( 1 ) THE Income-tax Appellate Tribunal, Allahabad Bench, Allahabad, has under Section 256 (1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), referred the following question to this court by means of its order dated September 21, 1976 :

"whether, on the facts and in the circumstances of the case, the compensation received by the assessee in a sum of Rs. 5,55,850 could be assessed as capital gains under Section 45 (1) of the income-tax Act, 1961?"

.

( 2 ) THE assessee-company runs a cotton spinning and weaving mill and a rayon mill. There was a fire in the spinning department of the cotton mill on November 28/29, 1962. It follows the calendar year as its year for accounting. The assessee received a sum of Rs. 9,13,678 as compensation from the insurance company. According to the assessee, out of this sum, it received Rs. 7,26,976 in the previous year (assessment year 1964-65) and the balance amount of rs. 1,86,702 in the following year. The Income-tax Officer did not accept the assessees contentions and held that since the major part of the claim had been received during the previous year relevant to the assessment year 1964-65 and as the assessee f