# _ ( · KHORSHED SHAPOOR CHEN AI ETC v. ASSISTANT CONTROLLER OF ESTATE DUTY

- **Citation:** [1980] 2 S.C.R. 315
- **Court:** Supreme Court of India
- **Decided:** 1979-12-04
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/khorshed-shapoor-chen-ai-etc-v-assistant-controller-of-estate-duty-7894
- **Pages:** 19

## Headnote

•
f
.. _ ..
( · ...
KHORSHED SHAPOOR CHEN AI ETC.
v.
ASSISTANT CONTROLLER OF ESTATE DUTY
December 4, 1979
315
TP. N. BHAGWATI, V. D. TULZAPURKAR AND R. S. PATHAK, JJ.J
B
Esrate Duty Act, 1953-Norices under sections 59(a) and 61 for reopening
;he assessments, consequent to enhancement of the compensation uttder section
18 of tire Land Acquisition Act, made after tire E.D. Assessments were o~·er
Lcgalisty of-Right to receive compensation at market value on tlze dares of the
relevant notifications, Ia whom accmes-Right to receive compensation and
Right to receive extra compensation.
C
The Andhra Pradesh Govemml!nt acquired the lands belonging
to one
Rashid Shapoor Chenai and situate at l\loosapet Village Hyderabad and QutbiUapur in .Medchal district. The special Deputy Collector of Land Acquisition
awarded a total compensation of Rs. 20,000 and Rs. 4,29,360 respectively. The
wmpcnsation of Rs. 20,000 was. paid during the life time of Rashid and the
·compensation of Rs. 4,29,360 was p·aid after Rashid's death to his widow
D
Mrs. Frcny Chen:.ti and son Shapoor Rashid Chenai on whom the estate of .
Ra.,hid devolved in equal shares.
On the death of Rashid on November 4, 1963, 1\Irs. Freny Chenai. (appcl·
lant in CA 2206j72) as his widow and 'account:.tble perso~· tiled ~cfore the
Re~pondent on December 26, 1963 an aet:ount. of the propert.lcs pass•ng on the
death of her husband under section 53{3) of the Act. The estate duty assessE
ment ~Aa.s completed by the respondent on. 1\Iarch. 29, 1966. With regard
to
the land§ acquired both during the lifetime of Rashid as well as after, their
values were taken at the respective figures of compensation (Rs. 20,000 nod
Rs. 4,29,360) awarded for them by the special Deputy Colh:ctor.
Shapoor Rashid Chenai, who had one half share ~ the undiv!ded estate of . .,.
hi, btc father Rashid died on 1\l:.ty, 7, 1965. As r<!QUII~ by_sect!on 53 of the
I:"
Act Mrs. Kborshcd Chcoai (appellant in CA 2205 (12) as his w•dow and the
'«<:countable pc;t!!on'a ftlcd before the respondent on November
6,
1965 an
account of tho properties pa.'iSing on the d~ath of her husband and the rc~pondent completed the estato duty nsscssmcnt on December 30, 1966. Even here,
tho rc~pondent adopted tho values of the lands ncqulrd by the Government at
figure1 award~d by the epedal D<'puty Collector.
G
The le a1 heirs of Jato. Rashid did not nc~ept t~ awards by the special
Dc:puty ~Ucctor in respect of tho lands ncqutred by GoveroJ:?7~t and a ref~-
I
Cl il C urt und~r s 18 of the Land Aeqlllsttlon Act. The
t'Oce was mad~> to
v
o
~
•
d
h
Civil c
d
d· ted March 6, 1967 fOct. 30, 1967 enhance
t c
com
ou~t, by its or crs a
cial Deputy Collector by Rs. 1,90,000 in r.:s·
.PensatJon awarded by the spe
.., 45 000 in rel>ptCt of Qutbillnpur lamb .
.Pect of Moosapet lands and by R.!l. _do, . :
of the Civil Court nnd filed
0
The Go
did
t capt the ectstons
\'ernment
no a
.
b
nhancement which appeals nre still
appeal,s to the High Court challcngwg t e e
'
Prnding in the High Court.
A
B
c
D
E
F
n
316
SUPREME cOURT REPORTS
(1980)2 S.C.It.
·
f ·nr mati'on that enhanced compensation was awarded by the
On rcce1pt o 1 or
•
d
·
Civil Court in respect of tho above lands the respondent ~MUC
two no!lces.
both dated November 14, 1969, onq addressed to .Mrs. Khorshcd
~hapoor
Chenai and the other to Mrs. Freny Rashid Cbenar. Tho formec nohce was
issued under section 59(a) of the Act calling upon Mrs. Khorsbed to show cause
•h th Estate Duty assessment made on December 30, 1966 should not be
'W y
e
. .
dcd b
th c· .
reopened and revised in view of the extra compensallons awar .
Y
e
1vi1
Court in respect of the lands acquired by the Govc.n;mcnt, while the
!~Iter
notice was issued under section 61 of the Act requmng Mrs. Frcny Chenat to
show c.1.use why the mistake apparent from the record should not be rectified
and the enhanced compensation included in the principal value. of the estate.
These noti~ were challenged by the reccipients by ftling writ petition.s

## Text

_Characters 0–39,555 of 54,538. This is a partial read: ask again with offset=39555 for what follows._

•
f
.. _ ..
( · ...
KHORSHED SHAPOOR CHEN AI ETC.
v.
