Madhava Reddy, J.
1. The assessee is an individual assessed to wealth-tax for assessment years 1970-71. The assessee is a shareholder in the Estate of late Nawab Salar Jung which was the subject-matter of a prolonged litigation. On the death of Salar Jung III, an ordinance was issued on November 12, 1949, providing for the administration of his estate. In the litigation that followed among the heirs of late Salar Jung, a compromise was entered d into on September 29, 1956, and a preliminary decree for partition of the estate was passed by this court on March 5, 1959. Under the compromise decree, the assessee's share of the property was determined, which among others, comprised of certain immovable properties which were subsequently acquired by the Government under the provisions of the Land Acquisition Act. Proceedings for acquisition of the lands were initiated on August 4, 1960 and a notification under s. 4(1) of the Land Acquisition Act was issued on August 25, 1960. It is in respect of the lands covered by this notification, the question as to how the wealth of the assessee should be assessed falls for consideration in this reference under s. 27(1) of the W.T. Act, 1957.
2. Immediately after the compromise decree came to be recorded by this court, two ladies, one claiming to be the wife of late Nawab Salar Jung and another claiming to be his daughter, field a petition on December 21, 1960, for leave to sue in forma-pauperis questioning the compromise decree and claiming a share in his estate. Pending the disposal of the petition, an injunction was issued by the trial court on April 21, 1961, restraining the parties from working out the compromise decree. That injunction was vacated only on April 30, 1962. The suit itself was dismissed some time in 1963 and the decree was confirmed by the High Court,with the details of which we are not concerned in this reference.
3. As regards the lands notified for acquisition on August 25, 1960, an award was made by the Special Deputy Collector on April 19, 1961, awarding a sum of Rs. 2, 39,526. This amount was paid on July 2, 1962 to the assessee after the interim injunction referred to above was vacated. The assessee-claimant sought a reference under s. 18 of the Land Acquisition Act for enhancement of the compensation. On that reference, the City Civil Court, Hyderabad, enhanced the compensation for the lands acquired to Rs. 4,09,300. The court also allowed solatium and interest thereon from the date the possession of the lands was taken. Aggrieved by that enhancement the State preferred an appeal to the High Court. Pending the appeal, the High Court permitted the assessee-claimant to withdraw the entire amount of compensation on furnishing security to the satisfaction of the court. Pursuant to the said order, the assessee withdraw the enhanced amount of compensation in December, 1968. The appeal as ultimately dismissed on December 18, 1970, and the enhanced compensation made by the City Civil Court on reference was confirmed.
4. The WTO determined the wealth of the assessee in respect of the asset acquired under the land acquisition notification dated August 25, 1960, on the total amount of the compensation ultimately paid to the assessee as a result of the dismissal of the State's appeal by the High Court on December 18, 1970. The Appellate Assistant Commissioner confirmed the said order. On appeal, the Tribunal held that the total value of the asset for the purpose of the assessment of wealth-tax as on the valuation dates for the assessment years 1960-61, 1961-62, 1962-63, to be 50% of Rs. 2,74,454 awarded by the Special Deputy Collector under his award dated August 19, 1960. For the assessment years 1963-64 to 1970-71, the value of the asset as on the relevant valuation dates to be 50% of the entire amount of compensation determined for the lands acquired plus 50 per cent. of the interest awarded thereto. In view of the said assessment, 'the Commissioner, Andhra Pradesh, has sought reference under s. 27(1) of the W.T. Act on the following four question :
'1. Whether, on the facts and in the circumstances of the case, the award of enhanced compensation amount of Rs. 4,09,300 by the First Additional Chief judge, City Civil Court. Hyderabad, by the The Judgment dated April 15, 1967, as finally upheld by the Andhra Pradesh High Court on December 18, 1970, in the appeal field by the State, is not relatable to the original right which flowed from the acquisition
2. If the answer to question (1) above is in the affirmative, whether the amount of extra compensation is not includible in the net wealth of the assessee on the relevant valuation dates prior to April 15, 1967
3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in fixing the value of the right to receive compensation at 50% of Rs. 2,75,454 for the assessment years 1960-61 to 1962-63 and 50% of the amount of compensation inclusive of the enhanced compensation finally awarded by the High Court together with interest for the assessment years 1963-64 to 1970-71
4. Whether, on the facts and in the circumstance of the case, interest accrued and the due could not be included in full in the net wealth of the assessee on the relevant valuation dates
