TaxTMI 
TaxTMI 
2020 (8) TMI 731
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....tax under Section 45 of the Act of 1961 for the previous year referable to the date of award of compensation i.e., 29.09.1970 and not the date of notification for acquisition. 2. In the present case, the question concerning date of accrual of capital gains arose in the backdrop that though the proceedings for acquisition in question were taken up by way of notification dated 15.05.1968 and award of compensation was made on 29.09.1970 but, as a matter of fact, at the time of issuance of the initial notification for acquisition, the subject land was already in possession of the beneficiary under a lease, though the period of lease had expired on 31.08.1967. In the light of these facts, the ITAT did not approve of charging tax over capital gains with reference to the date of award while observing that the date of notification (i.e., 15.05.1968) would be treated as the date of taking over physical possession and the transaction (leading to capital gains) would be considered as having taken place on that date and not on the date of award (i.e., 29.09.1970). The High Court, however, did not agree with this line of reasoning and held that the amount of compensation was determined only ....
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....a on 15.05.1968, seeking to acquire the subject land for public purpose, namely, playground for the College. This was followed by the declaration dated 13.08.1969 under Section 6 of the Act of 1894. Ultimately, after submission of the claim for compensation, the Land Acquisition Collector, Ambala proceeded to make the award on 29.09.1970. 7. The relevant features concerning possession of the land in question and computation of the amount of compensation are duly recorded in the award dated 29.09.1970 and for their relevance, the material parts of the award need to be taken note of. 7.1. As regards possession of the land in question, the learned Collector observed as under:- "Possession of land: The land in question was on lease with the Jain College, managing Society upto 31st August 1967. Thereafter the acquisition proceedings were started and the society was in possession of the same since then. Therefore the land owners are entitled to the interest from the date of notification u/s 4 which was issued on the 15th May, 1968. The interest at the rate of 6% per annum will be paid to the land owners in addition to the compensation and Solatium from 15th May,19....
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....e land in question had been acquired in the earlier years. The relevant part of the assessment order dated 12.02.1982 reads as under:- "........The assessee has shown intt. at Rs. 1000/- only. The assessee's lands were required by Haryana Govt. vide notification date 16.05.68, 11.06.69 and 13.08.69. Since the lands were acquired in the earlier years and the capital gains are not relevant for the year under consideration. However, the assessee received compensation late vide award dated 29.07.70 by land Acquisition Controller, the assessee received interest of Rs. 10596/- which the assessee has not shown in the return. As such the intt. Income is taken at 11596 including 1000/- so-moto shown by the assessee...." (sic) Before the Appellate Commissioner 9. Being aggrieved by the order so passed by the Assessing Officer, the assessee preferred an appeal before the Appellate Assistant Commissioner of Income Tax, Ambala- For short, 'the CIT(A)' in B/Amb/82-83 on the grounds, inter alia, that the AO was not justified in enhancing the annual letting value of the house property and was also not justified in including the interest amount of Rs. 11,596/- received from Land Acqu....
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....ount of compensation has not been fixed by the Land Acquisition Collector, no income could be said to have occurred to the appellant...... Income Tax is not levied on a mere right to receive compensation, there must be something tangible, something in the nature of debt, something in nature of an obligation to pay an ascertained amount. Till such time, no income can be said to have accrued. On the date when the collector awarded the compensation, it is only that amount which had accrued whether in fact paid or not. Accordingly, in the present case, even though the possession of land was taken in 1968, no amount can be said to accrued on the date of possession because the compensation at that point of time was not determined at all. This amount of compensation was determined only after the award dated 29.9.70. Therefore, if any income on account of capital gain is chargeable to tax, it will be chargeable on the date of award. It is held accordingly that the capital gain arising out of acquisition of land is chargeable to tax in the previous year, relevant to assessment year under consideration because the date of award i.e. 29.9.70 is within the relevant previous year." (em....
