ivil Appeal Nos 850 of 1973 etc
From the Judgment and Order dated 39
1970 of the Allahabad High Court in Civil Miscellaneous ITR No 461 of 1961
With CIVIL APPEAL No 941 of 1975
From the Judgment and Order dated 55
1972 of the Allahabad High Court in IT Reference No 236 of 1969
Raja Ram Agarwal and Mrs Rani Chhabra for the Appellants
BB Ahuja and Ms A Subhashini for the Respondents
The Judgment of the Court was delivered by RANGANATH MISRA J
CA
No 850 of 1973 This appeal is by certificate and is directed against the judgment of the High Court of Allahabad
Assessee and five of his brothers constituted a Hindu Joint Family
The relevant assessment year is 1953 54 corresponding to the accounting period ending on 30th June 1952
The Joint Family which owned inter alia a sugar factory at Bijnore
In 1930 there was partition in the family and the members of the erstwhile Joint Family constituted themselves into a partnership firm which took over the sugar factory and operated the same
In the year 1944 Sheo Prasad one of the brothers who was a partner of the firm instituted a suit in the Lahore High Court for dissolution of the firm
Partition of the country followed and after the parties shifted over to India a fresh suit was instituted at Bijnore for purposes of partition
The properties were put in charge of a receiver appointed by the Court
So far as the sugar factory is concerned the arrangement was that at five yearly rest an auction was to be held confined to the partners and the highest bidder would be given lease to operate the factory for that period under the receiver
On 16th July 1948 Sheo Prasad trans ferred his 16th share to Banarsi Dass at a stated valuation of Rs450000
On 3rd May 1950 another brother Devi Chand leased out his 16th share to Banarsi Dass on an annual payment of Rs50000
On 13th July 1950 yet another brother Kanshi Ram similarly leased out his 16th share to Banarsi Dass for a similar sum
In 1951 Kanshi Ram sued for cancellation of the lease
On 6th April 1954 the dispute was compromised and the lease was 104 terminated
Kanshi Ram undertook to pay to Banarsi Dass at the rate of Rs 16000 for the first three years and at the rate of Rs 10000 for the subsequent two years
Devi Chand s 16th share was also returned on mutual arrangement and he agreed to pay a sum of Rs39000 and odd annually to Banarsi Dass for the lease period
During the assessment proceedings the nature of these receipts came to be debat ed the assessee maintained that these were in the nature of capital receipt lieu of the lease hold interest and the Income tax Officer maintained that those were revenue re ceipts
In due course the Tribunal ultimately upheld the view of the Revenue
One more question that arose was the admissibility of a claim of expenditure being payment of interest on a loan taken for purchase of shares in the sugar factory
The Income tax Officer had allowed the claim of Rs75211
The Appellate Assistant Commissioner gave notice to the assessee and disallowed the same
The Appellate Tribunal reversed the finding of the Appellate Assistant Commissioner in regard to the admissibility of the claim
Thus the assessee as also the Revenue applied to the Tribunal to refer the case to the High Court
As far as relevant the following questions were referred for the opinion of the High Court under section 661 of the Act at the instance of the assessee
Whether on the facts and in the circum stances of the case the sums of Rs 16000 and Rs39262 received from Kanshi Ram and Devi Chand respectively were assessable as income of the assessee 2
Whether on the facts and in the circum stances of the case depreciation is allowable on the 16th share in SB Sugar Mills Bij nore which the assessee had acquired from Seth Sheo Prasad So far as the first question is concerned the High Court referred to the arrangement entered into by the parties as also the terms of compromise and referred to certain deci sions and came to the conclusion that the sum of Rs 16000 received as a part of the total sum of Rs68000 constituted an assessable receipt
On the same reasoning the High Court held that the amount of Rs39262 received from Devi Chand was also liable to tax
So far as the other question is concerned the High Court held The question however remains whether the assessee is 105 entitled to claim depreciation on the ground that it has acquired 16th share in the SB Sugar Mills
It is to be noted that the asses see does not claim to be full owner of the property
All that the assessee claims is 16th share in SB Sugar Mills The assessee claims allowance under clause vi of subsection 2 of section 10 of the Indian Income tax Act of 1922
Clause vi is In respect of depreciation of such buildings machinery plant or furniture being the property of the assessee    In order to qualify for an allowance under clause vi the assessee has to make out that the building machinery plant or furniture is the property of the assessee
Mr Shanti Bhushan appearing for the assessee urged that clause vi is attracted even where an asses see owns a fractional share in the machinery
On the other hand Mr Brij Lal Gupta appear ing for the Department urged that ownership of a fractional share in machinery does not attract clause vi
The point is not free from difficulty
 The High Court ultimately came to hold In order to qualify for an allowance under clause vi the claimant must make out that the machinery is the property of the assessee
That test is not satisfied by the present assessee
The assessee does not claim to be the full owner of the machinery in question
All that is claimed for the assessee is 16th share in the machinery
Such a fractional share will not suffice for granting an allow ance for depreciation under section 102vi of the Act
 We have heard learned counsel for the assessee appellant at length
He has referred to several authorities in support of the assessee s stand of admissibility of the claim  on both scores
According to him the proper test to be adopted should have been to find out whether the arrangement consti tuted an apparatus to earn profit
whether the arrangement was one in course of business activity and whether what was received constituted a part of the circulating capital or was a part of the fixed asset
We have considered the sub missions of 106 the learned counsel for the appellant but are not in a position to accept the same
There is hardly scope to doubt that the benefit of section 102vi of the Act would be admissible only where the assessee is the owner of the property
It too is not admissible in respect of a fraction al claim
Similarly we are of the view in agreement with the High Court
that the amounts which the assessee received under the compromise or by amicable arrangement was in the nature of profits to be received by the assessee for the interest held in the business and therefore constituted taxable income
No other point was canvassed before us