Before considering the questions themselves, certain aspects of the matter which are not in dispute may be clarified. As a result of the notification under s. 4(1) of the Land Acquisition Act, the property of the assessee vested in the Government and only the right to receive the compensation vested in the assessee. Although the share of the assessee was determined under the compromise decree March 5, 1959, in view of the injunction order dated April 21, 1961, the right to revive the compensation remained suspended. The injunction having been vacated on April 30, 1962, the amount of Rs. 2,74,454 was paid to the assessee on July 2, 1962. Further, on a reference to the civil court, though the compensation was enhanced to Rs. 4,09,300 by the City Civil Court, Hyderabad, under the decree dated April 15, 1967, the amount was paid to the directing the assessee to give security for drawing the enhanced amount of compensation. The appeal itself having been dismissed on December 18, 1970, the appellant could appropriate the enhanced compensation to herself only as and from the date of dismissal.
Where any asset comprising of immovable property itself is acquired under the provisions of the Land Acquisition Act, the irreducible minimum amount of compensation payable to the claimant is what is awarded by the Collector, Land Acquisition, which in this case is Rs. 2,74,454. The relevant valuation date for each of the assessment years is March 31, and for the first assessment year 1960-61, it was March 31, 1960. By that date the compensation payable for the asset acquired compulsorily under the provisions of the Land Acquisition Act was not determined. In respect of such an asset, in a case. arising under the E.D. Act, the Supreme Court in C.A. No. 2205/72 (Mrs. Khorshed Shapoor Chenai v. Asst. CED : [1980]122ITR21(SC) ), following the principles enunciated in Pandit Lakshmi kant Jha v. CWT [1973] 90(SC) laid down that (p. 30 of 122 ITR), 'since the lands were lost to the estate of the deceased before the relevant date. .....it would be the right to receive compensation under the Land Acquisition Act that will have to be evaluated under the E.D. Act'. The Supreme Court observed (pp. 31 of 122 ITR) :
'Upon acquisition of his lands under the Land Acquisition Act the claimant has only one right which is to receive compensation for the lands at their market value on the date of the relevant notification and it is this right which is quantified by the Collector under s. 11 and by the civil court under s. 26 of the Land Acquisition Act....it is well settled that in law the Collector's award under s. 11 is nothing more than an offer of compensation made by the Government to the claimants whose property is acquired.... If that be the true nature of the award made by the Collector than the question whether the right to receive compensation survives the award must depend upon whether the claimant acquiesces therein fully or not. If the offer is acquiesced in by total acceptance the right to compensation will not survive but if the offer is not accepted under protest and a land reference is sought by the claimant under s. 18, the right to receive compensation must be regarded as having survived and kept alive which the claimant prosecutes in a civil court...This, however, does not mean that the civil court's evaluation of this right done subsequently would be it valuation as at the relevant date either under the E.D. Act or the W.T. Act. It will be the duty of the assessing authority under either : of the enactments to evaluate this property (right to receive compensation at market value on the date of relevant notification) as on the relevant date (being the date of death under the E.D. Act and valuation date under the W.T. Act). Under s. 36 of the E.D. Act the assessing authority has to estimate the value of this property at the price which it would fetch if sold in the open market at the time of the deceased's death. In the case of the right to receive compensation, which is property, where the Collector's award has been made but has not been accepted or has been accepted under protest and a reference is sought or is pending in a civil court at the date of the deceased's death, the estimated value can never be below the figure quantified by the Collector because under s. 25(1) of the Land Acquisition Act, the civil court cannot award any amount below that awarded by the Collector, the estimated value can be equal to the Collector' award or more but can never be equal to the tall claim made by the claimant in the reference nor equal to the claim actually awarded by the civil court inasmuch as the risk or hazard of litigation would be a detracting factor while arriving at a reasonable and proper value of this property as on the date of the deceased's death. The assessing authority will have to estimate the value having regard to the peculiar nature of the property, its marketability and the surrounding circumstances including the risk or hazard of litigation looming large at the relevant date.'
