1982 (3) TMI 143 - AT - Wealth-tax

Appeals partially allowed, recompute values per Tribunal guidelines. Market value, solatium included, no interest till awarded.

Smt. D. Kamala Bai. Versus Wealth-Tax Officer/Income-Tax Officer And Another.

The appeals were allowed in part, with directions to recompute the values based on the Tribunal's guidelines. The Tribunal emphasized that the valuation ... Assessment Year, Civil Court, Land Acquisition, Right To Receive Compensation, Valuation Date Issues Involved:1. Valuation of the right to receive compensation for acquired agricultural lands.2. Impact of litigation and protected tenancy on compensation valuation.3. Relevance of solatium and interest in the compensation valuation.Detailed Analysis:1. Valuation of the Right to Receive Compensation for Acquired Agricultural Lands:The primary issue in these appeals is the valuation of the right to receive compensation for certain agricultural lands acquired by the government. The lands in question were:- 44 acres 11 guntas in Survey Nos. 225, 226, and 227 at Cherlapalli village.- 33 acres 7 guntas in Survey Nos. 223 and 224 at Cherlapalli village.- 8 acres 14 guntas in Survey No. 198, where the assessee had a half share.The Land Acquisition Officer (LAO) awarded compensation at Rs. 2,000 per acre on 21-9-1970, and the Additional Chief Judge enhanced it to Rs. 2 per sq. yd. on 27-9-1973. The assessee claimed lower values than awarded, citing litigation hazards and delays. The Wealth Tax Officer (WTO) believed the final awarded compensation, interest, and solatium should be the true index.2. Impact of Litigation and Protected Tenancy on Compensation Valuation:The assessee argued that the presence of protected tenants complicated the litigation, warranting a significant discount in the compensation value. The AAC adopted a method where:- For lands without protected tenancy litigation, the compensation awarded by the LAO plus 50% of the enhancement by the Additional Judge was considered.- For lands with protected tenancy litigation, 20% of the compensation awarded by the LAO was considered for the litigated part, with the remainder evaluated as above.The Tribunal noted that the valuation should consider the time-lag and litigation risks. The final compensation should be discounted based on the time between acquisition and final compensation determination, following the CBDT Circular No. 2D(WT), dated 15-5-1964.3. Relevance of Solatium and Interest in the Compensation Valuation:The Tribunal disagreed with the assessee's contention that solatium should not be treated as part of the compensation. Solatium, being a percentage of the compensation for deprivation of property, is considered an asset and included in the compensation amount.However, the Tribunal agreed that interest awarded should not form part of the compensation. The awarding of interest is at the court's discretion and is not an asset until actually awarded. This view aligns with the Andhra Pradesh High Court's decision in CIT v. Smt. Sankari Mnickyamma [1976] 105 ITR 172.Conclusion:The appeals were allowed in part, with directions to recompute the values based on the Tribunal's guidelines. The Tribunal emphasized that the valuation should reflect the market value on the relevant valuation dates, considering litigation risks and delays in compensation determination. The final compensation should include solatium but exclude interest until actually awarded.