The Income-tax Officer Vs. Shri P.C. Ramakrishna, Huf - Court Judgment

Excerpt:
1. these two appeals, one by the revenue and one by the assessee are directed against two different orders of the c.i.t. (appeals). the appeal of the assessee in i.t.a. no. 783/mds/2001 is against the order of the c.i.t. (appeals)-xii, chennai dated 19.2.2001 confirming the order of the assessing officer regarding refusal to recognize the partition of h.u.f. under section 171 of the i.t. act, 1961. the appeal of the revenue in ita no. 907/mds/2001 is directed against the order of the c.i.t. (appeals)-xii dated 19.2.2001 in respect of the assessrment framed by the assessing officer under section 143(3) of the act 2. first we will take up the assessee's appeal in ita no. 783/mds/01.the only issue it this appeal relates to confirming the order of the assessing officer by the c.i.t. (appeals) in regard to refusal to grant recognition to the family partition r f hindu undivided family under section 171 of the act which took place on 16.9.1994.3. the briefly stated facts of the case are that the assessee hindu undivided family of shri p.c. ramakrishna consists of shri p.c.ramakrishna, his wife and his two daughters viz., ms. samyuktha ramakrishna and ms. saranya ramakrishna. there was an oral total partition of h.u.f. on 16.9.1994 between sri. p.c. ramakrishna, his wife, smt. hymavathi ramakrishna and two daughters. under this oral partition, the two daughters, ms. samyuktha ramakrishna and ms. saranya ramakrishna were allotted rs. 12,50,000/- each and these amounts were adjusted against a sum of rs. 12,50,000/- advanced to each of them earlier as loan by h.u.f. in the said partition, all other properties of h.u.f. were allotted to sri p.c. ramakrishna. this oral partition took place on 16.9.1994 which was subsequently confirmed by a deed of declaration confirming the partition. in this deed of declaration of confirmation dated 9.3.1995 which was signed by sri p.c. ramakrishna, for himself and as guardian for his minor daughter, ms. saranya ramakrishna and elder daughter, ms. samyuktha ramakrishna, shri p.c.ramakrishna was allotted all the properties indicated in schedule ii, besides all liabilities of the huf existing on the date of partition and other liabilities that may be attributable to the undivided h.u.f.(sic)esides any other liability not specifically allocated to any other person under the times of the partition. the allocation made to ms.samyuktha ramakrishna and ms. saranya ramakrishna in oral partition dated 16.9.1994 have been indicated in schedule iii and iv of the deed of declaration confirming the partition dated 9^th march 1995. this partition was filed before the assessing officer under section 171 of the act seeking recognition of the partition as provided under the act.the petition was proceeded by the assessing officer who vide his order dated 17.3.1998 held that partition is sham one and the mere contrivance to divest the family funds to reduce the incidence of tax and accordingly he declined to grant recoqnition to the partition in exercise of his powers under section 171 of the act. the assessing officer considered the declaration of partition and in view of the parti on, sri p.c. ramakrishna who is kartha of h.u.f. is allotted in noveable properties at schedule i which consists of (a) one flat on the third floor of the property no. 9, 2nd street venus colony, alwarpet and (b) a flat at ground floor of the very same premises. apart from the above in noveable properties, he has been allotted all shares, bank balances, all monies receivable by family together with corresponding liabilities and both the daughters, ms. samyuktha ramakrishna and ms.saranya ramakrishna were allotted a sum of rs. 12,50,000/- each which was reported to be the loans due from these daugheters to the h.u.f.before the assessing officer, it was claimed that the partition is on the basis of recently brought out amendment to the hindu succession act i.e. hindu succession (tamilnadu succession act, 1989) by t.n.assembly. the assessing officer has rejected the claim of the assessee by discussing the amendment as well as the "inherent right" and the term "sui-juris", whether the right to property and partition is to the limited extent qua the daughters for enforcing a clear right over the property or at par with the sons of the family in the event of partition and he has held as under: what has been amended is only hindu succession act which provides for succession by survivorship of the family members which is 'spes successions". the provision obtaining prior to the amendment was that in regard to coparcenery property only the coparceners (male members) had the right to claim partition after providing for the marriage and maintenance expenses of the female members of the huf. by making an amendment to the succession act, what the legislature has intended to enact was, to provide an opening by way of right for the female members of the family out of the ancestoral property belonging to the family, whenever a partition takes place. the contradistinction in this context is that a mere right and not inherent right has been provided which is "sui-juris" to the limited extent of enforcing a clear right over the property, on par with the sons of the family, in the event of partition. in this case, partition is reported to have been effected unilaterally and recourse is had to be amendment made by the tamilnadu amendment act. the amendjment does not enjoin a right on the female members to ensure an inherent right of partition.another reason to reject the assessee's claim of partition is that the assessee's wife, smt. hymavathi ramakrishna has not been provided any sum for her maintenance in the declaration of partition. in view of these reasons, he refused to recognize the partition under section 171 of the act. aggrieved, the assessee preferred an appeal before the c.i.t.(appeals). the c.i.t. (appeals) has held that the provisions of section 171 of the act cannot confer any right to a partition which is not available to any person under the hindu law and according to him, under the hindu law, there should be a partition between two or more coparceners and therefore, it cannot be a partition where the h.u.f consists of only one coparcener. for this, he relied on the following case law:kundan lal v. cit finally, he held that even after introduction of amendment in tamil nadu in 1989, the daughters cannot claim partition in the joint family property of the huf and accordingly, he confirmed the action of the assessing officer. aggrieved, the assessee is in second appeal before the tribunal.4. before us, the ld. counsel for the assessee filed a paper book containing the following documents at pages 1 to 21: 1. the hindu succession (tamil nadu amendment) act, 1989 -act no. 1 of 1990 3. statement of facts and grounds of appeal before cit(appeals) - in the appeal against order under section 171 of the act - may be taken as written submissions in the present appeal before the hon'ble itat. 4. deed of declaration dt.09.03.95 confirming oral partition on 16.9.1994.5. the ld. counsel for the assessee relied on the hon'ble apex court judgment in the case of s. sai reddy v. s. narayanan reddy and ors.[1991] 3 scc 647 and argued that what has been considered by the hon'ble apex court is the amendment by introduction of section 29-a in hindu succession act, 1956 as amended by the state legislature by hindu succession (a.p. amendment) act, 1986). similar is the amendment of the hindu succession (tamil nadu amendment) act, 1989 as per chapter ii a, succession by survivorship. he further argued that the hon'ble apex court has laid down the principle regarding the concept of partition that the legislature has in mind cannot be equated with a mere severance of the status of the joint family which can be effected by an expression of a mere desire by a family member to do so. the partition that the legislature has in mind is a partition complete in all respects which has brought lebout an irreversible situation. where a partition of the property is effected by metes and bounds, the daughters cannot be deprived of the benefits conferred by the act.according to the id. counsel for the assessee, the hon'ble supreme court has held that the legislation is beneficial and placed on the statute book with the avowed object of benefiting daughter which is a vulnerable section of the society in all its stratas, it is necessary to give a liberal effect to it. further he argued that as per the amended provisions in the hindu succession (tamilnadu) act, the difference between daughter and son of the mitakshara hindu family is removed and the daughter is conferred the coparcenary rights in the joint family property by birth in the same manner and to the same extent as the son. in view of the new provisions, daughter is entitled to claim partition of h.u.f. hence, family partition of shri p.c.ramakrishna is perfectly in accordance with the provisions of law and the same should be recognized as a family partition under section 171 of the act. accordingly, he urged the bench to recognize the partition and reverse the orders of the lower authorities.6. the id. departmental representative relied on the orders of the lower authorities and supported the orders as these are based on judicial pronouncements as mentioned in the order of the c.i.t.(appeals). accordingly, he urder the bench to confirm the orders of the authorities below.7. we have heard the rival contentions. the facts are undisputed. first of all, we have to go through the case law of the hon'ble apex court cited supra wher in by way of amendment, section 29-a was introduced by hindu succession (a.p. amendment) act, 1986. the hon'ble apex court has considered the newly inserted section 29-a and the same reads as under: 29-a equal rights to daughter in coparcenary property. - notwithstanding anything contained in section 6 of this act - (i) in a joint hindu family governed by mitakshara law, the daughter of a coparcener shall by birth become a coparcener in her own right in the same manner as the son and have the same rights in the coparcenary property as she would have had if she had been a son; inclusive of the right to claim by survivorship; and shall be subject to the same liabilities and disabilities in respect thereto as the son; (ii) at a partition in such a joint hindu family the coparcenary property shall be so divided as to allot to a daughter the same share as is allottable to a son; provided that the share which a predeceased son or a predeceased daughter would have got at the partition if he or she had been alive at the time of the partition shall be allotted to the surviving child of such predeceased son or of such predeceased daughter: provided further that the share allottable to the predeceased child of a predeceased son or of a predeceased daughter, if such child had been alive at the time of the partition, shall be allotted to the child of such predeceased child of the predeceased son or of the predeceased daughter as the case may be; (iii) any property to which a female hindu becomes entitled by virtue of the provisions of clause (i) shall be held by her with the incidents of coparcenary ownership and shall be regarded, notwithstanding anything contained in this act or any other law for the time being in force, as property capable of being disposed of by her by will or other testamentary disposition; (iv) nothing in clause (ii) shall apply to a daughter married prior to or to a partition which had been effected before the commencement of the hindu succession (andhra pradesh amendment) act, 1986.8. the hon'ble apex court has considered the issue regarding the preliminary decree which has already been passed prior to the amended provisions and the high court committed an error in directing the trial court to allot shares to the unmarried daughters. this was pleaded before the hon'ble apex court. the hon'ble apex court has admitted that under the unamended act, unmarried daughters of a hindu mitakshara family were not entitled to any share in the joint family property. but the state of andhra pradesh removed the injustice to the daughters so far as that state was covered by newly introduced section 29a in the act and the hon'ble apex court has held in para 6 that by way of amendment, the daughter is conferred the coparcenary rights in the property by birth in the same manner and to the same extent asihe son, para 6 of the judgment reads as under: 6. it is obvious that under the aforesaid provision, the difference between daughter and son of the mitakshara hindu family is removed and the daughter is conferred the coparcenary rights in the joint family property by birth in the same manner and to the same extent as the son. she is, therefore, now entitled to claim partition and her share in the family property. the amending provision is a beneficial legislation which, among other things, is also directed towards eradicating social evils such as dowry and dowry deaths. it also achieves the constitutional mandate of equality between sexes. 