1997 (2) TMI 83

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..... flat ? " This reference pertains to the assessment year 1975-76. The material facts of the case giving rise to this reference are as follows : The assessee is an individual. He was occupying Flat No. 9-G of Malbar Apartment at Nepeansea Road, Bombay, since May, 1968, on leave and licence basis. He was paying compensation for that at the rate of Rs. 525 per month. He purchased the said flat on July 16, 1973, for a sum of Rs. 36,375 and was in occupation of the same as its owner since then. He sold the above flat on August 11, 1974, for a sum of Rs. 70,000. The assessee had purchased a flat bearing Flat No. 203 in Casablanca for Rs. 1,10,000 on August 1, 1974. The assessee claimed exemption from capital gains tax under section 54 of the .....

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..... ission of 1 earned counsel of the assessee. The admitted position in this case is that the assessee purchased the flat in question on July 16, 1973, and sold the same on August 11, 1974. Obviously, the flat in question was the property of the assessee only for a period of a little over one year. Section 54 of the Act, which grants exemption in respect of capital gains on sale of property used for residence, requires that the property in question must have been used by the assessee himself or by his parents mainly for the purpose of his own or his parents' own residence for a period of two years preceding the date of transfer. It is one of the conditions precedent for applicability of section 54 of the Act. Section 54 of the Act, as it stood .....

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..... rs in section 54, clearly means that the occupation of the assessee must be occupation in the capacity of the owner. It does not contemplate occupation during the period when the property even did not belong to him. In the instant case, admittedly, the assessee was in occupation of the property in question up to July 15, 1973, on leave and licence basis. He purchased the property from its owner only on July 16, 1973. The user of the same by the assessee on and from that date only is relevant for the purposes of section 54. That being so, it is obvious that the property in question had not been used by the assessee or his parents for own residence in the two years immediately preceding the date of the transfer. In view of the above, in our .....

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