1. WT Appeal Nos. 399 and 400 (Hyd.) of 1981 are appeals by the revenue relating to the assessment years 1969-70 and 1970-71 and WT Appeal Nos.
366 to 370 (Hyd.) of 1981 are appeals by the assessee relating to the assessment years 1971-1972 to 1975-76. All the appeals arise out of the wealth-tax proceedings and are, accordingly, considered together and disposed of by this order.
2. We would first take up for disposal the appeals filed by the assessee relating to the assessment years 1971-72 to 1975-76 wherein we shall set out the relevant facts which would also be necessary for disposing of the appeals filed by the revenue.
3. The assessee owned 7.31 acres of land situated in town survey No.1008 in Waltair Ward, Visakhapatnam. There was a notification dated 30-9-1965 that the land was to be acquired for town planning purposes.
In consequence of this notification, possession of land was taken on 25-9-1970 on which date the Land Acquisition Officer also passed an award. By this award compensation of Rs. 88,755 was awarded as also solatium at 15 per cent, i.e., Rs. 13,313 making an aggregate of Rs. 1,02,068. This compensation was received shortly thereafter and it is not in dispute that it was duly accounted for in the books prior to 31-3-1971 which was the valuation date relating to the assessment year 1971-72.
4. There was a reference by the assessee seeking enhancement of the compensation awarded. This matter came to be decided in O.F. No. 59 of 1971 by the court of the sub-judge, Visakhapatnam. The date of judgment was 5-2-1974 which date fell prior to 31-3-1974, i.e., the valuation date relevant to the assessment year 1974-75 and obviously prior to 31-3-1975, the valuation date relevant to the assessment year 1975-76.
By this judgment the sub-judge awarded enhanced compensation which was fixed at Rs. 6,90,667, 15 per cent solatium was also awarded. This came to Rs. 1,03,000 making a total of Rs. 7,94,267. Deducting the compensation and solatium originally awarded of Rs. 1,02,068, the assessee, in terms of the judgment of the sub-judge, would have become entitled to enhanced compensation and solatium to the extent of Rs. 6,92,199 which after certain adjustments should be taken at Rs. 6,93,187. This would be the correct figure as against the figure mentioned by the WTO of Rs. 6,94,719. The sub-judge also awarded interest of Rs. 84,787.
5. Against the judgment of the sub-judge, the State went up in appeal to the High Court. The High Court granted interim stay of the execution of the decree by its order in C.M.P. No. 10891 of 1974 in A.S.S.R. No.669516 of 1974, dated 22-11-1974 and the stay was made absolute by further order dated 27-12-1974. The assessee was permitted to draw out half the amount of enhanced compensation on furnishing adequate security. The appeal filed by the State is as on date still pending.
6. In this background, the WTO came to consider what value should be taken for the right to receive enhanced compensation in each of the years. The WTO took the value of the enhanced compensation at Rs. 6.94 lakhs which was the figure which would have resulted taking the judgment of the sub-judge as final for the assessment years 1971-72 to 1974-75. For the assessment year 1975-76, he took the figure of Rs. 7.13 lakhs which included the element of interest awarded by the sub-judge. The assessee contested the conclusions of the WTO before the AAC. Suffice it to say that after elaborate discussion, the AAC directed to take the value on each of the valuation dates at 50 per cent of the enhanced compensation and for the assessment years 1974-75 and 1975-76, he further directed that 50 per cent of the interest awarded also be taken into consideration.
7. The assessee is aggrieved with the findings of the AAC. The learned counsel submitted that the State was in appeal against the decision of the sub-judge and he placed before us the judgment of the sub-judge as well as the grounds of appeal filed by the State before the Hon'ble High Court in A.S. No. 56 of 1976. He submitted that the grounds clearly sought for restoration of the award made by the Land Acquisition Officer and it had been urged that the sub-judge had relied on material which was not relevant. He also referred us to an order of the AAC in this very case for the assessment year 1976-77, dated 26-12-1981, wherein the AAC directed that for the assessment year 1976-77, the value of the enhanced compensation should be taken at 20 per cent of that awarded by the city civil court. He submitted that the AAC had referred to some other orders of the Tribunal in coming to this conclusion. According to him, the percentage of 50 taken by the AAC was unrealistic and, therefore, he pleaded for a significantly lower percentage being adopted particularly because the appeal in the High Court was still pending and the assessment years now under consideration were years prior to that in which the successor AAC had himself adopted a percentage of only 20.
