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TMI Blog1990 (10) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance payment of Rs. 3,11,065, on August 26, 1983, the assessee invested a sum of Rs. 3,10,200 in the Seven Year National Rural Development Bonds (Second Issue). The balance of Rs. 4,26,150.58, received on April 30, 1984, was invested by the assessee on July 28, 1984, in specified units of the Unit Trust. During the assessment stage, the assessee pleaded that capital gains, if any, which arose by acquisition of the agricultural lands, could not be brought to tax in view of the decision of the Bombay High Court in Manubhai A. Sheth v. N. D. Nirgudkar [1981] 128 ITR 87. In the alternative, it was also pleaded that, by reason of the investments made by him in approved assets on August 26, 1983 and July 28, 1984, within six months of the receipt of the instalments of the award of compensation, he is entitled to the benefit of section 54E of the Income-tax Act. Both the pleas were ejected by the Income-tax Officer. The Income-tax Officer held that both the investments were made beyond the period of six months from November 19, 1982, when the Government took advance possession of the lands in question and title to the said lands vested in the Government. The date on which the Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied as a specified security by Notification No. G. S. R. 804 (E) dated October 27, 1983. Both the investments were held to be in specified securities enabling the assessee to avail of the benefit under section 54E of the Income-tax Act. The original petition was allowed. Aggrieved by the said judgment of the learned single judge, dated March 22, 1990 (See [1990] 186 ITR 63), the Revenue has come up in writ appeal. The judgment of the learned single judge is reported in Fr. Joseph Vilengetil v. Union of India [1990] 186 ITR 63 (Ker) ; [1990] 2 KLT 137. We heard counsel for the Revenue, Mr. N. R. K. Nair. The relevant statutory provisions with which we are concerned are section 54E(1) and the second proviso to section 54E(1) of the Act. They are as follows : "54E. Capital gain on transfer of capital assets not to be charged In certain cases. - (1) Where the capital gain arises from the transfer of long-term capital asset (the capital asset so transferred being hereafter in this section referred to as the original asset), and the assessee has, within a period of six months after the date of such transfer invested or deposited the whole or any part of the net consideration in any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iso to the said section, added by the Taxation Laws (Amendment) Act, 1984, held that, in the case of compulsory acquisition of land, the date of transfer should be reckoned as the date immediately following the date on which such compensation is received by the assessee and the assessee will get six months time for getting the benefit of section 54E of the Act, from the date of receipt of compensation. Law cannot insist that the person should deposit in specified securities, an amount which he has not received. The view, so taken by the learned single judge, is fully supported by the Bench decision of the Andhra Pradesh High Court in S. Gopal Reddy's case [1990] 181 ITR 378. Therein the court said thus : "It is true that section 54E is in the nature of a special provision. Whether it can be called an exception to section 45 or not, is immaterial. It indeed confers a benefit upon the assessees ; it also serves a public purpose. The idea was to encourage investment in specified assets, all of which are, generally speaking, of a public nature. It provides that where the consideration received in lieu of transfer of a capital asset is invested, within six months from the date of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period of six months referred to in sub-section (1) shall, in relation to so much of such compensation as is not received on the date of the transfer, be reckoned from the date on which such compensation is received by the assessee. The proviso takes note of the situation obtaining under the Land Acquisition Act which is the primary statute relating to compulsory acquisition of property. Normally speaking, possession of the property acquired is taken after the award is passed and the property vests in the State on the date possession is taken. However, the Act also provides for taking possession of the property even before the passing of the award, viz., section 17. In such a case, the property vests in the State on the date possession is taken, though the award is passed later. Prior to the Land Acquisition (Amendment) Act 68 of 1984, the Act did not provide for payment of any compensation on the date possession of the property is taken under section 17. The owner was obliged, all the same, to wait until the award is passed, for compensation. Then again, the Act provides for a reference to the civil court in case the owner is not satisfied with the compensation awarded by the L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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