JUDGMENT
N.K. Sud, J.
1. At the instance of the assessee, the Income-tax Appellate Tribunal, Amritsar (for short, “the Tribunal”), has referred the following question of law arising out of its order dt, 26th Feb., 1983 for asst. yr. 1976-77, for the opinion of this Court :
“Whether, in view of the facts and circumstances of the case, the Hon’ble Tribunal was justified in holding that Section 54 applies exclusively to individuals only and not to HUFs, particularly when the Finance Act, 1982, made a change in the law with regard to the applicability of Section 54 to individuals w.e.f. 1st April, 1983 ?”
2. The assessee, a Hindu undivided family (HUF), had a residential house at Swank Mandi, Amritsar. In April, 1975, it purchased another house at Dhab Khatikan at Amritsar and shifted into the same soon after the purchase. The old house at Swank Mandi was sold in February, 1976, for a sum of Rs. 40,000. The ITO worked out a capital gain of Rs. 29,475 which was charged to income-tax for the asst. yr. 1976-77. The assessee did not accept the liability as according to him, no capital gain had arisen from the sale of Swank Mandi house in view of the exemption available under Section 54 of the IT Act, 1961 (for short, “the Act”). This claim was rejected by the AO on the ground that since the family had already started living in the new house, the exemption under Section 54 of the Act was not available as it could be considered that the family had abandoned the old house at Swank Mandi and it was not used by it. Assessee preferred an appeal before the AAC, who, vide order dt. 22nd Jan., 1982, allowed the assessee’s claim holding that the benefit under Section 54 of the Act could not be disallowed merely on the ground that the assessee had shifted to the new house in April, 1975, i.e., prior to the sale of old house.
3. Revenue preferred an appeal before the Tribunal, which was allowed on the ground that the benefit of Section 54 was not available to the assessee, which was a HUF. According to the Tribunal, this benefit prior to the amendment of Section 54 w.e.f. 1st April, 1988 was available only to an individual.
4. Before adverting to the controversy, provisions of Section 54, as existing at the relevant time, may first be noticed. Section 54 of the Act, as it stood at the relevant time reads as under :
“54. Where a capital gain arises from the transfer of a capital asset to which the provisions of Section 53 are not applicable, being buildings or lands appurtenant thereto the income of which is chargeable under the head ‘Income from house property’ which in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his mainly for the purposes of his own or the parent’s own residence, and the assessee has within a period of one year before or after that date purchased, or has within a period of two years after that date constructed, a house property for the purposes of his own residence, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say :
(i) if the amount of the capital gain is greater than the cost of the new asset, the difference between the amount of the capital gain and cost of the new asset shall be charged under Section 45 as the income of the previous year, and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil.”
5. The conditions to attract the applicability of Section 54 upto the asst. yr. 1982-83 are :
(a) capital gain arising from the transfer by the assessee, and
(b) of one or more buildings or lands appurtenant thereto, the income of which is chargeable under the head “Income from house property”, and
(c) to such capital gains provisions of Section 53 are not applicable, and (d) such house property was being used by the assessee or a parent of his mainly for the purposes of his own or parent’s residence in two years immediately preceding the date of transfer, and
(e) the assessee has either within a period of one year before or after the date of transfer purchased a house property for the purposes of his own residence or has within a period of two years from the date of the transfer constructed a house property for the purpose of his own residence.
6. The crucial words appearing in the above provisions are “being used by the assessee or a parent of his”. This clearly shows that a reference was made to the assessee as an individual, otherwise, the question of ‘parent of his’ would not have arisen. Similarly, expression “for the purposes of his own or his parent’s own residence” further clarifies this position.
7. Thus, according to us, there is no ambiguity in the section so as to extend the benefit to the persons other than the individual. It may also be mentioned that the benefit was specifically extended to HUF by the Finance Act, 1987, w.e.f. 1st April, 1988 whereby the opening words “where in the case of assessee being an individual” were substituted by the words “where in the case of an assessee being an individual or a HUF”.
8. Similar view has been expressed by Delhi High Court in CIT v. K.C. Sahni (HUF) (2000) 246 ITR 299 (Del).
9. Accordingly, we are of the view that the Tribunal was justified in holding that prior to its amendment in the year 1988, the benefit of Section 54 of the Act was not available to the assessee, which is a HUF. The question is answered in the affirmative, i.e., in favour of the Revenue and against the assessee.