TMI Blog1985 (10) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 1973-74 is permissible in law ?" In order to appreciate the question referred to us, it is necessary to notice the facts that are not in dispute in the first instance. On June 21, 1971, the assessee purchased a house situated on Park Road, Bangalore City, for his residence and was using the same as his residence from about that date. Some time in May, 1972, he sold 2/3rds portion of the said house for a sum of Rs. 30,000 and some time in February, 1973, he purchased another house at Miller Road, Bangalore City. In his return filed for the assessment year 1973-74 relevant to the accounting year ending on March 31, 1973, before the Income-tax Officer, Assessment 2 (Additional) Circle-I, Bangalore, the assessee claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had not been used by him for a continuous period of two years prior to the date of sale, the exemption claimed by him under section 54 of the Act was unavailable. In support of his contention, Sri Sarangan strongly relies on the Division Bench rulings of the High Court of Madras in M Viswanathan v. CIT [1979] 117 ITR 244 and S Radhakrishna v. CIT [1984] 145 ITR 170. That the assessee did not reside in his residential house for a continuous period of two years is not in dispute. On these very facts, the controversy really turns on the construction of section 54 of the Act which stood as hereunder : "Where a capital gain arises from the transfer of a capital asset to which the provisions of section 53 are not applicable, being building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or construction, as the case may be, the cost shall be reduced by the amount of the capital gain." This section employs the term "in the two years immediately preceding the date of transfer". The term "in the two years" can only mean at any time within two years. On the plain language of these words, it is not open to a court to read the same as for a continuous period of two years. The later words "was being used" on which emphasis is laid by Sri Sarangan cannot restrict or control the terms "in the two years" occurring earlier. Sri Sarangan is undoubtedly right in maintaining that the section must be read as a whole and effect given to every part of the section. But, even when we read the section as a whole and do not minimise the impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer. This case was followed in CIT v. R. Mala [1982] 135 ITR 302 (Mad). No doubt, if this verb is to be classified according to grammar, then, it would fall into the category of past continuous tense. But past continuous here only means that whenever used in the preceding two years, the house should have been used as a residence; that is, the house must have been used by the assessee or a parent of his mainly for the purpose of his own or parent's own residence during the period of two years immediately preceding the date of sale; CIT v. Tikyomal Jasanmal [1971] 82 ITR 95 (Guj). The word 'mainly' makes it abundantly clear that it can be used even for other purposes and that will certainly break the continuity of residential use. am af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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