ASSISTANT CONTROLLER OF ESTATE DUTY
December 4, 1979
315
TP. N. BHAGWATI, V. D. TULZAPURKAR AND R. S. PATHAK, JJ.J
B
Esrate Duty Act, 1953-Norices under sections 59(a) and 61 for reopening
;he assessments, consequent to enhancement of the compensation uttder section
18 of tire Land Acquisition Act, made after tire E.D. Assessments were o~·er
Lcgalisty of-Right to receive compensation at market value on tlze dares of the
relevant notifications, Ia whom accmes-Right to receive compensation and
Right to receive extra compensation.
C
The Andhra Pradesh Govemml!nt acquired the lands belonging
to one
Rashid Shapoor Chenai and situate at l\loosapet Village Hyderabad and QutbiUapur in .Medchal district. The special Deputy Collector of Land Acquisition
awarded a total compensation of Rs. 20,000 and Rs. 4,29,360 respectively. The
wmpcnsation of Rs. 20,000 was. paid during the life time of Rashid and the
·compensation of Rs. 4,29,360 was p·aid after Rashid's death to his widow
D
Mrs. Frcny Chen:.ti and son Shapoor Rashid Chenai on whom the estate of .
Ra.,hid devolved in equal shares.
On the death of Rashid on November 4, 1963, 1\Irs. Freny Chenai. (appcl·
lant in CA 2206j72) as his widow and 'account:.tble perso~· tiled ~cfore the
Re~pondent on December 26, 1963 an aet:ount. of the propert.lcs pass•ng on the
death of her husband under section 53{3) of the Act. The estate duty assessE
ment ~Aa.s completed by the respondent on. 1\Iarch. 29, 1966. With regard
to
the land§ acquired both during the lifetime of Rashid as well as after, their
values were taken at the respective figures of compensation (Rs. 20,000 nod
Rs. 4,29,360) awarded for them by the special Deputy Colh:ctor.
Shapoor Rashid Chenai, who had one half share ~ the undiv!ded estate of . .,.
hi, btc father Rashid died on 1\l:.ty, 7, 1965. As r<!QUII~ by_sect!on 53 of the
I:"
Act Mrs. Kborshcd Chcoai (appellant in CA 2205 (12) as his w•dow and the
'«<:countable pc;t!!on'a ftlcd before the respondent on November
6,
1965 an
account of tho properties pa.'iSing on the d~ath of her husband and the rc~pondent completed the estato duty nsscssmcnt on December 30, 1966. Even here,
tho rc~pondent adopted tho values of the lands ncqulrd by the Government at
figure1 award~d by the epedal D<'puty Collector.
G
The le a1 heirs of Jato. Rashid did not nc~ept t~ awards by the special
Dc:puty ~Ucctor in respect of tho lands ncqutred by GoveroJ:?7~t and a ref~-
I
Cl il C urt und~r s 18 of the Land Aeqlllsttlon Act. The
t'Oce was mad~> to
v
o
~
•
d
h
Civil c
d
d· ted March 6, 1967 fOct. 30, 1967 enhance
t c
com
ou~t, by its or crs a
cial Deputy Collector by Rs. 1,90,000 in r.:s·
.PensatJon awarded by the spe
.., 45 000 in rel>ptCt of Qutbillnpur lamb .
.Pect of Moosapet lands and by R.!l. _do, . :
of the Civil Court nnd filed
0
The Go
did
t capt the ectstons
\'ernment
no a
.
b
nhancement which appeals nre still
appeal,s to the High Court challcngwg t e e
'
Prnding in the High Court.
A
B
c
D
E
F
n
316
SUPREME cOURT REPORTS
(1980)2 S.C.It.
·
f ·nr mati'on that enhanced compensation was awarded by the
On rcce1pt o 1 or
•
d
·
Civil Court in respect of tho above lands the respondent ~MUC
two no!lces.
both dated November 14, 1969, onq addressed to .Mrs. Khorshcd
~hapoor
Chenai and the other to Mrs. Freny Rashid Cbenar. Tho formec nohce was
issued under section 59(a) of the Act calling upon Mrs. Khorsbed to show cause
•h th Estate Duty assessment made on December 30, 1966 should not be
'W y
e
. .
dcd b
th c· .
reopened and revised in view of the extra compensallons awar .
Y
e
1vi1
Court in respect of the lands acquired by the Govc.n;mcnt, while the
!~Iter
notice was issued under section 61 of the Act requmng Mrs. Frcny Chenat to
show c.1.use why the mistake apparent from the record should not be rectified
and the enhanced compensation included in the principal value. of the estate.
These noti~ were challenged by the reccipients by ftling writ petition.s in tbc
High Court. The High Court negatived the contentions raised in both the writ
petitions upheld the impugned notices :md dismissed the writ petition.s. Hence
the two appeals by cei:tificates.
Allowing the appeals, the Court.
JIELD : 1. So far as the eswte duty assessment in respect of the properties.
pas~ing on the death of Shapoor w:u concerned, the lands which were the sub·
!cct matter of ncquisition proceedings could not be regarded as fonnin:; '
part of the esL'lte of the do:cea.sal on the relcvunt date and could DOl
pass on his death in as much as these lands hnd vested in the Government long
prior to his death but the richt to n:ceive compensation at market value on tbe
dates of the relevant notifications unquestionably accrued to the
dec.:a.'~<--d
'lvhich w:u property nod it would be such property that would pass on the death
of the deceased. In other words, since the lands were lost to the cst:tte of the
~cce;u;ed be(orc the relevant d:tte, n:tmcly, the d~tc of death, it would be tbc
right to receive compensation under the Lund Acquisition Act th.'lt will have t~
be evaluated under the £states Duty Act. [324 G-H, 32S A, C]
Pondit Laksltml Kant JIUl v. Commissionu of
W~alth To:c,
Diltar (Jlttl
Orissa, 90 lT.R. 97 (S.C.), applied.
