COMMISSIONER OF INCOME TAX DELHI vs. MS SUMAN DHAMIJA

These are three Income Tax Appeals (ITAs) and four Wealth Tax Appeals (WTAs) filed by the Revenue. ITA Nos.20, 21and 24 of 2003 are in respect of Assessment Years (AY) 1988-89, 1989-90 and 1985-86 respectively. WTA Nos.3/2003, 4/2003, 5/2003 and 6/2003 are in respect of AYs 1992-93, 1990-91, 1991-92 and 1988-89 respectively.

It must be noted at the outset as far as the Revenue’s appeals under the Income Tax Act, 1961 ('Act') are concerned, there were originally 2015:DHC:10010-DB

The orders dated 7th April 2011 and 26th March 2012 in ITA No. 24 of 2003 were challenged by the Revenue in the Supreme Court by filing Civil Appeal Nos. 4919-20 of 2015. The said appeals were allowed by the Supreme Court on 1st July, 2015 by holding that the CBDT Circular dated 9th February, 2011 was prospective. The appeal was remitted to the High Court for re-adjudication on merits. As a result, ITA No. 24 of 2003 was revived. Taking note of the above development, this Court on 24th August 2015, passed an order directing that the aforementioned ITA No. 24 of 2003 pertaining to AY 1985-86 be listed along with ITA No. 20/2003 (pertaining to AY 1988-89), ITA No.21/2003 (AY 1989-90) and the four WTAs as noted above.

The facts leading to the filing of the present appeals is that a land measuring 4826 bighas situated in Village Masoodpur was notified 2015:DHC:10010-DB

Even while the acquisition proceedings were pending, the predecessor-in-interest of the Respondent, i.e. late Mr. J.N. Dhamija, purchased 1/16th share of the bhumidari rights in respect of the said land from one Mr. Rampal Malhotra and fifteen others on 1st June, 1965. A sale deed for a sum of Rs. 4,000/- was engrossed on a stamp paper and the sale deed was duly registered. It was noted in the sale deed that Mr. Rampal Malhotra, the vendor, had agreed to sell his share in the said land, which he had purchased by way of a deed dated 14th April, 1960. In the sale deed Mr. Rampal Malhotra was described as holding 1/16th share of the bhumidari rights regarding land measuring 4200 bighas situated in Village Masoodpur. The sale deed stated that from that date, i.e. 1st June, 1965, the vendee, i.e. Mr. J.N. Dhamija “shall become a shareholder of 1/16th share” and “shall be bound to pay or to receive, whatever is written in the purchase deed mentioned above.”

Mr. J.N. Dhamija was, therefore, not the owner of the land himself but had purchased 1/16th of the bhumidari rights therein from Mr. Rampal Malhotra under the aforementioned sale deed. Mr. Malhotra was one of the transferees, who had acquired the bhumidari rights from Smt. Gulab Sundri on 14th April, 1960 and she too was not the owner of the land. She had acquired the bhumidari certificate on 5th July, 1958, with effect from 20th July, 1954 as proprietor of M/s. Diwan Bahadur Seth Kesri Singh Budh Singh which had taken the land on sub-lease from M/s. Delhi Pottery Works, which had in turn taken the land on 2015:DHC:10010-DB

On 24th November, 1959, Smt. Gulab Sundri filed a suit being Civil Suit No.174/66 before the Court of the Subordinate Judge, Delhi seeking a declaration that the order dated 14th July, 1958 of the Revenue Assistant cancelling the bhumidari certificate in her favour was void, illegal and without juri iction. This suit was decreed by the Sub Judge on 12th December, 1966. Against the aforementioned order, the Gaon Sabha as well as the Union of India filed an appeal which was dismissed by the Senior Sub Judge on 23rd April, 1968. No further appeal was filed by the Gaon Sabha. The aforementioned judgement dated 23rd April, 1968 became final and conclusive between the parties.

It is in the above background that late Mr. J.N. Dhamija acquired by way of sale deed dated 1st June, 1965 from Mr. Rampal Malhotra 1/16th share of the bhumidari rights. 2015:DHC:10010-DB

Now turning to the land acquisition proceedings that commenced with the notification dated 23rd January, 1965 under Section 4 of the 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.

