Naurata Ram Karta vs Commissioner of Income Tax

Rajive Bhalla, J.—The appellant, challenges order dated 29.10.1998 passed by the Income Tax Appellate Tribunal, dismissing his appeal with respect to assessment year 1993-94. Counsel for the appellant, in essence, submits that as compensation was received in the previous year relevant to the assessment year 1991-92 was duly disclosed in the return of income and was considered by the Assessing Officer, in assessment year 1991-92, the Assessing Officer while considering the appellant''s income in assessment year 1993-94, had no jurisdiction to impose tax on capital gains by construing that compensation had been received in the year previous to the assessment year 1993-94. Counsel for the appellant refers to Section 45(5)(b) of the income tax Act, 1961 (in short the Act), in support of his argument that as capital gain is payable in the year of receipt and, as admittedly, compensation was received in the previous year relevant to the assessment year 1991-92, the Assessing Officer, exercising power in the year 1993-94, had no jurisdiction to levy tax on this capital gain.

Counsel for the revenue submits that the questions of law framed by counsel for the appellant do not arise for adjudication as the appellant had placed the amount of compensation received, in the Capital Gains Scheme, 1988 and by virtue of Section 54B of the Act, was required to purchase agricultural land within two years of receipt of compensation. The appellant having failed to purchase agricultural land within two years, the amount became exigible to capital gains tax in the year 1993-94. The orders passed by the Assessing Officer, Commissioner of income tax (Appeals), duly affirmed by the Income Tax Appellate Tribunal, therefore, do not call for any interference.

We have heard counsel for the parties, perused the impugned orders and have no hesitation in holding that no question of law much less the substantial questions of law, framed by counsel for the appellant, arises for adjudication. Admittedly, the appellant received Rs. 16,40,160/- as enhanced compensation and interest, for acquisition of his agricultural land in the previous year relevant to 1991-92. It is not denied that the appellant placed this amount in an account in accordance with provisions of Capital Gains Scheme, 1988., thereby postponing the taxability of the amount for a period of two years during which, as provided by Section 54B of the Act the appellant was required to purchase agricultural land, failing which he would be liable to pay capital gains tax. Admittedly, the appellant did not purchase agricultural land within the period prescribed by Section 54B of the Act. We, therefore, find no error in the order passed by the Assessing Officer imposing tax on capital gains. The orders passed by the Commissioner of income tax (Appeals) as well as the Income Tax Appellate Tribunal, affirming the course adopted by the Assessing Officer, also do not suffer from any error of jurisdiction or law, much less do they give rise to any question of law. In view of what has been held herein-above, the appeal is dismissed.