- (1.) THE present appeal filed under Section 260A of the IT Act, 1961 by the Revenue has been admitted by this Court vide order dt. 22nd Nov., 2000 on the following substantial questions of law: (1) Whether on the facts and in the circumstances of the case, the Tribunal was justified in allowing the assessee deduction under Section 54E read with Section 54H of the IT Act, 1961 for purchase of capital gains units for Rs. 88,053? (2) Whether on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of CIT(A) dt. 30th Dec, 1992 directing the AO to allow the assessee deduction under Section 54E r/w Section 54H on account of the agricultural land purchased upto 31st Dec, 1991 for Rs. 6,80,808 whereas deduction under Section 54E has been erroneously considered and allowed by the AO to the extent of Rs. 3,74,960 in his set aside assessment order dt. 21st Oct., 1991 passed under Section 143(3)/251 of the Act, whereas the CIT(A) vide his order dt. 24th June, 1991 has given no such direction to AO to consider the claim of the assessee under Section 54E of the Act?
(2.) THE present appeal relates to the asst. yr. 1977 -78. Briefly stated facts giving rise to the present appeal are as follows: The agricultural land of the respondent -assessee was acquired by the U.P. Government on 27th Jan., 1977, for U.P. Avas Evam Vikas Parishad for their scheme No. 7. The Special Land Acquisition Officer vide order dt. 5th Sept., 1984 awarded compensation which was subsequently enhanced under Section 23(1A) of the Land Acquisition Act, 1984. The respondent -assessee had not filed any return of income in the asst. yr. 1977 -78 when the land was compulsorily acquired. Proceedings under Section 148 of the Act were initiated, pursuant to which, the respondent filed his return of income. The ITO, Meerut assessed the entire amount of compensation regarding capital gains arising in the year 1977 -78 and imposed tax accordingly. The appeal preferred by the respondent was partly allowed. The Tribunal, however, had allowed the appeal preferred by the respondents and granted benefit of Section 54E r/w Section 54H of the Act. We have heard Shri. A.N. Mahajan, learned standing counsel of the Revenue and Shri. V.K. Rastogi, learned Counsel for the respondent assessee.
(3.) LEARNED Counsel for the Revenue submitted that Section 54E of the Act was brought on the statute book by Finance (2) Act, 1977, w.e.f. 1st April, 1978. Its benefit could not have been extended in respect of capital gains which arose during the asst. yr. 1977 -78. He further submitted that the Tribunal erred in law in granting benefits of the aforesaid provisions.;