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TMI Blog2019 (4) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... o operate only prospectively from A.Y.2015- 2016. The sale being of a residential house does not necessarily restrict the meaning of 'a' to one. If the capital gains arise out of sale of plural of Captial Assets also, including the residential house, it would give rise to taxable capital gains. There is no reason to restrict the benefit of deduction upon investment in residential houses even though such units of residential houses are plural, which is not always so. The word 'a' would normally mean one. But it can in some circumstances include within its ambit and scope plural number also. It may be two or three or even more. Once we can hold that the word 'a' employed can include plural residential houses also in Section 54 prior to its amendment such interpretations will not change merely because the purchase of new assets in the form of residential houses is at different addresses which would depend upon the facts and circumstances of each case. So long as the same Assessee (HUF) purchased one or more residential houses out of the sale consideration for which the capital gain tax liability is in question in its own name, the same Assessee should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law in denying the exemption under Section 54 of the Act, when, unlike section 54F, there is no bar in acquiring more than one residential house to meet the needs of the appellant Hindu Undivided Family? 3.Whether on the facts and circumstances of the case and in law, the Appellate Tribunal's view that exemption under Section 54 is available in respect of one residential house only in accordance with the scope and ambit of Section 54 of the Act? 4.Whether on the facts and circumstances of the case and in law, the Appellate Tribunal's was right in law in denying exemption on the amount deposited in Capital Gains Account Scheme, which is eligible for exemption under Section 54 (2) of the Act? 3 . The facts in brief resulting in the present Appeal filed by the Assessee before us are as under: (i) The Assessee, a HUF, comprising of 11 members, Karta, his wife, two major sons with their own families including minors, sold its residential house situated at East Avani Moola Street, Madurai to one Smt.M.Jeyalakshmi for a consideration of ₹ 1,17,00,000/-, which resulted in Long Term Capital Gains to the extent of ₹ 1,00,93,149/- . The Assessee claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .11,38,193/- Stamp Duty and Registration Fee etc- ₹ 1,72,807/- Total Rs.13,11,000/- *PAN number of Tilokchand Sons (HUF) 4.Deposit under Capital Gain Account Scheme. SB-CGS 137016 with Canara Bank, South Veli Street Branch,Madurai in the name of Tilokchand Sons-HUF-Balance as on 31.07.2005-Rs.20,25,048/- 4. The Assessing Authority however denied the benefit of deduction under Section 54 of the Act to the Assessee and partly allowed only in respect of the residential house purchased by the Assessee at the highest of three purchases at ₹ 43,45,000/- viz., the property at No.24, Dhanappa Mudali Street, Madurai, and thus imposed the tax on the balance amount of capital gains which was assessed @ ₹ 57,48,149/-, after deducting a sum of ₹ 43,45,000/- from Long Term Capital Gains on sale declared by the Assessee at ₹ 1,00,93,149/-. 5. The First Appeal filed by the Assessee came to be allowed by the CIT (Appeals) following the decision of the Tribunal in the case of D.Anand Basappa Vs. ITO ( 91 ITD 53) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an ambiguity in the provision. Thus the one in favour of 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. 9.This is the judgment of the jurisdictional Tribunal and it is the latest one. Therefore, it will have precedence over any other judgment and is also binding on the authorities below it. The main substance of this judgment is that the expression 'a residential house' can also mean more than one. This is again drawn from section 13 of the General Clauses Act which clearly defines that singular shall include plural and vice versa. Therefore, the expression 'a residential house' appearing in section 54 connotes abstract plurality. Respectfully following the Judgment of the Income-tax Appellate Tribunal I hold that the appellant is entitled to claim full exemption under Section 54 of the Income-tax Act in respect of all the three properties purchased which was absolutely necessary to accommodate all the 11 members of the HUF,and investment in CGAS. In other words, the appellant is entitled to exemption of the full amount of long term capital gain of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential house were substituted by one residential house in India. The learned counsel for the Assessee, therefore, contended that even though the Assessee-HUF purchased the new properties viz., two residential houses and one plot of land in the name of the Assessee-HUF in Madurai itself, the original capital asset, viz., the residential house was sold by the Assessee-HUF resulting in capital gains, therefore, the benefit of Section 54 of the Act ought to have been given in respect of purchase of all the three new assets acquired by the Assessee, viz., two residential houses within one year and one plot of land on which the third residential house was also constructed within the prescribed period of three years. 8. He urged that prior to amendment with effect from 01.04.2015 words a residential house included within its sweep more than one residential house also, because of the provisions of Section 13 of the General Clauses Act, 1897, which stipulates that words in the singular shall include the plural, and vice versa . He submitted that object of Section 54 is to extend the benefit of exemption of deduction in the hands of the Assessee, who invests the realisation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to search for and select a particular meaning out of the diverse meanings a word is capable of, according to lexicographers. Dictionaries are not dictators of statutory construction where the benignant mood of a law, and more emphatically, the definition clause furnishes a different denotation. A statute cannot always be construed with the dictionary in one hand and the statute in the other . Regard must also be had to the scheme, context and to the legislative history. Words and expressions at times have a 'technical' or a 'legal meaning' and in that case they are understood in that sense. Judicial decisions expounding the meaning of words in construing statutes in pari materia will have more weight than the meaning furnished by dictionaries. (Principles of Statutory Interpretation by Justice G.P.Singh - pages 279 and 280). It is in this background, it is necessary to understand the meaning of the word 'a' in the context in which it is used in the said Section. 