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TMI Blog1987 (8) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... essment under section 147 for the assessment year 1966-67 to assessee the above compensation received. The proposal for reopening of the assessment under section 147 was submitted to the Central Board of Direct Taxes for.approval as according to the Income-tax Officer taxable capital gain was Rs. 50,859 and the Board accorded approval. Accordingly notice under section 147 was issued in response to which the assessee field the return. In this return the assessee has not returned any income from capital gain in respect of enhanced compensation as per the order of the District Judge. The Income-tax Officer made the assessment on 24-12-1983 under section 143(3) read with section 147. The assessee contended that for the assessment year 1973-74, he has declared enhanced compensation of his half share as well as the interest. With respect to the sum of Rs. 41,606 awarded in which the assessee had half share, it was claimed that it was a capital receipt and the Income-tax Officer in the assessment order for 1973-74 accepted the same. The assessee contended that the reopening of the assessment under section 147 is bad. The above contentions of the assessee did not find favour with the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also accepted by the Income-tax Officer for the assessment year 1973-74 and the department cannot give a go-by to that order. He also urged that the said amount is capital receipt and it cannot be treated as capital gain. In this connection he placed reliance on a decision in CIT v. Smt. M. Subaida [1986] 160 ITR 557 (Ker.). He strongly urged that the capital gain in respect of the enhanced Beevi compensation in assessable only in the assessment year 1973-74 as the additional compensation was granted only in that year and not in the assessment year 1966-67. He placed reliance on a decision in Khan Bahadur Ahmed Alladin & Sons v. CIT [1969] 74 ITR 651 (AP). The learned departmental representative repelled the above contentions. He submitted that since the land has been acquired in the accounting year relevant to the assessment year 1966-67 the additional compensation even if it is awarded in 1972 it is assessable in the assessment year 1966-67. The sum of Rs. 41,606 awarded for severance of land cannot be treated as a capital receipt and it is part of capital gain. He further urged that assessment has been validly reopened under section1 47 after obtaining the Board's sanction. Dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; -------- 1,08,235 -------- 1/2 share of the assessee in above 54,118 Less : Capital gain already assessed B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1973-74 but not in the assessment year 1966-67. In Khan Bahadur Ahmed Alladin & Sons' case, the A. P. High Court held that the enhanced compensation accrued to the assessee only when the Court accepted the claim and not when the land was taken over by the Government At page 658 it was observed as under : "In our view, unless the amount of compensation actually becomes payable or enforceable, it cannot be said to accrue or deemed to accrue. On the date when the Collector awarded the compensation, it is only that amount which had accrued or deemed to accrue, whether in fact paid or not. But by no stretch of the words in section 4(1) (b) (i), could it be said that the right to enhanced compensation, which has not yet been accepted by the proper forum, namely, the court, has also become payable on the date when the original compensation became payable, for being included in that year of assessment. The enhanced compensation accrues only when it becomes payable, i.e., when the court accepts the claim. As has been stated earlier, a mere claim by the assessee, after taking of possession of the land, at a particular rate or for a certain sum is not compensation. It must not be forgot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transfer of the land but it was awarded only by way of damages for injurious effect on the balance of the land belonging to the assessee. In coming to this conclusion we derive support from the decision of the Kerala High Court in Smt. M. Subaida Beevi's case wherein it was held that severance compensation is awarded to the assessee for the reason that the acquisition has injuriously effected the property other than the property acquired and it cannot be treated as part of the consideration received or accrued as a result of the transfer of the capital asset and so the compensation for severance is by way of damages for injurious effect on the land belonging to the assessee and not related to the capital asset. Following with respect this decision we hold that the sum of Rs. 41,606 in which the assessee has a share has been awarded only by way of damages for injurious effect on the balance of the land belonging to the assessee and it is not related to the transfer of the acquired land. Thus, it cannot be treated as part of the capital gain. 6. We will now take up the departmental appeal. The ground raised relates to the interest for the period 3-9-1965 to 31-3-1966 on the enhanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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