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TMI Blog2006 (7) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... partition of a Joint Hindu Family coparcenary property and in such partition, Hindu Family coparcenary property shall be so divided to a daughter so as to allot the same share as is allottable to a son - The amendment brought out w.e.f. 25th March, 1989 has removed the distinction as regards to a son or a daughter in respect thereto coparcenary property of Joint Hindu family as governed by Mitakshara law and daughters are clearly treated as coparceners. In the present case, there are two daughters to the Karta. Hence, there are three coparceners in the Joint Hindu Family and the daughters have been allotted a sum of Rs. 12,50,000 i.e. Ms. Samyuktha Ramakrishna Ms. Saranya Ramakrishna each - there are no infirmity in the partition of the Joint Hindu Family which is in accordance with the Hindu Succession (T.N. Amendment) Act, 1989. In view of this, the partition is as per the amended provisions of Hindu Succession (T.N. Amendment) Act, 1989. Hence, there is no reason to refuse Registration to family partition of Joint Hindu Family property. Accordingly, the partition of H.U.F. is recognized under section 171 of the Act and the Assessing Officer is directed to pass a consequential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to claim deduction under section 54 of the Act unlike section 54F of the Act. Therefore, the assessee is eligible for deduction under section 54 of the Act in respect of the investment made in both the flats simultaneously for computation of capital gains. The appeal of the Revenue is dismissed and the assessee's appeal is allowed. - Member(s) : MAHAVIR SINGH., SHAMIM YAHYA. ORDER Per Mahavir Singh, Judicial Member.-These two appeals, one by the Revenue and one by the assessee are directed against two different orders of the CIT (Appeals). The appeal of the assessee in ITA. No.783/Mds./2001 is against the order of the CIT (Appeals)-XII, Chennai dated 19-2-2001 confirming the order of the Assessing Officer regarding refusal to recognize the partition of HUF under section 171 of the Income- tax Act, 1961. The appeal of the Revenue in ITA No. 907/Mds./2001 is directed against the order of the CIT (Appeals)-XII, dated 19-2-2001 in respect of the assessment framed by the Assessing Officer under section 143(3) of the Act. 2. First we will take up the assessee's appeal in ITA No.783 /Mds./01. The only issue in this appeal relates to confirming the order of the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtha of HUF is allotted immovable properties at Schedule I which consists of : (a) one flat on the third floor of the property No.9, 2nd Street, Venus Colony, Alwarpet and (b) a flat at ground floor of the very same premises. Apart from the above immovable properties, he has been allotted all shares, bank balances, all monies receivable by family together with corresponding liabilities and both the daughters, Ms. Samyuktha Ramakrishna and Ms. Saranya Ramakrishna were allotted a sum of Rs. 12,50,000 each which was reported to be the loans due from these daughters to the HUF. Before the Assessing Officer, it was claimed that the partition is on the basis of recently brought out amendment to the Hindu Succession Act i.e. Hindu Succession (Tamilnadu Amendment) Act, 1989 by T.N. Assembly. The Assessing Officer has rejected the claim of the assessee by discussing the amendment as well as the "inherent right" and the term "sui-juris" Whether the right to property and partition is to the limited extent qua the daughters for enforcing a clear right over the property or at par with the sons of the family in the event of partition and he has held as under: "What has been amended is only Hin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt family property of the HUF and accordingly, he confirmed the action of the Assessing Officer. Aggrieved, the assessee is in second appeal before the Tribunal. 4. Before us, the ld. Counsel for the assessee filed a paper book containing the following documents at pages 1 to 21: 1. The Hindu Succession (Tamil Nadu Amendment) Act, 1989 (Act No.1 of 1990). 2. Hindu Succession (Amendment) Act, 2005 (Act No. 39 of 2005). 3. Statement of facts and grounds of appeal before CIT (Appeals) - in the appeal against order under section 171 of the Act - may be taken as written submissions in the present appeal before the Hon'ble ITAT. 4. Deed of declaration dated 9-3-1995 confirming oral partition on 16-9-1994. 5. The ld. Counsel for the assessee relied on the Hon'ble Apex Court judgment in the case of S. Sai Reddy v. S. Narayanan Reddy [1991] 3 SCC 647 and argued that what has been considered by the Hon'ble Apex Court is the amendment by introduction of section 29A in Hindu Succession Act, 1956 as amended by the State Legislature by Hindu Succession (A.P. Amendment) Act, 1986. Similar is the amendment of the Hindu Succession (TamilNadu Amendment) Act, 1989 as per Chapter II-A, suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mily governed by Mitakshara law, the daughter of a coparcener shall by birth become a coparcener in her own right in the same manner as the son and have the same rights in the coparcenary property as she would have had if she had been a son; inclusive of the right to claim by survivorship; and shall be subject to the same liabilities and disabilities in respect thereto as the son; (ii) at a partition in such a Joint Hindu Family the coparcenary property shall be so divided as to allot