1995 (8) TMI 35

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..... , 1961 ? 2. Whether, on the facts and in the circumstances of the case, the receipt of compensation of Rs. 87,887 by the assessee was a capital receipt ? 3. Whether, on the facts and in the circumstances of the case, the receipt of compensation of Rs. 87,887 by the assessee was a casual receipt ? 4. Whether, on the facts and in the circumstances of the case, the sale proceeds of leechee fruits was the agricultural income of the assessee within the meaning of section 2(1) of the Income-tax Act, 1961, and was exempt from tax ? We have heard learned counsel for the assessee, Sri R. S. Agarwal, and learned counsel for the Revenue, Sri R. R. Agarwal. The first three questions are inter-connected. The necessary facts are that the assessee ha .....

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..... , constituted a capital asset is not disputed. By virtue of the acceptance of the offer made by the Government of India (Defence Department) and acceptance of compensation in lieu thereof, the assessee's right in the said building stood relinquished in favour of the Government of India who became the owner of the said building on taking over possession and payment of compensation. There was thus a transfer of the said building within the meaning of section 2(47) of the Income-tax Act and the profit arising therefrom was a capital gain taxable under the Act. The receipt of compensation was certainly a capital receipt, but it is only out of a capital receipt that a capital gain arises. The receipt of compensation was not of the nature of ordi .....

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..... d or received by him fit to be taken to the market ; or the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him. The proviso to sub-section (1A) of section 2, however, requires that the land from which the income is derived must be assessed to land revenue in India or is subject to a local rate assessed and collected by the officers of the Government or where the land is not so assessed to land revenue or subject to a local rate, it is not situated in any area which is comprised within the jurisdiction of a municipality. Admittedly, the land in question is not assessed to land revenue or a local rate and it was situate within the jurisdiction of the municipality of Dehradun. The result , therefore, is t .....

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