TODIWALLA R R Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) UNDER S. 256(1) of the IT Act, 1961, the Tribunal has referred to this Court the following questions at the instance of the assessee :

(2.) THE relevant assessment year is 1974 75. Capital gains pertain to the amount actually received by the assessee in consideration of the acquisition of land under the Land Acquisition Act. As provided under S. 23(2) of the said Act, in addition to the market value of the land acquired, a sum of 15% on the market value in consideration of the compulsory nature of the acquisition was awarded. The question is whether,"the amount representing the said 15% should be excluded in determining "the full value of the consideration received or accruing as a result of the transfer, as per S. 48(1) of the IT Act. We think that to ask that question is to answer it. As per S. 45 of the Act, any profit or gains arising from the transfer of a capital asset is chargeable to income tax under the head "Capital gains", and is deemed to be the income of the previous year in which the transfer took place. The word "transfer"is specially defined under S. 2(47) of the Act. It includes compulsory acquisition of the capital asset. Sec. 48 prescribes the mode of computation and deductions admissible in the matter of capital gains. Sec. 48(1) uses the expression "full value of the consideration received or accruing as a result of the transfer of the capital assets". Clauses (a) and (b) of Sub S. (1) of S. 48 specify the amount to be deducted from the said value mentioned in sub s. (1). Solatium received in consideration of compulsory acquisition is not listed therein. It is true that solatium is an extra payment provided for under the Land Acquisition Act for acquiring the land compulsorily, and, therefore, does not represent the market value. But it would make no difference. It, nevertheless, is a part of compensation and forms part of the consideration actually received or accruing as a result of the "transfer". Neither S. 45 nor S. 48 of the IT Act speaks of the market value. It speaks of the full value of the consideration actually received or accrued.

(3.) UNDER the circumstances, Question No. 1 is answered in the affirmative and in favour of the Revenue.