V. Ramaswami, J.
1. The assessee had owned an extent of 7.23 acres of land in Jaffarkhanpet, Kodambakkam, Madras. They were acquired by the State Government in 1964. After the issue of notice under s. 9(1) of the Land Acquisition Act, possession of the lands was taken by the Government on March 27, 1964, and the property had vested in the Government as and from that date. The award by the Land Acquisition Officer under s. 11 of the Act was made on May 15, 1964, in which a sum of Rs. 12,755.75 was awarded as compensation for the lands acquired. The assessee received the compensation under protest and required the Land Acquisition Officer to refer the matter under s. 18 to the civil court for determination of the amount of compensation payable to him. When this reference was pending before the learned subordinate judge of Chingleput, the assessee filed his returns for the assessement years 1965-66 to 1969-70 under the W. T Act showing a net wealth below the taxable limit. The assessee had included in the net wealth an amount of Rs. 12,756 being the compensation for the lands acquired. The subordinate judge of Chingleput, by his judgment and decree dated October 28, 1968, awarded an enhancement of the compensation by Rs. 68,030 for the lands acquired together with Rs. 10,204.50, being 15 per cent. solatium on the enhanced compensation, making in all Rs. 78,234.50, with interest at the rate of 4 per cent. from the date of taking possession till the date of deposit. He was also held entitled to a sum of Rs. 5,750 which was wrongly deducted by the Land Acquisition Officer as reclamation charges. The assessee had actually received a sum of Rs. 1,00,756 as additional compensation during the accounting year relevant to the assessment year 1971-72. In the assessment order dated March 14, 1972, in respect of the assessment years 1965-66 to 1969-70, the WTO, noticing that the amount of compensation actually received in a subsequent year came to Rs. 1,00,756 and that a claim for a still higher compensation was pending in the High Court, estimated the total value of the compensation receivable from the Government at Rs. 1,75,000. In the view that the compensation became receivable the moment the acquisition takes place, despite the fact that it may be determined or quantified by the Government later and actually paid still later, he held that the full amount of compensation receivable will have to be returned and included in the net wealth and not the amount actually received initially, as returned by the assessee. Accordingly, the difference of Rs. 1,62,244 (Rs. 1,75,000 minus Rs. 12,756) was added to the net wealth returned and the assessment order made. In the return for the assessment year 1970-71, the assessee did not return the value of the compensation on the ground that the compensation had not yet been received. But the WTO made an assessment estimating the value of Rs. 1,75,000 as done in respect of the earlier years, on the ground that the compensation becomes receivable the moment the acquisition takes place. In the return for the assessment year 1971-72, the assessee had included a sum of Rs. 1,00,756, the compensation received by him as per the order of the learned subordinate judge of Chingleput. But in the assessment order the WTO added a sum of Rs. 74,244 as per his estimate of the compensation receivable at Rs. 1,75,000. Against the assessment orders for 1965-66 to 1971-72, the assessee preferred appeals to the AAC. The appellant objected to the estimated inclusion on the ground that there was no legal right vested in him to treat these amounts as debts due on the valuation date and, accordingly, they should have been excluded and the sum of Rs. 12,756 admitted by him alone should have been taken as the correct figure. The AAC did not accept this contention. The AAC pointed out that when the property was taken possession of and vested in the Government, an equivalent right to obtain its market value was vested with the appellant and that right continued to be vested with the appellant on the subsequent valuation dates, that this equivalent right to obtain the market value vested in the assessee should be valued at the market value on each of these valuation dates, that the appellant's value of Rs. 12,756 was clearly an underestimate judged in the light of the appellant's claim, the determination of the valuation by the civil court and the assessee's filing of the appeal to the High Court not satisfied with the compensation awarded by the civil court, and that the estimation by the WTO of the market value at Rs. 1,75,000 on each of the valuation dates did not appear to him to be incorrect. The assessee preferred a further appeal to the Tribunal. By the time the appeal was taken up for hearing by the Tribunal, the High Court had enhanced the compensation further and had fixed the market value at Rs. 1,37,506. The Tribunal, therefore, proceeded to consider as to whether the enhanced compensation fixed by the High Court could be said to represent the market value as on the respective valuation dates and finally held that the final enhanced compensation, interest and solatium will all date back to the date when the lands were taken possession of by the Government and that, therefore, this value will have to be substituted as the market value and has to be taken in the net wealth on the respective valuation dates. Accordingly, the Tribunal directed the WTO to adopt the final compensation amount payable to the assessee together with the interest up to the date of deposit and the solatium thereon as the value to be included in the net wealth in the place of Rs. 1,75,000 adopted by him.
