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Smt. Sarda Devi Singhania Vs. Wealth-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Allahabad
Decided On
Judge
Reported in(1986)15ITD129(All.)
AppellantSmt. Sarda Devi Singhania
RespondentWealth-tax Officer
Excerpt:
.....again reiterated before him that the asset held by the assessee was agricultural land and not any right to compensation from the government and, therefore, its value being rs. 46,725 was exempt from wealth-tax.it was also submitted before him that even if the assessee had only a right to receive compensation its value could not exceed rs, 23,309 as determined by the lao. it was further submitted that if the wto wanted to reject the assessee's valuation, the proper course for him was to refer the matter to the valuation officer under section 16a of the act.the commissioner (appeals) did not accept the above contention. he was of the opinion that the right to receive compensation could not be equated with the holding of the agricultural land and, therefore, exemption under section.....
Judgment:
1. The above appeal was decided by the Tribunal on 27-7-1981. The assessee has moved a miscellaneous application dated 29-2-1984, which was received in the office of the Tribunal on 4-4-1984. Through this application, the assessee has pointed out that there was a mistake apparent from the record in the order of the Tribunal, which requires rectification.

2. We briefly state the facts leading to the above application. The assessee owned certain agricultural lands in a village of District Kanpur. The said land was acquired by Kanpur Development Authority vide its notification in 1959 in terms of the Land Acquisition Act, 1894.

The value of the said land was fixed by the Land Acquisition Officer (LAO) at Rs. 23,309 vide his Award No. 141 dated 21-7-1965. The assessee appealed against the award and claimed that a sum of Rs. 5,45,000 should be awarded to her, as the cost of the land. The said appeal is still pending.

3. In her wealth-tax return for the above assessment year, the assessee declared the value of the above land at Rs. 46,725 and claimed that being less than Rs. 1,50,000, it was exempt from wealth-tax under Section 5(1)(iva) of the Wealth-tax Act, 1957 ('the Act'). The WTO held that the asset held by the assessee was not any land but she had only a right to receive compensation in respect of that land. He valued this right at Rs. 2,25,000 including interest due to her from the LAO and included it in the assessment.

4. The assessee appealed to the Commissioner (Appeals). It was again reiterated before him that the asset held by the assessee was agricultural land and not any right to compensation from the Government and, therefore, its value being Rs. 46,725 was exempt from wealth-tax.

It was also submitted before him that even if the assessee had only a right to receive compensation its value could not exceed Rs, 23,309 as determined by the LAO. It was further submitted that if the WTO wanted to reject the assessee's valuation, the proper course for him was to refer the matter to the Valuation Officer under Section 16A of the Act.

The Commissioner (Appeals) did not accept the above contention. He was of the opinion that the right to receive compensation could not be equated with the holding of the agricultural land and, therefore, exemption under Section 5(1)(iva) was not available to the assessee. On his part, he valued the assessee's right to compensation at Rs. 2 lakhs resulting in a relief of Rs. 25,000. He also rejected the assessee's contention that the reference to the Valuation Officer was necessary.

He, thus, confirmed the order of the WTO in principle.

5. Against the above findings of the Commissioner (Appeals), the assessee appealed to the Tribunal. The submissions placed before the Commissioner (Appeals) were repeated before the Tribunal. It was first contended that as on the valuation date, the assessee only held agricultural land as her asset and that the right to compensation had not arisen. It was next contended that alternatively the authorities had no jurisdiction to increase the value of the compensation over and above the amount of Rs. 23,309. With regard to the first contention, the Tribunal held as under: 14. We have carefully examined the facts on record and have given our anxious consideration to the rival submissions. There is in our opinion, no merit in the contention of the assessee that, as on the valuation date under consideration, she still held agricultural land as her asset. The said agricultural land had already been acquired and an award with regard to the compensation payable in respect thereof had been given by the Land Acquisition Officer vide his order No. 141 dated 27-8-1965. The asset, therefore, held by the assessee on the valuation date was the right to receive compensation. It was not the same thing as the agricultural land and, therefore, the question of any exemption being available to the assessee under Section 5(1)(iva) of the Wealth-tax Act, 1957 did not arise.