8. The learned counsel also referred to the Circular of the CBDT No.2-D(WT), dated 15-5-1964 [see Taxmann's Direct Taxes Circulars, vol. 1, 1980 edition, p. 1028] wherein the Board had prescribed certain percentages of the face value of Zamindari Abolition Compensation Bonds which were to be taken having regard to the number of years over which the payment was to be made. His submission was that in the case of such bonds, the amount of the ,bond was fixed and it was only the period of payment which was postponed. Yet, he submitted, where payment was to be made after a period of 9 years or more, only 45 per cent of the value was to be taken. Where the bonds themselves had not been given, he submitted that the circular provided for further discounts. According to him, where compensation was awarded in land acquisition proceedings, it was not even known what the amount of compensation would be till it was finally determined. This, he submitted, introduced a very large element of uncertainty and the discounts to be made should be much larger than what was prescribed by the Board in respect of the Zamindari Abolition Compensation Bonds. He sought to emphasize his point by , submitting that though the land in the present case was notified for acquisition on 30-9-1965 and possession was taken on 25-9-1970, till today the amount of compensation to be paid had not been finally decided because the appeal in the High Court was still pending. In respect of all these contentions, the learned counsel also placed reliance on three judgments of the Andhra Pradesh High Court-CWT v. G.M. Omar Khan  127 ITR 543, CWT v. Amatul Kareem  127 ITR 549 and CED v. Estate of Late Mohd. Sultan  127 ITR 277.
9. Another submission made by the learned counsel was that as far as interest was concerned, there was no justification for taking any percentage of the interest finally awarded because the award of interest was in the discretion of the Court.
10. The learned departmental representative, on the other hand, opposed the pleas put forth by the learned counsel for the assessee. His submission was that the decision of the AAC, relied on for the assessment year 1976-77, should not influence our conclusion because the case relied on by the learned AAC was an entirely different case and there was nothing to show that the facts were exactly similar. With reference to the decisions for the assessment years 1971-72 to 1975-76, he submitted that looking to the various imponderables, the AAC had already granted an adequate discount by taking a percentage of 50. He contended that there was no justification for reducing this further. He further stated that there were several cases where even the Tribunal had taken a percentage of 50 in respect of enhanced compensation and one such decision was that in WT Appeal Nos. 522 to 532 (Hyd.) of 1980, dated 26-9-1981.
11. On the point of interest, the learned departmental representative submitted that it was almost a certainly that the Courts would award interest and even though a percentage of 50 was not to be taken, a lower percentage could be taken.
12. At the time the present appeals were argued, we also had occasion to hear another set of appeals in Smt. D. Kamalabai [WT Appeal Nos. 540 to 546 (Hyd.) of 1981] wherein similar contentions were put forth on behalf of the revenue as well as on behalf of the assessee. In that case we have considered at some length the various contentions and our order in that case is dated 5-3-1982. Since we had occasion to deal with such contentions in these appeals, we thought that it would be advantageous if the parties are again heard on the basis of our order in that case so that the arguments could be crystallized further. We have, accordingly, heard the learned counsel for the assessee and the learned departmental representative with reference to our findings in that order wherein we have tried to enunciate some sort of principles which may have a general application. We do not recount, because it is not necessary, the entire arguments which we have set out in detail in the aforesaid order. Suffice it to say that our broad conclusion was that it would be reasonable to take the percentages as prescribed by the Board's Circular No. 2-D(WT) of 1964, dated 15-5-1964, with reference to the number of years from the valuation date when the final decision regarding compensation was given and to discount such percentages by a further 50 per cent. We had directed this further discount of 50 per cent having due regard to the observations of the Andhra Pradesh High Court in the case of Amatul Kareem (supra) wherein their Lordships had made a comparison between the compensation payable under the Zamindari Abolition Act which was more certain and that payable under the Land Acquisition Act, 1894, which continued to be nebulous for a considerable amount of time till it was finally decided.
