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TMI Blog1988 (9) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... r warrant for introducing the theory of risk and deducting a further amount on account of such risk ?" With the consent of both sides, we have reframed the question as follows : "Where, after the final valuation of the asset is known, in the determination of the value of such asset as on the date of death of the deceased and after such valuation is determined by applying Parks' formula or the relevant principles of valuation, as the case may be, whether there is any scope or warrant for introducing the theory of risk, thereby deducting a further amount on account of such risk ?" The Government of Andhra Pradesh acquired an extent of acres 143.35 land situated in Malkajigiri in Hyderabad belonging to the late Nawab Turab Yar Jung. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late Controller, following the decision of the Tribunal in respect of the wealth-tax matters pertaining to Nawab Turab Yar Jung, adopted 50% of the compensation amount excluding solatium and thus determined the amount at Rs. 5,15,000. On further appeal, the Income-tax Appellate Tribunal took into consideration the fact that the litigation with the tenants continued even after the death of the deceased and the same came to an end by a final judgment of the High Court on November 10, 1971. Applying Parks' Principles of Valuation, the Tribunal determined the value of the right in respect of receiving the compensation for these lands as on the date of death of the deceased, i.e., January 1, 1968, at Rs. 3,87,009 and after deducting 20% of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be fixed with reference to the date of death of the deceased, namely, January 10, 1968, the crucial aspect that must be taken into consideration was that there was no determination or even prospect of determination of any definite amount by way of compensation. What a willing purchaser would pay to buy the right to receive the compensation must be decided taking into account the surrounding circumstances, the long delay in the finalisation of the award proceedings and the litigation that ensued between the owner and the tenants. The lands in question on the date of death of Nawab Turab Yar Jung did not form part of his estate ; they were already acquired and possession was taken nearly seven years prior to his death. The only right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f litigation looming large at the relevant date. The first contention of counsel for the appellant, therefore, fails." A Division Bench of this court in CED v. Estate of Late Mohd. Sultan [1981] 127 ITR 277, following the aforesaid ruling of the Supreme Court in Khorshed's case [1980] 122 ITR 21, stated the legal position thus (p. 286) : "Having regard to the above dicta of the Supreme Court, it must be held that while the amount awarded by the Collector is a safe index for determining the value of the right to receive the compensation and such value can never be less than the said amount, that is not final nor is the claim of the estate-holder or his legal heirs for enhanced compensation final. Neither the ultimate compensation that is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right in assessing the value of the wealth of the assessee at rupees fourteen lakhs odd which was paid to him on April 2, 1970. As there is a prospect of the said amount being reduced and there is no prospect of the amount being paid in the near future in the circumstances, no further addition could be made to that amount." Again, in the case of CWT v. Amatul Kareem [1981] 127 ITR 549, Division Bench of this court, after reviewing the case law on the subject, expressed the view that 50% of the entire amount of compensation awarded by the High Court in land acquisition proceedings could be computed as the net wealth of the accountable person ; the reasoning adopted was (P. 558) : "Further, the amount payable under the Land Acquisition Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no certainty or even an approximate idea as to how much compensation the Government would fix for the lands acquired. The acquisition had taken place seven years prior to the death of the deceased. Only five years later, the award came to be passed. Different considerations would definitely arise in a case where there was a certainty of the receipt of a definite amount. Parks' principles were worked out only on the basis that there was certainty of receiving a definite amount. The compensation as fixed by this court came to Rs. 12,02,005 (vide its judgment dated August 28, 1978). This amount, by application of Parks' formula, works out to Rs. 3,87,009 as on January 10, 1968. In the determination of the figure at Rs. 3,87,009, no risk facto ..... X X X X Extracts X X X X X X X X Extracts X X X X
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