Judgement

SHAH, J. :- The Bangalore Transport Company Ltd. hereinafter called the Company - operated a public motor transport service in the town of Bangalore for several years. The Legislature of the State of Mysore enacted the Bangalore Road Transport Service Act, 1956 (Mysore Act 8 of 1956) with a view to provide for the acquisition of the undertaking of the Company. By virtue of Section 3 of the Act the undertaking, assets and documents of the Company vested in the Government of Mysore, on October 1, 1956, and the Company was paid Rs. 15,50,000 as compensation for loss of its undertaking assets and documents.

2. In respect of the previous year ending March 31, 1957, the Company submitted a return under the Income-tax Act claiming that it had earned no income from its business since its undertaking and business was taken over by the Government of Mysore on October 1, 1966 The Income-tax Officer, Urban Circle, Bangalore, brought to tax Rs. 4,01,954 disclosed by the Company s audited accounts as its taxable business income. This order was confirmed by the Appellate Assistant Commissioner in appeal. The Income-tax Appellate Tribunal modified the order of assessment and allowed Rs. 9