TaxTMI 
TaxTMI 
2020 (8) TMI 731
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....he 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 on passing of the award dated 29.09.1970 and, t....
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.... 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,1968, to date." 7.2. As regards entitlement to compensation, the learned Co....
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....rder 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 Acquisition Collector on the compensation paid for acquisition of land for the reason that the said interest am....
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....pellant...... 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." (emphasis in bold supplied) Before the Income Tax Appellate Tribunal, Chandigarh Bench 10. Against the order so passed by the CIT(A),....
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....r 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 the lands in question were not assessable for the accounting period relevant to the assessment year 75-76. The income from capital gains included in ....
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....ideration 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 basis." Supplementary facts concerning enhancement of compensation 13. Before entering into the orders passed in second round of proceedings after remand by the ITA....
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.... 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 and observed that 'since in the instant case, the award was announced on 29.09.1970, the said date viz 29.09.1970 is deemed to be the date of taking possession by the Government....
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.... 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 under Section 17 of the Act 1894; and that awarding of interest from 15.05.1968 was of no effect on the date of accrual of capital gains, particularly when such interest could have been award....
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....ad 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, Ambala were in unauthorized possession of the lands, would not effect the above mentioned legal position i.e. that the possession and ownership in the lands got transferred from the landlord to the Gov....
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.... 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 take 15.5.68 because no doubt the notification was there but before that date the college was in possession of land under a lease. Thus clear finding is difficult to emerge." 17.2. Having said that, the ITAT referred to the observa....
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....ould 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 against the order so passed in appeal, the revenue made an application before the ITAT seeking reference to the High Court under Section 256(1) of the Act of 1961. The ITAT, in its order dated 15.07.1991, took note of all the relevant facts; and, after finding....
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....h 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 of award i.e., 29.09.1970 fell within the relevant previous year. 19.4. Accordingly, the High Court disapproved the ITAT's order dated 29.06.1990 and answered the reference in favour of the revenue while holding, inter alia, as under:- "13.....It is clear from Section 4....
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....ng 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 1971-1972 because, the fact situation of the present case is similar to that of the other case of the appellant in relation to the assessment year 1975-1976, where the same issue was decided by the ITAT in favour of the appellant and the revenue accepted the said decision by not challenging the same ....
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...., 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 view as taken in relation to the similar case for the assessment year 1975-1976 squarely covers the present case and the revenue cannot take a different stand in relation to the assessment year 1971-1972. 21.3. Learned counsel for the appellant has also contended that the interest income and solatium accrued on....
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....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 23. We have heard learned counsel for the parties at length and have scanned through the material on record. Having regard to the submissions made and the contents of judgment/orders under consideration, the following principal points arise for determination in this appeal: - 1. As to whether, on the facts and in the c....
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....ith 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, as the case may be, computations made earlier shall be deemed to have been wrongly made and the Assessing Officer shall, notwithstanding anything contained in this Act, recompute in accordance with section 48 the capital gain arising from such transfer by taking the compensation or the consideration as enhanced or further enhanced, as the case may be, to be....
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....g 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' notice in writing of his intention to do so." "5A. Hearing of Objections.- (1) Any person interested in any land which has been notified under section 4, sub-section (1), as being needed or likely to be needed for a public purpose or for a company may, within thirty days after the issue of the notification, object to the acquisition of the land or of any land in the locality, as the case may be. (2) Every objection under sub-section ....
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....llector 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 interested, as reside or have agents authorised to receive service on their behalf, within the revenue district in which the land is situate. *** *** ***" "11. Enquiry and award by Collector.- On the day so fixed, or any other day to which the enquiry has been adjourned, the Collector shall proceed to enquire into the objections (if any), which any person interested has stated pursuant to a notice given under Section 9 to the measurements made under Section 8, and into the value of the land and at the date of....
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....ted 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 may again observe that the extractions in paragraph 25 are of the provisions of the Act of 1961 as applicable for the assessment year 1971-1972. Similarly, the extractions in paragraphs 26.1, 26.2 and 26.3 are of the provisions of the Act of 1894 as applicable in the year 1968 when the notification under Section 4 pertaining to the subject land was issued. 27. Having regard to the relevant provisions of the Act of 1961 whereby and whereunder, "capital gains" essentially relate to the transfer of capital asset by the assessee; and the background aspects of the present case, w....
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....f 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 106." Point No. 1. 28. As noticed, the first point for determination revolves around the basic questions as to when did the transfer of the land in question, by way of compulsory acquisition, take place and when did the capital gains accrue to the assessee-appellant? The assessee maintains that this transfer, leading to capital gains, took place on the very date of preliminary notification (15.05.1968) because, possession of the land in question was already with the beneficiary College. The revenue, however, asserts that such transfer reached its completion, resulting in capital gains, only on the date of award (29.09.1970). 29. For effectual dete....
