Summary
For assessment year 1971–1972, capital gains from compulsory acquisition accrued on the award dated 29 September 1970, when the transfer was completed, rather than on the preliminary notification dated 15 May 1968. The beneficiary college’s continued occupation after its lease expired did not amount to Government possession or vesting on notification. Interest awarded from the notification date did not alter that conclusion. A different acquisition involving urgency provisions did not bind the Revenue to the same assessment treatment. The assessee’s appeal was dismissed.
Issues
- When capital gains accrued where the beneficiary already occupied the land before compulsory acquisition.
- Whether an unchallenged decision concerning another acquisition and assessment year precluded the Revenue’s position.
Provisions considered
- Sections 2(47) and 45, as applicable to assessment year 1971–1972, Income-tax Act, 1961Linked capital gains to completion of the compulsory transfer, rather than merely to a claim for compensation or physical occupation. (¶¶ 25, 29, 30, 35, 36, 39.6, 41)
- Sections 16 and 17(1), as then applicable, Land Acquisition Act, 1894Distinguished ordinary acquisition after award from urgency acquisition, and identified the statutory vesting stage when possession predated that stage. (¶¶ 26.1, 26.2, 31, 33, 35, 36, 37, 38)
- Sections 108(q), 111(a) and 116, Transfer of Property Act, 1882Held that the former lessee remained a tenant at sufferance in the absence of assent to holding over; its occupation did not extinguish the owner’s title. (¶¶ 27.2, 27.2.1, 27.2.2, 39.1, 39.2, 39.3, 39.4, 39.5)
Held
- Under the statutory provisions applicable to this assessment, capital gains were income of the previous year in which the transfer occurred. Acquisition notifications alone did not divest ownership; vesting correlated with possession taken through the statutory acquisition process. (¶¶ 25, 29, 30, 31, 32)
- Where possession had been taken before the relevant statutory stage, capital gains accrued when that stage arrived: on the award in ordinary acquisition under Section 16, or after fifteen days from publication of the Section 9(1) notice in urgency acquisition under Section 17. Mere earlier occupation did not complete the transfer. (¶¶ 33, 35, 36)
- This was an ordinary acquisition, with no established invocation of urgency powers. The college’s occupation after lease expiry was that of a tenant at sufferance, not Government possession. The transfer was completed on the award dated 29 September 1970, making the gains assessable for 1971–1972. (¶¶ 37, 38, 39, 41)
- The right to receive compensation and interest was distinct from completion of the capital transfer. Interest awarded from the notification date did not establish earlier vesting. The protective assessment of interest on accrual basis for the relevant previous year was upheld. (¶¶ 34, 35, 40, 40.1, 46)
- The other assessment concerned a different parcel and an acquisition treated as urgent. Its unchallenged outcome did not prevent the Revenue from disputing this assessment; the differing facts and applicable vesting principles supplied just cause. (¶¶ 42, 43, 44, 45)
Result
Appeal dismissed without costs. Assessment of long-term capital gains, including enhanced compensation, and protective assessment of interest on accrual basis upheld.