2. At the instance of the assessee, the following question has been referred under s. 27 of the W. T. Act :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the compensaction fixed by the High Court in 1971, for the lands acquired from the assessee, the solatium payable thereon and interest till the date of deposit, is liable to the included in the computation of the net wealth of the assessee even for the assessment years 1965-66 to 1971-7 ?'
3. The question referred to us actuallly refers to the compensation fixed by the High Court as in 1971, but the correct year is 1975 and reference to 1971 appears to be a mistake.
4. A similar question came up for consideration before the Supreme Court in a case under the E. D. Act in a recent decision, Mrs. Khorshed Shapoor Chenai v. Asst. CED : 122ITR21(SC) . The short facts in that case which are relevant to this case may alone be noted and they are as follows : Certain lands belonging to one Rashid Were acquired under the Land Acquisition Act and possession was taken and under the award dated March 31, 1963, made under s. 11, the Land Acquisition Officer awarded a total compensation of Rs. 20,000. Rashid received the compensation under protest and there was a reference to the civil court under s. 18. Pending the reference in the civil court, Rashid died on November 4, 1963. A return under the E. D. Act was filed by his widow as accountable person on December 26, 1963, and the assessment was completed on March 29, 1966. The civil court enhanced the compensation by an order dated October 30, 1967. The Government did not accept the decision of the civil court and the appeals filed to the High Court challenging the enhancement were pending. On receipt of the information that enhanced compensation was awarded by the civil court, the EDO issued a notice to the widow, purporting to be one under s. 61 of the E. D. Act, to show cause why the mistake apparent from the record should not be rectified and the enhanced compensation included in the value of the estate. The accountable person filed a writ petition in the High Court of Andhra Pradesh. One of the grounds taken by the accountable person, among other grounds, was that the deceased had only a claim to get an extra compensation which was an inchoate right which could not be called 'property', and whether that claim amounted to a right to property capable of sale in the open market was highly debatable question. This case was considered along with another case relating to the estate of Shapoor, son of Rashid, who died on May 7, 1965. We do not consider it necessary to set out the facts in Shapoor's case as the facts in Rashid's case is more appropriate for our purpose. The Supreme court did not have any doubt in holding that the right to receive compensation at the market value on the dates of the relevant notifications accrued to the deceased on the vesting of the estate in the Government and this right to receive compensation at the market value was 'property' and constituted an asset for the purpose of both estate duty and wealth-tax and it is such property that would pass on the death of the deceased. The Supreme Court then proceeded to consider the argument of the accountable person in that case that no sooner the Collector made his awards determining the amounts of compensation payable to the claimants under s. 11 of the Land Acquisition Act. the right to receive compensation must be regarded as having merged in the awards and that what the claimants would be left with thereafter was merely a right agitate the correctness of such determination, and this right to claim further compensation is merely a right to litigate and was no asset or property, and further such a right would become an asset or property only after the civil court finally adjudicated upon such claim. Rejecting this contention, the Supreme Court held that there are no two separate rights, one, a right to receive compensation and that other to receive extra or further compensation, that the right of the claimant is to receive compensation for the lands at the fair market value on the date of the relevant notification and that, therefore, it was impossible to accept the contention that no sooner the Collector made the award under s. 11 the right to compensation is destroyed or ceases to exist or is merged in the award, and what is left with the claimant is a mere right to litigate the correctness of the award. The Supreme Court further observed that the claimant can litigate the correctness of the award because his right to compensation is not fully redeemed but remains alive when he prosecutes in a civil court. After thus holding, the Supreme Court made the following observations relating to the evaluation of this right with reference to the E. D. Act and the W. T. Act as on the relevant dates (p. 32) :
'This, however, does not mean that the civil court's evaluation of this right done subsequently would be its valuation as at the relevant date either under the E. D. Act or the W. T. Act. It will be the duty of the assessing authority under either of the enactments to evaluate this property (right to receive compensation at market value on the date of relevant notification) as on the relevant date (being the date of death under the E. D. Act and valuation date under the W. T. Act). Under s. 36 of the E. D. Act the assessing authority has to estimate the value of this property at the price which it would fetch if sold in the open market at the time of the deceased's death. In the case of the right to receive compensation, which is property, where the collector's award has been made but has not been accepted or has been accepted under protest and a reference is sought or is pending in a civil court at the date of the deceased's death, the estimated value can never be below the figure quantified by the Collector because under s. 25(1) of the Land Acquisition Act, the civil court cannot award any amount below that awarded by the Collector, the estimated value can be equal to the Collector's award or more but can never be equal to the tall claim made by the claimant in the reference nor equal to the claim actually awarded by the civil court inasmuch as the risk or hazard of litigation would be a detracting factor while arriving at a reasonable and proper value of this property as on the date of the deceased's death. The assessing authority will have to estimate the value having regard to the peculiar nature of the property, its marketability and the surrounding circumstances including the risk or hazard of litigation looming large at the relevant date.'
