COMMISSIONER OF INCOME TAX Vs. ZAIBUNNISA BEGUM

JUDGEMENT

(1.) TWO questions are referred to this court by the Income-tax Appellate Tribunal under s. 256(1) of the I.T. Act, 1961 :

(2.) THE matter relates to the assessment year 1964-65. THE assessee and her three sisters were the joint owners of house property consisting of a fairly large building and extensive land, each one owning 1/4th share. THE building has a built-up area of 17,136 sq. ft. and the total extent of land including the land on which the building stands is 13,029 sq. yards. THE building as well as the entire extent of land was acquired by the Government under the Land Acquisition Act for construction of the office of the Accountant-General. Compensation was initially awarded by the Land Acquisition Officer and it was enhanced by the Second Additional Chief Judge, City Civil Court, Hyderabad, pursuant to reference made under s. 18 of the Land Acquisition Act. THE compensation finally awarded was :

(3.) THE assessee filed an appeal to the Income-tax Appellate Tribunal questioning the correctness of the above view of the AAC. It was urged before the Income-tax Appellate Tribunal that the AAC wrongly construed the provisions of s. 54(1) of the Act, inasmuch as the language of s. 54(1) did not provide for the classification of the land appurtenant to a building as "reasonably appurtenant" and otherwise. According to the assessee, the entire extent of land contiguous to the building should be considered as land appurtenant to the building for purposes of s. 54(1) of the Act and the sum of Rs. 75,000 spent on the construction of the new residential house should be set off against the entirety of the capital gain arising on the sale of the building as well as the land. THE Income-tax Appellate Tribunal accepted the assessee's contention. THE Tribunal was of the view that the AAC was in error in qualifying the word "appurtenant" occurring in s. 54(1) as "reasonably appurtenant". In that view of the matter, the Tribunal reversed the order of the AAC concerning this point. THEreupon, the Commissioner of Income-tax asked for and obtained the present reference from the Tribunal under s. 256(1) of the Act.