S PADMANABHAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee was the owner of two house properties--Door Nos. 5-A and 5-B, Rajaji Street, Tambaram, and a vacant site adjoining the said properties. THE two houses were separately assessed to panchayat tax. THE assessee sold away these three items of properties during the year of account relevant to the assessment year 1962-63 to three different persons under three separate sale deeds on different dates. THE house properties were sold for Rs. 14, 000 each and the land for Rs. 6, 000, thus realising a total consideration of Rs. 34, 000. In addition, the assessee obtained a sum of Rs. 500 by way of forfeiture of deposit in respect of one of the transactions. Thus in all the assessee got a sum of Rs. 34, 500 by the sale of these properties. Adopting the value of these properties as on January 1, 1954, at Rs. 20, 000 the assessee returned an income of Rs. 14, 500 under capital gains and claimed exemption under section 53 of the Income-tax Act, 1961 (hereinafter called "the Act"), in respect of this income on the ground that each of the three capital assets was sold for less than Rs. 25, 000 and the aggregate value of all the properties owned by him did not exceed Rs. 50, 000.

(2.) THE assessee contended that for the application of section 53 of the Act each property sold or each transfer effected is to be considered independently. THE Income-tax Officer did not accept the assessee's claim for exemption and held that even though the amount of capital gains arising from the transfers would have to be calculated item by item it was the aggregate value of the consideration of all the transfers that has to be taken into account for the application of section 53. In that view, he subjected the amount of Rs. 14, 500 to capital gains tax. THE Appellate Assistant Commissioner and the Tribunal agreed with this view of the Income-tax Officer. At the instance of the assessee the following question has been referred "Whether the assessee is entitled to exemption under section 53 of the Income-tax Act, 1961, in respect of the capital gains arising from the transfer of the capital assets in the year of account?" *THE learned counsel for the assessee reiterated his contention that for application of section 53 of the Act each transfer effected would have to be considered independently. THE learned counsel for the revenue, on the other hand, contended that even though the amount of capital gain arising from transfers would have to be calculated item by item, for the application of section 53 of the Act it is the aggregate value of the consideration of all the transactions that has to be taken into account. We have to consider this question with reference to the scheme of the Act and in particular the provisions of sections 45, 48 and 53.