RAVINDRA GUNVANTILAL SHAH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN both these references, the Income -tax Appellate Tribunal has referred an identical question to this court under section 256(1) of the Income -tax Act, 1961. The question is as under :

(2.) ON a partial partition effected in 1974, of certain properties belonging to the bigger Hindu undivided family of Gunvantlal Jivanlal Shah, the assessees which are small Hindu undivided families and Jasudben got a house property. They sold away the said property for Rs. 13,50,000 by a sale deed registered on December 4, 1980. Out of the sale proceeds, the two assessees and also Jasudben invested Rs. 3 lakhs each by purchasing house properties for residence. Before the Income -tax Officer, both the assessees claimed that capital gains which arose out of sale of the self -occupied property was exempt under section 54 of the Act. The Income -tax Officer negatived their claim on the ground that section 54 was applicable to individuals and not to a Hindu undivided family. The appeals filed before the Commissioner (Appeals) were dismissed as the Commissioner was also of the same view. The assessees, therefore, preferred appeals before the Tribunal. The Tribunal also agreed with the view that section 54 had no application as both the assessees were Hindu undivided families and not individuals and, therefore, dismissed the appeals. The assessees thereupon moved the Tribunal for referring the abovestated question to this court.

(3.) THE relevant part of section 54 as it stood then read as under :