for the assessee in T. C. No. 635 of 1983 in the case of Southern Roadways Ltd. v. CIT. While considering the arguments advanced by learned counsel for the assessee therein, by our judgment in T.C.No. 635 of 1983 of even date (sic). We held that the undertaking of the assessee was taken over by the Government and the compensation was determined after taking into account each and every item of the assets belonging to the undertaking and, therefore, there was no slump sale so as not to attract the provisions of section 41(2) of the Act. The Tribunal in the case of Raman.& Raman (Pvt.) Ltd.
5. Followed the Special Bench order of the Tribunal in the case of Southern Roadways (P,) Ltd. And rendered its decision which is under reference in the present case. Since the arguments advanced by learned counsel appearing for the assessee in T. C. No. 504 of 1984 are similar and identical to the arguments advanced by learned counsel appearing for the assessee in T. C. No. 635 of 1983, for the reasons stated in our order of even date (sic) in T. C. No.635 of 1983, we hold in the present case that the Tribunal was correct in holding that section 41(2) is applicable to the facts of the case and the profit is chargeable under section 41(2) of the Act. <p.m></p.m>