COMMISSIONER OF INCOME TAX Vs. RAJESH KUMAR JALAN

JUDGEMENT

(1.) This appellant/Commissioner of Income-tax, Gauhati-1 preferred this appeal u/s 260-A of the Income-tax Act, 1961 against the common order dated 18.04.2001 passed by the Income-tax Appellate Tribunal, Gauhati Bench, Guwahati in ITA No. 328 (Gau) of 1999 and ITA No. 49 (Gau) of 2000 for the assessment year of the assessee 1996-97. By an order of this Court dated 28.02.2003, the appeal is admitted on the question "Whether in the facts and circumstances of the case the assessee was entitled to claim benefit under Section 54 of the Income-tax Act, 1961 on the entire amount received by him on account of sale of his house property?" The respondent/assessee is an income-tax assessee and status of the assessee is that of an individual trading in the business of truck playing. The assessement year under consideration is 1996-97.

(2.) The issue involved in the present appeal is the claim for benefit of exemption from being charged Income tax on the sale of properties used for residence u/s 54 of the Income-tax, 1961. Section 54 of the Income-tax Act, 1961 is a beneficial provision of the Income-tax Act, 1961 for the assessee in the matter relating with the sale of properties used for residence, it appears, for the constitutional goal of providing residence to the citizen of India. It is fairly well settled that in construing a beneficial enactment, the view that advance the object of the beneficial enactment and serve its purpose must be preferred to the one which obstruct the objects and paralyses the purpose of the beneficial enactment. In this regard, we may refer to the decision of the Apex Court in Kunal Singh -Vs-Union of India and Anr.: (2003) 4 SCC 524. Since Section 54 of the Income-tax Act, 1961 is required to be read and discussed in the present appeal it would be more convenient to quote Section 54 of the Income-tax Act, 1961 in entirety.

(3.) The facts which would suffice for deciding the present appeal are that the respondent/assessee sold his 1/4 the share in a residential property known as "Jalan House" at Rehabari, Guwahati for consideration of Rs. 40,00,000/- (Rupees forty thousand) only to the Government of Meghalaya for the Sale Deed [No. 348 dated 21.12.1995. Admittedly, the indexed cost of the property was worked out at Rs. 10,26,925/- (Rupees ten lakhs twenty-six thousand nine hundred and twenty five) and thus, there was a capital gain of Rs. 29,73,048/- (Rupees twenty nine lakhs seventy three thousand and forty eight) earned by the respondent/assessee and it was also not disputed. The respondent/ assessee with the money for the sale of his residential property known as "Jalal House" decided to purchase a residential Flat No. 4B on the fourth floor of a multistoried building situated at Bally High, 1, Ballygunge Park Road, Calcutta-19 from Shri Radha Krishna Jalan and Smt. Anguri Devi Jalan on 08.02.1996 each having one half share of ownership of the residential flat. The respondent/assessee negotiated with the above two owners to purchase their residential flat for a consideration of Rs. 30,00,000/- (Rupees thirty lakhs) and according entered into two agreements dated 09.05.1996 and 17.05.1996 and under the said two agreements, the respondent/assessee had taken physical possession of the said residential flat. From the two agreements of purchase, it is clear that each of the co-owners agreed to transfer and assign their respective shares or interest in the said flat together with a car park space for a consideration of Rs. 30,000/- (Rupees thirty thousand) in total.