9911796707
TMI Blog1987 (2) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... it. As agricultural land is not considered to be an asset from the assessment year 1981-82, the assessee claimed in its return for assessment year 1981-82 that nothing can be added towards the value of 3.57 acres of land. Now in these two appeals we are concerned with 3.57 acres covered by NTS 28. 3. Admittedly this land was acquired by the Government for construction of staff quarters for Railways. The department took possession of the land from the assessee under the consent award letter dated 6-10-1979. The text of the consent letter is as follows : " I hereby agree to give my land with Survey Number NTS 28 and the undermentioned structures standing thereon of Madhavaram village under acquisition for the work of constructing staff quarters to be taken possession by the South Central Railway from this date. This agreement holds good only if the said South Central Railway is prepared to pay interest at the rate, normally paid by the Government under rules in force on the quantum of compensation to be fixed by the concerned Land Acquisition Officer from the date of taking possession of the land till the date of payment of the said compensation. This agreement has nothing to do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as the award was not yet passed on the respective valuation dates, relevant to these two assessment years, his interest in the agricultural land does not cease and it continued to be the owner of the land on both these valuation dates. Therefore, the assessee is entitled to the exemption claimed under s. 5(1)(iva). These arguments were not accepted by the Wealth-tax Officer. Therefore he deleted the value of 3.57 acres returned by the assessee viz., Rs. 2,49,200. However as he found that the assessee had got the right to receive compensation he had estimated the probable amount of compensation received by him at Rs. 5,75,000 and the interest receivable thereon at Rs. 34,000 and after giving exemption under s. 5(1A) he had computed the total taxable net wealth of the assessee at Rs. 8,59,530 for assessment year 1980-81. Similarly he computed the net wealth of the assessee for assessment year 1981-82 at Rs. 5,58,800. 5. Aggrieved against the assessment thus framed against him the assessee went in appeal before the Appellate Assistant Commissioner, Vijayawada. The Appellate Assistant Commissioner by his combined impugned order dated 2-7-1986 dismissed the appeals filed before him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was also dismissed and the Appellate Assistant Commissioner held that the Wealth-tax Officer to be correct in including the accrued interest as the assessee's net wealth on the respective valuation dates. Hence both the appeals are found to be without force and hence they were dismissed. 6. We have heard Sri N. Srirama Murthy, learned counsel for the assessee-appellant and the Sri N. Santhanam, learned Departmental Representative. There are only two provisions prescribing the date from which the assessee whose land was acquired under the Land Acquisition Act would lose interest in the acquired land in favour of the Government. There are sections 16 and 17 of the Land Acquisition Act, 1894. They read as under : " 16. Power to take possession .---When the Collector has made an award under s. 11, he may take possession of the land, which shall thereupon vest absolutely in the Government free from all encumbrances. " In s. 17 relevant provisions which are germane for our purpose are sub-sections (1) and (4) and they are extracted hereunder : " (1) In cases of urgency, whenever the appropriate Government so directs, the Collector though no such award has been made may on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession by consent would make the acquired land vest in the government free from all encumbrances without passing of award was already considered by the 'A' Bench of this Tribunal [IT Appeal Nos. 2133 and 2134 (Hyd.) of 1975-76] in the case of M. Seetharamaiah v. ITO. The question was discussed at length at para 11 of the said order passed by the previous Bench stated above. There also possession was taken by the Government by consent on 26-2-1970. The award was passed on 10-9-1970. The question was, when did the acquired land vest in the Government ? They held : " Even on the above findings the question is whether the property vested with the Government on 26-2-1970 that is the date of handing over possession. We think the title to the property did not vest with the Government. If we examine the scheme of Land Acquisition Act the only provisions which deal with the vesting of the property absolutely with the State Government are section 16 and s. 17. Section 16 is clearly worded to say that when the Collector has made an award under s. 11 he may take possession of the land which shall thereupon vest absolutely in the Government free from all encumbrances. The possession contem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all encumbrances. Consequently we have to hold that on the respective valuation dates the assessee remains as the owner of the acquired land of 3.57 acres and therefore the value of such land should be included as part of his net wealth only for assessment year 1980-81. As far as assessment year 1981-82 is concerned agricultural land as having been ceased to be considered as one of the assets no value of the said land should be included in the net wealth of the assessee. 8. As far as the value of agricultural land for assessment year 1980-81 is concerned the assessee did not know what is going to be fixed as compensation over the acquired land. Ultimately he came to know of it only on 31-8-1984, the date of the award. In those circumstances the value of the agricultural land of 3.57 acres on 31-3-1980 should be taken to be equal to the present right to get future compensation on the land acquired. Such a right would not be taken to be equivalent to the actual compensation, solatium as well as interest fixed under the award because the amounts thus fixed under the award were shrouded in the mystry of future at the relevant valuation date i.e. 31-3-1980. 9. The assessee's counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y awarded under the award dated 31-8-1984 would be justifiable. We therefore direct the Wealth-tax Officer to adopt the market value of the land of 3.57 acres at 80% of the compensation fixed by the Land Acquisition authorities under the award dated 31-8-1984 for assessment year 1980-81. As we have already stated that for assessment year 1981-82 the value of this asset is exempt and hence no value of this land should be taken as part of the net wealth of the assessee. 11. Regarding exemption under s. 5(1)(iva) claimed for assessment year for 1980-81 the provision is as follows : (iva) agricultural land comprised in any tea, coffee, rubber, or cardamom plantation belonging to the assessee ; In our opinion exemption is not available for each and every sort of agricultural land. It is available only to tea, coffee, rubber or cardamom plantation is grown in such land. As the assessee did not grow any of those plantations on the land in question we are of the opinion that it is not entitled exemption under s. 5(1)(iva) for assessment year 1980-81. 12. In the result, the appeal of the assessee for 1980-81 is partly allowed and its appeal for assessment year 1981-82 is fully allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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