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TMI Blog1971 (12) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case, the Tribunal was justified in holding that the provisions of section 54(ii) are attracted to the sale effected by the assessee on July 1, 1962 ? (iii) Whether the computation of capital gains assessable to tax is in accordance with law? " The year of assessment is 1963-64, the corresponding accounting period being that which ended on March 31, 1963. The assessee, an individual, sold his residential house on July 25, 1960. He purchased a new house for Rs. 19,550. The capital gain in relation to those transactions computed in accordance with the provisions of the Indian Income-tax Act, 1922, was a sum of Rs. 15,029. No tax on the capital gains was, however imposed on the assessee under that Act in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price of the house that had been acquired by the assessee after the first sale and which had been considerably improved by him. According to the counsel for the assessee, section 54(ii) of the Income-tax Act, 1961, will be applicable only when the first sale also had resulted in capital gains which could be assessed under the 1961 Act. He invited our attention to section 45 and also to section 54. The relevant part of section 45(1) of the Income-tax Act, 1961, enacts that " any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 53, 54 and 54B be chargeable to income-tax under the head 'Capital gains' and shall be deemed to be the income of the previous ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of his mainly for the purposes of his own or the parent's own residence, and the assessee has within a period of one year before or after that date purchased, or has within a period of two years after that date constructed, a house property for the purposes of his own residence, then, instead of the capital gains being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost of the new asset, the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54(ii), but we feel no doubt that the question is a debatable one and that in those circumstances, the Income-tax Officer had no jurisdiction to invoke section 154 of the Income-tax Act, 1961. Reference may be made to a recent decision of the Supreme Court in T. S. Balaram, Income-tax Officer, Company Circle IV, Bombay v. Volkart Brothers . Their Lordships observed in that case as follows : " A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. " We are of the view that two opinions on the question are certainly possible. Section 154 could not therefore have been invoked. We answer the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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