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.....09.1972, the date of taking possession. Thus, the ITAT held that the capital gains arising from the said acquisition were not assessable for the accounting period relevant for the assessment year 1975-1976. The material part of findings of ITAT in the said order dated 19.12.1985, in ITA No.635/Chandi/84 pertaining to the assessment year 1975-1976, reads as under:- "9...The case, therefore, falls under the urgency provision contained in section 17 of the Land Acquisition Act, 1894. The transfer within the meaning of section 2(47) took place on the date the possession of land was taken by the Government. Section 2(47)(i) provides that the transfer in relation to a capital asset includes the extinguishment of any rights therein. Section 17 of the Act provides that after taking possession of the land in urgent cases, such land shall thereupon vest absolutely in the Government free from all encumbrances. The assessee was, therefore, divested of the title to the lands and the lands thereafter vested in the Government w.e.f. 4-9-72 i.e. the date of possession of the lands. In this view of the matter, we are of the opinion that the capital gains arising from the acquisition of th....
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....ver, is certain that the possession of the lands was taken before the award was made u/s 11 of the Land Acquisition Act. 6. Similar issue came up for consideration before us in the case of the assessee itself for the assessment year 1975-76 and vide our orders of even date in I.T.A. No. 635/Chandi we have held that it was a case which fell u/s 17 of the Act and, therefore, capital gains were assessable on the basis that the transfer took place on the date of possession of lands by the Government. Since the actual date of possession of the land is not available, we are of the opinion that the matter should be restored to the file of the ITO who should find out the actual date of possession of the lands by the Government. In case the possession of the lands was taken by the Government prior to the date of award and before Ist April,1970, the capital gains will not be included in the income for the assessment year 71-72. If the possession of the lands was also taken during the period 1-4-70 to 31-3-71, the capital gains will be assessable for the assessment year 71-72. After finding the actual date of possession by Govt. the ITO, he shall recompute the income on the above bas....
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....h no evidence in this regard was adduced but, the appellant relied upon the decision of Kerala High Court in the case of Peter John v. Commissioner of Income-Tax: (1986) 157 ITR 711 to submit that capital gains, if any, arise at the point of time when the land vests in the Government and such a date in the present case was 15.05.1968. Further, by way of communications dated 28.09.1987 and 11.01.1988, the AO asked the assessee-appellant to give the exact date-wise calculation of interest in terms of the aforesaid judgment of High Court dated 25.10.1985 but not much of assistance came up from the appellant in that regard. 15.1. As the appellant was unable to bring forth the requisite information with evidence, the AO also made enquiries from the revenue authorities, particularly regarding the date of taking over possession. In response, the AO received information that the land in question was on lease with the College; and that as per the procedure adopted, the date of taking possession by the Government was 'in consonance' with the date when the award was announced. 15.2. The AO took note of all the facts and features of this case in his re- assessment order dated 25.01.1988 ....
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.... only restored the issue as regards the date of possession to the file of AO and therefore, the AO was not justified in proceeding as if making a de-novo assessment; and was not justified in bringing the enhanced amount of compensation to tax for which, he should have passed a separate order under Section 155(7A) of the Act of 1961. In regard to this contention, the CIT(A) noted that indisputably, for computation of capital gains, the ITO had the power to take into consideration the enhanced compensation received by the appellant for compulsory acquisition of the land; and when the ITO could have drawn up a separate order under Section 155(7A), he was well within the powers to combine such an order with his order for carrying out the directions of ITAT. The contention on the frame of the order was, therefore, rejected. 16.2. The CIT(A), thereafter, extensively dealt with the facts of the case on the issue as to whether the ITO had correctly held that possession of the appellant's compulsorily acquired land was taken over by the Government during the previous year relevant to the assessment year in question. The CIT(A) held that it had not been a case of compulsory acquisition un....
