TMI Blog2005 (2) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... "), has referred the following questions of law arising out of its order dated September 29, 1984, relating to the assessment year 1975-76 for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that- (i) there was no residential house on plot No. D-10; (ii) the said house, if at all, was not occupied by the assessee or a parent of his for a period of two years immediately preceding the sale thereof; (iii) the new house purchased out of the sale proceeds of the plots sold was not utilised for the purpose of his residence as major portion thereof was let out; and (iv) plot No. D-11 did not form part of plot No. D-10 on which some structure was raised and, therefore, the assessee was not entitled to exemption under section 54 of the Income-tax Act, 1961?" The assessee purchased a plot of land measuring 2,000 sq. yards in village Sunet, opposite Punjab Agricultural University, Ludhiana, in the year 1970-71. Subsequently on urbanisation, the property was marked as plots Nos. 10-D and 11-D, Sarabha Nagar by the Improvement Trust, Ludhiana. Vide letter dated May 28, 1965, from the Chairman, Improv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 54 of the Act. The Income-tax Officer rejected the claim for exemption. According to him, his predecessor had visited the site and found that the tin shed was not worth living in as there were no amenities of life provided therein and at best, it could be used as a cattle shed. He further observed that the so-called house was never used by the assessee or his parent for their self-residence. The Income-tax Officer also recorded the statement of the assessee wherein he admitted that no bill for water supply was paid or received by him and that there was no electric connection in the tin shed. He also observed that even in the sale deed, there was no mention of any house on the aforesaid plot. Reference was also made to the application filed by the assessee for obtaining clearance certificate under section 230A(1) of the Act on March 7, 1974, wherein the information regarding the cost of construction of the property and cost of acquisition of land was given as under: "(i) Cost of land only not constructed Rs. 6,000 (ii) Plus development charges paid to Improvement Trust Rs. 9,775 (iii) Tin shed, water connection, barbed wiring boundary, plantation fruit grapes and non-fruit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Inspecting Assistant Commissioner computed the chargeable capital gain from the two plots sold by the assessee. The assessee went up in appeal before the Commissioner of Income-tax (Appeals) (for short "the CIT (A)"), who accepted the claim for exemption under section 54 of the Act against the sale of plot No. 10-D. He considered the tin shed constructed on the said plot as a residential house and he also accepted the claim that the house was occupied by a parent of the assessee for self-residence within the two years preceding the date of sale. Regarding the new house purchased at Chandigarh, he observed that the intention of the assessee to have purchased the house for self-residence was enough to entitle him for exemption under section 54 of the Act. He also observed that a major portion of the property was used by the assessee for his residence. The Commissioner of Income-tax (Appeals), however, did not accept the claim for exemption in respect of plot No. 11-D on the ground that it was a separate and distinct plot on which admittedly, there was no structure. He, therefore, held that the capital gains arising out of the sale of plot No. 11-D did not qualify for exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of being used as a residence. He further submitted that although the assessee had a residential house at Punjab Agricultural University Campus which was located opposite village Sunet in which the said plots are located, yet the assessee was using the tin shed for his own residence off and on. He also contended that merely because of a part of the new house at Chandigarh had been let out, it could not be a ground for disallowing the claim for exemption under section 54 of the Act as there was no requirement that the entire house should be used for the assessee's own residence. Mr. D.S. Patwalia, learned counsel for the Revenue, on the other hand, supported the order of the Tribunal. He contended that the findings of the Tribunal that there was no house in existence in plot No. 10-D and that the tin shed raised thereon was incapable of being used as a residence, are based on material on record and supported by sound reasoning. These findings are pure findings of fact in which no perversity has been pointed out. It is not in dispute that exemption in respect of capital gain envisaged under section 54 of the Act as it existed at the relevant time was available in the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... University. We are satisfied that the reasoning given by the Tribunal to hold that the tin shed was not a house used by the assessee for his residence, is quite justified. It stands admitted that the structure on plot No. D-10 is only a tin shed surrounded only by barbed wire. There is neither any bathroom or kitchen nor is any electricity provided in the said shed. It is, therefore, not possible to believe that a person of the status of senior teacher in the Punjab Agricultural University would use such a structure for his residence especially when he has been provided residential accommodation nearby in the university campus. It is not in dispute that the university campus is located opposite village Sunet where the plots in question are located. Thus we do not find any infirmity in the finding of the Tribunal that the tin shed on plot No. D-10, even if considered a house, was not occupied by the assessee or a parent of his for their residence in the two years immediately preceding the date of transfer. Thus, the assessee is not entitled to exemption under section 54 of the Act on this ground alone. Accordingly, we answer question No. (ii) in the affirmative, i.e., in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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