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TMI Blog2003 (2) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... an extent of 0.3059 hectares of land. The said land was acquired by the State Government for widening the National Highway pursuant to a declaration made on October 11, 1991. It appears that the land was taken advance possession of. On August 30, 1991, the assessee got a sum of Rs. 27,08,000 as advance towards compensation payable for the acquisition of the land. Later, the Land Acquisition Officer passed the award on December 18, 1992. As per the said award, the assessee became entitled to get a total sum of Rs. 38,11,604 by way of compensation. After adjusting the advance payment, the balance amount was paid to the assessee on January 11, 1993. Relying on the provisions of section 45(5)(a) of the Income-tax Act, 1961, for short "the Act", the Assessing Officer took the view that the entire compensation received by the assessee should be subjected to capital gains tax in the assessment year 1992-93, since the assessee had received a sum of Rs. 27,08,000 on August 30, 1991, which fell within the accounting period relevant to the assessment year concerned. Accordingly, the entire sum of Rs.38,l1,604 along with the interest was assessed to capital gains for the assessment year 1992- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5)(a) of the Act, introduced for the first time by the Finance Act, 1987, with effect from April 1, 1988, would squarely apply. Senior counsel submitted that clause (a) clearly provides that when the award amount or any part thereof is received on different dates, the entire award amount has to be assessed in the year in which a portion of the said amount was first received. Senior counsel on the basis of the above interpretation of clause (a) of sub-section (5) of section 45 submits that the Tribunal had erred in holding that only the sum of Rs. 9,73,219 has to be assessed in the year of receipt. Sri P. Balachandran, learned counsel appearing of the assessee, on the other hand, submits that in so far as capital gains is concerned, the charging provision is section 45(1) of the Act, which clearly provides that the capital gains arising from the transfer of a capital asset shall be deemed to be the income of the previous year in which the transfer took place, and that in the case of compulsory acquisition, the crucial date of transfer is the date of award, and therefore, the liability to pay capital gains tax arises only on dispossession from the property pursuant to the award. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of compulsory acquisition under any law, or a transfer the consideration for which was determined or approved by the Central Government or the Reserve Bank of India, and the compensation or the consideration for such transfer is enhanced or further enhanced by any court, Tribunal or other authority, the capital gain shall be dealt with in the following manner, namely:-- (a) the capital gain computed with reference to the compensation awarded in the first instance or, as the case may be, the consideration determined or approved in the first instance by the Central Government or the Reserve Bank of India shall be chargeable as income under the head 'Capital gains' of the previous year in which such compensation or part thereof, or such consideration or part thereof, was first received; and (b) the amount by which the compensation or consideration is enhanced or further enhanced by the court, Tribunal or other authority shall be deemed to be income chargeable under the head 'Capital gains' of the previous year in which such amount is received by the assessee." Since senior counsel has also relied on the provisions of section 54H of the Income-tax Act, the said provision i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins arising from the transfer of a capital asset by way of compulsory acquisition under any law and the compensation is enhanced or further enhanced by any court, Tribunal or other authority. In such a case, the capital gain shall be dealt with in the manner provided in clauses (a) and (b) thereto. From the above, it would appear that two conditions are to be satisfied for the application of sub-section (5). 1. Capital gains must arise from the transfer of a capital asset by way of compulsory acquisition under any law, and 2. The compensation for such transfer is enhanced or further enhanced by any court, Tribunal or other authority. Unless both these conditions concur, there is no question of application of sub-section (5). If we understand the purport of sub-section (5) in the above manner, since there is no case for the Department that enhanced compensation was awarded by the court, Tribunal or other authority, there is no question of application of sub-section (5) of section 45 at all in the instant case. However, we will deal with the contention of senior counsel for the Department that clause (a) of sub-section (5) applies even to a case where no enhancement of compen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng anything contained in sub-section (1), if at any stage of the proceedings, the Collector is satisfied that all the persons interested in the land who appeared before him have agreed in writing on the matters to be included in the award of the Collector in the form prescribed by rules made by the appropriate Government, he may, without making further enquiry, make an award according to the terms of such agreement." Section 11(3) of the Land Acquisition Act is also relevant, which reads as follows: "11. (3) The determination of compensation for any land under subsection (2) shall not in any way affect the determination of compensation in respect of other lands in the same locality or elsewhere in accordance with the other provisions of this Act." Section 12 of the said Act reads as follows: "12. Award of Collector when to be final.--(1) Such award shall be filed in the Collector's office and shall, except as hereinafter provided, be final and conclusive evidence, as between the Collector and the persons interested, whether they have respectively appeared before the Collector or not, of the true area and value of the land, and the apportionment of the compensation among the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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