COMMISSIONER OF INCOME TAX Vs. VIMAL CHAND GOLECHA

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has referred the following question of law arising out of its order dated July 30, 1980, in respect of the assessment year 1971-72 :

(2.) THE brief facts of the case are that the assessee purchased a plot of land on March 26, 1962, for a sum of Rs. 4,650. Another piece of land was purchased by the assessee for Rs. 2,274 on July 9, 1968, the patta of which was received on January 12, 1970. THE assessee has constructed a bungalow and the investment shown in the construction during the year 1968-69 was Rs. 16,000, during the year 1969-70 Rs. 50,774 and in 1970-71 Rs. 5,785. THE bungalow was sold in June, 1970, to M/s. Murli Investment Co. Private Limited for a sum of Rs. 1,30,000. According to the assessing authority, the capital asset in question came into existence in the assessment year 1970-71, the year in which the construction of the bungalow was completed and was sold to M/s. Murli Investment Co. Pvt, Ltd., Jaipur, in June, 1970. THE sale-deed was registered on August 4, 1970, which was considered by the assessing authority as within two years from the date of completion of the bungalow in the shape it was sold and the capital gains were taken as short-term capital gains. An appeal was preferred against the initial assessment made which was set aside by the learned Appellate Assistant Commissioner for recomputation of capital gains to find out the value of the property as it existed at the time it was sold in June, 1970. THE case was referred to the Valuation Officer under Section 55A of the Income-tax Act, 1961, and the value of the property including the cost of land was estimated at Rs. 1,98,350 as on the date of sale. Objections raised by the assessee were considered by the assessing authority and short-term capital gains were computed at a figure of Rs. 1,18,845. Against this order, an appeal was preferred to the Commissioner of Income-tax (Appeals), Jaipur, where the contention with regard to the invoking of the provisions of Section 52(2) of the Income-tax Act were raised and rejected. Objections with regard to the valuation of the land as well as bungalow were also raised. THE land was valued at Rs. 45,700 and the bungalow at Rs. 1,50,650. THE Commissioner of Income-tax has held that the capital gains should be recomputed on the basis of full and fair consideration of the property at a figure of Rs. 1,30,000 which was the sale consideration as mentioned in the sale deed dated August 4, 1970. THE contention that the gains are long-term capital gains and not short-term capital gains was rejected by the Commissioner of Income-tax (Appeals).