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....5.68. This goes to show that the interest was awarded to the appellant from a date prior to the date of award u/s 11 of the Land Acquisition Act which is dated 29.9.70 not because the possession had been taken u/s 17 of the Land Acquisition Act but because of various Court, rulings be holding, as mentioned above, that on equitable interpretation of Sec. 28 of the Land Acquisition Act, interest should be awarded from the date of possession even in cases where the possession had been taken before the date of award u/s 11 of the Land Acquisition Act, even though the possession was unauthorized or taken with or without the consent of the landlord. 10. In view of the above discussion, it is obvious that the possession of the lands in the instant case legally passed to S.A. Jain College, Ambala City through the Govt. on the date of the award u/s 11 of the Land Acquisition Act and it is only on this date that the ownership in the lands got vested in the Govt....... As discussed above, the fact that S.A. Jain College, Ambala was already in unauthorized possession of the lands and that interest has been awarded to the appellant from part of the period during which S.A. Jain College....
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....ssion. The Ld. ITO in his own way came to the conclusion that the date of award was the date of possession whereas assessee's case depended on the date of notification. Both the dates appear to be misconceived as the actual physical possession of the land was already with the college, under a lease, since 1.1.47. Thus as a consequence of the acquisition proceedings only some of symbolic or constructive possession was to be taken as the physical possession was already there. In terms of the order under challenge and so also the assessment order and the position of law also, the ownership exchanges hands from the date of award which in the present case is 29.9.70, but before recording a firm finding in this respect, we have to keep in mind the earlier finding of the Bench dated 19.12.85 wherein it was observed that the actual date of possession be ascertained and capital gains assessed in the year in which the possession was taken. The determination of this aspect is slightly difficult in view of the complex factual position existing on the record. We cannot take 29.9.70 as on the date of doubt (sic) the award was given but the possession was already with the college. We also cannot ....
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....he intention of the parties and the mention in the award that the interest became payable to the assessee from that date only and not from any other date. In the light of the above discussion, we are inclined to hold that the capital gains could not be assessed for the year under consideration as the transaction did take place on 15.5.68. The revenue authorities were thus not justified to include the capital gains for the year under consideration and the Ld (CIT(A) was not justified to confirm such action. We vacate the finding of this aspect. The Revenue authorities are at liberty to look into the matter in respect of capital gains taking the date of possession as 15.5.1968. Dispossession or actual date of taking physical possession is to be understood in the context of the facts to the present case as the change of the ownership as the possession was already with the college under the lease. 15. Since we have held that capital gains are not to be taxed for the year under consideration, other issues connected with this aspect and raised by the assessee not to be gone into as the very basis has knocked down." (emphasis in bold supplied) 18. Taking exception aga....
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....at for the purpose of assessment of capital gains, the date of award (i.e., 29.09.1970) was required to be taken as the date of taking over possession because, on that date, the land in question vested in the Government under Section 16 of the Act of 1894. 19.3. The High Court further examined the ambit and scope of Section 45 of the Act of 1961 and on its conjoint reading with Section 16 of the Act of 1894, came to the conclusion that the transfer of capital asset (the land in question) and its vesting in the Government took place on 29.09.1970, the date of award. The High Court further held that under the Income-tax Act, 1961, an income was chargeable to tax only when it had accrued or was deemed to have accrued in the year of assessment; and in the present case, if any income on account of capital gains was chargeable to tax, it would be chargeable on the date when the Collector determined the compensation because, the income accrued to the appellant only upon such determination. The High Court, therefore, held that the capital gains arising out of acquisition of land were chargeable to tax in the previous year relevant to assessment year under consideration because the date ....
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....nt and order dated 23.4.2008 so passed by the High Court, holding that the capital gains arising out of the acquisition in question were chargeable to tax in the assessment year 1971- 1972, the assessee-appellant has preferred this appeal by special leave. Rival Submissions Appellant 21. Assailing the view taken by the High Court, learned counsel for the appellant has essentially crusaded on two-fold arguments: One, that on the facts and in the circumstances of the present case, where the land in question was already in possession of the beneficiary College, the assessee-appellant was divested of its title and right to this property with issuance of notification under Section 4 of the Act of 1894 when the State took up the acquisition in urgency; and the transfer for the purposes of Section 2(47) of the Act of 1961 was complete on the date of that notification itself i.e., on 15.05.1968 and hence, capital gains arising out of such acquisition and interest accrued could not have been charged to tax with reference to the date of award i.e., 29.09.1970. Secondly, it is not open for the revenue to question the decision of ITAT in the present case pertaining to the assessment year....
