1986 (1) TMI 89

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....g that the order of the Income-tax Officer was not erroneous and thus holding that the Commissioner of Income-tax's assumption of jurisdiction under section 263 of the Income-tax Act, 1961, is bad in law ? " The material facts giving rise to this reference, briefly, are as follows: The assessee is a firm carrying on business of developing residential colonies. Certain parcels of land belonging to the assessee were acquired by the State Government on May 26, 1966. The Collector awarded compensation to the assessee, but, on a reference, the learned Additional District judge, Indore, by his order dated May 10, 1974, enhanced the amount of compensation and awarded interest amounting to Rs. 1,50,217 for the period May 26, 1966, to May 10, ....

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....ships held that the right to receive interest on additional compensation was acquired by the assessee only when such interest was awarded by the court on the enhanced amount of compensation and that he had no such right before the passing of such a decree. The aforesaid judgment was pronounced by the High Court of Madhya Pradesh on December 5, 1979, whereas the assessment order which was sought to be revised by the Commissioner of Income-tax was passed by the Income-tax Officer on June 23, 1979. From the aforesaid fact, it is very clear that on the date of passing of the assessment order, the judgment relied upon by the Commissioner of Income-tax was not in existence. It, therefore, follows that the Income-tax Officer has applied the law as....

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....r passed the order, the judgment of the High Court in CIT v. H. H. Maharaja Yashwant Rao Pawar [1981] 127 ITR 650, holding that the right to receive interest on the enhanced amount of compensation accrues to a person only when such interest is awarded by a court was not pronounced and, hence, it could not be held that on the basis of the material on record, the order of assessment passed by the Income-tax Officer was erroneous. Reliance was placed on the decision in Ganga Properties v. ITO [1979] 118 ITR 447 (Cal). Now, though it is true that revisional jurisdiction under section 263 of the Act has to be exercised in the light of the record as it stood at the time the order was passed by the Income-tax Officer, the judgment of the High Cour....