1997 (1) TMI 131 - AT - Income Tax

Summary

Issues:
1. Interpretation of eligibility for relief under section 54F of the Income-tax Act.
2. Determination of the date of transfer of asset for capital gain calculation.
3. Analysis of the Wealth-tax Officer's objection regarding the inclusion of the value of the right possessed by the assessee in the wealth of the assessee.

Analysis:
1. The appeal involved a dispute regarding the entitlement of the assessee to relief under section 54F of the Income-tax Act. The revenue contended that the assessee was not eligible for the relief, while the learned Commissioner of Income-tax (Appeals) had allowed the claim. The facts revolved around the purchase and subsequent relinquishment of a property, leading to the acquisition of another property within the stipulated time frame.

2. The core issue was the determination of the date of transfer of the asset for calculating capital gains. The Assessing Officer argued that the capital gain arose on the date of the agreement between the original owner and the new purchaser, while the CIT(A) held that it occurred when the possession was handed over by the assessee to the purchaser. The Tribunal analyzed the agreements, possession rights, and payment details to conclude that the transfer took place on the date of handing over possession, making the assessee eligible for exemption under section 54F.

3. Addressing the Wealth-tax Officer's objection, the Tribunal clarified that the possession without the right to or ownership of the property did not constitute 'net wealth' under the Wealth-tax Act. The Tribunal emphasized that liability to wealth-tax arises from ownership of assets, not mere possession. Therefore, the decision in the wealth-tax proceedings did not impact the assessee's claim for exemption under section 54F of the Income-tax Act.

In conclusion, the Tribunal upheld the order of the learned CIT(A) and dismissed the appeal filed by the revenue, affirming the assessee's eligibility for relief under section 54F of the Income-tax Act based on the transfer of the asset on the date of possession handover.