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Interpretation of Section 54 of the Income-tax Act 1961 for capital gains tax applicability to a co-operative society. Detailed Analysis: The case involved the interpretation of Section 54 of the Income-tax Act 1961 regarding the taxing of capital gains for a co-operative society. The assessee, a co-operative society, sold a building and purchased another within one year, claiming the benefit under Section 54. However, the Income-tax Officer and the Appellate Assistant Commissioner denied the claim, stating that Section 54 applied to individuals, not juridical persons like co-operative societies. The Tribunal upheld this decision, stating that the income was not chargeable under "Income from house property" and the buildings were not used for residential purposes. The Tribunal's reasoning was that the co-operative society did not qualify as an individual entitled to the benefit under Section 54. The counsel for the assessee argued that the building was used for the society's business, equating it to being used for residence based on Section 6 of the Act. The High Court referred to various definitions of "residence" and cited precedents to emphasize that the term typically refers to where an individual or their family habitually eats, drinks, and sleeps. The Court highlighted that Section 54 specifically mentions the residence of an individual or their parent, indicating that the provision aims to provide relief for residential properties occupied by individuals. The Court further elaborated that Section 54 requires the claimant to establish eligibility as a person entitled to the benefit and meet specified conditions. Since the co-operative society could not be considered an individual, it was ineligible for the benefit. Moreover, the buildings in question were used for business purposes, not for residential use, failing to meet the requirements under Section 54. Therefore, the Tribunal's decision was deemed correct, and the question was answered affirmatively, with each party bearing their own costs. In conclusion, the judgment clarifies that Section 54 of the Income-tax Act 1961 pertains to capital gains tax on residential properties for individuals, excluding entities like co-operative societies. The decision underscores the importance of meeting the specified conditions under the Act and the intended relief for residential properties occupied by individuals to qualify for the benefits outlined in the legislation.
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