9911796707
TMI Blog1983 (3) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... . 61 and 62 on the Butler Road, Lucknow, Raja Ram Kumar Bhargava had 50 per cent interest in the said property, while the assessee and Smt. Kamla Bhargava have two thirds and one-third share, respectively, in the other 50 per cent. (b) The total area of the said property is 2,23,423 sq. ft. consisting of the Northern strip facing the road and the Southern strip in the back side. (c) On 5-7-1962, a notification under section 4 of the Land Acquisition Act, was issued with a view to acquire a portion of the said property mostly the Northern strip. (d) On 31-10-1962, a declaration under sections 6 and 17(1), (1A) of the Land Acquisition Act, was issued to acquire 98,408 sq. ft. of the said property. (e) Before the Land Acquisition Officer, the assessee as well as the other co-owners ('the owners') of the said property made the following claims : (i) compensation of the rate of Rs. 4 per sq. ft. should be paid for the portion of the land acquired ; (ii) interest should be paid from 3-8-1963 as there was evidence that the possession was taken from that date ; (iii) damages at the rate of Rs. 4 per sq. ft. should be paid in respect of the injuries affected to the 1,25,015 sq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court pronounced its judgment in the appeals filed by the State of UP and the owners. The Hon'ble High Court was pleased to uphold the decision of the Civil Judge in respect of the rate per sq. ft. fixed by him for both the acquired and unacquired portions of the property in question. Similarly, it upheld the rate of interest and the date from which it was payable, as fixed by the Civil Judge. Further, the Hon'ble High Court was pleased to grant 15 per cent solatium under section 23(2). (l) Having been dissatisfied with the decision of the Hon'ble High Court, the State of UP moved a petition for leave to appeal to the Hon'ble Supreme Court on 17-5-1976 the Hon'ble High Court rejected the petition. (m) Thereafter, petition for special leave to appeal was moved by the State of UP before the Hon'ble Supreme Court. The Hon'ble Supreme Court, vide its order dated 22-8-1977, was pleased to grant such leave limited to 'the question as regards damages to be paid for severance and the question of solatium'. (n) The total damages for the unacquired portion of the property in question awarded was Rs. 3,75,045. The assessee's two-thirds share in 50 per cent of the said amount wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1973] 90 ITR 97 (SC) was not applicable in its case as the facts and circumstances in its case were clearly distinguishable from the facts and circumstances considered by the Hon'ble Supreme Court in Pandit Lakshmi Kant Jha's case ; (iv) like the Income-tax Act, under the Wealth-tax Act also, the actual/real wealth in its hand was liable to tax and not something else which was in jeopardy depending on the final decision of the highest Court of the land ; (v) the money deposited in the bank on the directions of the Court had no consequence as till the decision of the Hon'ble Supreme Court in the appeal filed by the State of UP, it had no right, title or interest in the said money ; (vi) the two amounts of damages and solatium should be deleted from its net wealth. The assessee relied on a number of reported cases mentioned in the order of the AAC. 7. The AAC in her consolidated order for the assessment years 1968-69 to 1975-76, accepted the contentions of the assessee as under : " I have heard the learned counsel and gone through the various rulings cited by him. On a careful consideration of all the facts and circumstances of the case, I am of the view that the cases reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Tribunal. The learned representative for the department strongly relied on the orders of the WTO and submitted that the AAC was not justified in deleting the two amounts in question, from the net wealth of the assessee. According to the learned representative for the department, the assessee's case is fully covered by the decision of the Hon'ble Supreme Court in Pandit Lakshmi Kant Jha's case. In that case, the issue was about the compensation while in the present case it is about the damages/solatium, which partake the character of compensation in a different way. In this connection, he submitted that but for the acquisition proceedings and taking over of 98,408 sq. ft. of the property, the assessee could not have got the damages/solatium. He further submitted that even though such damages/solatium were awarded by the Civil Judge or the Hon'ble High Court, still the character and nature thereof was nothing but compensation on the acquisition of the property. In this connection, he invited our attention to section 23 and submitted that the items mentioned as firstly, secondly, etc., were the components of the compensation payable to the person whose property was being acquire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s nothing but an actionable claim which is not a property under the Transfer of Property Act. There is a difference between the actionable claim and the debt. The former is not an asset, while the latter is, under the Act (iv) once an appeal is admitted by the higher Court against the decision of the lower Court, the whole issue becomes sub judice and, therefore, damages/solatium allowed by the Civil Judge and the Hon'ble High Court cannot be taken into consideration till the Hon'ble Supreme Court pronounces its decision in the appeal preferred by the State of UP ; (v) the decision in Pandit Lakshmi Kant