1996 (2) TMI 46 - HC - Income Tax

Summary

Issues:
- Interpretation of whether the lands in question are agricultural lands and if capital gains tax is attracted.
- Determination of the relevant date for the vesting of land in the government under the Land Acquisition Act.

Analysis:
The judgment pertains to an application filed under section 256(2) of the Income-tax Act, 1961, where the Commissioner of Income-tax sought a direction to the Income-tax Appellate Tribunal regarding the taxability of lands acquired under the Land Acquisition Act. The main question raised was whether the lands were agricultural and if capital gains tax applied. The possession of the land was taken before the draft notification was published, leading to a dispute over the relevant date for acquisition. The Commissioner contended that the land was acquired when possession was taken, citing a previous judgment. However, the court distinguished this case, emphasizing that in the present situation, possession was not taken under the urgency clause. Another case was referenced to determine the vesting of land in the government under the Land Acquisition Act, stating that vesting occurs upon the passing of the award. The court concluded that in this case, the relevant date for acquisition and capital gains was when the award was passed, not when possession was initially taken. Consequently, no capital gains arose in the previous year relevant to the assessment year in question. The Tribunal's decision was upheld, and the application was dismissed at the admission stage.