COMMISSIONER OF INCOME TAX Vs. VASUDEVAN CHETTIAR M

JUDGEMENT

(1.) AS per the direction of this court in T. C. P. No. 331 of 1984 on December 10, 1984, the following question of law has been referred for the opinion of this court at the instance of the Revenue under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") :

(2.) THE assessee, as an individual, derived income from jewellery business. For the year ending with March 31, 1979, corresponding to the assessment year 1979-80, the assessee sold a building bearing door No. 163, South Masi Street, Madurai. THE assessee, after taking the benefit of Section 54 of the Act, computed the capital gain and returned an amount of Rs. 24,411 and the same was accepted by the Income-tax Officer, Madurai, in his order dated March 22, 1980. THE order of the Income-tax Officer was perused by the Commissioner of Income-tax, Madurai, and he had taken a decision that the assessee was not entitled to the benefit of Section 54 of the Act, and the Commissioner passed an order under Section 263 of the Act, directing the Income-tax Officer to assess the assessee for gross capital gains of Rs. 76,234 instead of Rs. 24,411 without granting benefit under Section 54 of the Act.

(3.) IN this case, the assessee has sold the house at 163, South Masi Street, on June 13, 1978, and purchased the house at 183, South Masi Street, on January 12, 1978, within one year before the date of sale of the house at 163, South Masi Street, Madurai. It is evident from the perusal of the record that the assessee had claimed to be in possession of 1431 sq. ft. out of the total plinth area of 2130 sq. ft. in the building sold, before it was sold to a third party.