Since there was a dispute as to who should receive the compensation, a reference was made by the LAC under Section 31(2) of the LA Act to the Additional District Judge (ADJ), Delhi. By a judgement dated 20th April 1980, the learned ADJ decided the claims made by the following three sets of claimants – (i) Gaon Sabha of Village Masoodpur, (ii) Proprietors from owners of the land acquired under the awards and (iii) Smt. Gulab Sundri, proprietor of M/s. Dewan Bahadur Seth Kesari Singh Budh Singh, Kesari Pottery Works her transferees and bhumidars. While deciding the reference under Section 31(2), the learned ADJ framed the following issues on 20th November, 1969:

The following additional issues were framed by the learned ADJ on 7th November, 1970:

While deciding the issues (i) and (ii) framed on 18th December, 1969 and 7th November, 1970, the learned ADJ (Mr. P.S.Singla) held that the earlier judgement passed by the Sub Judge confirmed by the Senior Sub Judge operated as res judicata. Issue Nos.(iii) and (iv) were also decided against the Gaon Sabha. Issue Nos.(iii) and (v) framed on 18th December, 1969 were decided in favour of Smt. Gulab Sundri. It was held that the land in question fell within the purview of Section 3(13) of DLRA and that Smt. Gulab Sundri was a tenant as defined under Section 4(5) of the Punjab Tenancy Act. Deciding issue No. (iv) framed on 18th December, 1969 in favour of Smt. Gulab Sundri, the learned ADJ held that she had rightly been declared as a bhumidar and that the proprietors were legally barred from disputing the bhumidari rights 2015:DHC:10010-DB

Against the aforementioned judgement dated 20th May, 1980, passed by the learned ADJ, RFA Nos.309, 310, 356, 357, 340 and 341 of 1980 were filed in this Court.

Meanwhile at the instance of Mr. J.N. Dhamija a reference was made under Section 18 of the LA Act by way of LAC No.201/80 before the learned ADJ, Mr. S.R. Goel, seeking enhancement of compensation. By the judgement dated 7th July 1987, this reference was decided in favour of Mr. J.N. Dhamija holding that he was entitled to compensation of Rs.18,000/- per bigha and Rs.10,000/- per bigha for the minerals in respect of his 1/16th share of the rights in the land acquired in terms of the Award.

Against the aforementioned judgement of Mr. S.R. Goel, the learned ADJ, the Union of India filed RFA No.768/87 in this Court. While the said appeal was pending an order was passed on 29th October, 1987 by a Division Bench of this Court directing the Union of India to deposit the enhanced amount of compensation together with interest in the trial 2015:DHC:10010-DB

Treasury vouchers were then prepared by the learned ADJ on 30th March, 1988 in favour of Mr. J.N. Dhamija for sums of Rs.6,02,330.67 and Rs.3,64,03,764.62 both dated 30th March, 1988. 18. As a result Mr. J.N. Dhamija received a net amount of Rs.3,64,03,764. 62. This comprised the additional compensation of Rs.52,79,463.75, 30 % solatium on the said sum amounting to Rs. 15,82,839.12, additional amount of 12 % amounting to Rs. 27,64,511.90 and interest under Section 28 of the LA Act amounting to Rs.2,67,75,949. 85. Appeals arising from the proceedings under Section 31(2) LA Act

Meanwhile the appeals filed by the Union of India being RFA No.309 and 310/80 in respect of the proceedings under Section 31 (2) of the LA Act were dismissed by the High Court on 26th February, 1991 on the ground of partial abatement in respect of the sum of the Respondents whose LRs were not brought on record by the Appellant.

Against the aforementioned order, the Union of India went in appeal to the Supreme Court by way of a Special Leave Petition. By a judgement in S. Amarjit Singh Kalra (Dead) By LRs v. Smt. Pramod Gupta (Dead) By LRs 2002 (9) SCALE 577, the judgement dated 26th February, 1991 of the High Court was set aside and a direction was issued to the High Court decide the appeals afresh on merits. As a result RFA No.309 and 310/80 along with the other RFAs stand restored to the file of the High Court and are pending.

