TMI Blog1991 (2) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... dge and for the assessment years 1977-78 and 1978-79 at the value fixed by the Land Acquisition Officer together with 30% of the additional compensation awarded by the sub-judge ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in applying the circular of the Central Board of Direct Taxes No. 2 - D (WT) dated May 15, 1964 ? " The matter arises under the Wealth-tax Act. The proceedings relate to the assessment years 1970-71 to 1978-79. The assessee was the owner of rubber estate at Thrissur known as Vellanikara Estate. It was demised to firm, Messrs. Varkey Jacob and Co. The estate was acquired for the purpose of the Kerala Agricultural University. The short question that arises for consideration in these cases is the valuation of the property covered by the estate on the respective valuation dates from March 31, 1970, to March 31, 1978. The following details are relevant in order to decide the controversy involved in this case : Notifications under section 3(1) of the Land Acquisition Act 1-9-1970, 8-9-1970 and 10-11-1970. Possession of the property taken over by the Government 01-05-1973 Award passed by the Land Acquisition Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals) fixed the value of the enhanced compensation at 50% of the additional compensation fixed by the sub-judge. This was in addition to the original compensation fixed by the Land Acquisition Officer. The assessee filed appeals against the orders passed by the Commissioner of Wealth-tax (Appeals). The Tribunal disposed of all the nine appeals by a common order dated October 31, 1985. It was held that the assessment year 1970-71 is distinct and different and the value fixed by the Land Acquisition Officer together with 50% of the additional compensation of Rs. 18,80,148 awarded by the sub-judge will be determined as the net value of the assets. For the assessment years 1971-72 to 1973-74, the Tribunal determined the value as determined by the Land Acquisition Officer at Rs. 19,16,385 together with 20% of the additional compensation awarded by the sub-judge. The Tribunal determined the value for the assessment years 1974-75 to 1976-77 at the value determined by the Land Acquisition Officer together with 27.5% of the additional compensation awarded by the sub-judge. For the assessment years 1977-78 and 1978-79, the value as determined by the Land Acquisition Officer together with 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. At the time when the Appellate Tribunal rendered the common order for all the nine assessment years on October 31, 1985, the appeal filed by the State as well as the cross-objection filed by the assessee in the land acquisition matter were pending in this court as L. A. A. No. 247 of 1980 and cross-objection. Judgment in the above case was rendered by a Bench of this court on January 28, 1987, long after the Appellate Tribunal rendered the common order dated October 31, 1985. This court, in its judgment dated January 28, 1987, has modified the award of the Land Acquisition Court in a substantial manner. It has got relevance in fixing the value of the assets on the respective valuation dates. The general principles regarding valuation of the property for the purpose of the Wealth-tax Act have been laid down in innumerable decisions. A few of them have been adverted to by a Bench of this court in CIT v. P. I. George [1988] 171 ITR 620. The above decision was affirmed later in CWT v. Mrs. Sara Varghese [1991] 187 ITR 450 (Ker). Suffice it to say that there is a difference in principle between the valuation for fiscal statutes and for sale or compulsory acquisition. The qualitati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or all the other subsequent years, it is the right of the assessee to receive the compensation at the market rate (with reference to the date of the relevant notification) on the valuation date under the Wealth-tax Act that will govern the issue. For the years other than 1970-71, the material factor to be borne in mind is that the property to be valued is the right to receive compensation. It is for this 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 reference is sought or is pending in a civil court on the relevant valuation dates, the fixation of the estimated value is called for. It can never be below the figure quantified by the Collector (Land Acquisition Officer), since the civil court cannot award any amount below that awarded by the Land Acquisition Officer. The estimated value can be equal to the Collector's award or more but can never be equal to the tall claim made by the claimant in the reference nor equal to the claim actually awarded by the civil court inasmuch as the risk or hazards of litigation would be a detracting factor while arriving at a reasonable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court in L. A. A. No. 247 of 1980, dated January 28, 1987. Appropriate directions were given to the Wealth-tax Officer to amend the assessments in the light of the subsequent judgment of this court and which was in conformity with the direction given by the Appellate Assistant Commissioner and the Appellate Tribunal in that case. However, counsel for the Revenue adverted in paragraph 3 (at p. 197) of the judgment dated June 26, 1990 (see [1991] 192 ITR 196 (Ker)) and submitted that the view expressed by this court regarding the accrual of the right to receive enhanced compensation vis-a-vis the value to be adopted for purposes of the Wealth-tax Act on the respective valuation dates has been very widely stated and the matter requires clarification. This appears to be so. For fixing the valuation of an asset, which is the subject-matter of land acquisition proceedings on the respective valuation dates, what is valued is not the enhanced compensation as such, but "the right to receive the compensation". The said right is an "asset" for the purpose of the Wealth-tax Act and that should be valued, in the light of the decisions of the Supreme Court in Khorshed Shapoor Chenai v. Asst. CE ..... X X X X Extracts X X X X X X X X Extracts X X X X
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