TMI Blog1979 (12) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... hin. He owned a house situated at Mahatma Gandhi Road, Ernakulam, and resided there. On July 4, 1966, he executed a will under which he appointed his only son as the executor. He made certain bequests to his wife and married daughters and the remainder was given to his son absolutely. On September 9, 1969, he sold the residential house in Ernakulam to Sri Isac for a sum of Rs. 1,89,000 and he moved down to Madras. He purchased in Madras a vacant site for which he paid an advance of Rs. 3,000 on November 10, 1969. A draft sale deed was also got prepared, but before the sale could be executed he died on December 22, 1969. The sale deed was executed in favour of his son, Ramanathan, on June 8, 1970. The sale was for a sum of Rs. 30,938. A buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t belonging to him could alone be brought to tax under s. 45 of the Act and that the gains arising out of the sale which were brought to tax should have belonged to the assessee. After referring to decision of the Madhya Pradesh High Court in CIT v. Hukumchand Mohanlal [1967] 64 ITR 341, which was affirmed on appeal by the Supreme Court in CIT v. Hukumchand Mohanlal [1971] 82 ITR 624, the Tribunal considered that Ramanathan had not sold the capital asset in question and that he could not, therefore, be given the benefit of s. 54 of the Act. It is this order of the Tribunal that is now challenged by the assessee in this reference. Section 45 of the I.T. Act, 1961, provides that any profits or gains arising from the transfer of a capital as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty and substituted another in its place, then any capital gain derived by him would not be liable to assessment so long as the entire capital gain was reinvested in the newly acquired Property. Section 54 was previously in the form of a proviso to s. 12B of the Indian I.T. Act, 1922, which corresponds to s. 45 and the related provisions of the present Act. The whole scheme behind ss. 45 and 54 was thus to give relief to the assessees who had reinvested the capital gain by substituting another property for the one which was sold. The contention urged on behalf of the revenue in the present case, which found favour with the Tribunal, was that there must be identity between the person who sold the property and the person who actually acquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, constructed a house property for the purposes of his own residence. In the present case, it is clear on the facts that Venkateswaran paid an advance for the purpose of acquisition of the property to serve as residential accommodation for him. Unfortunately, before the conveyance could be executed in his favour, he passed away, and the sale deed had, therefore, to be executed in favour of his son. When once all these conditions are satisfied, the section provides that, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place as set out in s. 45, it has to be dealt with in accordance with the provisions of s. 54. Thus, s. 54 is the only provision on which attention has to be ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rictly construed. We do not find that there is any strict or liberal construction to be considered in the context of the provision on hand. The provision has to be construed and, on construing it, we find that the result is that, on the facts here, the assessee gets the benefit of s. 54. The learned counsel drew our attention to the decision relied on by the Tribunal in CIT v. Hukumchand Mohanlal [1967] 64 ITR 341. The question which arose for the decision of the Madhya Pradesh High Court was on the following facts. One Kanhaiyalal was carrying on business as selling agent of another firm. Kanhaiyalal died and his widow succeeded to the business. The principal firm had recovered from Kanhaiyalal certain sum as sales tax for the transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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