TMI Blog1996 (3) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... sons, the Assam Legislature passed the Assam Land (Requisition and Acquisition) Act, 1948 (herein after referred to as "the Act"). Section 3 of this Act provided for requisitioning of land and according to section 4, the requisitioned land could be used or dealt with in such manner as may seem expedient to the State Government. The land could also be acquired by the State Government after necessary notice. Section 7 of the Act sets out, the principles for determining compensation for acquisition/requisition of land. Sub-section (3) o f section 7 provides that where any land is requisitioned then every person interested in such land is to be paid such compensation as may be agreed upon in writing between the person interested and the Collect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid land even after requisition, was being cultivated by the refugees. Therefore, the agricultural character of the land did not undergo any change. The appellant then filed an application under section 66(1) of the Indian Income-tax Act, 1922, for stating the case but the same was rejected. Its application under section 66(2) of the Indian Income-tax Act, 1922, was allowed and the Tribunal thereupon stated the case and referred the following question of law to the High Court (see [1978] 113 ITR 545, 547) : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 1,24,638 was exempt from tax ?" The High Court answered the aforesaid question of law in favour of the respondent a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural purposes, and is either assessed to land revenue in the taxable territories or subject to a local rate assessed and collected by officers of the Government as such." The finding of fact in the present case is that even after the requisition of the land, the refugees were carrying on agricultural operations on the land in question. Therefore, one of the requirements of section 2(1) of the Indian Income-tax Act, 1922, namely, that the land is used for agricultural purposes stands satisfied. The only question which has been considered is whether the amount of compensation which was received can be regarded as rent or revenue which can be said to be derived from land. In our opinion, the answer to the said question is obvious. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Act, 1939, and compensation was paid in respect thereof. It was held that as the military authorities had not carried on agricultural operations on the lands, the compensation received by the assessee was not agricultural income. In the present case, however, the finding of fact is that the refugees, to whom the lands were allotted did carry on agricultural operations. Therefore, the compensation has to be regarded as agricultural income. In Senairam Doongarmall v. CIT [1961] 42 ITR 392 (SC) buildings had been requisitioned for defence purposes and the manufacture of tea had stopped. The question arose as to whether the compensation received for the requisitioning of the building was taxable as income. This court came to the conclusion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural land. Before concluding we may note that the respondent's land which was requisitioned was subsequently acquired by the State of Assam and compensation was paid. In CIT v. All India Tea and Trading Co. Ltd. [1979] 117 ITR 525 (Cal), it was held that as the land in question was agricultural land which was being used for agricultural purposes, even after its being requisitioned, the amount of compensation paid on its acquisition was not taxable under the head "Capital gains" as the said land was not a capital asset. It is clear, therefore, that at no point of time or at least till its acquisition the land lost is character of agricultural land. Therefore, compensation paid for the use by the refugees of the said land for agricult ..... X X X X Extracts X X X X X X X X Extracts X X X X
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