TaxTMI 
TaxTMI 
2005 (6) TMI 201
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....sp; 1,12,198 202 7,46,578 1,23,062 207 4,51,481 74,512 213 5,87,302 96,806 ------------------------------------------- 2. The brief facts of the case are that the assessees were owners of agricultural land situated in the SIM of Kalol. The lands were acquired by the Ahmedabad Urban Development Authority (AUDA) and awarded compensation. The assessees went in appeal before the Asstt. Judge, Mehsana and got enhanced compensation. Against the said judgment, AUDA filed a petition before the Hon'ble High Court of Gujarat. The Hon'ble Gujarat High Court has awarded compensation, solatium and interest to the assessees. The AO noticed that the land of the assessees was an agricultural land but according to the definition provided under s. 2(1A) of the IT Act, 1961, the income (which) accrued/arose on account of acquisition of land by AUDA, is not an agricultural inco....
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.... where the rates are very high. After hearing the arguments, the Hon'ble Court enhanced the compensation. However, the CIT(A) allowed the appeal relying on the facts that at the time of notification in the Gazette under the Land Acquisition Act and its finalization when there was no municipality in Kalol and, therefore, these areas were away from municipal corporation. The municipal corporation has come up in existence from 6th Jan., 1994. Therefore, the status of the land is to be decided in view of the fact that compensation accrued only after decision of the Court of the Asstt. Judge, Mehsana at Mehsana dt. 31st Aug., 1994." The learned Departmental Representative further submitted that the compensation amount was awarded on 31st Aug., 1994 by the Asstt. Judge, Mehsana. Therefore, the compensation became due to the assessee only after 31st Aug., 1994. It is also the submission of learned Departmental Representative that the submissions of the assessee are not correct that the sale of transfer of the property was finalized on 15th Nov., 1979 when the land was proposed for acquisition under the Land Acquisition Act because the mere agreement to sale is not transfer of proper....
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.... referred to above. (iii) Ranchhodbhai Bhaijibhai Patel vs. CIT (1971) 81 ITR 446 (Guj) In the above case, it is held that the property must be capital asset before the date of transfer/sale and not on the date of purchase/acquisition This case also does not support the assessee because the property was capital asset on the date of sale and the date of purchase is irrelevant in this case, therefore, supports the Department's stand. (iv) Vadilal Soda Ice Factory vs. CIT (1971) 80 ITR 711 (Guj) In the above decision, it was held that ".... transfer includes, sale, exchange, relinquishment are transfer .... Compulsory acquisition of property amounts to transfer within the meaning of s. 12(b) of the IT Act, 1922 and profit arising therefrom are assessable as capital gain..." It was also held that profit arising from compulsory acquisition including the solatium were assessable as capital gain besides the amount received as compensation for loss of contract or loss of profit were also assessable as income. After going through the above judgments cited by the learned representative of the assessee, it was found that all these judgements support the view of the Department w....
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....ide and that order of AO may be restored. 4. The learned Authorised Representative, on the other hand, relied upon the orders of CIT(A) and submitted that notification under s. 4 of the Land Acquisition Act was published in the Gazette on 15th Nov., 1979 and the notification under s. 6 of the Land Acquisition Act was published in the Gazette on 10th Nov., 1982. Thereafter the Land Acquisition Officer vide his award dt. 23rd Sept., 1986 has awarded the compensation of Rs. 13 to Rs. 25 per sq.mt. The said award have been challenged and the additional compensation, solatium and interest etc. has been finally determined by the Court of the Asstt. Judge vide the order dt. 31st Aug., 1994. The learned Authorised Representative further submitted that the AO has wrongly presumed that the said agricultural land is subject to capital gain. As per the provisions of s. 45(1) of the Act any profit or gain arising from the transfer of a capital asset is chargeable to tax under the head "Capital gains" in the previous year in which the transfer took place. The capital gain is taxable in the assessment year relevant to the previous year in which the capital asset is transferred. The learned Aut....
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....ve heard the learned representatives of the parties and perused the record and gone through the decisions cited by the learned representatives of the parties. The facts of the matter under consideration is whether the acquisition of agricultural land is a capital asset and has been transferred and liable to capital gain. Sec. 45(1) provides that any profits or gains arising from the transfer of a capital asset effected in the previous year shall be chargeable to income-tax under the head "Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place. On reading of s. 45(1), we find that two aspects are important in the cases under consideration, i.e., "capital assets" and "transfer". The definition of "transfer" has been provided in s. 2(47)(iii) that transfer in relation to a capital asset includes the compulsory acquisition thereof under any law. If this definition applies to the cases under consideration, we find that on acquisition of agricultural land it is 'transfer' and there is no dispute in this regard. The center-point of controversy is whether the said agricultural land is capital asset or not? The capital asset has been defin....