TMI Blog1989 (1) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... ement to purchase a flat at Hyderabad was entered into by the assessee during October 1980. Out of total consideration of Rs. 1,60,000 a sum of Rs. 1,47,500 was paid in instalments between October 1980 to November 1981. Last instalment of Rs. 12,500 was paid during November 1982 and the sale deed executed a year after, i.e., in November 1983. The Department computed the capital gain at Rs. 1,38,750 in respect of which the assessee claimed exemption under section 54(1) of the Act. 3. At the assessment stage, the Income-tax Officer disallowed the exemption on the sole ground that the Bombay flat was not occupied by the assessee continuously as during this very period he was carrying on his business as well residing at Hyderabad. The plea raised by the assessee that whenever he used to go to Bombay in connection with his business or meet relatives he stayed in this flat was not accepted by the Income-tax Officer to take the view that it could amount to continuous living of the assessee. The Income-tax Officer placed reliance on two decisions viz., M. Viswanathan v. CIT [1979] 117 ITR 244 (Mad.) and Smt. Vijayalakshmi v. CIT [1976] 100 ITR 648 (Kar.) in support of his finding. 4. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ediately preceding " coupled with the words " was being used " clearly connote the user by the assessee which extends to the date of transfer and since in that case the house was not used for a continuous period of two years for residential purposes by the assessee, the benefit of section 54 was not available to him. In Smt. Vijayalakshmi's case before the High Court of Karnataka, where the assessee had leased out the flat to her husband despite her residing therein, it was held that the flat was not being used mainly for the purpose of the residence of the assessee as the tenant, though the husband, had the legal right to be in possession and use it, disentitling the assessee to the exemption under section 54. The learned Departmental Representative also placed reliance on another decision of the Madras High Court in CIT v. K.N. Srinivasan [1987] 163 ITR 320 wherein the same view that the use by the assessee or his parents for an unbroken and continuous period of the two years as residence was taken to be a condition precedent for the exemption u/s. 54 is taken. 9. As against this, the assessee placed reliance on the following three authorities : (1) Smt. D. Rani v. ITO [1987] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee before November 1981, it could be safely said that the assessee paid almost the entire sale consideration within the prescribed period of one year to the builders except a paltry sum of Rs. 12,500 constituting less than 8% of the total value of the property. This instalment of Rs. 12,500 was made good by the assessee during Nov. '82 though the registration of the sale deed took place only in the month of November 1983. 13. In support of his contention that the agreement and the payment concluded the purchase, Shri Swamy in the first instance placed reliance on a decision of this Tribunal to which one of us is a party in Rajaram v. ITO [1986] 19 ITD 141 (Hyd.). In this case, the assessee had sold his residential flat on 5-3-1981. On 26-6-1981. he entered into an agreement to purchase a residential flat from a Construction Co. which construction was completed and conveyance deed executed and registered in his favour only on 3-3-1983. In the meantime, the assessee had paid a sum of Rs. 5,000 at the time of agreement within one year from the date of sale of the flat by him. Remaining payments were made only after expiry of one year. The flat was also not in existence at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal in Mrs. Shahzada Begum v. ITO [1983] 6 ITD 292 (Hyd.) wherein it was held that it was enough if the assessee is in a position to exercise rights in the property being acquired on his own rather than on behalf of vendor. In this case the assessee had paid major part of the sale consideration prior to the registration of the sale deed. 15. This case, on a reference has since been affirmed by the High Court of Andhra Pradesh in CIT v. Mrs. Shahzada Begum [1988] 173 ITR 397. 16. As against this, Shri K.K. Viswanatham, learned departmental representative, contended that in view of the law laid down by the Supreme Court in Nawab Sir Mir Osman Ali Khan's case and a recent decision of the Delhi Bench of this Tribunal in Chander Mohan's case the view taken by this Tribunal in Rajaram's case could no longer said to be good. That in Chander Mohan's case it was held that even where possession of residential flat had been passed on to the purchaser he did not become the purchaser in the eye of law or within the meaning of section 54 of the Act since till before the execution of the conveyance deed, the flat in question was only agreed to be sold. 17. In reply, the learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decision in Mrs. Shahzada Begum's case which is binding for the State of Andhra Pradesh according to which wherein substantial sum had been paid towards the consideration of the new acquisition and vacant possession of the property was also delivered to the assessee, although sale deed not executed and registered after the expiry of the prescribed period, delay in registration of the sale deed was held to be immaterial and the assessee entitled to the benefits of section 54(1). In the case before us, out of a total consideration of Rs. 1,60,000 a sum of Rs. 1,47,500 had been paid by the assessee to the builder. As regards possession, if we go through the agreement of sale, copy filed by the appellant, according to stipulation No. 4, the final payment had to be made by the purchaser after the premises are virtually completed and soon thereafter the purchaser will accept possession, meaning thereby that the maiden's possession of the flat was to be delivered only to the purchaser. 21. Applying Mrs. Shahzada Begum's case, it is explicitly clear that the Lordships of the A.P. High Court visualised a situation wherein the property had not been acquired but was in the process of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
