9911796707
TMI Blog2000 (2) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... ration made on 11-10-1991. On 30-8-1991 the assessee was given a sum of Rs. 27,08,000 as advance towards the compensation payable for the acquisition of the land. The Land Acquisition Officer later passed the award on 18-12-1992. As per the award the assessee became entitled to get a total sum of Rs. 38,11,604 by way of compensation. After setting off the advance paid earlier, the balance amount was paid to the assessee on 11-1-1993. The Assessing Officer was of the view that the sum of Rs. 27,08,000 received by the assessee during the previous year ending on 31-3-1992 was assessable to capital gains under section 45(5)(a) of the Income-tax Act. Accordingly he computed the capital gains assessable for the assessment year 1992-93. As per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar ending 31-3-1993 after the award was passed by the Land Acquisition Officer and in that sense under the provisions of section 45(5)(a) the capital gains could be considered for assessment for the assessment year 1993-94 only. Sub-section (5) was inserted in section 45 of the Income-tax Act by Finance Act, 1987 with effect from 1-4-1988. New sub-section (5) provided that the initial compensation awarded or determined or approved on compulsory acquisition of property shall be deemed to be assessee's income of the previous year in which the transfer took place. In case any enhanced compensation is received subsequently the compensation so received will be charged to tax as capital gains of the year in which such amount is received. Clause ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the transfer giving rise to the gains takes place except where otherwise provided. Accordingly, in the case of compulsory acquisition of assets, the capital gains included in the compensation, as originally awarded, is charged to tax in the year in which the transfer by way of compulsory acquisition takes place but additional compensation is brought to tax only in the year in which it is received. 23.1 It has been brought to the notice of the Government that in cases of compulsory acquisition of assets, at times there is a considerable gap between the dates of acquisition and payment of compensation. The result is that the existing provisions of capital gains taxation operate harshly inasmuch as the affected persons are unable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompensation was received by the assessee during the financial year 1992-93 only and so the same could be assessed for the assessment year 1993-94 and not for the assessment year 1992-93. 4. The question to be considered now is whether the sum of Rs. 27,08,000 received by the assessee on 31-8-1991 was part of the compensation amount, which could be assessed for the assessment year 1992-93 on receipt basis as per clause (a) of section 45(5). It may be noted that the assessee became entitled to the compensation on the acquisition of the property by the Government. What the Govt. paid on 31-8-1991 as advance to the assessee was part of the compensation payable on the acquisition of the property. Though the compensation payable was determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 only. We thus modify the order of the CIT (Appeals) and direct the Assessing Officer to consider the sum of Rs. 27,08,000 only for assessment of capital gains for the assessment year 1992-93. 5. The other ground raised by the Revenue in this appeal is that the CIT (Appeals) erred in deleting the addition towards the interest receivable on the compensation amount. In the assessment, the Assessing Officer included Rs. 51,095 as interest on the compensation on accrual basis. The assessee became eligible to interest at 9% on the compensation amount as per the award dated 18-12-1992. It was the finding of the CIT (Appeals) that, as the award was given on 18-12-1992, the accrual of interest was in the year ended on 31-3-1993 and so assessab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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