Delhi High Court Ito vs Smt Sheetal Kumari on 21 March, 2003 Equivalent citations: (2004)91TTJ(DEL)1097 ORDER R.M. Mehta, Vice President All these appeals have been filed by the revenue and having been heard together, are disposed of by means of a consolidated order. At the time of hearing, both the parties agreed and stated that the Tribunal be pleased to take up initially three appeals, which arose out of a consolidated order passed by the Commissioner (Appeals) for assessment years 199091, 199293 and 199496, and these were ITA Nos. 1828, 1829 and 1830/Del/2002. The common ground raised by the revenue in all these three appeals runs as under : "On the facts and circumstances of the case, the learned Commissioner (Appeals)XXVI, New Delhi, erred in deleting the addition by holding the recurring compensation as agricultural income exempt from tax, although the same is nothing but additional compensation chargeable under section 45(5) of the Income Tax Act." 2. Coming to the facts of the case, these are identical for assessment years 199091 and 199293 inasmuch as proceedings were originally initiated under section 147/148 and in response to the notices issued, the respondent filed returns showing nil income. The assessments came to be completed under section 143(3)/148 bringing to tax the compensation on accrual basis as disclosed by the assessed in a "note" given in the statement of income attached with the returns. 3. On appeal to the Commissioner (Appeals), Jodhpur, the assessments were set aside and the assessing officer was asked to decide as to who was the actual owner of the rental income and further, he was to examine the assessed's stand that the said income was agricultural income and, therefore, not taxable. 4. In order to complete the set aside proceedings, the assessing officer issued statutory notices to the respondent and the case was discussed with reference to the following brief facts : "A land measuring 100 bighas in Khasra No. 632/4 of Jodhpur Tehsil entered into the land revenue records in the name of Smt. Sugan Kanwar w/o late Sh. Rud Singh was requisitioned by the Ministry of defense through the competent authority, Jodhpur, in the year 1976. Subsequently, on a petition filed vide his order dated 2641988, the Collector, Jodhpur, allowed recurring compensation at the rate of Rs. 7,200 per annum. with effect from 481986 to 381989. Subsequently, Smt. Sugan Kanwar referred the matter to the arbitration and by an award of the arbitrator, dated 1061992, the quantum was enhanced, Smt. Sugan Kanwar was 'further allowed compensation amounting to Rs. 4,48,000 on 2951993. The following compensation was received by Smt. Sugan Kanwar on different dates : "Sl. No. Date of receipt of compensation Amount (Rs.) Relevant Asst. yr. 1. 17101989 74,880 199091 2. 29011992 17,75,580 199293 3. 29051993 4,48,000 199495" 5. The assessing officer in the reassessment proceedings referred to the facts noted by his predecessor and these being that the amount of recurring compensation pertaining to different assessment years was treated as income earned on accrual basis but referring to the provisions of section 45(5) wherein it had been provided that additional compensation received was to be taxed in the year of its receipt, made addition on protective basis in different assessment years whereas substantive additions were made for assessment years 199091 and 199293. 6. A reference was also made in the reassessment proceedings to the view taken by the predecessor assessing officer to treat the respondent as the real and beneficial owner of the recurring compensation received by Smt. Sugan Kanwar and there was also a reference to the note appended in the incometax returns of the respondent whereby she gave her no objection if the income was treated as such provided the proceedings against Smt. Sugan Kanwar were dropped and further that the amount of recurring compensation was to compensate her for the loss of agricultural income. 7. Considering the aforesaid facts and submissions, the predecessor assessing officer had held that the respondent was the substantial and beneficial owner of the land as also the compensation and included the same in her hands on substantive basis but to protect the interests of revenue, the same was subjected to assessment in the hands of Smt. Sugan Kanwar on protective basis. 8. The assessing officer thereafter in the reassessment referred to the nonacceptance by his predecessor of the assessed's claim that the compensation received was to compensate the owner for the loss of agricultural income on the following grounds : "(i) The land in question was an urban land situated well within the precincts of Jodhpur municipality. (ii) After the land was requisitioned the same was put totally for the nonagricultural use. (iii) The assessed ha