COMMISSIONER OF INCOME-TAX, WEST BENGAL-II, CALCUTTA versus HINDUSTAN HOUSING & LAND DEVELOPMENT TRUST LIMITED

Citation: [1986] 3 S.C.R. 390 · Decided: 29-07-1986 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Judgment (excerpt)

A 
COMMISSIONER OF INCOME-TAX, 
WEST BENGAL-II, CALCUTTA 
v. 
B 
HINDUSTAN HOUSING & LAND DEVELOPMENT 
c 
D 
E 
F 
G 
H 
TRUST LIMITED 
JULY 29, 1986 
(R.S. PATHAK AND SABYASACHI MUKHARJI, JJ.} 
Income-tax Act, 1922 s. 4(1)(b)(i)/lncome-tax Act, 1961: s. 
5( l)(b)-Acquisition of /and-Additional compensation received-lia-
bility to tax-Income whether could be deemed to have accmed or 
arisen during the relevant assessment year. 
During the pendency of the appeal by the State against an ar-
hitrator's award made on July 29, 1955 enhancing the original amount 
of compensation the Government deposited the extra amount, which the 
assessee was permitted to withdraw on May 9, 1956 on furnishing 
security. During the assessment proceedings for the relevant assessment 
year the Income-tax Officer brought that amount to tax as the assessee's 
business income. The Appellate Tribunal, however, accepted the asses· 
see's contention that the amount could not be said to have accrued to 
the assessee as its income during the relevant previous year, and there-
fore, was not liable to tax in the particular assessment year. The High 
Court answered the question referred in favour of the assessee and 
against the Revenue. 
Dismissing the appeal of the Revenue, this Court, 
HELD: It is only on the rmal determination of the amount of 
compensation that the right to such income in the nature of compensa-
tion arises or accrues and till then there is no liability in praesenti in 
respect of the additional amount of compensation claimed by the owner 
of the land. (396G] 
There is a clear distinction between cases where the right to re-
ceive 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. 
[396H;397A-R] 
390 
'
C.I.T. v. HINDUSTAN HOUSING (PATHAK,J.J 
391 
.In the instant case, although the award was made by the arbi· 
trator on July 29, 1955 enhancing the amount of compensation payable 
to the assessee, the entire amount was in dispute in the appeal filed by 
the Government. There was no absolute right to receive the amount at 
that stage, for if the appeal had been allowed in its eetirety the right to 
payment of the enhanced compensation would have fallen altogether. 
The sum, therefore, could not be said to have accrued or arisen during 
the relevant assessment year. [393G; 394A·B] 
E.D. Sassoon & Company Ltd. and others v. Commissioner of 
Income-tax, Bombay City, I 1954] 26 ITR 27, Commissioner of Income-
tax v. Jai Parkash Om Parkash Co. Ltd., (1961) 41 ITR 718, Pope The 
King Match Factory v. Commissioner of Income-tax, [1963] 50 ITR 495, 
Khan Bahadur Ahmed Alla din & Sons v. Commissioner of Income-tax, 
[1969] 74 ITR 651, Topandas Kundanmal v. Commissioner of Income-
tax, G,ujarat, [ 1978] 114 ITR 237, Barish Chandra Raj Singh v. The 
Deputy Land Acquisition Off1Cer & Anr., [1962] l SCR 676 and Addi-
tional Commissioner of Income-tax, Gujarat, v. New Jehangir Vakil 
Mills Co. Ltd., (1979) 117 ITR 849, referred to. 
Kedarnath Jute Mfg. Co. Ltd. v. Commissioner of Income-Tax 
(Central), Calcutta, [1971] 82 ITR 363, distinguished. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1126 
(NT) of 1974 
From the Judgment Order dated 9th January, 1973 of the Cal-
cutta High Court in Income Tax Reference No. 5of1967. 
V.S. Desai, Dr. M.B. Rao and Miss A. Subhashini for the 
Appellant. 
Nemo for the Respondent. 
The Judgment of the Court was delivered by 
PATHAK, J. This appeal by certificate granted by the High 
Court is directed against the judgment of the Calcutta High Court 
answering the following question in the negative: 
"Whether on the facts and in the circumstances of the case, 
the extra amount of compensation amounting to Rs. 
A 
B 
c 
D 
E 
F 
G 
H 
A 
B 
c 
D 
E 
F 
G 
H 
392 
SUPREME COURT REPORTS 
[1986] 3 S.C.R. 
7,24,914 was income arising or accruing to the assessee 
during the previous year relevant to the assessment year 
1956-57." 
The assessee, who is the respondent before us, is a limited com-
pany dealing in land. It maintains its accounts on the mercantile 
system. By an order dated June 21, 1946 under rule 75A(l) of the 
Defence of India Rules read with s. 19 of the Defence of India Act, 
1939 certain plots of land measuring about 19 .17 acres in village 
Kankulia in the Di~trict of 24 

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