A S CHHACHHI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference has been made to this Court under Section 256 (1) of the income Tax Act, 1961 (for short as "act") by the Income Tax Appellate Tribunal, delhi Bench "e" in ITA No. 3112/del/91 relevant for the assessment year 1989-90.

(2.) THE Tribunal has referred the following question for the opinion of this Court:-"whether, on the facts and in the circumstances of the case, the Tribunal was right in upholding order of Assessing Officer computing taxable gain at rs. 6,60,000/- for the assessment year 1989-90""

(3.) THE brief facts of this case as they appear from the paper book are that the assessee in the period relevant to assessment year 1989-90 owned a house at Jorbagh, New Delhi. He sold the ground floor of that house for a consideration of Rs. 30,00,000/- The cost of construction of the ground floor was shown to be Rs. 1,25,000/- and the expense for brokerage were claimed at rs. 45,000/ -. Thus, the transaction resulted in a capital gains of Rs. 28,30,000/ -. The assessee also purchased a residential house for a consideration of Rs. 8,90,000/- and also invested a sum of Rs. 6,00,000/- in I. D. B. I. Bonds. The question before the Assessing Officer was whether deduction under section 48 (2) of the Act should be first allowed from the gross capital gain of rs. 28,30,000/- or it should be allowed after making deductions for investment in the purchase of new flat and I. D. B. I. Bonds. The assessee claimed that the deductions under sec. 48 (2) of the Act should be first allowed to the extent of rs. 14,20,000/- and thereafter, the cost of the new residential flat and the bonds should be made deductable. As per the assessee"s computation, the capital gain came to nil. The Assessing Officer, however, declined to accept the formula suggested by the assessee and proceeded to first deduct the amount of investment made by the assessee in the purchase of flat and bonds amounting to rs. 15,00,000/- in the aggregate. The assessee returned capital gain "nil" as per the following calculation:- <FRM>JUDGEMENT_765_ILRDLH17_2008Html1.htm</FRM> The Assessing Officer, however, did not accept this and worked out the capital gains as under:- <FRM>JUDGEMENT_765_ILRDLH17_2008Html2.htm</FRM>