THE FAZILKA ELECTRIC SUPPLY CO. LTD. vs THE COMMISSIONER OF INCOME-TAX, DELHI

The Supreme Court held that the excess amount realized over the written down value of an electricity supply company's assets, upon compulsory acquisition by the Government under the Electricity Act, 1910, is taxable under Section 10(2)(vii) of the Indian Income Tax Act, 1922. The Court clarified that the option for purchase by the Government is a result of mutual agreement and does not constitute a compulsory acquisition as understood in law. Therefore, the Income Tax Officer's assessment was upheld, affirming the taxability of the excess amount realized.