SHRIGOPAL RAMESHWARDAS Vs. ADDITIONAL COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference under Section 256(1) of the I.T. Act, 1961, is at the instance of the assessee referring to this court for its decision the following question :

(2.) THE assessee, a HUF, consists of Radheshyam Agrawal and his two minor sons. Radheshyam Agrawal was adopted by Smt. Radhabai, widow of late Shri Radhakishan Agrawal, on August 11, 1948, by means of a registered adoption deed. Radhakishan Agrawal had executed a will, whereby he had permitted his widow to make the adoption after his death. House No. 175, at Andherdeo in Jabalpur, admittedly, was owned by and was the property of the assessee, i.e., the HUF. Shrimati Radhabai, the adoptive mother of Radheshyam Agrawal, was also a member of the HUF. THE said house No. 175 was being used by Smt. Radhabai as her residence until the same was sold by Radheshyam on April 25, 1963, for a sum of Rs. 45,000. In the return of income for the assessment year 1964-65 for which the accounting period ended on Diwali of 1963, the assessee had mentioned the fact of sale of the said house and had included a sum of Rs. 29,550 under the head "Capital gains" on sale of house property subject to further" deduction, if any. THE return was filed showing the income of Rs. 46,203.92 on July 11, 1964. At the time of assessment before the ITO, however, the assessee claimed exemption from " Capital gains " on the sale of the house property under Section 54 of the Act. THE ITO, by his order dated September 6, 1968, rejected the assessee's claim for exemption under Section 54 of the Act and brought to tax the sum of Rs. 2,9,550 under the head " Capital gains ".

(3.) THE real question for our decision is whether the word "assessee" used in Section 54 is applicable only to a living person and not to an artificial juridical person even though, for the purpose of the I.T. Act, the word " assessee " as defined in Section 2(7) of the Act includes every person, who is a "unit of assessment" and the definition of "person" in Section 2(31) of the Act is wide enough to include every artificial juridical person, including a HUF, a partnership firm, etc. In other words, even though for the purpose of the I.T, Act, a HUF or a partnership firm is a "unit of assessment" and for that reason an "assessee" as defined in Section 2(7) of the Act, the question is whether the word " assessee " used in Section 54 has to be construed equally widely. This question is to be answered, naturally, by finding the meaning to be given to the word "assessee" in the context in which it appears in Section 54 of the Act.