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....e present case, since the possession was taken on 15.05.1968, capital gains and interest accrued were taxable only in the assessment year 1969-1970 and not in the assessment year 1971-1972. 21.2. In the second limb of submissions, learned counsel for the appellant has referred to the order dated 19.12.1985, as passed by the ITAT in ITA No. 635/CHD/84 for the assessment year 1975-1976 (Annexure P-5) and has submitted that in the similar facts and circumstances, pertaining to the acquisition of another land of the appellant, the ITAT specifically decided that capital gains were not relatable to the date of award but were relatable to the date of dispossession; and the revenue indeed accepted the said decision by not challenging it any further. While strongly relying upon the decision of this Court in Berger Paints India Ltd. v. Commissioner of Income-Tax: (2004) 266 ITR 99, the learned counsel has contended that where the order passed in favour of the very same assessee and against the revenue in a similar matter has attained finality, the revenue cannot seek re-opening of the issue in relation to the other case without a just cause. Thus, according to the learned counsel, the vie....
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....rovision for taking possession in the present case had been Section 16 of the Act of 1894 whereunder, possession could be taken by Collector after making the award under Section 11 and only thereupon the land under acquisition vests in the Government, free from all encumbrances. The learned counsel would maintain that on the facts of the present case, the possession legally passed on to the College through the Government only on 29.09.1970 i.e., the date of award; and this date of award shall alone be relevant for chargeability of tax against capital gains of the assessee with transfer of capital asset. In support of his contentions, the learned counsel has referred to and relied upon various decisions including those in Joginder Singh and Ors. v. State of Punjab and Anr.: AIR 1985 SC 382 and Bombay Burmah Trading Corporation Ltd. v. Commissioner of Income-Tax: (1988) 169 ITR 148. 22.3. Learned counsel for revenue has also submitted that reliance by the appellant on the case of Berger Paints (supra) is entirely misplaced because the said case relates to business expenditure under Section 34B of the Act of 1961 and has no relevance to the present case. Points for determination....
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....uestioned before the CIT(A) but, it was held that as regards enhanced compensation, the AO could have passed the order by virtue of his powers under sub-section (7A) of Section 155 of the Act of 1961. Though, this aspect is not directly involved in the present appeal but, for the sake of reference, we may indicate that Section 155 of the Act deals with the power of amendments of assessment; and sub-section (7A) thereto was inserted by Finance Act, 1978 with retrospective effect from 01.04.1974 and was omitted by Act No. 4 of 1988 with effect from 01.04.1992. This sub-section (7A) of Section 155, as existing at the relevant time of passing the order by the AO, had been as under:- "(7A) Where in the assessment for any year, the capital gain arising from the transfer of a capital asset, being a transfer by way of compulsory acquisition under any law, or a transfer the consideration for which was determined or approved by the Central Government or the Reserve Bank of India, is computed under section 48 and the compensation for such acquisition or the consideration for such transfer is enhanced or further enhanced by any court, tribunal or other authority, the computation or, a....
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.... and the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality. (2) Thereupon it shall be lawful for any officer, either, generally or specially authorised by such Government in this behalf, and for his servants and workmen, - to enter upon and survey and take levels of any land in such locality; to dig or bore into the sub-soil; to do all other acts necessary to ascertain whether the land is adapted for such purpose; to set out the boundaries of the land proposed to be taken and the intended line of the work (if any) proposed to be made thereon; to mark such levels, boundaries and line by placing marks and cutting trenches; and, where otherwise the survey cannot be completed and the levels taken and the boundaries and line marked, to cut down and clear away any part of any standing crop, fence or jungle: Provided that no person shall enter into any building or upon any enclosed court or garden attached to a dwelling house (unless with the consent of the occupier thereof) without previously giving such occupier at least seven days' no....
