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Issues involved:
The issues involved in this case are whether the Appellate Tribunal was correct in confirming the deletion of capital gains arising from the sale of lands not treated as appurtenant to the building, and whether the entire land should be considered as appurtenant to the building for the purpose of exemption under section 54 of the Income-tax Act. Issue 1: Deletion of Capital Gains The assessee, an individual, sold a plot of land and constructed a new house, claiming relief under section 54 of the Income-tax Act. The Income-tax Officer applied norms of the Urban Land Ceiling Act to bifurcate the sale consideration, treating part as appurtenant land and the rest as a separate asset. However, the first appellate authority held that the entire property should be treated as one unit of land and building. The Appellate Tribunal found that the vacant land surrounding the main building was appurtenant to the building due to various constructions and facilities present, concluding that no part of the land could be separated. The Tribunal's decision was supported by the counsel for the assessee. Issue 2: Entire Land as Appurtenant The Department contended that the entire extent of land should not be considered appurtenant to the main building, citing the Andhra Pradesh High Court's tests to understand the meaning of "appurtenant." The Supreme Court's decision emphasized that whether land is appurtenant depends on the facts of each case. However, the Tribunal, after examining the plan of the premises, concluded that the entire land was utilized by the assessee and should be considered appurtenant to the main building. The High Court, considering the historical context and the usage of the property, upheld the Tribunal's decision, finding no infirmity in treating the entire land as appurtenant to the building. This judgment highlights the interpretation of "appurtenant land" under section 54 of the Income-tax Act, emphasizing the factual analysis of each case to determine the relationship between land and the main building. The decision underscores the importance of considering historical context and usage patterns in assessing the appurtenance of land to a building, ultimately affirming the Tribunal's findings in this case.
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