S RADHAKRISHNA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal has referred the following question under S. 256(1) of the IT Act, 1961 :

(2.) ON 13th Aug., 1966, the owner entered into an agreement with the firm known as M/s Raghava and Veera, who were real estate dealers and contractors, for the sale of 53 grounds and 550 sq. ft. with the building for a consideration of Rs. 4,20,000. Rs. 20,000 was paid by the purchaser to the assessee immediately, i.e., on 13th Aug., 1966, and the balance of consideration was agreed to be paid in four equal instalments of rupees one lakh on or before 15th April, 1967, 15th April, 1968, 15th Oct., 1968, and 15th April, 1969. Under the terms of the agreement, the assessee agreed to execute sale deeds either in favour of M/s Raghava and Veera or their nominee or nominees either by plots or in one lot as desired by them. While doing so, the purchasers, viz., M/s Raghava and Veera, were to be responsible for the preparation of the layout and sub -division of the plots to the satisfaction of the Corporation of Madras and the charges for amenities, etc. Notwithstanding the fact that the vendors had to execute and register sale deeds in favour of the purchasers, the vendors would not be entitled to anything more than at the rate of Rs. 8,000 per ground. Vacant possession of the land was handed over to M/s Raghava and Veera on the date of the agreement.

(3.) THE assessee filed a return for the asst. yrs. 1968 -69 to 1970 -71. He attached a note claiming exemption from tax on capital gains on the basis of S. 54 of the Act. His case was that the capital asset sold by him was an item of property comprising a building and lands appurtenant thereto, the income of which is chargeable under the head "Income from house property" and that so far as he was concerned, he had effected a single transfer of the entire property to M/s Raghava and Veera for Rs.4,20,000, the transaction having been finalised only on 9th July, 1969, when the last item of property was sold. For a period of two years immediately preceding that day, viz., 9th July , 1969, the assessee claimed to have been occupying the house for the purpose of his residence. It was also claimed that he purchased a house property in Hyderabad in 14th Feb., 1969, and that the said purchase being within a peroid of one year before 9th July,1969, it was liable to be taken into account in applying S. 54