6. With regard to the second contention, the Tribunal relying on the decision of the Supreme Court in the case of Mrs. Khorshed Shapoor Chenai v. ACED [1980] 122 ITR 21 restored the question of valuation of the right to receive the compensation to the WTO. The Tribunal directed the WTO to go into the above question and if necessary, take the help of the Valuation Officer for finding out the proper value of the right to receive compensation. The Tribunal rejected the contention of the assessee that the value as determined by the LAO was the correct value of the right to receive compensation which alone could be included for the purposes of wealth-tax.

7. In the present application, it is pointed out that although the LAO had passed the order of acquisition on 21-7-1965 under Section 11 of the Land Acquisition Act, the Collector had not taken possession of the land under Section 16 of the above Act till December 1976. This fact is not in dispute. It is on record that the assessee had shown income from agriculture even in the assessment years 1975-76 and 1976-77 which was accepted by the ITO. This fact was brought to the notice of the Commissioner (Appeals). It was also submitted before him that in the wealth-tax assessment for the assessment year 1974-75, the WTO had accepted the assessee having shown the above asset as agricultural land in the return and had completed the assessment accordingly. These facts clearly do go to show that on 31-3-1975, which is the valuation date for the assessment year under appeal, the possession of the land had not been taken by the Collector either under Section 16 or under Section 17 of the Land Acquisition Act.

8. On the basis of the above facts, it is pointed out in the application that the land in question could not be said to have vested in the Government. The learned counsel for the assessee invited our attention to Section 16. It states that when the Collector has made an award, he may take possession of the land which shall thereupon vest absolutely in the Government free from all encumbrances. Shri Unni, the counsel for the assessee also pointed out that the controversy regarding the above issue had been set at rest by the decision of the Supreme Court in the case of Dr. Shamlal Narula v. CIT [1964] 53 ITR 151. He, therefore, submitted that the Tribunal having not followed the above decision of the Supreme Court there was a mistake apparent from the record requiring rectification by us. The learned counsel for the assessee also referred to the following decisions of the Supreme Court, which clarify as to what is meant by taking possession and what are the modes of taking possession of the acquired land by the Collector under the Land Acquisition Act--Jetmull Bhojraj v. State of Bihar AIR 1972 SC 1363 and Balwant Naryan [1976] 1 SCC 700.

9. On behalf of the department, it was not disputed that the land acquired vested absolutely in the Government, only after the Collector had taken the possession. The learned departmental representative, however, submitted that it could not be treated as a mistake apparent from the record in view of the principle laid down by the Supreme Court in T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 and, therefore, there was no question of rectifying the order of the Tribunal. He further submitted that it was a settled principle of law that the Tribunal had no power to revise its order in the garb of rectifying a mistake.

10. We have given our careful thought to the entire matter. We have already stated above that there is no dispute before us that the possession of the land was not taken by the Collector up to 31-3-1975.

The possession was actually taken in December 1976, i.e., after the valuation date. The principle laid down by the Supreme Court in the case of Dr. Shamlal Narula (supra) will, therefore, apply to the case, The said principle mentioned in the following words ; Under both the sections [Sections 16 and 17 of the Land Acquisition Act, 1894], the land acquired vests absolutely in the Government after the Collector has taken possession in one case after the making of the award and in the other, even before the making of the award. In either case, some time may lapse between the taking of possession of the acquired land by the Collector and the payment or deposit of the compensation to the person interested in the land acquired. As the land acquired vests absolutely in the Government only after the Collector has taken possession of it, no interest therein will be outstanding in the claimant after the taking of such possession ; he is divested of his title to the land and his right to possession thereof, and both of them vest thereafter in the Government. Thereafter he will be entitled only to be paid compensation that has been or will be awarded to him. He will be entitled to compensation, though the ascertainment thereof may be postponed, from the date his title to the land and the right to possession thereof have been divested and vested in the Government.... (p. 154) 11. On the basis of the above principle, there cannot be two opinions that the land acquired did not vest absolutely in the Government on the valuation date. As the Collector had taken its possession only after that date, the assessee, therefore, continued to remain the owner of the land on the valuation date. It is the value of this land alone which could be included as an asset in the assessment of the wealth-tax. The Tribunal has, therefore, rendered a wrong decision contrary to the settled principle of law. That in our opinion, is a mistake apparent from the record. The mistake no doubt is one of law.

