Capital gains transfer under land acquisition law arises on possession and vesting, not mere publication of notification.

For capital gains purposes under the Kerala Land Acquisition Act, 1961, transfer is triggered only when possession is taken and the land vests absolutely in the Government. Mere publication of the acquisition notification does not by itself create a taxable transfer, because the statutory vesting mechanism under the Kerala Act differs from the Requisitioning and Acquisition of Immovable Property Act, 1952. The principle therefore is that the timing of transfer depends on the governing acquisition statute, and liability arises on actual vesting by possession rather than on notification alone.

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Issues: Whether, for purposes of capital gains, transfer took place on the date of the acquisition notification under the Kerala Land Acquisition Act, 1961, or only when possession was actually taken and the land vested in the Government.

Analysis: Under the Kerala Land Acquisition Act, 1961, vesting of land in the Government occurs after the Collector takes possession following the award, and the statutory scheme is materially different from the Requisitioning and Acquisition of Immovable Property Act, 1952, where vesting is tied to the publication of the acquisition notice. The earlier Supreme Court decision relied on by the Revenue turned on that different statutory provision and could not govern acquisition under the Kerala Act. On the facts, the liability to capital gains did not arise merely on publication of the notification; it arose only when possession was taken and the property vested absolutely in the Government.

Conclusion: Transfer for capital gains purposes did not occur on the date of the notification, and the question was answered in the affirmative in favour of the assessee and against the Revenue.

Ratio Decidendi: Where the governing land acquisition statute provides that vesting occurs only upon taking possession, capital gains transfer is attracted on actual vesting by possession and not on the mere publication of the acquisition notification.

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