17 Opinion of the Court. Dow relies on Danforth v. United States, supra, and United States v. Dickinson, supra, but neither case is in point on the issue before us. In Danforth the Court rejected the landowner's claim for interest on the ground, inter alia, that the construction of a set-back levee near his land did not amount to a "taking" because the Government by such action had not yet appropriated the property to its use. The expressly limited holding in Dickinson was that the statute of limitations did not bar an action under the Tucker Act for a taking by flooding when it was uncertain at what stage in the flooding operation the land had become appropriated to public use. In the present case there is no dispute over the fact that the United States appropriated Parcel 1 on the date that it entered into physical possession under order of the District Court. Finally, we see no merit in the suggestion that it is inequitable to deny Dow recovery in this action. Dow took his deed with full notice of the condemnation proceeding brought by the United States. There were readily available contractual means by which he could have protected himself vis-à-vis his grantors against the contingency that his claim against the United States would be subsequently invalidated by the Anti-Assignment Act. And whatever may be the equities between the former owners and Dow, or between the Government and the former owners, whose claim to compensation Dow asserts may be barred by the statute of limitations, such equities cannot serve to prevent the application of the correct rule of law as between the Government and Dow in this case. Cf. McKenzie v. Irving Trust Co., 323 U. S. 365, 369. Reversed. THE COLONY, INC., v. COMMISSIONER CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT. No. 306. Argued April 3, 1958. Decided June 9, 1958. Under the Internal Revenue Code of 1939, the Commissioner assessed deficiencies in a taxpayer's income taxes within an extended period provided in waivers executed by the taxpayer more than three but less than five years after the returns were filed. There was no claim that the returns were fraudulent or that the taxpayer had inaccurately reported its gross receipts. Instead, the deficiencies were based upon the Commissioner's determination that the taxpayer had understated the gross profits on sales of certain lots of land for residential purposes as a result of having erroneously included in their cost certain unallowable items of development expense. This resulted in an understatement of the taxpayer's gross income by more than 25% of the amount reported. Held: The five-year period of limitations prescribed in § 275 (c) for cases in which the taxpayer "omits from gross income an amount properly includible therein" which exceeds 25% of the gross income reported is not applicable, and the assessment was barred by the three-year limitation of § 275 (a). Pp. 29-38. (a) In § 275 (c), the words "omits from gross income an amount properly includible therein" refers to situations in which specific items of income are left out of the computation of gross income, and they do not apply to errors in the computation of gross income resulting from a mistaken overstatement of the cost of property sold. Pp. 32-33. (b) The legislative history of § 275 (c) supports this conclusion. Pp. 33-35. (c) In enacting § 275 (c), Congress was not concerned with the mere size of an error in reporting gross income but with a restricted type of situation where the taxpayer's failure to report some items of taxable income put the Commissioner at a special disadvantage in detecting errors. Pp. 36-38. 244 F. 2d 75, reversed. 28 Opinion of the Court. A. Robert Doll argued the cause for petitioner. With him on the brief were B. H. Barnett and Richard C. Oldham. Joseph F. Goetten argued the cause for respondent. With him on the brief were Solicitor General Rankin, Assistant Attorney General Rice and Grant W. Wiprud. MR. JUSTICE HARLAN delivered the opinion of the Court. The sole question in this case is whether assessments by the Commissioner of two asserted tax deficiencies were barred by the three-year statute of limitations provided in the Internal Revenue Code of 1939. Under the 1939 Code the general statute of limitations governing the assessment of federal income tax deficiencies is fixed at three years from the date on which the taxpayer filed his return, § 275 (a), 53 Stat. 86, except in cases involving a fraudulent return or failure to file a return, where a tax may be assessed at any time. § 276 (a), 53 Stat. 87. A special five-year period of limitations is provided when a taxpayer, even though acting in good faith, "omits from gross income an amount properly includible therein which is in excess of 25 per centum of the amount of gross income stated in the return... § 275 (c), 53 Stat. 86. In either case the period of limitation may be extended by a written waiver executed by the taxpayer within the statutory or any extended period of limitation. § 276 (b), 53 Stat. 87.1 1 The pertinent provisions of the 1939 Code are: "SEC. 275. PERIOD OF LIMITATION UPON ASSESSMENT AND COLLECTION. "Except as provided in section 276 "(a) GENERAL RULE.