9911796707
TMI Blog1979 (12) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... te. The accountable person preferred an appeal before the Appellate Controller. The Appellate Controller held that the only right the deceased had at the time of his death was right to receive compensation and not the property acquired. During the pendency of the appeal, an award was made valuing the entire extent of land compulsorily acquired together with the trees thereon at Rs. 55,510. Since the land was in the occupation of protected tenants, the deceased was declared entitled only to 40% of the compensation. The rest was held payable to the protected tenants. Thus, a sum of Rs. 22,204 was awarded as compensation for the property of the deceased which was compulsorily acquired before his death. It was claimed before the Appellate Controller that this sum of Rs. 22,204 should be substituted for Rs. 26,62,000 as the value of the estate of the deceased in respect of that item of property. The heirs of the deceased, however, not satisfied with the compensation awarded by the court on reference, preferred a further appeal and that appeal was still pending when the Appellate Controller disposed of the appeal preferred by the accountable person. The Appellate Controller held that wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompulsorily acquired by a notification under s. 4(1) of the Act on February 7, 1964. The deceased made a claim on November 5, 1964, for compensation at the rate of Rs. 5 per square yard which would work out to Rs. 26,62,000. The deceased died on December 16, 1964. From these facts, it is clear that the deceased ceased to be the owner and possessor of this property long before he died. The land as such vested in the Government free of all the encumbrances. As a result thereof the deceased was only entitled to receive compensation. The compensation for the land acquired was to be determined by the Collector, Land Acquisition, in accordance with the provisions of the Act and the criteria for determining the compensation in accordance with the principles laid down in ss. 23 and 24 of the Land Acquisition Act. These principles are intended to determine the market value of the land as on the date of the acquisition. In addition to the market value, 15% solatium has to be awarded as also interest from the date of taking possession of the land acquired. The principles enunciated in ss. 23 and 24 are intended to arrive at the market value of the land taking into account a willing seller and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the land already acquired. Section 5 of the Act directs that: " In the case of every person dying after the commencement of this Act, there shall.... be levied and paid upon the principal value ascertained... of all property... which passes on the death of such person ......" " Property " is defined in S. 2(15) as follows : " ' Property ' includes any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment for the time being representing the proceeds of sale and also includes any property converted from one species into another by any method. Explanation.-The creation by a person or with his consent of a debt or other right enforceable against him personally or against property which he was or might become competent to dispose of, or to charge or burden for his own benefit, shall be deemed to have been a disposition made by that person, and in relation to such a disposition the expression ' property ' shall include the debt or right created. Explanation 2.-The extinguishment at the expense of the deceased of a debt or other right shall be deemed to have been a disposition made by the deceased in favour of the person for whose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be envisaged and the principal value arrived at. In the case of compulsory acquisition of immovable property under the provisions of the Land Acquisition Act, since any amount less than what was awarded by the Collector under ss. 9 and 10 read with s. 12 cannot be given to the person interested, that can certainly form a valid basis for arriving at the value of the right of the deceased to receive compensation. The deceased or his legal heirs may not be satisfied with the compensation so awarded and are given the right to seek a reference to the court. Certainly, therefore, their right to receive compensation at a higher rate would also be a factor which should be taken into account in determining the value of this right. None the less as the claim is invariably put at a higher side and may not always be awarded and even if it be awarded, the whole of the said claim cannot be said to be the sole determining factor for assessing the value of the right to receive compensation which alone passes on the death of the estate-holder. Further, if any amount determined by way of compensation by the Collector has to be enhanced, steps are required to be taken by the persons interested or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the enhancement in the instant case was not made on account of the changes in the market values but only with reference to the provisions of the Commutation Regulations. Whether the entire amount of compensation was fixed and later altered or only a part of it was fixed and the other part was fixed later, the question is whether the deceased was entitled to the entire compensation amount on the date of death." The final amount that was determined as payable to the estate-holder or his legal representatives was held to be the basis for determining the liability for tax under the E.D. Act. Leave against this judgment was granted by this court. In Mrs. Freny Rashid Chenai v. Asst. CED [1973] 90 ITR 31 (AP), which is also a matter referred to this court in respect of land acquired under the Land Acquisition Act where the accountable person refused to accept the award made by the Special Deputy Collector as final and sought a reference to the civil court for enhancement of compensation and the civil court enhanced that compensation. The court held that " the right to receive the compensation for the lands acquired by the Government was a valuable right which could be sold in open ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be the right to receive compensation under the Land Acquisition Act that will have to be evaluated under the E.D. Act ...... Once the award is made " the right to receive compensation must be regarded as having merged in the awards, the determination having been made by a statutory public official and what the claimants would be left with thereafter was merely a right to agitate the correctness of such determination and this right to claim further compensation being merely a right to litigate was no asset or property and further that such right would become asset or property only after the Civil Court finally adjudicated upon such claim." The Supreme Court approved the High Court's observation that there are no two separate rights, one a right to receive compensation and the other, a right to receive extra or further compensation. The Supreme Court went on to repel the contention that after the award is made the right to compensation is destroyed or ceases to exist or is merged in the award or what is left with the claimant is a mere right to litigate the correctness of the award, and held : " The claimant can litigate the correctness of the award because his right to compensa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er be deemed as final for the purpose of arriving at the principal value of the estate under S. 36. These are all factors to be taken into account. In a given case not merely the amount of compensation but even the right to receive compensation may be in dispute. That again is a factor to be taken into account. For litigating with a view to earn the enhanced compensation the time spent and the expenditure likely to be incurred are all factors which would weigh with any person if the right to receive compensation were to be put in the market for sale on the date of death. These are all factors which have to be taken into account. The Appellate Tribunal while determining the principal value of the estate under S. 36 at Rs. 22,204 has not taken into account the fact that the right to receive enhanced compensation, though not at the rate at which it is claimed but at least at some higher amount than what is actually now awarded on reference by the civil court, has to be taken into account and that has been ignored. There is no dispute that the land being in the possession of protected tenants they are entitled to 60% of the compensation that is awarded or that may be found awardable in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