Following this enunciation of law by the Supreme Court a Division Bench of this court in R.C. No. 182/76 (CED v. Estate of late Mohd. Sultan : [1981]127ITR277(AP) ) and a Division Bench of this court in R.C. NO. 23/77 (CWT v. G. M. Omar Khan - See p. 543 surpa), to which one of us (Madhava Reddy J.), was a party held (p. 548) surpa : 'While the amount awarded by the Collector is a safe index for determining the value of the right to receive the compensation and such value can never be less than the said amount, that is not final nor is the claim of the estate-holder or his legal heirs for enhanced compensation, final. Neither the ultimate compensation that is awarded by the final court of appeal, nor the compensation determined by the court subsequent to the death of the deceased-estate e-holder, could be deemed as final, for the purpose of arriving at the principal value of the estate under s. 36. These are all relevant factors which are to be taken into account for determining the value of the right to receive compensation which alone forms part of the estate. In a given case, not merely the amount of compensation but even the right to receive compensation may be in dispute. That again is a factor to be taken into account. For litigating with a view to earn the enhanced compensation, the time spent and the expenditure likely to be incurred, are all factors which would weigh with any person if the right to receive compensation were to be put in the market for sale on the date of death.'
5. Having regard to the facts and circumstances of that case, the assessment of Rs. 14,05,536 made by the Tribunal in respect of the asset for which under the provisions of the R.A.I.P. Act, 1952, Rs. 21 lakhs odd fixed by the Collector as upheld as reasonable and the questions referred were answered in the affirmative and in favour of the assessee.
6. In the case, as already referred to above, although the compensation for the lands acquired was determined under the Land Acquisition Collector's award at Rs. 2,74,454 only 50 per cent. thereof was determined as the value of the asset on the valuation date for the assessment years 1960-61, 1961-62 and 1962-63 by the Tribunal. Further, although the enhanced amount of compensation Rs. 4,09,300 plus solatium and interest also as paid to the assessee in December, 1968, for the assessment years 1963-64 to 1970-71, 50 per cent. of the entire compensation plus 50 per cent. interest was taken as the value of the assessee's wealth.
7. It is contended for the revenue that when in fact the amount of compensation was received by the assessee on July 2, 1962, which is the proximate date to the date of acquisition of the asset, that entire amount ought to have been taken into account as was observed in R.C. No. 23/77 (CWT v. G. M. Omar Khan - See p. 543 supra). Likewise, for all the assessment years including the assessment years 1960-61 to 1962-63. No doubt in R.C. NO. 23/77 the amount of Rs. 14,05,36 was paid on April 2, 1970, while the valuation date was March 31, 1970, and therefore, the assessee's wealth for the assessment year 1970-71 was taken at Rs. 14,05,536. But it should be borne in mind that in this case for the assessment years 1960-61 to 1962-63, the relevant dates were March 31, 1960, March 31, 1961, and March 31, 1962, by which dates the amount of compensation was neither determined not paid. The amount, though determined on April 19, 1961, was not paid till July 2, 1962. Further, the amount of compensation itself was paid nearly two years after the date of the acquisition and not on a date proximate to the relevant assessment year. As in R.C. No. 23/77, in this case, the entire amount of Rs. 2,74,454 cannot be taken as the value of the asset for the assessment years 1960-61 to 1962-63. Further, though the award was made on April 19, 1961, in view of the injunction order made by the court on April 21, 1961, the assessee could not and in fact did not receive the compensation till it was vacated on April 30, 1962. That amount was actually paid to the assessee beyond the three relevant valuation years for the assessment years 1960-61 to 1962-63. When that is the position, the question is whether the entire amount which was actually paid subsequent to the relevant dates could be taken as the wealth of the assessee Up to the date of the receipt, the amount awarded was not his wealth and until it was paid it was only the right to receive the compensation which must necessarily be computed as wealth in accordance with the principles laid down by the Supreme court in the aforesaid decisions. Even with respect to the