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....or 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 Government in the matters of compulsory acquisition. Ordinarily, in such matters of compulsory acquisition, there is a structured process prescribed by law, which is required to be complied with for a lawful acquisition and which has the legal effect of transfer of ownership of the property in question to the acquiring body, usually the appropriate Government. The controversy in the present matter has its genesis in the compulsory acquisition of the land of assessee-appellant under the Act of 1894 and hence, pertinent it would be to look at the processes contemplated by the said enactment. 31.1. A brief overview of the scheme of the Act of 1894, as existing at the relev....
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....he 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 relieve him of the duty to take care of the land and protect it against encroachments. Again, such a notification does not either confer on the State Government any right to interfere with the ownership or other rights in the land or impose on it any duty to remove encroachments therefrom or in any other way safeguard the interests of the original owner of the land. It is in view of this position, that the owner's interests remain unaffected until possession is taken, that Section 48 gives a liberty to the State Government to withdraw from the acquisition at any stage before possession is taken......." (emphasis in bold supplied) 31.4. In the case of Fruit & Vegetable Mer....
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....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 Section 6 thereof, did not divest the owner of his right in respect of the property in question. 32. Having thus taken note of the general principles governing "capital gains" and "transfer of capital asset in compulsory acquisition", we may now examine as to when capital gains accrue on transfer of a capital asset in compulsory acquisition. 32.1. The features above-noticed, relating to completion of transfer by way of compulsory acquisition under the Act of 1894 upon taking of possession by the Government; and such event of taking possession being the relevant happening for the purpose of Section 45 of the Act of 1961, were duly applied by the Courts in various decisions related with taxing of capital....
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.... 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; and in the given situation, the moment the award was made, possession from that moment onwards should be related to the award; and on that date, the land vested in the Government. The High Court said (at pp. 20 and 21 of ITR),- "Vesting of title to the land is a matter of law, not a matter of inference. This is a case of transfer of property by operation of law and the relevant statute clearly provides the situations in which the land vests, viz., section 16, section 17(1) and section 17(2). According to these provisions, the taking of possession per se does not bring about vesting; the taking of possession must be consequent upon passing of an award (section 16) or an order contemplated by section 17(1), or in a situation c....
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....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 to the present case for, they essentially relate to the right to receive compensation and not about the date of vesting of the land, with which we are concerned in the present matter. 34.1. Learned counsel for the appellant has laid emphasis on the decision of the Full Bench of Kerala High Court in the case of Peter John (supra). In that case, the High Court essentially dealt with the questions as to when, in the matters of acquisition of land, the right to receive compensation arises and as to when interest accrues, as would be evident from the question of law referred, which had been as under (at p.713 of ITR) :- " Whether, on the facts and in the circumstances of the case, as per the ratio of the Supreme Court decisions in Shamlal Narula v. CIT [1964]....
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....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 accrues. The High Court again said (at pp.717-718 and 722 of ITR), - "Now, the question is, when does the right to receive interest accrue or is deemed to accrue; could it be at a point of time other than the date on which the right to receive compensation accrues? It could not be, as we have already noticed that the right to receive compensation accrues on dispossession of the land owner from the property on acquisition. He has a right in praesenti to receive compensation, though it might actually be quantified or paid at a later stage. If the entire compensation or true compensation as the Supreme Court would have it in Joginder Singh's case, AIR 1985 SC 382: [1985] 1 SCWR 110, to which the land owner was entitled, on a correct evaluation on the basis of the standards ....
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.... 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 saying that the question of accrual of interest will have to be determined in accordance with the above decision of this court. The effect of the decision, we may clarify, is that the interest cannot be taken to have accrued on the date of the order of the court granting enhanced compensation but has to be taken as having accrued year after year from the date of delivery of possession of the lands till the date of such order." 34.2.1. Obviously, the decision in Rama Bai (supra), does not relate to the questions at hand as regards completion of transfer so as to result in capital gains. In fact, the principles aforesaid are relevant only to the second part of the re-assessment order dated 25.01.1988, whereby, as regards interest income, the AO carried out protective assessment on accrual basis at the rate of 12% p....
