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TMI Blog2005 (2) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... which some structure was raised and, therefore, the assessee was not entitled to exemption under section 54 of the Income-tax Act, 1961?" The assessee purchased a plot of land measuring 2,000 sq. yards in village Sunet, opposite Punjab Agricultural University, Ludhiana, in the year 1970-71. Subsequently on urbanisation, the property was marked as plots Nos. 10-D and 11-D, Sarabha Nagar by the Improvement Trust, Ludhiana. Vide letter dated May 28, 1965, from the Chairman, Improvement Trust, Ludhiana, regarding the exemption under section 56 of the P.T.I. Act, 1922, the assessee was informed that against the original plot of 2000 sq. yards, he was allotted plots Nos. 10-D and 11-D measuring 1955 sq. yards as per plan deposited in the office of the trust. It was also stipulated in the said letter that the assessee was not allowed to sub-divide the allotted land and shall abide by the building bye-laws and other regulations of the trust for future construction. He was also required to get the construction of the existing structure, if any, regularised. The assessee through this letter was also asked to make certain payments and execute an agreement in the prescribed form. This letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also made to the application filed by the assessee for obtaining clearance certificate under section 230A(1) of the Act on March 7, 1974, wherein the information regarding the cost of construction of the property and cost of acquisition of land was given as under: "(i) Cost of land only not constructed Rs. 6,000 (ii) Plus development charges paid to Improvement Trust Rs. 9,775 (iii) Tin shed, water connection, barbed wiring boundary, plantation fruit grapes and non-fruit trees Rs. 5,000 approximately." From the above, the Income-tax Officer observed that it was crystal clear that there was no residential house as there were no boundary wall and it was covered by barbed wire only. There was neither any kitchen nor any bathroom in the said property. He also observed that the tin shed was being used only for the purposes of storage of fruit, etc. The Income-tax Officer, therefore, held that it could not be believed that the assessee or his parents had ever resided in the above tin shed where no living amenities were available. The matter about the disallowance for exemption under section 54 of the Act was referred to the Inspecting Assistant Commissioner of Income-tax by the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m for exemption under section 54 of the Act. He also observed that a major portion of the property was used by the assessee for his residence. The Commissioner of Income-tax (Appeals), however, did not accept the claim for exemption in respect of plot No. 11-D on the ground that it was a separate and distinct plot on which admittedly, there was no structure. He, therefore, held that the capital gains arising out of the sale of plot No. 11-D did not qualify for exemption under section 54 of the Act. Both the Revenue as well as the assessee filed appeals against the order of the Commissioner of Income-tax (Appeals). The Revenue challenged the exemption granted in respect of plot No. D-10 whereas the assessee was aggrieved by the non-grant of exemption in respect of plot No. D-11. The Tribunal considered the point whether there was any structure on plot No. D-10 and whether the same could be termed as a residential house so as to claim exemption under section 54 of the Act. It took the view that the tin shed on plot No. D-10 could not be considered as a residential house and therefore the capital gain arising out of the sale of the said plot along with tin shed did not qualify for e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal that there was no house in existence in plot No. 10-D and that the tin shed raised thereon was incapable of being used as a residence, are based on material on record and supported by sound reasoning. These findings are pure findings of fact in which no perversity has been pointed out. It is not in dispute that exemption in respect of capital gain envisaged under section 54 of the Act as it existed at the relevant time was available in the following circumstances: (i) the capital gain arises in respect of house and land appurtenant thereto; (ii) the house, in the two years immediately preceding the date of transfer, was being used by the assessee mainly for the purpose of his own or either of his parent's residence; (iii) the assessee within a period of one year before or after that date purchases or within a period of two years after that date constructs a house property; and (iv) the new house property is for the purposes of his own residence. Thus, to be entitled for exemption under section 54 of the Act all the above four conditions have to co-exist. Non-fulfilment of any of these, disentitles an assessee for claiming the exemption. In the case in hand, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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