Law:

Section:

Section 48 of the income-tax act, 1961-Capital gains-Computation of-Certain portion of assessee's property acquired by government-Compensation received included consideration towards damage sustained to unacquired property by reason of acquisition injuriously affecting it-Whether compensation paid for unacquired portion on account of damageformed part of full value of consideration for acquired land for purpose of section 48-Held, on facts, yes; but cost of acquisition of acquired portion should be worked out by placing a corresponding premium on it Facts For the assessment year 1973-74, certain portion of the property belonging to the assessee was acquired by the Bangalore Corporation at the market value of Rs. 100 per square yard as determined by the Land Acquistion Officer. The compensation finally awarded included the compensation paid in respect of the unacquired portions, at the rate of Rs. 10 per square yard, towards damage sustained by reasons of the acquisition injuriously affecting the remainder of the property as the compulsory acquisition of the frontage was staled to have resulted in depriving the unacquired house and the appurtenant land, of direct approach to the highway affecting its view and value. The ITO computed the capital gains by taking into account only the market value of the acquired portion and after making the statutory allowance thereon, but excluding the award amount paid for damage to the unacquired land. The Additional Commissioner, acting under section 263, directed the ITO to take into account also the amount of compensation paid on account of damage to the unacquired property, for the purpose of computation of capital gains. On appeal, the Tribunal took the view that the compensation, awarded for the injurious affection of the unacquired land, could not be regarded as forming part of the consideration for the acquired land for the purposes of capital gains. Thus, the Tribunal restored the order of the ITO. On reference: Held 1. Though, under section 23(1) of the Land Acquisition Act, injurious affection of the party's other land by reason of acquisition of its land is a criterion for quantifying compensation, the exercise is…

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