1992 (4) TMI 65 - AT - Income Tax

Assessing Officer, Charitable Institution, Charitable Or Religious Trust, Income From Property

Summary

Issues Involved:
1. Taxability of enhanced compensation and interest received by the assessee.
2. Applicability of section 45(5)(b) of the Income-tax Act, 1961.
3. Relevance of the Supreme Court's decision in CIT v. Hindustan Housing & Land Development Trust Ltd.
4. Whether the assessee can raise additional grounds regarding the nature of the land.

Summary:

1. Taxability of Enhanced Compensation and Interest:
The assessee challenged the taxability of Rs. 32,21,741 received as additional compensation and Rs. 21,03,687 as interest in the assessment year 1989-90. The Assessing Officer added the entire sum of Rs. 53,25,428.12 to the assessee's income, which was upheld by the CIT(Appeals). The assessee argued that since the appeals were pending before the High Court, the additional compensation had not accrued and was in a fluid state, making it non-taxable in 1989-90.

2. Applicability of Section 45(5)(b) of the Income-tax Act, 1961:
The Revenue contended that the enhanced compensation was chargeable under the head 'capital gains' in the year it was received, as per section 45(5)(b). The assessee argued that the receipt was not final due to the pending appeals and the conditional withdrawal of 50% of the amount against a bank guarantee.

3. Relevance of the Supreme Court's Decision in CIT v. Hindustan Housing & Land Development Trust Ltd.:
The Tribunal referred to the Supreme Court's decision, which distinguished between cases where the right to receive payment is in dispute and cases where only the quantification is in question. The Tribunal found the present case similar to Hindustan Housing, where the right to receive the enhanced compensation was in dispute, and thus, the amount could not be taxed in the year of the District Court's award.

4. Additional Grounds Regarding the Nature of the Land:
The assessee also raised additional grounds claiming the land was agricultural and not a capital asset, hence not subject to capital gains tax. However, the Tribunal did not address this issue in detail as the main appeal was allowed on the merits, making the additional grounds academic.

Conclusion:
The Tribunal concluded that the enhanced compensation and interest could not be taxed in the assessment year 1989-90 as the right to receive the amount was in dispute and not final. The amount became taxable only in the year when the High Court settled the issue, i.e., assessment year 1991-92. The appeal was allowed.