TMI Blog2007 (3) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 1991-92 under section 45(5)(b) of the Income-tax Act, 1961 ? (ii) Whether the Income-tax Appellate Tribunal, on the facts and circumstances of the case, was right in law in upholding the applicability of section 148 of the Income-tax Act, 1961, especially when all the facts were placed before the assessing authority even while filing the return and at the assessment stage itself?" 2. The assessee and his brothers received certain lands in a partition in the year 1956 made by their father who died in the year 1969. The said lands were acquired by the Government in the land acquisition proceedings. The assessee received compensation from the Government for the first time in the assessment year 1984-85. The assessee went on appeal against the compensation granted under the acquisition proceedings before the Sub Court, Poonamallee, which ordered additional compensation together with interest. Both the assessee as well as the State went on appeal before the High Court. Till the assessment year 1990-91, the additional compensation received was admitted in the returns. In the assessment year 1991-92, the assessee received additional compensation of Rs. 2,02,624. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment. Thereafter, in the appeal preferred before the apex court as against the order of this court in its order dated July 25, 1990, the Supreme Court allowed the withdrawal of the said amount of 50 per cent. of compensation on the claimant-assessee filing a written undertaking to return the same with interest if called upon. On the question of applicability of section 45(5)(b), the Commissioner of Income-tax (Appeals) agreed with the assessee that the question as regards the right to enhanced compensation was still a matter to be adjudicated upon by the High Court, and hence the assessee did not have the right to receive the enhanced compensation amount. The question of capital gains could be considered in the year in which the matter was finally decided by the High Court. In so holding, the Commissioner of Income-tax (Appeals) followed the decision of the Supreme Court reported in CIT v. Hindustan Housing and Land Development Trust Ltd. [1986] 161 ITR 524. Thus, on the merits, the Commissioner of Income-tax (Appeals) allowed the appeal. 6. The Revenue preferred an appeal before the Income-tax Appellate Tribunal, challenging the correctness of the order of the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther contended that the right to receive the compensation and its character as an income would arise or accrue only after the final determination of the right of the assessee to the enhanced compensation. Consequently, the ruling of the Supreme Court reported in CIT v. Hindustan Housing and Land Development Trust Ltd. [1986] 161 ITR 524 would apply in full force to the facts of the case. The assessee also questioned the Tribunal's order in dismissing the cross-objection that the action taken under section 148 was well within law. 8. Learned counsel appearing for the assessee submitted that the Tribunal ought to have considered the decision of the apex court in a proper perspective to grant the relief. 9. Learned counsel appearing for the assessee pointed out to the passages from the decision of the apex court to contend that the amendment had not brought forth any change in the declaration of law by the apex court. He also referred to the order of the apex court dated November 14, 1991, in C. A. No. 3094 of 1990, etc., and to the order of this court dated December 22, 1997, in A. S. Nos. 1122 of 1990, etc. ; that the mere receipt of money under an undertaking does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Housing Board being impleaded as a party or co-appellant in the pending appeals before the High Court. They have also stated that they would give consent to any applications for receipt of additional evidence if the Housing Board comes forward with such applications subject to the liberty reserved to them to adduce rebuttal evidence. They have further stated that they would not oppose the applications of the Housing Board under section 5 of the Limitation Act. In the light of the statements contained in the counter affidavit of the claimants, we dispose of these SLPs. No order as to costs. Stay granted in this case shall stand vacated. Claimants may move the High Court for appropriate order for withdrawing the compensation amount." 13. The order in the main appeal was passed by the High Court after remand from the Supreme Court only on December 22, 1997. The further special leave petition preferred was dismissed by the Supreme Court on January 22, 1999. Hence, at least till orders on the question of additional enhanced compensation reached a finality, the amount received by the assessee as per the orders of the Supreme Court was on the basis of a written undertaking giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of compulsory acquisition under any law and the compensation for such transfer is enhanced or further enhanced by any court or tribunal or other authority. 18. The purport of introduction of section 45(5) needs to be noted. It is seen that the additional compensation is awarded at several stages by different appellate authorities. This necessitated rectification of the original assessment under the Income-tax Act at each stage. To provide for rectification of the assessment of the year in which the capital gain was originally assessed, section 155(7A) was introduced. Section 155(7A) of the Income-tax Act, 1961, enabled the Income-tax Officer to recompute the capital gains arising from the transfer of the capital asset by taking the enhanced compensation to be the full value of the consideration received or accrued as a result of the transfer. Thus, the provision enabled recomputation by providing for a period of limitation of four years to be reckoned from the end of the previous year in which the additional compensation was received by the assessee. However, difficulties were also experienced in cases where the additional compensation is received by a person other than the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Chief CIT v. Smt. Shantavva [2004] 267 ITR 67, took the view that (page 72) : "Section 45(5)(b) will be attracted only when the assessee receives the 'enhanced compensation', in pursuance of a final award/order of a court, tribunal or other authority increasing the compensation. If any amount is received after stay of the award, in pursuance of any interim order, as a payment subject to the final result, it will not be an amount received as 'enhanced compensation' contemplated under section 45(5)(b), but only an interim payment received subject to final decision. It will attract section 45(5)(b) only when the final decision is rendered. We are supported in the said view by a decision of the Supreme Court and a decision of this court." 21. The decision of the Supreme Court reported in CIT v. Hindustan Housing and Land Development Trust Ltd. [1986] 161 ITR 524 relied on by the assessee and referred to in the above decision may also be noted. It related to a case of an award granted in respect of compulsory acquisition of land. It was taken up on appeal by the land owner. The arbitrator made an award enhancing the compensation to Rs. 30,10,873 as against the award at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is admitted and the quantification is left to be determined in accordance with the settled or accepted principles. The apex court pointed out that the enhanced compensation accrues only when it becomes payable, i.e., when the court accepts the claim. 22. This court had an occasion to consider the question as regards the nature of receipt of the amount as per the interim conditional orders in State appeal in land acquisition matters pending before the court. In the decisions reported in CWT/CIT v. Smt. T. Girija Ammal [2006] 282 ITR 614 and Anil Kumar Forma (HUF) v. CIT [2007] 289 ITR 245, this court held that the additional compensation received could not be treated as part of the compensation received for the transfer of the land until it is finally determined by the High Court or the Supreme Court. The decision reported in Anil Kumar Forma (HUF) v. CIT [2007] 289 ITR 245 (Mad) followed the decision reported in CWT/CIT v. Smt. T. Girija Ammal [2006] 282 ITR 614 (Mad). The view expressed therein fully covers the issue here too. 23. It may be seen that following the decision of the Supreme Court reported in CIT v. Hindustan Housing and Land Development Trus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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