ORDER
M.M. Cherian, Accountant Member
1. This is an appeal directed against the order passed by the CIT (Appeals), Cochin on the assessee, Shri Alexander George, for the assessment year 1986-87.
2. The dispute in this appeal is regarding the assessment of capital gains arising on the acquisition of 2.47 acres of land belonging to the assessee. The assessee received a total sum of Rs. 15,56,015 as compensation on land acquisition by the State Government. Before the Assessing Officer the assessee claimed that the land concerned was agricultural land and so the capital gains arising on the transfer was not liable to tax under the Income-tax Act. The Assessing Officer did not accept that claim and he proceeded to make the assessment of the capital gain at Rs. 13,33,987. He allowed deduction under section 54F of the Income-tax Act on the investment in a residential house out of the compensation amount. Deduction was also allowed under section 54B on Rs. 47,000 being the investment in agricultural land. The assessee took up the matter in appeal. The CIT (Appeals) held that the capital gains arising on the transfer of the land used for agricultural purposes constitutes income within the meaning of section 2(14) and so it was rightly brought to tax. Another contention before the CIT (Appeals) was that the capital gains, if at all taxable, was to be assessed for the assessment year 1987-88 and not for the assessment year 1986-87. The CIT (Appeals) did not agree, on the view that the land was taken over by the Government on 14-5-1985 invoking the urgency provisions in the Land Acquisition Act. As regards the deduction under section 54F, before the CIT (Appeals) the assessee’s claim was for deduction of Rs. 6,96,000. But the Assessing Officer had allowed deduction for a total sum of Rs. 6,53,000. The appellate authority found that the deduction allowed by the Assessing Officer was reasonable. In regard to the relief under section 54F also, the CIT (Appeals) found no reason to interfere with the finding of the Assessing Officer. Thus, the appeal was dismissed by the CIT (Appeals). Aggrieved with the order of the first appellate authority the assessee has filed this appeal before the Tribunal.
3. The first ground raised by the assessee in this appeal is that the CIT (Appeals) erred in holding that the capital gains arising on the acquisition of the property was rightly brought to tax for the assessment year 1986-87, whereas according to the assessee it was assessable for the assessment year 1987-88. Before us, the assessee’s counsel, Shri C. K. Nair, Advocate, submitted that the Assessing Officer, as also the CIT (Appeals), was in error in holding that the transfer of the property within the meaning of section 2(47) of the Income-tax Act had taken place in the year ending 31-3-1986. The learned counsel stated that in this case the acquisition was not made under the urgency provisions contained in section 17 of the Land Acquisition Act and the land was required by the Government for establishing the Export Processing Zone at Cochin and there was no urgency in the matter. According to Shri Nair, in the present case there is nothing to show that the possession of the land was taken over by the Government prior to 31-3-1986. His contention was that the transfer in this case was effected only on 29-9-1986, when the award was given by the Land Acquisition Officer. The paper book filed before us by the assessee’s counsel contains a copy of the award No. 66/86 in LAL. 63/85. In this award in Form No. 9 with number 66/86 is dated 29-9-1986. It is on the basis of this award that the learned counsel contends that the possession could have been taken only after 29-9-1986 and in that sense on a date falling in the previous year ending on 31-3-1987. Shri C. K. Nair strongly contended that the capital gains was not assessable for the assessment year 1986-87 and so there was error in the decision of the CIT (Appeals) upholding the assessment.
4. On behalf of the revenue, Shri Kuruvilla M. George, the Departmental Representative, supported the order of the CIT (Appeals) and submitted that there was clear evidence to show that in this case the land belonging to the assessee had been acquired by the Government invoking the urgency provisions contained in section 17 of the Land Acquisition Act. It was stated that for invoking the urgency provisions a notice was required to be published under section 9(1) and on the expiry of 15 days from the publication of the notice the Collector could take possession of the land for a public purpose. Shri Kuruvilla pointed out that such a notice was issued on 1-7-1985 and so after the expiry of 15 days the land vested with the Government. It was submitted that the Assessing Officer was thus justified in bringing to tax the capital gains in the assessment year 1986-87. The learned Departmental Representative urged us to uphold the decision of the CIT (Appeals) confirming the assessment of the capital gains.