7. the question that falls for our consideration is whether the preliminary decree has the effect of depriving respondents 2 to 5 of the benefits of the amendment. the learned counsel placed reliance on clause (iv) of section 29-a to support his contention that it does. clause (ii) of the section provides that a daughter shall be allotted share like a son in the same manner treating her to be a son at the partition of the joint family property. however, the legislature was conscious that prior to the enforcement of the amending act, partitions will already have taken place in some families and arrangements with regard to the disposition of the properties would have been made and marriage expenses would have beer, incurred etc. the legislature, therefore, did not want to unsettle the (sic) positions. hence, it enacted cause (iv) providing that clause (ii) would not apply to daughter married prior to the partition or to a partition which had already been effected refore the commencement of the amending act. thus if prior to the partition of family property a daughter had been married, she was disentitled to any share in the property. similarly, if the partition had been effected before september 5, 1985 the date on which the amending act came into force, the daughter even though unmarried was not given a share in the family property. the crucial question, however, is as to when a partition can be said to have been effected for the purposes of the amended provision. a partition of the joint hindu family can be effected by various modes, viz., by a family settlement, by a registered instrument of partition, by oral arrangement by the parties, or by a decree of the court. when a suit for partition is filed in a court, a preliminary decree is passed determining shares of the members of the family. the final decree follows, thereafter, allotting specific properties and directing the partition of the immovable properties by metes and bounds. unless and until the final decree is passed and the allottees of the shares are put in possession of the respective property, the partition is not complete. the preliminary decree which determines shares does not bring about the final partition. for, pending the final decree the shares themselves are liable to be varied on account of the intervening events. in the instant case, there is no dispute that only a preliminary decree had been passed and before the final decree could be passed the amending act came into force as a result of which clause ii) of section 29-a of the act became applicable. this intervening event which gave shares to respondents 2 to 5 had the effect of varying shares of the parties like any supervening development. since the legislation is beneficial and placed on the statute book with the avowed object of benefiting women which is a vulnerable section of the society in all its stratas, it is necessary to give a liberal effect to it. for this reason also, we cannot equate the concept of partition that the legislature has in mind in the present case with a mere severance of the status of the joint family which can be effected by an expression of a mere desire by a family member to do so. the partition that the legislature has in mind in the present case is undoubtedly a partition completed in all respects and which has brought about an irreversible situation. a preliminary decree which merely declares shares which are themselves liable to change does not bring about any irreversible situation. hence, we are of the view that unless a partition of the property is effected by metes and bounds, the daughters cannot be deprived of the benefits conferred by the act. any other view is likely to deprive a vast section of the fair sex of the benefits conferred by the amendment. spurious family settlements, instruments of partitions not to speak of oral partitions will spring up and nullify the beneficial effect of the legislation depriving a vast section of women of its benefits.9. now, we will go through the hindu succession (tamilnadu amendment) act which came into force on 25^th day of march, 1989 and the hindu succession act, 1956 as applicable to the state of tamilnadu amended by hindu succession (tamilnadu amendment act) 1989. chapter il-a - succession by survivorship as amended reads as under: equal rights to daughter in coparcenary property: 29-a. notwithstanding anything contained in section 6 of this act - (i) in a joint hindu family governed by mitakshara law, the daughter of a coparcener shall by birth become a coparcener in her own right in the same manner as a son and have the same rights in the coparcenary property as she would have had if she had been a son, inclusive of the right to claim by survivorship; and shall be subject to the same liabilities and disabilities in respect thereto as the son ; (ii) at a partition in such a joint hindu family the coparcenary property shall be so divided as to allot to a daughter the same share as is allowable to a son: provided that the share which a pre-deceased son or a pre-deceased daughter would have got at the partition if he or she had been alive at the time of the partition shall be allotted to the surviving child of such pre-deceased son or of such pre-deceased daughter: provided further that the share allottable to the pre-deceased child of a pre-deceased son or of a pre-deceased daughter, if such child had been alive at the time of the partition, shall be allotted to the child of such pre-deceased, child of the pre-deceased son or of the pre-deceased daughter, as the case may be: (iii) any property to which a female hindu becomes entitled by virtue of the provisions of clause (i) shall be held by her with the incidents of coparcenary ownership and shall be regarded, notwithstanding anything contained in this act or any other law for the time being in force, as property capable of being disposed of by her by will or other testamentary disposition. (iv) nothing in this chapter shall apply to a daughter married before the date of the commencement of the hindu succession (tamil nadu amendment) act, 1989 (v) nothing in clause (ii) shall apply to a partition which had been effected before the date of the commencement of the hindu succession (tamil nadu amendment) act, 1989. interest to devolve by survivorship on death. 29.b when a female hindu dies after the date of the commencement of the hindu succession (tamil nadu amendment) act, 1989, having at the time of her death, an interest in a mitakshara coparcenary property by virtue of the provisions of section 29-a, her interest in the property shall devolve by survivorship upon the surviving members of the coparcenary and not in accordance with this act: provided that if the deceased had left any child or child of a pre-deceased child, the interest of the deceased in the mitakshara coparcenary property shall devolve testamentary or intestate succession, as the case may be, under this act and not by survivorship.10. prior to the amendment to the hindu succession act, 1956 by the hindu succession (tamil nadu amendment) act, 1989, the rules of ancient hindu law geverning the rights of the women in the family in the mitakshara school of hindu law, no doubt female members had no right to claim partition of the family properties but had a right to maintenance and even the share in the property can be allotted equal to that of a son. this custom is still prevalent under the benares and bombay school of mitakshara hindu law. however, in southern india, or madras school of mitakshara hindu law, this custom has became obsolete as observed by the learned author mulla on hindu law at para 3 & 15 of page 436 of 15^th edition but diverse view has been taken in the case of k.v.thangavelu v. the court of wards, madras and ors. 1946 - 2 mlj 143 mcs at page 148 wherein their lordships of madras high court have observed as under: no doubt as pointed out in mayne's hindu law (10th edition) page 543, the rules of the mitakshara allotting a share to wives, widows, mothers and grandmothers have became obsolete in southern india owing to the influence of smriti chandrika and saraswathi vilasa, but in the northern provinces, the rules are still in force.the above decision clearly indicates that as far as the southern or madras school of mitakshara law is concerned, the females in the family have got no right to a share in the family property in the event of partition.11. similarly, this question again came up for consideration before the karnataka high court while dealing with tax laws itself, in the case of ramachandra bhat v. controller of estate duty 123 itr 841 karnataka. in the above case, the issue involved is as under: 11.1 consequent to the death of one govinda bhat, the question arose as to the e tate passing on death chargeable to estate duty under the estate duty act, 1953 the family of said govinda bhat at the time of his death consisted of himse of, his wife and two sons and he was the manager of joint hindu family. befor the asst. controller of estate duty it was contended by the accountable person that only 1/4^th interest in the joint family property passed on the death of govin a bhat on the basis that the wife of govinda bhat also had a share in the joint family property. the asst. ced rejected the said contention. the appellate ced also rejected it in the appeal filed by the accountable person. aggrieved by the order of the appellate controller, the accountable person filed an appeal before the tribunal, bangalore bench. in that appeal, in addition to the contention referred to above, he raised a further contention that by virtue of section 33(1)(n) of the act, the value of the interest of the lineal descendants in the residential house in which the deceased was living, was also not liable to be included for the purpose of rate under section 34(1)(c) of the act. the tribunal held that the entire value of the residential house had to be excluded from consideration both under section 34(1)(a) and under section 34(1)(c), in view of section 33(1)(c) of the act. but the contention of the accountable person that the wife had also a share in the joint family property during the lifetime of govinda bhat was rejected.11.2 against the said order of the tribunal, the accountable person went on reference to the high court on the question whether the tribunal was right in law in holding that the wife of the deceased had no share in the hindu undivided family property and also no amount was to be allotted towards maintenance. this reference was decided by the karnataka high court in the case reported in 123 itr 841. while deciding the issue the hon'ble court held as follows: the second question relates to the contention of the accountable person that on the death of govinda bhat only 1/4th share in the coparcenary property passed and not 1/3^rd as held by the authorities under the act. this contention is based on the assumption that the wife of govinda bhat had a share in the family property before his death. since it is admitted that the joint family in question was governed by the madras school of mitakshara law, it has to be held that the wife of govinda bhat had no share in the family property during his life time.the above case law clearly indicates the preposition of law that under the madras or southern school of mitakshara law, a female member such as wife had no share in the property of a hindu undivided family. in the circumstances, it is submitted that the partition in the present case does not suffer from any legal infirmity and has to be taken as a total partition and not a partial partition.11.3 incidentally, the madras high court in the case of shenbagammal v.ced 162 itr 445 has held that while under general rules of hindu law, the husband has got an obligation to maintain his wife and this obligation is independent of possession of any property by the husband, this obligation is not fixed or fastened to any particular property.this right of the wife to be maintained by the husband and the obligation of the husband to maintain the wife will not, by themselves create any charge or encumbrance over the property of the husband and unless and until it is made a charge on the property, it is not enforceable, like any other liability.11.4 while the above decision does not deal directly with the right of the wife in the family property, still it is indicative of the preposition that maintenance of a wife is the personal obligation of the husband which does not result in any share in the husband's property, which is indicative of the fact that a wife has got no legal right to claim any share in the husband's property whether it is his individual property or his right in the joint family property.12. the assessing officer while refusing recognition to the partition has also stated that the partition was by reason of unilateral action on the part of the father and hence cannot be accepted as genuine.factually, this view of the assessing officer is incorrect and has probably arisen as a result of the misunderstanding on the part of the assessing officer in interpreting the provisions of tamil nadu amendment act, 1989, incorporating section 29 a to the hindu succession act, 1956. the assessing officer has started with the preposition that the effect of the amending act of 1989 is not to make the daughters coparceners but only confers on them a right to claim a share equal to that of the coparcener (male members) in the event of partition. a reading of sub-section (1) of section 29 a clearly indicates that the daughter of a coparcener shall become a coparcener in her own right in the same manner