Arijit Pasayat, C.J.

1. Pursuant to the directions given by the Court under Section 256(2) of the Income-tax Act, 1961 (in short Act), following questions have been referred for opinion of this Court:

(i) Whether on the facts and in the circumstances of the case, the Tribunal was legally right in treating that the construction of the flats in Akash Deep Building was made by the assessee

(ii) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was entitled to exemption to capital gains under Section 54(1) of the Income-tax Act, 1961, as the flats constructed in the Akash Deep Building were constructed within two years from the date of sale of property No. 9, Hailey Road, New Delhi

2. The basic dispute in the case related to assessees claim of exemption under Section 54(1) of the Act. Late Maharani of Palitana was owner of properties, situated at 9, Hailey Road, New Delhi. She was residing in this house since 1954. She sold this house to M/s. Ansal and Sehgal Properties (P.) Ltd. for a consideration of Rs. 7,11,001, as per sale-deed dated 22nd April, 1969. She died some time in 1970. Smt.

Brinda Kumari (hereinafter referred to as the assessee) was her executrix. Out of the sale proceeds, a sum of Rs. 5,25,000 was paid to M/s. Ansal and Sehgal Properties (P.) Ltd. Akash Deep Building was constructed on the site of 9, Hailey Road after demolishing the building thereon. The new building was ready for occupation on 4th December, 1970. Heirs of late Maharani occupied the new flats on the third floor of the Akash Deep Building soon after it was ready for occupation. Income-tax Officer was of the view that the flats on the third floor in Akash Deep Building were purchased by the assessee and there was no construction thereof by the assessee to be entitled to exemption under Section 54(1) of the Act. Further, since the building was under construction and it was not known whether the same would be used by the assessee for residence or it would be rented out, claim of exemption under Section 54(1) of the Act was not allowable. Accordingly, assessee was assessed for capital gains amounting to Rs. 2,89,301. Matter was carried in appeal by the assessee to the Appellate Assistant Commissioner (in short the AAC). The said Authority took the view that since the new building was constructed within two years of the date of transfer of 9, Hailey Road, the provisions of Section 54(1) would apply. Tribunal upheld the conclusion with the following observations:

We do not find any force in these submissions. In our opinion, it is immaterial whether the construction is made by the assessee himself or it is got made through someone else. A handy example a Will be where a person gets his house constructed by a contractor. It is not, therefore, necessary that the new house should be constructed by the assessee himself or herself personally. In the present case on facts, there is no dispute that the late Maharani advanced a sum of Rs. 5,25,000 for the specific purpose of construction of flats for her on third floor of the Akash Deep Building. The Akash Deep Building was constructed after demolishing 9, Hailey Road, which was sold by late Maharani to M/s. Ansal and Sehgal Properties (P.) Ltd. If, therefore, the latter constructed the flats on behalf of the late Maharani with the funds advanced by her, there appears to be no difficulty in treating the construction as the construction made by her. For these reasons, we are inclined to agree with the Appellate Assistant Commissioner that the provisions of Section 54(1) are attracted, as the new flats were constructed within two years of the sale of 9, Hailey Road, New Delhi.

An application under Section 256(1) was rejected and on being moved under Section 256(2) of the Act, this Court directed for referring two questions, as set out above.

3. According to learned Counsel for the Revenue, the true import of the Revenues case has not been appreciated by the Tribunal. In fact, it was a clear case of a purchase and not construction, as observed by the Tribunal. According to learned Counsel for the assessee, factual findings have been recorded that advance was given for the specific purpose of construction of flats for her on the 3rd floor of the Akash Deep Building and, therefore, no question of law arises.

4. We find substance in assessees stand. Tribunal has inter alia recorded a positive finding in the following terms:

In the present case on the facts there is no dispute that the late Maharani advanced a sum of Rs. 5,25,000 for the specific purpose of construction of flats for her on third floor of the Akash Deep Building. The Akash Deep Building was constructed after demolishing 9, Hailey Road, which was sold by late Maharani to M/s. Ansal and Sehgal Properties (P.) Ltd. If, therefore, the latter constructed the flats on behalf of the late Maharani with the funds advanced by her, there appears to be no difficulty in treating the construction as the construction made by her.

In view of the aforesaid findings, which are factual, no question of law arises. We accordingly decline to answer the questions referred.

Reference stands disposed of accordingly.