12. Before we actually direct the amendment of the order of the Tribunal, we will like to discuss the question whether it could also be treated as a mistake apparent from the record justifying action under Section 254(2) of the Income-tax Act, 1961. The Supreme Court in the case of Volkart Bros, (supra) has held that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on the debatable point of law is not a mistake apparent from the record. In our opinion, this principle is not violated in the present case. After the decision of the Supreme Court in the case of Dr. Shamlal Narula (supra), it cannot be said that there is any debatable point of law or that there can be two opinions on the issue. There is also no longer any necessity of a long drawn process of reasoning. The Supreme Court in the case of M.K. Venkatachalam, ITO v. Bombay Dyeing & Mfg. Co. Ltd. [1958] 34 ITR 143, had held that a mistake may either be of law or of fact and that a glaring and obvious mistake of law can be rectified, as much as a mistake of fact apparent from the record. The issue has been made much clear by the Supreme Court in the case of Thungabhadra Industries Ltd. v. Government of AP AIR 1964 SC 1372. It was held in this case that where without any elaborate argument one could point out to an error and say here is a substantial point of law which stares one in the face, and there could reasonably be no two opinions entertained about it', a clear case of an error apparent on the face of the record would be made out. Section 254(2) would of course not be applicable where there is no settled principle of law and the Tribunal would be changing its own view or if there could possibly be two views, and one of them might be adopted. That position would be outside the scope of Section 254(2). The law declared by the Supreme Court is binding on all Courts within the territory of India under article 141 of the Constitution and obviously omission to follow it would be a mistake of law rectifiable under Section 254(2).

13. We, therefore, delete paragraph Nos. 14 to 16 of the order of the Tribunal dated 27-7-1981 and direct that the following paragraph be substituted and numbered as paragraph No. 14: We have carefully examined the facts on record and have given our anxious consi deration to the rival submissions. It is on record that the possession of the land in question had not been taken by the collector on the valuation date i.e., 31-3-1975. In that situation, the principle laid down by the Hon'ble Supreme Court in the case of Dr. Shamlal Narula v. CIT [1964] 53 ITR 151 will apply to the case. At p. 154 of the report, the Court had held as under: Another approach to the problem leads to the same result. Under Section 16 of Act 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 under Section 17 thereof: In cases of urgency, whenever the appropriate Government so directs, the collector, though no such award has been ma de, may, on the expiration of fifteen days from the publication of the notice mentioned in Section 9, Sub-section (1), take possession of any waste or arable land needed for public purposes or for a company.

Such land shall thereupon vest absolutely in the Government, free from all encumbrances.

Under both the sections the land acquired vests absolutely in the Government after the collector has taken possession in one case after the making of the award and in the other, even before the making of the award. In either case, some time may lapse between the taking of possession of the acquired land by the collector and the payment of deposit of the compensation to the person interested in the land acquired. As the land acquired vests absolutely in the Government only after the collector has taken possession of it, no interest therein will be outstanding in the claimant after the taking of such possession: he is divested of his title to the land and his right to possession thereof, and both of them vest thereafter in the Government.

Thereafter he will be entitled only to be paid compensation that has been or will be awarded to him. He will be entitled to compensation, though the ascertainment thereof may be postponed, from the date his title to the land and the right to possession thereof have been divested and vested in the Government....' Following the above principle, we hold that the assessee continued to remain the owner of the agricultural land on the valuation date. Since the value of the land was Rs, 46,725, which was less than Rs. 1,50,000, it was exempt from wealth-tax under Section 5(1)(iva). We, therefore, direct the deletion of Rs. 2 lakhs from the assessment.

14. Paragraph Nos. 17 to 22 of the order will be renumbered as paragraph Nos. 15 to 20.


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