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Issues involved: Interpretation of exemption u/s 54 of the Income-tax Act, 1961 for legal representatives in case of sale and purchase of residential property by deceased assessee.
Summary: The High Court of Andhra Pradesh was tasked with providing an opinion on the denial of exemption u/s 54 of the Income-tax Act, 1961 for the relevant assessment year 1976-77. The case involved the sale of a residential house by a deceased individual and subsequent purchase by the legal representatives within one year. The dispute arose as the Income-tax Officer contended that the exemption cannot be claimed since the seller and buyer were different individuals. The Appellate Tribunal upheld this decision based on precedents from Karnataka and Gujarat High Courts. The legal counsel for the assessee argued that exemption should be allowed u/s 54 of the Act, emphasizing the broad interpretation of the term "assessee" to include legal heirs. The Court agreed with this interpretation, stating that as long as the sale and purchase are part of the same scheme, the identity of the assessee remains consistent. Referring to a decision by the Madras High Court, the Court concluded that the word "assessee" should be liberally interpreted to achieve the objective of granting exemptions. In this case, the sale and subsequent purchase were interconnected, leading to a favorable decision for the legal representatives. In conclusion, the Court answered the question in the negative, ruling in favor of the assessee and against the Revenue, without imposing any costs.
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