as a son and have the same rights in the coparcenary property as she would have had if she had been a son, inclusive of the right to claim by survivorship and shall be subject to the same liabilities and disabilities in respect thereto as a son. in the circumstances and in the light of the fact that one of the daughters of sri p.c. ramakrishna, namely ms. samyuktha had attained majority and has signed the declaration dt. 9.3.96 confirming the partition on 16.9.94. the assessing officer is factually wrong in holding that the partition was by unilateral action of the father and hence cannot be accepted as genuine. further, the assessing officer has also said that since no provision was made for the maintenance and marriage of daughters in the partition, this will be another ground for holding that the partition was not genuine. this conclusion of the assessing officer also flows from the misunderstanding of the provisions of the amending act by the assessing officer. once the daughter becomes coparcener in her own right with the same rights and liabilities as that of a son with a right to claim partition and share in the family property, it is not necessary to provide separately for the maintenance and marriage of the said daughters in the family partition. after all, under the pre-amended provisions, it has never been stated that the provision for maintenance and marriage of sons has to be made in the family partition.13. in view of the above discussions, considering the provisions of hindu succession act, 1956 as amended by hindu succession (a.p.amendment) act, 1986, introduction of section 29a which was confirmed by the hon'ble apex court in the case of s. sai reddy (supra) and also the amendment of hindu succession 1956 by the hindu succession (t.n.amendment) act 1989, which are the provisions similar to the hindu succession (a.p. amendment) act, we are of the considered opinion that the difference between daughter and son of the mitakshara hindu family is removed and the daughter is conferred the coparcenary rights in the joint family property by birth in the same manner and to the same extent as the son. daughter is entitled to claim partition and her share in the joint family property i.e. h.u.f. property, is without dispute. in the present case, sri p.c. ramakrishna, h.u.f. apart from p.c. ramakrishna, karta, two daughters viz., ms. samyuktha ramakrishna and ms. saranya ramakrishna along with his wife, smt. hymavathi ramakrishna are the members of h.u.f. after the amendment of hindu succession (t.n. amendment) act, 1989 vide clause (i) and (ii), the daughter in h.u.f. shall by birth become a coparcener in her own right in the same manners as the son and have the same rights in the coparcenary property as she would have had if she had been a son, inclusive of the right to claim by survivorship and shall be subject to liabilities and disabilities in respect thereto as the son. she is entitled to partition of a joint hindu family coparcenary property and in such partition, hindu family coparcenary property shall be so divided to a daughter so as to allot the same share as is allowable to a son. the amendment brought out w.e.f. 25^th march, 1989 has removed the distinction as regards to a son or a daughter in respect thereto coparcenary property of joint hindu family as governed by mitakshara law and daughters are clearly treated as coparceners. in the present case, there are two daughters to the karta. hence, there are three coparceners in the joint hindu family and the daughters have been allotted a sum of rs. 12,50,000/-i.e. ms. samyuktha ramakrishna & ms.saranya ramakrishna each. hence, we find no infirmity in the partition of the joint hindu family which is in accordance with the hindu succession (t.n. amendment) act, 1989. in view of this, we hold that the partition is as per the amended provisions of hindu succession (t.n. amendment) act, 1989. hence, there is no reason to refuse registration to family partition of joint hindu family property.accordingly, the partition of h.u.f. is recognized under section 171 of the act and the assessing officer is directed to pass a consequential order recognizing the partition of the h.u.f. in the result, the assessee's appeal is allowed.14. ita no. 907/mds/01 : in this appeal of the revenue, the first issue is regarding estimation of fair market value as on 1.4.1981 for the purpose of computation of long term capital gains on account of sale of property i.e. house property at no. 24, cathedral road, chennai.15. we have heard the rival contentions and gone through the facts of the case the briefly stated facts are that the assessee claimed fair market value of the property as on 1.4.1981 at rs. 4.24 lakhs per ground for the purpose of computation of capital gains on this property. the assessee has adopted the value on the basis of valuation made by the registered valuer, m/s. k.b. subramaniam associates who vide its report dated 3.9.1996 has given the following reasons for valuing the property at rs. 4.24,000/- per ground: for valuation of the land, the following sale instance has been relied upon document no. 6020/85 dated 235-12-85, property at no. 82, poes garden, vacant land of 2 1/2 grounds purchased by m/s. crompton greaves for rs. 15,00,000/- which works out to rs. 6,00,000/- per ground. the sale instance property is in poes garden, and the instance is as on december 1985, working back for 1981 at 20% rate of inflation per year, for the last 4 1/2 years i.e. april 1981 to december 1985 the cost of land as on 1-4-1981 will be rs. 2,65,000/-per ground. the sale instance property is in a residential area. the subject property is on cathedral road where the possible f.s.i is rs. 2.5 times, against 1.5 times available at poes garden. therefore the land value of poes garden is to appreciated by 60% (1.5 times - 2.5 times) which works out to rs. 4,24,000/- per ground for the subject property as on 1-4-1981 and the same is adopted in this valuation.during the course of assessment proceedings, the assessing officer deputed an inspector for verification of the fair market value and the inspector reported on 26.12.1997 on the basis of information gathered from the registering authority and the guide-line value of various property at cathedral road between rs. 75,000/- and rs. 1,00,000/-.when this is pointed out to the assessee's representative, he argued before the assessing officer that the property is in a dominant location where a reputed jewellery shop, petrol bunk and drive-in ressaurant are located. the assessee's representative further argued that there is also a prime locality just adjacent to the famous women's college-stella maris. it was also argued that opposite to the assessee's property a seven storeyed building i.e. crowns court has also come up. in view of this, he argued that due to loration advantage coupled with hotel facility and good transportation the value of the property is very high and this property is a block piece of land of more than 4 grounds, eventually the value is higher. in spite of these arguments, the assessing officer estimated the fair market value at rs. 2 lakhs per ground only. aggrieved, the assessee preferred an appeal before the c.i.t.(appeals). the c.i.t.(appeals) adopted the value at rs. 3.5 lakhs per ground as against rs. 2 lakhs per ground estimated by the assessing officer. the c.i.t.(appeals) has gone into the arguments of the assessee before the assessing officer as wiii as before him. he has also found that the valuation made by the assessee was based on approved valuer's report. even he considered the argument of the assessee that the property is located in a better situation and compared to the sale in tances brought out by the inspector in his report. after taking into consideration all these facts, he adopted the value of the property at rs. 3.5 lakhs per ground. before us also, the assessee's representative reiterated the arguments which were advanced before the lower authorities. in view of the above discussions, we are of the considered opinion that the assessee's property is in prime location where a reputed jewellery shop, petrol bunk, drive-in restaurant, women's college-stella maris and a seven storeyed building i.e. crowns court are located. in our view, the adoption of value by the assessee is based on the valuation made by the registered valuer who vide its report dated 3.9.1996 has given the reasoning that the property in question, cathedral road where possible f.s.i. is 2.5 times against 1.5 times available at poes garden. the sale instances given by the assessee is of residential property. according to the assessing officer, he deputed an inspector of income-tax who has brought out the value of the property of cathedral road between rs. 75,000/- and rs. 1,00,000/-. he has not given any basis for the adoption of value at rs. 2 lakhs and even the department has not referred the matter to the valuation cell for knowing the fair market value as on 1.4.1981. hence, we are of the view that the c.i.t.(appeals) has rightly estimated the fair market value as on 1.4.1981 at rs. 5 lakhs and we do not find any infirmity in the order of the c.i.t.(appeals) and the same is confirmed. the revenue fails on this ground.16. the next issue in this revenue's appeal is as to whether the assessee is enti led to deduction under section 54 of the act in view of capital gains in regard to sale of two separate residential flats at cathedral road which are situated one in the ground floor and other in the third floor or not.17. we have heard the rival contentions on this issue and gone through the facts of the case. the briefly stated facts of the case are that the assessee claimed exemption of capital gains arising out of sale of property at no. 24,cathedral road, chennai measuring 4 grounds and 839 sq.ft. with house at rs. 1,10 crores. the assessee claimed exemption under section 54 of the act for the flats purchased by the assessee in ground floor and third floor. the assessee, under the term of agreement entered into with m/s. alacrity housing ltd. has agreed to receive part of sale consideration of rs. 1.10 crores in the form of two flats as detailed below: i. a flat of 247.122 sq.mtrs. (2660 sq.ft.) on the third floor with 11.148 sq.mtrs. (120 sq.ft.) undivided share in the recreation room valued at rs. 32,66,500/-. ii. a flat of 154.50 sq.mtrs. (1662 sq.ft.) on the ground floor with 6.968 sq.mts. (75 sq.ft. undivided share in the recreation room valued at rs. 20,40,975/-.the assessee is accordingly entitled to total area of 4332 sq.ft. of flat together with 195 sq.ft. undivided share in the recreation room.the assessee has taken two different floors as the assessee's mother who is entitled to be provided with accommodation by the assessee is to stay in the property was finding it difficult to stay in the upper floor due to old age and health, required the accommodation in the ground floor. as a matter of fact, the assessee's mother, smt. seela sokar is occupying the ground floor and sri p.c. ramakrishna along with his wife and daughters occupied the third floor. the assessee claimed exemption under section 54 of the act. in view of the above facts, the assessing officer allowed the exemption in regard to the investment in house property in respect of third floor flat and recomputed the capital gains. aggrieved, the assessee preferred an appeal before the c.i.t.