Skip to content


K. Sadasiva Krishan Rao Vs. Commissioner of Income-tax, Andhra Pradesh - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAndhra Pradesh High Court
Decided On
Judge
Reported in(1983)33CTR(AP)34; [1983]144ITR270(AP)
ActsIncome Tax Act, 1961 - Sections 4 ;Land Acquisition Act - Sections 28
AppellantK. Sadasiva Krishan Rao
RespondentCommissioner of Income-tax, Andhra Pradesh
Appellant AdvocateS. Dasaratharama Reddy, Adv.
Respondent AdvocateM. Suryanarayana Murthy, Adv.
Excerpt:
.....- enhanced interest - section 4 of income tax act, 1961 and section 28 of land acquisition act - lands of assessee acquired by government on payment of compensation - compensation enhanced on reference to civil court - assessee entitled to enhanced interest for assessment year 1967-68 relatable to period 01.01.1953 to 21.04.1966 - interest received was revenue receipt - entire interest received to be included in income of accounting year in which it was received - it cannot be distributed proportionately over period commencing from date of section 4 (1) notification and date of judgment of civil court - res judicata or estoppel does not exist in income tax - error committed in one assessment year cannot be repeated in next year. - motor vehicles act (59 of 1988)section 149 (2): [v...........nay accounts whatsoever and, therefore, it must be held having regard to the fact that the right to compensation and interest accrues on the date of issuance of s. 4(1) notification, that the accrual basis is the method of accounting applicable to the assessee. firstly we may point out that in the income-tax law, there is no such thing as estoppel or res judicate. each year is a distinct unit year and any mistakes or errors committed in one assessment year cannot be directed to be repeated in the next year, either on the ground of estoppel or on the grounds of res judicate. be that as it may, the decision of this court in cit v. smt. sankari manickyamma : [1976]105itr172(ap) , is not based upon or influenced by the method of accounting adopted by a particular assessee. the.....
Judgment:

Jeevan Reddy, J.

1. There questions are referred by the Income-tax Appellate Tribunal, Hyderbad, for our opinion, viz. :

'1. Whether, in the facts and circumstances of the case, was the Appellate Tribunal justified in stating that the interest paid under section 28 of the Land Acquisition Act was not additional compensation representing capital receipt estimated and measured in terms of interest as decided by the Madras High Court in A. S. Krishnamurthi v. Revenue divisional officer report din : AIR1971Mad236 , but revenue receipt?

2. Whether, in the fact and circumstances of the case, was the Appellate Tribunal right in law in holding that the entire interest amount of Rs. 73,295 was assessable in the assessment year 1967-68 and not that only proportionate interest referable to the assessment year 1967-68 was only assessable in that year

3. Whether, in the facts and circumstances of the case, was the Appellate Tribunal justified in holding that the entire amount of Rs. 73,295 is assessable in 1967=68, even though the Income-tax officer himself has chosen to asses similar interest on accrual basis in the assessment years 1969-70 and 1970-71?'

2. The lands of the assessee wear acquired by the Government Certain compensation was awarded by the Land Acquisition Officer, but on a reference to the civil court, the compensation was enhanced. As a result of the enhancement of compensation, the assessee became entitled to enhanced interest as well. He received a sum of Rs. 75,972 in the accounting year relevant to the assessment year 1967-68, relatable to the period January 1, 1953, to April 21, 1966. The assessee do not show this entire interest as having been received in the accounting year relevant to the assessment year 1967-68. He showed only that portion of interest as is relatable to the said accounting year, having divided the total interest among the several accounting years falling within the period January 1, 1953, to April 21, 1966. The assessee did not show this entire interest as having been received in the accounting year relevant as is relatable to the said accounting year, having divided the total interest among the several accounting years falling within the period January 1, 1953, to April 21, 1966. This was accepted by the ITO. The Commissioner, however, in exercise of his revisional power, set abide the assessment and directed the ITO to pass fresh order, after including the entire amount in the income of the relevant assessment year. The assessee went up in appeal to the Appellate Tribunal against the decision of the Commissioner. The Tribunal dismissed the appeal following the judgment of this court in CIT v. Smt. Sankari Manickyamma (1976) 105 refer the aforesaid three question for the opinion of this court, which was accordingly done.