enhanced amount for compensation, it would be seen that though on reference the amount was enhanced to Rs. 4,09,300 under the decree of the City Civil Court dated April 15, 1967, that decree had not become final. The State had questioned the quantum in its appeal to the High Court and that appeal came to be disposed of only on December 18, 1970, i.e., long after the valuation date relevant for the last assessment year 1970-71, i.e., March 31, 1970. Hence, even with respect to the assessment years 1963-64 to 1970-71, the entire amount of compensation was not received by the assessee on the relevant valuation dates. If in those circumstances, the Tribunal has assessed the assessee's wealth at 50% of Rs. 2,74,454 as the wealth of the assessee for the assessment years 1960-61 to 1961-62 and at 50% of Rs. 4,09,300 for the assessment years 1963-64 to 1970-71, could it be said to have violated any of the principles laid down by the Supreme Court in C.A. No. 2205/72 (Mrs. Khorshed Shapoor Chenai v. Ast. CED : [1980]122ITR21(SC) ). We think not. In our opinion, the fact that the lands were acquired in 1960 and the amount of compensation Of Rs. 2,74,454 itself was awarded some time later and could not be paid to or received by the assessee till July 2, 1962, in view of the litigation pending in the courts, obviously that amount could not be treated as the wealth of the assessee during the assessment years 1960-61 to 1962-63. Before the amount could be received, the litigation had to be contested and the injunction had to be got vacated. The matter did not end in the trial court. It was taken to the High Court and it was only when the High Court dismissed the appeal, that the right of the assessee to receive even that Rs. 2,74,454 was finally established. When only the right to receive compensation vests in the assessee and the market value of this right had to be ascertained in accordance with the principles laid down by the Supreme Court in C.A. No. 2205/72 (Mrs. Khorshed Shapoor Chenai v. Asst. CED : [1980]122ITR21(SC) ), all these factors had to be necessarily taken into account in assessing the value of that right. The Tribunal rightly took into consideration the hazard and risk involved in the litigation and the prospect of the amount not being received in the near future. These are certainly relevant factors for determining the value of the asset. When the Tribunal has, in view of these relevant factors, assessed the value of the wealth 50% we cannot say that it has adopted any wrong principle of law and hold that the entire amount of compensation ought to have been treated as the wealth of the assessee.
8. So also when the amount of compensation was enhanced by the City Civil Court, the entire enhanced amount could not be treated as the wealth of the assessee for there was always the prospect of the said amount being reduced by the court before which the State had preferred an appeal. In view of the hazard and risk involved in purchasing the right of the assessee to the said compensation, when placed in the market, it would not have fetched the full amount. Any purchaser would have calculated and taken into account the risk involved, the amount of time that would have to be spent and the expenditure that would have had to be incurred before offering to purchase the right to receive the enhanced compensation. The Appellate Tribunal has taken all these factors into consideration in holding that only 50% of the enhanced compensation could be taken as the wealth of the assessee. Though the amount of compensation determined under the award and later enhanced by the City Civil Court and confirmed by the Tribunal is the quantification of the original right of the assessee to receive the compensation which flowed from out of the acquisition made under the notification dated August 25, 1960, the entire amount of Rs. 4,09,300 which is the enhanced amount, or Rs. 2,74,454, which was the original amount awarded by the Collector, cannot be deemed to be the wealth of the assessee. That entire amount cannot be included in the net income of the assessee. For the assessment years 1960-61 to 1962-63, it would be only 50% of the amount awarded under the award dated April 19, 1960. For the subsequent assessment years 1963-64 to 1970-71, it would be 50% of Rs. 4,09,300 which is the enhanced amount. The entire enhanced amount can never deemed the wealth of the assessee for those years for that became his absolute wealth only after the appeal was dismissed on December 18, 1970, which is subsequent to the relevant valuation dates for the assessment years in question.