5. The paper book filed before us by the assessee’s counsel contains the following documents :
(i) Award No. 66/86 in Form No. 9.
(ii) Note to award No. 66/86.
(iii) Notice in Form 8B dated 1-7-1985.
(iv) Government Notification No. 2332/J/2/85/IND dated 24-4-1985.
From the Note to Award (Annexure-H in the paper book) it can be seen that the Government has passed an order in GO Ms. 202/84/Ind dated 17-9-1984 according sanction to invoke urgency provisions under the Land Acquisition Act in respect of this acquisition and to dispense with the enquiry under section 5 of the Kerala Land Acquisition Act. Accordingly the notification under the Kerala Land Acquisition Act had been published in the local newspapers on 3-10-1984 and 7-10-1984. Consequent to the amendment of the Central L.A. Act, a revised composite notification cinder section 4(1) of the L.A. Act, 1894 had been published in the Extra-ordinary Gazette No. 8 dated 28-1-1985 and also in the local newspapers on 31-1-1985. The declaration under section 6 of the L.A. Act was approved by the Government in the Notification No.2332/J2/ID dated 24-4-1985 and published Extra-ordinary Gazette No. 377 dated 29-4-1985. This was also published in the local newspapers on 23-6-1984 and 24-6-1985. The enquiry under section 9 of the L.A. Act was conducted on 17-7-1985. From the Note to Award it can be seen that on 31-3-1986 the Deputy Collector (L.A.) passed an order as under :
“The land and improvements thereon will vest with Government free from all encumbrances and it will be transferred to param boke.”
6. The question to be considered is as to when the ‘transfer’ of the property had been effected, within the meaning of section 2(47) of the Income-tax Act. The assessee’s claim is that the transfer was effected on 29-9-1986 when the award No. 66/86 was given. On the other hand, the contention of the department is that the date of the award would be relevant only in a case of acquisition under section 16 of the L.A. Act, whereas in the present case the acquisition was under section 17. In such a case of acquisition invoking the urgency provisions under section 17, the land vests with the Government on the expiry of the period of 15 days after the issue of the notice. From the Government Notification dated 24-4-1985 it can be seen that sanction was given to invoke the urgency provisions under section 17 to acquire this property. The relevant portion of the notification reads as under :
“And whereas the Government of Kerala has considering the urgency of the matter, directed under section 17(4) of the said Act that conditions of section 5(a) of the Act shall not be applicable to the properties described in the undermentioned schedule.
And whereas the Kerala Government is convinced that the property as to be acquired for a public purpose.
Now therefore the Government of Kerala under section 5 of the said Act hereby declare that the property measuring 2,7929 Hectres or near about described in the Schedule given hereunder is required for a public purpose, viz. construction of Cochin Export Processing Zone and under section 7 of the said Act hereby directs, the Dy. Collector (Land Acquisition) to receive orders for acquiring the said property. Further, the Government also directs that the Collector may take Possession of the property within 15 days of publication of the notice under section 9(1) of the said Act.”
In para 2 of the Notification it is clearly stated that the Government accorded sanction to invoke the urgency provisions of the L.A. Act. In the Note to Award dated 31-3-1986 also it is made clear that the acquisition was in accordance with the sanction given by the Government for invoking the urgency provisions under the L.A. Act. In the light of these evidences it cannot be said that the acquisition of the property was not made under the urgency provisions in section 17.
7. We may now refer to section 17 of the L.A. Act, which reads as under :
“Special powers in cases of urgency. –
(1) In cases of urgency whenever the appropriate Government so directs, the Collector, though no such award has been made, may on the expiration of fifteen days from the publication of the declaration mentioned in section 9, sub-section take possession of any land needed for a public purpose. Such land shah thereupon vest absolutely in the Government free from all encumbrances.”
The Government Notification dated 24-4-1985 reproduced earlier, makes it clear that the Government directed the Collector to take possession of the land within fifteen days of publication of the notice under section 9(1) of the L.A. Act.
