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Issues Involved:
The judgment involves the interpretation of section 54(1) of the Income-tax Act, 1961 regarding exemption for capital gains tax on the sale of a residential property and purchase of a new property within a specified period. Summary of Judgment: Issue 1: Interpretation of Section 54(1) - Exemption Criteria The assessee sold a flat and entered into an agreement to purchase another flat within the stipulated period. The Assessing Officer allowed partial exemption, but the Tribunal considered the entire investment and granted exemption u/s 54(1). The Andhra Pradesh High Court and the apex court's decisions were cited to support the view that registration is not necessary for exemption under section 54(1) if payment and possession are within the specified period. Issue 2: Investment in Constructed Property The assessee invested in a flat under construction within three years of selling her property. The court deliberated whether the requirement for exemption u/s 54(1) necessitates self-construction of the house or if purchasing a property under construction suffices. Referring to the purpose of the provision, the court emphasized that the intent is to exempt capital gains tax when the sale proceeds are reinvested in a residential property, regardless of self-construction. Judicial Interpretation and Decision Citing the Supreme Court's stance on modifying statutory provisions to align with legislative intent, the court emphasized that the purpose of section 54(1) is to provide relief when sale proceeds are reinvested in a residential property, irrespective of self-construction. The Tribunal's decision to grant exemption based on the investment in a property under construction was upheld, ruling in favor of the assessee and against the Revenue. Conclusion The court affirmed that investing in a property under construction within the specified period qualifies for exemption u/s 54(1), aligning with the legislative intent to relieve capital gains tax on reinvestment in residential properties. The application was disposed of, with all parties instructed to act in accordance with the judgment.
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