These observations of Amatul Kareem!s case (supra) read as under : The last contention raised by Mr. Rama Rao, learned counsel for the revenue, is that while in Pandit Lakshmi Kant Jha v. CWT  90 ITR 97, the Supreme Court had determined the net wealth of the assessee at 65 per cent of the compensation payable, in the present case, the net wealth is determined at 50 per cent of the compensation. The determination of the net wealth in such matters cannot be made arbitrarily or on the basis of an invariable formula.
No doubt, in these two cases, as pointed out by the learned counsel, the net wealth has been determined at different percentages of the total amount of the compensation awarded. But the points of difference between these two cases are quite obvious. While the amount of compensation payable under the Bihar Zamindari Abolition Act is an amount which does not vary when calculated according to the principles laid down under that Act and that amount is payable on fixed dates, the amount of compensation to be determined under the provisions of the Land Acquisition Act is the market value of the land which will vary from case to case. That apart, under the provisions of the Land Acquisition Act, even the right to receive the compensation may be disputed and only after the amount is ascertained, it would become payable, whereas under the Bihar Zamindari Abolition Act it is payable every month. Further, the amount payable under the Land Acquisition Act is subject to appeal to the High Court. Even the right to receive the compensation may be disputed. The time taken for the completion of these proceedings may vary from case to case. Hence, no hard and fast rule could be laid down as to what percentage of total amount of compensation should be taken as the proper percentage for determining the net wealth of an assessee in a case where the net wealth comprises of the right to receive the compensation. That must necessarily depend, as observed by the Supreme Court, on a consideration of all the relevant factors and circumstances of the case. (p. 558) 13. The submission of the learned counsel in the present case was that the compensation matter had not yet been finally decided and it was still pending in the High Court and, therefore, the percentages, as fixed by us in the case referred to, should be further discounted. The learned departmental representative, on the other hand, contended that the percentage of 50 by which we directed the percentages prescribed by the circular of the Board to be discounted was on the high side.
14. We have considered the rival submissions. Looking to the nebulous nature of the compensation to be awarded under the Land Acquisition Act till it is finally decided and considering that a large number of years often pass before matters are concluded and having regard to the ratio of the judgment of the Supreme Court in Mrs. Khorshed Shapoor Chenai v.A. CED  122 ITR 21, we do not think that the discount which was fixed by us at 50 per cent of the percentagesp rescribed by the circular would call for any modification. There is some force in the contention of the learned counsel for the assessee that since the matters in the present case are yet not finally decided and since there is only an appeal by the State, some further element of discount may be called for because if anything, the enhanced compensation will only be reduced. But, in the course of argument, the learned counsel very fairly submitted that to bring about a finality in the matter of quantum, it may be taken as going on record that the compensation awarded by the sub-judge of Rs. 6,93,187 may be taken as the basis for determining the value and the percentages, which we had set out in our order referred to, may be applied thereto. Thus, for the assessment year 1971-72, since till today the matter is not finally decided, with reference to the figure of Rs. 6,93,187 since over 18 years have passed (in the hypothetical assumption that the matters will be finally decided during the current year, i.e., 1982), 20 per cent of such value (50 per cent of 40 per cent as prescribed in the Board's circular) may be taken. For the assessment year 1972-73, the same figure of 20 per cent will be repeated. For the assessment year 1973-74, 22.5 per cent of the figure of Rs. 6,93,187 will be taken, for the assessment year 1974-75, 25 per cent of the aforesaid figure and for 1975-76, 27.5 per cent of the aforesaid figure will be taken.
15. For the assessment years 1974-75 and 1975-76, the AAC had directed that 50 per cent of the interest awarded should also be taken. In conformity with our directions relating to the compensation and solatium, we direct that for the assessment year 1974-75, 25 per cent of the interest and for 1975-76, 27.5 per cent of the interest should be taken.
