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TMI Blog1971 (12) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case, the Income-tax Officer had jurisdiction to invoke the provisions of section 154 of the Income-tax Act, 1961, and to revise the assessment originally made ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the provisions of section 54(ii) are attracted to the sale effected by the assessee on July 1, 1962 ? (iii) Whether the computation of capital gains assessable to tax is in accordance with law? " The year of assessment is 1963-64, the corresponding accounting period being that which ended on March 31, 1963. The assessee, an individual, sold his residential house on July 25, 1960. He purchased a new house for Rs. 19,550. The capital gain in relation to those tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the assessee contended that it is not at all clear that section 54(ii) of the Income-tax Act, 1961, warranted the inclusion of the sum of Rs. 15,029 to the difference between the purchase and sale price of the house that had been acquired by the assessee after the first sale and which had been considerably improved by him. According to the counsel for the assessee, section 54(ii) of the Income-tax Act, 1961, will be applicable only when the first sale also had resulted in capital gains which could be assessed under the 1961 Act. He invited our attention to section 45 and also to section 54. The relevant part of section 45(1) of the Income-tax Act, 1961, enacts that " any profits or gains arising from the transfer of a capital a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereto the income of which is chargeable under the head 'Income from house property', which in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his mainly for the purposes of his own or the parent's own residence, and the assessee has within a period of one year before or after that date purchased, or has within a period of two years after that date constructed, a house property for the purposes of his own residence, then, instead of the capital gains being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961, did not apply and cannot be treated as a " new asset " for the purpose of section 54. We do not consider it necessary to express a final opinion about the ambit and scope of section 54, particularly section 54(ii), but we feel no doubt that the question is a debatable one and that in those circumstances, the Income-tax Officer had no jurisdiction to invoke section 154 of the Income-tax Act, 1961. Reference may be made to a recent decision of the Supreme Court in T. S. Balaram, Income-tax Officer, Company Circle IV, Bombay v. Volkart Brothers . Their Lordships observed in that case as follows : " A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process ..... X X X X Extracts X X X X X X X X Extracts X X X X
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