TMI Blog1992 (4) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 53,25,428.12 payable to him as per the District Court's order. The assessee made compliance of this direction and withdrew a sum of Rs. 26,62,714.06 during the assessment year 1989-90. 4. The Assessing Officer while completing the assessment for the assessment year 1989-90 added to the assessee's income the entire sum of Rs. 53,25,428 by order dated 25-3-1991, which was sustained by the CIT(Appeals) during the first appeal. Eventually, in pursuance of a settlement dated 6-11-1990 outside the Court arrived at between the assessee and M/s. Mahindra Mahindra Ltd., for whose benefit the acquisition had taken place, the latter agreeing to pay to the assessee the compensation determined by the District Court, it was decided to withdraw the appeals pending before the High Court. This settlement was given effect to by the Hon'ble High Court of Bombay vide its order dated 28-10-1991, copy available at pages 55 to 57 of the paper book in consequence of which the dispute got set at rest and the assessee finally withdrew the remainder of the compensation awarded to them, i.e., a sum of Rs. 26,62,714.06, and equal amount representing the first 50% already withdrawn by them as per the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also submitted that the ratio of the Apex Court in the case of Hindustan Housing Land Development Trust Ltd. was not applicable to the facts of the present case. 9. We have carefully gone through the record and taken into consideration the submissions made by either side. Insofar as the facts of the case are concerned, there is incidentally no dispute between the parties. On these facts which have been detailed out in the foregoing paragraphs, the question for adjudication is as to whether the amount of enhanced compensation amounting to Rs. 53,25,428.12 awarded by the learned Joint District Judge, Nasik could be said to have been received by the assessee in terms of clause (b) of sub-section (5) of section 45 of the Act. This provision runs as under :--- " 45. (5) Notwidistanding anything contained in sub-section (1), where the capital gain arises from the transfer of capital asset, being a transfer by way of compulsory acquisition under any law, or a transfer the consideration for which was determined or approved by the Central Government or the Reserve Bank of India, and the compensation or the consideration for such transfer is enhanced or further enhanced by any Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly the rate at which the additional compensation was awardable to the assessee was in a flux and this question could be adjudicated upon by the High Court of Bombay in any legal manner, their Lordships pleased. It was in this context that although the assessee was permitted to withdraw 50 per cent of the decretal amount such withdrawal was not unconditional and the same was only subject of furnishing a bank guarantee of the equivalent amount to the satisfaction of the court. Indisputably, if the appeal preferred by the State had gone in its favour in full, the whole of this amount became refundable immediately and payable by the assessee and/or his guarantor, viz., a nationalised Bank. No doubt that the assessee could have also got more compensation by the High Court's order but this possibility will not detract us from saying that the issue of the adjudication of additional compensation pending before the High Court was both substantial and real and the liberty granted to the assessee to withdraw 50 per cent of the decretal amount did not confer upon them an absolute right to receive the same at that stage. This is also supported from the claim of the State of Maharashtra laid in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Tribunal answered in favour of the assessee and so the High Court. 16. The Supreme Court on the basis of the above facts took the view that no doubt the enhanced amount of compensation became payable to the assessee pursuant to the arbitrator's award on 29-7-1955 the entire amount was in dispute in the appeal filed by the Govt. This dispute was recorded by the Court as real and substantial because the assessee was not permitted to withdraw the amount deposited by the State Govt. without furnishing a Bond. Their Lordships observed, " there was no absolute right to receive the amount at that stage. If the appeals were allowed in its entirety the right to payment of enhanced compensation would have fallen altogether. The extra amount of compensation of Rs. 7,24,914 was not income arising or accruing to the respondent during the previous year relevant to assessment year 1956-57." 17. It is in this context that the Supreme Court made the observations extracted in para 10 of our order. If we compare the facts of the case in hand with those of the Supreme Court's case succinctly given hereinbefore, we are afraid, we are unable to find out any material or substantial difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mained to be done was a mere quantification of that liability." 19. We are, therefore, of opinion that the amount of additional compensation cannot be said to have become payable to the assessee on its grant by the Distt. Court's order. The words ' previous year in which such amount is received by the assessee ' appearing in clause (b) of sub-section (5) of section 45 clearly mean the assessment year in which such amount is received by the assessee unclouded and unshadowed. Till such time the appeal filed by the State Govt. was not decided, the dispute raised by the Govt. real and substantial, there was no absolute right available to the assessee to withdraw the sum half of which was in fact permitted to be withdrawn as per the High Court's order but only on furnishing a Bank guarantee to the satisfaction of the Court's Registrar. 20. We may also point out that insofar as the exigibility of the original amount of compensation to tax is concerned, the same has been treated differently by the Legislature. Clause (a) of sub-section (5) of section 45 runs as under :--- " The capital gain computed with reference to the compensation awarded in the first instance or, as the case m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court. That the amount of additional compensation became payable and got paid to them within the meaning of section 45(5)(b) only vide High Court's order dated 28-10-1991 when the issue was finally determined as per a settlement, accepted and concluded by the High Court's order of the same date, available at pages 55 to 57 of the paper book. It is only as per this order that the Bank guarantee filed by the assessee at the time of the withdrawal of 50 per cent of the additional compensation stood discharged. In this view of the matter the amount of compensation would become taxable for the purpose of the capital gains only during the assessment year in which 28-10- 1991 falls and not assessment year 1989-90 during which it has been taxed by the Revenue authorities. 22. Before we depart, we may also make a passing reference to the additional ground taken by the assessee, available at page 92 of the paper book. The assessee wanted to raise the following additional grounds before us :-- " (i) The land under acquisition is an agricultural land and, therefore, it is not a capital asset and hence, the capital gains computed by the Income-tax Officer are required to be delete ..... X X X X Extracts X X X X X X X X Extracts X X X X
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