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TMI Blog1986 (1) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of purchaser --------------------------------------------------------------------------------------------------------------------------------------------------- 18-1-1979 25 2nd Appellant and his son Shri Dhairyawan 16-2-1979 35 3rd Appellant and his son Shri Ambrish 8-3-1979 15 1st Appellant and his son Shri Suryakant 31-3-1979 12 1st Appellant and his wife --------------------------------------------------------------------------------------------------------------------------------------------------- The total amount invested in the purchase of these four flats was Rs. 1,77,750. In computing the capital gains arising from the sale of his residential flat on Altamount Road, the appellant claimed deduction of this amount of Rs. 1,77,750 by taking the purchase price of all the four flats together. It was contended by the assessee that 'a house property' in section 54 of the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of the residence of himself and the members of his family. The learned counsel submitted that there was a common kitchen maintained in one of the flats only and that he and his children were living together, even though the flats were purchased in the joint names of the appellant and his wife and the appellant and one of the sons, as the case may be. He further submitted that the assessee was not liable to any income-tax in the later assessment years but that the assessee's sons were income-tax assessees. In their assessments, the income from this property in respect of the flats in the joint names of themselves and their father was neither shown nor assessed. Shri Patil submitted that there was a common kitchen and a common ration card for the assessee's entire family and that, therefore, the assessee was entitled to the exemption claimed by him in respect of the investment made in the purchase of these four flats as the purchase of a house property within the meaning of section 54(1). Shri Patil next argued that assuming that these flats should be considered as different houses, yet the assessee cannot be denied the relief claimed by him as, according to him, 'a house propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that the departmental authorities were fully justified in restricting the appellant's claim for relief to only in respect of one of the flats. He, therefore, argued that there was no merit in the assessee's appeal. 5. We have carefully considered the rival submissions of the parties in the light of the authorities referred to above. In the present case, there is no dispute that the assessee is entitled to the deduction claimed by him under section 54(1) as it stood before its amendment by the Finance Act, 1982, with effect from 1-4-1983. In fact, the ITO himself has allowed the benefit of section 54 in respect of a sum of Rs. 49,500 invested in the purchase of one flat while computing the capital gains assessable in the hands of the appellant as against the appellant's claim for deduction of Rs. 1,77,750. Therefore, the question narrows down to whether the assessee is entitled to deduct the balance of Rs. 1,28,250 representing the amount invested by him out of the sale proceeds of his flat in 'Giriraj' in the remaining three flats for the purpose of his residence under section 54 in the computation of his capital gains, as claimed by him. This will depend upon the question w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision we would like to refer is to the decision of the Calcutta High Court in B.B. Sarkar's case. In this case their Lordships of the Calcutta High Court had held that the expression used in a statute should ordinarily be understood in the sense in which it is best harmonious with the object of the statute and which effectuates the object of the Legislature and that it is, therefore, necessary to read section 54 in the context of the subject-matter and its setting in the scheme of capital gains and the object of the exemption and to ascertain its true import. Their Lordships held that the main purpose of section 54 is to give relief in respect of profit on the sale of a residential house, that if the assessee is entitled to relief on the fulfilment of either of the two conditions, that is to say, either purchasing a house property within one year or constructing the house within two years, it would be improper to hold that on fulfilment of both the conditions he would be disentitled to that relief, that it is the fulfilment of two alternative conditions that is contemplated by section 54 and that where both the conditions are fulfilled within the time stipulated, the assessee wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been purchased by the assessee in the same building for the purpose of his own residence and are being used by him for that purpose only. The mere fact that the assessee had purchased them jointly either in the name of his wife or in the names of his sons would not materially affect or alter the factual position that he is the owner of all the four flats and that he is also living in them along with the members of his family. The fact that on a future date the assessee may divide these properties among the members of his family is of no relevance or consequence for the purpose of allowing relief to the assessee under section 54, since the assessee has fulfilled the conditions laid down under section 54, namely, that he had purchased a house for his own residence by investing the sale proceeds of his former residential house in the purchase of these four flats. It can hardly be denied that considering the strength of the assessee's family with ten members, the accommodation acquired by the assessee in the form of four flats in the same building is commensurate to his requirements. We are, therefore, inclined to accept the contentions of the learned counsel for the appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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