S APPALA NARASAMMA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The Tribunal has stated the following question for our opinion under section 256(1) of the Income-tax Act, 1961 :

(2.) The facts relevant to the question are : The land of the assessee was acquired for the Town Planning Trust under the provisions of the Land Acquisition Act. During the course of the land acquisition proceedings, possession of the land was delivered voluntarily by the assessee to the Town Planning Trust on 25/03/1970. The award was passed on 22/03/1971. In the assessment proceedings, the question arose, in which year did the capital gain arise ? In other words, the question was whether the land must be deemed to have vested in the State on 25/03/1970, when the possession was taken with the consent of the landlord or on 22/03/1971, when the award was passed ? The Tribunal took the view that the vesting is on the date of the passing of the award, i.e., 22/03/1971, which conclusion is questioned by the assessee before us.

(3.) Title to property can pass in two ways, i.e., either by the execution of a sale deed as contemplated by the Transfer of Property Act or by operation of law. This is a case of property passing by operation of law. In such a case, we must look to the provisions of the statute - Land Acquisition Act - to find out when does the property pass - to wit, when does the property vest in the State. There are two provisions in the Land Acquisition Act (hereinafter referred to as "the Act"), which are relevant on this aspect. They are section 16 and sub-section (1) and (2) of section 17. They read as follows :