1987 (3) TMI 8 - HC - Income Tax

Summary

Issues involved:
The judgment addresses the issues of acquisition of lands under the Requisitioning and Acquisition of Immovable Property Act, 1952, completion of acquisition before March 1, 1970, classification of lands as agricultural lands at the time of acquisition, and eligibility for benefit under section 54B of the Income-tax Act.

Completion of Acquisition:
The lands in question were requisitioned by defence authorities under the 1952 Act and later proposed to be acquired, with the notification published on March 12, 1970. The court held that the acquisition was not completed before March 1, 1970, as the acquisition notification was published on March 12, 1970, making that the date of transfer.

Classification of Lands:
The assessees argued that the lands were agricultural at the time of acquisition, but the court found it unnecessary to determine this as the lands fell within urban areas specified by the Finance Act, 1970, making them "capital assets" subject to capital gains tax.

Eligibility for Benefit under Section 54B:
The assessees claimed benefit under section 54B by purchasing other agricultural lands within two years of the transfer. However, as the lands were not used for agricultural purposes by the assessees or their parents in the preceding two years, the court ruled against the assessees, denying them the benefit.

Conclusion:
The court answered all three questions against the assessees and in favor of the Revenue, stating that the lands, although potentially agricultural, were within urban areas and subject to capital gains tax. The assessees were deemed ineligible for the benefit under section 54B due to non-agricultural use of the lands.