TaxTMI 
TaxTMI 
2003 (10) TMI 263
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....p; 16/2 1 7 abi Kothi No. 321, 26/2/1 1 9 Ger Mumkin Sec. 21, Chd. 26/2/3 5 4 Ger Mumkin ------- 9-7 ------- &n....
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....ction 2(14) of Income-tax Act was applicable to this land. It was held to be a capital asset having regard to its nature, location and situation. 3.1 The assessee during the course of assessment proceedings further relied upon the decision of Hon'ble Supreme Court in the case of CIT v. Hindustan Housing & Land Development Trust Ltd. [1986] 161 ITR 524 to contend that the decision of the District Judge awarding enhanced compensation was not final and was challenged by the Haryana Government before the Hon'ble Punjab & Haryana High Court and, therefore, in the light of above announcement of Hon'ble Supreme Court nothing was taxable in the hands of the assessee. The Assessing Officer held that the aforesaid decision was distinguishable and not applicable to the facts of the case as per his observations on pages 11 and 12 of the assessment order. The Assessing Officer held that enhanced compensation of Rs. 16,55,566 was taxable as capital gain under section 45(5)(b) of Income-tax Act. Accordingly the above amount was added in the income of the assessee. 4. The assessee impugned above addition in: appeal before the Commissioner of Income-tax (Appeals) who held that the land in que....
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....acquisition proceedings holding that the land in question was an urban asset. The learned Departmental Representative also referred to various statements of the assessee claiming compensation of land as a commercial asset. She further argued that it was an urban asset. The learned Departmental Representative placed strong reliance on decision of Hon'ble Supreme Court in the case of CWT v. Officer-in-charge (Court of Wards), Paigah [1976] 105 ITR 133. She also placed reliance on the decision of Hon'ble Supreme Court in the case of CIT v. Gemini Pictures Circuit (P.) Ltd. [1996] 220 ITR 431. The learned Departmental Representative further argued that the decision of Hon'ble Supreme Court in the case of Hindustan Housing & Land Development Trust Ltd. had no application in this case as the right to receive compensation was not challenged here. At any rate, the assessee was taxed under section 45(5)(b) of Income-tax Act, a special provision providing for taxation of enhanced compensation. The learned Commissioner of Income-tax (Appeals) committed an error in not considering the above provision or the situation and surrounding of the land in question, the learned Departmental Representat....
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....cter of the land. Their Lordships laid certain tests for determining whether a particular peace of land was agricultural or not. The aforesaid authority was rendered under the Wealth-tax Act. 7.1 In the case of Gemini Pictures Circuit (P.) Ltd their Lordships made the following observations:-- "Held, that the land was situated within the limits of the Madras Municipal Corporation. It was located on the Mount Road which is the main artery of the city and its business centre. Even when the assessee purchased it in 1950, there was a hotel building located in the said land. In the municipal records, the property was registered as urban land and urban land tax was being levied thereon. Even when the assessee purchased an extent of about four acres of land with a hotel building in 1950, for a consideration of Rs. 5.53 lakhs, it could not have been for the purpose of raising banana plantation or vegetables. And when the land was sold in 1966-67, it was sold at the rate of about Rs. 260 per sq. yard. Neither the sale deed under which the assessee purchased the said land nor the sale deeds executed by it in 1966-67 described the land as agricultural land. After purchasing the land, th....
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.... been made in the assessment order. The assessee had himself applied for permission to construct a hotel on this plot. There is further admission on the part of the assessee that it is a commercial asset and compensation be allowed to the assessee @ Rs. 2,000 per sq. yd. Even the District Judge while allowing compensation enhanced it from Rs. 55 per sq. yd. to Rs. 250 per sq. yd. The land in the vicinity was all sold on per sq. yd. basis. Thus, looked from any angle the land in question cannot be treated as agricultural land. It was a capital asset and has to be subjected to tax accordingly. 9. The Assessing Officer applied provisions of section 45(5) which is as under:-- "45(5) Notwithstanding anything contained in sub-section (1), where the capital gain arises from the transfer of a capital asset, being a transfer by way of compulsory acquisition under any law, or a transfer the consideration for which was determined or approved by the Central Government or the Reserve Bank of India, and the compensation or the consideration for such transfer is enhanced or further enhanced by any court, Tribunal or other authority, the capital gain shall be dealt with in the following mann....
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....y the assessee in the period under consideration. Under the aforesaid clause (b), the entire enhanced compensation has been subjected to tax. There is no dispute that the compensation enhanced by the District Judge was received by the assessee in the period under consideration. The provision of above sub-section (5) in super-session to earlier provision, provides for assessment of capital gain on account of compulsory acquisition of a capital asset in the year in which the compensation or enhanced compensation is received by the assessee. Having regard to clear and un-ambiguous language of clause (b) of the sub-section, there can be no argument on assessability of enhanced compensation. In fairness to the learned counsel no objection or argument to the taxability of enhanced compensation under the aforesaid clause was raised before us. His submission was that the cost of acquisition of land in question was to be determined in assessment year 1994-95 after applying indexed cost of acquisition and was to be allowed under section 48 of the Income-tax Act. He accordingly argued that the entire enhanced compensation could not be assessed and the benefit of clause (a) has to be allowed t....
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.... Trust Ltd. It was submitted that enhancement of compensation was challenged by the Government before the Hon'ble High Court and the matter was still pending before the Hon'ble High Court. The right to enhanced compensation was still inchoate right and the decision of District Judge cannot be said to be final. The learned Departmental Representative opposed the above submission. 13. After careful consideration of rival submissions, we do not find any substance in the submission advanced on behalf of the assessee. As already held the enhanced compensation is liable to be taxed in the light of provision of section 45(5)(b) of Income-tax Act brought on Statute Book w.e.f. 1-4-1988. Their Lordships of Supreme Court in the case of Hindustan Housing & Land Development Trust Ltd. were not concerned with the above provision. In fact, the decision was rendered on July 29, 1986 whereas the statutory provision was introduced later w.e.f. 1-4-1988. Their Lordships in the above case decided whether income would "accrue" where right of enhanced compensation is an inchoate right. The statutory provisions referred to above, on the other hand, made enhanced compensation taxable on receipt basis.....