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TMI Blog1983 (3) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... , the additional compensation of Rs. 2,30,738 was received by the assessee. 2. The original assessment was made on 1-3-1975. In the original assessment the compensation as determined by the Land Acquisition Officer as per his award was taken and the capital gain was computed. After the order dated 22-6-1976 of the District Judge enhancing the compensation by Rs. 2,30,738, the ITO by his order dated 27-2-1979 passed under section 154 of the Income-tax Act, 1961 ('the Act'), rectified the original assessment order by taking into consideration the additional compensation of Rs. 2,30,738 and determined the capital gain. Against that order, the assessee appealed to the Commissioner (Appeals). He held that section 155(7A) of the Act came into effect only from 1-4-1974. The additional compensation of Rs. 2,30,738 cannot be brought to tax for the assessment year 1972-73 by an order under section 154. Thus, he deleted the sum of Rs. 2,30,738 for computing the capital gain. Against the same, the revenue has preferred the present appeal. 3. The learned departmental representative submitted that the District Judge by his order dated 22-6-1976 enhanced the compensation by Rs. 2,30,738. In v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se may be, to be the full value of the consideration received or accruing as a result of such transfer and shall make the necessary amendment ; and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the end of the previous year in which the additional compensation or consideration was received by the assessee. " The above provision was given retrospective effect from 1-4-1974. According to the above provision, if the compensation is enhanced, the computation made earlier shall be deemed to have been wrongly made and the ITO shall recompute in accordance with section 48 of the Act, the capital gain arising from such transfer by taking the compensation as enhanced to be the full value of the consideration received as a result of the transfer and shall make the necessary amendment and the provisions of section 154 shall apply thereto and the period of four years specified in sub-section (7) of that section being reckoned from the end of the previous year in which the additional compensation was received by the assessee. The above provision contemplates for rectification of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. In T.S. Devinatha Nadar's case the respondent assessees therein were partners of a registered firm. The assessment of the firm was originally completed on 22-1-1946 and the assessment of the respondent-assessee as individual was completed on 24-1-1946 including his share income from the firm. Subsequently, the assessment of the firm was reopened and a sum of Rs. 90,000 was added to the income of the firm. The notice under section 34 of the 1922 Act, was issued on 11-9-1952 and the reassessment of the firm took place on 30-5-1959. Subsequently, on 24-7-1959 a notice under section 35(5) of the 1922 Act was served for rectification of the assessment as individual and the rectification was ultimately ordered to be made on 31-8-1959. Section 35(5) was brought on the statute book by the Indian Income-tax (Amendment) Act, 1953, which came into force [with retrospective effect] from 1-4-1952. It was contended before the Supreme Court that as the section was brought on the statute book from 1-4-1952, any mistake anterior to that date cannot be rectified. The Supreme Court observed as under : " Applying the above principles, we find that the aim of the Legislation was to bring into li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the 'completed assessment' of a partner. As the mischief sought to be rectified was the discrepancy between the income of the partner assessed as an individual and his income as computed on the assessment of the firm, the Legislature must be held to have made the remedy applicable whenever the mischief was discovered. There would have been nothing unjust in making the power of rectification exercisable at any time after the discovery of the discrepancy but the Legislature in its wisdom did not think that the power should be used except within a limited period of four years from the date of the final order. " Again the Supreme Court has observed as under : " With very great respect, we find ourselves unable to concur. As we have already said, sub-section (5) becomes operative as soon as it is found on the assessment or reassessment of the firm or on any reduction or enhancement made in the income of the firm that the share of the partner in the profit or loss of the firm had not been included in the assessment of the partner or if included was not correct. The completion of the assessment of the partner as an individual need not happen after April 1, 1952. The completed asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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