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Commissioner of Income-tax, Andhra Pradesh Vs. Syed KhadruddIn Ali Khan and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAndhra Pradesh High Court
Decided On
Judge
Reported in(1983)35CTR(AP)344; [1983]144ITR266(AP)
ActsIncome Tax Act - 256(1)
AppellantCommissioner of Income-tax, Andhra Pradesh
RespondentSyed KhadruddIn Ali Khan and anr.
Appellant AdvocateM. Suryanarayana Murthy, Adv.
Respondent AdvocateY.V. Anjaneyulu, Adv.
Excerpt:
.....- on appeal high court modified such compensation - whether such compensation be assessed in the year when compensation was awarded originally - compensation can be assessed only when it is accrued to assessee - such compensation will accrue to assessee only after disposal of appeal - in such case assessee liable to be assessed only after final disposal of appeal. - cantonments act[c.a. no. 41/2006]. section 346 & cantonment fund (servants rules, 1937, rules 13, 14 & 15: [h.l. gokhale, ag. cj, p.v. hardas, naresh h. patil, r.m. borde & r.m. savant, jj] jurisdiction of school tribunal constituted under maharashtra employees of private schools (conditions of service) regulations act, (3 of 1978) held, school run by the cantonment board is a primary school and it is not a school..........is liable to levy of income-0tax for the assessment year 1957-58?' 5. it is, thus, clear that the question referred in both cases, has two aspects, namely : (i) the taxability of the amount as income, and (ii) the assessment year in which it is liable to tax. 6. this fact, we are stating because at the inception of the hearing there was a controversy between the counsel for the parties whether taxability of the amount has also been referred to this court. we are of the opinion that the question of taxability also is referred to us since without referring to the first (taxability) aspect, referring the second aspect has no meaning and would make no sense. in any event, the question referred to use is clear and admits of no ambiguity. 7. we may now state a few facts relevant to these.....
Judgment:

Jeevan Reddy, J.

1. Identical questions arise in both these cases referred under s. 256(1) of the I. T. ACt. In R. C. No. 129/77 the Department asked the following question to be referred for the opinion of this court :

'Whether, on the facts and in the circumstances of the case, the sum of Rs. 33, 094, being the interest on compensation awarded by the court on September 29, 1956, is liable to levy of income-tax for the assessment year 1957-58?'

2. The Tribunal did refer the same question.

3. In R. C. No. 1 of 1978, the Department asked for two questions to be referred on identical facts, namely :

'1. Whether, on the facts and in the circumstances of the case, m the sum of Rs. 33,094, being the interest on compensation awarded by court, is an assessable income under the Income-tax Act?

2. Whether, on the facts and in the circumstances of the case, the sum of Rs. 33,094 is liable to assessment for the year 1957-58?'

4. The Tribunal however, referred the following question :

'Whether, in the fact and in the circumstances of the case, the sum Rs. 33,094, is liable to levy of income-0tax for the assessment year 1957-58?'

5. It is, thus, clear that the question referred in both cases, has two aspects, namely :

(i) the taxability of the amount as income, and

(ii) the assessment year in which it is liable to tax.

6. This fact, we are stating because at the inception of the hearing there was a controversy between the counsel for the parties whether taxability of the amount has also been referred to this court. We are of the opinion that the question of taxability also is referred to us since without referring to the first (taxability) aspect, referring the second aspect has no meaning and would make no sense. In any event, the question referred to use is clear and admits of no ambiguity.

7. We may now state a few facts relevant to these cases. The assessees in these two reference are legal representatives of late Sri Syed Moiuddin Ali Khan Bahadur. On April 7, 1947, the lands of the deceased were acquired by the Government. By this award dated September 28, 1950, the Collector awarded a compensation of O. S. Rs. 1,875 and it was paid in 1950. The matter was, however, taken to the civil court, which by its judgment dated September 29, 1956, enhanced the compensation by fixing it at the rat of S. S. 12 annas per square yard for the entire land acquired by the government which was found to be 172 acres and 36 guntas in extent. Solatium at 15% and interest at 6% per annum were also awarded. Against this order the State filed an appeal before this court and the claimants filed corrs-objections. The High Court by kits judgment dated November 1, 1963, confirmed the rate of compensation, but decreased the area of land acquired to Ac. 145-00.

8. As stated above, according to the judgment of the civil court dated September, 29, 1956, interest was payable at 6% per annum. The ITO wanted to tax the entire amount of interest; payable to the two assessee, s by virtue of the judgment of the civil court, in the assessment year 1957-58, which was objected to by the assessees. (We may state that the amount of interest payable to each of the assessees in these two references is identical, namely Rs. 33,094 as per the judgment of the civil court). The ITO overruled the objection of the assesses and included the entire amount payable to each of them s income of the assessment year 1957-58. On appeal, the AAC held that the receipt was causal and of a non recurring nature and hence not taxable. He also pointed that in any event the amount of interest should be apportioned between the relevant years and only the amount referable to the particular assessment year alone could be taxed in that year. The department went up in appeal to the Tribunal and the assessee also filed cross-objection, since he wa disputing the very taxability of the amount altogether. The Tribunal held that the mount is not at all taxable in a such as it is a receipt of a casual and non-recurring nature in the hands of the assessee. Accordingly it allowed the cross-objection and dismissed the appeal filed by the department. It is then that the Department asked the Tribunal to state the question refer to above for the opinion of this court, which was done.

9. So far as the taxability of compensation awarded for the land or property acquired is concerned that question has been concluded by the decisions of the Supreme Court in Dr. Shamlal Narula v. CIT : [1964]53ITR151(SC) , and T. N. K. Govindaraju Chetty v. CIT : [1967]66ITR465(SC) . A decision of this court in CIT v. Smt. Sankari Manickytamma : [1976]105ITR172(AP) further goes to show that the amount is taxable in the year in which it accrued and that it need not be apportioned between several relevant years to which it pertains. We are, however, told that the judgment of this court it pertains. WE are, however, told that the judgment of this court in Sankari Manickyamma, s case is the subject-matter of appeal in the Supreme Court now. Be that a it many, the taxability of the amount can no longer be questioned by the assessee in view of the afore decisions and we must, therefore, hold that the amount of interest received on compensation is taxable as income.

10. The next question is, whether the said income is liable to be taxed in the assessment year 1957-58. On this question again the matter seems to be no longer reintergra. It has been held by the Gujarat High Court in Topands Kundanmla v. CIT : [1978]114ITR237(Guj) and Addl. CIT v. New Jehangir Vakril Mills Co. Ltd. : [1979]117ITR849(Guj) and by the Calcutta High Court in CIt v. Hindusthan Housing and Land Developmnet Trust Ltd. : [1977]108ITR380(Cal) , that the amount accrues only when a final judgment is rendered. When an appeal is preferred against a judgment of a civil court, it loses its finality and, therefore, the date of judgment under appeal cannot be treated as the date of accrual. The date of accrual would be the date on which the final judgment is rendered. The same view appears to have been taken by this court in CWT v. Amatul Kareem : [1981]127ITR549(AP) -no doubt a case arising under the W. T. ACt. In view of these decisions it must be held that the date of accrual cannot be treated as September 29, 1956, namely, the date on which the civil court rendered its judgment enhancing the compunction. It must accordingly be held that the said amount could not have been taxed in the assessment year 1957-58.

11. Accordingly, the question referred to us is answered in the following manner :

While the amount of Rs. 33,094 representing the interest on the compensation awarded to the respective assesses is taxable as income, it cannot be taxed or included in the income for the assessment year 1957-58.


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