Land assessed to revenue requires a subsisting assessment; acquisition and free conveyance extinguished the exemption claim.

Land acquired under the Land Acquisition Act and later conveyed free from Government land revenue was not treated as land assessed to land revenue for section 2(1)(a) of the Indian Income-tax Act. The earlier revenue-paying estate interest was extinguished on acquisition, and the later payment described as the capitalised value of revenue did not preserve any subsisting assessment; at most it compensated the Government's lost revenue interest or operated as a redemption that ended the assessment. The conveyance expressly transferring the land free and discharged from land revenue confirmed that no relevant assessment survived, so the exemption was unavailable.

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Issues: Whether land acquired under the Land Acquisition Act and thereafter conveyed as free from Government land revenue could still be treated as land assessed to land revenue within the meaning of section 2(1)(a) of the Indian Income-tax Act.

Analysis: The land originally formed part of a revenue-paying estate, but upon acquisition under the Land Acquisition Act the pre-existing estate interest was extinguished and the land vested in Government free from other interests. The subsequent payment described as the capitalised value of the revenue did not preserve the old assessment; on the facts it either represented compensation for the Government's lost revenue interest or, even if treated as a redemption, operated to extinguish any subsisting assessment. The later deed of conveyance strengthened that conclusion by expressly transferring the land as free and discharged from all Government land revenue and charges in the nature thereof.

Conclusion: The land was not assessed to land revenue during the relevant accounting years, so the Tribunal's conclusion was correct and the assessee was not entitled to the exemption claimed.

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