- (1.) On an application under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following questions for our opinion : "1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that for the purpose of getting exemption under Section 54F there was no requirement that the sale price should be actually invested in the house property and that it was sufficient if the legal title to the property vests with the assessee ? 2. Whether the Tribunal was right in holding that notwithstanding the fact that the sale price of the shares was not actually invested in the house property, the assessee would got exemption under Section 54F since the house property was registered in her name within two years from the date of the sale of the shares ? 3. Whether, on the facts and in the circumstances of the case and on a proper interpretation of Section 54F, the Tribunal was right in law in upholding the assessee's claim to relief under Section 54F on the ground that all the conditions of the section were satisfied ?"
(2.) The assessment year in hand is 1987-88. During the course of assessment, the Assessing Officer noticed that the assessee has sold the shares and invested the sale consideration in the purchase of a house on September 30, 1986. The house purchased is Flat No. 3, Iron Side Road, Calcutta, and claimed exemption of capital gains tax on the sale of shares under Section 54F. The purchase price was Rs. 25 lakhs out of which Rs. 5 lakhs was paid to the seller at the time of registration of sale deed and for the balance, cheques were issued by the assessee in favour of the seller but the seller could not encash that amount as the assessee made the request to the seller to treat the amount shown in the deed as loan to the assessee.
(3.) The Income-tax Officer on the aforesaid facts was not satisfied with the claim of the assessee. According to him, as the sale proceeds on account of sale of shares has not been utilised for the purchase of the residential house. Therefore, the assessee is not entitled for benefit of Section 54F.;