Statutory vesting under land acquisition law occurs only on the award or urgent possession, not on voluntary handover alone.

Under the Land Acquisition Act, title vests only in the statutory modes expressly provided by the Act. Section 16 contemplates vesting on the award and taking of possession, while section 17 applies only in specified urgency cases; mere voluntary delivery of possession, even during acquisition proceedings, does not itself cause statutory vesting. The doctrine of relation back was treated as inapplicable because bare prior possession is not the same as vesting by operation of law. On the stated facts, possession was not taken under section 17 and the award came later, so transfer and vesting were treated as occurring on the date of the award, attracting capital gains in that year.

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Issues: Whether, for capital gains purposes, the transfer of the acquired land took place when possession was voluntarily handed over before the award, or when the award was subsequently passed under the Land Acquisition Act.

Analysis: Vesting of title under the Land Acquisition Act is a matter of statute and occurs only in the situations expressly provided by the Act. Under section 16, vesting follows the award and taking of possession; under section 17(1) and section 17(2), vesting occurs only in the special urgency situations contemplated thereunder. Mere delivery of possession, even with the consent of the landowner and even during acquisition proceedings, does not by itself bring about vesting. The doctrine of relating back was held inapplicable because the statute does not treat bare prior possession as equivalent to statutory vesting. On the facts, possession was not taken under section 17 and the award was passed later, so vesting occurred on the date of the award.

Conclusion: The transfer and vesting took place on the date of the award, not on the earlier date when possession was handed over; the question was answered against the assessee and in favour of the Revenue.

Final Conclusion: Capital gains liability was attracted in the year of the award, since statutory vesting did not occur on the earlier voluntary delivery of possession.

Ratio Decidendi: Under the Land Acquisition Act, title vests in the Government only upon statutory vesting under the specific provisions authorising such vesting, and bare delivery of possession before the award does not constitute transfer by operation of law.

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