TMI Blog1998 (6) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... essee on the sale of the house property should be computed by applying the provisions of section 45 read with section 54 of the Income-tax Act, 1961 ?" The assessee, as an individual, derived income from jewellery business. For the year ending with March 31, 1979, corresponding to the assessment year 1979-80, the assessee sold a building bearing door No. 163, South Masi Street, Madurai. The assessee, after taking the benefit of section 54 of the Act, computed the capital gain and returned an amount of Rs. 24,411 and the same was accepted by the Income-tax Officer, Madurai, in his order dated March 22, 1980. The order of the Income-tax Officer was perused by the Commissioner of Income-tax, Madurai, and he had taken a decision that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house sold and it was a residential building and he was in occupation of a portion of 1431 sq. ft. out of the total area of the said house measuring 2130 sq. ft. The fact remains that the assessee had purchased another residential house bearing door No. 183, South Masi Street, Madurai, on January 12, 1978. It is not in dispute that the assessee had sold the house bearing door No. 163, South Masi Street, Madurai, on June 13, 1978. It is in connection with these sale transactions, the assessee had claimed the benefit of capital gain under section 54(1) of the Act. A perusal of section 54(1) of the Act would disclose that an income-tax assessee can claim benefit under the Act, if he had purchased a residential house within a period of one ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to put forward the case with regard to the area under his occupation in the abovesaid building, specifying the area let out to the tenant. It is only because a question was raised by the Commissioner of Income-tax while revising the order of assessment under section 263 of the Act, with regard to the occupation of the plinth area by the assessee in door No. 163, South Masi Street, Madurai, the assessee was under a compelling necessity to state the total area as well as the area under his occupation, to claim benefit under section 54(1) of the Act. Therefore, as rightly held by the Appellate Tribunal, the disclosure of the area under the occupation of the assessee, out of the total area of the abovesaid building, cannot be termed as an after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. It has also been held by a Division Bench of this court in CIT v. Mrs. P. Rajasulochana [1994] 210 ITR 423 following the decision in CIT v. Kamala Ranganathan [1990] 186 ITR 536 (Mad), that even if a part of the property was let out, and if the major portion of the property had been used for the residence of the assessee for two years prior to the sale, the assessee would be entitled to the exemption under section 54 of the Act from capital gains. The decisions referred to supra apply to the facts of the present case and the assessee herein is entitled to the benefit of section 54(1) of the Act. Learned counsel for the Revenue placed reliance on the decision in CIT v. C. Jayalakshmi [1981] 132 ITR 82 (Mad) wherein it was held that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 82 (Mad) and laid down the law as stated supra. Therefore, the decision in CIT v. C. Jayalakshmi [1981] 132 ITR 82 (Mad) will not help the Revenue to hold that the assessee is not entitled to the benefit of section 54(1) of the Act. Learned counsel for the Revenue has also brought to the notice of this court, the decision in CIT v. Tikyomal Jasanmal [1971] 82 ITR 95 (Guj), in support of his contention. In that case, the assessee had sold the house, which he had been using as his residence and constructed the ground floor of another building within two years and let out more than half of the area to tenants. In view of the said circumstances, it was held by the High Court of Gujarat that the ground floor could be taken as a unit of ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jasanmal [1971] 82 ITR 95 (Guj) also will not come to the rescue of the Revenue to hold that the assessee is not entitled to the benefit of section 54 of the Act. Further, learned counsel for the Revenue would contend that because of the omission of the word "mainly" in the second limb of the second condition in the abovesaid section, it has to be held that the entire area of the residential building purchased by the assessee should be used for his own occupation without letting any portion to a tenant for claiming benefit under the abovesaid section. On the other hand, learned counsel for the assessee would contend that the said omission of the word "mainly" as stated supra would only enable the assessee to occupy a portion of the buildi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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