As far as the order dated 7th July 1987 passed by the learned ADJ (Mr. S.R.Goel) in the proceedings under Section 18 of the LA Act, the Union of India did not question the enhancement to the extent of Rs. 6,02,330. However, as regards the balance enhanced sum of Rs. 3,64,03,754 the Union of India filed RFA Nos.85 and 868/1987 in this Court. A Division Bench of this Court passed a judgement on 5th October, 2001 dismissing RFA Nos.85 and 868/1987. The appeal filed against the said judgement by the Union of India was allowed by the Supreme Court by judgement dated 7th September, 2005 in Union of India v. Pramod Gupta (2005) 12 SCC 1. The Supreme Court set aside the judgement of the High Court and remitted the appeals to this Court for a fresh decision.

As a result the appeals arising both from the proceedings under Section 31 of the LA Act and the proceedings for enhancement of the compensation under Section 18 of the LA Act are pending before this Court. 2015:DHC:10010-DB

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 Assessee 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. A copy of the guarantee was also enclosed with the letter. It was submitted that till finality was attached to the determination of the appeal by the High Court withdrawal of the amount by the Assessee was pursuant to an inchoate and contingent right and therefore not liable to any capital gains. Further details were furnished in this regard by letters dated 27th September, 1990, 5th December, 1990, 16th January, 1991, 13th February, 1991 and 2015:DHC:10010-DB

The AO passed an order dated 27th March 1992 holding that the entire compensation received by Mr. Dhamija, whether in the form of interest on solatium or additional compensation, was taxable in the year of receipt. Capital gain was charged on this amount. The CIT (A) by an order dated 28th August 1992 held following the order rendered by him in the case of Mr. K.K. Kochar, one of the co-owners of the same property, that the land in question was not agricultural land, and to this extent the plea of Mr. Dhamija was negatived. The CIT (A) however agreed with Mr. Dhamija that since the negotiable instrument in the nature of the treasury vouchers were received by Mr. Dhamija on 30th March 1988, the taxability of the said sums had to be examined in AY 1988-89 and not in the AY 1989-90. The AO was directed to examine the assessability of the amount of capital gains, in the accounting year 1987-88 relevant to AY 1988-89, after considering all the contentions of Mr. Dhamija and pass a speaking order after hearing him on all the relevant points.

Meanwhile in relation to the return that had been filed by Mr. Dhamija for AY 1988-89 on 29th July 1988 declaring a total income of Rs. 76,020, the assessment was completed u/s 143 (1) of the Act by the AO's order dated 24th November 1988. However, consequent upon the developments in relation to the assessment proceedings for AY 1989-90, 2015:DHC:10010-DB

The Revenue was aggrieved by the order of the CIT (A) in invalidating the reopening of the assessments and in declining to apply Section 45 (5) of the Act for even AY 1988-89. The Revenue was also aggrieved by the CIT (A) holding that interest could not be taxed since the receipt itself was not covered under Section 45(5) of the Act. The Assessee was in appeal before the ITAT on the ground that the invoking of Section 147 was justified only for AY 1989-90 and not for other years including AY 1988-89. The other contentions urged by the Assessee were that (i) the land in question was agricultural land and therefore not amenable to capital gains tax; (ii) the Assessee was not the owner of the land and was not at all liable to tax in respect of the 2015:DHC:10010-DB

As far as the Wealth Tax Act (WT Act) proceedings are concerned, the Assessee while computing net wealth for AY 1988-89 claimed that the compensation received under bank guarantee was not includable in the net wealth as it was only an advance towards compensation for the compulsory acquisition of the land. While the AO did not accept this claim, the CIT(A) accepted it for AY 1988-89. A similar exercise took place at the hands of the CIT(A) for AY 1990-91 as well to 1991-92 with only the amount being different. The Revenue was aggrieved by these orders and therefore appealed to the ITAT.

A common order dated 31st December, 2002 was passed by the ITAT disposing of all of the aforementioned appeals. The Assessee's appeals were dismissed by holding that the reopening of the assessments for AYs 1981-82 to 1987-88 by invoking Section 147 of the Act was valid. It was held that the "AO's action for reopening assessments for all the assessment years under consideration was based on the material which came into existence only after the completion of the assessments in those years according to which the income chargeable to tax was liable to taxed in those assessment years, we feel that his actions was based on his prima facie belief that income chargeable to tax has 2015:DHC:10010-DB

As far as the WT Act cases were concerned, the ITAT agreed with the Assessee that the monies received were in the nature of trust money. The WT Act did not contemplate including trust money in the net wealth. The appeals of the Revenue were dismissed and those of the Assessee were allowed. As regards sum of Rs.6,02,330/-, since the CIT(A) had not dealt with the grievance of the Assessee, the said issue was remitted to the CIT(A) for a fresh adjudication.