16. At this stage, it will be necessary to deal with the contention of the learned departmental representative that for the earlier years also we should direct a percentage of the interest to be taken. In our order referred to, this point had arisen and looking to the ratio of the judgment of the Andhra Pradesh High Court in CIT v. Smt. Sankari Manickyamma  105 ITR 172, we had come to the conclusion that no value can be taken for the interest prior to actual awarding of the same since it was a matter of descretion of the Court. Having heard the learned departmental representative again, we are inclined to adhere to our earlier conclusion because what we have to determine is the market value of the right to receive a certain amount and when the right to receive such amount is in the pure discretion of the Court, we consider that it would virtually have no marketable value on an earlier date as in that case a willing buyer is not likely to make any payment towards a probable awarding of interest which is in the discretion of the Court. Therefore, for the earlier years, we would come to the conclusion that there is no question of adding any value for the interest which was eventually awarded.
17. We now take up the appeals of the revenue, i.e., WT Appeal Nos. 399 and 400 (Hyd.) of 1981. The assessee in the present case was a dealer in real property. He had made his own valuation of the land which was acquired and of which possession was taken on 25-9-1970 in relation to the valuation dated 31-3-1969 and 31-3-1970. On 31-3-1969 the value shown was Rs. 1,06,145 and on 31-3-1970 it was Rs. 1,44,414. The WTO was of the view that the value of enhanced compensation as fixed by the sub-judge should be taken as the figure. What the WTO did was to take the figure of Rs. 6,93,187 in addition to the wealth returned for each of the years. Thus, in effect, in both the years the value taken by him is more than the value awarded by the* sub-judge because the values returned by the assessee of Rs. 1.06 lakhs in 1969-70 and Rs, 1.44 lakhs in 1970-71 were both higher than the value awarded by the Land Acquisition Officer which was Rs. 1.02 lakhs.
18. The submission of the learned counsel is that since a market valuation had been made by the assessee, the same should not be disturbed. The learned departmental representative, on the other hand, submitted that the market value as on 31-3-1969 should be adopted since the asset on that date was the land itself and not the right to receive compensation and since the sub-judge had fixed the compensation with reference to the date of acquisition, i.e., 25-9-1970 which was subsequent to the valuation dates, at a total of Rs. 7.94 lakhs, it would be proper to take the total of Rs. 7.94 lakhs or at least deducting 15 per cent solatium, Rs. 6.90 lakhs, as the value of land on these two valuation dates. In such an event, he stated, appropriate directions for making a recalculation could be given to the WTO.19. We have considered these submissions. No doubt, on the valuation dates 31-3-1969 and 31-3-1970, the asset in question was the land.
However, in the present case there was the notification dated 30-9-1965. When a piece of land is the subject of notification relating to compulsory acquisition, the land will not fetch the same value as when it was a land not subject to such a notification. Such a notification would certainly have a depressing effect on the value of the land. Therefore, the value of the land cannot be taken to be Rs. 6.90 lakhs. The question that arises is what is the value that is to be taken. The Land Acquisition Officer had fixed the compensation at Rs. 89,000 in round figures. For the assessment year 1971-72, we have directed that 20 per cent of the further compensation fixed of Rs. 6.93 lakhs should be taken. This would work out to Rs. 1.38 lakhs. If the figure of Rs. 88,000 is aggregated with the figure of Rs. 1.38 lakhs, we arrive at a figure of Rs. 2.26 lakhs We consider that taking the value of the land at Rs. 2.25 lakhs in round figures would take into consideration all the factors, viz., the depressing effect of the notification as also the point urged by the learned departmental representative that what we have to take into consideration is land value because the asset was a land in question. We would direct the WTO to make a recomputation by excluding from the wealth returned the element of the value of land, i.e., Rs. 1.06 lakhs in 1969-70 and Rs. 1.44 lakhs in 1970-71 and include thereafter the value of the land as fixed by us, i.e., Rs. 2.25 lakhs for each of the assessment years 1969-70 and 1970-71. To this extent the appeals of the department would succeed because the AAC had directed adoption of the value as returned by the assessee himself.