ANAND BABU AGARWAL Vs. INCOME TAX OFFICER KANPUR

JUDGEMENT

(1.) In the State of U.P., the Zamindari system was abolished by the U.P. Zamindari Abolition & Land Reforms Act, 1950. On the abolition of Zamindari, the State of U.P. issued bonds to the ex-Zamindars/ intermediaries known as U.P. Zamindari Abolition Compensation Bonds (hereinafter referred to as the "compensation bonds") and U.P. Zamindari Abolition Rehabilitation Grant Bonds (hereinafter referred to as the "rehabilitation bonds") wherein compensation was payable to bond holders or their successors in equal annual instalments spread over 40 years. The bonds were transferable. The compensation bonds were interest-bearing whereas the rehabilitation bonds were, without any interest.

(2.) The Petitioner Anand Babu Agarwal in the year 1970 purchased compensation bonds of the face value of Rs. 3 lakhs and rehabilitation bonds of the face value of Rs. 5 lakhs for Rs. 99 thousand and Rs. 98 thousand, respectively. The interest received from the compensation bonds was duly disclosed by the Petitioner for a! assessment years and for the asst. yr. 1978-79 as interest from securities. The compensation received was disclosed as capital receipt. The assessment for the asst. yr. 1978-79 was finalised on 13th Nov., 1978, treating the amount of compensation received in excess of cost of the bonds as capital receipt. However, for the asst. yr. 1979-80, the amount of Rs. 28,224 received as compensation from the bonds again shown as Gapital receipt was not accepted and a reference was made under Section 144A of the IT Act, 1961 (hereinafter referred to as "the Act") for suitable direction about, the taxability of the aforesaid amount as part of the revenue receipt. The IAC vide order dt. 30th Jan., 1981, directed the ITO to. reopen all earlier assessments pertaining to the Petitioner and to tax proportionate realisation of amount of compensation over and above the cost of the purchase of the aforesaid bonds. The said order was assailed by the Petitioner in revision under Section 264 of the IT Act which was disposed of by the CIT vide judgment and order dt. 20th Jan., 1982 and the matter was remanded to the IAC who again vide order dt. 2nd Feb., 1982, affirmed his earlier view. This order was again challenged by the Petitioner in revision under Section 264 of the Act which has been dismissed vide order dt. 17th Dec., 1982.

(3.) The aforesaid order dt. 17th Dec, 1982, and the order dt. 2nd Feb., 1982, have been impugned by the Petitioner in the present writ petition.