COMMISSIONER OF INCOME TAX Vs. PURSHOTTAMBHAI MAGANBHAI HATHEESING HUF
LAWS(GJH)-1983-9-11
HIGH COURT OF GUJARAT
Decided on September 21,1983

COMMISSIONER OF INCOME TAX Appellant
VERSUS
PURSHOTTAMBHAI MAGANBHAI HATHEESING (HUF) Respondents

JUDGEMENT

MEHTA, J. - (1.) THE assessee is an HUF and their land bearing final Plot No. 105 situate within Sajpur in Khanpur area within the municipal limits of the City of Ahmedabad was sought to be acquired for the public purpose of main office building of the Reserve Bank of India, vide order and award of the Special Land Acquisition Officer made on February 3, 1971. Since long term capital gains arose out of the compensation received in respect of the acquisition of the assessee's land, a question arose for the first time in the course of the assessment for the asst. year 1972 73 as to whether it was liable to be brought to tax in the said assessment year. It should be noted that though the possession of the land was taken over on December 29, 1970, it appears to be by private negotiations since it is common ground that the Special Land Acquisition Officer had not acquired the possession in exercise of his urgency powers under S. 17 of the Land Acquisition Act. It is also an admitted position that the award was made on February 3, 1971. The previous year corresponding the asst. yr. 1971 72 was calendar year 1970. The ITO brought the capital gains to tax in the course of the said assessment year and determined the capital gains arising from the amount of compensation awarded at Rs. 3,94,450 after deducting the valuation of the land as on January 1, 1954, estimated at Rs. 8 per square yard for the reasons stated in the order. The assessee being aggrieved by the order of the ITO carried the matter in appeal before the AAC who held that it was rightly brought to tax in the asst. year 1971 72. He, however, reduced the amount of capital gains by estimating the value of the land as on January 1, 1954, at the rate of Rs. 10 instead of Rs. 8 per sq. yard.
(2.) ON appeal by the assessee, the Tribunal held that as the title to the land would vest in the Government when the possession is taken over by the Collector in accordance with the provisions of the Land Acquisition Act and the Collector could have taken possession only on the award being made under S. II, the title would be complete only on February 3, 1971, when the award was made, in fact, by the Special Land Acquisition Officer, and it was, therefore, beyond the previous year relatable to the asst. year 1971 72. The Tribunal, therefore, allowed the appeal and held that the charge of capital gains for the year in question was not justified. At the instance of the Revenue, therefore, the following question has been referred to us in IT Ref. No. 210 of 1976: "Whether, on the facts and in the circumstances of the case, the capital gains arising from compulsory acquisition of the land arose in the previous year corresponding to the asst. year 1971 72 and became taxable in that assessment year ?"
(3.) IT appears that the ITO concerned has also made a protective assessment by bringing to tax the long term capital gains arising out of the Compensation received for the acquisition of the said land in the asst. year 1972 73. In appeal, at the instance of the assessee, the CIT (A) had confirmed the protective assessment. The assessee carried the matter in further appeal to the Tribunal. Unfor tunately, however, the Tribunal following the decision of this Court in Addl. CIT vs. New Jehangir Vakil Mills Co. Ltd.(1979) 10 CTR (Guj) 61 : (1979) 117 ITR 849, deleted the capital gains amount from the asst. year 1972 73. The Revenue, therefore, sought the reference which was granted and the following question has been set down for our opinion : "Whether, on the facts and in the circumstances of the case, the amount of Rs. 1,89,453 as long term capital gains is not liable to be assessed in the hands of the assessee HUF for the asst. yr. 1972 73 in question ?" ;


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