9911796707
TMI Blog1983 (9) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... le, the assessee claimed exemption from capital gains under section 54 of the Income-tax Act, 1961 ('the Act'). The ITO did not grant relief on the ground that the assessee was not the owner of the flat for more than two years. On appeal, the AAC allowed the assessee's claim. Hence, the departmental appeal. 2. The learned counsel for the department has pointed out that the assessee was not occupying the flat as owner but was in a relationship to the flat as not even a tenant but something less, viz., leave and licence. In order to obtain relief under section 54, the assessee should be the owner of the property throughout and not merely satisfy the condition of staying in the property. The learned counsel has also stressed the expression " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n these cases the question of ownership, which could have been rightly stressed if that were necessary, was not highlighted at all. 4. The operative portion of section 54 is as under : "Where a capital gain arises from the transfer of a capital asset to which the provisions of section 53 are not applicable, being buildings or lands appurtenant thereto 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 (hereafter in this section referred to as the original asset), and the assessee has within a period of one yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apacity in the property. The order en passant observes : "In this connection we would like to make it clear that ownership does not appear to be a necessary ingredient of the condition of user laid down in section 54." Apart from the fact that these observations were not necessary to decide the appeal before the Tribunal, the point does not seem to have been discussed or reasoned out either. More than that the Tribunal has not concentrated on the length of the ownership of the property either. If the assessee is not the owner of the property on the date of the sale, certainly no capital gains can arise. This would go against the statement quoted above. Much support, therefore, from this decision cannot be obtained. The decision in IT Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng reasons, the benefit has to be denied in the present case. In R. Mala's case a building was constructed on a land and the assessee stayed in the building for a period shorter than two years. Even though as a matter of fact in that case the ownership of the land and a building did not vest in the assessee for a period of two years, their Lordships did not suggest that if that be so, the benefit could have been granted. What is, therefore, clear analogically from this decision would appear to be the assessee's residence in the same building, viz., the asset which is the subject-matter of capital gain. If the assessee owned a plot of land for more than two years and stayed in a building constructed on it for less than two years, she would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of ownership of the property at all. This latter, however, is implied in the reference to the income from house property. The advantage is to be given to a person who has used the property as the residential property and after selling it acquires another residential property. The periods of residence are specified. If the ownership does not run concurrently with the residence there would appear to be no particular reason why a specific period of residence is referred to in the section. It would be improper to presume that the Legislature incorporated a condition such as a period of residence of two years without any purpose. If the assessee were not the owner of the property for the two years, this purpose would be defeated. In the extr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
