2004 (5) TMI 14 - HC - Income Tax

This is an application by Revenue u/s 256(2) requesting this court to direct the Tribunal to refer the questions of law which according to the Revenue does arise out of the order, passed by the Tribunal - We accordingly allow the application and direct the Tribunal to refer to this court the following questions of law - (i) Whether Tribunal was justified in law in allowing the benefits of section 54F to an assessee who owned another residential house on the date of transfer? (ii) Whether Tribunal was justified in law in allowing the benefits of section 54F even if the transfer is not evidenced by a registered deed?

Summary

Issues:
1. Application under section 256(2) of the Income-tax Act, 1961 to direct the Income-tax Appellate Tribunal to refer questions of law.
2. Whether questions of law arise out of the Tribunal's order dated August 25, 1993, in ITA No 1133/Ind/1989.
3. Entitlement of the assessee to benefit under section 54F of the Act for a transaction not evidenced by a registered deed of sale.

Analysis:
1. The judgment pertains to an application made by the Revenue (Income-tax Department) under section 256(2) of the Income-tax Act, 1961, seeking the High Court to direct the Income-tax Appellate Tribunal to refer questions of law arising from the Tribunal's order dated August 25, 1993. The court, after hearing both counsels and perusing the case record, found that questions of law indeed arise from the Tribunal's order. It was emphasized that if an issue involves interpretation of a section of the Act on admitted facts, it qualifies as a question of law for reference to the High Court under section 256(1) of the Act.

2. The judgment highlights that the central issue revolves around the entitlement of the assessee to claim the benefit of section 54F of the Act for a transaction that lacks a registered deed of sale. While the Tribunal ruled in favor of the assessee based on decisions from other High Courts, the High Court deemed it appropriate to examine the matter in its reference jurisdiction. The court emphasized that even if the Tribunal's view may be upheld eventually, it does not negate the issue from being a question of law that necessitates a reference to the High Court for resolution.

3. Consequently, the High Court allowed the application and directed the Tribunal to refer two specific questions of law to the court under section 256(2) of the Act. The questions pertained to the justification in law for allowing the benefits of section 54F to an assessee who owned another residential house at the time of transfer, and whether the benefits of section 54F could be extended even if the transfer lacked a registered deed. The court instructed the Tribunal to submit the statement of the case within six months for further proceedings, without imposing any costs.