(appeals) who allowed the claim of the assessee. aggrieved, the revenue is in second appeal before the tribunal.18. the id. departmental representative relied on the grounds of appeal as well as the order of the assessing officer. on the other hand, the id. counsel for the assessee, shri t.n. seetharaman argued that section 54f which is para materia with section 54f of the act clearly restricts the claim for exemption of one residential house but there is no such restriction under section 54f of the act. in view of this, he argued that there is no case for restricing the claim for relief under section 54 of the act to one house. in support of this, he relied on the circular dated 25.3.1997. he also relied on the following decisions of the various high courts and the tribunals: 1. cit v. dr. laxmichand narpal nagda (deceased) [1995] 211 itr 804 (bom.)cit v. mrs. hilla j.b. wadia 19. we have considered the submissions of both the sides. the facts are undisputed. first of all we have gone through the provisions of section 54(1) which reads as under: section 54 profit on sale of property used for residence - (1) [subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a hindu undivided family], the capital gain arises from the transfer of a "long term capital asset" being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "income from house property" (hereinafter in this section referred to as the original asset), and the asset has within a period of [one year before or two years after the date on which the transfer took place purchased], or has within a period of three years after that date constructed, a residential house, 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, - further, we have also gone through the provisions of section 54f(1) which reads as under: section 54f capital gain on transfer of certain capital assets not to be charged in case of investment in residential house -(1) [subject to the provisions of sub-section (4), where, in the rase of an assessee being an individual or a hindu undivided family], the capital gain arises rom the transfer of any long term capital asset, not being a residential house (hereafter in was section referred to as the original asset), and the assessee has, within a period of one (sic) before or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereinafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section that to say,- provided that nothing contained in this sub-section shall apply where the assessee owns on the date of the transfer of the original asset, or purchases, within the period of one year after such date, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "income from house property", other than the new asset." on a comparison of the phraseology of sections 54(1) and 54f of the act as above, it appears that the subject matter of the transfer in section 54(1) of the act is residential house whereas in section 54f of the act is any long term capital asset, not being a residential house, whereas in order to gain full exemption under section 54(1)(a) of the act, only the whole of the amount of capital gains arising out of transfer of the original asset, as distinguished from the gross or net consideration for the transfer, need be invested in the purchase of construction, as the case may be, of the new asset. the requirement under section 54f(1)(a) of the act demands the investment of the entire "net consideration" on such purchase or construction, as the case may be. it does not affect another residential house having already been allowed exemption. whereas in the case of section 54f of the act benefit, such as purchase or construction of another residential house forfeits the already-allowed exemption. the assessee can claim exemption under section 54f of the act only to one residential house. there is distinction between section 54 and 54f of the act. in view of the facts narrated above, we have to see as to whether the assessee is entitled for deduction under section 54 of the act in respect of both the flats acquired or not. the deduction under section 54 is allowable in respect of a residential house as worded in this section. here, the assessing officer has denied exemption only on the basis that residential house means, one residential house and not more than one. but the contention of the assessee is that residential house means any residential house and not only one residential house. the assessee in this case acquired two flats, one on ground floor and the other on third floor. the reasons stated by the assessee for acquiring the ground floor is that the assessee's mother who is entitled to be provided with accommodation by the assessee is to stay in the property and she was finding it difficult to stay in the upper floor due to her old age and health. the assessee's mother is staying in the ground floor and they are having common kitchen on ground floor flat and there is no kitchen on third floor flat. these flats fall under one building i.e. ground floor and third floor. the desire of the assessee is that these two flats are to be used as one house as it is seen from the case law of the tribunal of the bombay bench in the case of k.g. vyas (supra). the tribunal allowed the claim of the assessee under section 54 of the act by holding that since all the four apartments were in one building though on different floors under occupation of the same family. further it was held as under: 9. in the present case all the four flats have been purchased by the assessee in the same building for the purpose of his own residence and are being used by him for that purpose only. the mere fact that the assessee had purchased them jointly either in the name of his wife or in the names of his sons would not materially affect or alter the factual position that he is the owner of all the four flats and that he is also living in them along with the members of his family. the fact that on a future date the assessee may divide these properties among the members of his family is of no relevance or consequence for the purpose of allowing relief to the assessee under section 54, since the assessee has fulfilled the conditions laid down under section 54, namely, that he had purchased a house for his own residence by investing the sale proceeds of his former residential house in the purchase of the assessee's family with ten members, the accommodation acquired by the assessee in the form of four flats in the same building is commensurate to his requirements. we are, therefore, inclined to accept the contentions of the learned counsel for the appellant and hold that the assessee is entitled to full relief under section 54 in respect of the entire amount of rs. 1,77,750/ as invested by him in the purchase of four flats for the purpose of his own residence under section 54(1). accordingly, we accept the contentions of the learned counsel for the assessee and direct the ito to allow deduction of the balance of rs. 1,28,250 in the computation of capital gains under section 54(1) to the appellant.20. now, the only issue that arises for consideration is that whether a residential house should be treated as allowable under section 54 or whether more than one residential house can be considered as allowable under section 54 of the act. a bare leading of section 54 of the act, clearly infers that there is no bar to claim deduction for more than one residential house and if the assessee is holding a residential house and on sale of such property, the assessee requires another property, the a' essee is eligible for deduction under section 54 of the act. if the assessee, in the same year sell a residential house and acquires a house property out of such transacton, still the assessee is eligible for deduction under section 54 of the act. there is no bar in acquiring more than one house residential house under section 54 unlike under section 54f of the act. it can easily be held that if the assessee purchases two houses to meet his needs out of the sale proceeds of one residential house, he cannot be denied exemption under section 54 of the act. what is to be examined is whether the other conditions as specified in section 54 are satisfied at the time of investment in each of the property or not. in the present case, it is clear that these two flats are acquired simultaneously under the terms of agreement entered into on 29^th october, 1993 and on the same date the possession of these flats were given in the same year, simultaneously. the meaning of term 'residential house' as used in section 54 of the act can be understood by referring the decision of the allahabad high court in the case of shiv narain chaudhari (supra) wherein the hon'ble allahabad high court has held that exemption under section 5(1)(vi) of the w.t. act, 1957 is allowable in respect of one house or part of house to the assessee and the relevant discussion in pages 107 & 108 reads as under: to attract the exemption under clause (iv) of section 5(1) of the act the house owned by the assessee should be used by the assessee exclusively for residential purpose in the present case the assessee is a hindu undivided family consisting of four adult male members. each of them is occupying one residential unit in the building bearing door nos. 92 and 92-a it is well settled that though a hindu undivided family is ordinarily joint not only in estate but also in food and worship, the members of such family need not have a common residence. in other words, the family may continue to remain undivided even though different members of the family are residing separately if a building otherwise comes within the meaning of the word "house", the mere fact that different members of the hindu undivided family who own that building, are living separately in different self-contained portions thereof, will not, in our opinion, constitute that building into many houses.further, the hon'ble tribunal in the case of d. anand basappa (supra) has discussed the words and phrases "a residential house' which reads as under: 7.6 it is also observed in mrs. gulshanbanoo r. mukhi's case (supra) that the intention of the legislature is clear to grant exemption for only one house. we are unable to find any such intention anywhere stated it cannot be presumed that if the legislature intended more than one residential unit, it could have used the words 'house or houses'. it can equally also be held that if the intention of legislature is to restrict the deduction for only one house, then instead of using the word 'a residential house' the words 'one residential house' would have been used therein. it may also be noted that under general clauses act, as per section 13, singular shall include plural and vice versa. reliance placed on the decision of hon'ble supreme court in vegetable products limited case to the extent that if the language of the statute is plain, the fact that the consequences of giving effect to it may lead to absurd result, is of no effect in interpreting the provisions. however, the same decision also holds that if there is ambiguity in interpretation of the provisions, the one which is in favour of the assessee, should be adopted. the varying decisions at extreme ends can definitely result into saying that there is an ambiguity in the provision. thus the one in favour of the assessee is to be adopted rather than applying a strict meaning by saying that there is no ambiguity. thus this issue is decided in favour of the assessee.even the cbdt has discussed the scope and effect of amendment on section 54 with effect from 1.4.1983 which is explained in circular no.346 dated 30.6.1982 138 itr(st.) 23) which reads as under: modification of the provisions relating to exemption of capital gains on transfer of self-occupied house property on investment in other house property for self-occupation -section 54. 19.1 under section 54 of the income-ax act, capital gains arising on the transfer of a house property which in the two years immediately preceding the date of its transfer was used by the assessee or a parent of his for self-residence is exempted from income-tax if the assessee, within a period of one year before or after that date, purchases or within a period of two years after the date of such transfer constructs a house property for the purpose of his own residence. the exemption of capital gains is restricted to the amount of such capital gain utilized for the purchase or construction of the new house property. where the amount of capital gain is greater than the cost of the house property so purchased or constructed, the balance amount of the capital gains is charged to tax. if, however, the amount of capital gain is equal to or less than the cost of the house property purchased or constructed, the capital gain is completely exempted from income-tax. if such house property purchased or constructed is transferred within a period of three years of its purchase or construction the capital gain on the property so transferred is calculated by reducing the cost of its acquisition by the amount of the capital gain exempted torn income-tax. 19.2 the conditions of self-occupation of the property by the assessee or his parent before its transfer and the purchase or construction of the new property to be used for the residence of the assessee for the purposes of exemption of capital gains created hardship for assessees. this was usually due to the fact of employment or business of the assessee at a place different from the place where such property was situated. 19.3 the finance act has made the following modifications in section 54 of the income-tax act, namely: (i) the conditions of residence by the assessee or his parent in the property which was transferred, as also residence by the assessee in the new property purchased or constructed by him have been removed. (ii) the period for construction of a new property has been raised from two years to three years since assessees sometimes experience difficulty in complying with the existing time-limit of two years for the construction of a house property. (iii) it is clarified that this exemption will be allowed only in the case of individual assessees. (iv) it has. been provided that this exemption will apply only in relation to long-term capital gains, that is gains arising from the transfer of a house property which had been held by the assessee for a period exceeding 36 months. 19.4 this provision will take effect from 1^st april, 1983, and will accordingly apply in relation to the assessment year 1983-84 and subsequent years.in view of the above facts and the provisions including the case laws referred, we are of view that both the flats are acquired by the assessee, simultaneously and hence the conditions for acquiring the residential house within the time specified under section 54 of the act are complied with. there is no bar in acquiring more than one residential houses to claim deduction under section 54 of the act unlike section 54f of the act. therefore, the assessee is eligible for deduction under section 54 of the act in respect of the investment made in both the flats simultaneously for computation of capital gains. in view of this, the revenue's appeal deserves to be dismissed.21. in the result, the appeal of the revenue is dismissed and the assessee's appeal is allowed.