to a daughter the same share as is allottable to a son: Provided that the share which a predeceased son or a predeceased daughter would have got at the partition if he or she had been alive at the time of the partition shall be allotted to the surviving child of such predeceased son or of such predeceased daughter: Provided further that the share allottable to the predeceased child of a predeceased son or of a predeceased daughter, if such child had been alive at the time of the partition, shall be allotted to the child of such predeceased child of the predeceased son or of the predeceased daughter as the case may be; (iii) any property to which a female Hindu becomes entitled by virtue of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the same manner treating her to be a son at the partition of the joint family property. However, the Legislature was conscious that prior to the enforcement of the amending Act, partitions will already have taken place in some families and arrangements with regard to the disposition of the properties would have been made and marriage expenses would have been incurred etc. The Legislature, therefore, did not want to unsettle the settled positions. Hence, it enacted clause (iv) providing that clause (ii) would not apply to a daughter married prior to the partition or to a partition which had already been effected before the commencement of the amending Act. Thus if prior to the partition of family property a daughter had been married, she was disentitled to any share in the property. Similarly, if the partition had been effected before September 5, 1985 the date on which the amending Act came into force, the daughter even though unmarried was not given a share in the family property. The crucial question, however, is as to when a partition can be said to have been effected for the purposes of the amended provision. A partition of the joint Hindu family can be effected by various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a vast section of women of its benefits." 9. Now, we will go through the Hindu Succession (Tamilnadu Amendment) Act which came into force on 25th day of March, 1989 and the Hindu Succession Act, 1956 as applicable to the State of Tamilnadu amended by Hindu Succession (Tamilnadu Amendment) Act, 1989. Chapter II-A-Succession by survivorship as amended reads as under: "29A. Equal rights to daughter in coparcenary property.-Notwithstanding anything contained in section 6 of this Act.- (i) in a Joint Hindu Family governed by Mitakshara Law, the daughter of a coparcener shall by birth become a coparcener in her own right in the same manner as a son and have the same rights in the coparcenary property as she would have had if she had been a son, inclusive of the right to claim by survivorship; and shall be subject to the same liabilities and disabilities in respect thereto as the son; (ii) at a partition in such a Joint Hindu Family the coparcenary property shall be so divided as to allot to a daughter the same share as is allowable to a son: Provided that the share which a predeceased son or a predeceased daughter would have got at the partition if he or she had been alive a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras School of Mitakshara Hindu Law, this custom has became obsolete as observed by the learned Author Mulla on Hindu Law at paras 3 15 of page 436 of 15th Edition but diverse view has been taken in the case of K.V. Thangavelu v. Court of Wards [1946] 2 MLJ 143 (Mad.) at page 148 wherein their Lordships of Madras High Court have observed as under: "No doubt as pointed out in Mayne's Hindu Law (10th edition) page 543, the rules of the Mitakshara allotting a share to wives, widows, mothers and grandmothers have became obsolete in Southern India owing to the influence of Smriti Chandrika and Saraswathi Vilas a, but in the Northern provinces, the rules are still in force." The above decision clearly indicates that as far as the Southern or Madras School of Mitakshara Law is concerned, the females in the family have got no right to a share in the family property in the event of partition. 11. Similarly, this question again came up for consideration before the Karnataka High Court while dealing with tax laws itself, in the case of Controller of Estate Duty v. Ramachandra Bhat [1980] 123 ITR 841 (Kar.). In the above case, the issue involved is as under: 11.1 Consequent to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... School of Mitakshara Law, it has to be held that the wife of Govinda Bhat had no share in the family property during his life-time." The above case law clearly indicates the preposition of law that under the Madras or Southern School of Mitakshara Law, a female member such as wife had no share in the property of a Hindu undivided family. In the circumstances, it is submitted that the partition in the present case does not suffer from any legal infirmity and has to be taken as a total partition and not a partial partition. 