TMI Blog1994 (10) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... Act for the purpose of the Kerala Agricultural University at Mannuthy near Trichur. The relevant notifications under section 3(1) of the Kerala Land Acquisition Act were published on September 1, 1970, September 8, 1970, and November 10, 1970. The property was taken possession of on May 1, 1973. An award was passed in respect of the said property on March 15, 1974, under which an amount of Rs. 19,16,385 was awarded as compensation to the assessee. In addition, a sum of Rs. 9,58,192 was also awarded as compensation to the firm, Messrs. Varkey Jacob and Co., which was the lessee of the estate. The total compensation of Rs. 28,74,577 was divided between the assessee-owner and the lessee company in the ratio of 2 : 1. The assessee filed refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in possession of the land and there was no threat of acquisition. Hence, the market value of the land was to be taken into account for wealth-tax purposes. The second group of assessment years is 1971-72, 1972-73, 1973-74 and 1974-75 and the third group is of assessment years 1975-76 to 1978-79. From the assessment year 1971-72 onwards, the assessee had only the right to receive compensation which had to be valued. During the assessment years 1971-72, 1972-73 and 1973-74, the compensation amount had not been determined by the Collector. It was determined by the Collector only in March, 1974, and the compensation was paid on June 28, 1974. For these three assessment years, therefore, the present value of the right to receive compensation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired to be evaluated for and from the assessment year 1975-76 was only the present value of the enhanced compensation as set out in paragraph 6A of the Tribunal's order. The Tribunal in effect, therefore, gave a discount of 25 per cent. only on the enhanced value of compensation for the hazards and uncertainties of litigation for these assessment years. Column 4 in the Table in paragraph 6A read with Note F makes this clear. The Department has contended that for all these assessment years, the discount for hazards of litigation at 25 per cent. should have been allowed only on the enhanced value of compensation and not on the entire compensation. This contention has no merit. In the first place, the right to receive compensation for the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department can have no grievance because in effect, the Tribunal has given a deduction only on the enhanced value of compensation, taking into account the fact that a sum of Rs. 28,74,577 had already been received by the assessee and, therefore, was already a part of the assessee's wealth during these assessment years. Therefore, there was no need to make any allowance in respect of this amount which had entered the wealth stream of the assessee. In these circumstances, in our view, the Tribunal has rightly rejected the application of the Department for raising question No. 1 and referring the same to us. Question No. 1 is as follows : " Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the Department relied upon a decision of the Supreme Court in the case of Rama Bai v. CIT [1990] 181 ITR 400. That was a case under the Income-tax Act and the Supreme Court held that interest on enhanced compensation awarded by the court has to be taken as having accrued not on the date of the order of the court granting enhanced compensation, but as having accrued year after year from the date of delivery of possession of the land till the date of such order. Such interest cannot be assessed to income-tax in one lump sum in the year in which the order is made. We are, however, concerned with a slightly different question, viz., whether the interest which was so awarded by the court can be taken into account for the purpose of de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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