TMI Blog1979 (2) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... the capital gains at Rs. 52,989 and disclosed the same in the return. The ITO, however, found on inquiry that the assessee-company was not satisfied with the amount of compensation awarded by the Land Acquisition Officer and had pursued the matter in appeal by asking for a reference under s. 18 of the Land Acquisition Act, 1894. In the reference application, the contention of the assessee-company was that compensation should be paid at the rate of Rs. 35 per square yard and the amount of compensation should be paid on that basis together with solatium at 15% on the amount that might be determined. The company was also claiming damages for the severance of the land and, under this item, it was claiming Rs. 25 per square yard. The company's claim in the reference application stood at Rs. 5,10,891. The ITO was of the view that, in view of the assessee's own contention before the Resident Assistant Collector, Bhavnagar, the total compensation receivable was Rs. 4,73,047 on the basis of fair market value. The ITO, therefore, proceeded to invoke the provisions of s. 52(2) of the Act of 1961 and on that basis determined the fair market value in lieu of the full value of consideration rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this regard is reached by the Land Acquisition Authorities?" The Tribunal in the first instance felt that this question did not arise out of the order of the Tribunal. However, on an application made in that behalf, the High Court gave directions under s. 256(2) and the Tribunal, in pursuance of that direction, referred the third question which was not originally referred by the Tribunal, and that reference is Income-tax Reference No. 124 of 1978. The question that is referred to the High Court for our opinion in Income-tax Reference No. 124 of 1978 is that third question. As regards the main contention regarding capital gains arising out of the proceedings in land acquisition, there is the decision of this High Court in Topandas Kundanmal v. CIT [1978] 114 ITR 237 (Guj). There the legal position was pointed out as follows : "Having regard to the provisions of the Land Acquisition Act, the compensation awarded by the Land Acquisition Officer is nothing more than an offer to the person whose land is sought to be acquired. If that offer is not accepted, the acquisition proceedings are not concluded. The owner has the statutory right of having the question determined by the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompensation amount is concerned, as and when the compensation amount is enhanced by the District Court or by the High Court or finally by the Supreme Court, that amount will be brought to tax as and when further compensation is finally determined in the judicial hierarchy of courts. When that amount is thus finally judicially determined, the amount of capital gains will have to be computed. We may point out that, with effect from April 1, 1974 there is now the provision of s. 155(7A) of the I.T. Act which has a material bearing on the question before us. Under that sub-section: "Where in the assessment for any year, the capital gain arising from the transfer of a capital asset, being a transfer by way of compulsory acquisition under any law, or a transfer the consideration for which was determined or approved by the Central Government or the Reserve Bank of India, is computed under section 48 and the compensation for such acquisition or the consideration for such transfer is enhanced or further enhanced by any court, tribunal or other authority, the computation or, as the case may be, computations made earlier shall be deemed to have been wrongly made and the Income-tax Officer s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land acquisition proceedings. That section, as it stood with effect from April 1, 1964, was in these terms : "Without prejudice to the provisions of sub-section (1), if in the opinion of the Income-tax Officer the fair market value of a capital asset transferred by an assessee as on the date of the transfer exceeds the full value of the consideration declared by the assessee in respect of the transfer of such capital asset by an amount of not less than fifteen per cent. of the value so declared, the full value of the consideration for such capital asset shall, with the previous approval of the Inspecting Assistant Commissioner, be taken to be its fair market value on the date of its transfer." Under sub-s. (1), as it stood with effect from April 1, 1967, the words were : "Where the person who acquires a capital asset from an assessee is directly or indirectly connected with the assessee and the Income-tax Officer has reason to believe that the transfer was effected with the object of avoidance or reduction of the liability of the assessee under section 45, the full value of the consideration for the transfer shall, with the previous approval of the Inspecting Assistant Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of assessment shall be made under s. 143 or s. 144 at any time after the expiry of different periods provided in that sub-section. Under sub-s. (2), no order of assessment, reassessment or recomputation shall be made under s. 147 after the period specified in sub-s. (2) of s. 153. Under sub-s. (3) of s. 153, it is provided that the provisions of sub-ss. (1) and (2) shall not apply to the following classes of assessments, reassessments and recomputations which may be completed at any time ... (ii) where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order, ...or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act. It is clear that once the amount of compensation is finally determined in judicial proceedings, effect to that finding will have to be given with reference to the year in which possession was taken and since that is so, by virtue of s. 153(3)(ii), the question of limitation would not arise for consideration. That is the prima facie view which appears to us at the present stage. In view of this prima facie vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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