TMI Blog1994 (10) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ut to Rs. 2,25,000. His contribution to the total cost of acquisition was Rs. 1,38,396. His share of long-term capital gains from the sale of the above flat worked out to Rs. 35,182. The assessee claimed exemption in respect of the entire amount of a capital gain arising from the sale of the said flat on the ground that the flat in question had been used as a residential unit for two years immediately preceding the date on which the transfer took place and within a period of one year from the date of sale, he had purchased a flat at Delhi for the purpose of his own residence, and hence, section 54 of the Act was applicable. The above claim of the assessee was rejected by the Income-tax Officer on the ground that section 54 of the Act was not applicable to the case of the assessee, because, within the two years immediately preceding the date of transfer, it was not being used by the assessee or his parents mainly for the purpose of his own or his parent's residence. It was observed that the flat in question was let out to the Deputy British High Commissioner up to February 17, 1971, and thereafter it was lying vacant for a period of eleven months. The Income-tax Officer, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficient compliance with the requirements of section 54 of the Act. Reliance was placed in support of his contention on certain observations in a recent decision of this court in CIT v. Indulal C. Kamdar [1995] 214 ITR 143 (Bom). On the other hand, the submission of learned counsel for the Revenue Mr. G. S. Jetley, is that to fall within the purview of section 54 of the Act and to get the benefit thereof, the house or the flat should have been used in the two years immediately preceding the date of transfer for the use of the assessee or his parents' own residence. It is a condition precedent and only on its fulfilment, the benefit of section 54 can be claimed. Mr. Jetly also relies on the same decision of this court in CIT v. Indulal C. Kamdar [1995] 214 ITR 143 on which reliance has been placed by the assessee and submits that the ratio of the said decision fully supports his contention. According to him, reference to certain observations from decisions out of context by the assessee and reliance placed on them is improper and misplaced. We have given our careful consideration to the rival submissions in the light of the facts of the present case. We have also perused the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above section makes it clear that the "use of the house in the two years immediately preceding the date of transfer by the assessee or a parent of his for the purpose of his own or his parents' own residence" is a condition precedent for applicability of this section. The expression "in the two years" cannot be construed to mean "at any time within the two years", meaning thereby "during the entire period of two years" and it has to be read and understood accordingly. It has been rightly held by this court in CIT v. Indulal C. Kamdar [1995] 214 ITR 143 that the benefit of section 54 of the Act cannot be availed of by the assessee merely because he had used the property "at any time" within the period of two years immediately preceding the transfer of the asset. It was observed that if such an interpretation is upheld, the very purpose of using the expression "in the two years immediately preceding the date of transfer" and the object of the section would be defeated. It was further held that merely because the expression is "in the two years" and not "for the two years", it cannot be interpreted so as to nullify the effect of the key words used therein. The reference in the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be construed as statutes. They must be read as a whole and observations made therein should be considered in the light of the facts and circumstances of that case and the questions, before the court. A decision of the court takes its colour from the questions involved in the case in which it is rendered. The legal position in this regard has been summed up in a recent decision of the Supreme Court in CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297 in the following words : " It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by this court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this court. A decision of this court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision of this court and not to pick out words or sentences from the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the decision of the Madras High Court in CIT v. K. N. Srinivasan [1987] 163 ITR 320. In this case also, the question for consideration before the court was whether the assessee can claim exemption under section 54 of the Act in respect of a residential house even though the house in question had not been used by the assessee or his parents for an unbroken or continuous period of two years as residence. The court followed its earlier decision in M. Viswanathan v. CIT [1979] 117 ITR 244 and CIT v. R. Mala [1982] 135 ITR 302 and answered the question in the negative. In the above case, the court also noticed the decision of a single judge of the Delhi High Court in S. Harnam Singh Suri v. CBDT [1984] 145 ITR 159, where a different view has been taken. It, however, did not accept the same. We have perused the decision of the Delhi High Court in S. Harnam Singh Suri v. CBDT [1984] 145 ITR 159, where disagreeing with the decisions of the Madras High Court, it has been held that : (i) the word "in" can never mean continuously "for not less than" ; and (ii) that it means that the assessee should have used the building for residence within the preceding two years ; and (iii) that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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