2. There or~ no two kparate risht~-ono 11 right to recdve compensation
IUld other a right to receive extru. or {urthcr compensation. Upon acquisition
of his lands under Jho Lllod Acquisition Act the claimant bas only one risbt
"'hich Is to receive compensation for the lands ot their !Illlrket value on ~
date of tbe relevant notificatioM and It Ia thia right which is qu11ntifkd by ~~
Collector under •· 11 alld by tho Civil Court under s 26 of the Land AcqulSl·
!ion. Act. lt ~ true that under •· 11 tho Collector alter holdiog the n~C$S~irY
IDqutry dch:rlillna the quantum of compensation by fixing the market value of
the lllnd und in doing so is guided by tho provisioru coutuin.:d In as. 23 and 24
of the Act-the Very provillioM by references to which the Civil Court fixes the
valuation. It is idlO true that the Collector'& awnrd is, und.:r ~. 12. dec!artd'
t~ be, ucept as otherwise provWed, finn! and conchL<ive evid(nce as betw«ll'
him and .the J'er.IOM interested. Even ao, it is well settled thut in taw ~e
Collectors a word under 1. 11 ia nothing more than aa oiler ot compen.satJoll
made by tho Government tQ the d:timant whose property is acquired. lf thJlt
be th~ true nntu~e of the award made by the Collector th~a the question wbetber
tht lll;ht to rece1ve c:ompensatioa survives the llwa.rd mwt depend upon wbe~
·--~~~-
i
• i
\
. i
·- - --··-
--:-)'-·
•.
r
.·J
,
.
'
K. S. CHENAI V. CONTROLLER OF ESTATE DUTY
. . 317
the claimant acquies~s therein fully o: not. If the offer is acquiesced in by
total acceptance ~e nght to compensation. will not survive but if the offer is
.not accepted or IS accepted .under pro~t and a land. reference is sought by the
claimant under s. 18, the nght to receive compcn.sa!lon must be regarded as
having survi~ed and kept alive which the claimant prose.cutcs in Civil CC\urt
[326 B-G)
Eua v. Secn·tary of State for India ll.R 32 Cal. 605; Raja llorish C110ndra
v. Dy. Land Requisition O[Jir:cr, [1962] 2 SCR 676 and Dr. G. H. Grant v. Sta/1!
J~/ Bihar [1965] 3 SCR 576, followed.
3. It is not correct that no sooner the Collector has made his award under
5• 11 the right to compensation is destroyed or ceases to exist or is merced in
the award, or what is left with the claimant is a mer~ right to litigate the correctness of the award. The claimant can litigate the correctness of the award
because his right to compensation is not fully redeemed but remains alive
which be prosecutes in Civil Court That is why when a claimant dies in a
·pending reference his heirs are brought on record and are permitted to prose·
cute the rcf~rcnce.
This, however, does not mean that the Civil Court's
evaluation of this right done subsequently would be its valuation as at the
relevant date either under the Estate Duty Act or the Wealth Ta.'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) ns on the relevant date (being the date of death under
the Stale Duty and Vuluatio n date under the Wealth Ta.'C Act). Under s. 36
of the State Duty Act the ussessing authority has to estimnte the value of this
property at the price whil:h it would fetch if sold in the open market at the
timt: of the t!cc~:<~~;ed '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 areference is sought or is
{IC:nrling in Civil Court at the date of the dt!ceascd's death the estimated value
can uever be below the figure quantifil!d by the Collector because under s. 25(1 l
of the Land Acquil.ition Act.
Civil Court cannot award any amount below
thilt awarded by the Collector; the estimated value may be eql!al to the Collector'• award of more but can never bo equal to the tall claim made by the
claimant in the Reference nor equal to the claim actually award.!d by the Civil
Court inasmuch us the risk or hazard of litigation would be dctr:lcting (actor
'•bile arriving at u reasonable nml proper value of this property as o.n the dat.:o,
(.[ the deceased'~ death. The asscs~ing authority will hav~ to estimate
th~
value having regan.l to the peculiar nature of the proper!}', its ~~rk~tability a_nd
the aurrounding circumstances including the risk or ha.zaru or hltgataon loommg
l.ar,e at the relevant dah:. [326 H. 327 A-FJ
4. lhe very is~uanco of the notice under section 59(a) was on a ~rong basis;
h was bsucd with tho obj.:ct to includ.: the enluncd an~ounts recet\·ed by the
arJICIIant in the principal value o! the pro~rty passmg :m the death o~
Shan..
d b ·
·
h
to duty· such notl.:e and the subsequent reassess
,~,r an
nn~;:mg t e same
•
·
·
bl
rncot m d
·
.
th eo{ would be clearly illegal
and unsusta!Da e
a e m pun~uance
er
. .
k
· h th
ina\much as the elltra compcn.~ation awardro by the CIVIl Court ta ·en, Wit
~
original compen.,ation as on the date. of the death .of the deedce~ed. :rop~ .I
as Well as actual 'incht~ion of such extra compe!IS3.tionhawdard h f\ t ~
IV~
Court in the principal value or tho estate passing on t e
cat o I e I cccasthc
v.~·•--
tha one reason. In the first :r ace
c
~ ..... be manifestly wrong for more
n
.