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....fter appearing." "9. Notice to persons interested.- (1) The Collector shall then cause public notice to be given at convenient places on or near the land to be taken, stating that the Government intends to take possession of the land, and that claims to compensation for all interests in such land may be made to him. (2) Such notice shall state the particulars of the land so needed, and shall require all persons interested in the land to appear personally or by agent before the Collector at a time and place therein mentioned (such time not being earlier than fifteen days after the date of publication of the notice), and to state the nature of their respective interests in the land and the amount and particulars of their claims to compensation for such interests, and their objections (if any) to the measurements made under Section 8. The Collector may in any case require such statement to be made in writing and signed by the party or his agent. (3) The Collector shall also serve notice to the same effect on the occupier (if any) of such land and on all such persons known or believed to be interested therein, or to be entitled to act for persons so intereste....
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.... of any land to which in the opinion of the appropriate Government, the provisions of sub-section (1) or sub-section (2) are applicable, the appropriate Government may direct that the provisions of Section 5A shall not apply, and, if it does so direct, a declaration may be made under Section 6 in respect of the land at any time after the publication of the notification under Section 4, sub-section (1)." 26.3. One peripheral aspect relating to the treatment of interest on enhanced compensation has also occurred in the present case for which, the CIT(A) in his order dated 31.03.1989, has referred to Section 28 of the Act of 1894. This provision, as existing at the relevant time, had been as under:- "28. Collector may be directed to pay interest on excess compensation.- If the sum which, in the opinion of the Court, the Collector ought to have awarded as compensation is in excess of the sum which the Collector did award as compensation, the award of the Court may direct that the Collector shall pay interest on such excess at the rate of six per centum per annum from the date on which he took possession of the land to the date of payment of such excess into Court." Note: We....
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....e property leased:- *** *** *** (q) on the determination of the lease, the lessee is bound to put the lessor into possession of the property." 27.2.1. Determination of lease by efflux of time is envisaged in clause (a) of Section 111 of the Act of 1882 as follows: "111. Determination of lease.- A lease of immovable property determines- (a) by efflux of the time limited thereby; *** *** ***" 27.2.2. One of the features of the transaction of lease, in the case where lessee remains in possession after determination thereof and the lessor assents to his possession, is dealt with by Section 116 of the Act of 1882 that reads as under:- "116. Effect of holding over.- If a lessee or under-lessee of property remains in possession thereof after the determination of the lease granted to the lessee, and the lessor or his legal representative accepts rent from the lessee or under-lessee, or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in section 10....
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....d, by fiction, it has been provided that such profits or gains shall be deemed to be the income of the previous year in which transfer took place. Differently put, capital gains of an assessee, arising from transfer of capital asset, are chargeable to tax as income of the previous year in which transfer had taken place. 30. Applying the aforesaid concepts of "transfer" and "transfer of property" to the facts of the present case, it could be readily found that when the subject land has been compulsorily acquired, its transfer from the assessee-appellant to the Government is directly covered by Section 2(47) of the Act of 1961. 30.1. Thus, the basic elements for chargeability of the gains, arising from compulsory acquisition of the subject land, to income-tax under the head "capital gains", do exist in the present case. However, the gains so arising would be deemed to be the income of the previous year in which transfer took place. 31. Entering into the enquiry as to when had the transfer, of subject land from the assessee-appellant to the Government, taken place, we need to take into account the principles governing completion of transfer of land from the owner to the Gover....
