TMI Blog2009 (3) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... a. Here in these appeals two set of assessees are owners of these properties. In lot A, HUF were the owner and lot B the individuals were the co-owners. The Government of West Bengal while exercising the powers under s. 3(1) of the West Bengal Land (Requisition and Acquisition) Act, 1948 (hereinafter called the said Act), requisitioned land and building in question on 23rd April, 1976 for the purpose of use by the Calcutta State Transport Corporation (CSTC). Later on by notification dt. 7th April, 1990 issued under s. 4(la) of the said Act, the West Bengal Government acquired the land for public purpose and consequently the land vested in the State Government w.e.f. 7th April, 1990. The asses sees received requisition compensation for the period 23rd April, 1976 to 6th April, 1990 and also enhanced acquisition compensation on 20th April, 2000 vide order dt. 3rd March, 2000 of Hon'ble Calcutta High Court, whereby the dispute regarding the additional compensation has reached the finality. In the meantime, pursuant to interim conditional order passed by the Hon'ble Calcutta High Court, the asses sees received certain amounts on 22nd April, 1996 and 2nd April, 1997. These amounts were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order, the assessees preferred appeals before the CIT(A) which were decided vide impugned orders and the AO was directed to delete the requisition compensation as the same is capital receipt and does not have character of income. 6. Before us, the learned Departmental Representative has submitted that as per s. 48 of the IT Act, the mode of computation of capital gain uses expression full value of consideration. The full value of consideration means what the transfer or received or is entitled to receive as compensation for asset transfer and this includes every receipt or accrual, irrespective of nomenclature as a result of transfer of capital asset. He has further contended that the compensation received by the assessees for requisition is also a consideration received by the assessees for transfer of land due to acquisition by the Government and shall be part of the total consideration. Therefore, while computing the capital gain, the compensation received by the assessees from the West Bengal Government on account of requisition as well as acquisition of the land has to be considered. He has relied upon the order of the AO. 7. On the other hand, the learned Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is necessary so to do for maintaining supplies and services essential to the life of the community or for increasing employment opportunities for the people by establishing commercial estates and industrial estates in different areas or for providing proper facilities for transport, communication, irrigation or drainage or for the creation of better living conditions in rural or urban areas, not being an industrial or other area excluded by the State Government by a notification in this behalf, by the construction or reconstruction of dwelling places in such areas or for purposes connected therewith or incidental thereto, the State Government may, by order in writing requisition any land and may make such further orders as appear to it to be necessary or expedient in connection with the requisitioning." 9. The State Government by exercising its powers under s. 3(1) of the Act can requisition any land for the purpose specified in the said section. As per s. 6(1), if the land requisitioned under s. 3 is not acquired, the same may be released by the State Government from requisition and the possession is also returned to the owner who is entitled for the possession. As per s. 4(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amounts of compensation were revenue receipts taxable in the hands of the assessee: Held, (i) that the first consideration before holding a receipt to the profits or gains of business within s. 10 of the IT Act was to see if there was a business at all of which it could be said to be income. The primary condition of the application of s. 10 was that tax was payable by an assessee under the head 'Profits and gains of a business' in respect of a business carried on by him. Whether an assessee did not carry on business at all, the section could not be made applicable, and any compensation for requisition of assets that he received could not bear the character of profits of a business. (ii) That 'business' denoted an activity with the object of earning profit. To say that a business was being carried on, meant no more than that profit was to be earned by a process of production. The business of a tea-grower and manufacturer was not merely to grow tea plants but to collect tea leaves and render them fit for sale. The tending of his tea gardens to preserve the plants, was not a continuation of the business of the assessee which had come to an end for the time being. (iii) That t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that the assessees have not maintained complete travel itinerary or log-book in respect of travelling and no call book is maintained for telephone expenses to substantiate the entire claim of expenses. Therefore, he has restricted the disallowance by 50 per cent of the disallowance made by the AO. 17. We have heard the learned Departmental Representative as well as the learned Authorized Representative and considered the relevant records. We find that these expenses were incurred by the assessees during the litigation for the enhanced compensation. The litigation was for both compensation, i.e., requisition as well as for acquisition compensation. Since, the assessees have not offered the requisition compensation as income and we have also held that the requisition compensation cannot be considered as the income of the assessees, therefore, the expenses proportionate to the requisition compensation are not allowable. The AO taxed both the requisition as well as the acquisition compensation under long-term capital gain and allowed the litigation expenses but disallowed the other expenses by way of conveyance, telephone, vehicle and office expenses. Therefore, when the requi ..... 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