2013 (1) TMI 906 - HC - Income Tax

Summary

Issues involved: Interpretation of Section 54F of the Income Tax Act regarding exemption claim for demolished property within 3 years of purchase.

Summary:
1. The main issue in this case is whether the respondent-assessee is entitled to benefit under Section 54F of the Income Tax Act when the purchased property is demolished within three years.

2. The revenue argued that the demolition of the property within three years of purchase would amount to transfer, thus disqualifying the assessee from the exemption under Section 54F.

3. The Commissioner of Income Tax (Appeals) allowed the assessee's claim, stating that the demolition did not constitute a transfer as per Section 54F(3) of the Act.

4. The Tribunal upheld the CIT(A)'s decision, citing the Supreme Court case of Vania Silk Mills P. Ltd., which held that destruction of assets does not constitute a transfer under the Act.

5. The revenue's counsel tried to distinguish the Vania Silk Mills case by arguing that the destruction in that case was involuntary due to fire, but the court found this distinction irrelevant and applied the same reasoning to the present case.

6. The High Court dismissed the appeal, stating that there was no reason to entertain the proposed question of law, and upheld the decision in favor of the respondent-assessee.