.
th
aaid property. namely, the enhanced compensation was n": m e:ust.:ncc "'
o
A
B
c
D
E
F
G
n
·.:
A
B
c
D
E
G
. 318
SUPREME COURT REPORTS
[1980] 2 S.C.R.
d 1 of the death of the deceased. Secondly, such extra compensation awarded
b~ ~he City Civil Court was liable to variation in th: appeals that ~ere pending
in the High CourL Thirdly, such extra compensation together wtth the compensation awarded by the Special Deputy Col.lcctor could not be regarded as
the proper valuation of the right to compensation as on the relevant date (the
date of the deceased's death). [330 A-D]
5. The notice under section 16l of the Act and the rcctificativn order passed
in pursuance thereof if illegal and unsustainable. [333 E]
(i) The r~ctiJication is being undertaken on the ground that the initial valuation adopted in respect of the acquired lands was based at raks fixed by the
Land Acquisition Officer, that such .valuation was obviously wron;: in view of
the enhanced compensation· awarded by the Civil Court and, therdore, the
enhanced compensation was sought to be included in the principal
value of
the estate by undertaking the rectification proceedings. In substance it cannot
be said to be a case of rectification of any mistake apparent from the record
· but the reswndent is really seeking to change his opinio nabout the V<lluatioJt
of the acquired lands because some other authority, namely, lhe Ci·;il Court
bas valued th_!: same differently. [331 C-E]
(ii) for the purpose of enhancing the value of the acquired lands t>n the basis
of their value as determined by the Civil Court the respondent must resort to
provisions of s. S!l and proceed to IIl:lkc reassessment but sucll reassessment has.
to be done within the period of three yean; from the date of the original assessment und~r s. 73A of the Act. In the instant case the respondent resorted to
s. 61 because the rectification of any mistake apparent from the record could be
don: nt any time within five yearn from the date of the original assessment.
[331 E.F)
(iii) When the original assessment was made it v.01s the duty of the res·
pondcnt, alter scrutinising the account filed and examining the materials produced before him, to v::~luc the estate of the deceased properly under s. 36 of
the Act nnd when he accepted the com~nsation fi:oted by the special Deputy
Collector as the proper v:•luation ho must be deemed to have adopted that
valuation as his ·own estimated value of the lands which he wanted to enhance
b~ ;cJyin~ upon the valuation mnde by the another authority, namely, the City
Cl\·11 Court. To such a case s. 59 is clearly attracted but obviously with a view
to avoid the bar of s. 73A ho purported to i.~ue the impugned notice
und~r
a. 61. [332 F-HJ
Ethtl Rodriqrlt!t v. Assista111 Colltrolltr of Estate Duty, E.rtat~ Dllty-cru11:
Jncome Tax: Circle, Matrllalort, [1963] 49 l.T.R. (E.D. )' 128, applied.
CIVIL API'ELLATE ]IJRISDICTION: Civil App:al Nos. :005-2006 of
1972.
(
·
From the Judgment and Order dated 17-11-1971 and 16·11-71 of 1
the Andhra Pradesh High Court in W.P. Nos. 5~ of 1970 a·rid 4059/
69.
II
N: A. Palkhiwlla, Y. V. Anjaneyulu, A. Subba Rao, J. B. Dada"'
chanjl, Mrs. A. K. Verma, T. Ansari and A. H. Haskar for the Appellant.
i
f I I
' I
. I
K. S. CHENAI v. CONTROLLER OF ESTATE DUTY (Tulzapurkar, J.) 319
t
V. S. Desai, B. B. Ahuja and Miss A. Subhashini for the ResponA
dent.
S. P. Meht•a, !. B. Dadachanji, R. Narain, Mrs. A. K. Verma, T.
Ansari and A. H. Haskar for the Intervener.
The Judgment of the Court was delivered by
TULZAPURKAR, J .-These two appeals by certific~tes granted by the
High Court of Andhra Pradesh raise the question of legality and or
validity of two notices issued by the · Assistant Controller of Estate
·~ Duty, Hyderabad, one under s. 59(a) and the other under s. 61 of the
V '
~ Estate Duty Act, 1953 (hereinafter called 'the Act').
Two parcels of agricultural land (admeasuring 22 Acres 24 Guntas
and 8 Ac:res 23 Guntas) situated in Moosapet village, belonging to ohe
Rashid Shapoor Chenai wer~, during his lifetime, acquired for the Syntlletic Drugs Project Factory of the Indian Dru~ and Pharmaceutical
Ltd. by the Andhra Pradesh Government by Notifications issued on
June 19, 1961 and January 18, 1962 u'nder the Land Acqui~ition Act.
Possession of the lands was taken in January 1963 and by two separate awards both made on January 31, 1963 the Special Deputy Collector of Land Acquisition award;:d a total compensation of Rs. 20,000.
This compensation was received by Rashid himself during his lifetime.
