ORDER
K.R. Dixit, Judicial Member
1. All these appeals arise out of the same facts and give rise to the same grounds. They are, therefore, dealt with by this common order,
2. The facts briefly are that the assessees constituted an HUF and owned certain lands which were acquired by the Government and compensation paid thereon. Capital gains resulted therefrom and the question was regarding taxing the same. The HUF had carried out a partition. This was not accepted by the ITO. He taxed the capital gains protectively in the hands of the individual members of the HUF. He also proceeded to tax it substantively in the hands of the HUF by giving a notice to the karta of the HUF asking him to show cause why a notice under Section 148 of the Income-tax Act, 1961 (‘the Act’) should not be issued. The assessees had claimed the value of the land as on 1-1-1954 at 20 paise per sq. ft. but the ITO took it at 15 paise per sq. ft. The assessee’s claim was that the solatium should not be taken as a part of the com pensation for ascertaining the capital gains. These contentions were rejected by the ITO who also charged interest under Section 139(8) of the Act for a period of 2 months.
3. The AAC finding that the claim to partition had been accepted in appeal, made the protective assessments on the assessees as substantive. Further, on finding that the assessees had received the enhanced com pensation by the judgment of the Gujarat High Court, he took the enhanced figure for the purpose of computation of capital gains. He confirmed the rest of the order of the ITO. Regarding the claim to deduction of improvement charges an affidavit of Shri Bachubhai Ramjibhai, the then karta, was filed before the AAC but this was not accepted by him on the ground that no details had been filed and also that neither any books were maintained nor any bills were available to support the claim. He rejected that claim on the ground that the affidavit was self-serving statement and no reliance would be placed on it.
4 to 8. [These paras are not reproduced here as they involved minor issues.]
9. The fifth ground is that 15 per cent solatium cannot be included in the compensation for the purpose of computation of capital gains. Shri J.P. Shah submitted that solatium is not compensation for acquiring the property. It is only the payment because the land is being acquired compulsorily. The owner is paid this solatium because the land is taken away against his will. Therefore, solatium is not compensation for the land. He relied upon the following two observations :
We have already held that the 15 percent solatium is not integrated with the market value but is a gift or addition provided under the statute…. [Emphasis supplied] — State of Madras v. Balaji Chettiar AIR 1959 Mad. 16, 21.
…but a statutory right to receive the additional solatium on compulsory acquisition cannot in our judgment be regarded as a right to property …. — Assistant Collector v. Jamnadas Gokuldas Patel AIR 1960 Bom. 35, 42.
10. We have to consider this question in the light of Sections 45 and 48 of the Act. Under Section 45 the profit or gain arising from the transfer of capital asset is chargeable to tax. Under Section 48 capital gain is to be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of capital asset, certain amounts. The question, therefore, is whether the entire amount including solatium is a consideration received or accruing as a result of a transfer of the capital asset and whether the capital gains has arisen from the transfer of the capital asset. Now, it may be true that solatium is paid for the compulsion involved in the transfer. However, the transfer in this case has to be taken as a whole. In the circumstances there would not be any transfer but for the compulsion and the two cannot be separated. There is a transfer because there is compulsion and the total payment including solatium is for the transfer. The Bombay High Court was dealing with the question whether the solatium was property right or not, and it held that it was not. But even if we hold that solatium is not a property right, can we say that the amount received including solatium is not as a result of transfer of the capital asset? That cannot be said. Therefore, this ground has also to be rejected.
11 and 12. [Theseparas are not reproduced here as they involved minor issues.]