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TMI Blog2000 (9) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... lease on 19-3-1924 in favour of Shri Ram Singh Kabli under a registered deed. The lease was in perpetuity in the name of Delhi Pottery Works (P.) Ltd. Shri Ram Singh Kabli kept only 5 acres and alienated the rest of the land measuring 19.1 acres. On this land a superstructure for factory was raised. The assessee s late husband Shri Kesar Singh and their son took on sub-lease of the said land, factory premises and machinery installed thereon on 20-3-1942 and the rent payable was fixed at ₹ 500 per month. The sub-lease was for a period of 17 years. Delhi Pottery Works Pvt. Ltd. went into liquidation and the official liquidator released the aforementioned property in favour of Smt. Harnam Kaur, widow of late Shri Ram Singh Kabli in March, 1949. Shri Kesar Singh started paying sub-lease rent of ₹ 500 per month to Smt. Harnam Kaur. After the death of Shri Kesar Singh, the same lease-hold right in the said land devolved on the assessee, who started pottery business in the name and style of M/s Kesar Potteries. On 15-9-1962 the Government of India issued a Notification under section 4 of Land Acquisition Act acquiring the land in Arkpur village including the aforesaid land of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by the assessee during the relevant assessment year was ₹ 59,63,410 and after excluding 50% in terms of section 48(2) be brought to tax the remaining amount under the head Capital gains . 6. Before the first appellate authority it was urged that the amount of compensation was not liable to be taxed till the matter was finally decided by the court and also that the assessee was a sub-lessee of the land and structure standing thereon and her interest was only as a tenant. The assessee further pointed out that as there was no cost of acquisition of the tenancy right, capital gain was not chargeable to tax. The learned first appellate authority concurred with the submissions advanced on behalf of the assessee and held that there was no justification in bringing to tax the capital gain of ₹ 24,81,705 and accordingly deleted the addition. 7. Before us the learned Departmental Representative contended that the first appellate authority erred in reversing the order of the Assessing Officer on this issue. It was contended by the learned Departmental Representative that the case of the assessee was squarely falling within the provisions of section 45(5) which was intro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon. It is palpable that the assessee had received enhanced compensation during the year under consideration after furnishing the necessary security/guarantee, which was put to tax by the revenue. There is no dispute about the fact that the judgment of the District Judge, enhancing compensation was not accepted by the Union Government and appeal was filed before the Hon ble High Court. In order to consideration the applicability of section 45(5) to the facts of the present case it is necessary to note down the contents of this provision :- 45(5) Notwithstanding anything contained in sub-section (1), where the capital gain arises from the transfer of a capital asset, being a transfer by way of compulsory acquisition under any law, or a transfer the consideration for which was determined or approved by the Central Government or the Reserve Bank of India, and the compensation or the consideration for such transfer is enhanced or further enhanced by any court, Tribunal or other authority, the capital gain shall be dealt with in the following manner, namely :- (a )the capital gain computed with reference to the compensation awarded in the first instance or, as the case ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But in the instant case the Government came up in appeal against the enhancement made by the District Judge thus jeopardising the enhancement. Now the fate of the enhancement already received by the assessee got disturbed, the finality in respect of which became dependent on the outcome of the final judicial pronouncement. Till then it cannot be said that the assessee has received the enhancement within the meaning of section 45(5) entitling the revenue to charge tax thereon. Unless the enhanced compensation is received within any embargo, leaving thereby no scope or likelihood of the return, the same cannot be said to fall within the scope of section 45(5) of the Income-tax Act. We are reminded of the judgment of the Hon ble Supreme Court in the case of P. Mariappa Gounder v. CIT [1998] 232 ITR 2 , wherein their Lordships held that mesne profit is assessable to tax in the year in which the liability became ascertained. In this case the assessee filed a suit against the vendor for specific performance of the conveyance deed of a property. The suit was decreed by the Supreme Court on April 22, 1958 and by its judgment dated 22-4-1958 the Supreme Court also declared the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought any material on record to suggest that the series of transactions shown by the assessee were not business. It was also contended that the absence of money lendor s license was not crucial in determining the head of income under which it is taxable. 12.1 Before us the learned Departmental Representative contended that the CIT (Appeals) had not appreciated the facts in the right perspective. It was further pointed out that the money advanced by the assessee was not in the nature of business because it was given to only a handful of her relatives and also that there was no organised activity which could establish that the assessee was engaged in the money lending business. He relied on the decision in the case of Bengal Assam Investors Ltd. v. CIT [1966] 59 ITR 547 (SC) and CIT v. K.S. Venkatasubbiah Reddiar [1996] 221 ITR 181 (Mad.) for the proposition that the activity of the assessee advancing money on interest did not constitute business. 12.2 As against this, the learned counsel for the assessee invited our attention towards a chart included in the assessee s paper book showing details of persons to whom the money was lent. In particular, our attention was drawn tow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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