The following questions of law were framed by this Court in the ITAs by the order dated 14th September, 2004:

In the WTAs the following question was framed by the same order: "Whether the Tribunal had not erred in holding that the money received by the assessee by way of enhanced compensation/interest was in the nature of trust money and, therefore, not includable in the net wealth of the assessee?"

On behalf of the Revenue, it was submitted by Mr. Zoheb Hossain, Advocate as under:

In reply, it was submitted by Mr. C.S.Aggarwal, learned Senior counsel for the Assessee as under:

The central issue that arises is whether the land acquisition compensation received by the Assessee can be subjected to capital gains tax in her hands for the AYs in question. Section 45 (5) of the Act is relevant in the present case reads as under: “45 (5) Notwithstanding anything contained in sub-Section (1), where the capital gain arises from the transfer of a capital asset, being a transfer by way of compulsory acquisition under any law, or a transfer the consideration for which was determined or approved by the Central Government or the Reserve Bank of India, and the compensation or the consideration for such transfer is 2015:DHC:10010-DB

In order to understand the rationale behind the insertion of sub- section (5) to Section 45 of the Act with effect from 1st April 1988, the law that was in force prior to its insertion requires to be noted.

To begin with, prior to introduction of sub-section (5) in Section 45, the compensation initially awarded and the enhanced compensation, finally determined on conclusion of the proceedings in appeal, were both taxable in the year of acquisition. Section 155 (7A) of the Act provided for rectification of the assessment of an earlier year and this provision was invoked as and when additional compensation was received. Where the additional compensation was awarded at several stages by different appellate authorities, it necessitated rectification of the original assessment at each of the said stages. To overcome this difficulty sub-section (5) was inserted in Section 45 with effect from 1st April 1988. In terms of this provision, both the compensation as first determined in the land acquisition Award as well as the enhanced 2015:DHC:10010-DB

For the purposes of Section 45 (5), in order to attract capital gains in regard to enhancement of compensation received in respect of land that has been acquired, the following conditions must be fulfilled:

Two questions that have arisen in the past in relation to the enhanced compensation received in terms of Section 45 (5) are: what happens (a) when the right to receive compensation is itself in dispute and has not attained finality, and (b) when the question of the quantum enhanced compensation is pending final determination before a Tribunal or Court?

1 The distinction between the two situations was brought out in the decision of the Supreme Court in CIT v. Hindustan Housing and Land Development Trust Limited (supra). There the Assessee company was dealing in land and maintaining its accounts on the mercantile system. 2015:DHC:10010-DB

2 Not satisfied with the compensation, the Assessee preferred an appeal before the Arbitrator who made an award enhancing the compensation to Rs. 30,10,873 with interest at 5% and a further recurring compensation at Rs. 6,272-10-4 per month. The State Government appealed to the High Court and during the pendency of the appeal, it deposited Rs. 7,36,691, which the Assessee was permitted to withdraw on furnishing security. On receipt of the amount, the assessee credited it in its suspense account on the same date.

3 During the assessment proceedings for the AY 1956-57, relevant to the accounting period ending 31st March 1956, the AO brought to tax a sum of Rs. 7,24,914 as the Assessee's business income. This represented the difference between the sum of Rs. 7,37,190 payable to the assessee in terms of the award dated 29th July, 1955, of the arbitrator and a sum of Rs. 12,276 out of that amount which had already been assessed to tax. The Income-tax Officer treated the sum as liable to income-tax during that year on the basis that the income accrued to the assessee on the date of the award. The assessment was confirmed by the Appellate Assistant Commissioner of Income-tax on first appeal. The question was whether the additional amount could be brought to tax in the year in which it was received by the Assessee. The ITAT held that the amount did not accrue to the Assessee as its income in the AY in question.

