MOOLCHAND Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Jabalpur Bench, Jabalpur has referred the following questions of law, pursuant to the direction issued by this Court to refer the said questions :

(2.) THE assessee had sold a plot for Rs. 30,000 on 26th July, 1980 which was purchased by him on 23rd Jan., 1977 for Rs. 10,000. The capital gain of Rs. 20,000, thus, accrued to him. The assessee claimed this amount to be exempted under S. 54E of the IT Act in para 3 of his return on the ground that the sale proceeds were kept in a fixed deposit. The exemption was refused by the ITO on the ground that the assessee had not fulfilled the conditions laid down under S. 54E(1A)(a)(b) of the Act requiring the assessee to furnish along with the deposit, a declaration in writing to the bank that the assessee will not take any loan or advance on the deposit and to furnish along with return of income a copy of such declaration duly attested by a person not below the rank of sub-agent, agent or manager of such bank. The assessee had furnished certificate from the bank before the ITO to the effect that the deposit was made by the assessee for 5 years maturing on 30th March, 1986 and that he had not taken any loan and that the assessee had assured that he would not take any loan on this fixed deposit.

(3.) SEC . 54E(1A)(a) and (b) reads as under : (1A) Where the assessee deposits after the 27th day of April, 1978, the whole or any part of the net consideration in respect of the original asset in any new asset being a deposit referred to in sub-cl. (vi) of cl. (a) of Expln. 1 below sub-s. (1), the cost of such new asset shall not be taken into account for the purposes of that sub-section unless the following conditions are fulfilled, namely :