11.3 Incidentally, the Madras High Court in the case of Smt. G. Shenbagammal v. CED [1986] 162 ITR 445 has held that while under general rules of Hindu Law, the husband has got an obligation to maintain his wife and this obligation is independent of possession of any property by the husband, this obligation is not fixed or fastened to any particular property. This right of the wife to be maintained by the husband and the obligation of the husband to maintain the wife will not, by themselves create any charge of encumbrance over the property of the husband and unless and until it is made a charge on the property, it is not enforceable, like any other liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes coparcener in her own right with the same rights and liabilities as that of a son with a right to claim partition and share in the family property, it is not necessary to provide separately for the maintenance and marriage of the said daughters in the family partition. After all, under the pre-amended provisions, it has never been stated that the provision for maintenance and marriage of sons has to be made in the family partition. 13. In view of the above discussions, considering the provisions of Hindu Succession Act, 1956 as amended by Hindu Succession (A.P. Amendment) Act, 1986, introduction of section 29A which was confirmed by the Hon'ble Apex Court in the case of S. Sai Reddy and also the amendment of Hindu Succession Act, 1956 by the Hindu Succession (T.N. Amendment) Act, 1989, which are the provisions similar to the Hindu Succession (A.P. Amendment) Act, we are of the considered opinion that the difference between daughter and son of the Mitakshara Hindu Family is removed and the daughter is conferred the coparcenary rights in the joint family property by birth in the same manner and to the same extent as the son. Daughter is entitled to claim partition and her share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a "long term capital asset", being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereinafter in this section referred to as the original asset), and the asset has within of a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,-" Further, we have also gone through the provisions of section 54F(1) which reads as under: "54F. Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.-(1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Here, the Assessing Officer has denied exemption only on the basis that residential house means, one residential house and not more than one. But the contention of the assessee is that residential house means any residential house and not only one residential house. The assessee in this case acquired two flats, one on ground floor and the other on third floor. The reasons stated by the assessee for acquiring the ground floor is that the assessee's mother who is entitled to be provided with accommodation by the assessee is to stay in the property and she was finding it difficult to stay in the upper floor due to her old age and health. The assessee's mother is staying in the ground floor and they are having common kitchen on ground floor flat and there is no kitchen on third floor flat. These flats fall under one building i.e. ground floor and third floor. The desire of the assessee is that these two flats are to be used as one house as it is seen from the case law of the Tribunal of the Bombay Bench in the case of K.G. Vyas v. ITO [1986] 16 ITD 195. The Tribunal allowed the claim of the assessee under section 54 of the Act by holding that since all the four apartments were in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... still the assessee is eligible for deduction under section 54 of the Act. There is no bar in acquiring more than one house/residential house under section 54 unlike under section 54F of the Act. It can easily be held that if the assessee purchases two houses to meet his needs out of the sale proceeds of one residential house, he cannot be denied exemption under section 54 of the Act. What is to be examined is whether the other conditions as specified in section 54 are satisfied at the time of investment in each of the property or not. In the present case, it is clear that these two flats are acquired simultaneously under the terms of agreement entered into on 29th October, 1993 and on the same date the possession of these flats were given in the same year, simultaneously. The meaning of term 'residential house' as used in section 54 of the Act can be understood by referring the decision on the Allahabad High Court in the case of Shiv Narain Chaudhari v. CWT [1977] 108 ITR 104 wherein the Hon'ble Allahabad High Court has held that exemption under section 5(1)(vi) of the Wealth-tax Act, 1957 is allowable in respect of one house or part of house to the assessee and the relevant dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto saying that there is an ambiguity in the provision. Thus the one in favour of the assessee is to be adopted rather than applying a strict meaning by saying that there is no ambiguity. Thus, this issue is decided in favour of the assessee." Even the CBDT has discussed the scope and effect of amendment on section 54 with effect from 1-4-1983 which is explained in Circular No. 346 dated 30-6-19B2 [138 ITR (St.) 23] which reads as under: "Modification of the provisions relating to exemption of capital gains on transfer of self-occupied house property on investment in other house property for self-occupation-section 54. 19.1 Under section 54 of the Income-tax Act, capital gains arising on the transfer of a house property which in the two years immediately preceding the date of its transfer was used by the assessee or a parent of his for self-residence is exempted from income-tax if the assessee, within a period of one year before or after that date, purchases or within a period of two years after the date of such transfer constructs a house property for the purpose of his own residence. The exemption of capital gains is restricted to the amount of such capital gain utilized fo ..... 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