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Issues:
1. Determination of the date of transfer of property for capital gains tax purposes. 2. Correct assessment year for taxation of capital gains arising from compulsory acquisition of property. Analysis: The case involved a dispute regarding the taxation of capital gains arising from the compulsory acquisition of a property under section 17(1) of the Land Acquisition Act, 1894. The primary issue was to determine the date of transfer of the property for capital gains tax purposes. The Tribunal referred two questions of law to the High Court for consideration. The first question was whether the transfer of property occurred based on the date of the acquisition proceedings notification or the date of the order of the Land Acquisition Officer. The second question related to the correct assessment year for taxing the capital gains arising from the acquisition. The High Court analyzed the facts of the case, noting that the actual possession of the property was taken over on January 4, 1975. The Court emphasized that the crucial date for determining the assessment year for capital gains tax is the date of taking over possession. Referring to section 17(1) of the Land Acquisition Act, which allows the government to take possession before passing the award, the Court concluded that the possession date, i.e., January 4, 1975, was the relevant date for assessing the capital gains. In light of the evidence regarding the possession date, the High Court held that the Tribunal's decision was correct. Consequently, the Court answered both questions of law in favor of the assessee and against the Revenue. The first question regarding the date of transfer of property for capital gains tax purposes was resolved in favor of the assessee, based on the possession date of January 4, 1975. Similarly, the second question concerning the correct assessment year for taxation of capital gains was also decided in favor of the assessee, aligning with the possession date as the determining factor for assessment.
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