Desai, J.:— This is a reference at the instance of the assessee and the question referred to us by the Income-tax Appellate Tribunal, Poona Bench, is as under:
“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Appellate Assistant Commissioner was right in law in coming to the conclusion that the sum of Rs. 23,327 should be brought to charge as capital gains for the assessment year 1964–65 and the sum of Rs. 21,328 would be chargeable to capital gains for the assessment year 1966–67?”
2. In order to appreciate the rival contentions a few facts may be stated asunder;-—The Tribunal was considering the income of the assessee for the assessment years 1964–65 and 1966–67. The assessee had many agricultural lands in Vishrambag area, Sangli. Some of the plots were acquired by the Land Acquisition Officer in 1962, for which an award was made on March 6, 1963. Under the award, Rs. 23,327.61 were awarded to the applicant. This was in respect of an area of 54,824 sq. ft.
3. The date of the award, namely, March 6, 1963, would fall within the assessment year 1964–65. As the owner was not satisfied with the compensation awarded to her, necessary proceedings were taken in the Court of the Civil Judge, Senior Division, Sangli, who awarded an additional amount of Rs. 21,327-61 by his decision, which was given on February 22, 1965. This date would be relevant to the assessment year 1966–67.
4. In the assessment of the assessee for the year 1964–65, the ITO took the valuation of the land at Re. 0.25 per sq. ft. as on January 1, 1954, which had already been decided in the case of another assessee and determined the capital gains taking into account the entire amount of Rs. 44,655.22 being the original amount awarded by the Land Acquisition Officer and the enhanced compensation payable under the judgment given by the Civil Judge, Senior Division. This was objected to by the assessee and was the first objection considered by the AAC and upheld. The AAC held that the amount of Rs. 21,328, which was the additional amount awarded under the decree passed by the Civil Judge, should be excluded from the assessment for the assessment year 1964–65 and shall be includible in the assessment year 1966–67.
5. Before the Tribunal it was contended on behalf of the assessee that if at all capital gains tax can be charged in respect of the two amounts, the tax could be levied only in the year 1962–63. This was based upon the contention that possession had been taken of the lands as early as February 2, 1961, and this was said to be established by reference to a kabje pavti and a letter addressed to the Executive Engineer presumably confirming the handing over of the possession. The Tribunal examined various provisions of the Land Acquisition Act, 1894, and held that under the scheme of the Act, ordinarily possession would be taken after the award was made under s. 11 and not before it. According to the Tribunal, the only exception to the ordinary scheme was the urgency provision contained under s. 17 which provided that in exceptional cases possession could be taken by the Government even though the award had not been made. Section 17(1) provides that whenever recourse is made to the provision, the land would thereupon vest in the Government free from all encumbrances.
6. Before us, it was contended on behalf of the assessee that it would appear that possession was taken by the Government under earlier notifications and the date of handing over of possession should be accepted as the proper date for computing capital gains. In our opinion, there is no substance in the argument. The notifications which are rescinded cease to exist legally. We have to consider only the notifications under ss. 4 and 6 which are the operative notifications and if the dates as mentioned in the order of the Tribunal are borne in mind, it would be clear that until the award was made, which was on May 6, 1983, there would not be any passing of the property or legal vesting of the same in the Government. The fact that possession had been handed over to the Government earlier would have no relevance to the passing of the property or the vesting of it. Once that conclusion is reached, it would be clear that capital gains would be attracted for the first time in the assessment year 1964–65 only. There is no challenge to the initial decision of the AAC which was confirmed by the Tribunal that the amounts are required to be considered in two separate assessment years. If at all any party had any grievance, it would be the Revenue and not the assessee.
7. In the result, the question referred to us is answered in the affirmative and in favour of the Revenue. The assessee to pay the costs of the reference to the Revenue.
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