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Issues:
1. Computation of capital gains on the sale of a plot of land. 2. Determination of whether the asset in question is a long-term capital asset. 3. Interpretation of the provisions of section 2(42A) of the Income-tax Act, 1961. 4. Application of section 54 of the Transfer of Property Act to the transfer of immovable property. Analysis: 1. The appeal was filed by the assessee against the order of the AAC regarding the computation of total income for the assessment year 1977-78. The ITO determined the total income at Rs. 64,410, while the declared income was Rs. 42,110. The dispute arose from the sale of a plot of land for Rs. 70,000, with a cost of acquisition of Rs. 6,600 and additional costs of improvement. The ITO calculated the gross capital gains at Rs. 59,930, differing from the assessee's claim of Rs. 57,060. Furthermore, the ITO denied the assessee a special deduction under section 80T, considering the asset a short-term capital asset due to the period of holding. The AAC reworked the computation under section 48, allowing a deduction of Rs. 2,140, but confirmed the short-term capital asset classification. 2. The main contention was whether the asset in question qualified as a long-term capital asset. The assessee argued that the asset had been held for more than five years based on the definition in section 2(42A) of the Act. The assessee presented evidence of property tax payments in 1968, indicating ownership before the transfer in the financial year 1976-77. The revenue argued that the assessee did not possess the plot before 1968, citing recitals in the sale deed. However, the Tribunal found the evidence of property tax payments conclusive, determining that the assessee had held the asset for over 60 months before the sale. 3. Regarding the interpretation of section 2(42A), the Tribunal referred to a precedent to reject the revenue's argument that ownership as a registered owner was necessary for holding an asset. The Tribunal emphasized that the term 'held' did not require ownership in the legal sense, supporting the assessee's position based on the property tax evidence. 4. The second limb of the assessee's argument focused on the application of section 54 of the Transfer of Property Act to the transfer of the plot. The assessee claimed that the transfer was effective in March 1961, before the extension of section 54 to Delhi in October 1962. The Tribunal acknowledged the possession of the plot by the assessee before 1968 but rejected the claim that the title had transferred based on verbal agreement alone. Ultimately, the Tribunal allowed the appeal, granting the assessee the special deduction under section 80T and directing the ITO to adjust the relief accordingly. The appeal was allowed in favor of the assessee.
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