Law: Income Tax Act, 1961

Section: 2(47),48

Income tax----Capital gains---Transfer under Land Acquisition Act---Date when Government took possession, of land in case of urgency---Capital gains chargeable in year of taxing possession---Land Acquisition Act, 1894, S.17---Indian Income Tax Act, 1961, Ss.2(47) & 48. Where in a case of acquisition of land by the Government, possession of the land has been taken by the Government and handed over in a case of urgency, even though the award of compensation has been made subsequently, the effective date of transfer of the title would be the date of taking possession under section 17 of the Land Acquisition Act, 1894. Capital gains would be chargeable to tax in the year of taking possession. Karamarkar M. B. and D. L. Gokhale v. CIT (1984) 140 ITR 234 Bom. distinguished. JUDGMENT S.N. SINGH, J.---This reference has been made at the instance of the assessee under section 256(1) of the Income Tax Act, 1961, by the Income-tax Appellate Tribunal with three questions, stated to be questions of law, arising out of the order, dated March 19, 1992, passed by the Incometax Appellate Tribunal in I.T.A. No.108/(Gau) of 1990, for opinion of this Court. The questions referred to us are quoted below: "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the transfer took place on the date of taking possession by the Government even though initial compensation/advance had been determined and became payable in subsequent years? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the land was legally transferred within the meaning of section 17 of the Land Acquisition Act, 1894, when the land was neither waste or arable? (iii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that capital gain was chargeable to tax in the year of taking possession even though no capital gains could be computed under section 48 of the Income Tax Act, 1961, during that year?" The assessee is a private limited company having its registered office at Sichar. The assessee-Company follows the mercantile system of accounting and maintains accounts on…

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