TMI Blog1992 (1) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... e on transfer of agricultural lands and consequently deleted the capital gains assessed for this year. 2. Briefly stated, the assessees are six co-owners of agricultural land which was compulsorily acquired by the State under emergency provision 17 for construction of municipal market on 20-10-1978, i.e., 11 days before the end of the accounting year on 31-10-1978. The Award was given by the Acquisition Officer on 30-4-1979 fixing Rs. 2,03,878. The assessee received the money on 3-5-1979. Taking the case of Shri Mallikarjun Sidramappa Bidwe as model, fixed deposit of Rs. 2,00,000 was made in Osmanabad District Central Co-op. Bank Ltd. within six months from the date of receipt of compensation money in terms of section 54E of the Income-Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was not satisfied by the assessee. 6. On appeal before the CIT(Appeals), the counsel for the assessee maintained that the land sold was agricultural land and was used for agricultural purposes at the time of transfer and therefore the judgment of the Bombay High Court in the case of Manubhai A. Sheth squarely applied. Alternatively, exemption under section 54E was reiterated with reference to the date of receipt of compensation as the compensation was not paid on the date of acquisition of property. The question of exemption under sections 11 and 11A was not specifically argued before us and, therefore, we are not dealing with that aspect. Relying on the extract from the Talati as referred in 7/12 extract and holding it as conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gricultural use and there was agreement to sell the land to building society. Therefore, profits from sale of land was held to be not exempt from capital gains even though agricultural operations were carried on before the sale of the land. 8. Besides the above technical contention, the learned departmental representative has also relied on the amendments made in the statute law. Referring to sec. 2(1A) which defines ' agricultural income ' he pointed out that Explanation thereunder inserted by the Finance Act, 1989 clarified that revenue derived from land shall not include and shall be deemed never to have included any income arising from the transfer of any land referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss objections filed by the assessees, the learned counsel for the assessees was fair enough to admit that at the time when the CIT(Appeals) passed the order, he did not anticipate the amendments in statute referred to above. For that reason, he fairly conceded the merits of the ground taken in the departmental appeal. However, he strongly relied on the alternative contention regarding exemption under section 54E made before the CIT(Appeals) and which he did not consider to deal with mainly on the ground that he decided the issue purely on the nature of the land being agricultural land and applying the ratio of the Bombay High Court judgment in the case of Manubhai A. Sheth. Therefore, he rightly contended that the judgment of the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Therefore, it is urged that the date of receipt of compensation should be the criterion for deciding the question whether the specific investments were made in terms of sec. 54E(1) or not. In support of this contention, the learned counsel for the assessee also relied on the judgment of the Andhra Pradesh High Court if the case of S. Gopal Reddy v. CIT [1990] 181 ITR 378. In that case, in more or less similar circumstances, exemption under section 54 E(1) was granted to the assessee when he invested a sum of Rs. 50,000 in the specified assets on 7-2-1981, though compensation was received on 19-8-1980. While the award was passed on 17-7-1978, notice of award was given on 1-8-1980 and the transfer was effected on 10-1-1978. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of receipt of the compensation amount. We further hold that the second proviso to sub-section (1) of section 54E should take effect from the date of enforcement of section 54E of the Act and it is applicable to the original compensation as also to the enhanced compensation received for the acquisition." Accordingly, the Dn. Bench of the Kerala High Court upheld the order of the Single Judge in the case, of Fr. Joseph Vilengetil. The learned counsel placed reliance also on the order of the Tribunal, Madras Bench ' D ' in the case of V. Vaidyanathan v. ITO [1991] 39 ITD 229. In view of the aforesaid authorities, the learned counsel for the assessee urged that the assessee is entitled to exemption under section 54E(1) in respect of the inv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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