3. So for as the first question is concerned, there can be little doubt today regarding the proposition that interest received is a revenue receipt and not a capital receipt. Indeed, the learned counsel for the assessee did not seriously contend to the contrary on this question.

4. Coming to the Second question, it is concluded so far as this court is concerned, by the diction in CIT v. Smt. Sankari Manickyamma : [1976]105ITR172(AP) , which was also followed by another Bench of which one of us (Jeevan Reddy J. is a party) in RC Nos. 129/77 and 1/78, disposed of on June 22, 1982 (CIT v. Syed Khadrauddin Ali Khan 0043/1982 : [1983]144ITR266(AP) . Mr. Dasaratharamam Reddy Sought to canvass the correctness of the Bench decision in CIT v. smt. sankari manickyamma : [1976]105ITR172(AP) , on the ground that the underlying ratio of the said judgment has been disapproved by the supreme court in its decision in Mrs. khorshed shapoor chenai v. asst. CED : [1980]122ITR21(SC) . On a perusal of the said judgment, however, we are unable to agree with the submission of the counsel. The case in Mrs. khorshed shapoor chenai v. asst. CED : [1980]122ITR21(SC) , arose under the E. D. Act the Supreme Court clarified that there are in two right in an owner, who land is acquire d under the land acquisition Act, viz., one right to receive compensation and the other, a right to receive extra or further compensation. The court clarified that the claimant has only one right to receive the compensation, though it may be, that this right is quantified by the collector under s. 11 or by the civil court under s. 26 of the land acquisition Act. It was pointed out that on passing of the award by the Collector; the right of the owner to receive compensation is not extinguished; nor can it be said that thereafter his right is only to litigate for more compensation. were unable too see how the principle of this decision runs counter to the bench decision of this court. Even the Bench recognised the right to claim compensation in an owner even after passing of the award by the Land Acquisition officer, but pointed out that this right to claim compensation is distinct from the right to receive compensation. It was further pointed out that the interest on the enhanced compensation under s. 28 of the Land Acquisition Act is discretionary and that until awarded the owners right to only to claim it. on this ratio it was held that the entire interest received should be included in the income of the accounting year in which it is received and it cannot be distributed proportionately over the period commencing from the date of s. 4(1) notification and the date of the judgment of the civil court. We are, therefore, of the opinion that the following the said Bench decision, the second question has to be answered in the affirmative and in favour of the Department and against the assessee.

5. On the third question, Mr. Dasaratharamam Reddy argued that the ITO has himself chosen to asses similar interest on accrual basis for the assessment years 1969-70 and 1970-71 and that, therefore, he cannot adopt a different principle while making assessment for the assessment year 1967-68. He contended that the assessee here has not maintained nay accounts whatsoever and, therefore, it must be held having regard to the fact that the right to compensation and interest accrues on the date of issuance of s. 4(1) notification, that the accrual basis is the method of accounting applicable to the assessee. Firstly we may point out that in the income-tax law, there is no such thing as estoppel or res judicate. Each year is a distinct unit year and any mistakes or errors committed in one assessment year cannot be directed to be repeated in the next year, either on the ground of estoppel or on the grounds of res judicate. Be that as it may, the decision of this court in CIT v. Smt. Sankari Manickyamma : [1976]105ITR172(AP) , is not based upon or influenced by the method of accounting adopted by a particular assessee. The conclusion of the Bench reached and the principles it ennuciated is based exclusively upon the provisions of the Land Acquisition ACt, unconnecteal with the method of accounting adopted by a given assessee. It is, therefore, immaterial which method of accounting is adopted by the assessee. Whichever method a particular assessee may adopt, the principle in CIT v. Smt. Sankari Manickyamma : [1976]105ITR172(AP) , squarely applies. We are, therefore, unable to say that merely because for the subsequent two assessment years, accrual basis was adopted and only a proportionate interest was allocated to those assessment years, the same thing must be directed to be done in respect of the assessment year 1967-68. NO such opinion can be rendered nor any such direction given by this court. Accordingly, the third question is also answered in the affirmative, in favour of the Department and against the assessee. The referred case answered accordingly No costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //