Air India vs Commissioner of Income Tax

D.R. Dhanuka, J.—By this reference u/s 256(1) of the income tax Act, 1961 (''the Act''), the Tribunal has referred the following questions of law to this Court for opinion:

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the insurance monies received by Air India in excess of the original cost of its engine No. 5217 destroyed in an accident were liable to tax as capital gains under the income tax Act, 1961?

Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the insurance monies received by Air India under the Insurance Policy on reinstatement basis in excess of the original cost of the aircraft ''Emperor Ashoka'' destroyed in an accident, were liable to tax as ''capital gains'' under the income tax Act, 1961?

The learned counsel for the revenue has fairly informed the Court that both the questions are covered by the decision of the Supreme Court in the case of Vania Silk Mills (P) Ltd. Vs. Commissioner of Income Tax, Ahmedabad [OVERRULED], , in favour of the assessee. In view of the above statement and following the said decision we answer both questions in the affirmative and in favour of the assessee. No order as to costs.