1995-VIL-204-ITAT-
Equivalent Citation: TTJ 054, 593,
Income Tax Appellate Tribunal BOMBAY
Date: 23.06.1995
SMT. KALWANTI D. ALREJA.
Vs
INCOME TAX OFFICER.
BENCH
Member(s) : V. DONGZATHANG., M. K. CHATURVEDI.
JUDGMENT
This appeal by the assessee is directed against the order of CIT(A) and pertains to the asst. yr. 1993-94. Shri S.E. Dastur, Porus Kaka and G.P. Mehta, learned counsel for the assessee appeared before us.
2. The solitary ground persuasively presented before us projects the following grievance:
"The learned CIT(A) erred in holding that the applicant was not entitled to deduction at Rs. 20,00,000 under s. 54F of the IT Act, 1961 out of the sale proceeds of the shares at Rs. 22,22,339.40."
3. We have heard the rival submissions in the light of the material placed before us and precedents relied upon. This was alternative submission before the Revenue authorities. It was without prejudice to the claim of assessee that the sale of shares is part of family arrangement. It was held by the Revenue authority that there is no sufficient nexus between the sale of shares at a profit and the payment to son in terms of some family arrangement. It was therefore alternatively argued that the assessee is entitled to exemption under s. 54F if there be any capital gain arising out of the transfer of shares. The amount realised from the sale of shares was invested in the purchase of residential house, being 1/5th share in the flat belonging to her son Dr. Bipin Alreja. On the date of said purchase assessee was not owning any identifiable different unit which could be construed to be residential house.
4. Assessing Officer (AO) disallowed the assessee's claim on the ground that the same was purely technical interpretation of law and in effect the assessee only acquired his flat and not purchased the same. CIT(A) concluded the matter as under:
"Assessee bought with the sale proceeds is the 1/5th share in a single composite flat. It is not an independent residential unit. Moreover, as rightly observed by the AO, the assessee was already having 2/5th share in the same singly house property. The same was chargeable to tax as house property income. But no tax was payable because being self occupied the Annual Letting Value was taken at nil. I have therefore no doubt in my mind that the assessee is not entitled to the exemption under s. 54F of the IT Act, 1961."
5. The assessee was originally owning 1/5th share in the flat jointly with other family members. On the demise of her husband in the year 1982, assessee as per the will of her husband got 1/5th share of her husband in the same flat. The flat bearing No. 6 is in the building by the name "The Beacon", 140, Backbay Reclamation, Bombay-400021.
6. Revenue disallowed the claim of the assessee under s. 54F mainly on the ground that benefit of s. 54F cannot be availed by the assessee as she was already having 2/5th share in the same house property. We therefore got to see that in view of the proviso to s. 54F(1) whether the benefit of section could be granted to the assessee. As clarified in the proviso the benefit of s. 54F shall not be grantedâ
(i) Where the assessee owns on the date of transfer of the original asset or
(ii) purchases, within the period of one year after such date,
(iii) constructs, within the period of 3 years of such date. any residential house, the income from which is chargeable under the head "income from house property" other than the new asset.
7. Reliance was placed on the decision of the apex Court rendered in the case of CIT vs. Aravinda Reddy (1979) 12 CTR (SC) 423 : (1979) 120 ITR 46 (SC). In this case, 4 brothers, members of an HUF, partitioned jointly family property, leaving undivided a common house. The assessee, the eldest of them, had sold his own house incurring capital gain tax. Each of his 3 brothers executed a release deed valuing the share in the common house at Rs. 30,000 in favour of the assessee towards the extra share agreed to be given. The question was whether this would amount to a "purchase" of the house by the assessee attracting s. 54(1) and the assessee would be entitled to the relief thereunder on the ground that he had purchased a property. On this factual backdrop Hon'ble Supreme Court has held that the word "purchase" in s. 54(1) had to be given its common meaning, viz., buy for a price or equivalent of price by payment in kind or adjustment towards a debt or for other monetary consideration. Each release in this case was a transfer of releaser's share for consideration to the releasee and the transferee, the assessee, "purchased" the share of each of his brothers and the assessee was, therefore, entitled to the relief under s. 54(1). It would be apt to put the ratio in the words of Justice Krishna Iyer.
"We agree. The signification of a word of plural semantic shades may, in a given text, depend on the pressure of the context or other indicia. Absent such compelling mutation of sense, the speech of the lay is also the language of the law. We find no reason to divorce the ordinary meaning of the word "purchase" as buying for a price or equivalent of price by a payment in kind or adjustment towards an old debt or for other monetary consideration from the legal meaning of that word in s. 54(1). If you sell your house and make a profit, pay Caesar what is due to him. But if you buy or build another subject to the conditions of s. 54(1) you are exempt. The purpose is plain; the symmetry is simple, the language is plain. Why mutilate the meaning by lexical legalism. We see no stress in the section on "cash and carry". The point pressed must, therefore, be negatived. We have declined to hear Sri S.T. Desai's artillery fire although he was armed cap a pie with Mitakshara lore and law. A point of suffocating scholarship sometimes arrives in Court when one nostalgically remembers the escapist verse:
"Where ignorance is bliss,
Tis folly to be wise."
8. In the case of Shiv Narayan Chaudhari vs. CWT 1977 CTR (All) 149 : (1977) 108 ITR 104 (All) it was held that several self-contained dwelling units which are continuous and situate in the same compound and within common boundaries and having unity of the structure could be regarded as one house. In the instant case it can be said that the assessee on the date of purchase of 1/5th share from his son in the flat did not have any other identifiable different unit. Consequent upon the purchase also assessee had only one identifiable residential unit. She simply got the bigger share in the said unit by making the purchase. The fact that the assessee had interest in the same unit prior to the date of purchase is not the condition aliunde to which deduction under s. 54F can be denied to the assessee.
9. Each law consists of two parts, viz., body and soul; the latter of the law is the body of law and the sense and reason of the law is the soul of law. Law, to a large extent, lives in the language even if it exists with the spirit of the statute. Dean pound used to say that the main thing is not the fixed rule but the understanding with which the rule is applied to an individual case. Sec. 54F was inserted in the statute with an intent to provide incentive to the house building activity. In a welfare State it is necessary to see that citizens get proper shelter. To facilitate the task the section was enacted. It is a benevolent provision, therefore should not be construed too technically.
10. Take an example. X constructs a house on a plot owned by him. First year he sells shares and construct ground floor of the house. Next year again he sells the shares and construct first floor. Benefit under s. 54F cannot be denied just because X in the first year owns ground floor of the house. The meaning of the word owns on the date of transfer of original asset is in relation to an identifiable different unit, and not in respect of the same unit. Therefore, in our opinion conditions precedent for availing the benefit of s. 54F did exist in the facts and circumstances of the case. We, therefore, direct the AO to allow the benefit of s. 54F to the assessee. In view of this finding it is not necessary to decide the other issues. We, therefore, decline to comment over the same.
In the result appeal stands allowed pro tanto.
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