ORDER
K.R. Dixit, Judicial Member
1. In all these appeals there is only one question, i.e., whether the compensation received in respect of the acquisition of certain land can be taxed entirely in the hands of the assessee or has to be taxed in proportion to the actual compensation received by the assessee.
2. Briefly, the assessee was owner of certain immovable property which he purported to throw into the common hotchpot of a Hindu undivided family by declaration dated 7th August, 1970. On 18th August, 1970 there was a partial partition of that property as a result of which the assessee became entitled only to l/9th share of that property. In the land acquisition proceedings the assessee filed an application dated 3rd October, 1970 that l/9th part of the compensation may be paid to each one of the 9 members of the HUF. Accordingly, she received her l/9th share. However, the Income-tax Officer for the asst. year 1972-73 levied tax on the capital gains worked out on the basis of the full amount of compensation and not only on her 1/9th share. His view was based on the ground that the female member of a Hindu undivided family could not throw her property in the common stock. The AAC confirmed that order. The Tribunal however directed the Income-tax Officer to tax the assessee on the capital gain only if on the basis of the l/9th share of the compensation the assessee was liable to tax. For the asst. year 1976-77 the Tribunal held that no income-tax could be levied in respect of the interest on the full amount of compensation.
3. The learned counsel for the assessee has relied upon these two orders and submitted that since the Tribunal has held that the tax on the capital gains could be levied only in respect of the 1/9th share of the compensation and that the interest on the full amount of compensation could not be charged to income-tax, only 1/9th of the compensation and not the full compensation thereof constituted the wealth of the assessee for the asst. years before us.
4. His alternative submission was that if by any chance it is held that the full amount of compensation was a part of the assessee’s wealth then in view of the fact that 8/9th part thereof has already been paid to others the value thereof in the assessee’s hands be ascertained bearing in mind the difficulty of recovery of this amount
5. On the other hand, the learned Departmental Representative relied upon the ‘ Tribunal’s order in gift-tax proceedings in the assessee’s case for the asst. year 1971-72. In those proceedings, the Gift-tax Officer had held that there was a gift by the assessee of the immovable property but the Tribunal held that since no formal conveyance had been executed there was no gift. The learned D.R. argued that in view of this decision of the Tribunal, it has to be held that the property continued to be that of the assessee and consequently the compensation also. He submitted that although the compensation might have been paid to the other members of the HUF these are merely consequential which are not relevant because the ownership of the property and therefore, the right to receive the compensation was that of the assessee. In this connection, he invited our attention to the Tribunal’s aforesaid order in gift-tax proceedings where his suggestion that the matter be restored to the GTO to ascertain how the property had been treated by the HUF, was rejected on the ground that matters consequential upon the transfer could not decide the fact of transfer. Therefore, according to him, it was riot relevant to consider as to who had received the compensation and what portion thereof. He submitted that even if physical possession was given, the ownership thereof would not change implying thereby that even if the physical possession of the compensation money was in the hands of the other members of the HUF the ownership thereof vested in the assessee. He made a two-fold submission on the merits that this was not a valid partition because there was no effective throwing of the property into the HUF and secondly even if the partition was valid there was no transfer because there was no conveyance. He also submitted that the Tribunal’s order in income-tax proceedings for the asst. year 1972-73 should not be relied upon because it was merely based on the reasoning that the assessee having accepted the position that the property belonged to the HUF in the deed of partial partition was estopped from contending that the property did not belong to the HUF. According to him, the principle of stare decisis was applicable only if there was a decision on merits. His alternative submission was that in view of the amendment making the partial partition invalid for the asst years 1980-81 and 1981-82, the property and consequently the compensation money should be regarded as belonging to the assessee. Regarding the alternative submission made by the assessee’s counsel for valuation of the compensation money gone into the hands of the other members of the HUF he submitted that what was to be valued was the right to receive the compensation and not the actual part of it which might have gone into the hands of the other members of the HUF.
6. The learned counsel for the assessee replied that in asst. year 1972-73 there was no longer any right to receive compensation because actually compensation had in fact been received. He pointed out that for the asst. years 1971-72 to 1974-75 wealth-tax had been levied on the assessee and there was no appeal from those orders. Therefore, according to him, the assessee could not now deny her liability for the subsequent year.
7. In our view, the crucial fact in this case is that compensation had been received in respect of the immovable property and so the right to receive compensation has been transformed into money itself, i.e., hardcash. That being so, valuation of that right no longer remains in issue. It is true as the learned D.R. submitted that the property and the right to receive the compensation in respect thereof cannot be separated, but what is being separated here from the property is not the right to receive the compensation but the compensation money itself, the said right having been extinguished in the meantime. The assessee’s learned counsel has produced before us the bank-slip book mentioning the separate vouchers for payment of compensation with their numbers and copies thereof have been filed. It is therefore, unnecessary for us to consider the question whether we follow the Tribunal’s decisions in the income-tax matters or that in the gift-tax matter. Further, that money has been paid to the other members of the H.U.F. by reason of the assessee’s having written on 3rd October, 1970 to the Land Acquisition Officer to do so. Therefore, it is not merely a case of handing over possession of the money. According to the Tribunal’s decision in the gift-tax proceedings above the assessee continued to be the owner and so had the right to receive the full compensation. It was at that point of time that it can be said that the assessee made a gift of her right to receive compensation to the other members of the HUF. Indeed, for this purpose it is irrelevant that they were members of the HUF. The Land Acquisition Officer was not concerned with that. He was requested to make the payment to those persons and he did so. It is necessary to make this observation because otherwise there is an inconsistency inasmuch as the assessee on the one hand does not pay gift-tax in respect of the immovable property in the asst. year 1971-72 and also does not pay wealth-tax in respect of the compensation money received for the asst. years before us.
8. The fact that wealth-tax has been levied on the assessee for the asst. years 1972-73 to 1974-75 and the assessee has accepted that position (as pointed out by the learned D.R.) cannot create a liability against the assessee for the subsequent year because the basis thereof is absent.
9. The invalidity of the partition will not make any difference because the basis of our decision is different. Therefore, for the aforesaid reason, we hold that wealth-tax cannot be levied on the assessee in respect of any portion of the compensation in excess of her 1/9th share which she has received for any of the assessment years before us.
10. In the result, all the appeals are allowed.