COMMISSIONER OF INCOME TAX Vs. ANILABEN UPENDRA SHAH

JUDGEMENT

(1.) In this reference at the instance of the revenue, the following question is referred for our opinion in respect of assessment year 1983-84 :-

(2.) The facts leading to this reference, briefly stated, are as under :- The assessee is an individual and the assessment year involved in 1983-84. She filed the return of her income on 23.6.1983 showing total income at Rs.39,756.00. During the course of examination of the record of the assessee, it was noticed by the Income-tax Officer that she had taken possession of a flat in October, 1981 and the said flat was sold in December, 1982 for Rs.1,40,000.00 including outstanding loan of Rs.30,000.00. The Income-tax officer further noted that in her return of income, the assessee had claimed the capital gain as a long term capital gain and had accordingly claimed deduction under Section 80T of the Act for an amount of Rs.14,310.00. The Income-tax Officer was of the opinion that the capital gain should be treated as short term capital gain in view of the date of taking possession of the flat in October, 1981 and the sale thereof by her in December, 1982. ON being asked to explain, the assessee through her reply dated 14.9.1984 contended that she had become a member of Ambalal Park Co-operative Housing Society Ltd. on 6.9.1979 by depositing a sum of Rs. 5000.00 which included entrance fees of Rs. 55.00 and share capital of Rs.250.00. The assessee further contended that she had become member of the society by acquiring shares thereon on 15.11.1979. It was further explained by the assessee that the total cost of the flat after excluding the loan amounting to Rs.30,000.00 came to Rs.67,757.00. The possession of the said flat was, however, delivered by the said society to the assessee only in October, 1981. Thereafter, the assessee had entered into an agreement to sell the said flat on 8.10.1982 and in performance of such contract she had later on sold the same on 4.12.1982 for Rs.1,40,000.00. It was, thus contended on behalf of the assessee that it was not at all a case of short term capital gain, but was that of long term capital gain. The Income-tax Officer did not feel satisfied with the contentions of the assessee. In this opinion, the assessee had avoided to mention the date of transfer of the shares, though the assessee had contended that the contract was completed when allotment of shares was made. The Income-tax Officer was, therefore, of the opinion that since the assessee had taken possession in October, 1981 and the date of possession was material for the purposes of effective ownership, it was a case of short term capital gain and should be taxed accordingly. The Income-tax Officer, therefore, subjected an amount of Rs.42,243.00 to the short term capital gain tax. The aggrieved assessee appealed to the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner, the main contention of the assessee was that she had acquired the capital asset on 7.9.1979 and in no case later than 15.11.1979 and, therefore, she was entitled to deduction under Section 80T to the extent of Rs.16.434.00. It was further contended on behalf of the assessee that the words "held" and "possessed" were not synonymous. Both the words were having different meanings. According to the assessee, the word used by the legislature was "held" and, therefore, "possession" was not relevant for computing the period of capital asset held. Relying upon certain decisions of the Tribunal, the Appellate Assistant Commissioner accepted the contention of the assessee and following the view of the Tribunal to the effect that the date of acquisition of flat was the date of agreement and not the date of occupation of the flat, directed the Income-tax Officer to treat the capital gain as long term capital gain and grant deduction under Section 80T of the Act to the assessee. The revenue carried the matter in appeal to the Tribunal. The Tribunal confirmed the view of the Appellate Assistant commissioner. Hence, this reference at the instance of the revenue.

(3.) We have heard Mr Akil Kureshi, learned counsel for the revenue. Though served, none appears for the respondent-assessee.