Judgment:
1. These two appeals, one by the Revenue and one by the Assessee are directed against two different orders of the C.I.T. (Appeals). The appeal of the Assessee in I.T.A. No. 783/Mds/2001 is against the order of the C.I.T. (Appeals)-XII, Chennai dated 19.2.2001 confirming the order of the Assessing Officer regarding refusal to recognize the partition of H.U.F. under Section 171 of the I.T. Act, 1961. The appeal of the Revenue in ITA No. 907/Mds/2001 is directed against the order of the C.I.T. (Appeals)-XII dated 19.2.2001 in respect of the assessrment framed by the Assessing Officer under Section 143(3) of the Act 2. First we will take up the Assessee's appeal in ITA No. 783/Mds/01.

The only issue it this appeal relates to confirming the order of the Assessing Officer by the C.I.T. (Appeals) in regard to refusal to grant recognition to the family partition r f Hindu Undivided Family under Section 171 of the Act which took place on 16.9.1994.

3. The briefly stated facts of the case are that the Assessee Hindu Undivided Family of Shri P.C. Ramakrishna consists of Shri P.C.Ramakrishna, his wife and his two daughters viz., Ms. Samyuktha Ramakrishna and Ms. Saranya Ramakrishna. There was an oral total partition of H.U.F. on 16.9.1994 between Sri. P.C. Ramakrishna, his wife, Smt. Hymavathi Ramakrishna and two daughters. Under this oral partition, the two daughters, Ms. Samyuktha Ramakrishna and Ms. Saranya Ramakrishna were allotted Rs. 12,50,000/- each and these amounts were adjusted against a sum of Rs. 12,50,000/- advanced to each of them earlier as loan by H.U.F. In the said partition, all other properties of H.U.F. were allotted to Sri P.C. Ramakrishna. This oral partition took place on 16.9.1994 which was subsequently confirmed by a Deed of Declaration confirming the partition. In this Deed of Declaration of confirmation dated 9.3.1995 which was signed by Sri P.C. Ramakrishna, for himself and as guardian for his minor daughter, Ms. Saranya Ramakrishna and elder daughter, Ms. Samyuktha Ramakrishna, Shri P.C.Ramakrishna was allotted all the properties indicated in Schedule II, besides all liabilities of the HUF existing on the date of partition and other liabilities that may be attributable to the Undivided H.U.F.(sic)esides any other liability not specifically allocated to any other person under the times of the partition. The allocation made to Ms.

Samyuktha Ramakrishna and Ms. Saranya Ramakrishna in oral partition dated 16.9.1994 have been indicated in Schedule III and IV of the Deed of Declaration confirming the partition dated 9^th March 1995. This partition was filed before the Assessing Officer under Section 171 of the Act seeking recognition of the partition as provided under the Act.

The petition was proceeded by the Assessing Officer who vide his order dated 17.3.1998 held that partition is sham one and the mere contrivance to divest the family funds to reduce the incidence of tax and accordingly he declined to grant recoqnition to the partition in exercise of his powers Under Section 171 of the Act. The Assessing Officer considered the declaration of partition and in view of the parti on, Sri P.C. Ramakrishna who is Kartha of H.U.F. is allotted in noveable properties at Schedule I which consists of (a) one flat on the third floor of the property No. 9, 2nd street Venus Colony, Alwarpet and (b) a flat at ground floor of the very same premises. Apart from the above in noveable properties, he has been allotted all shares, bank balances, all monies receivable by family together with corresponding liabilities and both the daughters, Ms. Samyuktha Ramakrishna and Ms.

