1. These are cross-appeals, the assessment year involved is 1968-69 and the valuation date is shown as 31-3-1968. WT Appeal No. 1606 (Delhi) of 1980 is by the assessee, an individual/resident while WT Appeal No.1590 (Delhi) of 1980 is by the revenue.
2. The assessee is aggrieved on the score that the Commissioner (Appeals) has wrongly upheld the addition of Rs. 4,12,793 being the compensation received in the later years, since the Commissioner (Appeals) has held that the compensation accrued to the assessee during the assessment year under appeal. The revenue is aggrieved on the score that the Commissioner (Appeals) is not justified in deleting the addition of Rs. 8,46,550 made by the WTO on account of the intended compensation to be received by the assessee from the Government for his land at Patparganj which has been acquired by the Government.
3. The facts briefly stated and as found out from the assessment order dated 26-3-1979 are as under: The assessee has claimed in part 4 of the return that 'Land at Patparganj covering 82 bighas and 19 biswas of agricultural land with some structure and tube-well appurtenant thereto as exempt being agricultural land'. Perusal of the income-tax record reveal the following facts: The assessee owned the above lands and the same were acquired by the Government vide notification under Section 4 and under Section 6 of the Land Acquisition Act in March 1966. The assessee has received a compensation of Rs. 1,77,936.40 from the Land Acquisition Collector and a further sum of Rs. 22,856.79 from the Additional District Judge. The assessee has further preferred appeals in the Delhi High Court and has claimed a sum of Rs. 8,46,550. The assessee was further required to explain as to why the compensation already received and that claimed in appeal be not assessed to wealth-tax.
The assessee's counsel, Shri R.N. Bahl, has stated that neither the amount received after the valuation date nor the amount claimed in appeal is taxable under the Act as the same was not determined on the valuation date. I do not agree with the submissions made by the assessee's counsel. The assessee claimed that the land was an agricultural one also does not hold good because once the land is taken over by the Land Acquisition Collector, the assessee ceases to own the land and the asset to be then included in the wealth is the right to receive compensation. The amount of compensation awarded by the Collector would be included in the net wealth of the assessee.
If the party has claimed additional compensation and a reference is to be made in the Court, the claim to the compensation ultimately awarded by the Court is also an asset. The wealth to be assessed is the right to receive the full amount of compensation as, even according to the assessee, that is the value as on the valuation date.
The right to receive the market value as compensation for the lands which are acquired comes into existence as soon as the lands are acquired and that right is an asset within the meaning of the charging section of the Wealth-tax Act, 1957. Further, it is an indivisible right. There are two rights, one to receive compensation and the other to receive enhanced compensation. The only right is to receive compensation for the land acquired by the Government which is the fair market value on the date of acquisition. The right to receive compensation is the capital of the claimant from the date the lands are acquired and to be assessed as a movable asset.
In this case, the assessee has already received compensation of Rs. 4,12,793 and has further claimed the compensation of Rs. 8,46,550.
The total amount is, therefore, taken as market value of the land acquired by the Government: Rs. 12,59,343.
4. In appeal by the assessee, the Commissioner (Appeals) reduced the wealth by Rs. 8,46,550. He reasoned that the contention of the assessee that the land was agricultural has to be rejected because once a notice under Sections 4 and 6 of the Land Acquisition Act, 1894 is issued, the property vests in the Government and the agricultural land ceases to exist and the assessee is entitled to compensation and the compensation to be fixed is relatable to the date of acquisition. He further reasoned that on the facts of the assessee's case the land vested with the Government on 13-11-1959 or 18-3-1966 when the notice under Section 6 was issued. He did not agree with the contention raised on behalf of the assessee that the land passes to the Government only after the compensation is awarded.
He relied upon the ratio laid down by the Hon'ble Supreme Court in the case of Pandit Lakshmi Kant Jha v. CWT  90 ITR 97. He further held that the right to receive compensation was held to be a valuable right and, hence, was liable to wealth-tax. However, he agreed with the contention that the value of land could not be enhanced by Rs. 8,46,550 because the appeals before the High Court were filed much later after the valuation date and the order of the High Court has not yet been received. He, accordingly, held that the amount of Rs. 4,53,000 being the amount of compensation awarded by the Land Acquisition Collector as well as the Additional Judge was liable to wealth-tax, although the order of the Session Court may have been received after the valuation date. He further relied upon the ratio of the Hon'ble Madras High Court in the case of M. Ranganath a Sastri v. CIT  119 ITR 488 and that of the Hon'ble Allahabad High Court in the case of CWT v. Smt.
Preetilata Devi  123 ITR 382, observing that the order passed by the Land Acquisition Collector merged with the order of the Sessions Judge, he held that Rs. 4,53,000 was due to the assessee from the very date that the property vested in the Government, He further relied upon the ratio laid down by the Hon'ble Supreme Court in the case of Mrs.
Khorshed Shapoor Chenai v. ACED  122 ITR 21 for the proposition that any tall claim made by the assessee before a higher appellate authority cannot be adopted as the value of the compensation until it is awarded. He also held that once award is made, it leads back to the date of notice under Sections 4 and 6 and the assessee is deemed to be entitled to that compensation which is finally awarded by a Court from the very date that the ownership passed into the hands of the Government.
