HARISH CHANDRA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE eight references under S. 256(1) of the INCOME TAX ACT, 1961 (hereinafter referred to as " the Act"), arise out of eight connected cases for the asst. year 1966 -67, for the previous accounting year ending 31st March, 1966. They pose the following questions of law for the opinion of this Court :

(2.) THE eight references concern different co -sharers of the property known as Kothi Anar Bagh, Subzi Mandi, Delhi, which was acquired by the Government under the Land Acquisition Act, 1894 (hereinafter referred to as "the Acquisition Act"). Each assessee had 1/32 share in the said property. The notification under S. 4 of the Acquisition Act was made on 10th Sept., 1962. The declaration under S. 6 of the Acquisition Act was made on 11th June, 1963. The assessees then filed their claims before the Land Acquisition Collector in which the value of that property was stated as Rs. 24,51,408. The Land Acquisition Collector after holding an enquiry into the value of the land at the date of the publication of the notification under S. 4 and into the respective interests of the persons claiming the compensation made his award on 20th Nov., 1965. The property was evaluated by the Land Acquisition Collector at Rs. 10,51,309 in his award and after adding 15% for compulsory acquisition assessed the value at Rs. 12,13,308 -50. After the making of the award by the Land Acquisition Collector, the said amount was deposited. The amount as offered by the Land Acquisition Collector was received by the assessees under protest on 24th March, 1966. The possession of the acquired land was taken by the Land Acquisition Collector under S. 16 of the Acquisition Act before 31st March, 1966 as the exact date is not on the record.

(3.) IT was the common case of the parties before the Tribunal that the year of transfer in the present case was the year relevant to the present assessment year. The award of the Land Acquisition Collector came in November, 1965, the compensation thereof was received by the assessee on 24th March, 1966, and the possession of the acquired land was taken by the Collector before 31st March, 1966. All these dates fell within the previous year 1965 - 66, as the assessees have been maintaining financial year as the accounting year. In the present case, the ITO had assessed the value of the property as on 1st Jan., 1954, at Rs. 50 per sq. yd. and this valuation was accepted by the Tribunal. Construing the provisions of S. 45 of the Act, the Tribunal came to the conclusion that the capital gains have to be treated as deemed to have accrued in the year in which the transfer took place. The Tribunal upheld the orders of the IT authorities who had taken into account the enhanced compensation received under the orders of the Addl. District Judge while evaluating capital gains. The Tribunal observed that the assessees got the enhanced compensation in September, 1970, and that would not prevent the consideration of that sum in the computation of capital gains even if the compensation is enhanced or reduced on further appeals by the High Court or the Supreme Court. It opined that the effect of these enhancements or reduction would relate back to the year of transfer and the capital gains would have to be accordingly adjusted in terms thereof.