COMMISSIONER OF INCOME TAX Vs. M KALPAGAM

JUDGEMENT

(1.) IN compliance with the order of this Court dt. 8th November, 1982 the following questions are referred by the Tribunal for the opinion of this Court under S. 256(2) of the IT Act, 1961 :"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in confirming the deletion of capital gains of Rs. 1, 47, 638 arising on the sale of lands measuring 7 grounds and 1878 sq. ft. not treated as appurtenant to the building, from the assessment of the assessee for the asst. yr. 1975-76 ?(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding and had valid materials to hold that the entire 10 grounds and 29 sq. ft. should be taken as the land appurtenant to the building and, therefore, the entire capital gains is exempt under S. 54 of the Act for the asst. yr. 1975-76 ?" *

(2.) THE assessee is an individual. THE assessee sold a plot of land measuring 10 grounds and 29 sq. ft. for a sum of Rs. 2, 70, 000 in the asst. yr. 1975-76. With the proceeds, the assessee constructed a new house and claimed relief under S. 54 of the IT Act in the computation of capital gains exigible to tax. THE ITO was of the opinion that applying the norms of the Urban Land Ceiling Act, only an area of 2 grounds and 580 sq. ft. could be taken as land appurtenant to the building and balance of the vacant land should be treated as separate asset. Accordingly, the ITO apportioned the sale consideration of Rs. 2, 70, 000 at Rs. 1, 10, 000 for the value of the building and the appurtenant land so restricted by him and the balance of Rs. 1, 60, 000 relating to the piece of the vacant land.

(3.) WE have heard the learned standing counsel for the Department as well as the learned counsel appearing for the assessee. The assessee is an individual. In the asst. yr. 1975-76, the assessee sold her property situated at Thiruvanmiyur for a sum of Rs. 2, 70, 000. The extent of the property is 10 grounds and 29 sq. ft. The building occupies an area of 4, 500 sq. ft. There is a pathway leading from the main road to the building. The pathway occupies an area of 6, 750 sq. ft. There are sit outs, servant quarters, cow sheds etc. Apart from the area occupied by the main building, pathway, sit out, servant quarters and cow sheds etc. there is vacant land. The abovesaid constructions are scattered over the area of 10 grounds and 29 sq. ft. Therefore, it cannot be said that apart from the main building in which the assessee is residing, the assessee is not using or utilising the rest of the open ground.