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TMI Blog1987 (8) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... perty, the assessee claimed exemption u/s 54(1) of the IT Act, which was disallowed by the ITO for the reason that the assessee was not entitled to this relief, as he was being assessed in the status of a Hindu Undivided Family. According to the Income-tax Officer only individuals can claim this relief u/s 54(1). The CIT (Appeals), however, disagreed with this view of the Income-tax Officer and held that the language used in sec. 54(1) was such that the relief could be claimed either by an individual or by an HUF. He further held that in the case of an individual, the benefit could be availed, whether the individual himself uses the building for his own residence or whether his parent used the building for his residence and that in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82-83 also. Shri Seshagiri Rao further relied on the decision of the Karnataka High Court in CIT v. C. Chandrashekar [1984] 145 ITR 429 and of Madhya Pradesh High Court in the case of Smt. Rampyaribai Narayandas v. CIT [1984] 147 ITR 223 in support of his submissions. He therefore submitted that the order of the CITY (Appeals) directing the granting of exemption under sec. 54(1) to the assessee should be reversed and that of the ITO restored. 24. The learned Chartered Accountant for the assessee submitted that the assessee's HUF consisted of only two members, namely the assessee and his wife, that the assessee was the sole coparcener of the said HUF and that the assessee had sold the property as an individual only, as he had absolute powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nherited by him from his father. He is a married person. As per Supreme Court decision in Narendranath's case, his status is to be treated as HUF. The return has been accordingly filed changing the status as HUF. The status declared is in order." It is because of this changed status in which the assessee is assessed that the department is seeking to deny the relief claimed by him under section 54(1) of the Act in respect of the capital gains arising on the sale of his residential property. In support of their contention, they rely on the decision of the Kerela High Court in K. I. Viswambharan Bros.' case, which was a case of a partnership firm claiming exemption under section 54 in respect of the house property purchased by the firm. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r joint Hindu family property as if it were his separate property and that he may sell, mortgage or make a gift of it. In the case before them, their Lordships held that when the Sole member gifted the property in favour of his wife, it was in his capacity as individual with all the powers vested in him for the disposition of joint family property as if it were his separate property and that accordingly he should be deemed to have acted in his individual capacity while making the gift in favour of his wife. Their Lordships further held that the same result would be reached even if the father-karta was the sole surviving coparcener or the only male member of a joint family, that a father coparcener has certain special powers of disposing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have also taken a similar view and held that a sole surviving coparcener of HUF can dispose of coparcenary property as if it were his separate property, that the gifts made by the assessee in his capacity as sole surviving coparcener out of the immovable property of the HUF to his minor daughters and wife were valid gifts and that therefore the capital gains which arose to his wife and the two trusts in the said case could not be assessed in the hands of the assessee. Their lordships followed the decision of the Supreme Court in the case of Surjit Lal Chhabda v. CIT [1975] 101 ITR 776 and Anilkumar B. Laskari v. CIT [1983] 142 ITR 831 (Guj.). 29. In our view, these two decisions of the Madras and Bombay High Courts are directly applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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