4 Reversing the High Court, the Supreme Court held that "there is a clear distinction between cases such as the present one, where the right to receive payment is in dispute and it is not a question of merely quantifying the amount to be received, and cases where the right to receive payment is admitted and the quantification only of the amount payable is left to be determined in accordance with settled or accepted principles."

1 The Supreme Court in CIT v. Ghanshyam (HUF) (supra) was called upon to interpret Section 45 (5) of the Act and determine if it applied to a situation where the order of the civil court enhancing compensation was pending challenge in the superior court. The facts were that the in the return filed for AY 1999-2000, the Assessee did not offer the amount of enhanced compensation and the interest received thereon during the previous year relevant to the assessment year for taxation, on the plea that the amount of enhanced compensation received had not accrued during the year of receipt as the entire amount was in dispute in appeal filed by the State before the High Court against the order of the Reference Court granting enhanced compensation. The amount was received by the Assessee in terms of the interim order of the High Court against the Assessee furnishing security to the satisfaction of the executing court. The Assessee also contended that the interest received on enhanced compensation during the previous year was not chargeable to tax.

2 The AO did not accept the contentions of the Assessee in view of the clear language of Section 45 (5) of the Act which was effective from 1st April 1988. In appeal, the CIT (A) agreed with the Assessee that the enhanced compensation and the interest thereon had not accrued to the Assessee since the appeal was pending before the High Court and the Assessee had only been permitted to withdraw the sum upon furnishing security. The CIT (A) referred to the decision in CIT v. Hindustan Housing and Land Development Trust Limited (supra). The ITAT as well as the High Court affirmed the said order.

3 The Supreme Court reversed the above appellate orders and affirmed the order of the AO. It held that:

Three other provisions require to be noticed. The proviso in clause b) of sub-Section (5) that the amount by which the compensation or consideration is enhanced shall be deemed to be income chargeable under the head ‘Capital gains’ of the previous year in which such amount is received by the Assessee, was introduced with effect from 1st April 2015. It contemplates the passing of an interim order by a court, Tribunal or authority pursuant to which compensation is received. It is not in dispute that the said proviso which is prospective does not apply to the case on hand. Clause (c) to Section 45 (5), introduced with effect from 1st April 2004 envisages re-computation of capital gains of a particular AY where by a subsequent order of a Court the enhanced compensation is reduced. Likewise Section 155 (16) introduced simultaneously also envisages likewise. This would take care of the final 2015:DHC:10010-DB

The question that then arises is whether in the facts and circumstances of the present case the conditions for sub-section 5 (b) of Section 45 to be attracted can be said to have been fulfilled?

There are two strands of litigation. One pertains to right of the Assessee to receive compensation which, from the above narration of facts, has obviously not attained finality. The civil suit pertaining to the right of the Assessee was decreed. However, after the land acquisition Award was passed, there were three sets of claimants to the compensation and this led to the reference to the ADJ under Section 31 (2) of the LA Act. The appeals challenging the order passed by the ADJ in the said proceedings have been remanded by the Supreme Court to this Court for a fresh hearing. The outcome of the said appeals and any further proceedings arising therefrom would decide whether or not the Assessee has a right to receive compensation for the 1/16th share of the bhumidari rights.

Therefore, although there is a transfer of the 1/16th share of the bhumidari right in the land in question in favour of the Assessee, the question whether the Assessee is entitled to receive compensation for the extinguishment of such right on its vesting in the State is still uncertain or inchoate. That will also depend on the answer to the 2015:DHC:10010-DB

The second strand of litigation pertains to the enhancement of compensation in the reference under Section 18 of the LA Act. The appeals in those proceedings have also been remanded to this Court and are pending. During the pendency of the appeals, the Assessee has been permitted to withdraw the undisputed and disputed sums of compensation deposited in the Court. She has withdrawn the disputed (enhanced) sum by furnishing a bank guarantee.

As far as the second strand of litigation is concerned, in view of the decision of the Supreme Court in CIT v. Ghanshyam (HUF) (supra) the legal position is clear that notwithstanding the pendency of appeals regarding enhancement of compensation, the amount of enhanced compensation is taxable in the year of receipt. Also, the said decision clarifies that interest under Section 28 of the LA Act, the additional compensation and the solatium would also be likewise taxable.