The notice was published on 1-7-1985 and the party was called for hearing and enquiry was conducted on 17-7-1985. As per the direction of the Government, the Collector had to take possession at least by 17-7-1985. Even otherwise, as per the provisions of section 17 of the L.A.-Act the land vests with the Government absolutely after 17-7-1985. There is also other evidence to show that possession was taken in the Previous year ending on 31-3-1986. From the Award Note dated 31-3-1986 it can be seen that the assessee was given an advance of Rs. 12,20,000 on 17-5-1985 out of the total compensation amount of Rs. 15,56,015. The Government would not give an advance of nearly 80% of the compensation amount before taking possession of the land. In any case, the order of the Dy. Collector (L.A.) dated 31-3-1986 makes it clear that ‘the land and the improvements thereon will vest with the Government free from all encumbrances’ at least on 31-3-1986.
8. The learned counsel for the assessee has relied on various decisions in support of his contention regarding ‘transfer’ under section 2(47) of the Income-tax Act in a case of compulsory acquisition of land. In the case of Hakim Singh v. State of UP. AIR 1970 All. 151(FB) the Court held that section 17(1) and (4) are two independent provisions capable of being enforced at two different stages of land acquisition proceedings’ Action under section 17(1) can be taken only after notification under sections 4 and 6 and the notice under section 9(1) have been issued and objection, if any, under section 5 have been dispensed with. In the present case, we have already seen that notification had been issued and notice under section 9(1) was also issued on 1-7-1985, and the assessee’s objections called for. There was thus proper compliance of the provisions relating to compulsory acquisition invoking the urgency provisions under section 17 of the L.A. Act.
The case of Jetmull Bhojraj v. State of Bihar AIR 1972 SC 1363 relied on by the learned counsel is distinguishable, as in that case there was no material on record to show that the Government had given to the Collector any direction under section 17(1) to take possession of the land. In the case before us, we have already seen that the Government had by the Notification dated 24-4-1985 accorded sanction to invoke the urgency provision of section 17 and directed the Collector to take possession of the property after 15 days of publication of the notice under section 9(1). Thus, on facts, the decision is distinguishable.
9. In the case of Fruit& Vegetable Merchants Union v. Delhi Improvement Trust AIR 1957 SC 344, the Supreme Court considered the meaning of the word `vest’ appearing in sections 16 and 17 of the Land Acquisition Act. In that connection, the Supreme Court observed as under :
“On the other hand, sections 16 and 17 of the Land Acquisition Act (Act 1 of 1894) provide that the property so acquired, upon the happening of certain events, shall ‘vest absolutely in the Government free from all encumbrances’. In the cases contemplated by sections 16 and 17, the property acquired becomes the property of Government without any conditions or limitations either as to title or possession. The Legislature has made it clear that the vesting of the property is not for any limited purpose or limited duration. It would thus appear that the word ‘vest’ has not got a fixed connotation, meaning in all cases that the property is owned by the person or the authority in whom it vests. It may vest in title, or it may vest in possession, or it may vest in a limited sense, as indicated in the context in which it may have been used in a particular piece of legislation.’
10. in the case of Addl. CIT v. New Jehangir Vakil Mills Co. Ltd. [1979] 117 ITR 849 the Gujarat High Court held as under :
“If the, receipt of the compensation amount results in capital gains, then the right to such income would arise in the year in which the transfer is effected, ic., when possession is taken under the Land Acquisition Act and in the light of section 45 of the IT Act that is the relevant date for computation of capital gains.’
This was approved by the Supreme Court in CIT v. Hindustan Housing & Land Development Trust Ltd. [1986] 161 ITR 524/27 Taxman 450A. As the land under consideration vested with the Government in the year ending 31-3-1986, on account of the acquisition proceedings under section 17 of the L.A. Act, we hold that the capital gains arising from the acquisition was liable to tax for the assessment year 1986-87 only. The appeal on the ground that the assessment for the assessment year 1986-87 is not in order is thus decided against the assessee.
11. At the time of hearing of this appeal, the assessee wanted to file an additional ground as under :
“The agricultural land acquired is a land situated in Panchayat area and is not a land situated within the notified area for the purpose of section 2(14) (iii) (b) of the Income-tax Act in view of the Notification No. 9447/F dated 6th January, 1994 issued by the Central Government and hence the profit arising on transfer of land is not exigible to capital gains tax.’
