LAWS(BOM)-1993-12-8

COMMISSIONER OF INCOME TAX Vs. INDULAL C KAMDAR

Decided On December 01, 1993
COMMISSIONER OF INCOME TAX Appellant
V/S
INDULAL C. KAMDAR Respondents

JUDGEMENT

(1.) THIS reference involves consideration of interesting and important question of law as to the interpretation of S. 54 of the IT Act, 1961 as it stood prior to its amendment by Finance Act of 1982. There is a sharp difference of opinion between the view taken by the High Court of Madras and Gujarat on the one hand and the High Court of Karnataka on the other hand as indicated in later part of the judgment. The High Court of Delhi has dissented from the Madras view and has taken altogether a different view on some of the facts concerning interpretation of the abovereferred provision as would be discussed in later part of this judgment. The High Court of Madras and Gujarat has taken the view that the assessee or his parents must have used the residential house for unbroken and continuous period of two years prior to date of the transfer thereof in order to be entitled to claim exemption from levy of capital gains tax under S. 54 of the Act as it then stood. The High Court of Karnataka has taken the view that the user of the residential house by the assessee or his parents at any time within 2 years prior to date of transfer thereof was enough to entitle the assessee to claim such exemption. The High Court of Delhi appears to have taken the view that the assessee must have 'mainly' used the house as his own residence during the relevant period and if the assessee or his parents had used the residential house 'mainly' though not continuously within a period of two years prior to the transfer thereof, the assessee would be entitled to exemption from levy of capital gains tax to the extent provided in the said section.

(2.) BY this reference made under S. 256(1) of the IT Act, 1961, at the instance of the Revenue, the Tribunal has referred the following question to this Court, for its opinion.

(3.) PRIOR to 1st April, 1974, S. 54 of the Act stood as under :