1984 (1) TMI 148 - AT - Wealth-tax

Tribunal allows appeals on compensation rights in land acquisition, emphasizing market value assessment.

WEALTH TAX OFFICER. Versus AR RAJAGOPLAN.

WEALTH TAX OFFICER. Versus AR RAJAGOPLAN. - TTJ 019, 259, Issues:- Whether the additional compensation granted by the High Court should be included in the net wealth or allowed as a deduction through a bank guarantee.- Whether the liability represented by the bank guarantee should be considered contingent and not deductible.- Whether the estimated market value of the right to receive compensation should be based on the compensation awarded by the Land Acquisition Officer or the total amount including enhancements by other courts.Analysis:1. The appeals consolidated by the Revenue before the ITAT MADRAS-A involved the common issue of the treatment of additional compensation granted by the High Court. The appeals related to assessment years 1978-79, 1979-80, and 1980-81, with the last dates of the respective financial years serving as valuation dates. The AAC of WT had held that the additional compensation should not be included in the net wealth or that the liability represented by a bank guarantee for the same amount should be allowed as a deduction. The Revenue contested this decision, citing errors by the AAC and the Tribunal in similar cases for earlier assessment years.2. The case revolved around land in Koyambedu village acquired for a housing scheme, with the compensation amount being disputed and eventually increased by the High Court. The Supreme Court granted a stay on the High Court's judgment, allowing the assessee to withdraw the additional compensation amount deposited by the State Government and secure it in fixed deposits with a bank guarantee. The WTO initially rejected the bank guarantee as a deductible liability, deeming it contingent.3. On appeal, the AAC considered the Supreme Court's involvement and the nature of the compensation dispute. The AAC concluded that the amount withdrawn by the assessee should not be part of the net wealth, leading to the bank guarantee liability being deductible. The AAC directed the WTO to adjust the net wealth accordingly. This decision prompted the Revenue's appeal before the Tribunal.4. During the Tribunal proceedings, both the assessee's counsel and the Departmental Representative presented their arguments. The Tribunal noted a previous judgment by the Madras High Court in a similar matter, directing a reevaluation based on the Supreme Court's ruling regarding the right to compensation. The Tribunal emphasized that the estimated market value of the right to compensation should consider the initial award by the Land Acquisition Officer and other factors such as litigation risks. Following the High Court's directive, the Tribunal set aside the previous decisions and instructed the WTO to estimate the market value of the compensation right in line with the Supreme Court's principles.5. Ultimately, the Tribunal allowed the appeals for statistical purposes, indicating a procedural victory for the Revenue without altering the substantive issues at hand. The decision highlighted the importance of correctly assessing the market value of compensation rights in land acquisition cases, aligning with the legal precedents set by higher courts.