Compulsory Acquisition Time Window 54H

Section 89 — COMPULSORY ACQUISITION TIME-WINDOW RESET

Section 89 is the substantive equivalent of 1961 s. 54H. It is a critical procedural relief for compulsory-acquisition reinvestment exemptions (ss. 82, 83, 84, 85 and 86). Where compensation for compulsory acquisition is NOT received on the date of transfer (often delayed by years under Land Acquisition Act procedure), the reinvestment time-window is reckoned from the DATE OF RECEIPT OF COMPENSATION — not from the date of transfer. This prevents the absurd outcome where reinvestment windows expire before the assessee even has the funds to reinvest.

STATUTORY ARCHITECTURE

Without s. 89, an assessee facing compulsory acquisition would be in an impossible position: Date of transfer (acquisition by Govt) determines the year of charge AND starts the reinvestment window. BUT compensation often takes 2-5 years to materialise. Without funds in hand, the assessee cannot reinvest within the standard 1+2/3-year windows. Section 89 solves this by tolling the reinvestment window — it starts from the RECEIPT of compensation, not the date of transfer / acquisition.

CASE LAW

CIT v. Smt. Sankari Manickyamma (Mad HC) — section 54H relief is mandatory wherever compensation receipt is delayed; AO has no discretion to disallow if conditions met. ITAT Hyd / Mum (various) — enhanced compensation (received years after initial) is a separate event triggering its OWN s. 89 reset window.

PLANNING NOTES

(i) For affected landowners (highway / metro / SEZ acquisition), maintain meticulous tracking: notification date / award date / compensation cheque-receipt date. (ii) On receipt of initial compensation, immediately invest within s. 85 (54EC) ₹ 50 lakh window — clock starts from receipt date. (iii) On receipt of enhanced compensation (years later), fresh s. 89 window opens — re-deploy quickly. (iv) For partial-receipt situations (some compensation received, balance pending), the s. 89 window applies to each tranche separately.

CROSS-REFERENCES

• Sections 82-86 — Reinvestment exemptions (this section extends their windows).
• Section 67(12)/(13) — Compulsory acquisition charge timing.
• Section 84 — Industrial-undertaking compulsory acquisition reinvestment.