Law:

Section:

Section 54E of the Income-tax Act, 1961 - Capital Gains - Not to be charged in certain case - Assessment year 1983-84 - Whether period of six months referred to in section 54E(1) be reckoned from date on which compensation is received by assessee and not from date of possession taken over by Government - Held, yes - Whether, therefore, where assessee made investment in specified securities within a period of six months from date of receipt of compensation, he was entitled to benefit as given in section 54E - Held, yes FACTS For the relevant year the assessee filed his returns of income wherein he disclosed certain amount being advance paid to him on 11-3-1983, towards compensation yet to be finally determined in respect of the agricultural land acquired by the Government and of which the Government took advance possession on 19-11-1982. The award was passed by the Land Acquisition Officer on 31-3-1984. The final payment was made on 30-4-1984. On 26-8-1983, the assessee invested part of the amount in the Seven Years National Rural Development Bonds and the remaining amount received on 30-4-1984, was invested by the assessee on 28-7-1984, in specified units of the UTI. The assessee claimed that since he had invested within six months of the receipt of the instalments of the award of compensation, he was entitled to the benefit of section 54E. The ITO held that both the investments were made beyond the period of six months from 19-11-1982, when the Government took advance possession of the lands in question and title to the said lands vested in the Government. The date on which the Government took possession of the land was taken as the date of transfer from which alone the period for investment was to be reckoned. On writ, the Single Judge set aside the assessment order and held that the second proviso to sub-section (1) of section 54E is only clarificatory in nature, that in the case of compulsory acquisition of property under the statute, if the full amount of compensation awarded for such acquisition was not received by the assessee on the date of such transfer, the period of six months referred to in sub-section (1) of section 54E shall, in relation to so…

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