Later two more parcels of agricultural land (admeasuring 131 Acr~
10 Guntas and 224 Acres 22 Guntas) situated at Qutbillapur in Medchal Taluk belonging to Rashid w~re acquired for Hindustan Machine
Tools, Units I and II by th~ Andhra Pradesh Government by Notifications issued on November 1, 1963 and February 1, 1964 under the
La'nd Acquisition Act. Though the former notification was issued during his lifetime and the latter after death, poss·.;ssion of both the lands
was taken after his death by the Government on December · 4,
1963
and March 15, 1964 and by two separate awards made on March 12,
1965 and March 19, 1965, the Special Deputy Collector awarded a
total compensation of Rs. 4,29,360. This compensation was received
in April 1965 by the heirs of Rashid, namely, his widow Mrs. Frcny
Chenai and son Shapoor Rashid Chenai on whom the estate of Rashid
devolved in equal· shares.
On tlr~ death of Rashid on November 4, 1963, Mrs. Freny Chenai
(the appellant in C.A. No. 2206 of 1972) as his widow and the
'accountable persoh' filed before the respondent on December 26,
1963 on account of the properties passing on the ~eath of her husband
under s. 53(3) of the Act. The estate duty assessment was compkted
by the respondent on March 29, 1966. With regard to the lands ac..:
quired both during the lifetime of Rashid as well a~ after their values
__
_., ___ _,
__ Ill _
__ ..... -
8
c
D
E
F
G·,
B
.
320
SUPREME COUR.T REPORTS
· [198Q] 2 S.C.R.
A
mre taken at the respective figures of compensation (Rs. 20,000 and
i:
B
c
D
I
E
F
.G
n
Rs. 4,29,360) awarded for them by the Special Deputy Collector.
Unfortunately, within two years of his father's death, Shapoor
Rashid Chenai (the son) died on May 7, 1965. As stated earlier he
. had one half share in the undivid·~d es:ate of his late father Rashid. As
required by s.53 of the Act, (Mrs. Khorshed Chenai) (the appellant in
C.A No. 2205/1972) as his widow and the 'accountable person' filed
before th.; Respondent on November 6, 1965 on account of the properj
ties passing on the death of her husband and the Respondent completed ~·
the estate duty assessment on December 30, 1966. In making this
.
assessment also the respondent as in the Ca!?e of estate duty assessment
in respect of the properties passing on the death of Rashid, adopted the
values of the lands acquired by the Government at figures awarde.d b'y
the Special Deputy Collector for those lands.
It app~ars that the legal heirs of Rashid did not accept the awards
made by the Special Deputy Collector in res~ct of the aforesaid lands
and requested the Special Deputy Collector to refer the question of
compensation to Civil Court under s.l8 of the Land Acquisition Act.
References were, accordingly, made and the Civil Court by its order
dated March 6, 1967 enhanced the compensation awarded by the
Special Deputy CoUector in respect of Moosapet land by Rs. 1,90,000
and by its order dated October 30, 1967 enhanced the compensation in
respect of Qutbillapur lands by Rs. 20,45,000. The Government did
not accept the decisions of the Civil Court and filed appeals to the High
Court challenging the enhancement, which appeals are still pending in
the High Court. On receipt of information that cahanced compensation was awarded by the Civil Court in r~spect of the above lands the
respondent issued two notices both dated November 14, 1969, one
addr~ssed to Mrs. Khorshed Shapoor Chenai and the oth.er to Mrs.
Freny Rashid Chenai. The former notire was issued ·under s. 59(a)
of the Act calling·upon Mrs. Khorshed Chenai to show cause why the
estate duty assessment made on December 30, 1966 should not be re·
opened and revised in view of lhe extra compensations awarded by the
Civil Court in respect. of the lands acquired by the Government, while
the latter notice was issued under s. 61 of the Act requiring Mrs. Freny
Chenai to show cause why the mistalre apparent from the record should
not be rectified and the enhanced compensation included in the principal value of the estate.
These notices were challenged by thet
recepients by filing writ petitions in the High Court.
The notice under s. 59(a) of the Act issued for the reopening of
the assessment completed on December 30, 1966 was challenged in
--------
-
. -·-y- ..-"'II.IEr.l!IJI·---·------
I 0'
--~~
J
\.· ..
\.
"\
J<;.. .-'<
r
• •
t<. S. CHENAI V. CONTHOLLER OF ESTATE DUTY (Tulzapurkar, J.) 321
ait petition No. 54 of 1970 on two gro_unds : (a) that after compen-
-sation had been awarded by the Special Deputy Collector und~r s. 11 of
the Land Acquisit.ion Act the heirs of the deceased Rashid had merely
.exercised a right to sue for further compensation which was merely a
hope or a chance that the compensation might be enhanced, that such
hope or chance could not be elevated to the status of an assets or property and as such not asset or property chargeable to estate duty bad
escaped as~ssment and (b) that even assuming that any asset or property chargeable to estate duty had escaped assessment the notice was
·illegal and without jurisdiction b.!cause such escapement was not due to
a·ny omission or failure on the part of th·~ accountable person to disclose
fully nnd truly material facts necessary for making the assessment. As
regards the first ground, the High Court took the view that the right to
receive compensation equivalent to mark·~t value of the lands on the
-dates of notifications which sprang directly from the acquisition was
•·property", that no fresh or independent right "to receive extra compcnsatio'n" accrued to th•.! heirs of the dcceas·~d and that &ince compensation awarded by Special Deputy Collector had been enhanced by
Rs. 1,90,000 for the lands acquired for the Synthetic Drugs Projo.:ct and
by Rs. 20,45,000 for the lands acquired for the Hindustan Machine.
Tools by tho: Civil Court, these facts, which came into existence subsequent to the making of the original assessm.:nt, easily led to the conclusion that the values adopted by the respondent fof these lands were •
far below tht>ir real and true market value and as such prop.::rty (meaning lands) chargeable to es•ate duty having been under-valued had escaped assessment of the duty.
On the s~cond aspect the High Court
held that the fact that land References were filed ~g:;~inst the awards of
the Special Deputy Collector tmda s. 18 of th.: Land Acquisition Act
and were pending in the Civil Court was not disclosed by the accountable person, that the said fact was a primary and material t'.lct and not
.an inferential fact and its non-disclosure amounted to omissiotl or failure
which could kud the assessing authority to a reasonable belief that property chargeab!c to estate duty had escaped assessment and as such the
respondent had jurisdiction to issue the notice.
fn this view, of the
matter. the High Court uphehi ttl\! notice issued und.:r s. 59(a) of the
Act and dismissed the writ petition. ThL'i d.:cisi\,)\ of the High Court is
being challenged before us in Civil Appeal No. ::!205 of 1972.
The hsuancc ofl the notice under s. 61 or the Act was challenged in
Writ Petition No. 4059 of 1969 principally on three grounds: (i) that
the accountable person had only a claim iO get an extra cdmpensatio'n
which was an inchoate right which could not be called 'property' and
·whether that chtim amounted to a right to property capable of salll in
.open market was a highly debatable question and a mistake which haJ
A
B
c
D
E
F
G
"
322
SUPREME COURT REPORTS
(1980] 2 S.C.R.
.
h d' cussion and debate could not be said:
"".
A
. to be discovered after lengt. Y IS
d (") that land acquisition pro·
to be a mistake apparent on ~he~e~~~ 'u~
1
not being part of the assessceedings and land References ID
IVt
~
ce to such other record was.
mcnt r~cord a mistake discovered by re ;re~ th case and (iii) that the
not a mistake apparent from the recor t h . c
f Rashid belonged to
extra compensation received by the )ega.
elrs o
crt that ass•'d
~~
B
th
and not to the deceased and hc'nce It was not prop
y
p .•
em
d
h
[
no proFrty escaped
on the death of the deceased an ' t ere ore,
.
.
t
In other words under the guise of rectification, the cnass·!ssmcn ·
'
·
t
nd therefore
•
hanced compensation could not b-~ taken Into ~c~ou_n . a
•
.
~
•the impugned notice was illegal and without
J~msdtctlon. ~he Ht!;?
Court negatived the contentions and upheld the Impugned notice. This.
C
decision is challenged in Civil App~al No. 2206 of 1972.
0
E
F
G
II
D~aling first with C.A. No. 2205 of 1972, wherein the notice issued
under s.59(a) of the Act has been challenged, counsel for the appellant
raised three conte'ntions against the vbv taken by the High Court. At
the out 5et counS'.!I pointed out that so far as the estate duty assessment in respect of the properties passing on the death of Shapoor was·
concerned, the respondent as well as the H igh Court had proceeded orr
th·~ v.Tong assumption that the acquired lands formed part of the estate
of the d~ccascJ and passed on his death, for, it was on such basis that
the High Court held that having regard to the enhanced compensation·
granted by the Civil Court for the la.nds such property (meaning lands)
had been undervalued in the original assessment and as such it had escaped assessment to duty. According to him the lands no long.:r
formed part of the estat~ of the deceased at the da:e of his ·death,
namely, on May 7, 1965, inasmuch as long prior thereto they had
ve~t~:d in the Govcrnmc:nt, and, therefore, it was merely the right to·
receive comp;:nsation, which, if at all, could constitute property pass!ng
on the death of the deceased., but he contended that during the lifetimeof the (].~;:cased the lands in question had not merely heen acquired but
cvc·n the compensation as determined under tho;: awards made by ~he
Spcciill D.:puty Co:J.~ctor was paid to and received by the deceased and:
hence nt tho;; time of the death the initial right to receive compensation:
~ad already merged in those awards ami the only right which the dcc~a~ed had was the right to agitate against the correctness of the award:>
and nothing more and this right to claim furth~r compensation was :t
~rccario~s right, being merely a right to litigate-a chancy and dicey
nght, wh1ch could not be clev;~tcd to the status of any asset or property
lind ns such there was no question of any property having escaped thenss~ssmcnt to du:y. It was urged thut such n right to further compensation would bccom.! property only when the claim would be accepted!
. .. ·--- -------···-·--""'
. ---~-~-------
\..
·~
(
K. S. CHENAI v. CONTROLLER OF ESTATE DUTY (Tulzapurkar, J.) 323
finally by the Court and till the enhanc-ed compensation became payable by reason of final adjudication of the Court no property could be
said to have come into existence and certainly it was not in existence at
the date of death. It was point·~d out that against the decrees passed
by the City Civil Court appeals had been preferred by the Government
to the High Court and even the High Court's decision might be carried
in further appeal to this Court and, therefore, till the claim was finally
accepted by the high~st Court no property (enhanced compensation)
could be said to have come into existence. Counsel urged that it would~
run counter to aU principles of direct taxation to regard the amou'nt
decreed subsequ.;ntly by the final Court as property having come into
existence retrospectively on the re},;vant date (being date of death under
Estate Duty Act and valuation date unckr the Wealth Tax Act) though,
in fact, it did not exist on that date, a'nd in this behalf reliance was
placed upon the dt;::cision of the Andhra Pradesh High Court in Khan
Bahadur Ahmed Alladin & .Sons. v. Commissioner of Income-tax('),
two decisions of the Calcutta High Court, namely, Commissioner of
Wealth Tax, West Bengai (II) v. U. C. Mahatab(") and Commissioner
of Income-Tax, West Bengal-I! vi. Hindustan Housing and Land Development Trust Ltd.(8 ) two decisions of the Gujarat High Court, namely,
Topandas Kundanmal v. Commissioner of Income-tax(4 )
and Addl.
Commissioner of Income-Tax, Gujarat v. New Jelumgir Vakil Mills
Co. Ltd. (r,) and one decision of the Kerala High Court in M. Jairam v.
Commissioner of Income~ Tax, Kerala(6). Secondly, counsel contended
that assuming that the. right to receive compensation survived and it
was that right which was being prosecuted by the heirs of Rashid in
Civil Court, the impugned notice had not been issued on the ground
that such right to compensation had be~n undervalued on the earlier
occasion and required to be properly valued as at the date of the death
but the basis on which it was issued was clearly unsustainablein law
inasmuch as the respondent had issued it on the assumption that there
had been escapement of assessment to duty because the lahds in the
original assessment had been undervalued in view of the glaring enhano~d compensation awarded by the Civi1 Court,and the High Court's
decision upholding the issuance of such notice on the wrong basis was
liable to be set aside. Thin!ly, counsel contended that seeking Refe-
.re·nces under the Land Acquisition Act and
th~ir pendency in Civil
(l) 74 I.T.R. 651; 657 and 658.
(2) 78 I.T.R. 214.
(3) 108 I.T.R. 380.
(4) 114 LT.R. 237.
(5) .117 I.T.R. 849.
(6) J]7 l.T.R. 638.
---------~--- - ~·
EG·
324
SUPREME COURT REPORTS
[1980} 2 S.C.R.
'f 'A
Court could not be said to be primary facts, non-disclosure of whictl
could amount to an on)ission or failure on the part of the accountable
~rson resulting in escapement of ass~ment to duty.
B
c
On the other hand counsel for the Revenue pressed for our acceptance the view taken by the High Court. He fairly conceded that the
lands in question could not be ~egarded as forming part of the estate of
the dereased on the relevant date in~smuch as the lands had vested in
the Government long prior to the death of the deceased, but he contended that upon such acquisition of lands, the right to receive compensation at market value on the dates of the relevant notifications accrued
to the deoeased and such right was unquestionably property which
would pass on the death of the deceased. He disputed that this right
to receive compensation got mer~d in the awards made by the Special
Deputy Collector or that thereafter such right ceased to exist. According to him if the awards made by the Special Deputy Collector had been
acquiesced in and accepted without a'ny protest by the deceased or his
D
heirs, such right would have merged in--the said awards, but where, as
in the case here, the awards made by the Special Deputy Collector,
which in law are nothiiig but offers made by the Government to the
claimant, are not accepted or are accepted under protest and the claimant seeks land References in Civil Courts, the right to compensation
must be regarded as having surviwd or kept alive by the claimants and
E
it is that property (right to compensation) which will have to be
evaluated by the assessing authority as qn the date of death. According
to him obviously this asset or property had not been correctly valued
in the original assessment proceedings inasmuch as glaring enhance-r
ment had been granted by the Civil Courts ih the land References and,
therefore, there was escapement of assessment to duty, and hence the
notice under s. 59(a) of the Act should be regarded as having been
issued properly. Counsel further contended that the High Court had
rightly taken the view that seeking References under the Land Acquisi--
tion Act and their pendency in Civil Court were primary facts which
had not been disclosed' by the accountable person during the original
·G
assessment and such non·disclosure led to the reasonable belief that
there was escapement of assessment to duty. The impugned
noti~
according to him, therefore, was, relied and justified.
As stated above, so far as the estate! duty assessment in respect of
the properties passing o:t;~. the death of Shapoor was concerned, counsel
for the Revenue fairly conceded that the la'nds which were the subject-
•H
matter of acquisition proceedings could not be regarded as forming
part of the estate of the deceased on the relevant date and could not
pass on his death inasmuch as those lands had vested in the Government
--- 1r---
- --.........-
J
J ~
Jl
"
..
•
-tl
_}.
.t-
I
'
\..
..
..
. J
>
K. S. CHENAI v. CONTROLLER OF ESTATE DUTY (Tulzapurkar, J.) 325
long prior to his death but the right to receive compensatio'n at market
valve on the dates of the relevant notifications unquestionably accrued
to the deceased which was property and it would be such pro~rty that
would pass on the death of th~ deceased. That such right is property
is well-settled and if necessary reference may 'be made to a decision of
this Court in Pandit Lakshmi Kant Jha v. Commissioner of WealthTax, Bihar and Orissa C), a case under the Wealth-Tax Act, 1957
where it has been clearly held that the right to receive com~nsation in
respect of the Zamindari estate which was acquired by the Government
under the Bihar Land Reforms Act, 1950, e\"Cn though the date of payment was deferred, was property and constituted an asset for the purpose of that taxing statute. In other words, since the lands ~re lost
to the estate of the ·deceased before the releva'nt date, namely, the date
of death, it would be the right to receive compensation under the Land
Acquisition Act that will have to be evaluated under the Estate Duty
Act. Counsel for the appellant did not dispute this position but he contended that no sooner the Collector (the Special Deputy Collector herein) made his awards determining the amounts of compensation payable
to the claimants under sec. 11 of the Land Acquisition Act, the right
to receive compensation must be regarded as having merged in the
awards, the determination having been made by a statutory public official and what the claimants would be left with thereafter WM merely a
right to agitat•;: the correctness of such determination and this right to
claim further compensation being merely a right to litigate was no asset
or property and further that such ri.cllt would become asset or property
only after the Civil Court finally adjudicated upon such claim. The
High Court, while negativing this contention, has held that the "right to
receive extra compensation'' was not a separate or different right independent of "the right to receive compensation".
