HARISH CHANDRA Vs. COMMISSIONER OF INCOME TAX
LAWS(DLH)-1983-12-19
HIGH COURT OF DELHI
Decided on December 19,1983

HARISH CHANDRA Appellant
VERSUS
COMMISSIONER OF INCOME TAX Respondents


Cited Judgements :-

COMMISSIONER OF INCOME TAX VS. S SAJIT SINGH AND SONS [LAWS(RAJ)-1985-9-30] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. PREM KUMAR [LAWS(ALL)-2007-11-201] [REFERRED TO]
PARAGON CONSTRUCTIONS (I) (P) LTD. VS. COMMISSIONER OF INCOME TAX [LAWS(DLH)-2004-9-159] [REFERRED TO]
MOHAN VS. GOVERNMENT OF INDIA [LAWS(BOM)-2008-8-268] [REFERRED TO]
VODAFONE INDIA SERVICES PRIVATE LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX [LAWS(IT)-2014-12-25] [REFERRED TO]
VODAFONE INDIA SERVICES PVT LTD VS. COMMISSIONER OF INCOME TAX AND ANOTHER [LAWS(BOM)-2015-10-247] [REFERRED]
CENTRAL INDIA ELECTRIC SUPPLY CO. LTD VS. INCOME TAX OFFICER [LAWS(DLH)-2011-1-438] [REFERRED TO]


JUDGEMENT

S.S.CHADHA, J. - (1.)THESE eight references under S. 256(1) of the INCOME TAX ACT, 1961 (hereinafter referred to as " the Act"), arise out of eight connected cases for the asst. year 1966 -67, for the previous accounting year ending 31st March, 1966. They pose the following questions of law for the opinion of this Court :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that capital gains was assessable in the hands of each assessee for the present year under S. 45 of the INCOME TAX ACT, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in taking into account the compensation received by each of the assessees pursuant to the order of the District Judge ?"

(2.)THE eight references concern different co -sharers of the property known as Kothi Anar Bagh, Subzi Mandi, Delhi, which was acquired by the Government under the Land Acquisition Act, 1894 (hereinafter referred to as "the Acquisition Act"). Each assessee had 1/32 share in the said property. The notification under S. 4 of the Acquisition Act was made on 10th Sept., 1962. The declaration under S. 6 of the Acquisition Act was made on 11th June, 1963. The assessees then filed their claims before the Land Acquisition Collector in which the value of that property was stated as Rs. 24,51,408. The Land Acquisition Collector after holding an enquiry into the value of the land at the date of the publication of the notification under S. 4 and into the respective interests of the persons claiming the compensation made his award on 20th Nov., 1965. The property was evaluated by the Land Acquisition Collector at Rs. 10,51,309 in his award and after adding 15% for compulsory acquisition assessed the value at Rs. 12,13,308 -50. After the making of the award by the Land Acquisition Collector, the said amount was deposited. The amount as offered by the Land Acquisition Collector was received by the assessees under protest on 24th March, 1966. The possession of the acquired land was taken by the Land Acquisition Collector under S. 16 of the Acquisition Act before 31st March, 1966 as the exact date is not on the record.
The assessees were not satisfied with the award of compensation by the Land Acquisition Collector and, therefore, moved reference petitions under S. 18 of the Acquisition Act for the determination of the compensation by the Court. The Land Acquisition Collector forwarded the reference petitions to the Court. The Addl. District Judge determined the compensation on 12th Sept., 1969, and enhanced the compensation by Rs. 3,58,669. The assessees were not satisfied with the determination of the compensation by the Court of Addl. District Judge and have filed appeals for further enhancement of the compensation up to the value of the property as stated in the claims made before the Land Acquisition Collector, namely, by Rs. 8,40,000. The Government is also aggrieved of the determination of the compensation by the Addl. District Judge and have preferred appeals against the enhancement allowed. The two appeals are pending in the High Court. During the pendency of the appeals, the assessees have been allowed to withdraw the enhanced compensation on furnishing securities for restitutiom The enhanced compensation was received by the assessees in September, 1970.

(3.)IT was the common case of the parties before the Tribunal that the year of transfer in the present case was the year relevant to the present assessment year. The award of the Land Acquisition Collector came in November, 1965, the compensation thereof was received by the assessee on 24th March, 1966, and the possession of the acquired land was taken by the Collector before 31st March, 1966. All these dates fell within the previous year 1965 - 66, as the assessees have been maintaining financial year as the accounting year. In the present case, the ITO had assessed the value of the property as on 1st Jan., 1954, at Rs. 50 per sq. yd. and this valuation was accepted by the Tribunal. Construing the provisions of S. 45 of the Act, the Tribunal came to the conclusion that the capital gains have to be treated as deemed to have accrued in the year in which the transfer took place. The Tribunal upheld the orders of the IT authorities who had taken into account the enhanced compensation received under the orders of the Addl. District Judge while evaluating capital gains. The Tribunal observed that the assessees got the enhanced compensation in September, 1970, and that would not prevent the consideration of that sum in the computation of capital gains even if the compensation is enhanced or reduced on further appeals by the High Court or the Supreme Court. It opined that the effect of these enhancements or reduction would relate back to the year of transfer and the capital gains would have to be accordingly adjusted in terms thereof.
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