Law:

Section:

section 52 of the income-tax act, 1961-capital gains-consideration for transfer in cases of under-statement-whether, in a case arising under the land acquisition act, provisions of section 52(2) could be invoked-held, no-whether capital gains was to be determined with reference to the amount of compensation paid by the land acquisition officer-held, yes; however, it was open to it to recompute capital gains as and when amount of compensation was finally determined by process of judicial determination Facts The Government of Gujarat acquired land belonging to the assessee and the assessee received Rs. 1,74,807 as and by way of compensation together with interest, etc., under the terms of an award of the Land Acquisition Officer. The assessee calculated the capital gains at Rs. 52,989 and disclosed the same in the return. The ITO, however, found, on inquiry, that the assessee filed an application for a reference under section 18 of the Land Acquisition Act, 1894 and that, as per the assessee's own contention, the total compensation receivable was Rs. 4,73,047 on the basis of the fair market value. The ITO, therefore, invoked the provisions of section 52(2) and determined the fair market value in lieu of the full value of consideration received by the assessee. After making adjustments, he determined long-term capital gains at Rs. 4,21,098. In appeal, the AAC accepted an alternative proposal of the assessee that it would not object to determination of capital gains with reference to the revised amount of compensation received by the assessee in case the application for revision of compensation was accepted by the land acquisition authorities. The assessee, however, carried the matter to Tribunal. The Tribunal held that section 52(2) was not attracted and so long as the award of the Land Acquisition Officer stood, there was no question of determination of the fair market value in respect of the property. The Tribunal observed that it would be open to the ITO to proceed with the matter in accordance with law if a higher amount of compensation was received by the assessee at a later date. On reference : Held 1 .The amount awarded by the Land Acquisition Officer was…

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