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.... to withdraw from the acquisition under Section 48 of the Act of 1894, this Court exposited on the gamut of the ordinary process of taking possession of the land under acquisition and legal requirements as also implications thereof, in the following words:- "5......Under the scheme of the Act, neither the notification under Section 4 nor the declaration under Section 6 nor the notice under Section 9 is sufficient to divest the original owner of, or other person interested in, the land of his rights therein. Section 16 makes it clear beyond doubt that the title to the land vests in the government only when possession is taken by the government. Till that point of time, the land continues to be with the original owner and he is also free (except where there is specific legislation to the contrary) to deal with the land just as he likes, although it may be that on account of the pendency of proceedings for acquisition intending purchasers may be chary of coming near the land. So long as possession is not taken over, the mere fact of a notification under Section 4 or declaration under Section 6 having been made does not divest the owner of his rights in respect of the land or ....
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....ation. It would thus appear that the word "vest" has not got a fixed connotation, meaning in all cases that the property is owned by the person or the authority in whom it vests. It may vest in title, or it may vest in possession, or it may vest in a limited sense, as indicated in the context in which it may have been used in a particular piece of legislation....." (emphasis in bold supplied) 31.5. The expositions aforesaid leave nothing for debate that in the matter of compulsory acquisition of land under the Act of 1894 for public purpose, the property was to vest absolutely in the Government (thereby divesting the owner of all his rights therein) only after taking of possession in either of the methods i.e., after making of award, as provided in Section 16; or earlier than making of award, as provided in Section 17. In other words, the owner was divested of the property and same vested in the Government in absolute terms only if, and after, the possession was taken by either of the processes envisaged in Sections 16 and 17. However, so long as possession was not taken, the mere fact of issuance of notification under Section 4 of the Act of 1894 or declaration under S....
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....process contemplated by the statute, we may usefully refer to the decision of Andhra Pradesh High Court in the case of S. Appala Narasamma v. Commissioner of Income-Tax: (1987) 168 ITR 17. Therein, the land of the assessee was acquired for the Town Planning Trust but, during the course of land acquisition proceedings, possession of the land was delivered voluntarily by the assessee to the Town Planning Trust on 25.03.1970. The award of compensation was made on 22.03.1971. In the assessment proceedings, the question arose, as to in which year did the capital gain arise? Thus, similar question was involved therein, i.e., as to whether the land must be deemed to have vested in the State on the date when the possession was taken with the consent of the landlord or on the date of award? The Tribunal took the view that the land vested in the Government on the date of making of the award and this conclusion was affirmed by the High Court. While dealing with the principles relating to vesting of title and examining the fact situation where possession was taken before making of award, the High Court held that vesting of title to the land was a matter of law and not a matter of inference; an....
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.... issued the land does not vest in the Government free from all encumbrances. We are of the view that when a notification under s. 17(1) is issued, on the expiration of fifteen days from the publication of the notice mentioned in s. 9(1), the possession previously obtained will be deemed to be the possession of the Government under s. 17(1) of the Act and the land will vest in the Government free from all encumbrances." (emphasis in bold supplied) 33.2. The said decision in S. Appala Narasamma was followed by the same High Court in the case of Commissioner of Income-Tax v. Pandari Laxmaiah: (1997) 223 ITR 671 where, possession of the subject land was taken on 03.08.1977 whereas the preliminary notification for acquisition was published on 01.09.1977 while notice under Section 9(1) was issued on 20.05.1980 and award was passed on 25.03.1981. The High Court held that the relevant date for vesting of the land in the Government would be the date of making the award. 34. Before dilating on the principles aforesaid, we may refer to the decisions cited by the learned counsel for the parties but, while pointing out at once that the said decisions are not of direct application....
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....roperty for the market value and when in the process he takes possession of the property at whatever stage it might be, the owner of the property is deprived of the income and enjoyment of the property from that time. Whether the offer in regard to the quantum of compensation is accepted by the land owner straightaway or finally settled by the court is a different question touching on the quantum of compensation, not of the right to receive compensation. We are here on the question as to from which date the land owner is entitled to receive it. There could be absolutely no doubt that both statutorily and in equity, the land owner has a right to receive compensation on the day on which he is dispossessed of the property. That right arises immediately on dispossession and does not await quantification of the compensation by the Land Acquisition Officer or by the court....." 34.1.2. Further, in relation to the question as to when does the right to receive interest accrue or when it is deemed to accrue, the High Court again referred to the enunciation in Joginder Singh (supra) and held that it would not be at a point of time other than the date when the right to receive compensation....