As this ground is concerned with the assess ability of the capital gains, which is already in appeal before us, we allowed the assessee to raise the additional ground. The assessee’s counsel explained that through this ground he was challenging the very assessment for the reason that the land concerned was no longer in the notified area. Shri Kochunni Nair submitted that transfer of agricultural land would not normally give rise to capital gains assessable to tax under the Income-tax Act. In the present case it was not disputed that the property belonging to the assessee, which was taken over by the Government was agricultural land. Shri Nair submitted that agricultural land would not fall within the meaning of capital asset in section 2(14) of the Income-tax Act, unless situate in an area within the jurisdiction of a Municipality etc. as provided in section 2(14) (iii) (a) or (b). The land in dispute is situate in Thrikkakara South Village of Kanayannur Taluk. Shri Nair stated that it does not come within the jurisdiction of any Municipality etc. as mentioned in sub-clause (q) above. Hence to fall within the meaning of capital asset, the agricultural land, should be in a notified area as provided in sub-clause (b). Shri Kochunni Nair admitted that in the notification issued by the Central Government on 6th Feb. 1973 No. S.O. 77(E), in item 22, areas covered by Trikkakara were included for the purpose of section 2(14) of the IT Act. He pointed out that in the subsequent Notification No. 9447/F issued on 6th January 1994 (item 12), Trikkakara was not included as a notified area in the State of Kerala. It was his contention that though originally Trikkakara was included in the earlier notification, that notification was later superseded and that the supersession had the effect of repealing the earlier notification and in that sense it should be considered that Trikkakara was no longer a notified area for the purpose of section 2(14) of the Income-tax Act. The learned counsel elaborated his argument with the submission that even though at the time of acquisition of the land by the Government it was a capital asset within the meaning of section 2(14), in view of the notification dated 6-2-1973, the effect of the second notification superseding the earlier one was that the transfer of agricultural land in Thrikkakara Panchayat would not attract liability on the capital gains. Shri Nair submitted that in a particular case if the assessment had been completed already and the assessee had accepted that assessment, or the appeal had become final, the assessment of the capital gains on a transfer effected prior to 6th January, 1994 would be in order, as that would be in accordance with the law prevailing at that time, but in the present case the position was different. Though the assessment had been completed before 6th January, 1994, the matter had not assumed finality and the assessee was still challenging the assessment in appeal. Shri Nair submitted that appeal proceedings being only continuation of assessment proceedings, the appellate authorities would have to consider the second notification and its effect on the assessment in the light of the supersession of the earlier notification. It was contended that in view of the fact that the assessee was disputing the assessment of the capital gains before the Tribunal., the assessee could take the benefit under the subsequent notification issued by the Central Government on 6th January, 1994 to plead that, the earlier notification had been repealed and so it was not a valid assessment of the capital gains. The learned counsel submitted that the effect of the supersession of the earlier notification was that the areas notified earlier ceased to be notified areas not only after 6-1-1994 but with retrospective effect. He relied on a number of decisions to support his argument that supersession had the effect of repealing of the earlier notification and that after the issue of the second notification, the proceedings initiated in the light of the earlier notification and still pending would become null and void in the eye of law. The learned counsel referred to the effect of repeal as appearing in section 6 of the General Clauses Act and submitted that the provisions of section 6 of the General Clauses Act would ordinarily apply in the absence of a special saving clause in the repealing statute. Great stress was laid on the fact that in the second notification dated 6-1-1994 there was no special saving clause introduced to `save’ Thrikkakara, which was therein the earlier notification. The learned counsel summarised his contentions by stating that as per the earlier notification agricultural land in Thrikkakara Panchayat was a capital asset and the capital gains arising on transfer of such land was assessable for the assessment years prior to 1994, but after issue of the second notification on 6-1-1994, agricultural land in Thrikkakara Panchayat was not a`capital asset’ and the gain arising on its transfer was not liable to tax not only for the assessment years after 6-1-1994, but also for the earlier assessment years, provided that the assessment for the earlier years was still pending in appeal. In the present case, as the appeal was still pending, the assessee would be entitled to the benefit in the absence of any special saving clause in the second notification.
