COMMISSIONER OF INCOME TAX Vs. AJITSINGH KHAJANCHI

JUDGEMENT

(1.) ON being directed by this Court under Section 256(2) of the IT Act, 1961 (hereinafter referred to as 'Act'), the Tribunal, Indore Bench, Indore, has referred the following questions of law for the opinion of this Court: (i) Whether on the facts and in the circumstances of the case, Tribunal was justified in law in allowing the benefits of Section 54F to an assessee who owned another residential house on the date of transfer? (ii) Whether on the facts and in the circumstances of the case, Tribunal was justified in law in allowing the benefits of Section 54F even if the transfer is not evidenced by a registered deed?

(2.) THE assessee had sold his plot of land for Rs. 11,32,625 and claimed exemption under Section 54F of the Act in respect of purchase of residential flat at 7, Chetak Vihar, Race Course Road, Indore, on Rs. 3,50,000 and in addition to this exemption, Rs. 25,000 had also been claimed in respect of expected investments in the said flat within one year.

(3.) ON appeal to CIT(A), the claim for exemption under Section 54F of the Act regarding investment in flat for a sum of Rs. 3,90,000 was allowed. In wealth -tax proceedings, the WTO had also held that the assessee had purchased the residential flat and he was entitled to deduction under Section 5(l)(iv) of the WT Act, 1957. The Revenue, accordingly, took the matter before Tribunal in appeal. The Tribunal, after considering the arguments advanced by the parties and the judgment relied on by the assessee, was of the view that there was effective transfer of the flat in favour of assessee, the same having been actually possessed by him. Therefore, merely on account of the absence of registered sale deed, the assessee was not disentitled to exemption under Section 54F of the Act.