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TMI Blog1985 (7) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The said appeal is still pending. 3. In her wealth-tax return for the above assessment year, the assessee declared the value of the above land at Rs. 46,725 and claimed that being less than Rs. 1,50,000, it was exempt from wealth-tax under section 5(1)(iva) of the Wealth-tax Act, 1957 ('the Act'). The WTO held that the asset held by the assessee was not any land but she had only a right to receive compensation in respect of that land. He valued this right at Rs. 2,25,000 including interest due to her from the LAO and included it in the assessment. 4. The assessee appealed to the Commissioner (Appeals). It was again reiterated before him that the asset held by the assessee was agricultural land and not any right to compensation from the Government and, therefore, its value being Rs. 46,725 was exempt from wealth-tax. It was also submitted before him that even if the assessee had only a right to receive compensation its value could not exceed Rs. 23,309 as determined by the LAO. It was further submitted that if the WTO wanted to reject the assessee's valuation, the proper course for him was to refer the matter to the Valuation Officer under section 16A of the Act. The Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee that the value as determined by the LAO was the correct value of the right to receive compensation which alone could be included for the purposes of wealth-tax. 7. In the present application, it is pointed out that although the LAO had passed the order of acquisition on 21-7-1965 under section 11 of the Land Acquisition Act, the Collector had not taken possession of the land under section 16 of the above Act till December 1976. This fact is not in dispute. It is on record that the assessee had shown income from agriculture even in the assessment years 1975-76 and 1976-77 which was accepted by the ITO. This fact was brought to the notice of the Commissioner (Appeals). It was also submitted before him that in the wealth-tax assessment for the assessment year 1974-75, the WTO had accepted the assessee having shown the above asset as agricultural land in the return and had completed the assessment accordingly. These facts clearly do go to show that on 31-3-1975, which is the valuation date for the assessment year under appeal, the possession of the land had not been taken by the Collector either under section 16 or under section 17 of the Land Acquisition Act. 8. On the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession in one case after the making of the award and in the other, even before the making of the award. In either case, some time may lapse between the taking of possession of the acquired land by the Collector and the payment or deposit of the compensation to the person interested in the land acquired. As the land acquired vests absolutely in the Government only. after the Collector has taken possession of it, no interest therein will be outstanding in the claimant after the taking of such possession ; he is divested of his title to the land and his right to possession thereof, and both of them vest thereafter in the Government. Thereafter he will be entitled only to be paid compensation that has been or will be awarded to him. He will be entitled to compensation, though the ascertainment thereof may be postponed, from the date his title to the land and the right to possession thereof have been divested and vested in the Government...." 11. On the basis of the above principle, there cannot be two opinions that the land acquired did not vest absolutely in the Government on the valuation date. As the Collector had taken its possession only after that date, the assessee, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of India under article 141 of the Constitution and obviously omission to follow it would be a mistake of law rectifiable under section 254(2). 13. We, therefore, delete paragraph Nos. 14 to 16 of the order of the Tribunal dated 27-7-1981 and direct that the following paragraph be substituted and numbered as paragraph No. 14: "We have carefully examined the facts on record and have given our anxious consideration to the rival submissions. It is on record that the possession of the land in question had not been taken by the collector on the valuation date i.e., 31-3-1975. In that situation, the principle laid down by the Hon'ble Supreme Court in the case of Dr. Shamlal Narula v. CIT [1964] 53 ITR 151 will apply to the case. At p. 154 of the report, the Court had held as under : 'Another approach to the problem leads to the same result. Under section 16 of Act when the collector has made an award under section 11 he may take possession of the land which shall thereupon vest absolutely in the Government free from all encumbrances under section 17 thereof : "In cases of urgency, whenever the appropriate Government so directs, the collector, though no such award has been made, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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