TMI Blog2000 (9) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... was in perpetuity in the name of Delhi Pottery Works (P.) Ltd. Shri Ram Singh Kabli kept only 5 acres and alienated the rest of the land measuring 19.1 acres. On this land a superstructure for factory was raised. The assessee's late husband Shri Kesar Singh and their son took on sub-lease of the said land, factory premises and machinery installed thereon on20-3-1942and the rent payable was fixed at Rs. 500 per month. The sub-lease was for a period of 17 years. Delhi Pottery Works Pvt. Ltd. went into liquidation and the official liquidator released the aforementioned property in favour of Smt. Harnam Kaur, widow of late Shri Ram Singh Kabli in March, 1949. Shri Kesar Singh started paying sublease rent of Rs. 500 per month to Smt. Harnam Kaur. After the death of Shri Kesar Singh, the same lease-hold right in the said land devolved on the assessee, who started pottery business in the name and style of M/s Kesar Potteries. On15-9-1962the Government of India issued a Notification under section 4 of Land Acquisition Act acquiring the land in Arkpur village including the aforesaid land of 5 acres, which was under the tenancy and occupancy of the assessee. Notification under section 6 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxed till the matter was finally decided by the court and also that the assessee was a sub-lessee of the land and structure standing thereon and her interest was only as a tenant. The assessee further pointed out that as there was no cost of acquisition of the tenancy right, capital gain was 'not chargeable to tax. The learned first appellate authority concurred with the submissions advanced on behalf of the assessee and held that there was no justification in bringing to tax the capital gain of Ps. 24,81,705 and accordingly deleted the addition. 7. Before us the learned Departmental Representative contended that the first appellate authority erred in reversing the order of the Assessing Officer on this issue. It was contended by the learned Departmental Representative that the case of the assessee was squarely falling within the provisions of section 45(5) which was introduced with effect from assessment year 1988-89 and the year under consideration was also the same. The learned Departmental Representative contended that clause (b) of section 45(5) provides in unambiguous terms that the amount by which compensation is enhanced was to be deemed to be the income chargeable unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted by the Union Government and appeal was filed before the Hon'ble High Court. In order to consideration the applicability of section 45(5) to the facts of the present case it is necessary to note down the contents of this provision : '45(5) Notwithstanding anything contained in sub-section (1), where the capital gain arises from the transfer of a capital asset, being a transfer by way of compulsory acquisition under any law, or a transfer the consideration for which was determined or approved by the Central Government or the Reserve Bank of India, and the compensation or the consideration for such transfer is enhanced or further enhanced by any court, Tribunal or other authority, the capital gain shall be dealt with in the following manner, namely : (a) the capital gain computed with reference to the compensation awarded in the first instance or, as the case may be, the consideration determined or approved in the first instance by the Central Government or the Reserve Bank of India shall be chargeable as income under the head 'Capital gains' of the previous year in which such compensation or part thereof or such consideration or part thereof, was first received; and (b) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Till then it cannot be said that the assessee has "received" the enhancement within the meaning of section 45(5) entitling the revenue to charge tax thereon. Unless the enhanced compensation is received within any embargo, leaving thereby no scope or likelihood of the return, the same cannot be said to fall within the scope of section 45(5) of the Income-tax Act. We are reminded of the judgment of the Hon'ble Supreme Court in the case of P. Mariappa Gounder v. CIT [1998] 232 ITR 2, wherein their Lordships held that mesne profit is assessable to tax in the year in which the liability became ascertained. In this case the assessee filed a suit against the vendor for specific performance of the conveyance deed of a property. The suit was decreed by the Supreme Court onApril 22, 1958and by its judgment dated22-4-1958the Supreme Court also declared the assessee as entitled to mesne profits and directed the trial court to determine the quantum of such mesne profits. The trial court determined the same by order dated22-12-1962and the mesne profit was received by the assessee in the assessment year 1963-64. In this case it was held that mesne profits were to be assessed in assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appreciated the facts in the right perspective. It was further pointed out that the money advanced by the assessee was not in the nature of business because it was given to only a handful of her relatives and also that there was no organised activity which could establish that the assessee was engaged in the money lending business. He relied on the decision in the case of Bengal Assam Investors Ltd. v. CIT [1966] 59 ITR 547 (SC) and CIT v. K.S. Venkatasubbiah Reddiar [1996] 221 ITR 18 (Mad.) for the proposition that the activity of the assessee advancing money on interest did not constitute business. 12.2 As against this, the learned counsel for the assessee invited our attention towards a chart included in the assessee's paper book showing details of persons to whom the money was lent. In particular, our attention was drawn towards the statement of three pages annexed with this chart, which includes names of 51 persons to whom the assessee had advanced money on interest, which also included various firms and also private limited companies, in addition to individuals. The learned counsel further pointed out that the assessee was in this business since assessment year 1981-82 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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