TaxTMI 
TaxTMI 
1995 (7) TMI 117
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....ded is liable for capital gain only in assessment year 1990-91 ? (2) Alternatively, since only an amount of Rs. 83,364 which represents 80 per cent of the compensation was received by the assessee in the year of account only, the capital gains is to be computed on that amount as for as assessment year 1989-90 is concerned. (3) What is the value of the land acquired as on 1- 1-1974 ? Whether its value can be accepted at Rs. 26 per sq. yd. as per the registered valuer's report ? (4) Whether the amount of Rs. 4,573 is correctly levied as interest and whether it accrued in the accounting year relevant to 1989-90 ? Alternatively, whether it is excessive? " 2. The facts giving rise to the issue on hand are the following : The asses....
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....r's report. 4. Before the ITO it was contended that since the award was passed and the compensation was received under the award on 6-6-1991 the whole of the capital gain should be assessed only in assessment year 1992-93. In any view of the matter, since only 80 per cent of the compensation was received by him in the accounting year relevant to asst. year 1989-90 the capital gain should be assessed only on the amount of Rs. 83,370. The ITO did not agree with the contentions of the assessee. He held that under section 45(5), the capital gain is to be charged during the same year in which it has been earned and since the assessee had received the first amount of Rs. 83,370 which the assessee must have shown in his Income-tax return of hav....
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....ause in the provisions of section 45(5)(a), it has been specifically mentioned that for the compensation awarded in the first instance, the capital gains shall be chargeable in the previous year in which such compensation or part thereof was first received. In this case, the assessee first received the award amount, though it does not represent the whole of the awarded amount, in the previous year relevant to assessment year 1989-90. Hence, the Assessing Officer rightly assessed the whole amount of compensation awarded in the first instance. 7. The next attack against the assessment order was about wrongly taxing the interest received on compensation. It was contended that on the whole of the interest received on the awarded compensation....
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....ains 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 manner, namely :--- (a) the capital gain computed with reference to the compensation awarded in the first instance or, as the case may be, the consideration determined or approved in the first instance by the Central Government or the Reserve Bank of India shall be charge able as income under the head ' Capital gains ....
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....place. In the facts of this case, that is what actually happened. Therefore, Rs. 83,370 should be taken to be the consideration received under a legal transfer. Section 45(5)(a) speaks of the consideration or part thereof which was received. The amount of Rs. 83,370 received fulfilled all the characteristics of the words ' consideration first received '. Therefore, the said amount of Rs. 83,370 is liable for capital gains, not so much as part of ultimately awarded compensation but as consideration first received towards transfer of the land. Therefore, since the award was passed only on 22-2-1990 much after the payment of this sum of Rs. 83,370, it cannot be taken to be part of awarded compensation even before it is awarded. Therefore, for ....