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1990 DIGILAW 147 (KER)

Fr. Joseph Vilangatil v. Union of India

1990-03-22

K.A.NAYAR

body1990
Judgment :- Even though very many questions have been raised in the Original Petition, the short question argued before me at the time of hearing of the case is whether the benefit of S.54 E of the Income tax Act is available to the petitioner in the circumstance of this case. 4.12 acres of land situate in Nadama Village in Kanayannur Taluk belonging to the petitioner was acquired under the Kerala Land Acquisition Act by the Revenue Divisional Officer, Fort Cochin for the construction of the new Dairy PJ intact Tripunithura. Advance possession was taken on 19-11-1982 under S.19 of the, An iCt. The transfer took place under that Section. The compensation payable for the ar musician was paid to the petitioner in two installments. An advance payment of Rs.31 io65/. Was Made on 11-3-1983 and out of this an amount of Rs.310200/- was invested by the petitioner on 26-8-1983 in the National Rural Development Bonds (Second Issue). The award in respect of the land was passed on 31-3-1984 for an amount ofRs.7, 37,215-58 and after deducting the advance payment the balance of Rs.4, 26,150-58 was paid to the petitioner on 30-4-1984 and within six months therefrom that is, on 28-7-1984 the petitioner invested the entire amount in the specified Units of the Unit Trust of India. 2. For the assessment year 1983-84, i.e. for the previous year ending 31-3-1983 the petitioner submitted a return of income under the head "other sources" showing an amount of Rs.200/- and an amount of Rs.3,11,200/- was disclosed as long term capital gains claimed as exempt under S.54E of the Income tax Act. The Income tax Officer rejected the claim for the benefit of S.54E on two grounds, namely, the amount has not been invested in the specified securities within six months from the date of transfer which, according to him, was 10-11-1982 and that the investment made in National Rural Development Bonds (Second Issue) and Unit Trust were not the specified securities as on 19-11-1982. S.54E as it stand before its amendment with effect from 1-4-1984 gives certain benefits to assesses in respect of capital gains arising from transfer of capital asset if the assessee invest the same in specified asset within a period of six months after the date of such transfer. S.54E as it stand before its amendment with effect from 1-4-1984 gives certain benefits to assesses in respect of capital gains arising from transfer of capital asset if the assessee invest the same in specified asset within a period of six months after the date of such transfer. The Taxation Laws (Amendment) Act, 1984 added a proviso with effect from 1-4-1984 as under: "Provided further that in a case where the transfer of the original asset is by way of compulsory acquisition under any law and the full amount of compensation awarded for such acquisition is not received by the assessee on the date of such transfer, the period of six months referred to in this sub-section shall, in relation to so much of such compensation as is not received on the date of the transfer, be reckoned from the date of the transfer, be reckoned from the date immediately following the date on which such compensation is received by the assessee." This amendment took effect from 1-4-1984 and will have effect with effect from 1984- 85 normally. Since the petitioner in this case invested the amount within six months of the date of receipt of the compensation in specified securities, the petitioner contended that he is entitled to get the benefit of S.54E of the Act. The Income tax Officer by Ext.P1 Denied this benefit on the ground that the date of transfer is 19-11-1982 and the amount of compensation ought to have been deposited by him in the specified security within six Months from that date. In fact more than half of the amount of compensation was paid To the petitioner only on 30-4-1984 and therefore the contention of the petitioner was That he could not have deposited the amount, which he did not receive. The petitioner Therefore challenges Ext. P1 order in this Original Petition and prays for a declaration that six months mentioned in S.54E is six months from the date of receipt of the Compensation and the proviso introduced by the Taxation Law (Amendment) Act 1984 to interpret the date of transfer in the case of persons who did not receive compensation Order compulsory acquisition as the date from which the compensation has been paid to an persons is declaratory. In other words, the date of transfer should be reckoned as The rate immediately following the date on which such compensation is received by the assessee ancj he gets six months time for getting the benefit of S.54E of the Act. The Petitions contention is that this amendment is declaratory in nature as any other Interpretation would mean a direction to the assessee to do something impossible in law And in fact in other words, one cannot deposit an amount in specific security which He has not rAved The Lam, does not require to do any impossibility to obtain the Benefit of astute. 3. Even though the position has been clarified by the proviso it should be interpreted that this benefit would be available to the petitioner for the year 1984-85 also. The High Court of Andhra Pradesh in Gopal Reddy v. C.I.T., (1990) 1811.T.R, 378 held that under the provisions of S.54 E of the Act 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. The court further held that the second proviso to sub-section (1) of S.54 E inserted with effect from 1-4-1984 stating that in the case of compulsory acquisition of property under a statute, if the full amount of compensation awarded for such acquisition is not received by the assessee on the date of such transfer, the period of six months referred to in sub-section (1) shall, in relation to so much of such compensation as is not received on the date of the transfer be reckoned from the date on which such compensation is received by the assessee should be deemed to have prevailed even prior to April, 1984, i.e. with effect from the date of the enactment of S.54 E. Any other interpretation would make S.54 E unworkable and would result in denying the benefit given to the assesses under S.54 E. Therefore, Ext.P1 in so far as it construes the date of transfer as 19-11-1982 for getting the benefit of S.54E is erroneous. 4. Then the next question is whether the petitioner has invested the amount in specified securities. 4. Then the next question is whether the petitioner has invested the amount in specified securities. National Rural Development Bonds (Second issue), 1983 has been notified as specified security in pursuance of sub-clause (iii) of clause (e) of Explanation I to sub-section (i) of S.54E of the Income tax Act, 1961. Therefore the investment made by the petitioner on 26-8-1983 in the National Rural Development Bonds (Second Issue), 1983 is an investment in specified security. The second investment made is on 28-7-1984. That is in the special series of Units issued under the capital gains unit scheme 1983 of the Unit Trust of India. This also has been notified as specified security by Notification No.G.S. R.804(E) dated 27-10-1983. 5. In the circumstances of the case the petitioner is entitled to succeed in this Original Petition. Ext.P1 is therefore quashed. The second respondent is directed to re-work the benefit available to the petitioner in the light of this judgment. The Original Petition is allowed as above. No costs.