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.... receive compensation. Therefore, reference to the decision in Peter John (supra) is entirely inapt in the present case. 34.2. In the case of Rama Bai (supra), this Court dealt with a batch of appeals and references essentially involving the question regarding the point of time at which the interest payable under Sections 28 and 34 of the Act of 1894 accrues or arises, where such interest is paid on enhanced compensation awarded on a reference under Section 18 or on further appeal to the High Court and/or the Supreme Court. This Court found that the issue stood concluded by the decision in Commissioner of Income- Tax v. Govindrajulu Chetty (T.N.K.): [1987] 165 ITR 231; and it was held that the interest cannot be taken to have accrued on the date of the order granting enhanced compensation but has to be taken as having accrued year after year from the date of delivery of possession. This Court said as under:- "......we are of the opinion that the appeals before us (Civil Appeal No. 810 of 1974 and Civil Appeal No. 3027 of 1988) have to be allowed and the references made under section 257 (Tax reference Cases Nos. 3 of 1976 and 1 to 3 of 1978) have to be answered by sayin....
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....taking over possession in relation to the component of enhancement effected by the High Court. For the reasons already discussed, this judgement also does not directly relate with the question of completion of transfer for accrual of capital gain. 34.4. The case of Bombay Burmah Trading Corpn. Ltd. (supra), is also inapplicable to the present case because therein, the questions basically related to the amount of damages received by the assessee due to the loss suffered during World War II. The observations therein, again, do not have bearing on the question as to when the transfer of land, in the matter of compulsory acquisition, be treated as complete so as to result in capital gains. 35. Therefore, the aforesaid decisions cited by the learned counsel for parties, even if of guidance on the question relating to the right to receive compensation, do not directly assist us in determination of the core question involved in this matter because, income-tax on capital gains is not levied on the mere right to receive compensation. For chargeability of income-tax, the income ought to have either arrived or accrued. In the matter of acquisition of land under the Act of 1894, taking o....
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....9 (1), in the case of urgency acquisition under Section 17. 37. As per the facts-sheet noticed hereinbefore, in the present case, the land in question was subjected to acquisition under the Act of 1894 by adopting the ordinary process leading to award under Section 11. Therefore, ordinarily, capital gains would have accrued upon taking over of possession after making of the award. Consequently, capital gains to the assessee-appellant for the acquisition in question could not have accrued before the date of award i.e., 29.09.1970. 38. However, on the strength of the submissions that the land in question had already been in possession of the beneficiary of acquisition, it has been suggested on behalf of the assessee-appellant that the land vested in the Government immediately upon issuance of notification under Section 4 of the Act of 1894 i.e., 15.05.1968 and capital gain accrued on that date. This suggestion and the contentions founded thereupon remain totally meritless for a variety of factors as indicated infra. 38.1. Even if we keep all other aspects aside and assume that the land in question was, or came, in possession of the Government before passing of the award, the....
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.... and 7 marlas was not on lease with the College and the said lease expired on 31.08.1967 but, the land continued in possession of the College. The legal effect of these facts could be gathered from the relevant provisions of the Transfer of Property Act, 1882 and the enunciations by the Courts. 39.2. As noticed, where the time period of any lease of immovable property is limited, it determines by efflux of such time, as per Section 111(a) of the Act of 1882. Further, in terms of Section 108(q) of the Act of 1882, on determination of lease, the lessee is bound to put the lessor into possession of the leased property. In case where lessee does not deliver possession to the lessor after determination of the lease but the lessor accepts rent or otherwise assents to his continuing in possession, in the absence of an agreement to the contrary, the status of such lessee is that of tenant holding over, in terms of Section 116 of the Act of 1882. But, in the absence of acceptance of rent or otherwise assent by the lessor, the status of lessee is that of tenant at sufferance. 39.3. The aforesaid aspects relating to the status of parties after expiry of the period of lease remain well s....
