S.P. Kapur, Judicial Member -
(1.) THESE are cross-appeals, the assessment year involved is 1968-69 and the valuation date is shown as 31-3-1968. WT Appeal No. 1606 (Delhi) of 1980 is by the assessee, an individual/resident while WT Appeal No. 1590 (Delhi) of 1980 is by the revenue.
(2.) The assessee is aggrieved on the score that the Commissioner (Appeals) has wrongly upheld the addition of Rs. 4,12,793 being the compensation received in the later years, since the Commissioner (Appeals) has held that the compensation accrued to the assessee during the assessment year under appeal. The revenue is aggrieved on the score that the Commissioner (Appeals) is not justified in deleting the addition of Rs. 8,46,550 made by the WTO on account of the intended compensation to be received by the assessee from the Government for his land at Patparganj which has been acquired by the Government.
The facts briefly stated and as found out from the assessment order dated 26-3-1979 are as under:
The assessee has claimed in part 4 of the return that 'Land at Patparganj covering 82 bighas and 19 biswas of agricultural land with some structure and tube-well appurtenant thereto as exempt being agricultural land'. Perusal of the income-tax record reveal the following facts:
The assessee owned the above lands and the same were acquired by the Government vide notification under Section 4 and under Section 6 of the Land Acquisition Act in March 1966. The assessee has received a compensation of Rs. 1,77,936.40 from the Land Acquisition Collector and a further sum of Rs. 22,856.79 from the Additional District Judge. The assessee has further preferred appeals in the Delhi High Court and has claimed a sum of Rs. 8,46,550. The assessee was further required to explain as to why the compensation already received and that claimed in appeal be not assessed to wealth-tax. The assessee's counsel, Shri R.N. Bahl, has stated that neither the amount received after the valuation date nor the amount claimed in appeal is taxable under the Act as the same was not determined on the valuation date. I do not agree with the submissions made by the assessee's counsel. The assessee claimed that the land was an agricultural one also does not hold good because once the land is taken over by the Land Acquisition Collector, the assessee ceases to own the land and the asset to be then included in the wealth is the right to receive compensation. The amount of compensation awarded by the Collector would be included in the net wealth of the assessee. If the party has claimed additional compensation and a reference is to be made in the Court, the claim to the compensation ultimately awarded by the Court is also an asset. The wealth to be assessed is the right to receive the full amount of compensation as, even according to the assessee, that is the value as on the valuation date.
The right to receive the market value as compensation for the lands which are acquired comes into existence as soon as the lands are acquired and that right is an asset within the meaning of the charging section of the Wealth-tax Act, 1957. Further, it is an indivisible right. There are two rights, one to receive compensation and the other to receive enhanced compensation. The only right is to receive compensation for the land acquired by the Government which is the fair market value on the date of acquisition. The right to receive compensation is the capital of the claimant from the date the lands are acquired and to be assessed as a movable asset.
In this case, the assessee has already received compensation of Rs. 4,12,793 and has further claimed the compensation of Rs. 8,46,550. The total amount is, therefore, taken as market value of the land acquired by the Government: Rs. 12,59,343.
(3.) IN appeal by the assessee, the Commissioner (Appeals) reduced the wealth by Rs. 8,46,550. He reasoned that the contention of the assessee that the land was agricultural has to be rejected because once a notice under Sections 4 and 6 of the Land Acquisition Act, 1894 is issued, the property vests in the Government and the agricultural land ceases to exist and the assessee is entitled to compensation and the compensation to be fixed is relatable to the date of acquisition. He further reasoned that on the facts of the assessee's case the land vested with the Government on 13-11-1959 or 18-3-1966 when the notice under Section 6 was issued. He did not agree with the contention raised on behalf of the assessee that the land passes to the Government only after the compensation is awarded.
He relied upon the ratio laid down by the Hon'ble Supreme Court in the case of Pandit Lakshmi Kant Jha v. CWT  90 ITR 97. He further held that the right to receive compensation was held to be a valuable right and, hence, was liable to wealth-tax. However, he agreed with the contention that the value of land could not be enhanced by Rs. 8,46,550 because the appeals before the High Court were filed much later after the valuation date and the order of the High Court has not yet been received. He, accordingly, held that the amount of Rs. 4,53,000 being the amount of compensation awarded by the Land Acquisition Collector as well as the Additional Judge was liable to wealth-tax, although the order of the Session Court may have been received after the valuation date. He further relied upon the ratio of the Hon'ble Madras High Court in the case of M. Ranganath a Sastri v. CIT  119 ITR 488 and that of the Hon'ble Allahabad High Court in the case of CWT v. Smt. Preetilata Devi  123 ITR 382, observing that the order passed by the Land Acquisition Collector merged with the order of the Sessions Judge, he held that Rs. 4,53,000 was due to the assessee from the very date that the property vested in the Government, He further relied upon the ratio laid down by the Hon'ble Supreme Court in the case of Mrs. Khorshed Shapoor Chenai v. ACED  122 ITR 21 for the proposition that any tall claim made by the assessee before a higher appellate authority cannot be adopted as the value of the compensation until it is awarded. He also held that once award is made, it leads back to the date of notice under Sections 4 and 6 and the assessee is deemed to be entitled to that compensation which is finally awarded by a Court from the very date that the ownership passed into the hands of the Government.;