TMI Blog1979 (12) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... e, acquired for the synthetic drugs project factory of the Indian Drugs and Pharmaceutical Ltd., by the Andhra Pradesh Govt. by notifications issued on June 19, 1961, and January 13, 1962, under the Land Acquisition Act. Possession of the lands was taken in January, 1963, and by two separate awards both made on January 31, 1963, the Special Deputy Collector of Land Acquisition awarded a total compensation of ₹ 20,000. This compensation was received by Rashid himself during his lifetime. Later, two more parcels of agricultural land (admeasuring 131 acres, IO guntas and 224 acres 22 guntas) situated at Qutbillapur in Madchal taluk belonging to Rashid were acquired for Hindustan Machine Tools, units I and II, by the Andhra Pradesh Govt. by notifications issued on November 1, 1963, and February 1, 1964, under the Land Acquisition Act. Though the former notification was issued during his lifetime and the latter after death, possession of both the lands was taken after his death by the Govt. on December 4, 1963, and March 15, 1964, and by two separate awards made on March 12, 1965, and March 19, 1965, the Special Deputy Collector awarded a total compensation of ₹ 4,29,360. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anced compensation was awarded by the Civil Court in respect of the above lands the respondent issued two notices both dated November 14, 1969, one addressed to Mrs. Khorshed Shapoor Chenai and the other to Mrs. Freny Rashid Chenai. The former notice was issued under s. 59(a) of the Act calling upon Mrs. Khorshed Chenai to show cause why E.D. assessment made on December 30, 1966, should not be reopened and revised in view of the extra compensation awarded by the Civil Court in respect of the lands acquired by the Govt., while the latter notice was issued under s. 61 of the Act requiring Mrs. Freny Chenai to show cause why the mistake apparent from the record should not be rectified and the enhanced compensation included in the principal value of the estate. These notices were challenged by the recipients by filing writ petitions in the High Court. The notice under S. 59(a) of the Act issud for the reopening of the assessment completed on December 30, 1966, was challenged in Writ Petition No. 54 of 1970, on two grounds: (a) that after compensation had been awarded by the Special Deputy Collector under s. 11 of the Land Acquisition Act the heirs of the deceased Rashid had merely e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the notice under s. 61 of the Act was challenged in Writ Petition No. 4059 of 1969 principally on three grounds : (i) that the accountable person had only a claim to get an extra compensation which was an inchoate right which could not be called property and whether that claim amounted to a right to property capable of sale in the open market was a highly debatable question and a mistake which had to be discovered after lengthy discussion and debate could not be said to be a mistake apparent on the record, (ii) that land acquisition proceedings and land references in Civil Court not being part of the assessment record a mistake discovered by reference to such other record was not a mistake apparent from the record of the case, and (iii) that the extra compensation received by the legal heirs of Rashid belonged to them and not to the deceased and hence it was not property that passed on the death of the deceased and, therefore, no property escaped assessment. In other words, under the guise of rectification, the enhanced compensation could not be taken into account and, therefore, the impugned notice was illegal and without jurisdiction. The High Court negatived the contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Civil Court appeals had been preferred by the Govt. to the High Court and even the High Court's decision might be carried in further appeal to this court and, therefore, till the claim was finally accepted by the highest court no property (enhanced compensation) could be said to have come into existence, Counsel urged that it would run counter to all principles of direct taxation to regard the amount decreed subsequently by the final court as property having come into existence retrospectively on the relevant date (being the date of death under the E.D. Act and valuation date under the W.T. Act) though, in fact, it did not exist on that date, and in this behalf reliance was placed upon the decision of the Andhra Pradesh High Court in Khan Bahadur Ahmed Alladin Sons v. CIT [1969] 74 ITR 651, 657, 658, two decisions of the Calcutta High Court, namely, CWT v. U. C. Mahatab [1970] 78 ITR 214 nd CIT v. Hindusthan Housing and Land Development Trust Ltd. [1977] 108 ITR 380, two decisions of the Gujarat High Court, namely, Topandas Kundanmal v. CIT [1978] 114 ITR 237 and Addl. CIT v. New Jehangir Vakil Mills Co. Ltd. [1979] 117 ITR 849 and one decision of the Kerala High Court in M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving survived or kept alive by the claimants and it is that property (right to compensation) which will have to be evaluated by the assessing authority as on the date of death. According to him, obviously, this asset or property had not been correctly valued in the original assessment proceedings inasmuch as glaring enhancement had been granted by the Civil Courts in the land references and, therefore, there was escapement of assessment to duty, and hence the notice under s. 59(a) of the Act should be regarded as having been issued properly. Counsel further contended that the High Court had rightly taken the view that seeking references under the Land Acquisition Act and their pendency in Civil Court were primary facts which had not been disclosed by the accountable person during the original assessment and such non-disclosure led to the reasonable belief that there was escapement of assessment to duty. The impugned notice according to him, therefore, was legal and justified. As stated above, so far as the E.D. assessment in respect of the properties passing on the death of Shapoor was concerned, counsel for the revenue fairly conceded that the lands which were the subject-matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to ' receive compensation ' and a separate right to receive ' extra compensation '. The only right is to receive compensation for the lands acquired by the Government, which is the fair market value on the date of acquisition. The argument of the learned counsel that the right to receive extra compensation accrued when the Civil Court passed the order and not before, does not merit acceptance. The so-called right to receive extra compensation cannot be torn from or considered separately from the right to receive the market value of the lands acquired by the Government. The