This appeal has to fail and is hereby dismissed
Parties are directed to bear their own costs throughout
A No 233 of 1976 This appeal between the parties is also by certificate granted by the Allahabad High Court and relates to the assessment year 1955 56 for the accounting period ending on 30th June 1954
Leave has been confined to two questions as would appear from the order granting the certificate namely as to whether one of the instalments received by the assessee out of the said amount of Rs68000 as referred to above in respect of an earlier assessment year constituted a taxable receipt
The second question relates to acquisition of the 16th share under a deed of exchange from Devi Chand under the exchange deed dated 16th July 1948 which indicated that the valuation of that interest was shown to be Rs450000 and depreciation was claimed in regard to it
Both the questions raised here are covered by our aforesaid judgment
The appeal of the assessee has therefore to fail
The appeal is accordingly dismissed
Parties are directed to bear their own costs
CA No 1101 of 1975
The relevant assessment year in this case is 1954 55 corresponding to the accounting period ending June 30 1953
Three questions survive for consideration One relating to the receipt of Rs 16000 and Rs42957 in the same manner as already indicated and the other depreciation in regard to the 16th share said to have been valued at Rs450000
Both the questions have to be answered against the assessee for the reasons already indicated
In this case there is a third question which is relevant namely whether in the facts and circumstances of the case
the unabsorbed carried forward loss of Rs78084 was liable to be set off against the share of the rent received by the assessee from the Receiver
Dealing with this question the High Court ob served
107 During the previous year relevant to the assessment year 1953 54 the assessee had suffered a loss in sugar business
After setting off the loss against other heads of income there remained an unabsorbed loss of Rs78084
In the assessment year in dispute the assessee claimed that the unabsorbed loss of the preceding year should be brought for ward and set off against its share in lease money received from the Receiver in respect of SB Sugar Mills
This claim of the assessee has been disallowed and the question arises as to whether the assessee was entitled to carry forward and set off the loss as claimed by it
 The High Court referred to section 24 of the Income tax Act of 1922 and indicated that two conditions had to be ful filled before the claim of set off of carried forward loss could be admitted firstly the income against which the loss has to be set off should be income from business and secondly the business should be same in which the loss was suffered
The High Court referred to certain decisions including the one of this Court in and ultimately negatived the claim of the assessee by saying that the question would not arise because the letting out of the sugar mill was not the business of the assessee
In fact the receiver was appointed for dissolution of the firm and the main reason
as found by the High Court
for allowing the sugar factory to work was to dispose it of as a running mill so that proper price would be fetched
Having heard learned counsel for the parties we are satisfied that there is no merit in the assessee s stand and the same has got to be dismissed
The appeal is accordingly dismissed
Parties are directed to bear their own costs throughout
CA No 941 of 1975 This appeal is by certificate from the judgment of the Allahabad High Court
The assessee is the sugar mill which during the relevant assessment year 1960 61 corresponding to the accounting period ending 30th June 1959 was in the hands of a Court Receiver
The sugar mill was being assessed as an Association of Persons
Banarsi Dass
a partner had 16th share therein
He had acquired under a deed of ex change dated 16th July 1948 16th share of Sheo Prasad in exchange of shares held by Banarsi Dass in Lord Krishna Sugar Mills valued at Rs450000
In this assessment year the receiver claimed that for the purposes of computing the depreciation allowance the written down value of the busi ness assets be enhanced so as to reflect the sum of Rs450000 in place of 16th share representing the share of 108 Sheo Prasad
Similar claim had been raised by Banarsi Dass in his own assessment
The Income tax Officer rejected the claim and such rejection has been upheld throughout
We have already turned down the claim of Banarsi Dass
This claim has therefore to be rejected
We may additionally point out that under the scheme of the Act it is the assessee who alone is entitled to maintain such claim of depreciation and it would indeed be difficult within the framework of the scheme contained in the statute to maintain a separate value of the part of the asset to work out depreciation
The book value as shown must be applicable to the entire assets of the firm including the 16th share which Sheo Prasad had given to Banarsi Dass
The claim has rightly been rejected in the forums below including the High Court
The appeal has no merit and is dismissed
Parties will bear their own costs
PSS Appeals dis missed


Summary:
The appellant who was a public servant was dismissed from service after departmental inquiry
Thereafter he was charged with having committed the offence of criminal misconduct under section 52 Prevention of Corruption Act 1947 and was convicted
No sanction under section 6 of the Act was produced before the trial Court
It was contended that the Court could not take cognizance of the offence without there being a proper sanction to prosecute  Held that no sanction under section 6 of the Act was necessary for the prosecution of the appellant as he was not a public servant at the time of the taking of cognizance of the offence
In construing the provisions of a statute it is essential for a Court in the first instance to give effect to the natural meaning of the words used therein if those words are clear enough
It is only in the case of any ambiguity that a Court is entitled to ascertain the intention of the legislature
Where a general power to take cognizance of an offence is vested in a Court any prohibition to the exercise of that power by any provision of law must be confined to the terms of the prohibition
The words in section 61 of the Act are clear enough and must be given effect to
The more important words in cl
c of section 61 are  of the authority competent to remove him from his office 
A public servant who has ceased to be a public servant is not a person removable from any office by competent authority
The conclusion is inevitable that at the time a Court is asked to take cognizance not only must the offence have been committed by a public servant but the person accused must still be a public servant removable from his office by a competent authority before the provisions of section 6 can apply