TMI Blog2001 (4) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... prejudice to the ground No. 1 above, the CIT(A) is not justified in holding that the transaction made for the flat in Calcutta amounted to transfer and eligible for exemption under s. 54 when the said transaction was made for sub-lease of the property and not purchase." 3. Since in both the appeals the issue involved is same and based on the same facts, we dispose of both these appeals by a common order for the sake of convenience. 4. The relevant facts giving rise to these appeals are that the assessee sold his one-fourth share in a residential property known as 'Jalan House' at Rehabari, Guwahati for a consideration of Rs. 40 lacs by sale deed dt. 21st Dec., 1995 to the Govt. of Meghalaya. The index cost of the property was worked out at Rs. 10,26,952 and thus there was a capital gain of Rs. 29,73,048. Since the assessee had no other residential house, he in order to enjoy exemption from the levy of capital gain tax within the provisions of s. 54 of the Act, decided to purchase a residential flat No. 4B on the fourth floor of a multistoried building namely 'Bally-High' situated at 1, Ballygunge Park Road, Calcutta-19 having an area of 2875 sft. from Shri Radha Kishan Jalan a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts Scheme, 1988. The AO in the assessment order at pp. 4 and 5 has stated the amounts which according to him, was not appropriated by the assessee in accordance with the provisions of s. 54(2) of the Act. 4.4 In view of the above, the AO held that the assessee was not entitled to the benefit of exemption under s. 54 of the Act. The AO held that the entire amount of capital gain of Rs. 29,73,048, was taxable as long-term capital gains. Being aggrieved, the assessee filed appeal before the first appellate authority. 4.5 The assessee contended that the AO had not property understood the nature of the sub-lease dt. 17th Jan., 1998 which was executed by the assessee with M/s Agarwal Co. Ltd. who were the lessees of the land on which the entire super-structure was standing. He submitted that as per the requirement of law, the assessee entered into a long-term sub-lease with M/s Agarwal Co. Ltd. in respect of proportionate undivided share in the land attributable to the unexpired period of the lease and the lease rent and security etc. were attributable towards the land only and was not forming the cost of the flat in question for which the assessee had separately paid Rs. 30 lacs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive buyers of the flats. As mentioned hereinabove, flat No. 4B was first purchased by M/s Santosh Electronics Ltd. by entering into two separate agreements both dt. 20th Jan., 1989 with M/s Agarwal Co. Ltd. and M/s Bally High Properties (P) Ltd. M/s Santosh Electronics Ltd. got possession in the said constructed flat along with leasehold rights in respect of proportionate share in the land at the said premises and in this regard the learned authorised representative of the assessee referred to p. D-3 of the paper book. It was further submitted by the learned authorised representative of the assessee that M/s Santosh Electronics Ltd. entered into agreement dt. 17th Jan., 1996 with Sri Radha Kishan Jalan to transfer and assign the undivided 1/2 share of interest in the said flat with authority to transfer or assign his right, title, claim and interest in the said undivided 1/2 share together with undivided share in land. He further submitted that similarly M/s Santosh Electronics Ltd. entered into another agreement with Smt. Anguri Devi Jalan on 19th Jan., 1996 to transfer and assign the undivided 1/2 share of interest in the said flat with the same rights as with Mr. Radha Kishan J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that once the condition under s. 54(1) is satisfied, i.e., the purchase of the flat within the stipulated period of one year before or two years after the date on which the transfer took place, then there is no requirement to rebut (sic) to s. 54(2) of the Act. He further referred to a copy of the balance sheet as on 31st March, 1996 at pp. B-1 to B-6 of the paper book and submitted that the assessee had shown in Schedule E the investment in the properties of Rs. 30 lacs. He submitted that the balance amount payable to Sri Radha Kishan Jalan and Smt. Anguri Devi Jalan was shown as unsecured loan under Sch. 'B' as on 31st March, 1997. He submitted that the assessee had purchased the flat within the stipulated time and thus the amount of capital gains stood utilised within the stipulated period as laid down under s. 54(1) of the Act. The learned authorised representative of the assessee placed reliance in support of his submission on the decision of the Kerala High Court in the case of ITO vs. K.C. Gopalan (2000) 162 CTR (Ker) 566 and submitted that the law does not insist that the sale consideration obtained by the assessee itself should be utilised for the purchase of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of the said flat. Not only this, there is no dispute that the assessee got the possession of the said flat in May, 1996. We further observe that in the balance sheet, a copy of which is placed at pp. B-1 to B-6 of the paper book the assessee had shown in the list of investments in Sch. E the total investment in the properties in respect of the said at flat Rs. 30 lacs and the balance amount payable to Shri Radha Kishan Jalan and Smt. Anguri Devi Jalan was shown as unsecured loans. Clause (v) of s. 2(47) of the Act reads as under: "Any transfer involving the allowing of possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in s. 53A of the Transfer of Property Act, 1882 (4 of 1882) or........." 11. Therefore, for the purpose of transfer the possession of the flat in part performance of the contract under s. 53A of the Transfer of Property Act is essential. Further, under the provisions of s. 54(1) of the IT Act, it is stipulated that a person is entitled to take the benefit if the purchase has been made within the stipulated period of one year before or two years after the date on which the transfer took pl ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