5. As against Rs. 12,59,343 assessed by the WTO as compensation, the Commissioner (Appeals) afforded partial relief to the assessee in the sum of Rs. 8,46,550 with the resultant effect that the assessed wealth vis-a-vis this time of asset (sic), stood reduced to Rs. 4,12,793. The Commissioner (Appeals) has wrongly mentioned this figure at Rs. 4,53,000.
6. The assessee is aggrieved on the score of the amount of Rs. 4,12,793 having been assessed as wealth instead of his claim that as on the valuation date the asset, viz., agricultural land was not a taxable asset since as on the valuation date the asset was agricultural land and no right to receive compensation was with the assessee. The revenue is in appeal against the partial relief allowed by the Commissioner (Appeals), viz., Rs. 8,46,550.
7. We have heard the learned authorised representatives of the parties at length. We have also perused very carefully the orders of the lower authorities as also the paper book since placed on our file, for and on behalf of the assessee which also contains order dated 18-12-1980 made in R.A. Nos. 1032 to 1036 (Delhi) of 1980 in the case of CWT v. Shri Kesho Dass. We have also perused the copy of award No. 2179 whereby compensation was awarded to the assessee on 12-11-1968 and the award is said to have been announced on 13-11-1968.
8. The case of the assessee is that as on the valuation date, viz., 31-3-1968, the assessee was owning agricultural land and there was no right to receive compensation qua the assessee against the Government since the right to receive compensation arises only when either the award is made or else the land vests with the Government. The assessee as such contends that the award having been made on 13-11-1968, as also that the tender of payment of compensation award having been made on 12-11-1968, the earliest date that could be taken to be is the date when the assessee could claim compensation as also right to claim compensation could be one of these dates.
9. The case of the revenue is that once there are notifications under Sections 4 and 6, the assessee has got a right to receive compensation and qua the assessee, no longer there exists an agricultural asset, viz., agricultural land, but the assessee has the right to receive compensation and that amount is to be included as wealth in computing the net wealth of the assessee as on the valuation date, The revenue as such contends that the total amount of compensation, viz., Rs. 12,59,343 is to be treated as the net wealth.
10. Section 4, which provides for publication of preliminary notification and powers of officers thereupon, reads as under: (1) Whenever it appears to the appropriate Government that land in any locality is needed or is likely to be needed for any public purpose, a notification to that effect shall be published in the Official Gazette, and the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality.
(2) Thereupon it shall be lawful for any officer, either generally or specially authorised by such Government in this behalf, and for his servants and workmen, to enter upon and survey and take levels of any land in such locality; to do all other acts necessary to ascertain whether the land is adapted for such purpose; to set out the boundaries of the land proposed to be taken and the intended line of the work (if any) proposed to be made thereon; to mark such levels, boundaries and line by placing marks and cutting trenches; and where otherwise the survey cannot be completed and the levels taken and the boundaries and line marked, to cut down and clear away any part of any standing crop, fence or jungle: Provided that no person shall enter into any building or upon any enclosed court or garden attached to a dwelling-house (unless with the consent of the occupier thereof) without previously giving such occupier at least seven days' notice in writing of his intention to do so.
11. A reading of the above section makes it clear that a mere notification does not create interest in favour of the Government since a notification under Section 4 has necessarily to be followed by a declaration under Section 6 when the decision as to acquisition is made. Although the assessee's right to deal with his property ends with notification under Section 4 of the Act but it does not bar the owner of the property to sell it. A notification under Section 4 gets cancelled if the project is abundant or else objections under Section 5A of the Land Acquisition Act are allowed. Also, the Government can withdraw a notification made under Section 4 by virtue of powers under Section 48 of the Land Acquisition Act.
12. On the facts of the assessee's case, preliminary notification under Section 4 of the Land Acquisition Act is dated 13-11-1959. Notification is numbered F. 15(III)/59-LSG and covers an area of 34,070 acres. Final acquisition notification under Section 6 covering an area of 51 bighas and 15 biswas was issued vide Notification No. F. 4(71)/63 L and H, dated 17-6-1963. The second notification under Section 6 in respect of 1752 bighas and 2 biswas of land was issued vide Notification No. F.4(19)/65 L and H, dated 18-2-1966.
13. Section 6 deals with 'declaration of intended acquisition' and reads as under: 6. Declaration that land is required for a public purpose.--(1) Subject to the provisions of Part V (I of this Act, when the appropriate Government is satisfied, after considering the report, if any, made under Section 5A, Sub-section (2), that any particular land is needed for a public purpose, or for a company, a declaration shall be made to that effect under the signature of a Secretary to such Government or of some officer duly authorised to certify its orders and different declarations may be made from time to time in respect of different parcels of any land covered by the same notification under Section 4, Sub-section (1), irrespective of whether one report or different reports has or have been made (wherever required) under Section 5A, Sub-section (2): Provided that no declaration in respect of any particular land covered by a notification under Section 4, Sub-section (1), published after the commencement of the Land Acquisition (Amendment and Validation) Ordinance, 1967, shall be made after the expiry of three years from the date of such publication: Provided further that no such declaration shall be made unless the compensation to be awarded for such property is to be paid by a company, or wholly or partly out of public revenues or some fund controlled or managed by a local authority.