10. The words a or an and the are called Articles. They come before nouns. There are two Articles - a (or an) and the. a or an is called the Indefinite Article, because it us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the provision of Section 54(1) of the Income-tax Act discloses that when an individual-assesses or Hindu undivided family-assesses sells a residential building or lands appurtenant thereto, he can invest capital gains for purchase of residential building to seek exemption of the capital gains tax. Section 13 of the General Clauses Act declares that whenever the singular is used for a word, it is permissible to include the plural. 6. The contention of the Revenue is that the phrase 'a' residential house would mean one residential house and it does not appear to the correct understanding. The expression 'a' residential house should be understood in a sense that building should be of residential in nature and ' a' should not be understood to indicate a singular number . The combined reading of Sections 54(1) and 54F of the Income-tax Act discloses that, a non residential building can be sold, the capital gain of which can be invested in a residential building to seek exemption of capital gain tax. However, the proviso to Section 54 of the Income-tax Act, lays down that if the assessee has already one residential building, he is not enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dential houses which was purchased for the higher value of ₹ 43,45,000/- out of three purchases. She submitted that the amendment by Finance (No.2) Act 2014 with effect from 01.04.2015 to substitute the words 'one' in place of 'a' in Section 54 and 54F is only clarificatory in nature and, therefore, it would apply to the present AY-2005-2006 also. She relied upon the decision of the Punjab and Haryana High Court in the case of Pawan Arya Vs.Commissioner of Income Tax reported in [2011] 11 taxmann.com 312, wherein the Division Bench of Punjab and Haryana High Court, after referring the decision of the Karnataka High Court in the case of CIT vs. D.Anand Basappa (supra) held that while the Tribunal had not allowed the said benefit of Section 54 of the Act in respect of purchase of more than one residential house, no Substantial Questions of Law arose for consideration by the High Court. The Division Bench of Punjab and Haryana High Court sought to distinguish the Karnatanka High Court judgment and held that both the flats were and could be treated as one house, as both had been combined to make one residential house. The learned counsel for the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. [Prior to amendment by Finance Act 2014 w.e.f. 01.04.2015 amendment, the aforesaid words in brackets read like this.' Contructed, a residential house] 16. We are conscious of the fact that the questions posed for our consideration have to be answered in the context of an Assessee which is a HUF, which has a special character. It is only by deeming fiction of law that a HUF, is treated as a separate assessable entity by including the same in the definition of the word 'person' under Section 2 (31) of the Act. The definition of the word Assessee under Section 2(7) of the Act means a 'person' by whom any tax or sum of money is payable under the Act. Thus, the HUF is also a 'person' and a separate assessable entity under the Income Tax Act, 1961. 17. The purpose of Section 54 appears to allow a deduction to an Assessee, being an individual or HUF, to the extent of investment made in residential house as against the Capital Gains accruing on the sale of original residential house or sold capital asset. The word 'a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of a long-term capital asset, not being a residential house, and the assessee within a period of one year before or two years after the date of transfer, purchases, or within a period of three years after the date of transfer constructs, a residential house, then, the portion of capital gains in the ratio of cost of new asset to the net consideration received on transfer is not chargeable to tax. 20.3.Certain courts had interpreted that the exemption is also available if investment is made in more than one residential house. The benefit was intended for investment in one residential house within India . Accordingly, sub-section (1) of Section 54 of the Income-tax Act has been amended to provide that the rollover relief under the said section is available if the investment is made in one residential house situated in India. 20.4.Similarly, sub-section (1) of Section 54F of the Income-tax Act has been amended to provide that the exemption is available if the investment is made in one residential house situated in India. 20.5. Applicability:-These amendments take effect from 1st April, 2015 and will accordingly apply in relation to assessment year 2015-16 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 54 prior to its amendment such interpretations will not change merely because the purchase of new assets in the form of residential houses is at different addresses which would depend upon the facts and circumstances of each case. So long as the same Assessee (HUF) purchased one or more residential houses out of the sale consideration for which the capital gain tax liability is in question in its own name, the same Assessee should be held entitled to the benefit of deduction under Section 54 of the Act, subject to the purchase or construction being within the stipulated time limit in respect of the plural number of residential houses also. The said provision also envisages an investment in the prescribed securities which to some extent the present Assessee also made and even that was held entitled to deduction from Capital Gains tax liability by the authorities below. If that be so, the Assessee-HUF in the present case, in our opinion, complied with the conditions of Section 54 of the Act in its true letter and spirit and, therefore was entitled to the deduction under Section 54 of the Act for the entire investment in the properties and securities. Therefore, in our opinion ..... 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