TMI Blog1996 (1) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... an amount of Rs. 52,000. Another property became the subject-matter of acquisition process, when 8.25 cents of the land came to be acquired on May 4, 1976, though taking of possession on the same day by application of the urgency clause. There is no dispute that the amount of compensation was received by the assessee on August 17, 1976 --- two days after the account closing of the assessment year 1977-78. There is also no dispute that the reference court granted enhanced compensation amounting to Rs. 1,51,914 by an award of the reference court dated November 1, 1978. In regard to this award, the enhanced amount was actually received on October 27, 1980. It appears that the assessee did not place on record any capital gains for the assessment year 1977-78, contending that in fact capital gains had arisen for the next year 1978-79. It was also contended by the assessee before the Income-tax Officer that even the additional compensation granted by the reference court amounting to Rs. 1,51,914 as stated above could not become taxable during the year 1977-78 or even in 1978-79, contending in regard thereto that as the amount was received only on October 27, 1980, the same could be ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions as specified in clauses (i) and (ii). Additionally, section 54(2) also enacts to deal with the situation when the transfer of the original asset is by way of compulsory acquisition under any law and also the situation where the compensation gets enhanced by the court and in regard thereto it is enacted, so far as is relevant for the purpose of this reference that if the assessee has within a period of one year before or after the date of the receipt of the additional compensation purchased or within a period of two years after that date constructed a house property for the purposes of his own residence, the question is to be dealt with as provided in the said section. It must be made clear that in this reference we are not concerned with the method of dealing With the situation but we are concerned with the factual situation as to whether the said provision become applicable entitling the assessee to claim exemption in accordance with the above provisions. As already stated above whichever is the statutory position to be taken into consideration, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be understood as mainly and in regard thereto has placed reliance on the decision of the Madras High Court in CIT v. C. Jayalakshmi [1981] 132 ITR 82 to the effect that the word "mainly" is not to be confused with "wholly" and has to be understood as principally. In addition even on factual basis the Tribunal has observed that it is not disputed that one-third of the compensation received is shown as referable to the shop as against its two-thirds is shown as referable to the residential user of the building, so much so that the Income-tax Officer has proceeded with this proportion of apportionment. In view of this position, it is not possible to disturb the finding of the Tribunal in regard thereto. On the other aspect, the facts on record are not in dispute. The Tribunal has considered this aspect in paragraph 8 onwards. It is seen that the property was purchased on May 14, 1975, for Rs. 52,000. It is also seen that the award and the possession occurred on the same day---May 4, 1976, in view of the fact that it was acquisition by railways and naturally this peculiarity lays emphasis on the date on which the possession is given. Factually there cannot be any dispute, therefrom th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was up to April 11, 1980. The Tribunal has also recorded the factual undisputed position that the assessee had started construction which appears to have been completed by the end of 1980. In fact, there is a positive and clear cut factual finding that the construction was completed by December, 1980. Therefore, it is not possible to consider that what was constructed under lawful permission was not house property in regard to which there could be claim for exemption. Even the submission of learned counsel with regard to the language and a consequential submission that the house property has to be understood as a newly built house property to the extent that there should be a situation that there should be no construction standing on the land as it is. Carefully considering the language it becomes more than difficult to accept the said submission to restrict it only to new construction and not constructions which are in the nature of remodelling as has been the factual situation on record. The question is as to whether the additional compensation could be said to have been utilised in the matter of construction so as to be able to claim benefit under section 54(2) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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