Agricultural land remained exempt until award and possession, so no taxable right to compensation arose on the valuation date

Under the Land Acquisition Act, preliminary notifications and declarations do not by themselves divest the owner of agricultural land or create an accrued right to compensation. Vesting occurs only when possession is taken after award proceedings, with absolute vesting under section 16. Because the award and tender of compensation were made after the valuation date, the assessee continued to own exempt agricultural land on that date and had not yet acquired a taxable right to compensation. The claimed compensation was therefore not includible in net wealth as at 31-3-1968.

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Issues: Whether, on the valuation date, the assessee's acquired agricultural land had ceased to be an exempt asset and had been replaced by a taxable right to receive compensation under the Wealth-tax Act.

Analysis: The notifications under sections 4 and 6 of the Land Acquisition Act, 1894 did not by themselves vest the land in the Government. Vesting under the acquisition scheme occurs only when possession is taken after an award under section 11, with section 16 providing for absolute vesting free from encumbrances. On the facts, the award and tender of compensation were made only on 12-11-1968/13-11-1968, after the valuation date of 31-3-1968. Therefore, as on the valuation date, the assessee continued to own agricultural land and the right to receive compensation had not yet accrued.

Conclusion: The amount claimed as compensation was not includible in the assessee's net wealth on 31-3-1968, and the assessee succeeds.

Ratio Decidendi: In land acquisition matters, the right to receive compensation accrues only on the making of the award or tender of compensation, and not on the preliminary notification or declaration; until then, agricultural land retained by the owner is not replaced by a taxable right to compensation for wealth-tax purposes.

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