Saranya Ramakrishna were allotted a sum of Rs. 12,50,000/- each which was reported to be the loans due from these daugheters to the H.U.F.Before the Assessing Officer, it was claimed that the partition is on the basis of recently brought out amendment to the Hindu Succession Act i.e. Hindu Succession (Tamilnadu Succession Act, 1989) by T.N.Assembly. The Assessing Officer has rejected the claim of the Assessee by discussing the amendment as well as the "inherent right" and the term "sui-juris", Whether the right to property and partition is to the limited extent qua the daughters for enforcing a clear right over the property or at par with the sons of the family in the event of partition and he has held as under: What has been amended is only Hindu Succession Act which provides for succession by survivorship of the family members which is 'SPES SUCCESSIONS". The provision obtaining prior to the amendment was that in regard to coparcenery property only the coparceners (male members) had the right to claim partition after providing for the marriage and maintenance expenses of the female members of the HUF. By making an amendment to the Succession Act, what the legislature has intended to enact was, to provide an opening by way of right for the female members of the family out of the ancestoral property belonging to the family, whenever a partition takes place. The contradistinction in this context is that a mere right and not inherent right has been provided which is "sui-juris" to the limited extent of enforcing a clear right over the property, on par with the sons of the family, in the event of partition. In this case, partition is reported to have been effected unilaterally and recourse is had to be amendment made by the Tamilnadu Amendment Act.

The amendjment does not enjoin a right on the female members to ensure an inherent right of partition.

Another reason to reject the Assessee's claim of partition is that the Assessee's wife, Smt. Hymavathi Ramakrishna has not been provided any sum for her maintenance in the declaration of partition. In view of these reasons, he refused to recognize the partition under Section 171 of the Act. Aggrieved, the Assessee preferred an appeal before the C.I.T.(Appeals). The C.I.T. (Appeals) has held that the provisions of Section 171 of the Act cannot confer any right to a partition which is not available to any person under the Hindu Law and according to him, under the Hindu Law, there should be a partition between two or more coparceners and therefore, it cannot be a partition where the H.U.F consists of only one coparcener. For this, he relied on the following case law:Kundan Lal v. CIT Finally, he held that even after introduction of amendment in Tamil Nadu in 1989, the daughters cannot claim partition in the joint family property of the HUF and accordingly, he confirmed the action of the Assessing Officer. Aggrieved, the Assessee is in second appeal before the Tribunal.

4. Before us, the ld. Counsel for the Assessee filed a paper book containing the following documents at pages 1 to 21: 1. The Hindu Succession (Tamil Nadu Amendment) Act, 1989 -Act No. 1 of 1990 3. Statement of facts and grounds of appeal before CIT(Appeals) - in the appeal against order Under Section 171 of the Act - may be taken as written submissions in the present appeal before the Hon'ble ITAT. 4. Deed of declaration dt.09.03.95 confirming oral partition on 16.9.1994.

5. The ld. Counsel for the Assessee relied on the Hon'ble Apex Court judgment in the case of S. Sai Reddy v. S. Narayanan Reddy And Ors.

[1991] 3 SCC 647 and argued that what has been considered by the Hon'ble Apex Court is the amendment by introduction of Section 29-A in Hindu Succession Act, 1956 as amended by the State Legislature by Hindu Succession (A.P. Amendment) Act, 1986). Similar is the amendment of the Hindu Succession (Tamil Nadu Amendment) Act, 1989 as per Chapter II A, succession by survivorship. He further argued that the Hon'ble Apex Court has laid down the principle regarding the concept of partition that the Legislature has in mind cannot be equated with a mere severance of the status of the joint family which can be effected by an expression of a mere desire by a family member to do so. The partition that the Legislature has in mind is a partition complete in all respects which has brought lebout an irreversible situation. Where a partition of the property is effected by metes and bounds, the daughters cannot be deprived of the benefits conferred by the Act.

According to the Id. Counsel for the Assessee, the Hon'ble Supreme Court has held that the legislation is beneficial and placed on the statute book with the avowed object of benefiting daughter which is a vulnerable section of the society in all its stratas, it is necessary to give a liberal effect to it. Further he argued that as per the amended provisions in the Hindu Succession (Tamilnadu) Act, the difference between daughter and son of the Mitakshara Hindu Family is removed and the daughter is conferred the coparcenary rights in the joint family property by birth in the same manner and to the same extent as the son. In view of the new provisions, daughter is entitled to claim partition of H.U.F. Hence, family partition of Shri P.C.Ramakrishna is perfectly in accordance with the provisions of law and the same should be recognized as a family partition under Section 171 of the Act. Accordingly, he urged the Bench to recognize the partition and reverse the orders of the lower authorities.

6. The Id. Departmental Representative relied on the orders of the lower authorities and supported the orders as these are based on judicial pronouncements as mentioned in the order of the C.I.T.(Appeals). Accordingly, he urder the Bench to confirm the orders of the authorities below.

7. We have heard the rival contentions. The facts are undisputed. First of all, we have to go through the case law of the Hon'ble Apex Court cited supra wher in by way of amendment, Section 29-A was introduced by Hindu Succession (A.P. Amendment) Act, 1986. The Hon'ble Apex Court has considered the newly inserted Section 29-A and the same reads as under: 29-A Equal rights to daughter in coparcenary property. - Notwithstanding anything contained in Section 6 of this Act - (i) in a Joint Hindu Family governed by Mitakshara law, the daughter of a coparcener shall by birth become a coparcener in her own right in the same manner as the son and have the same rights in the coparcenary property as she would have had if she had been a son; inclusive of the right to claim by survivorship; and shall be subject to the same liabilities and disabilities in respect thereto as the son; (ii) at a partition in such a Joint Hindu Family the coparcenary property shall be so divided as to allot to a daughter the same share as is allottable to a son; Provided that the share which a predeceased son or a predeceased daughter would have got at the partition if he or she had been alive at the time of the partition shall be allotted to the surviving child of such predeceased son or of such predeceased daughter: Provided further that the share allottable to the predeceased child of a predeceased son or of a predeceased daughter, if such child had been alive at the time of the partition, shall be allotted to the child of such predeceased child of the predeceased son or of the predeceased daughter as the case may be; (iii) any property to which a female Hindu becomes entitled by virtue of the provisions of Clause (i) shall be held by her with the incidents of coparcenary ownership and shall be regarded, notwithstanding anything contained in this Act or any other law for the time being in force, as property capable of being disposed of by her by will or other testamentary disposition; (iv) nothing in Clause (ii) shall apply to a daughter married prior to or to a partition which had been effected before the commencement of the Hindu Succession (Andhra Pradesh Amendment) Act, 1986.

8. The Hon'ble Apex Court has considered the issue regarding the preliminary decree which has already been passed prior to the amended provisions and the High Court committed an error in directing the trial court to allot shares to the unmarried daughters. This was pleaded before the Hon'ble Apex Court. The Hon'ble Apex Court has admitted that under the unamended Act, unmarried daughters of a Hindu Mitakshara family were not entitled to any share in the joint family property. But the State of Andhra Pradesh removed the injustice to the daughters so far as that State was covered by newly introduced Section 29A in the Act and the Hon'ble Apex Court has held in para 6 that by way of amendment, the daughter is conferred the coparcenary rights in the property by birth in the same manner and to the same extent asihe son, para 6 of the judgment reads as under: 6. It is obvious that under the aforesaid provision, the difference between daughter and son of the Mitakshara Hindu family is removed and the daughter is conferred the coparcenary rights in the joint family property by birth in the same manner and to the same extent as the son. She is, therefore, now entitled to claim partition and her share in the family property. The amending provision is a beneficial legislation which, among other things, is also directed towards eradicating social evils such as dowry and dowry deaths. It also achieves the constitutional mandate of equality between sexes.

7. The question that falls for our consideration is whether the preliminary decree has the effect of depriving respondents 2 to 5 of the benefits of the amendment. The learned Counsel placed reliance on Clause (iv) of Section 29-A to support his contention that it does. Clause (ii) of the section provides that a daughter shall be allotted share like a son in the same manner treating her to be a son at the partition of the joint family property. However, the legislature was conscious that prior to the enforcement of the amending Act, partitions will already have taken place in some families and arrangements with regard to the disposition of the properties would have been made and marriage expenses would have beer, incurred etc. The legislature, therefore, did not want to unsettle the (sic) positions. Hence, it enacted cause (iv) providing that Clause (ii) would not apply to daughter married prior to the partition or to a partition which had already been effected refore the commencement of the amending Act. Thus if prior to the partition of family property a daughter had been married, she was disentitled to any share in the property. Similarly, if the partition had been effected before September 5, 1985 the date on which the amending Act came into force, the daughter even though unmarried was not given a share in the family property. The crucial question, however, is as to when a partition can be said to have been effected for the purposes of the amended provision. A partition of the joint Hindu family can be effected by various modes, viz., by a family settlement, by a registered instrument of partition, by oral arrangement by the parties, or by a decree of the court. When a suit for partition is filed in a court, a preliminary decree is passed determining shares of the members of the family. The final decree follows, thereafter, allotting specific properties and directing the partition of the immovable properties by metes and bounds. Unless and until the final decree is passed and the allottees of the shares are put in possession of the respective property, the partition is not complete. The preliminary decree which determines shares does not bring about the final partition. For, pending the final decree the shares themselves are liable to be varied on account of the intervening events. In the instant case, there is no dispute that only a preliminary decree had been passed and before the final decree could be passed the amending Act came into force as a result of which clause ii) of Section 29-A of the Act became applicable.