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....o 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 over of possession before arrival of relevant stage for such taking over may give rise to a potential right in the owner of the property to make a claim for compensation but, looking to the scheme of enactment, it cannot be said that transfer resulting in capital gains is complete with taking over of possession, even if such taking over had happened earlier than the point of time of vesting contemplated in the relevant provisions. 35.1. The decision of this Court in the case of Avinash Sharma (supra), however, supports the view that in the case of urgency acquisition, even if possession of the land under acquisition is taken earlier, it should be related to the process contemplated by Section 17 (1) of the Act of 1894, and deemed to be effective from the date on which the period prescribed by Section 17 (1) would exp....
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....f 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 position of law stated in point (a) of paragraph 36 hereinabove would apply; and capital gains shall be deemed to have accrued upon arrival of the relevant stage of taking possession i.e., making of award and hence, capital gains cannot be taken to have accrued before the date of award i.e., 29.09.1970. 38.2. In order to wriggle out of the above-mentioned plain operation of law, it has been desperately suggested on behalf of the appellant that it had been a case of urgency acquisition and hence, the process contemplated by Section 17 of the Act of 1894 would apply. This suggestion is also baseless and suffers from several infirmities. 38.2.1. In the first place, it is evident on the face of the record that it had not been a matter of urgency acquisition and nowhere it appears that the process contemplated by Section 17 of the....
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.... 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 settled and do not require much elaboration. However, for ready reference, we may point out that in the case of Nand Ram (D) through LRs. and Ors. v. Jagdish Prasad (D) through LRs.: 2020 (5) SCALE 723, this Court has re-expounded the relevant principles in sufficient details, albeit in a different context. The relevant background of the said case had been that the land of plaintiff was taken on lease by the defendant where it was agreed that the plaintiff-lessor will not seek ejectment of defendant-lessee except in the case where the rent for one year remained in arrears. The entire leased land was acquired under the Act of 1894. The Land Acquisition Collector determined the amount of compensation but then, dispute arose with regard to apportionment between the plaintiff and the defendant for which, the matter went in reference. The Reference....
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.... 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 of the lease, the common law rule is that he is a tenant on sufferance. A distinction should be drawn between a tenant continuing in possession after the determination of the term with the consent of the landlord and a tenant doing so without his consent. The former is a tenant at sufferance in English Law and the latter a tenant holding over or a tenant at will. In view of the concluding words of Section 116 of the Transfer of Property Act, a lessee holding over is in a better position than a tenant at will. The assent of the landlord to the continuance of possession after the determination of the tenancy will create a new tenancy. What the section contemplates is that on one side there should be an offer of taking a new lease evidenced by the lessee or sub-lessee remaining in possession of the property after his term was over and on the other side there....
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....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 the Government on the date of initial notification remains totally baseless and could only be rejected. 39.5. Apart from the above, the significant factor for which the entire case of the assessee-appellant is knocked to the ground is that neither on the date of notification i.e., 15.05.1968 nor until the date of award, the Government took over possession of the land in question. As noticed, the possession had been of the erstwhile lessee, the College. Even if the said College was going to be the ultimate beneficiary of the acquisition, it cannot be said that immediately upon issuance of notification under Section 4 of the Act of 1894, its possession became the possession of the Government. Its possession, as noticed, remained that of tenant at sufferance and not beyond. 39.6. Viewed from any angle, it is clear that accrual of capital gains in the present case had not taken place ....
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....ssions 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 taking possession. Admittedly, the said decision for the assessment year 1975- 1976 was not appealed against and had attained finality. Hence, it has been argued on behalf of the appellant that it is not open for the revenue to question the similar decision of ITAT in the present case pertaining to the assessment year 1971-1972. 43. We may gainfully recapitulate that in the case pertaining to the assessment year 1975-1976, the question of capital gains arose in the backdrop of the facts that another parcel of land of the appellant was acquired for the purpose of construction of warehouse of Ambala City. The notification under Section 4 of the Act of 1894 was issued on 26.06.1971 and the award of compensation was made on 27.06.1974 but, possession of the said land was taken by the Government on 04.09.1972 i.e., before making of the award. In the given set of facts and circumstances, in ITA No.....
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..... 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) and that relating to the assessment year 1975-1976 (in ITA No. 635/Chandi/84) were decided by ITAT on the same date i.e., 19.12.1985. While the answer in relation to the assessment year 1975-1976 was given by the ITAT in favour of assessee-appellant to the effect that possession having been taken on the specified date i.e., 04.09.1972, capital gains were not assessable for the assessment year 1975-1976 but, while deciding the appeal relating to the present case for the assessment year 1971-1972, the ITAT found that the date of taking over possession was not available and hence, the matter was restored to the file of the ITO to find out the actual date of possession. Of course, one observation was made by the ITAT in the order dated 19.12.1985 relating to the present case that possession of the land in question was taken before making of the award. However, this observation turns out to be incorrect on facts as a....