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Issues:
1. Determination of capital gains for assessment years 1964-65 and 1966-67. 2. Validity of assessing additional amount awarded under the decree in separate assessment years. 3. Date for computing capital gains based on possession of land by the Government. Analysis: The High Court of Bombay was presented with a reference from the Income-tax Appellate Tribunal regarding the assessment of capital gains for the years 1964-65 and 1966-67. The case involved the acquisition of agricultural lands by the Land Acquisition Officer in 1962, with an award made in March 1963. Subsequently, an additional amount was awarded by the Civil Judge in February 1965. The main issue was whether the sum awarded should be considered as capital gains for the respective assessment years. The Appellate Assistant Commissioner (AAC) had initially ruled that the additional amount should be excluded from the assessment for 1964-65 and included in the assessment for 1966-67. Regarding the computation of capital gains, the assessee argued that possession of the lands had been taken earlier, and thus, the tax should have been levied in 1962-63. However, the Tribunal analyzed the Land Acquisition Act of 1894 and concluded that possession is typically taken after the award is made, except under urgent circumstances as per Section 17 of the Act. The Court agreed with the Tribunal's interpretation, emphasizing that legal vesting only occurs upon the making of the award. Therefore, capital gains would be applicable for the first time in the assessment year 1964-65. The Court upheld the decision that the amounts should be considered in separate assessment years, affirming the AAC's ruling. It was noted that any grievance regarding this arrangement would be on the part of the Revenue, not the assessee. Ultimately, the Court answered the reference question in favor of the Revenue, directing the assessee to bear the costs of the reference.
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