(2) Every declaration shall be published in the Official Gazette, and shall state the district or other territorial division in which the land is situate, the purpose for which it is needed, its approximate area, and, where a plan shall have been made of the land, the place where such plan may be inspected.
(3) The said declaration shall be conclusive evidence that the land is needed for a public purpose or for a company, as the case may be; and, after making such declaration, the appropriate Government may acquire the land in manner hereinafter appearing.
14. As the heading of Section 6 suggests, the said notification is a declaration of intended acquisition and while a notification under Section 4 refers to land in a particular locality, notification under Section 6 refers to land contemlates the particulars of the land itself. Under Section 4 the land is needed or likely to be needed whereas under Section 6 a pre-determination of the object as to acquisition of land is dealt with and it is declared by notification under Section 6 that the land is finally need for a public purpose or for the purpose of a company and with the issuance of notification under Section 6, there is a presumption that the Government has evinced an intention to contribute in part from the public revenue for the acquisition of the land.
15. As such a notification under Section 6 speaks of the intention of the Government to acquire the land and particulars of land but with an issuance of a notification of the above section, the land does not vest in the Government. The land vests absolutely in the Government under Section 16 of the Land Acquisition Act and the vesting is free from all encumbrances.
16. Section 16 deals with the topic 'Taking Possession' and deals with the power to take possession. It reads, 'When the Collector has made an award under Section 11, he may take possession of the land, which shall thereupon vest absolutely in the Government, free from all encumbrances.' 17. From a reading of the above three sections, viz., Sections 4, 6 and 16, it follows that cumulative effect of all these sections is that once the Collector makes an award under Section 12 of the Land Acquisition Act, he can take possession of the land and the vesting of the land is absolute and is free from all encumbrances.
18. In proceedings under the Land Acquisition Act, the title to the land does not pass to the State as soon as an award under Section 11 of the Land Acquisition Act is made or an award is filed under Section 12 but it is deferred till the possession is taken under Section 16.
19. A making of award under Section 11 amounts to an offer from the State to the assessee vis-a-vis the amount of compensation for acquisition of property and filing the said award under Section 12 makes the award finally, qua the assessee and the Government, subject to right of the parties to apply for enhanced compensation or else counter claim, as the case may be.
20. In other words, it follows that, qua the assessee, the right to receive compensation accrues only when an award under Section 11 is made or else when an award is filed under Section 12 and not before that date since an award under Section 11 is the tender of payment of compensation and, hence, the right to receive compensation arises when an offer is made in terms of compensation by the Collector to the assessee.
21. On the facts of the assessee's case, the date of tender of the payment of compensation is 12-11-1968 (vide page 83 of award No. 2179) and the award is said to be likely announced on 13-11-1968. The assessee as such gets a right to receive compensation on 12-11-1968/13-11-1968 and till that date the asset, viz., the land of the assessee is an agricultural land and it is a common ground that the subject-matter of acquisition vide award No. 2179 is the agricultural land of the assessee and in that view of the matter, giving due consideration to the facts of the case as also to the submissions made before us, we do hold that right to receive compensation accrued to the assessee against the Government on 12-11-1968 and since the valuation date for the assessment year under appeal is 31-3-1968, as on that valuation date, the assessee was owning agricultural land and since agricultural land was not an asset within the meaning of the Wealth-tax Act, 1957 ('the Act') the said asset cannot be included as wealth in the hands of the assessee while computing the assessee's net wealth for the purposes of its charge to wealth-tax under the provisions of the Act.
22. The resultant effect is that the appeal by the assessee stands allowed and it is held that as on 31-3-1968, there was no right to receive compensation with the assessee and the assessee was owning agricultural land.
23. As regards the ratio of the decision of the Hon'ble Supreme Court in the case of Pandit Lakshmi Kant Jha (supra), the facts of the assessee's case are distinguishable with the facts of that case since the assessee in that case was holding zamindari estate which was acquired by the Government under the Bihar Land Reforms Act, 1950.
Acquisition under the Bihar Land Reforms Act is not at par with the acquisition under the Land Acquisition Act and the ratio of decision of the Hon'ble Supreme Court in the case of Pandit Lakshmi Kant Jha (supra) as such does not apply no the facts of the assessee's case.
24. Since we have held that the right to receive compensation accrues to the assessee much later than the valuation date, the case law relied upon by the learned Commissioner (Appeals) in the impugned order is of on help to the revenue.
25. In the ultimate result, WT Appeal No. 1606 (Delhi) of 1980 by the assessee succeeds and stands allowed while WT Appeal No. 1590 (Delhi) of 1980 by the revenue fails and stands dismissed. The orders of both of the lower authorities insofar as those relate to the subject-matter of these appeals stand reversed.