1989 (4) TMI 125 - AT - Income Tax

Summary

Issues:
1. Whether the capital gain made by the assessee is exempt from tax under section 54 of the Income Tax Act, 1961.

Detailed Analysis:
The judgment pertains to a second appeal by the assessee regarding her assessment for the assessment year 1979-80. The main issue in this appeal is whether the capital gain made by the assessee is exempt from tax under section 54 of the Income Tax Act, 1961. The assessee sold a residential house in Delhi and purchased a plot of land in Ghaziabad to construct a new house within the prescribed period to claim exemption from capital gains tax.

The relevant provision under section 54 at the time required the assessee to construct a house within two years after the sale of the property to avail the exemption. The Income Tax Officer (ITO) held that the capital gain was not exempt as the house in Ghaziabad was not completed within the specified period. The contention was also raised regarding the occupancy of the original house in Delhi before the sale and whether it was let out to a tenant.

The assessee argued that she was in possession of the original house for self-residence until May 1978, and even if a portion was let out, the main part was still occupied by her. However, documentary evidence showed that the entire property was let out before the sale. The contention regarding the completion of the new house within the stipulated period was also disputed.

The appellate tribunal considered the evidence presented, including affidavits and certificates, to determine if the conditions for exemption under section 54 were met. The tribunal found that the construction of the new house was not completed within the specified period, and the evidence provided was insufficient to prove habitability. Therefore, the exemption under section 54 was denied, and the orders of the authorities below were upheld.

In conclusion, the appeal by the assessee was dismissed, and the capital gain was held to be taxable as the conditions for exemption under section 54 were not satisfied. The judgment provides a detailed analysis of the facts, legal provisions, and evidence presented to support the decision.