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TMI Blog1982 (7) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... which date it was sold by the assessee to Shri S.P. Mantri through minor guardian father Shri Pandurang Jivraj Mantri and the consideration was Rs. 2,91,000. As per the sale deed, the assessee HUF earned a surplus profit of Rs. 93,371. The assessee also incurred expenditure of Rs. 3,260 as commission and pleader's fees. etc., and the net gain was Rs. 90,111. The assessee later on purchased a flat in a co-operative society on 1-4-1976 for Rs. 77,782 for residence within one year from the date of sale of the property. The assessee claimed that the surplus obtained is a long-term capital gain since the asset was sold in 1975 was purchased or acquired in 1966 and the asset was held by the assessee for a period exceeding 60 months. Hence, the assessee is entitled to claim deduction under section 80T of the Act from the total income in respect of long-term capital gain. The assessee also claimed deduction under section 54(1) of Rs. 77,782 representing investment in the new flat and deduction under section 80T of Rs. 6,832 was claimed and on long-term capital gain was computed at Rs. 12,329. 3. The ITO considered the assessee's claim and went through the material on record and according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be a non-living person since it is a family comprising of living persons. However, the contention of the assessee's representative that the assessee is entitled to benefit under section 54(1) was turned down by the AAC. He relied on certain judgments of the High Courts and he observed that the HUF is an artificial or fictional person and would not be able to have a self-occupied property/residence. Accordingly, the AAC upheld the order of the ITO and dismissed the assessee's appeal. 8. Against the order of the AAC the present appeal lies before the Tribunal. 9. Shri Gadgil, the learned representative of the assessee, filed before us compilation of 19 pages and also a copy of the sale deed which took place on 14-10-1975. Shri Gadgil's first argument was regarding the applicability of section 54(1). The main point that Shri Gadgil made before us is that section 2(7) includes a HUF and we have to consider whether section 54(1) is applicable to individual or HUF. According to Shri Gadgil section 2(31) defines 'person' which includes HUF and, therefore, HUF is entitled to benefit under section 54(1). Shri Gadgil made reference to K.L Viswambharan Bros. v. CIT [1973] 91 ITR 588 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for that purpose he referred to section 6 of the Act. He further stated that if an individual has a house and it is used for purpose of residence then the assessee is entitled to benefit under section 54 and it is worthy to note, he added, that further concession is granted to parents under section 54 for that purpose be relied on the order of the Madras Bench 'D' in IT Appeal No. 2516 (Mad.) of 1979 [it dealt with section 54(b) of the Act]. Reference was made to 28 ITR 322 at 326, para 12. 13. Then Shri Gadgil stated as to what is the HUF and he said that it is a group of individuals and for that purpose he relied on the judgment of the Supreme Court in the case of Banarsi Dass v. WTO [1965] 56 ITR 224 (it was a case regarding the taxability of HUF to wealth-tax). According to Shri Gadgil, HUF means individuals who reside and they can have parents and, therefore, the HUF, which is a group of individuals, is capable of having parents is entitled to benefit under section 54(1). Reference was also made to in the case of WTO v. C.K. Mammed Kayi [1981] 129 ITR 307, 313 (SC) [the Supreme Court in that case held that the term 'individual' (under section 3 of the Wealth-tax Act) should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent one, the HUF. Shri Sathe relied on the case of Rowji Sojpal v. CIT [1957] 31 ITR 721 (Bom.) and stated that this judgment was considered by the Madhya Pradesh High Court in the case of Shrigopal Rameshwardas. Shri Sathe stressed that the case of Shrigopal Rameshwardas is relevant for our purpose and there is no contra decision on the point and hence, having regard to the case of CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589 (Bom.) the said decision of the Madhya Pradesh High Court is binding upon this Bench. Shri Sathe argued that request made by Shri Gadgil that the matter should be referred to a Special Bench is not acceptable because there is a binding decision of the Bombay High Court in the case of Godavaridevi and even if a Special Bench is asked to adjudicate upon this issue, it will have to follow the decision of the Madhya Pradesh High Court. Shri Sathe attacked the argument of Shri Gadgil that a HUF is given exemption under section 5(1)(iv) of the Wealth-tax Act but it is worth noting that because section 5(1)(iv) is amended, the exemption is granted to assessee from 1-4-1972 and, therefore, the assessee cannot make much of the exemption granted to the HUF whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 54(1). He made a submission that the claim of section 80T if not accepted then the matter may be sent to the ITO so that the assessee will be in a position to give value of the land and also of the building separately. 