1986 (9) TMI 130

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.... her residence. After seven months thereafter the assessee sold the house on 3-11-1981 for Rs. 2,50,000. After deducting the cost of acquisition of this property amounting to Rs. 2,01,300, the assessee arrived at the net gain of Rs. 48,700 on transfer of the said property. The capital gain so arrived at was claimed as exempt under section 54 on the ground that she has constructed a new house property in March 1982 within two years from the date of the sale. The claim of the assessee was allowed by the ITO while completing the assessment. The Commissioner issued notice under section 263 as be was of the view that the assessment order is erroneous and prejudicial to the interests of the revenue. In response to the said notice the assessee fil....

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....was justified in invoking the provisions of section 263 and withdrawing the benefit allowed by the ITO under section 54. He placed reliance on the decision of the Madras High Court in the case of M. Viswanathan v. CIT [1979] 117 ITR 244. 4. We have considered the rival submissions, Section 54 reads 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 pa....

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....y 1973 another house was purchased. The assessee claimed the benefit of section 54. On those facts the Karnataka High Court held as under : ". . The assessee did not reside in his residential house for a continuous period of two years is not in dispute. On these very facts, the controversy really turn on the construction of section 54. This section employs the term ' in the two years immediately preceding the date of transfer '. The term ' in the two years ' can only mean at any time within two years. On the plain language of these words, it is not open to a Court to read the same as for the continuous period of two years. The later words ' was being used ' cannot restrict or control the terms ' in the two years ' occurring earlier. Undo....