D P MEHTA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of assessee, following question has been referred under S. 256(1) of the IT Act, 1961 (in short, the 'Act'), for opinion of this Court by the Income tax Appellate Tribunal, New Delhi (in short, the 'Tribunal') :

(2.) FACTUAL position in a nutshell is as follows : Assessee, an individual, sold his property No. E 64, Greater Kailash, New Delhi (in short, 'E 64'), for Rs. 2,50,000 on 17th July, 1971. Cost of the property, so far as assessee is concerned, was Rs. 1,57,554. Thus, there was a capital gain of Rs. 92,446. Assessee purchased a plot of land at E 58, Greater Kailash, New Delhi, on 24th Jan., 1971, for Rs. 80,000 and started construction thereon. Assessee claimed that within two years from the date of sale of E 64 he had constructed property for the purpose of his residence and the cost of such construction amounted to Rs. 1,10,000, and as such he was entitled to exemption from the tax for capital gain amounting to Rs. 92,446. The cost of construction, in addition to the cost of land, was stated to be Rs. 30,000. ITO rejected the said claim on the ground that there was no evidence of user as residence. Reliance was placed on a statement dt. 28th Jan., 1974, wherein assessee had himself stated that the building was not worth occupying. Matter was carried in appeal before AAC. The said authority upheld the conclusions of AO and rejected the appeal. Matter was carried in further appeal before the Tribunal. By order dt. 25th June, 1976, matter was remitted back to AAC by the Tribunal for afresh consideration. AAC again considered the matter and rejected assessee's appeal by order dt. 11th Oct., 1976. Matter was again carried before the Tribunal which, by order dt. 20th April, 1978, upheld the rejection of assessee's claim.

(3.) WE have heard learned counsel for the parties. Learned counsel for assessee submitted that, in view of the conclusions of the Tribunal, that servant quarters had been constructed, the further conclusion that, keeping in view the assessee's status, it cannot be said that the house was being used for the purpose of residence cannot be maintained. It was further submitted that what was necessary for claiming exemption related to user of the property for the purpose of residence and the status of assessee and/or total built in area has no relevance so far as that aspect is concerned. Learned counsel for Revenue, on the other hand, referred to the statement dt. 28th Jan., 1974, wherein assessee himself submitted that the building was not worth occupying.