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Issues involved:
The judgment involves the interpretation of whether a Hindu Undivided Family (HUF) can claim exemption under section 54 of the Income-tax Act, 1961 for capital gains from the sale of a property. Summary: The assessee, a HUF, sold a property and claimed exemption under section 54 of the Act. The Income Tax Officer (ITO) rejected the claim, bringing the sum of Rs. 29,550 under the head "Capital gains." The Appellate Assistant Commissioner (AAC) allowed the exemption. However, the Income-tax Appellate Tribunal rejected the claim, stating that section 54 applies only to individuals, not to HUFs. The key issue was whether the term "assessee" in section 54 includes HUFs. The court analyzed the definitions of "assessee" and "person" in the Act. It considered the ordinary meaning of "residence" and how it applies to living persons. The court also examined provisions related to determining residence for individuals and HUFs. Referring to past judgments, the court found that the term "assessee" in section 54 refers only to living persons, not to artificial juridical persons like HUFs. The court emphasized that the plain meaning of the words used in section 54 supports this interpretation. Citing various authorities, the court concluded that section 54 applies to individuals, not fictional or artificial juridical persons like HUFs. In conclusion, the court held that section 54 of the Income-tax Act, 1961 applies only to individuals, not to fictional or artificial juridical persons like HUFs. The judgment favored the revenue, directing each party to bear their own costs.
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