9. Mr. Rama Rao, learned counsel for the revenue, urged that since the total amount of enhanced compensation was received by the assessee in December, 1968, at least for the assessment years 1968-69, 1969-70 and 1970-71, the entire enhanced amount of Rs. 4,09,300 should be taken as the net wealth of the assessee. But, as already stated above, this amount was paid to the assessee as a result of the final order of the High Court and the right of the assessee to receive the enhanced compensation at its full value. That right vested in the assessee absolutely only on the dismissal of the appeal on December 18, 1970. Therefore, a different criteria account be applied for determining the net wealth of the assessee for the assessment years 1968-69, 1969-70 and 1970-71, as contended by the learned counsel for the revenue. For these years also, the Tribunal's assessment of wealth at 50% of the enhanced compensation and 50% of the interest is, therefore, upheld.
10. The last contention raised by Mr. Rama Rao, learned counsel for the revenue, is that while in Pandit Lakshmikant Jha v. CWT : [1973]90ITR97(SC) the Supreme Court had determined the net wealth of the assessee at 65% of the compensation payable, in the present case, the net wealth is determined at 50% of the compensation. The determination of the net wealth in such matters cannot be made arbitrarily or on the basis of an invariable formula. No doubt, in these two cases, as pointed out by the learned counsel, the net wealth has been determined at different percentages of the total amount of the compensation awarded. But the points of difference between these two cases are quite obvious. While the amount of compensation payable under the Bihar Zamindar Abolition Act is an amount which does not vary when calculated according to the principles laid down under that Act and that amount is payable on fixed dates, the amount of compensation to determined under the provisions of the Land Acquisition Act is the market value of the land which will vary from case to case. That apart, under the provisions of the Land Acquisition Act, even the right to receive the compensation may be disputed and only after the amount is ascertained, it would become payable, whereas under the Bihar Zamindari Abolition Act it is payable every month. Further, the amount payable under the Land Acquisition Act is subject to appeal to the High Court. Even the right to receive the compensation may be disputed. The time taken for the completion of these proceedings may vary from case to case. Hence, no hard and fast rule could be laid down as to what percentage of total amount of compensation should be taken as the proper percentage for determining the net wealth of an assessee in a case where the net wealth comprises of the right to receive the compensation. That must necessarily depend, as observed by the Supreme Court, on a consideration of all the relevant factors and circumstances of the case.
11. The learned counsel for the revenue, Mr. Rama Rao, also contended that interest is also accrued to the assessee in full when the enhanced amount of compensation was determined by the City Civil Court on July 2, 1962, on reference. Whether any amount of interest accrued could be included in the net wealth of an assessee or not is a matter on which no reference is made and as such we are not concerned in this reference. We are only concerned with the question whether the full amount of interest should have been included or only 50% of the entire amount of compensation awarded by the High Court could be computed as the net wealth of the assessee for the relevant assessment years. For the reasons stated above, we are of the view that the full amount of interest accrued on the compensation payable is not includible in the net wealth of the assessee for those years.
12. In view of the foregoing discussion, we answer questions Nos. 1 to 3 as follows :
13. While the right to receive the enhanced amount of compensation of Rs. 4,09,300 as decreed by the First Additional Judge, City Civil Court, by his judgment dated April 15, 1967 and finally upheld by the High Court on December 18, 1970, is relatable to the original right of the assessee to the property acquired, that amount cannot be determined as the net wealth of the assessee for the first three assessment years, i.e., 1960-61, 1961-62 and 1962-63; the assessment made by the Tribunal at 50% of the amount of compensation awarded by the Collector, i.e., Rs. 2,74,454, in the circumstances of the case, is the proper valuation of the net wealth of the assessee for those years; and for the subsequent years, 50% of the entire amount of compensation, i.e., Rs. 4,09,300, is the proper valuation. Accordingly, we answer questions Nos. 1 to 3 in favour of the assessee and against the revenue.
14. On the last question, we hold that the entire amount of compensation ultimately awarded together with interest accrued thereon and due could not be included in full in the net wealth of the assessee on the revelant valuation dates. We answer this question, accordingly, in favour of the assessee and against the revenue. No costs. Advocate's fee Rs. 250.