9911796707
TMI Blog2006 (2) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... resent reference relates to the assessment year 1973-74. The assessee was the owner of a factory known as Bimal Glass Works which he sold on May 26, 1991, to M/s. Sri Veer Industries, Delhi, for a sum of Rs. 10,50,000. As agreed upon, out of the total sale consideration a sum of Rs. four lakhs was received in cash at the time of execution of the sale deed and balance of Rs. 6,87,000 (including the interest thereon) was to be paid to the assessee in instalments subsequently. The Collector, Agra, after the aforesaid sale deed, proceeded to sell the assets/properties of M/s. Shri Veer Industries on account of arrears of the sales tax due against it. The assessee instituted a suit claiming vendor's lien on the sale of that property by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee towards interest and deposited in the bank under the orders of the court). The assessee challenged the addition of the aforesaid amount in his hands by filing appeal. The first appellate authority did not accept the contention of the assessee on the ground that for all practical purposes the said sum was an "asset" at the hands of the assessee within the meaning of the Wealth-tax Act. The Income-tax Appellate Tribunal, however, in second appeal accepted the contention of the assessee and deleted the addition of Rs. 2,08,000 in the hands of the assessee on the ground that the assessee did not acquire any title on the ground that the amount was deposited in fixed deposit subject to the acceptance of the compromise by the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial position of the vendee, its version about the assessee's claim, the value of the property in question and about the fate of the orders passed in several litigations between the assessee and the vendee and the Collector of Agra. The Wealth-tax Officer, however, as noted in the order of the Tribunal in appeal failed to make proper enquiries in accordance with the directions of the Tribunal and failed to contact the vendee company in order to enquire about the position of the compromise and the objection of Sri R. K. Jain and also failed to point out the final outcome of the dispute between the assessee vis-a-vis, the Collector, Agra, and the liability of the vendee company, if any, and the Wealth-tax Officer to whom the matter was referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is also disputed. The Appellate Assistant Commissioner as well as the learned senior counsel laid much emphasis on the fact that the Collector awarded the compensation in the land acquisition proceeding in the name of the assessee and as such for all practical purposes the assessee became the owner of the property and as such the interest accrued on the compensation amount is liable to be included in the net assets of the assessee. The said argument, in our opinion is untenable in law. The subsequent delivery of possession in the absence of transfer of "title" by the vendee company to the assessee pending acceptance of the compromise by the court is of little consequence and will not make the assessee owner of the property as ownership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded in the net wealth of the assessee. The apex court has held that the continuance of the assessee was precarious in nature because it could be terminated by the lessor. On the same analogy, we are of the view that on the facts of the present case the right of the assessee to receive the compensation amount was very much sub judice and not free from doubt before the court. The entitlement or authority to receive the compensation amount was the subject matter of litigation and at that point of time the assessee had no clear legal title to receive the compensation amount inasmuch as the compromise petition was not accepted by the Court. More so, it has come on record that in spite of various opportunities granted by the Tribunal there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quantum of compensation to be received by the erstwhile owner. In that context the Supreme Court has said that the determination of compensation takes time, therefore, the right to receive the compensation is an asset and is includible in the net asset value of the assessee. It has been further clarified that the said right cannot be equal to the amount of compensation payable under the Acquisition Act. The afore stated principle in our opinion, will not be applicable in a case where the very authority, entitlement basis of foundation to receive the compensation is in dispute and is subjudice before the court of law. The pronouncement of law made by the Supreme Court will not be extended to such cases which fall in the second category m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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