VASAVAN T N Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The year of assessment is 1974-75. Reference is at the instance of the assessee. The question referred reads:

(2.) Facts relevant and requisite can briefly be stated thus: The land measuring an extent of 2.45 acres (50 cents) comprised in Sy. No.945/1 of Poonithura Village originally belonged to the assessee. He gifted the same to his wife in the year 1960. He thereafter constructed a building on the said land in the year 1970. The Government of Kerala in the year 1973 acquired the aforesaid land and the building and also the adjoining land of an extent of 5.79 acres belonging to the assessee for the public purpose namely, widening of the National Highway. The Land Acquisition Officer awarded compensation in a sum of Rs.73,500/- for the land belonging to the wife and Rs.1,05,518/- for the building. Both the assessee and his wife, not being satisfied with the compensation so awarded, got the question relating to enhancement of compensation referred to the court of the Second Additional Subordinate Judge, Ernakulam as is seen from L.A.R.899/ 1973. The Subordinate Judge by his judgment and decree awarded additional compensation of Rs.23418.21 for the land and Rs.33992.31 for the building. Solatium at 15% was also awarded. As a result of the judgment and decree the assessee's wife received a total amount of Rs. 1,16,692/- as compensation for the land and trees thereon and the assessee was paid compensation in a sum of Rs.1,59,766/- for the building.

(3.) The return for the assessment year in question filed by the assessee however, did not include the capital gains arising from the compulsory acquisition of the land belonging to his wife. When questioned he gave the explanation that he was not liable to account the capital gains, the wife probably would be liable to account. The assessing authority did not accept the contention. He accordingly held that the capital gains arising from the compulsory acquisition of the land belonging to the wife is liable to be assessed in the hands of the assessee in view of the provisions contained in S.64 of the Income Tax Act. Aggrieved by the order of assessment the assessee preferred an appeal before the Appellate Assistant Commissioner of Income Tax, Ernakulam, wherein he reiterated the various contentions, he had raised before the assessing authority. He also raised the contention that if the capital gains, the wife is liable to account, is liable to be assessed in his hands then he is entitled to the benefit of S.54. The Appellate Assistant Commissioner by his order accepted this case of the assessee. He accordingly found that the assessee is entitled to the benefit of S.54 in respect of the capital gains, he has been called upon to account which, but for S.64, should have been accounted for by the wife. The assessee as also the Department attacked the said order of the Appellate Assistant Commissioner by filing appeals. These appeals were disposed of by the common order, Annexure-C. It can be seen from this order that the case set up by the Department was that the compensation awarded by the Land Acquisition Officer for acquiring the land and the building, the wife of the assessee alone can lay claim to. This contention was resisted by the assessee. He in this connection reiterated the contentions he had raised before the assessing authority as also the Appellate Assistant Commissioner. Considering the various aspects of these competing contentions the Tribunal held that the wife alone is entitled to get the compensation for acquiring the land. The Tribunal also held that the husband alone can get the compensation for the building. We shall in this connection reproduce the said finding: