PER SHRI T. VENKATAPAA, J.M. ORDER One appeal is by Department and other by assessee. They are being taken up together. 2 . assessee and one Smt. R. Anasuya Devi owned 12 acres 15 guntas of land at Hanumakonda as co-owners with equal shares. Out of this land 5 acres 2 guntas were acquired by Sub-Collector, Warangal for Road Transport Department during year ended 31st March, 1966 relevant to asst. yr. 1966-67. compensation of Rs. 1,51,717 was paid to co-owners. In asst. yr. 1966-67 capital gain in each of assessments of co- owners was assessed at Rs. 3,259. Against compensation of Rs. 1,51,717 awarded by Sub-Collector, Co-owners appealed before District Judge, Warangal who by his order dt. 18th Aug., 1972 granted further compensation of Rs. 60,112 and sum of Rs. 41,606 was also awarded as compensation for severance of land. ITO reopened assessment under s. 147 for asst. yr. 1966-67 to assessee above compensation received. proposal for reopening of assessment under s. 147 was submitted to CBDT for approval as according to ITO taxable capital gain was Rs. 50,859 and Board accorded approval. Accordingly notice under s. 147 was issued in response to which assessee field return. In this return assessee has not returned any income from capital gain in respect of enhanced compensation as per order of District Judge. ITO made assessment on 24th Dec., 1983 under s. 143(3) r/w s. 147. assessee contended that for asst. yr. 1973-74, he has declared enhanced compensation of his half share as well as interest. With respect to sum of Rs. 41,606 awarded in which assessee had half share, it was claimed that it was capital receipt and ITO in assessment order for 1973-74 accepted same. assessee contended that reopening of assessment under s. 147 is bad. above contentions of assessee did not find favour with ITO. In assessment order dt. 24th Dec., 1983 he held that assessment has been validly reopened. assessee's contention that amount received for severance of land resulting in injurious effect on remaining land was capital receipt does not hold good as it was also received as part of enhanced compensation. Hence it is part of capital gain. He computed capital gain and also taxed interest received on enhanced compensation as well as he compensation received for severance of land. assessee appealed to AAC. He held that enhanced compensation is assessable in asst. yr. 1966-67. assessment was validly reopened under s. 147 as escaped income is Rs. 50,859. additional compensation for severance of land is also taxable as capital gain. So far as interest is concerned, interest from 3rd Sept., 1965 to 31st March, 1973 is assessable only in asst. yr. 1973-74 as enhanced compensation was awarded on 18th Aug., 1972 and so it is not assessable in asst. yr. 1966-67. interest assessable for asst. yr. 1966-67 is interest which accrued for period 3rd Sept., 1965 to 31st March, 1966 and nothing more. He directed ITO to rework interest for that period. Against above order, assessee as well as Revenue has preferred these appeals. 3. learned counsel for assessee strongly urged that reopening of assessment under s. 147 is not valid as escaped income if any is below Rs. 50,000 and so reopening done beyond 8 years is time barred and Board has also no power to accord sanction. He pointed out that out of capital gains of Rs. 54,118 exemption of Rs. 5,000 under s. 80T is to be allowed. capital gain thereafter to be assessed will be only Rs. 49,118. Since it is below Rs. 50,000 even Board has no power to sanction. He then submitted that additional compensation has been received on 18th Aug., 1972 and it has been assessed in asst. yr. 1973-74. Hence, it cannot be assessed in asst. yr. 1966-67. He further urged that sum of Rs. 41,606 awarded by District Judge for severance of land resulting in injurious effect on remaining land is capital receipt and half share of assessee in that amount cannot be treated as capital gain. This contention was also accepted by ITO for asst. yr. 1973-74 and Department cannot give go-by to that order. He also urged that said amount is capital receipt and it cannot be treated as capital gain. In this connection he placed reliance on decision in CIT vs. Smt. M. Subaida Beevi (1986) 57 CTR (Ker) 324 : (1986) 160 ITR 557 (Ker). He strongly urged that capital gain in respect of enhanced compensation in assessable only in asst. yr. 1973-74 as additional compensation was granted only in that year and not in asst. yr. 1966-67. He placed reliance on decision in Khan Bahadur Ahmed Alladin & Sons vs. CIT (1969) 74 ITR 651 (AP). learned Departmental representative repelled above contentions. He submitted that since land has been acquired in accounting year relevant to asst. yr. 1966-67 additional compensation even if it is awarded in 1972 it is assessable in asst. yr. 1966-67. sum of Rs. 41,606 awarded for severance of land cannot be treated as capital receipt and it is part of capital gain. He further urged that assessment has been validly reopened under section1 47 after obtaining Board's sanction. Dealing with Departmental appeal he submitted that entire interest on enhanced compensation as also additional compensation for severance of land is assessable in asst. yr. 1966-67. Dealing with Departmental appeal, learned counsel for assessee submitted that interest on enhanced compensation and additional compensation is not assessable in asst. yr. 1966-67. He placed reliance on decision of A. P. High Court in CIT vs. Smt. Sankari Manickyamma (1976) 105 ITR 172. 