This intervening event which gave shares to respondents 2 to 5 had the effect of varying shares of the parties like any supervening development. Since the legislation is beneficial and placed on the statute book with the avowed object of benefiting women which is a vulnerable section of the society in all its stratas, it is necessary to give a liberal effect to it. For this reason also, we cannot equate the concept of partition that the legislature has in mind in the present case with a mere severance of the status of the joint family which can be effected by an expression of a mere desire by a family member to do so. The partition that the legislature has in mind in the present case is undoubtedly a partition completed in all respects and which has brought about an irreversible situation.

A preliminary decree which merely declares shares which are themselves liable to change does not bring about any irreversible situation. Hence, we are of the view that unless a partition of the property is effected by metes and bounds, the daughters cannot be deprived of the benefits conferred by the Act. Any other view is likely to deprive a vast section of the fair sex of the benefits conferred by the amendment. Spurious family settlements, instruments of partitions not to speak of oral partitions will spring up and nullify the beneficial effect of the legislation depriving a vast section of women of its benefits.

9. Now, we will go through the Hindu Succession (Tamilnadu Amendment) Act which came into force on 25^th day of March, 1989 and the Hindu Succession Act, 1956 as applicable to the State of Tamilnadu amended by Hindu Succession (Tamilnadu Amendment Act) 1989. Chapter Il-A - Succession by survivorship as amended reads as under: Equal rights to daughter in coparcenary property: 29-A. Notwithstanding anything contained in Section 6 of this Act - (i) in a Joint Hindu Family governed by Mitakshara Law, the daughter of a coparcener shall by birth become a coparcener in her own right in the same manner as a son and have the same rights in the coparcenary property as she would have had if she had been a son, inclusive of the right to claim by survivorship; and shall be subject to the same liabilities and disabilities in respect thereto as the son ; (ii) at a partition in such a Joint Hindu Family the coparcenary property shall be so divided as to allot to a daughter the same share as is allowable to a son: Provided that the share which a pre-deceased son or a pre-deceased daughter would have got at the partition if he or she had been alive at the time of the partition shall be allotted to the surviving child of such pre-deceased son or of such pre-deceased daughter: Provided further that the share allottable to the pre-deceased child of a pre-deceased son or of a pre-deceased daughter, if such child had been alive at the time of the partition, shall be allotted to the child of such pre-deceased, child of the pre-deceased son or of the pre-deceased daughter, as the case may be: (iii) any property to which a female Hindu becomes entitled by virtue of the provisions of Clause (i) shall be held by her with the incidents of coparcenary ownership and shall be regarded, notwithstanding anything contained in this Act or any other law for the time being in force, as property capable of being disposed of by her by will or other testamentary disposition.

(iv) nothing in this Chapter shall apply to a daughter married before the date of the commencement of the Hindu Succession (Tamil Nadu Amendment) Act, 1989 (v) nothing in Clause (ii) shall apply to a partition which had been effected before the date of the commencement of the Hindu Succession (Tamil Nadu Amendment) Act, 1989.

Interest to devolve by survivorship on death. 29.B When a female Hindu dies after the date of the commencement of the Hindu Succession (Tamil Nadu Amendment) Act, 1989, having at the time of her death, an interest in a Mitakshara coparcenary property by virtue of the provisions of Section 29-A, her interest in the property shall devolve by survivorship upon the surviving members of the coparcenary and not in accordance with this Act: Provided that if the deceased had left any child or child of a pre-deceased child, the interest of the deceased in the Mitakshara coparcenary property shall devolve testamentary or intestate succession, as the case may be, under this Act and not by survivorship.

10. Prior to the amendment to the Hindu Succession Act, 1956 by the Hindu Succession (Tamil Nadu Amendment) Act, 1989, the rules of ancient Hindu Law geverning the rights of the women in the family in the Mitakshara School of Hindu Law, no doubt female members had no right to claim partition of the family properties but had a right to maintenance and even the share in the property can be allotted equal to that of a son. This custom is still prevalent under the Benares and Bombay School of Mitakshara Hindu Law. However, in Southern India, or Madras School of Mitakshara Hindu Law, this custom has became obsolete as observed by the learned Author Mulla on Hindu Law at para 3 & 15 of page 436 of 15^th Edition but diverse view has been taken in the case of K.V.Thangavelu v. The Court of Wards, Madras and Ors. 1946 - 2 MLJ 143 Mcs at page 148 wherein their Lordships of Madras High Court have observed as under: No doubt as pointed out in Mayne's Hindu Law (10th edition) page 543, the rules of the Mitakshara allotting a share to wives, widows, mothers and grandmothers have became obsolete in Southern India owing to the influence of Smriti Chandrika and Saraswathi Vilasa, but in the Northern provinces, the rules are still in force.

The above decision clearly indicates that as far as the Southern or Madras School of Mitakshara Law is concerned, the females in the family have got no right to a share in the family property in the event of partition.

11. Similarly, this question again came up for consideration before the Karnataka High Court while dealing with tax laws itself, in the case of Ramachandra Bhat v. Controller of Estate Duty 123 ITR 841 Karnataka. In the above case, the issue involved is as under: 11.1 Consequent to the death of one Govinda Bhat, the question arose as to the e tate passing on death chargeable to estate duty under the Estate Duty Act, 1953 the family of said Govinda Bhat at the time of his death consisted of himse of, his wife and two sons and he was the manager of Joint Hindu Family. Befor the Asst. Controller of Estate Duty it was contended by the accountable person that only 1/4^th interest in the joint family property passed on the death of Govin a Bhat on the basis that the wife of Govinda Bhat also had a share in the joint family property. The Asst. CED rejected the said contention. The Appellate CED also rejected it in the appeal filed by the accountable person. Aggrieved by the order of the Appellate Controller, the accountable person filed an appeal before the Tribunal, Bangalore Bench. In that appeal, in addition to the contention referred to above, he raised a further contention that by virtue of Section 33(1)(n) of the Act, the value of the interest of the lineal descendants in the residential house in which the deceased was living, was also not liable to be included for the purpose of rate under Section 34(1)(c) of the Act. The Tribunal held that the entire value of the residential house had to be excluded from consideration both under Section 34(1)(a) and under Section 34(1)(c), in view of Section 33(1)(c) of the Act. But the contention of the accountable person that the wife had also a share in the joint family property during the lifetime of Govinda Bhat was rejected.

11.2 Against the said order of the Tribunal, the accountable person went on reference to the High Court on the question whether the Tribunal was right in law in holding that the wife of the deceased had no share in the Hindu Undivided Family Property and also no amount was to be allotted towards maintenance. This reference was decided by the Karnataka High Court in the case reported in 123 ITR 841. While deciding the issue the Hon'ble Court held as follows: The second question relates to the contention of the accountable person that on the death of Govinda Bhat only 1/4th share in the coparcenary property passed and not 1/3^rd as held by the Authorities under the Act. This contention is based on the assumption that the wife of Govinda Bhat had a share in the family property before his death. Since it is admitted that the joint family in question was governed by the Madras School of Mitakshara Law, it has to be held that the wife of Govinda Bhat had no share in the family property during his life time.

The above case law clearly indicates the preposition of law that under the Madras or Southern School of Mitakshara Law, a female member such as wife had no share in the property of a Hindu undivided family. In the circumstances, it is submitted that the partition in the present case does not suffer from any legal infirmity and has to be taken as a total partition and not a partial partition.

11.3 Incidentally, the Madras High Court in the case of Shenbagammal v.CED 162 ITR 445 has held that while under general rules of Hindu Law, the husband has got an obligation to maintain his wife and this obligation is independent of possession of any property by the husband, this obligation is not fixed or fastened to any particular property.

This right of the wife to be maintained by the husband and the obligation of the husband to maintain the wife will not, by themselves create any charge or encumbrance over the property of the husband and unless and until it is made a charge on the property, it is not enforceable, like any other liability.

11.4 While the above decision does not deal directly with the right of the wife in the family property, still it is indicative of the preposition that maintenance of a wife is the personal obligation of the husband which does not result in any share in the husband's property, which is indicative of the fact that a wife has got no legal right to claim any share in the husband's property whether it is his individual property or his right in the joint family property.

12. The Assessing Officer while refusing recognition to the partition has also stated that the partition was by reason of unilateral action on the part of the father and hence cannot be accepted as genuine.

