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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.