GOPAL REDDY S Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) : Under S. 256(1) of the IT Act, 1961, the Tribunal has referred the following question:

(2.) SURVEY No. 422 in Atmakur village was owned by the assessee (Gopal Reddy) and Ramachandra Reddy. The said land was acquired by the State of Andhra Pradesh under the provisions of the Land Acquisition Act, 1894. Notification under S. 4(1) was made on 25th Aug., 1977, and possession of the property taken on 10th Jan., 1978. It is not clear from the record whether possession was taken under S. 17(1) or otherwise. Be that as it may, all the authorities under the Act have acted on the footing that 10th Jan., 1978, is the date of the transfer. Award was passed on 17th July, 1978, but, for reasons which are not clear, the notice of the award was given only on 1st Aug., 1980, to the assessee. Compensation was received by him on 19th Aug., 1980. The assessee got Rs. 66,605.13 as his share. On 7th Feb., 1981, he invested a sum of Rs. 50,000 out of the said compensation in a fixed deposit in the Bank of Baroda and claimed relief under S. 54E(1) for the amount deposited. The assessee's case was that inasmuch as he received the compensation only on 19th Aug., 1980, the deposit made by him on 7th Feb., 1981, is within six months of the receipt and, hence, he is entitled to the benefit of S. 54E(1). The ITO rejected the said claim on the ground that the deposit was not made within six months from the date of the transfer, i.e., 10th Jan., 1978. His view was confirmed on appeal by both the appellate authorities, whereupon the present reference was obtained by the assessee. The assessment year concerned herein is 1978-79.

(3.) THERE was a controversy before us as to the very meaning of the second proviso to S. 54E(1). The contention of learned standing counsel for the Revenue was that it is applicable only to enhanced compensation, but not to original compensation. (The expression "original compensation" means and refers to the compensation awarded by the Land Acquisition Offlcer). We do not, however, think that this should be the meaning or purport of the said proviso. THERE is no reason why the proviso should not be made applicable to the original compensation as well where it is received not on the date of the transfer, but on a different, subsequent, date. We are not impressed by the argument of learned standing counsel that by adopting the interpretation which we have done, we would be reading words into the statute, or that we would be modifying or amending the statute. We may emphasise that what is to be invested in specified assets is "the consideration or any part thereof", and unless the consideration is received or accrues, there is no question of investing it. At this stage, we must refer to yet another submission of learned standing counsel. He submits that S. 54E(1) uses not only the expression "received" but also the expression "accruing". Emphasis is upon the words "the consideration or any part thereof received or accruing as a result of such transfer". We are prepared to agree that the word "accruing" may have been used to meet certain situations; but, the said expression has certainly no relevance in a situation like the present one. THERE is no question of consideration, arising from a compulsory transfer, accruing to an assessee, like the assessee concerned herein. THEREfore, whatever purpose the said expression may have intended to serve, it has no relevance on the issue arising herein.