It has observed
thus:
"The right to receive compensation for the lands acquired
by the Government, .at their market value at the date of the
acquisition is one and indivisible right.
There is no right
to 'receive compensation' a,.nd a separate right to receive 'extra
comp;msation'. The only: right is to receive the compensation for. the lands acquired by the Government, which is. the
fair market value on the date of acquisition.
The argument of learned counsel that the right to receive
extra compensation accrued when the Civil Court passed the
order and not before does
not merit
acceptance.
The
(1) 90 J.T.R. 97.
..
c·
,.
. . A
326
SUPREME COURT REPORTS
[1980] 2 s.c.a.
so called right to receive extra compensation cannot be torn
from or consider~ separately from the right to receive the
market value of the lands acquired by the Government. That
right accrues to the owner of the lands as soon as the lands are
acquired by the Government. It is, therefore, difficult to accept the argument of the learned counsel for the petitioner
that a fresh and an independent right to 'receive extra compensation' accrue to the heirs of the deceased and that it was
owrnd and possessed by the heirs of the deceased."
In our opinion the High Court was right in holding that there are
no two separate rights-one a right to receive compensation and other
-c a right to receiv·~ extra or further compensation. Upon acquisition of
· his lands under the Land Acquisition Act the claiinant 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 Wlder s.ll and by the Civil Court under
s.26 of the Land Acquisition Act.. It is true that under s.ll the Collec..
~D
tor after holding the necessary inquiry determines the quantum of ~om
pensation by fixing the marlret value of the land and in doing so is
guided by the provisions contained in ss. 23 and 24 of Act-the very
provisions by reference to which the Civil Court fixes the valuation. It
is also true that the Collector's award is, under s.l2, declar~d to be,
except as otherwise provided, final and conclusiv·~ evidence as between
E
him and the persons interested. Even so, it is well settled that in law
the Collector's award under s.ll is nothing more than a'n offer of compensation made by the Government to the claimants whose property
is acquired (vide Privy Council decisions in Ezra v. Secretary of State
for lndiaC) and this Court's decision in Rfzja Harish Chandra v. Dy .
.. • , Land Requisition Officer(2) and Dr. G. H.
Grant v. State
of
' '
Bihar C)). If that be the true nature of the award made by the Collector· then the question whe1ber the right to receive compensation sur·
vives the award must depend upon whether the claimant acquiesces
tlnlrein fully or not. If the offer is acquiesced in by total aeceptan~ the
right to compensation will not survive but if the offer is not accepted
-G
or is accepted under protest and a land reference is sought by the
claimant under s.l8, the right to receive compensation must be regarded
as having survived and kept alive which the claimant prosecutes in
Civil Court. It is impossible to accept the contention that no sooner
the Collector has made his award under s.ll the right to compensation
is destroyed or ceases to exist or is merged in the award, or what is left
(1) I.L.R. 32 Cal 605.
(2) [1962] 2 s.c.R. 676.
(3) [1965) 3 S.C.R. 576 .
.
- - -· ...... ·- ..
~
I •••
\..
'-
"
1(.., -~
K. S. CHENAI v. CONTROLLER OF ESTATE DUTY (Tu[zclpurkar, J.) 32'/
with th~ claimant is a mere righ! to litigate the correctness of the award.
The claimant can litigate the correctn~ss of the award because his right
to compensation is not fully redeemed but remains alive which he prose-·
-
-..
cutes in Civil Court. That is why when a ~laimant dies in a pending
J..
referenCe his heirs are brought on record and are permitted to prosecute
the reference. This, however, does not mean that the Civil Court's
.evaluation of this right done subsequep.tly would be its valuation a.> at
the rekvant date either under the Es~ate Duty Act or the Wealth Tax
Act. It will be the duty of the assessing authority under either of the
enactments to evaluate this property (right to receive compensation at
~rket value on the date of relevant notification) as o'n the relevant date
v· • (being the date of death under the Estate Duty and valuation date
under the Wealth Tax Act). Under s.36 of the Estate Duty Act the
assessing authority has ~· 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 b.;en accepted under protest and a reference is sought
or is pending in 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, Civil Court
cannot award any amount below tha! awarded by the Collector; the estimated value may be equal to the Collector's 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 whib arriv-
"""' ~at
a reasonable a'nd proper value of this property as on the date of
· V
m: 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 dsk or hazard
of litigation looming large at the rebvant date. The first contention of
>
counsel for the appellant, therefore, fails.
f
The second contention urged by the counsel for the appellant, howB
c
D
E
F
ever, appears to us to be \Wll-founded and the impugned notice issued
G
•
under s.59(a) of tQe Act will have to be quashed on that ground.