IT Appeal No. 2529 (Bom.) Of 1983 [Assessment Year 1978-79]. Case: Income-Tax Officer Vs Anwar K. Porbandarwalla. High Court of Bombay (India)

Case NumberIT Appeal No. 2529 (Bom.) Of 1983 [Assessment Year 1978-79]
JudgesShri M. R. Sikka, Judicial Member
IssueIncome Tax Act 1961 - Section 54
Citation1984 (8) ITD 658 (Mum)
Judgement DateFebruary 29, 1984
CourtHigh Court of Bombay (India)

Order:

Shri M. R. Sikka, Judicial Member

  1. This appeal has been filed by the department against the order dated 15-2-1983 of the AAC, whereby, he has held that the assessee is entitled to the benefit of section 54(1) of the Income Tax Act 1961 (the Act).

  2. The assessee had been in possession of the flat in question situated at Bandra as a tenant under one Smt. Khatijabai since the year 1972. He purchased this flat from smt. Khatijabai on 17-7-1976 for Rs. 15,000. Later on, he sold the same to Smt. Zohrakhanubai Alomohamed on 17-10-1977 for Rs. 46,500 and declared the net capital gains at Rs. 26,451. In the course of the assessment proceedings for the assessment year 1978-79, the assessee claimed the benefit of section 54(1). The ITO was of the view that sine the assessee had used the flat for his residence as an owner only for one year and three months and not for two years immediately preceding the date of transfer, i.e., 17-10-1977, he was not entitled to the exemption under section 54(1).

  3. However, on appeal, the AAC held that section 54(1) did not require that the assessee must necessarily reside in the house as an owner for two years immediately preceding the date on which the transfer took place. According to him, as the assessee had been residing in the house since the year 1972 and as there was no dispute about the satisfaction of the other conditions, the assessee was entitled to claim exemption under section 54(1). Aggrieved by the order of the AAC, the department has filed the present appeal.

  4. After going through the record and hearing the learned representatives of the parties, we do not find any substance in this appeal. Section 54(1) provides as follows:

    54. (1) Where a capital gain arises from the transfer of a capital asset t which the provisions of section 53 are not applicable, being buildings or lands appurtenant thereto the income of which is chargeable under the head Income from house property, which in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a...

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