TMI Blog1980 (2) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 4(1) of the Land Acquisition Act was issued on August 25, 1960. It is in respect of the lands covered by this notification, the question as to how the wealth of the assessee should be assessed falls for consideration in this reference under s. 27(1) of the W.T. Act, 1957. Immediately after the compromise decree came to be recorded by this court, two ladies, one claiming to be the wife of late Nawab Salar Jung and another claiming to be his daughter, filed a petition on December 21, 1960, for leave to sue in forma-pauperis questioning the compromise decree and claiming a share in his estate. Pending the disposal of the petition, an injunction was issued by the trial court on April 21, 1961, restraining the parties from working out the compromise decree. That injunction was vacated only on April 30, 1962. The suit itself was dismissed some time in 1963 and the decree was confirmed by the High Court, with the details of which we are not concerned in this reference. As regards the lands notified for acquisition on August 25, 1960, an award was made by the Special Deputy Collector on April 19, 1961, awarding a sum of Rs. 2,39,526 and a solatium of 15% thereon, in all amounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch flowed from the acquisition ? 2. If the answer to question (1) above is in the affirmative, whether the amount of extra compensation is not includible in the net wealth of the assessee on the relevant valuation dates prior to April 15, 1967 ? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in fixing the value of the right to receive compensation at 50% of Rs. 2,75,454 for the assessment years 1960-61 to 1962-63 and 50% of the amount of compensation inclusive of the enhanced compensation finally awarded by the High Court together with interest for the assessment years 1963-64 to 1970-71 ? 4. Whether, on the facts and in the circumstances of the case, interest accrued and due could not be included in full in the net wealth of the assessee on the relevant valuation dates ? " Before considering the questions themselves, certain aspects of the matter which are not in dispute may be clarified. As a result of the notification under s. 4(1) of the Land Acquisition Act, the property of the assessee vested in the Government and only the right to receive the compensation vested in the assessee. Although the share of the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n offer of compensation made by the Government to the claimants whose property is acquired...... If that be the true nature of the award made by the Collector then the question whether the right to receive compensation 'survives the award must depend upon whether the claimant acquiesces therein fully or not. If the offer is acquiesced in by total acceptance the right to compensation will not survive but if the offer is not accepted or is accepted under protest and a land reference is sought by the claimant under s. 18, the right to receive compensation must be regarded as having survived and kept alive which the claimant prosecutes in a civil court... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pute. That again is a factor to be taken into account. For litigating with a view to earn the enhanced compensation, the time spent and the expenditure likely to be incurred, are all factors which would weigh with any person if the right to receive compensation were to be put in the market for sale on the date of death. Having regard to the facts and circumstances of that case, the assessment of Rs. 14,05,536 made by the Tribunal in respect of the asset for which under the provisions of the R.A.I.P. Act, 1952, Rs. 21 lakhs odd fixed by the Collector was upheld as reasonable and the questions referred were answered in the affirmative and in favour of the assessee. In this case, as already referred to above, although the compensation for the lands acquired was determined under the Land Acquisition Collector's award at Rs. 2,74,454 only 50 per cent. thereof was determined as the value of the asset on the valuation date for the assessment years 1960-61, 1961-62 and 1962-63 by the Tribunal. Further, although the enhanced amount of compensation of Rs. 4,09,300 plus solatium and interest also was paid to the assessee in December, 1968, for the assessment years 1963-64 to 1970-71, 50 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that decree had not become final. The State had questioned the quantum in its appeal to the High Court and that appeal came to be disposed of only on December 18, 1970, i.e., long after the valuation date relevant for the last assessment year 1970-71, i.e., March 31, 1970. Hence, even with respect to the assessment years 1963-64 to 1970-71, the entire amount of compensation was not received by the assessee on the relevant valuation dates. If in those circumstances, the Tribunal has assessed the assessee's wealth at 50% of Rs. 2,74,454 as the wealth of the assessee for the assessment years 1960-61 to 1962-63 and at 50% of Rs. 4,09,300 for the assessment years 1963-64 to 1970-71, could it be said to have violated any of the principles laid down by the Supreme Court in C.A. No. 2205/72 (Mrs. Khorshed Shapoor Chenai v. Asst. CED [1980] 122 ITR 21). We think not. In our opinion, the fact that the lands were acquired in 1960 and the amount of compensation of Rs. 2,74,454 itself was awarded some time later and could not be paid to or received by the assessee till July 2, 1962, in view of the litigation pending in the courts, obviously that amount could not be treated as the wealth of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the acquisition made under the notification dated August 25, 1960, the entire amount of Rs. 4,09,300 which is the enhanced amount, or Rs. 2,74,454, which was the original amount awarded by the Collector, cannot be deemed to be the wealth of the assessee. That entire amount cannot be included in the net income of the assessee. For the assessment years 1960-61 to 1962-63, it would be only 50% of the amount awarded under the award dated April 19, 1960. For the subsequent assessment years 1963-64 to 1970-71, it would be 50% of Rs. 4,09,300 which is the enhanced amount. The entire enhanced amount can never be deemed the wealth of the assessee for those years for that became his absolute wealth only after the appeal was dismissed on December 18, 1970, which is subsequent to the relevant valuation dates for the assessment years in question. Mr. Rama Rao, learned counsel for the revenue, urged that since, the total amount of enhanced compensation was received by the assessee in December, 1968, at least for the assessment years 1968-69, 1969-70 and 1970-71, the entire enhanced amount of Rs. 4,09,300 should be taken as the net wealth of the assessee. But, as already stated above, this am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion may be disputed. The time taken for the completion of these proceedings may vary from case to case. Hence, no hard and fast rule could be laid down as to what percentage of total amount of compensation should be taken as the proper percentage for determining the net wealth of an assessee in case where the net wealth comprises of the right to receive the compensation. That must necessarily depend, as observed by the Supreme Court, on a consideration of all the relevant factors and circumstances of the case. The learned counsel for the revenue, Mr. Rama Rao, also contended that interest is also accrued to the assessee in full when the enhanced amount of compensation was determined by the City Civil Court on July 2, 1962, on reference. Whether any amount of interest accrued could be included in the net wealth of an assessee or not is a matter on which no reference is made and as such we are not concerned in this reference. We are only concerned with the question whether the full amount of interest should have been included or only 50% of the entire amount of compensation awarded by the High Court could be computed as the net wealth of the assessee for the relevant assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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