12. The Departmental Representative, Shri Kuruvilla M. George, on the other hand submitted that for the purpose of assessing the capital gains, what was relevant was the nature of the asset as on the date of transfer. In the present case, the transfer by way of compulsory acquisition was in the previous year ending on 31-3-1986. According to the learned Departmental Representative, the relevant question was whether the agricultural land `transferred’ by the assessee was a capital asset at the time of acquisition or not. At that time the Notification issued by the Central Government on 6th January, 1973 was in force, and under that Notification under item 22, areas covered by Thrikkakara were included. The next Notification was issued only in 1994. Shri Kuruvilla submitted that in respect of all the transfers effected till 6-1-1994 the provisions of the earlier Notification were applicable. Regarding the contention that the earlier Notification had been repealed, the learned Departmental Representative submitted that there was no repeal, but the second Notification was issued only in supersession of the earlier notification. Drawing our attention to para 2 of the second notification (205 ITR St.163), the learned departmental representative submitted that, that notification was to have effect on and from the date of its publication in the Official Gazette. It was pointed out that it was published in the Official Gazette after 6th January, 1994 only. What Shri Kuruvilla wanted to emphasis was that the second notification had no retrospective effect. He further stated that those Notifications issued by the Central Government were instances of subordinate legislation and that in the absence of an express or implied provision subordinate legislation could not have had retrospective operation. Shri Kuruvilla submitted that the second notification issued on 6-1-1994 in supersession of the first notification became effective after 6-1-1994 only and so in respect of all transfers of agricultural land in Thrikkakara Panchayat during the period from 6-2-1973 to 6-1-1994 there would be liability to capital gains. It was contended that the General Clauses Act and the provisions therein would not make any change in the above position of the statute. The learned departmental representative contended that though the appeal proceedings were continuation of assessment proceedings, it would not be correct to say that the assessment made for the assessment year 1986-87 in the light of the notification applicable for that year would automatically become nullified after the passing of the second notification, even though it had no retrospective operation. Arguing on the above lines, the learned Departmental Representative urged us to uphold the assessment of the capital gains for the assessment year 1986-87 which had been made in view of the Notification dated 6-2-1973, applicable at the relevant time.
13. We have given due consideration to the submissions on both sides. It is not disputed by the learned counsel for the assessee that at the time when the land was acquired by the Government, it was a `capital asset’ within the meaning of section 2(14), on account of the fact that it was agricultural land situate in notified area, i.e., Thrikkakara Panchayat, as per the Notification dated 6-2-1973. In that Notification in item 22, against the Municipality of Cochin, the following areas are notified for the purpose of section 2(14) :
“Areas covered by Thrikkakara, Tripunlthura and Kalamasery Panchayats.’
The capital gains arising on the transfer of the assessee’s land, falling in the Thrikkakara Panchayat could be thus brought to tax on the basis of the above Notification for the assessment year 1986-87. But then, on 6th January, 1994 the Central Government issued another notification ‘in supersession of the Notification of the Government of India in the erstwhile Ministry of Finance (Department of Revenue and Insurance) No. S.O. 77(E) dated Feb. 6, 1993’. In that Notification in item 12, against Kerala, 3 Kochi (Cochin) the following areas are notified :
“Areas forming part of Eloor and Maradu Panchayats upto a distance of 8 Kms from the Municipal limits.’
It is clear that Thrikkakara Panchayat is not included in the second Notification. The learned counsel for the assessee submits that, after the issue of the second Notification, agricultural land in Thrikkakara Panchayat would cease to be capital asset under section 2(14) of the Income-tax Act. But then he further contends that the effect of the second notification is that even in respect of the earlier period such agricultural land would not qualify as a `capital asset’. This is in spite of the fact, as Per para 2 of the Notification dated 6th January, 1994, that ‘this Notification shall have effect on and from the date of its publication in the Official Gazette’. There is nothing in the notification to show that it was taking effect retrospectively. But still the learned counsel for the assessee contends that the effect should be deemed to be retrospective in respect of those areas which are not included in this Notification, even though included in the earlier Notification dated 6th Feb., 1973. His contention is that the second Notification was issued in supersession of the earlier Notification and that the effect of `supersession’ is that the earlier Notification is repealed in the sense as if it was never in the statute book. Referring to section 6 of the General Clauses Act, Shri Kochunni Nair contends that the normal effect of repeal is to obliterate the repealed Act from the statute book as if it had never been passed. It may be pointed out that section 6 applies only in respect of any Central Act or Regulation that repeals any enactment. It is doubtful whether the notification issued by the Central Government could be considered as a Central Act or Regulation.
