Case Law Details
Brief of the Case
Delhi High Court held In the case of: CIT vs. Suman Dhamija that in the present case the Assesses is justified in contending that although award has been made and the compensation payable has been enhanced, the amount itself is in dispute, that dispute is pending in the Court. In E.D. Sassoon & Co. v. CIT (1954) 26 ITR 27 (SC) it was held that income cannot be said to accrue or arise to an Assessee unless and until there is created in favour of the Assesses a debt due by somebody. Unless that happens it could not be said that the Assessee had acquired a right to receive the income or the income has accrued to him. Hence enhanced compensation received by the Assessee for the purposes of capital gains under Section 45 (5) (b) will have to await the final decision from the proceedings under Land Acquisition Act.
Facts of the Case
The land acquisition proceedings that commenced with the notification dated 23rd January, 1965 under Section 4 of the Land Acquisition Act, 1894 (LA Act), an Award No.2225 was made by the Land Acquisition Collector (LAC) on 26th March 1969 in respect of land measuring 4826 bighas situated in Village Masoodpur, of which included the land admeasuring 3224 bighas, 1/16th of the bhumidari rights in which was purchased by late Mr. J.N. Dhamija.
Mr. J.N. Dhamija filed his return of income for AY 1989-90 on 26th August 1989 declaring an income of Rs. 15,61,044 of which Rs. 14,44,39 was shown as interest from M/s. Kashmir Holdings. During the course of the assessment proceedings, Mr. Dhamija’s auditors submitted a letter dated 19th August 1990 to the Assessing Officer (AO) explaining that Mr. Dhamija had received additional compensation of Rs. 3,64,03,764/- and Rs. 6,02,3301- in the previous year relevant to AY 1989-90 for his share in land measuring 3224 bighas situated in village Masoodpur, Delhi pursuant to an order passed by the ADJ in LAC No. 201/80 on 7th July 1987. It was explained in the said letter that while the first enhanced sum of Rs.6,02,330/- was not disputed by the Union and had been disclosed by the Assessee as capital gains, the balance enhanced sum of Rs.3,64,03,764/- was not accepted by the Union of India and an appeal had been filed by it in this Court. It was pointed out that the money had been released to the Assesses against bank guarantee and that in case the Assessee did not succeed in the High Court in the said appeal of the Union of India, the entire amount would have to be returned by the Assessee to the Union of India.
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