9911796707
TMI Blog2000 (5) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... income from agriculture from the lands owned by him. Some of the agricultural lands owned by the assessee situated at Turangi Village, Kakinada Rural Mandal, East Godavari District were proposed to be acquired by the Land Acquisition authority. In accordance with the said proposal, the lands belonging to the assessee were taken possession of by the authorities op 30-1-1988 with the consent of the assessee. When the possession of the lands was taken by the authorities with the consent of the assessee, there was an agreement to the effect that no interest would be payable by the Government upto 30-10-1988, or till the date of the award whichever would be earlier. Subsequently, necessary notifications were issued and official acquisition award ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :-- "On careful consideration of the submissions of the appellant and the facts and circumstances of the case I am fully convinced that interest granted by the Land Acquisition Department prior to the period of passing the award is to be treated as compensation for depriving from the use of the land and therefore, is of capital nature. Hence, the addition does not stand. The same is deleted." 5. It is against the above finding and order of the learned Commissioner (Appeals) that the revenue has preferred these second appeals before this Tribunal. 6. The Revenue has raised the following affective grounds, which are common for both the assessment years under appeal "1 . ..... 2. The date of vesting of the property in the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s capital in nature and not susceptible to the levy of income-tax. She contended that the vesting of land in Government took place on the date of the award and not on the date of taking possession of the land. For this proposition, she relied on the decision of the Andhra Pradesh High Court in CIT v. Pandari Laxmaiah [1997] 223 ITR 671. She further contended in the light of the above decisions that though the possession of the land was taken by the Government even before the initiation of the acquisition proceedings under the Land Acquisition Act, yet for the purposes of vesting of the land in the Government, the relevant date would be the date when the award was passed. She contended therefore that the interest pertaining to the period fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income. But, in this case before us, interest is for the period prior to the passing of the acquisition award. This is because the land was taken possession of, by the Government, even before the passing of the necessary award. At the same time, the property in the land has never passed along with the act of taking possession of the land from the assessee. The physical possession of the land was taken from the assessee on the basis of the consent. The assessee was actually deprived of the possession, but at the same time, the assessee was not deprived of the ownership. The assessee was deprived of the ownership of the land only on the date of passing of the award. This legal position is clearly upheld by the Hon'ble High Court of Andhra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not affect the question. It is still compensation for deprivation of property." 10. In the light of the above legal position, examining the facts of the assessee's case, we are of the view that the interest received by the assessee for the interregnum period from the date of possession of the land taken over by the Government, to the date of format award of acquisition has to be held as a capital receipt in the hands of the assessee, since the same is paid by way of compensation for deprivation of the property, to the assessee. As for the decision of the Hon'ble Supreme Court in the case of K.S. Krishna Rao relied upon by the learned Departmental Representative, we find that the ratio of that decision has no application to the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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