1995 (7) TMI 117 - AT - Income Tax

Summary

Issues:
Computation of capital gains - Whether compensation received in the year of account is liable for capital gains or only the amount received should be considered.
Value of the land acquired as on 1-1-1974 - Whether the value can be accepted at Rs. 26 per sq. yd. as per the registered valuer's report.
Levied interest amount - Whether the interest amount of Rs. 4,573 is correctly levied and accrued in the relevant accounting year.

Analysis:

Computation of Capital Gains:
The case involved the assessment year 1989-90 where the main issue was the computation of capital gains from the acquisition of agricultural land. The appellant received Rs. 83,370 as part of the compensation before the award was passed on 22-2-1990. The question was whether this amount should be considered for capital gains or the total compensation amount of Rs. 1,34,182. The tribunal held that the consideration first received, i.e., Rs. 83,370, should be treated as the basis for computing capital gains for the relevant assessment year, as it was received before the award date, and thus cannot be considered part of the ultimately awarded compensation.

Value of Land Acquired:
Another issue was the valuation of the land acquired as on 1-1-1974. The appellant initially valued the land at Rs. 20 per sq. yd. but later revised it to Rs. 26 per sq. yd. based on a sale deed and valuer's report. The assessing officer valued it at Rs. 15 per sq. yd. The tribunal, considering all facts, held the value of the land at Rs. 20 per sq. yd., partially allowing the appellant's claim.

Levied Interest Amount:
Regarding the interest amount of Rs. 4,573, the appellant argued that it should not be taxed in the relevant assessment year as the interest pertained to a later period. The tribunal agreed with the appellant, stating that interest should be computed from the date of possession to the date of the award, and since the award was passed on 22-2-1990, the interest should be taxed in the subsequent assessment year. The tribunal ruled in favor of the appellant on this issue, citing the Supreme Court's decision in Rama Bai v. CIT [1990] 181 ITR 400.

In conclusion, the tribunal partly allowed the appeal of the assessee, ruling in favor of the appellant on the computation of capital gains based on the consideration first received, the valuation of the land as on 1-1-1974, and the taxation of interest amount in the subsequent assessment year.