Asset of assessee were taken up by way of notification dated 15-5-1968 and award of compensation was made on 29-9-1970 – But, at time of issuance of initial notification for acquisition, subject land was already in possession of beneficiary college under a lease even after expiry of lease on 31-8-1967- Assessee contended that transfer, leading to capital gains, took place on very date of preliminary notification (15-5-1968) because, possession of land in question was already with beneficiary College .-Revenue contended that transfer reached its completion, resulting in capital gains, only on date of award (29-9-1970) . Court held that instant case, assessee continued to carry its status as owner of land in question and that status was not lost only because a part of land remained in possession of College, accordingly the contention that land vested in Government on date of initial notification remains totally baseless and was to be rejected . Further, neither on date of notification i.e., 15-5-1968 nor until date of award, Government took over possession of land in question and if at all possession of College was to result in vesting of land in Government, such vesting happened only on date of award i.e., 29-9-1970 and not before , therefore, transfer of capital asset (land in question), for purposes of S. 45 of Act was complete only date of award and not on date of notification for acquisition under section 4 of Act of 1894 . Accordingly the AO had rightly assessed tax liability of assessee on long-term capital gains arising on account of acquisition, on basis of amount of compensation allowed in award dated 29-9-1970 as also enhanced amount of compensation accrued finally to assessee; and as regards interest income, had rightly made protective assessment on accrual basis .Department not bound by rule of consistency . Berger Paints India Ltd. v. CIT (2004) 266 ITR 99 (SC) distinguished. ( CANO 2416 of 2010 dt 25 -08 -2020 ) (AY. 1971 -72 )
Rajpal Singh v .CIT ( 2020) 427 ITR 1/ 118 taxmann.com 508 / 273 Taxman 375/193 DTR 97 / 316 CTR 225( SC) www.itatonline .org
S. 45 :Capital gains – Accrual -Protective assessment – Rule of consistency – Department not bound by rule of consistency – Lease- Completion of transfer with vesting of land in the Government essentially correlates with taking over of possession of the land under acquisition by the Government- However, where possession is taken over before arriving of the relevant stage for such taking over, capital gains shall be deemed to have accrued upon arrival of the relevant stage and not before.- To be more specific, in such cases, capital gains shall be deemed to have accrued: (a) upon making of the award, in the case of ordinary acquisition referable to Section 16; and (b) after expiration of fifteen days from the publication of the notice mentioned in Section 9 (1), in the case of urgency acquisition under Section 17 [ Land Acquisition Act, 1984 , S ,4,6 ,16 ,17,Transfer of Property Act, 1882, . 108(q), 111(a), 116 ]