- (1.) THE following question of law has been referred to by the Tribunal, vide order dated August 28, 1980, for adjudication : "whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that capital gain of Rs. 32,390 should be treated as long-term capital gains ?"
(2.) THE assessee filed a return for the assessment year 1973-74 on November 1, 1973, declaring income at Rs. 19,737. The Income-tax Officer completed the assessment on March 23, 1976, at Rs. 37,750. The assessee had shown a capital gain of Rs. 32,390 arising from the sale of house property and claimed the same to be a long-term capital gain. The dispute arose as to the nature of the capital gain between the assessee and the Department. The Department taking a cue from the agreement entered into by the assessee with Messrs. Ansal and Seigal Properties (P.) Ltd. , New Delhi, the builder, took the view that, in fact, the assessee became the owner of the property on February 13, 1973, when the last instalment was paid and so construing the capital gain could not be termed a long-term capital gain. On the other hand, the assessee claimed that by virtue of an agreement entered into with the builder on May 29, 1970, the flat was held by him for more than 24 months and this way the capital gain was liable to be treated as a long-term capital gain.
(3.) THE Income-tax Officer rejected the contention of the assessee and treated the same as a short-term capital gain. For this, reliance was placed by the Income-tax Officer on clause 35 of the agreement which reads as under : "no right, title or interest would pass to the buyer unless all the monies due and payable under this agreement have been paid and valid receipts obtained from the builders. In the event of failure to pay money due and payable, all monies already paid to the builders shall stand forfeited to the builders. ";