Long-term capital gain, section 54F relief, and house-property deductions were examined alongside recomputation of interest liabilities.

Long-term capital gain on sale of shares was recognised on the facts, and the section 54F claim was restored for verification because the decisive question was whether the assessee had constructed a residential house out of the net consideration; mere commercial use did not by itself defeat the claim. The note also states that brokerage paid for letting out property is not an allowable deduction under the exhaustive house-property deduction scheme. On interest under sections 234B and 234C, levy was not deleted, but recomputation was required after giving effect to reliefs, with an opportunity to contest applicability before the Assessing Officer.

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Issues: (i) Whether the gain on sale of shares was a long-term capital gain and whether exemption under section 54F was available; (ii) whether brokerage paid for letting out property was deductible while computing income from house property; (iii) whether interest under sections 234B and 234C could be charged and how it was to be recomputed.

Issue (i): Whether the gain on sale of shares was a long-term capital gain and whether exemption under section 54F was available

Analysis: The additional evidence showing the period of holding of the shares was admitted because it removed the obscurity in the factual position and was necessary for a correct appreciation of the matter. On the facts, the receipt from sale of shares was held to be a long-term capital gain. For section 54F, the relevant inquiry was whether the assessee had constructed a residential house out of the net consideration. Mere commercial use of the property did not by itself defeat the claim if the structure was otherwise a residential house. As the factual question whether the constructed property was a residential house was not conclusively established, the matter required verification by the Assessing Officer. The assessee, however, had substantiated at least the investment evidenced by the VDIS material to the extent of Rs. 1,50,000.

Conclusion: The gain was treated as a long-term capital gain and the exemption claim under section 54F was restored for verification, with further relief allowable to the extent of Rs. 1,50,000 if the residential-house condition was satisfied.

Issue (ii): Whether brokerage paid for letting out property was deductible while computing income from house property

Analysis: The heads of deduction under the house-property provisions were held to be exhaustive. Brokerage for arranging the letting was not one of the permissible deductions under the statutory scheme governing annual value and deductions.

Conclusion: The brokerage deduction was disallowed and the addition was sustained against the assessee.

Issue (iii): Whether interest under sections 234B and 234C could be charged and how it was to be recomputed

Analysis: The challenge to levy of interest on the ground that it could be charged only on returned income was rejected. At the same time, the interest had to be recomputed after giving effect to the reliefs granted, and the assessee was to be given an opportunity to question the very applicability of such interest before the Assessing Officer.

Conclusion: The levy was not deleted, but the matter was directed to be recomputed consequentially with opportunity of hearing.

Final Conclusion: The appeal succeeded only in part. The capital-gains issue was accepted to the extent indicated and remitted for verification, the brokerage disallowance was upheld, and the interest matter was left for consequential recomputation.

Ratio Decidendi: For section 54F, the decisive requirement is investment in a residential house, not the subsequent user of the property, and additional evidence may be admitted when necessary to remove factual obscurity and advance a correct decision.

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