9911796707
TMI Blog1987 (8) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1966-67 the capital gain in each of the assessments of the co-owners was assessed at Rs. 3,259. Against the compensation of Rs. 1,51,717 awarded by the Sub-Collector, the Co-owners appealed before the District Judge, Warangal who by his order dated 18-8-1972 granted a further compensation of Rs. 60,112 and a sum of Rs. 41,606 was also awarded as compensation for severance of land. The Income-tax Officer reopened the assessment under section 147 for the assessment year 1966-67 to assessee the above compensation received. The proposal for reopening of the assessment under section 147 was submitted to the Central Board of Direct Taxes for.approval as according to the Income-tax Officer taxable capital gain was Rs. 50,859 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed compensation is assessable in the assessment year 1966-67. The assessment was validly reopened under section 147 as the escaped income is Rs. 50,859. The additional compensation for severance of land is also taxable as capital gain. So far as the interest is concerned, the interest from 3-9-1965 to 31-3-1973 is assessable only in the assessment year 1973-74 as the enhanced compensation was awarded on 18-8-1972 and so it is not assessable in the assessment year 1966-67. The interest assessable for the assessment year 1966-67 is the interest which accrued for the period 3-9-1965 to 31-3-1966 and nothing more. He directed the Income-tax Officer to rework the interest for that period. Against the above order, the assessee as well as the reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1973-74 as the additional compensation was granted only in that year and not in the assessment year 1966-67. He placed reliance on a decision in Khan Bahadur Ahmed Alladin Sons v. CIT [1969] 74 ITR 651 (AP). The learned departmental representative repelled the above contentions. He submitted that since the land has been acquired in the accounting year relevant to the assessment year 1966-67 the additional compensation even if it is awarded in 1972 it is assessable in the assessment year 1966-67. The sum of Rs. 41,606 awarded for severance of land cannot be treated as a capital receipt and it is part of capital gain. He further urged that assessment has been validly reopened under section1 47 after obtaining the Board's sanction. Dealing w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in above 54,118 Less : Capital gain already assessed Balance taxable capital gain 3,259 -------- 50,859 -------- From the above it is clear that the assessee's half share in the capital gain is Rs. 54,118. Out of this deduction of Rs. 5,000 under section 80T has to be allowed. If that is allowed the capital gain would come to Rs. 49,118. This deduction under section 80T has not been allowed in the original assessment as the capital gain assessed was Rs. 3,259 which was below Rs. 5,000. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the original compensation became payable, for being included in that year of assessment. The enhanced compensation accrues only when it becomes payable, i.e., when the court accepts the claim. As has been stated earlier, a mere claim by the assessee, after taking of possession of the land, at a particular rate or for a certain sum is not compensation. It must not be forgotten that, even if a court has awarded enhanced compensation, there is a right of appeal by the Government to the High Court, and the High Court may either disallow that claim or reduce the compensation. As against that judgment, there is a further right of appeal to the Supreme Court. The assessee also can appeal against the insufficiency of the enhanced compensation. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -74 earlier. Thus, the Income-tax Officer was wrong in assessing the above amount in the assessment for the assessment year 1966-67 by his order dated 24-12-1983. This principle would apply even in respect of Rs. 41,606 in which the assessee has half share, awarded by the District Judge on 18-8-1972 for severance of land resulting in injurious effect on the remaining land. Hence, this amount is not assessable in the assessment year 1966-67. Further, it cannot be treated as capital gain also as it has not been awarded for the transfer of the land but it was awarded only by way of damages for injurious effect on the balance of the land belonging to the assessee. In coming to this conclusion we derive support from the decision of the Kerala Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