19. We have considered the rival submissions and perused the material before us. 20. Though long and interesting arguments were advanced on behalf of both the sides, indeed, two issues are involved, namely, (1) whether the assessee is entitled to benefit under section 54(1) ; and (2) whether the assessee is entitled to relief under section 80T. 21. Before we enter into merits of the matter, we shall first refer to the definition of 'assessee' as given in section 2(7) which defines the 'assessee' as meaning a person by whom any tax or any other sum of money is payable under this Act. At this juncture it is relevant to refer to section 2(31) where definition of 'person' is given which means : "(31) 'person' includes--(i) an individual ; (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be an individual and a human being because only an individual is capable of having a parent. It is obvious that the assessees, like a company, a firm, a legal authority cannot have a parent and they are not capable of using an asset, i.e., building, for its residence. Therefore, to expand the term individual so as to embrace HUF will be stretching the term too far. This aspect of the matter has been considered by the Madhya Pradesh High Court in the case of Shrigopal Rameshwardas. The High Court held as under : "The word 'assessee' as defined by section 2(7) of the Income-tax Act, 1961, includes every person who is a 'unit of assessment' and the definition of 'Person' in section 2(31) is wide enough to include every artificial juridical person including a HUF, a partnership firm, etc. However, section 2 which contains these definitions states that the definitions are to apply 'unless the context otherwise requires'. In the context of section 54 of the Act, which provides for exemption from tax on capital gains, where the property was being used by the assessee or a parent of his mainly for the purpose of his own or the parent's own residence, the use of the words 'parent of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claimed for the purpose of assessment by the firm because it was not possible to envisage the usage of the building by the firm for its residence as required by the section. Similar view has been held in the case of R.S. Nikhere which is a case of co-operative housing society. In Banarsi Dass' case, the Supreme Court has dealt with the term HUF and the taxability of it to wealth-tax. However, it must be borne in mind that the Supreme Court was dealing with and interpreting the word 'individual' in entry 86 of List I of Schedule VII to the Constitution of India. Therefore for income-tax purposes the term 'individual' cannot be said to embrace HUF having regard to definition given in section 2(31) which distinguishes between individual, HUF, firm, etc. 24. In the case of Mammed Kayi (at page 313) the Supreme Court which held that 'Individual' includes Mappilla Tarwad. It was a case of the Wealth-tax Act. In the judgment of the Supreme Court in the case of CIT v. Sodra Devi [1957] 32 ITR 615, it is held that an individual does not mean only a human being but it is wide enough to include a group of persons forming (a natural) unit. This was a case under the 1922 Act which dealt wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Madras Benches. This argument has to be rejected because in Arvind Boards' case the Gujarat High Court held that the decision of the Madhya Pradesh High Court has persuasive value and that it is not binding. It must be stressed that one High Court can dissent from the view of another High Court. But a Tribunal being a creature of statute cannot sit over the judgment of a High Court. 27. As far as relief under section 80T is concerned, we are inclined to hold that the assessee has made out a case. As already stated, the undisputed facts are that the assessee purchased land (in 1966 for Rs. 36,000 and odd) on which construction was started in 1970 and it was completed in the year 1973. The property was in use of the assessee up to 10-10-1975 on which date the said property was sold for Rs. 2,91,000 and on 1-4-1976, the assessee purchased a flat in a co-operative society for Rs. 77,782. 28. The ITO dealt with this point in paras 6, 7 and 10 of his order. We find that the land was already possessed by the assessee as back as in 1966 and the construction of building was started in 1970 and completed in 1973. Therefore, what was sold was land along with the building. Shri Gadg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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