This appeal has been filed by Department against order dt. 22nd March, 1983 of CIT (A) relating to asst. yr. 1979-80, previous year of which ended on 30th June, 1978. only ground taken in this appeal reads as below: "That under facts and in circumstances of case CIT (A) erred in law in allowing deduction of sum of Rs. 2,51,501 as capital receipt." assessee is company deriving income from business in manufacture and sale of tea. There was another tea company named Chulsa Tea Co., also doing business in manufacture and sale of tea. That was Sterling Company which was required under Foreign Exchange Regulations Act to dilute its equity capital. Hence, said Chulsa Tea Co, amalgamated with and merged in assessee company w.e.f. 1st Jan., 1978. Prior to this amalgamation there was fire in premises of Chulsa Tea Co. and certain assets were damaged. matter was settled with Insurance Company which paid sum of Rs. 19,14,670 to Chulsa Tea Co. giving rise to profit under s. 41(2) of Act of Rs. 6,98,750 on that account alone. That amount was duly assessed in hands of Chulsa Tea Co. and there was no dispute about same. damaged assets in respect of which Insurance Co. paid assessee's claim were lying in premises of Chulsa Tea Co. After amalgamation, assessee came into possession of those damaged assets along with other assets of Chulsa Tea Co. During year under consideration, assessee sold those damaged assets and realised sum of Rs. 2,51,501 which was created in its P & L A/c. assessee's contention before ITO was that said amount of Rs. 2,51,501 represented capital receipt and so was not liable to tax. ITO did not agree but taxed same as revenue receipt in hands of assessee. assessee appealed to CIT (A) and contended that ITO should have accepted its claim. CIT (A) observed that amount to be assessed under s. 41(2) of Act had already been assessed in hands of Chulsa Tea Co. and so amount realised by assessee by selling damaged assets was clearly capital receipt. Hence, she deleted addition of Rs. 2,51,501. Sri A.K. Chakraborty, ld. representative for department, urged before us that ld. CIT (A) erred in her decision. He stated that Insurance Co. settled claim of assessee after taking into account value of damaged materials that can be salvaged. As assessee has appropriated sale proceeds of those damaged assets, he urged that assessee should be deemed to have realised further instalment of profit under s. 41(2) of Act in addition to what was realised by its predecessor-in-business in earlier assessment year. He urged that burden to show that amount under consideration was not liable to tax was on assessee and ld. CIT (A) erred in deleting said amount even though assessee had not discharged that burden. Sri P.K. Chatterjee, ld. representative for assessee, on other hand, supported order of CIT (A). He stated that ITO has assessed amount under head "other sources" and so it could not be profit under s. 41(2) of Act. Further, he said that assessee was not dealing in damaged assets and so they were not its stock-in-trade. What assessee sold was capital assets and so sale proceeds received in lieu thereof evidently represented capital receipt in hands of assessee. Further he urged that even if Insurance Company left damaged materials in possession of Chulsa Tea Co. as part of total amount payable by it to latter, even then, additional profit under 41(2), if any, could arise only to Chulsa Tea Company in earlier assessment year so that assessee before us is not in any way effected by same. We have considered contentions of both parties as well as fact on record. Admittedly, assessee before us has succeeded to all assets and liabilities of its predecessor-in-business, viz., Chulsa Tea Company by virtue of amalgamation w.e.f. 1st Jan., 1978. If damaged assets were property of Chulsa Tea Company and Insurance Company settled claim after deducting value of damaged assets given over to Chulsa Tea Co. then, sale proceeds thereof would represent capital receipt because damaged assets were evidently capital assets. On other hand, if, as is normal practice, Insurance Company became owner of damaged materials and settled account on that basis then Chulsa Tea Co. was not owner of those assets. If that be so, assessee also could not be owner of those assets. Those assets belonged to Insurance Company of which assessee just like its predecessor was mere bailee. However, assessee has treated those assets as if they were its own during that year under consideration by selling them and appropriating to self sale proceeds. It is not clear from record as to whether assessee acquired ownership of those damaged assets during year under consideration as part of insurance claim of its predecessor or otherwise. If Insurance Company gave up its ownership of those damaged assets during year under consideration in favour of assessee in settlement of additional claim made by assessee, then value thereof may become another instalment of profit under s. 41(2) realised by assessee during year under consideration. Even otherwise, provisions of s. 28(iv) may come into play if facts of case so warrant. terms and conditions of contract of insurance as well as settlement arrived at after fire between Chulsa Tea Co. and Insurance Company has neither been brought on record nor were made available to us. As stated earlier, crucial question is as to who was owner of damaged assets at time of settlement of claim and when claim was finally settled. Whatever applies to Chulsa Tea Co, evidently applies to assessee before us because it has taken over business of former as going concern. Unless aforesaid crucial questions are answered with reference to terms of settlement, it is not possible to decide matter one way or other. Hence, we vacate orders of CIT (A) as well as ITO on this point and restore matter to file of ITO with direction with decide same afresh in accordance with law and our observations above after giving reasonable opportunity of being heard to assessee concerned. In result, appeal may be treated as allowed for statistical purposes. *** INCOME TAX OFFICER v. GOODRICK GROUP LTD.