1988 (4) TMI 97 - AT - Income Tax

Summary

Issues Involved:
1. Applicability of Section 54(1) of the Income Tax Act, 1961.
2. Date of sale of the old flat in Jivan Vihar Co-op. Housing Society Ltd.
3. Date of acquisition of the new flat in Kalpa Vruksha Co-op. Housing Society Ltd.

Detailed Analysis:

1. Applicability of Section 54(1) of the Income Tax Act, 1961:

The main issue in the appeal was whether the appellant's case was covered by Section 54(1) of the Income Tax Act, 1961, which provides for exemption on capital gains if the assessee has, within a specified period, purchased or constructed a new residential property. The CIT (Appeals) had held that the appellant was not entitled to this exemption, a decision which was contested by the appellant.

2. Date of Sale of the Old Flat in Jivan Vihar Co-op. Housing Society Ltd.:

The appellant contended that the old flat in Jivan Vihar Co-op. Housing Society Ltd. was sold on 1-4-1975, while the Income Tax Officer (ITO) and CIT (Appeals) determined the sale date as 1-9-1975. The Tribunal examined the evidence and concluded that the sale date was indeed 1-9-1975, as the flat was registered in the name of the new owners on that date. The Tribunal found no evidence to support the appellant's claim of a sale on 1-4-1975.

3. Date of Acquisition of the New Flat in Kalpa Vruksha Co-op. Housing Society Ltd.:

The appellant argued that the new flat in Kalpa Vruksha Co-op. Housing Society Ltd. was acquired on 1-4-1975, the date she took possession after the completion certificate was issued by the Bombay Municipal Corporation. The CIT (Appeals) held that the acquisition date was 5-11-1971, when the appellant became a member of the society and entered into an agreement for the flat.

The Tribunal reviewed the evidence, including minutes from the society's meeting, certificates from the society, and municipal tax records. It was established that the building was not completed until March 1975, and the flat was allotted and occupied by the appellant on 1-4-1975. The Tribunal noted that the mere membership in the society did not equate to ownership of the flat. The Tribunal held that the acquisition date was 1-4-1975, aligning with the appellant's claim.

Conclusion:

The Tribunal concluded that the appellant's case was indeed covered by Section 54(1) of the Income Tax Act, 1961. The new flat was acquired within one year before the sale of the old flat, thus entitling the appellant to the exemption on capital gains. The Tribunal directed that the computation of capital gains be revised to grant the relief under Section 54(1).

Result:

The appeal was partly allowed, overturning the CIT (Appeals)'s decision regarding the applicability of Section 54(1) and directing a revision in the computation of capital gains.