Jha's case and Chenai's case would not be applicable in the present case as the statutes and the point at issue in those cases were different ; (vi) the damages/solatium allowed by the Civil Judge and the Hon'ble High Court are nothing but fiat of the Court which could not be treated as an asset for the wealth-tax purposes ; (vii) the fact that the assessee had withdrawn money deposited in the bank against the bond/bank guarantee, would not convert what was not an asset into an asset for the wealth-tax purposes ; (viii) in any event since the damages and the solatium were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he property acquired under the Land Acquisition Act, the same is no longer in dispute before us. Therefore, now we are left with the damages/solatium received by the assessee by virtue of the order/decision of the Civil Judge/Hon'ble High Court. The assessee's case is that since the State of UP has preferred an appeal before the Hon'ble Supreme Court against the damages/solatium, its right to enjoy the same is nothing but an inchoate right, which could not be treated as a debt owed to it. In any event, since the damages/solatium were granted to it on 15-7-1969 and 16-4-1976, the amount of damages cannot be included in its net wealth in respect of the assessment years, the valuation dates of which fell prior to 15-7-1969. Similarly, the amount of solatium cannot be included in its net wealth in respect of the assessment years, the valuation dates of which fell prior to 16-4-1976. The revenue, on the other hand, contends that both these amounts are includible in the net wealth of the assessee irrespective of the fact that an appeal is pending before the Hon'ble Supreme Court. In any event, the value of the right to receive damages/solatium cannot be taken at nil as such right is a va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in respect of the assessment year 1964-65 in the following manner : " In our case the question referred to us relates to assessment year 1964-65, for which the relevant valuation date was 27th October, 1963. On this date the value of the asset, viz., the amount of compensation, was the amount determined as payable to the assessee for the acquired property with reference to the value of that property on 7th December, 1961, the date of notification under the Land Acquisition Act, and that amount alone represented the value of the asset liable to be returned under the Wealth-tax Act. On 27th October, 1963, the only value in operation was the amount determined by the Land Acquisition Officer, viz., Rs. 98,430, but on the date when the assessee filed the return, viz., 28th February, 1968, the Civil and Session Judge judgment has come into existence. The order of the Civil and Session Judge superseded and supplanted the determination made by the Land Acquisition Officer. In the eye of law the order passed by the Land Acquisition Officer merged in the order of the Civil and Session Judge with the result that the legally recognised amount of compensation was Rs. 98,430 plus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustained by the person interested, at the time of the Collector's taking possession of the land, by reason of the acquisition injuriously affecting his other property, movable or immovable, in any other manner, or his earnings ; " The aforesaid extract of section 23 clearly shows that the authority awarding compensation shall have to take into consideration the loss suffered by a person in respect of the property not acquired under the Land Acquisition Act. If the authority concerned failed to consider this aspect of the matter and if the higher authority in the judicial hierarchy considers this aspect of the matter, surely that cannot be said to be a fiat of the Court as was urged on behalf of the assessee. Sub-section (2) of section 23 is a mandatory provision for awarding solatium to a party whose land is compulsorily acquired under the Land Acquisition Act. Therefore, if the lower authority does not consider the claim made by the person who is deprived of his property and the higher authority in the judicial hierarchy considers the same, we fail to appreciate how this also could be called a fiat of the Court. In this view of the matter, we have no hesitation to hold that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the Wealth-tax Act." In view of the aforesaid observations of the Hon'ble Supreme Court, we are of the opinion that the right to receive compensation/solatium has a value on each of the relevant valuation dates. Again, in the case of Chenai, the Hon'ble Supreme Court has clearly held that where the lands are compulsorily acquired under the Land Acquisition Act, there are no two rights but only one right to receive compensation. The only thing left is regarding the quantification of such right. Since as already stated above, the matter is pending before the Hon'ble Supreme Court, we are of the view that it would be just and proper to restore the case to the file of the WTO with a direction to include the amount of damages/solatium as are finally determined by the Hon'ble Supreme Court and modify the assessments accordingly. 13. Before we part with the order, we like to quote the following comments from the latest commentary on the Law of Land Acquisition and Compensation by V.G. Ramachandran (6th edition, 1983), which is also illuminating : " 49. Limits of interference by Supreme Court or High Court.--The Supreme Court has laid down the salutary principle that in an app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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