Law:

Section:

Section 2(14) of the Income-tax Act, 1961, read with section 17 of the Land Acquisition Act, 1894 - Capital gains - Capital asset - Assessment year 1986-87 - Whether so far as urgency clause is concerned, possession of land can be taken after notice under section 9 of Land Acquisition Act is issued and such land shall vest in Government and in such cases of urgency, passing of award is not necessary as it is required in case of ordinary mode of acquisition - Held, yes - Whether, in case urgency clause is invoked, capital gains arising therefrom is to be assessed in year in which vesting is completed after issuance of notice - Held, yes - Whether, where notification, declaring land situated in concerned area as capital asset, was in force at time of vesting of land in Government but superseded subsequently during pendency of appeal by another notification which excluded properties in concerned area subsequent notification could not be taken note of and it could not be contended that compensation would no more amount to capital assets - Held, yes FACTS The assessee was the owner of a piece of land, he received compensation on acquisition of the land by the State Government. The assessee claimed that it was agricultural land and so, capital gains arising on the transfer was not liable to tax. His claim was not accepted by the Assessing Officer and the capital gains was brought to tax. On appeal, the Commissioner (Appeals) affirmed the order of the Assessing Officer. The Commissioner (Appeals) further found that the land was taken over by the State Government on 14-5-1985 and, hence, required to be assessed in the assessment year 1986-87. On further appeal, the Tribunal affirmed the order of the Commissioner (Appeals). The Tribunal rejected the further contention that since the notification including that area was cancelled in 1994, during pendency of the appeal the compensation could not be included as capital gains. On appeal : HELD In the ordinary mode, the notification is issued under section 4 of the 1894 Act whereby it is made known that a certain land is likely to be acquired for a public purpose. An opportunity is given to the owner of the land to file his…

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