Section 54B relief: two-year period runs from receipt of compensation, and land appurtenances count in qualifying investment.

For exemption under section 54B, the two-year investment period is to be computed from the date on which compensation is actually received, not from the date of compulsory transfer or vesting, because the provision is beneficial and must be applied to avoid depriving the assessee of relief due to delayed payment. The finding that the agricultural land was transferred on 26.06.1977 was treated as a factual conclusion supported by the record. The value of the tube-well and standing trees was also held to form part of the agricultural land investment and was not deductible from the qualifying purchase consideration. The exemption was thus upheld on all material issues.

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Issues: (i) Whether the date of transfer of the acquired agricultural land was to be treated as 26.06.1977 and not an earlier date; (ii) Whether, for exemption under section 54B, the period of two years was to be computed from the date of receipt of compensation and not from the date of transfer; (iii) Whether the value of the tube-well and standing trees was to be excluded from the assessee's investment in the agricultural land purchased.

Issue (i): Whether the date of transfer of the acquired agricultural land was to be treated as 26.06.1977 and not an earlier date.

Analysis: The finding that possession and transfer took place on 26.06.1977 was supported by the appellate authorities and no material was shown to dislodge that factual conclusion. In the absence of any evidence demonstrating perversity or legal error, the finding remained one of fact.

Conclusion: The date of transfer was correctly treated as 26.06.1977.

Issue (ii): Whether, for exemption under section 54B, the period of two years was to be computed from the date of receipt of compensation and not from the date of transfer.

Analysis: Section 54B was read harmoniously with section 45 of the Income-tax Act, but as a beneficial provision it was construed to avoid an absurd result where delay in payment of compensation would deprive the assessee of the exemption. The provision was interpreted to make the date of actual receipt of compensation the relevant starting point for the two-year period, and not the date of transfer or vesting under the Land Acquisition Act.

Conclusion: The two-year period under section 54B had to be computed from the date of receipt of compensation, and the assessee was entitled to the benefit.

Issue (iii): Whether the value of the tube-well and standing trees was to be excluded from the assessee's investment in the agricultural land purchased.

Analysis: The tube-well and standing trees were part of the agricultural land acquired and repurchased, and there was no material to show that their value stood apart from the land investment. The entire purchase consideration was therefore to be treated as investment in agricultural land.

Conclusion: The value of the tube-well and standing trees was not liable to be deducted from the assessee's investment.

Final Conclusion: The reference was answered wholly in the assessee's favour, and the exemption under section 54B was upheld on all material issues.

Ratio Decidendi: For the purposes of section 54B, the relevant date for computing the two-year investment period is the date on which compensation is actually received, and not the date of transfer under compulsory acquisition; where accessories form part of the agricultural land, their value is included in the qualifying investment.

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