TMI Blog2004 (7) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of the Assessing Officer in treating the enhanced compensation of Rs. 16,55,566 received by the assessee as capital gains under section 45(5)(b) of the Act. Before adverting to the dispute, the relevant facts may first be noticed: Vide notifications dated December 12,1983, and March 19,1984, 9 kanals 7 marlas land of the assessee was acquired by the Haryana Government and vide award dated August 14, 1985, the assessee was granted a compensation of Rs. 4,69,709 at the rate of Rs. 55 per square yard. On a reference filed at the instance of the assessee, the District Judge vide his award dated October 14, 1992, enhanced the compensation to Rs. 250 per square yard. The State of Haryana challenged the enhancement made by the District Judge in appeal before this court, which was admitted. However, the prayer of the State Government for staying the disbursement of enhanced compensation was rejected and it was ordered that the compensation be disbursed to the claimant on his furnishing bank guarantee and adequate security. In compliance with the order of this court, the Land Acquisition Officer, Urban Estate, Panchkula, vide order dated April 9, 1993, gave compensation of Rs. 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any municipality or municipal limit. The Commissioner of Income-tax (Appeals) further held that the question whether the acquired land was agricultural or not, was to be determined in the year of its acquisition. Since the land was acquired in the year 1983 and the Revenue had accepted the claim of the assessee for exemption by treating it as agricultural land, it was not open to the Revenue to reopen this question in a subsequent year when enhanced compensation was received. Accordingly, he reversed the findings of the Assessing Officer that the additional compensation of Rs. 16,55,566 was required to be treated as capital gain under section 45(5)(b) of the Act. Not satisfied with the order of the Commissioner of Income-tax (Appeals), the Revenue preferred an appeal before the Tribunal which, vide the impugned order dated October 8, 2003, has set aside the findings of the Commissioner of Income-tax (Appeals) and upheld the action of the Assessing Officer in treating the additional compensation as capital gain. The Tribunal examined the matter at length and held that as per the revenue records, the land was described as Gair Mumkin or Abi on which no cultivation was possible. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H, be chargeable to income-tax under the head 'Capital gains', and shall be deemed to be the income of the previous year in which the transfer took place." A perusal of the above shows that income under the head "Capital gain" arises on transfer of a "capital asset". "Capital asset" has been defined in section 2(14) of the Act, which specifically excludes agricultural land in India, not being land situate- "(a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or (b) in any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board c referred to in item (a), as the Central Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensation or consideration is reduced by any court, Tribunal or other authority, such assessed capital gain of that year shall be recomputed by taking the compensation or consideration as so reduced by such court, Tribunal or other authority to be the full value of the consideration. Explanation. --For the purpose of this sub-section, - (i) in relation to the amount referred to in clause (b), the cost of acquisition and the cost of improvement shall be taken to be nil; (ii) the provisions of this sub-section shall apply also in a case where the transfer took place prior to the 1st day of April, 1988 ; (iii) where by reason of the death of the person who made the transfer, or for any other reason, the enhanced compensation or consideration is received by any other person, the amount referred to in clause (b) shall be deemed to be the income, chargeable to tax under the head 'Capital gains' of such other person." A bare perusal of the above shows that the provisions of this section are applicable to a case where a capital asset is transferred by way of compulsory acquisition and capital gain arises thereon. In other words, if at the time of transfer the asset does not fall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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