COMMISSIONER OF INCOME TAX Vs. P RAJASULOCHANA

JUDGEMENT

(1.) THE admitted facts in this case are that the assessee, who is an individual, had sold the property bearing door No. 3A, Longford Garden, Bangalore, on November 20, 1974. THE assessee claimed relief under section 54(1) of the Income-tax Act, 1961, which is admissible only if the assessee had used the premises which have been sold, for the assessee's or the assessee's parent's own residence for a period of two years before the sale. THE assessee had pointed out that she had lived in the ground floor of the premises from August 15, 1972, onwards. Only the first floor had been let out from 1963 to August 14, 1972, and thereafter it fell vacant and the assessee was in occupation of the first floor from March 22, 1973, till it was sold on November 20, 1974. THE Appellate Tribunal found that the property was mainly in the occupation of the assessee for her residence and, therefore, she was entitled to the relief under section 54 of the Act. THE Revenue has sought reference of the following questions "(i) Whether, on the facts and in the circumstances of the case and on a proper construction of section 54, there was justification for the exemption of a sum of Rs. 76, 912 representing the cost of the new property out of the capital gains of Rs. 1, 24, 138 ?(ii) Whether, having regard to the provisions of section 54 of the Income-tax Act, 1961, the Appellate Tribunal's finding that the property sold by the assessee was mainly used for her residence, is based on valid and relevant materials ?"* It was argued that since part of the property was let out, it could not be considered that the property was mainly used for the purpose of the assessee's residence. However, our attention was drawn to the case of CIT v. Kamala Ranganathan, where it has been held that even if a part of the property was let out, the assessee would be entitled to the relief, if the major portion of the property had been used for the residence of the assessee for two years prior to saleLearned counsel for the Revenue also placed before us a decision in CIT v. C. Jayalakshmi, where the expression "mainly" had been considered and contended that a substantial portion of the house should have been used to qualify for the relief. But we find that even in that decision a word of caution was expressed that the benefit of the provision should not be lost merely because a small portion of the building had been let out for rentTHE facts of this case are almost similar to both the decisions cited above. Hence, we see no infirmity in the findings given by the Tribunal. We, therefore, answer the questions referred to us in the affirmative and against the Revenue. THE assessee will be entitled to the costs of this reference. Counsel's fee Rs. 500.