JUDGMENT
V.K. Singhal, J.
1. The Income-tax Appellate Tribunal has referred the following question of law arising out of its order dated September 30, 1980, in respect of the assessment year 1976-77 under Section 256(1) of the Income-tax Act :
“Whether the Tribunal was right in law in holding that the words ‘the assessee’ occurring in Sub-section (1) of Section 54 of the Income-tax Act, 1961, is not referable to a Hindu undivided family and, consequently, the benefit contemplated by Section 54(1) as allowed by the Commissioner of Income-tax (Appeals) is not available to the assessee-Hindu undivided family ?”
2. The brief facts of the case are that the assessee is a Hindu undivided family and has shown capital gains on the sale of the property known as ‘Vinay Champa’. It was contended by the assessee that the construction of another building was made within a period of two years of the sale of the building and, therefore, the benefit of the provisions of Section 54 has to be given to it. The Income-tax Officer declined to give the benefit of Section 54(1) to the assessee,
3. On appeal before the Commissioner of Income-tax (Appeals), the contention of the assessee was accepted and it was held that the word “assessee’, as occurring in Section 54(1) takes within its ambit a Hindu undivided family also and, therefore, like the individuals the assessee-Hindu undivided family is also entitled to the benefit of Section 54(1) and the appeal was allowed.
4. In further appeal before the Income-tax Appellate Tribunal, the Tribunal relied on the decision of the Madhya Pradesh High Court in Shrigopal Rameshwardas v. Addl. CIT [1979] 119 ITR 980 and held that the benefit contemplated under Section 54 is available to a living person only and it is not available to the Hindu undivided family or an artificial person. Following the said decision it was held that the word “assessee” occurring in Sub-section (1) of Section 54 is referable only to a living person and not a Hindu undivided family and consequently the benefit contemplated by Section 54(1) is not available to a Hindu undivided family. Section 54(1) at the relevant time was as under :
“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 (hereinafter in this section referred to as the original asset), 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, …”
5. The exemption has been granted if the construction is made within a period of two years but the point which has to be seen is to whom the exemption is available. The words “assessee” or a “parent of his” cannot be interpreted to include a Hindu undivided family as neither does a Hindu undivided family have a parent nor could the word “his” have been used for it. Though the benefit of this section has been extended from the assessment year 1988-89 to the Hindu undivided family, the said amendment cannot be considered to be retrospective in nature.
6. The submission of Mr. Ranka on behalf of the assessee is that the word “individual” in Section 3 of the Wealth-tax Act, 1957, was held to include a Hindu undivided family, according to the decision of the apex court in WTO v. C.K. Mammed Kayi [1981] 129 ITR 307 (SC). The said decision is altogether of a different language and the word individual was considered to include a group of individuals. The language of Section 54(1) as reproduced above restricts the exemption from capital gain in respect of the house which was used by the assessee for his residence or his parent’s residence. The decision in CIT v. T.N. Aravinda Reddy [1979] 120 ITR 46 (SC), relied on, is in respect of the rights of the members to claim the benefit under Section 54(1) and is not an authority for the proposition that besides the members, the benefit would be extended to the Hindu undivided family. The decision of the Andhra Pradesh High Court in Mir Gulam Ali Khan (Late) v. CIT [1987] 165 ITR 228, has extended the meaning of the word “assessee” used in Section 54 to include his legal representative and is not a decision on the proposition that a Hindu undivided family would also be entitled to claim the relief. Similarly, the decision of the Karnataka High Court in CWT v. C.P. Appanna [1993] 202 ITR 678, is also in respect of a different provision of law of wealth-tax where the word “individual” was considered to include a “group of individuals”.
7. The different High Courts have interpreted the provisions of Section 54 in CIT v. G.K. Devarajulu [1991] 191 ITR 211 (Mad), Anam Venkata Krishna Reddy v. CIT [1988] 172 ITR 425 (AP), Shrigopal Rameshwardas v. Addl. CIT [1979] 119 ITR 980 (MP), Rowji Sojpal v. CIT [1957] 31 ITR 721 (Bom), CIT v. C. Chandrashekar [1984] 145 ITR 429 (Kar), K.I. Viswambharan and Bros. v. CIT [1973] 91 ITR 588 (Ker) [FB], Smt. Rampyaribai Narayandas v. CIT [1984] 147 ITR 223 (MP) and Kanhiyalal and Ramswaroop v. CIT [1984] 149 ITR 157 (MP), and it has been held that the benefit of exemption under Section 54(1) cannot be claimed by the Hindu undivided family.
8. In these circumstances, we are of the view that the Income-tax Appellate Tribunal was justified in coming to the conclusion that the word “assessee” occurring in Sub-section (1) of Section 54 is referable only to a living person and not to a Hindu undivided family and, consequently, the benefit contemplated by Section 54(1) is not available to a Hindu undivided family.
9. The reference is accordingly answered in favour of the Revenue and against the assessee. No orders as to costs.