-The amount of income taxes imposed by this chapter shall be assessed within three years after the return was filed, and no proceeding in court without assessment for the collection Opinion of the Court. 357 U.S. The Commissioner assessed deficiencies in the taxpayer's income taxes for each of the fiscal years ending October 31, 1946, and 1947, within the extended period provided in waivers which were executed by the taxpayer more than three but less than five years after the returns were filed. There was no claim that the taxpayer had inaccurately reported its gross receipts. Instead, the deficiencies were based upon the Commissioner's determination that the taxpayer had understated the gross profits on the sales of certain lots of land for residential purposes as a result of having overstated the "basis” of such lots by erroneously including in their cost certain unallowable items of development expense. There was no claim that the returns were fraudulent. The Tax Court sustained the Commissioner. It held that substantial portions of the development costs were properly disallowed, and that these errors by the taxpayer of such taxes shall be begun after the expiration of such period. "(c) OMISSION FROM GROSS INCOME.-If the taxpayer omits from gross income an amount properly includible therein which is in excess of 25 per centum of the amount of gross income stated in the return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within 5 years after the return was filed. "SEC. 276. SAME-EXCEPTIONS. "(a) FALSE RETURN OR NO RETURN.-In the case of a false or fraudulent return with intent to evade tax or of a failure to file a return the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time. "(b) WAIVER. Where before the expiration of the time prescribed in section 275 for the assessment of the tax, both the Commissioner and the taxpayer have consented in writing to its assessment after such time, the tax may be assessed at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon." 28 Opinion of the Court. had resulted in the understatement of the taxpayer's total gross income by 77.2% and 30.7%, respectively, of the amounts reported for the taxable years 1946 and 1947. In addition, the Tax Court held that in these circumstances the five-year period of limitation provided for in § 275 (c) was applicable. It took the view that the statutory language, "omits from gross income an amount properly includible therein," embraced not merely the omission from a return of an item of income received by or accruing to a taxpayer, but also an understatement of gross income resulting from a taxpayer's miscalculation of profits through the erroneous inclusion of an excessive item of cost. 26 T. C. 30. On the taxpayer's appeal to the Court of Appeals the only question raised was whether the three-year or the five-year statute of limitations governed the assessment of these deficiencies. Adhering to its earlier decision in Reis v. Commissioner, 142 F. 2d 900, the Court of Appeals affirmed. 244 F. 2d 75. We granted certiorari because this decision conflicted with rulings in other Courts of Appeals on the same issue, and 2 In conflict with this case are decisions in four different Courts of Appeals. Uptegrove Lumber Co. v. Commissioner, 204 F. 2d 570 (C. A. 3d Cir.); Deakman-Wells Co. v. Commissioner, 213 F. 2d 894 (C. A. 3d Cir.); Slaff v. Commissioner, 220 F. 2d 65 (C. A. 9th Cir.); Davis v. Hightower, 230 F. 2d 549 (C. A. 5th Cir.); Goodenow v. Commissioner, 238 F. 2d 20 (C. A. 8th Cir.). The Court of Claims has also held to the contrary of the present case. Lazarus v. Commissioner, 136 Ct. Cl. 283, 142 F. Supp. 897. Three Courts of Appeals decisions antedating Uptegrove Lumber Co. v. Commissioner, supra, provided support for the Government's construction of § 275 (c). Foster's Estate v. Commissioner, 131 F. 2d 405 (C. A. 5th Cir.); Ketcham v. Commissioner, 142 F. 2d 996 (C. A. 2d Cir.); O'Bryan v. Commissioner, 148 F. 2d 456 (C. A. 9th Cir.). But neither Foster's Estate nor O'Bryan can be regarded as the controlling authority within their respective circuits in view of the more recent decisions in Davis v. Hightower, supra, and Slaff v. Commissioner, supra. Ketcham is distinguishable on its facts. The Sixth Circuit has consistently maintained its current posi |