TMI Blog1999 (5) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that the assessee is entitled to the benefit of exemption under section 54 of the Income-tax Act, 1961 ?" The relevant facts pertaining to the case are as under : The respondent-assessee had purchased a house property for Rs. 14,999. The said amount was paid from cash gift of Rs. 15,701 which was received by her from her husband on the same day. The said house property was sold during the relevant assessment year for a sum of Rs. 84,999. From the sale proceeds on March 16, 1977, the assessee had purchased 15 per cent. share in another house property which was owned by her husband and her son. The respondent-assessee claimed exemption under the provisions of section 54 of the Act in respect of capital gain which was used for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim exemption under the provisions of section 54 of the Act. The Revenue had taken the matter in appeal before the Tribunal but the Tribunal upheld the order of the Appellate Assistant Commissioner whereby a claim of the respondent-assessee for exemption under the provisions of section 54 of the Act was justified. Section 54 of the Act at the relevant time, was as under : "54. 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 assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he house property wherein the respondent-assessee was residing prior to the purchase would disentitle her from making a claim under the provisions of section 54 of the Act. Two points are involved in the said question. First-whether mere purchase of interest in a residential house is sufficient, provided all other conditions are fulfilled to claim exemption under the provisions of section 54 of the Act ; second--whether an assessee is entitled to claim the exemption under section 54 of the Act, provided all other conditions are fulfilled, if he purchases a house property which was used by him for his residence prior to the purchase. Before considering the said two points let us see the sum and substance of the provisions of section 54 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the sense in which it can harmonise with the subject of the enactment and the object which the Legislature has in view. In view of the said principle, it is very clear that when the Legislature has desired to give exemption to an assessee who is selling his residential house so as to purchase another residential house, one cannot interpret the provision in a manner which would disentitle the assessee to claim the exemption under the section merely because the assessee could not purchase the residential house in toto and the assessee purchased only a portion of the house. We are supported in our above referred view by a judgment delivered in, the case of CIT v. Tikyomal Jasanmal [1971] 82 ITR 95 (Guj), wherein it was held that a portion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause the assessee was residing in the residential house which was purchased by the assessee, the Revenue cannot be permitted to say that the assessee cannot claim exemption under the provisions of section 54 of the Act. Section 54 of the Act nowhere states that the residential house which is purchased by the assessee so as to enable the assessee to get exemption under the provisions of section 54 of the Act should not be the one in which the assessee was residing. It would be absurd to give such an interpretation so as to disentitle an assessee from getting an exemption if the assessee purchases the house property wherein he was residing prior to the purchase. When the section does not put any such embargo, it would be absolutely against th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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