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....e absence of payment of rent by the lessee, the status of the lessee will be that of tenant at sufferance and not a tenant holding over. Section 116 of the TP Act confers the status of a tenant holding over on a yearly or monthly basis keeping in view the purpose of the lease, only if the lessor accepts the payment of lease money. If the lessor does not accept the lease money, the status of the lessee would be that of tenant at sufferance. This Court in the judgments reported as Bhawanji Lakhamshi and Ors. v. Himatlal Jamnadas Dani and Ors. (1972) 1 SCC 388, Badrilal v. Municipal Corp. of Indore : (1973) 2 SCC 388 and R.V. Bhupal Prasad v. State of A.P. and Ors.: (1995) 5 SCC 698 and also a judgment in Sevoke Properties Ltd. v. West Bengal State Electricity Distribution Co. Ltd. examined the scope of Section 116 of the TP Act and held that the lease would be renewed as a tenant holding over only if the lessor accepts the pay-ment of rent after the expiry of lease period. This Court in Bhawanji Lakhamshi held as under: "9. The act of holding over after the expiration of the term does not create a tenancy of any kind. If a tenant remains in possession after the determination....
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....rofits for the use and occupation of the property." 39.4. The said principles, when applied to the present case, leave nothing to doubt that in relation to that part of the land in question which was given on lease, possession of the College, after determination of the lease on 31.08.1967, was only that of a tenant at sufferance because it has not been shown if the lessor i.e., the appellant accepted rent or otherwise assented to the continuation of lease. The possession of College over the part of land in question being only that of tenant at sufferance, had the corresponding acknowledgment of the title of the appellant and of the liability of the College to pay mesne profits for use and occupation. The same status of the parties qua the land under lease existed on the date of notification for acquisition i.e., 15.05.1968 and continued even until the date of award i.e., 29.09.1970. In other words, even until the date of award, the appellant-assessee continued to carry its status as owner of the land in question and that status was not lost only because a part of the land remained in possession of the College. In this view of the matter, the suggestion that the land vested in th....
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....s been discussed hereinabove, the answer to Point No. 1 is clearly in the negative i.e., against the assessee-appellant and in favour of the revenue that on the facts and in the circumstances of the present case, transfer of the capital asset (land in question), for the purposes of Section 45 of the Act of 1961, was complete only on 29.09.1970, the date of award and not on 15.05.1968, the date of notification for acquisition under Section 4 of the Act of 1894; and hence, capital gains arising out of such acquisition have rightly been charged to tax with reference to the date of award i.e., 29.09.1970. Point No. 2 42. Though we have found that vesting of land in question for the purpose of accrual of capital gains in this case was complete only on the date of award that falls within the previous year relevant for the assessment year 1971-72, the question still remains, in view of the submissions made on behalf of the appellant, about the effect of the decision of ITAT in relation to the other case of the assessee-appellant for the assessment year 1975- 1976 where the issue concerning date of accrual of capital gains was decided against the revenue with reference to the date of....
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.... the above-noted observations apply to the present case? In our view, the answer to this question is clearly in the negative for more than one reason. 44.1. In the first place, it is ex facie evident that the matter involved in the said case pertaining to the assessment year 1975-1976 was taken to be an acquisition under the urgency provision contained in Section 17 of the Act of 1894 whereas, the acquisition proceedings in the present case had not been of urgency acquisition but had been of ordinary process where possession could have been taken only under Section 16 after making of the award. As noticed, the very structure of the ordinary process leading to possession under Section 16 of the Act of 1894 has been different than that of the urgency process under Section 17; and the said decision pertaining to the proceedings under Section 17 of the Act of 1894 cannot be directly applied to the present case. 44.2. Secondly, the fact that the said case relating to the assessment year 1975-1976 was not akin to the present case was indicated by the ITAT itself. As noticed, both the cases, i.e., the present one relating to the assessment year 1971-1972 (in ITA No. 634/Chandi/84) a....