In Rakshya Singh v. State of Bihar AIR 1957 Part 66 at 67 it was held with reference to Bihar Coal Control Order that the scope of section 6 is limited to repeal of enactments and regulations, but not to repeal of a State statute. It is also clear that when there is no repeal section 6 would have no operation. In the present case there is nothing to show that the second notification issued on 6th January, 1994 has repealed the earlier Notification, though it is issued in supersession of the earlier one. There is an essential distinction between an Act or order which is repealed and one which is superseded. In Nand Kishore v. Emperor AIR 1945 Oudh 214 it was observed as follows
“The effect of an Act or order which is superseded is not to obliterate it altogether. An Act or order is said to be superseded when a later enactment or order effects the same purpose as an earlier one by repetition of its terms or otherwise.’
In the case of R. S. Anand Behari Lal v. United Provinces Government AlR 1955 NUC (All.) 2769 the Allahabad High Court held that in case of supersession of a notification, the obligations and liabilities accrued and incurred under the earlier notification remain unaffected, since the subsequent notification will be effectual from the date of second notification and not retrospectively so as to abrogate the earlier notification from the date of its commencement.
14. The position in the present case is no different. Even if the Notification issued on 6-1-1994 is viewed as a Central Act or Regulation and that it has repealed. The earlier Notification, the repeal will not affect the rights, privileges, obligations or liabilities acquired under the earlier notification. This is also clear from section 6 of the General Clauses Act, which provides that the repeal shall not :
“(C) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed.’
There is no need to go into the question as to whether the Notification is a Central Act or Regulation in view of the decision of the Supreme Court in the case of Manuiendra Dutt v. Purnendu Prosad Roy Chowdhury AIR 1967 SC 1419 which was a case of deletion of section 29 of the Calcutta Thika Tenancy Act, 1949, by the Amendment Act of 1953. It was held by the Supreme Court that by virtue of the said deletion, the Controller before whom the proceeding was pending was not deprived of the jurisdiction to try the matter pending before him on the date of coming into force of the Amending Act-See CIT v. Smt. R. Sharadamma [1996] 219 ITR 671/85 Taxman 679 (SC) at 675. In the case of Smt. R. Sharadamma (supra) the Supreme Court was considering the jurisdiction of the Inspecting Asstt. Commissioner to continue the proceedings pending before him on 31st March, 1976, by virtue of the deletion of sub-section (2) of section 274 of the IT Act by the Taxation Laws (Amendment) Act, 1975 w.e.f. April 1, 1976. The Supreme Court held that even after the omission of sub-section (2) of section 274 with effect from 1-4-1976, the IAC, was competent to continue with the proceedings and pass appropriate orders. In that context the Court observed :
“The general principle is that a law which brings about a change in the forum does not affect pending actions unless an intention to the contrary is clearly shown.”
Reference may also be made to the decision in CIT v. Dhadi Sahu [1993] 199 ITR 610 (SC) wherein the Supreme Court held that the change in law does not affect pending proceedings unless intention to contrary is shown. The same view was taken by the Madras High Court in CIT. v. Star Oil Mills [1997] 228 ITR 26 also.
15. In the light of the decisions cited above, we have to hold that the proceeding taken in view of the Notification dated 6-2-1973 does not cease to be valid in law, after the issue of the Notification on 6-1-1994, as there is nothing in the second Notification to show that it had retrospective operation. In the circumstances of this case, the contentions raised by the assessee against the validity of the assessment of capital gains are rejected and the assessment is upheld.
16. In the grounds of appeal the assessee has also disputed the relief allowed under section 54F and under section 54B of the Act on the capital gains brought to tax in the assessment. There is also another ground to the effect that the CIT (Appeals) ought to have considered the value of land as on 1-4-1974 for fixing the cost of acquisition. No arguments were raised before us in support of these grounds. Further, from the assessment order we notice that the cost of acquisition as on 1-4-1974 only was considered, even though by mistake in the computation the date as 1-1-1964 was shown.
In the absence of any arguments raised by the learned counsel in support of these grounds, we find no reason to interfere with the decision given by the CIT (Appeals). These grounds are therefore treated as dismissed.
17. In the result, this appeal by the assessee is dismissed.