The right to receive such compensation in the present case is intrinsically linked to the outcome of the appeals arising from the proceedings under Section 31 (2) LA Act. The question whether the transfer of the bhumidari rights is also a transfer of a right in the land acquired and is, therefore, capable of being compensated would also hinge on the outcome of the appeals arising from the proceedings under Section 31 (2) of the LA Act. There is a possibility that if the Assessee 2015:DHC:10010-DB

As is evident from the decision of the Supreme Court in S. Amarjeet Singh Kalra (Dead) by LRs v. Smt. Pramod Gupta (Dead) by LRs (supra) there are two other claimants for compensation, viz., the Gaon Sabha of Village Masoodpur and owners of the land. It was acknowledged in the said decision that "the claim of each one was in respect of his distinct, definite and separate share and their respective rights are no inter-dependant but independent."

The decision of the Bombay High Court in CIT v. Sharda Sugar Industries Limited (supra) also appears to support the case of the Assessee insofar as it holds that “where the right to receive payment is in dispute, no income will arise or accrue.” In that case, again the amounts deposited by the State which was withdrawn by the Assessee on furnishing a bank guarantee, where rights to dispute the amount can be said to have accrued to the Assessee. It is noticed that “the Assessee was accountable for the excess collection and obliged to refund the same if so directed by the court. Such amounts collected by the Assessee are not assessable as the income of the Assessee.” It was held that the said amounts were, therefore, not assessable in the hands of the Assessee in the AY in which the amount was withdrawn by the Assessee. The decision of the Punjab and Haryana High Court in CIT v. Smt. Prakash Kaur (supra)also supports the stand of the Assessee.

Turning to the decisions relied upon by the Revenue, it is seen that in Commissioner of Income Tax v. Sharda Kochar (supra), the Assessee was compensated pursuant to the land acquisition award against the bank guarantee. The AO rejected the Assessee’s contention that the enhanced amounts were not taxable since the question of enhancement was under challenge in the Supreme Court. The AO applied newly enacted Section 45 (5) itself with effect from 1st April 1988 and brought to the enhanced compensation of the tax. The ITAT further accepted the contention of the Assessee following the decision of this Court of CIT v. Harish Chander 154 ITR 473 and CIT v. Devki Nand 138 ITR 225 and held that Section 45 (5) would not applicable as the money had been paid on furnishing of bank guarantee. This Court applied the decision of the Supreme Court in Commissioner of Income Tax v. Ghanshyam (HUF) (supra) and reversed the decision of the ITAT.

There are two distinct features as far as the above case is concerned. One is there was no issue regarding right to receive the compensation itself being inchoate. In other words there was no ground urged in that case that the Assessee was not entitled to receive compensation. Secondly, the decision was rendered in the absence of the Assessee and perhaps for that reason, the above issue was not considered.

Turning to the facts in CIT v. Gulab Sundri Bapna (supra) which was again given in the absence of the Assessee, the vacant possession of land under sub-lease was handed over by the Assessee on 30th March 1976 and the possession of the factory building, which was also 2015:DHC:10010-DB

The questions framed by this Court in the Revenue's appeal read as under:

It is, therefore, clear that Section 45 (5) applies with effect from the AY 1988-89. The decision in Karimatharuvi Tea Estate Limited v. State of Kerala (supra) also supports this position.

Consequently as far the income tax appeals are concerned, the questions framed by the Court are answered as under:

Turning to the wealth tax appeals, it is seen that as held by the ITAT in the present case, amount of compensation received by the Assessee in the nature of ‘trust money’ which may be required to be returned by the Assessee in case she does not succeed in the appeal emanating from the order in the proceedings under Section 31 (2) of the LA Act. For an Assessee to be brought to tax within the ambit of the wealth tax provisions, it should be shown, as on the valuation date, to be belonging to the Assessee. In the facts of the case, the ITAT was justified in holding that the provision of WT Act did not stand attracted yet. That too will have to await the final decision in the appellate proceedings emanating from the order of the ADJ in the proceedings under Section 31 (2) LA Act.

The appeals are accordingly dismissed but, in the facts and circumstances of the case, with no orders as to cost.