Enhanced compensation on land acquisition is taxable only on actual receipt, not while the enhancement claim is pending.

Enhanced compensation arising from compulsory acquisition is taken into account only when the right to receive it actually accrues on grant of enhancement and the amount is received. Pending claims for enhancement do not justify inclusion in an earlier wealth-tax assessment year merely because the claim is under adjudication. Applying the settled receipt-based principle, the court upheld the Tribunal's view that no addition could be made before actual receipt, and the issue was decided in favour of the assessee.

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Issues: Whether the enhanced compensation received on acquisition of land was required to be taken into account in valuing the assessee's right to receive compensation for the relevant wealth-tax assessment years.

Analysis: The right to enhanced compensation arose only when the competent court granted the enhancement, and the governing principle applied was that enhanced compensation is taxable on receipt basis in the year of actual receipt. Relying on the settled rule that compensation and enhanced compensation are to be brought to tax when received, the Court found no infirmity in the Tribunal's view that the addition could not be made in the earlier assessment year merely because the claim for enhancement had been pending.

Conclusion: The issue was answered in favour of the assessee and against the Department.

Ratio Decidendi: Enhanced compensation arising from compulsory acquisition is to be brought to tax only in the year of actual receipt, and not in the year in which the claim for enhancement is pending or merely adjudicated.

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