“(i) In substance relying upon the aforesaid authorities
and also relying upon the definition given in S. 2(47) of the Income-tax Act,
1961, the contention of the Department is that for determining the assessment
year in which capital gain should be taxed, it is the date of transfer which
has to be considered and because u/s.16 of the Land Acquisition Act, 1894, the
title passes to the Government upon taking the possession, therefore, the date
of transfer in compulsory land acquisition would be the date on which
possession is taken.
(ii) We have considered the matter and we are of the
opinion that the contention of the Department in respect of the A.Y. 1984-85
overlooks the vital facts, namely, that where S. 17 of the Land Acquisition
Act, 1894 has been invoked for the purposes of acquisition of land, possession
can be taken even where no award of compensation has been given.
(iii) If we accept the contention of the Department, it
would mean that the assessee whose land has been acquired will have to file a
return disclosing the amount of capital gain arising to him without even
knowing what the amount of that capital gain would be, because that amount can
become known to him only after the award has been given. ‘Lex non cogit ad
impossibilia’ is age-old maxim meaning that the law does not compel a man
to do which he cannot possibly perform. Requiring the assessee to file a
proper and complete return by including the income under the head ‘Capital
gain’ would be impossible for the assessee, in cases of the nature referred
above.
(iv) The assessee was required to invest the capital gain
in the specified securities, like capital gain bonds issued from time to time
or in a residential house under the various provisions of the Income-tax Act,
1961, from S. 54 onwards within the time specified therein as computed from
the date of transfer. It is obvious that in order to invest the money in the
specified items, the assessee must first receive the money. Therefore,
accepting the contention of the Department would mean depriving the assessee
of those benefits or tax relief in all cases where S. 17 of the Land
Acquisition Act, 1894, has been applied.
(v) The Tribunal was justified in holding that no capital
gain is exigible to tax in A.Y. 1984-85 on the facts and circumstances of the
case.”
