2014 Supreme(SC) 474

SUPREME COURT OF INDIA
ANIL R. DAVE, SHIVA KIRTI SINGH, JJ.
Sh. Sanjeev Lal etc. etc. – Appellants
Vs.
Commissioner of Income Tax, Chandigarh & ANR. – Respondents
[Civil Appeal Nos.5899-5900 of 2014 arising out of SLP (c) Nos.16958-59 of 2013]
Decided On : 01-07-2014

IMPORTANT POINT
If a person, who gets some excess amount upon transfer of his old residential premises and thereafter purchases or constructs a new premises within the time stipulated under Section 54 of the Act, the Legislature does not want him to be burdened with tax on the long term capital gain and therefore, relief has been given to him in respect of paying income tax on the long term capital gain.

Headnote:Income Tax Act, 1961 – Section 54 – Benefit under section 54 – Entitlement to – Appellants held disentitled to any benefit under Section 54 of the Act for the reason that transfer of the original asset, had been effected on 24.9. 2004 whereas the appellants had purchased another residential house on 30.4. 2003 more than one year prior to the purchase of new asset and appellants were made liable to pay income tax on the capital gain under Section 45 of the Act – If justified – Held a right in respect of the capital asset, the property in question had been transferred by appellants in favour of vendee/transferee on 27.12. 2002 – The sale deed could not be executed for the reason that appellants had been prevented from dealing with the residential house by an order of a competent court, which they could not have violated – In view of peculiar facts of the case and looking at the definition of the term 'transfer" as defined under Section 2(47) of the Act, held that appellants were entitled to relief under Section 54 of the Act in respect of the long term capital gain which they had earned in pursuance of transfer of their residential property and used for purchase of a new asset/residential house – Impugned judgments quashed and set aside and Authorities directed to re – assess the income of the appellants for the Assessment Year 2005 – 2006, after taking into account the fact that appellants were entitled to the relief, subject to fulfilment of other conditions – Appeals allowed(para23)

       Facts of the Case –

       Appellants herein in the instant case were held disentitled to any benefit under Section 54 of the Act for the reason that transfer of the original asset, had been effected on 24.9. 2004 whereas the appellants had purchased another residential house on 30.4. 2003 more than one year prior to the purchase of new asset and appellants were made liable to pay income tax on the capital gain under Section 45 of the Act. Assessment order had been challenged by the appellants before the Commissioner of Income Tax (Appeals). The appeal, so far as it pertained to the benefit under Section 54 of the Act was concerned, had been dismissed and therefore, the appellants had approached the Income Tax Appellate Tribunal. The Tribunal also upheld the orders passed by the Commissioner and therefore, the appellants had approached the High Court by filing appeals under Section 260 A of the Act, which were dismissed by virtue of the impugned judgments. Present appeals have been filed against said order of High Court.

       Findings of the Court –

       A right in respect of the capital asset, the property in question had been transferred by appellants in favour of vendee/transferee on 27.12. 2002. The sale deed could not be executed for the reason that appellants had been prevented from dealing with the residential house by an order of a competent court, which they could not have violated. In view of peculiar facts of the case and looking at the definition of the term 'transfer" as defined under Section 2(47) of the Act, held that appellants were entitled to relief under Section 54 of the Act in respect of the long term capital gain which they had earned in pursuance of transfer of their residential property and used for purchase of a new asset/residential house. Impugned judgments were quashed and set aside and Authorities were directed to re – assess the income of the appellants for the Assessment Year 2005 – 2006, after taking into account the fact that appellants were entitled to the relief, subject to fulfilment of other conditions. Appeals were allowed.

       Result – Appeals allowed