4. We have considered rival submissions. It will be necessary to give computation of capital gain as mentioned by ITO in assessment order dt. 24th Dec., 1983. It is as follows : Rs. Original compensation 1,51,717 Add : Enhanced Compensation 60,112 Add : Compensation for severance 41,606 2,53,435 Deduct : Cost of acquisition of land as fixed by AAC in his order dt.18th March, 1967@ Rs. 26,400 1,45,200 per acre and cost of5.20 acres worked out to Rs. 1,45,200 1,08,235 1/2 share of assessee in above 54,118 Less : Capital gain already assessed 3,259 Balance taxable capital gain 50,859 From above it is clear that assessee's half share in capital gain is Rs. 54,118. Out of this deduction of Rs. 5,000 under s. 80T has to be allowed. If that is allowed capital gain would come to Rs. 49,118. This deduction under s. 80T has not been allowed in original assessment as capital gain assessed was Rs. 3,259 which was below Rs. 5,000. Hence, after deduction of Rs. 5,000 under s. 80T capital gain is only Rs. 49,118. Since this is below Rs. 50,000 even CBDT cannot accord sanction for reopening assessment beyond period of 8 years. Since assessment has been reopened beyond period of 8 years when income escaped is below Rs. 50,000 reopening of assessment itself is not valid. Thus, we hold that re- assessment proceedings are invalid, and re-assessment order dt. 24th Dec., 1983 cannot stand. 5. enhanced compensation of Rs. 60,112 in which assessee has half share has been awarded by District Judge on 18th Aug., 1972 which is assessable only in asst. yr. 1973-74 but not in asst. yr. 1966-67. In Khan Bahadur Ahmed Alladin & Sons' case (supra), A. P. High Court held that enhanced compensation accrued to assessee only when Court accepted claim and not when land was taken over by Government. At page 658 it was observed as under : "In our view, unless amount of compensation actually becomes payable o r enforceable, it cannot be said to accrue or deemed to accrue. On date when Collector awarded compensation, it is only that amount which had accrued or deemed to accrue, whether in fact paid or not. But by no stretch of words in s. 4(1) (b) (i), could it be said that right to enhanced compensation, which has not yet been accepted by proper forum, namely, Court, has also become payable on date when original compensation became payable, for being included in that year of assessment. enhanced compensation accrues only when it becomes payable, i.e., when Court accepts claim. As has been stated earlier, mere claim by assessee, after taking of possession of land, at particular rate or for certain sum is not compensation. It must not be forgotten that, even if Court has awarded enhanced compensation, there is right of appeal by Government to High Court, and High Court may either disallow that claim or reduce compensation. As against that judgment, there is further right of appeal to Supreme Court. assessee also can appeal against insufficiency of enhanced compensation. Can it be said that final determination by highest Court of compensation would entitle ITO, notwithstanding period of limitation fixed under IT Act, to reopen assessment in which he had included initial compensation awarded by Collector and recompute entire income on basis of final compensation ? We do not think there can be any justification for such proposition. On proper construction of terms 'accrue' or 'arise', we are of view that such interpretation cannot be placed. interpretation given by us does not affect interests of Revenue. At same time it safeguards assessee and prevents harassment. To hold otherwise, would be contrary to provisions of law." above ratio would squarely apply to instant case. decision in Addl. CIT vs. G. M. Omarkhan (1979) 116 ITR 950 (AP) and decision in S. Appalanarasamma vs. CIT (1987) 31 Taxman 231 (AP) are distinguishable as they do not deal with enhanced compensation awarded by high Court. Following with respect decision of A. P. High Court in Khan Bahadur Ahmed Alladin & Sons' case (supra) we hold that enhanced compensation of Rs. 60,112 in which assessee has half share which was awarded by District judge on 18th Aug., 1972 is assessable only in asst. yr. 1973-74 and not in asst. yr. 1966-67. We are told that in fact ITO has assessed same in asst. yr. 1973-74 earlier. Thus, ITO was wrong in assessing above amount in assessment for asst. yr. 1966-67 by his order dt. 24th Dec., 1983. This principle would apply even in respect of Rs. 41,606 in which assessee has half share, awarded by District Judge on 18th Aug., 1972 for severance of land resulting in injurious effect on remaining land. Hence, this amount is not assessable in asst. yr. 1966-67. Further, it cannot be treated as capital gain also as it has not been awarded for transfer of land but it was awarded only by way of damages for injurious effect on balance of land belonging to assessee. In coming to this conclusion we derive support from decision of Kerala High Court in Smt. M. Subaida Beevi's case (supra) wherein it was held that severance compensation is awarded to assessee for reason that acquisition has injuriously effected property other than property acquired and it cannot be treated as part of consideration received or accrued as result of transfer of capital asset and so compensation for severance is by way of damages for injurious effect on land belonging to assessee and not related to capital asset. Following with respect this decision we hold that sum of Rs. 41,606 in which assessee has share has been awarded only by way of damages for injurious effect on balance of land belonging to assessee and it is not related to transfer of acquired land. Thus, it cannot be treated as part of capital gain. 6. We will now take up Departmental appeal. ground raised relates to interest for period 3rd Sept., 1965 to 31st March, 1966 on enhanced compensation and on additional compensation. In Smt. Sankari Manickyamma's case (supra), A. P. High Court held that right to receive compensation or interest accrues to person from date when statutorily designated authorities determine same. AAC has only followed above decision. In our view above decision squarely applies to instant case. District Judge awarded interest in his judgment dt. 18th Aug., 1972 and so it was assessable only in asst. yr. 1973-74. 7 . In result, assessee's appeal is allowed and Departmental appeal is dismissed. *** INCOME TAX OFFICER v. R. SURENDER REDDY