E R KOTHANDARAMAN Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE assessee had owned an extent of 7.23 acres of land in Jaffarkhanpet, Kodambakkam, Madras. THEy were acquired by the State Government in 1964. After the issue of notice under s. 9(1) of the Land Acquisition Act, possession of the lands was taken by the Government on March 27, 1964, and the property had vested in the Government as and from that date. THE award by the Land Acquisition Officer under s. 11 of the Act was made on May 15, 1964, in which a sum of Rs. 12, 755.75 was awarded as compensation for the lands acquired. THE assessee received the compensation under protest and required the Land Acquisition Officer to refer the matter under s. 18 to the civil court for determination of the amount of compensation payable to him. When this reference was pending before the learned subordinate judge of Chingleput, the assessee filed his returns for the assessment years 1965-66 to 1969-70 under the W. T. Act showing a net wealth below the taxable limit.

(2.) THE assessee had included in the net wealth an amount of Rs. 12, 756 being the compensation for the lands acquired. THE subordinate judge of Chingleput, by his judgment and decree dated October 28, 1968, awarded an enhancement of the compensation by Rs. 68, 030 for the lands acquired together with Rs. 10, 204.50, being 15 per cent. solatium on the enhanced compensation, making in all Rs. 78, 234.50, with interest at the rate of 4 per cent. from the date of taking possession till the date of deposit. He was also held entitled to a sum of Rs. 5, 750 which was wrongly deducted by the Land Acquisition Officer as reclamation charges. THE assessee had actually received a sum of Rs. 1, 00, 756 as additional compensation during the accounting year relevant to the assessment year 1971-72. In the assessment order dated March 14, 1972, in respect of the assessment years 1965-66 to 1969-70, the Wto, noticing that the amount of compensation actually received in a subsequent year came to Rs. 1, 00, 756 and that a claim for a still higher compensation was pending in the High Court, estimated the total value of the compensation receivable from the Government at Rs. 1, 75, 000. In the view that the compensation became receivable the moment the acquisition takes place, despite the fact that it may be determined or quantified by the Government later and actually paid still later, he held that the full amount of compensation receivable will have to be returned and included in the net wealth and not the amount actually received initially, as returned by the assessee. Accordingly, the difference of Rs. 1, 62, 244 (Rs. 1, 75, 000 minus Rs. 12, 756) was added to the net wealth returned and the assessment order made. In the return for the assessment year 1970-71, the assessee did not return the value of the compensation on the ground that the compensation had not yet been received. But the Wto made an assessment estimating the value of Rs. 1, 75, 000 as done in respect of the earlier years, on the ground that the compensation becomes receivable the moment the acquisition takes place. In the return for the assessment year 1971-72, the assessee had included a sum of Rs. 1, 00, 756, the compensation received by him as per the order of the learned subordinate judge of Chingleput. But in the assessment order the Wto added a sum of Rs. 74, 244 as per his estimate of the compensation receivable at Rs. 1, 75, 000. Against the assessment orders for 1965-66 to 1971-72, the assessee preferred appeals to the Aac.

(3.) THE assessing authority will have to estimate the value having regard to the peculiar nature of the property, its marketability and the surrounding circumstances including the risk or hazard of litigation looming large at the relevant date." *It is seen from the above passage that if, on the relevant date, the Land Acquisition Collector has not made any award the Wto had to estimate the value of the right to receive compensation for the property acquired at the market value as on the valuation date under the W. T. Act. If the Land Acquisition Officer has made an award and the claimant has not accepted and a reference is pending in the civil court on the relevant date, the Wto has to evaluate that right to receive compensation at a figure which shall not be below the amount awarded by the Collector but the estimated value can be either equal to the Collector's award or more. However, in both cases, that is, whether there is an award by the Land Acquisition Officer or not, the assessing authority will have to estimate the value having regard to the peculiar nature of the property, its marketability and the surrounding circumstances including the risk or hazard of litigation looming large at the relevant date. THE learned counsel for the assessee contended, relying on the first sentence of the passage extracted above where their Lordships stated that "this, however, does not mean that the civil court's evaluation of this right done subsequently would be its valuation as at the relevant date either under the E. D. Act or the W. T. Act "and the later passage where they have stated that the estimate" can never be equal to the tall claim made by the claimant in the reference nor equal to the claim actually awarded by the civil court inasmuch as the risk or hazard of litigation would be a detracting factor while arriving at a reasonable and proper value of this property as on the date of the deceased's death" *, that the civil court's valuation in this case cannot be taken as the market value of the right to receive compensation as on the relevant dates for the assessment years 1965-66 to 1969-70, and that the High Court's value also does not represent the market value for any of the assessment years 1965-66 to 1971-72. We think the learned counsel is well founded in this contention. If the civil court's valuation had not been appealed against by the Government but only the claimant had appealed claiming more compensation, it will be open to the assessing authority., when valuing the right for any assessment year, the relevant date for which is subsequent to such determination by the civil court to take that value as determined by the court, or assess it at more than that figure.