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2015 (10) TMI 953 - HC - Income TaxInterest on fixed deposits representing compensation, pledged against bank guarantee given to KIADB pending resolution of dispute over title of land - whether is taxable in the respective years when such interest was credited by bank in its books as held by ITAT? - Held that:- If an amount is received by the assessee on certain conditions or by imposing any restrictions, such as of furnishing security, the assessee does not become the real owner of the money, though received in his name, or the interest that accrues thereon would not be chargeable to tax, till such dispute is resolved and the condition, or restriction, so imposed is removed or resolved.For the foregoing reasons, we decide the first question of law in favour of the assessee and against the Revenue. Part of compensation relating to trees in the agricultural land acquisition proceeding - whether is taxable as capital gains and chargeable to tax in the block period and not in the year of unconditional receipt as held by ITAT - whether the capital gains could be charged on the compensation for the standing mango and other fruit bearing trees, building, borewell and other assets on the agricultural land of the assessee, which was acquired under a notification for compulsory acquisition? - Held that:- What is to be noted in this regard is that it was acquisition of the land, along with structure, trees etc., which was made by a single transaction. It was only for the purpose of payment of compensation that valuation of the building, borewell, standing trees (which may be mango, tamarind and other fruit bearing trees) was made. While calculating the valuation of the trees, which was done by the Land Acquisition Officer of the Board, part relief had been granted by the Authorities with regard to certain kinds of trees and also the building and the borewell. But mango trees, which were approximately 12 years of age, were valued separately, and compensation on the same was treated as taxable. In this regard, since it is clear that the acquisition was for the entire land on "as is where is basis", and the land in question is agricultural land, and the valuation of the trees and other assets, were made only for the purpose of calculating compensation, therefore the amount paid to the assessee was actually for acquisition of the agricultural land, which was exempted from tax. Hence, the question of payment of capital gains on the compensation only for the mango trees, etc., cannot be justified in law. The ratio of the decision COMMISSIONER OF INCOME TAX v/s M.RAMAIAH REDDY (1984 (12) TMI 56 - KARNATAKA High Court) goes in favour of the assessee and not the Revenue. We are of the firm opinion that it was one transaction of acquisition, under which the land, as well as the trees, etc., had been acquired, and splitting the same into two for the purpose of taxation would be against the law. - Decided in favour of assessee.
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