right accrues to the owner of the lands as soon as the lands are acquired by the Government. It is, therefore, difficult to accept the argument of the learned counsel for the petitioner that a fresh and an independent right to ' receive extra compensation ' accrued to the heirs of the deceased and that it was owned and possessed by the heirs of the deceased. In our opinion, the High Court was right in holding that there are no two separate rights-one a right to receive compensation and the other, a right to receive extra or further compensation. Upon acquisition of his lands under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference. This, however, does not mean that the Civil Court's evaluation of this right done subsequently would be its valuation as at the relevant date either under the E.D. Act or the W.T. Act. It will be the duty of the assessing authority under either of the enactments to evaluate this property (right to receive compensation at market value on the date of relevant notification) as on the relevant date (being the date of death under the E.D. Act and valuation date under the W.T. Act). Under s. 36 of the E.D. Act the assessing authority has to estimate the value of this property at the price which it would fetch if sold in the open market at the time of the deceased's death. In the case of the right to receive compensation, which is property, where the Collector's award has been made but has not been accepted or has been accepted under protest and a reference is sought or is pending in a Civil Court at the date of the deceased's death, the estimated value can never be below the figure quantified by the Collector because under s. 25(1) of the Land Acquisition Act, the Civil Court cannot award any amount below that awarded by the Collector, the estimated value can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .P. .No. 364/65, O.P. No. 29164 and O.P. No. 30/64 relating to the land acquired by the Government escaped assessment. In View of your failure to disclose full particulars to the department regarding the land acquisition proceedings in the account filed by you, reassessment proceedings been initiated under s. 59(a) of the Estate Duty Act. The aforesaid Communication clearly brings out the fact that in the respondent's view the extra compensation (meaning the enhanced amounts) received by the appellant under the Civil Court decrees in land references had escaped assessment in the earlier assessment proceedings and since such escapement was due to the appellant's failure to disclose full particulars regarding the land acquisition proceedings, reassessments proceedings were being initiated. In other words, the assessment was being reopened for the purpose of including the enhanced amounts received by the appellant in the principal value of the property passing on the death and assessing the same to duty and not for the purpose of evaluating the right to compensation which had been under-valued on the earlier occasion. Further, as regards the basis on which the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant in the principal value of the property passing on death and bringing the same to duty. We were informed at the Bar by counsel for the appellant that in the reassessment which was made pursuant to the impugned notice, the quantum of extra compensation decreed by the Civil Court was included in the assessment and brought to duty. Obviously, the impugned notice which was issued on a wrong basis and with the aforesaid objective and the subsequent reassessment made in pursuance thereof would be clearly illegal and unsustainable inasmuch as the extra compensation awarded by the Civil Court taken with the original compensation awarded by the Special Deputy Collector cannot be regarded as proper evaluation of the right to receive compensation as on the date of death of the deceased. Proposed as well as actual inclusion of such extra compensation awarded by the Civil Court in the principal value of the estate passing on the death of the deceased would be manifestly wrong for more than one reason. In the first place, the said property, namely, the enhanced compensation, was not in existence at the date of death of the deceased. Secondly, such extra compensation awarded by the Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Acquisition Officer) with a duty worked out at ₹ 5,07,949.20, that it was then learnt that in respect of the acquired lands the Civil Court had enhanced the compensation fixed by the Land Acquisition Officer and had ordered payment thereof with interest at 4% (particulars whereof were specified) and that, therefore, the respondent proposed to rectify the assessment ; under s. 61 as mistake apparent from the record and adopt the above enhanced compensation awarded by the court . It is thus clear that the rectification is being undertaken on the that the initial valuation adopted in respect of the acquired lands was based at rates fixed by the Land Acquisition Officer, that such valuation was obviously wrong in view of the enhanced compensation awarded by the Civil Court and, therefore, the enhanced compensation was sought to be included in the principal value of the estate by undertaking the rectification proceedings. In substance, it cannot be said to be a case of rectification of any mistake apparent from the record but the respondent is really seeking to change his opinion about the valuation of the acquired lands because some other authority, namely, the Civil Court ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the instant case clearly come within the ratio of the aforesaid decision. The High Court has attempted to distinguish the above decision by stating that in the instant case the respondent had merely accepted the value of the acquired lands as determined by the Special Deputy Collector in his award and the accountable person had no objection to this course and, therefore, the respondent himself did not estimate the, market value of the lands on the date of death of Rashid and as such it was not a case of change of opinion on his part as regards the correct valuation of the lands. It is difficult to accept this view. It cannot be disputed that when the original assessment was made it was the duty of the respondent, after scrutinising the account filed and examining the materials produced before him, to value the estate of the deceased properly under s. 36 of the Act and when he accepted the compensation fixed by the Special Deputy Collector as the proper valuation, he must be deemed to have adopted that valuation as his own estimated value of the lands which he wanted to enhance by relying upon the valuation made by another authority, namely, the City Civil Court. To such a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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