( 1 ) AT the instance of the revenue, the Income Tax Appellate Tribunal Ahmedabad Bench b has referred to this Court the following question of law arising out of its order dated 4/10/1983 passed in I. T. A. No. 471/ahd/1982 under the provisions of sec. 256 (1) of the Income-tax Act, 1961 (hereinafter referred to as the Act ). "whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee is entitled to the benefit of exemption under section 54 of the Income-tax Act, 1961?"

( 2 ) THE relevant facts pertaining to the case are as under:-

( 3 ) THE respondent-assessee had purchased a house property for Rs. 14,999. The said amount was paid from cash gift of Rs. 15701 which was received by her from her husband on the same day. The said house property was sold during the relevant assessment year for a sum of Rs. 84,999. From the sale proceeds, on 16. 3. 77, the assessee had purchased 15% share in another house property which was owned by her husband and her son. The respondent-assessee claimed exemption under the provisions of sec. 54 of the Act in respect of capital gain which was used for the purpose of purchase of the interest in the house property. It is pertinent to note that prior to purchase of 15% interest in the house property, the respondent assessee was residing in the said house with her husband and the son and even after purchase of 15% interest in the said house property, she continued to stay in the said house property.

( 4 ) THE ITO rejected the claim on the ground that the property which was purchased by her on 16. 3. 77 was also being used by her for her residential purposes along with her husband before interest in the property was purchased by her and she had purchased only some interest in the said house property. Moreover, he also held that the capital gain arising from the transaction referred to hereinabove should be assessed in the hands of the husband of the respondent-assessee, as the husband was the real owner of the property purchased by the assessee because the consideration for purchase of the property was given by the assessee from the amount of gift received by her from her husband. In another proceeding initiated by the assessees husband, the finding with regard to assessing capital gain in the hands of the assessees husband had been reversed and therefore at this stage we are not concerned whether the husband of the assessee should be assessed for the amount of capital gain.

( 5 ) IN an appeal before the AAC, it was held that the respondent-assessee was entitled to claim exemption under the provisions of sec. 54 of the Act.

( 6 ) THE revenue had taken the matter in appeal before the Tribunal but the Tribunal upheld the order of the AAC whereby claim of the respondent-assessee for exemption under the provisions of sec. 54 of the Act was justified. Section 54 of the Act, at the relevant time, was as under:-WHERE a capital gain arises from the transfer of a capital asset to which the provisions of section 53 are not applicable, being buildings or lands appurtenant thereto the income of which is chargeable under the head "income from house property", which in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his mainly for the purposes of his own or the parents own residence, and the assessee has within a period of one year before or after that date purchased, or has within a period of two years after that date constructed, a house property for the purposes of his own residence, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say, (i) if the amount of the capital gain is greater than the cost of the new asset, the difference between the amount of the capital gain and the cost of the new a