COMMISSIONER OF WEALTH TAX Vs. P V JACOB

JUDGEMENT

(1.) ALL these petitions are under S. 27 (3) of the WT Act, 1957 ('the Act') . As they raise certain common questions, they are being heard together. The assessee was the owner of a rubber estate at Trichur known as 'Vellanikara Estates' which was acquired by the Government of Kerala under the Kerala Land Acquisition Act for the purpose of the Kerala Agricultural University at Mannuthy near Trichur. The relevant notifications under S. 3 (1) of the Kerala Land Acquisition Act were published on 1st Sept. 1970, 8th Sept. 1970 and 10th Nov.1970. The property was taken possession of on 1st May, 1973. Award was passed in respect of the said property on 15th March, 1974 under which an amount of Rs. 19,16,385 was awarded as compensation to the assessee. In addition, as sum of Rs. 9,58,192 was also awarded as compensation to the firm Varkey Jacob & Co. Which was the lessee of the estate. The total compensation of Rs. 28,74,577 was divided between the assessee-owner and the lessee-company in the ratio of 2 : 1.

(2.) THE assessee filed reference petitions before the Subordinate Court, Trichur, for enhancement of compensation. Ultimately, the matter was decided by the High Court by it order dt. 28th Jan. 1987 in L.A.A.No.324 of 1977. The High Court finally determined the enhanced compensation at Rs. 24,03,450. It also awarded interest on the enhanced compensation amount from the date when the property was taken over by the Government.

(3.) THE Tribunal, in its order dt. 21st June, 1991 which covers all these Assessment years, divided the Assessment years in to three groups. For the asst. yrs. 1970-71, the assessee was in possession of the land and there was no threat of acquisition. Hence, the market value of the land was to be taken into account for wealth-tax purposes. The second group of the assessment years is 1971-72 to 1974-75 and the third group is of asst. yrs. 1975-76 to 1978-79. From the asst. yr. 1971-72 onwards the assessee only had the right to receive compensation which had to be valued. During the asst. yrs. 1971-72 to 1973-74, the compensation amount had not been determined by the Collector. It was determined by the Collector only in March, 1974 and the compensation was paid on 28th June, 1974. For these three assessment years, therefore, the present value of the right to receive compensation as determined by the Collector is less than amount actually awarded by the Collector. For the asst. yr. 1974-75, the full value of this compensation is taken into account. This plus the present value of enhanced compensation constitute the value of total compensation for these four assessment years. Thus, the Tribunal has valued the assessee's right to receive total compensation and its present value. It has also taken into account the fact that the assessee's right to receive compensation must also take care of factors such as the risk and hazards of litigation. It held that during this period, when no part of compensation amount had been actually received by the assessee, a margin of 25 per cent on total compensation would take care of factors such as uncertainties and hazards of litigation. Regard was also had to the fact that there were several appeals against the initial compensation which was awarded and the litigation was spread over a period of 25 years. Taking all factors into account, the Tribunal allowed a discount of 25 per cent on the total compensation (i.e., as awarded by the Collector and enhanced by the High Court) as calculated by the Tribunal in paragraph 6A of its order to arrive at its discounted value on the relevant assessment date.