5. It is seen from the above passage that if, on the relevant date, the Land Acquisition Collector has not made any award the WTO had to estimate the value of the right to receive compensation for the property acquired at the market value as on the valuation date under the W. T. Act. If the Land Acquisition Officer has made an award and the claimant has not accepted and a reference is pending in the civil court on the relevant date, the WTO has to evaluate that right to receive compensation at a figure which shall not be below the amount awarded by the Collector but the estimated value can be either equal to the Collector's award or more. However, in both cases, that is, whether there is an award by the Land Acquisition Officer or not, the assessing authority will have to estimate the value having regard to the peculiar nature of the property, its marketability and the surrounding circumstances including the risk or hazard of litigation looming large at the relevant date. The learned counsel for the assessee contended, relying on the first sentence of the passage extracted above where their Lordships stated that 'this, however, does not mean that the civil court's evaluation of this right done subsequently would be its valuation as at the relevant date either under the E. D. Act or the W. T. Act' and the later passage where they have stated that the estimate 'can never be equal to the tall claim made by the claimant in the reference nor equal to the claim actually awarded by the civil court inasmuch as the risk or hazard of litigation would be a detracting factor while arriving at a reasonable and proper value of this property as on the date of the deceased's death', that the civil court's valuation in this case cannot be taken as the market value of the right to receive compensation as on the relevant dates for the assessment years 1965-66 to 1969-70, and that the High Court's value also does not represent the market value for any of the assessment years 1965-66 to 1971-72. We think the learned counsel is well founded in this contention. If the civil court's valuation had not been appealed against by the Government but only the claimant had appealed claiming more compensation, it will be open to the assessing authority, when valuing the right for any assessment year, the relevant date for which is subsequent to such determination by the civil court to take that value as determined by the court, or assess it at more than that figure. This is on the analogy that similar to the amount awarded by the Land Acquisition Officer the amount awarded by the civil court cannot be reduced in the further proceedings. But, if the civil court's award is disputed both by the claimant as also the Government, the assessing authority will be in the same position, as if the case is pending in a civil court and his estimate cannot be below the amount awarded by the Land Acquisition Officer. He will have to estimate the value again as on the relevant date for each of the subsequent years having regard to the risk or hazard of litigation and the peculiar nature of the property and its marketability. We are, therefore, of the view that for the assessment years 1965-66 to 1969-70, the WTO has to estimate the value of the right to receive compensation in accordance with the judgment of the Supreme Court, referred to above, at a figure which may be equal to the amount awarded by the Land Acquisition Officer or more, and for the years 1970-71, at a figure which may be equal to Rs. 1,00,756 awarded by the civil court or more, but such estimate cannot be equal to the tall claim made by the claimant in the reference, nor equal to the amount actually awarded by the High Court.
6. Though the Tribunal noticed that the WTO had only estimated the value and not relied on any compensation awarded by the civil court, it did not go into the question as to whether the estimate made by the WTO was in accordance with law. As already noticed, while setting out the facts, the Tribunal decided only the question as to whether the enhanced compensation awarded by the High Court could be said to represent the market value as on the respective valuation dates in respect of each of the assessment years, and in the view that that would be the correct market value, directed the WTO to adopt the final compensation amount as the value to be included in the net wealth in the place of Rs. 1,75,000 adopted by him. Since this view of the Tribunal cannot be accepted, we have to direct the Tribunal to go into the question as to whether the estimate made by the WTO is correct and in accordance with law.
7. The WTO has purported to estimate the value of Rs. 1,75,000. Since we are not sure that the WTO has taken into account, in estimating that value, the peculiar nature of the property, its marketability and the surrounding circumstances including the risk or hazard of litigation looming large at the relevant date, it would be open to the Tribunal, if they so consider, to remand the matter to the AAC or the WTO, if they consider it necessary.
8. Accordingly, we answer the question in the negative and in favour of the assessee, subject to the direction to the Tribunal to rehear the appeal on the question of estimation of the value. The assessee will be entitled to his costs. Counsel's fee Rs. 500. (one set).