Factually, this view of the Assessing Officer is incorrect and has probably arisen as a result of the misunderstanding on the part of the Assessing Officer in interpreting the provisions of Tamil Nadu Amendment Act, 1989, incorporating Section 29 A to the Hindu Succession Act, 1956. The Assessing Officer has started with the preposition that the effect of the Amending Act of 1989 is not to make the daughters coparceners but only confers on them a right to claim a share equal to that of the coparcener (male members) in the event of partition. A reading of Sub-section (1) of Section 29 A clearly indicates that the daughter of a coparcener shall become a coparcener in her own right in the same manner as a son and have the same rights in the coparcenary property as she would have had if she had been a son, inclusive of the right to claim by survivorship and shall be subject to the same liabilities and disabilities in respect thereto as a son. In the circumstances and in the light of the fact that one of the daughters of Sri P.C. Ramakrishna, namely Ms. Samyuktha had attained majority and has signed the Declaration dt. 9.3.96 confirming the partition on 16.9.94. The Assessing Officer is factually wrong in holding that the partition was by unilateral action of the father and hence cannot be accepted as genuine. Further, the Assessing Officer has also said that since no provision was made for the maintenance and marriage of daughters in the partition, this will be another ground for holding that the partition was not genuine. This conclusion of the Assessing Officer also flows from the misunderstanding of the provisions of the amending act by the Assessing Officer. Once the daughter becomes coparcener in her own right with the same rights and liabilities as that of a son with a right to claim partition and share in the family property, it is not necessary to provide separately for the maintenance and marriage of the said daughters in the family partition. After all, under the pre-amended provisions, it has never been stated that the provision for maintenance and marriage of sons has to be made in the family partition.

13. In view of the above discussions, considering the provisions of Hindu Succession Act, 1956 as amended by Hindu Succession (A.P.Amendment) Act, 1986, introduction of Section 29A which was confirmed by the Hon'ble Apex Court in the case of S. Sai Reddy (supra) and also the amendment of Hindu Succession 1956 by the Hindu Succession (T.N.Amendment) Act 1989, which are the provisions similar to the Hindu Succession (A.P. Amendment) Act, we are of the considered opinion that the difference between daughter and son of the Mitakshara Hindu Family is removed and the daughter is conferred the coparcenary rights in the joint family property by birth in the same manner and to the same extent as the son. Daughter is entitled to claim partition and her share in the joint family property i.e. H.U.F. property, is without dispute. In the present case, Sri P.C. Ramakrishna, H.U.F. apart from P.C. Ramakrishna, Karta, two daughters viz., Ms. Samyuktha Ramakrishna and Ms. Saranya Ramakrishna along with his wife, Smt. Hymavathi Ramakrishna are the members of H.U.F. After the amendment of Hindu Succession (T.N. Amendment) Act, 1989 vide Clause (i) and (ii), the daughter in H.U.F. shall by birth become a coparcener in her own right in the same manners as the son and have the same rights in the coparcenary property as she would have had if she had been a son, inclusive of the right to claim by survivorship and shall be subject to liabilities and disabilities in respect thereto as the son. She is entitled to partition of a Joint Hindu Family coparcenary property and in such partition, Hindu Family coparcenary property shall be so divided to a daughter so as to allot the same share as is allowable to a son. The amendment brought out w.e.f. 25^th March, 1989 has removed the distinction as regards to a son or a daughter in respect thereto coparcenary property of Joint Hindu family as governed by Mitakshara law and daughters are clearly treated as coparceners. In the present case, there are two daughters to the Karta. Hence, there are three coparceners in the Joint Hindu Family and the daughters have been allotted a sum of Rs. 12,50,000/-i.e. Ms. Samyuktha Ramakrishna & Ms.

Saranya Ramakrishna each. Hence, we find no infirmity in the partition of the Joint Hindu Family which is in accordance with the Hindu Succession (T.N. Amendment) Act, 1989. In view of this, we hold that the partition is as per the amended provisions of Hindu Succession (T.N. Amendment) Act, 1989. Hence, there is no reason to refuse Registration to family partition of Joint Hindu Family property.

Accordingly, the partition of H.U.F. is recognized under Section 171 of the Act and the Assessing Officer is directed to pass a consequential order recognizing the partition of the H.U.F. In the result, the Assessee's appeal is allowed.

14. ITA No. 907/Mds/01 : In this appeal of the Revenue, the first issue is regarding estimation of fair market value as on 1.4.1981 for the purpose of computation of long term capital gains on account of sale of property i.e. house property at No. 24, Cathedral Road, Chennai.

15. We have heard the rival contentions and gone through the facts of the case The briefly stated facts are that the Assessee claimed fair market value of the property as on 1.4.1981 at Rs. 4.24 lakhs per ground for the purpose of computation of capital gains on this property. The Assessee has adopted the value on the basis of valuation made by the Registered Valuer, M/s. K.B. Subramaniam Associates who vide its report dated 3.9.1996 has given the following reasons for valuing the property at Rs. 4.24,000/- per ground: For valuation of the land, the following sale instance has been relied upon Document No. 6020/85 dated 235-12-85, property at No. 82, Poes Garden, vacant land of 2 1/2 grounds purchased by M/s.

Crompton Greaves for Rs. 15,00,000/- which works out to Rs. 6,00,000/- per ground. The sale instance property is in Poes Garden, and the instance is as on December 1985, working back for 1981 at 20% rate of inflation per year, for the last 4 1/2 years i.e. April 1981 to December 1985 the cost of land as on 1-4-1981 will be Rs. 2,65,000/-per ground. The sale instance property is in a residential area. The subject property is on Cathedral Road where the possible F.S.I is Rs. 2.5 times, against 1.5 times available at Poes Garden.

Therefore the land value of Poes Garden is to appreciated by 60% (1.5 times - 2.5 times) which works out to Rs. 4,24,000/- per ground for the subject property as on 1-4-1981 and the same is adopted in this valuation.

During the course of assessment proceedings, the Assessing Officer deputed an Inspector for verification of the fair market value and the Inspector reported on 26.12.1997 on the basis of information gathered from the registering authority and the guide-line value of various property at Cathedral Road between Rs. 75,000/- and Rs. 1,00,000/-.

When this is pointed out to the Assessee's representative, he argued before the Assessing Officer that the property is in a dominant location where a reputed jewellery shop, petrol bunk and drive-in ressaurant are located. The Assessee's representative further argued that there is also a prime locality just adjacent to the famous women's college-Stella Maris. It was also argued that opposite to the Assessee's property a seven storeyed building i.e. crowns court has also come up. In view of this, he argued that due to loration advantage coupled with hotel facility and good transportation the value of the property is very high and this property is a block piece of land of more than 4 grounds, eventually the value is higher. In spite of these arguments, the Assessing Officer estimated the fair market value at Rs. 2 lakhs per ground only. Aggrieved, the Assessee preferred an appeal before the C.I.T.(Appeals). The C.I.T.(Appeals) adopted the value at Rs. 3.5 lakhs per ground as against Rs. 2 lakhs per ground estimated by the Assessing Officer. The C.I.T.(Appeals) has gone into the arguments of the Assessee before the Assessing Officer as wiII as before him. He has also found that the valuation made by the Assessee was based on approved valuer's report. Even he considered the argument of the Assessee that the property is located in a better situation and compared to the sale in tances brought out by the Inspector in his report. After taking into consideration all these facts, he adopted the value of the property at Rs. 3.5 lakhs per ground. Before us also, the Assessee's representative reiterated the arguments which were advanced before the lower authorities. In view of the above discussions, we are of the considered opinion that the Assessee's property is in prime location where a reputed jewellery shop, petrol bunk, drive-in restaurant, women's college-Stella Maris and a seven storeyed building i.e. crowns court are located. In our view, the adoption of value by the Assessee is based on the valuation made by the Registered valuer who vide its report dated 3.9.1996 has given the reasoning that the property in question, Cathedral Road where possible F.S.I. is 2.5 times against 1.5 times available at Poes Garden. The sale instances given by the Assessee is of residential property. According to the Assessing Officer, he deputed an Inspector of Income-tax who has brought out the value of the property of Cathedral Road between Rs. 75,000/- and Rs. 1,00,000/-. He has not given any basis for the adoption of value at Rs. 2 lakhs and even the Department has not referred the matter to the Valuation Cell for knowing the fair market value as on 1.4.1981. Hence, we are of the view that the C.I.T.(Appeals) has rightly estimated the fair market value as on 1.4.1981 at Rs. 5 lakhs and we do not find any infirmity in the order of the C.I.T.(Appeals) and the same is confirmed. The Revenue fails on this ground.

16. The next issue in this Revenue's appeal is as to whether the Assessee is enti led to deduction under Section 54 of the Act in view of capital gains in regard to sale of two separate residential flats at Cathedral Road which are situated one in the ground floor and other in the third floor or not.

17. We have heard the rival contentions on this issue and gone through the facts of the case. The briefly stated facts of the case are that the Assessee claimed exemption of capital gains arising out of sale of property at No. 24,Cathedral Road, Chennai measuring 4 grounds and 839 sq.ft. with house at Rs. 1,10 crores. The Assessee claimed exemption under Section 54 of the Act for the flats purchased by the Assessee in ground floor and third floor. The Assessee, under the term of agreement entered into with M/s. Alacrity Housing Ltd. has agreed to receive part of sale consideration of Rs. 1.10 crores in the form of two flats as detailed below: i. A flat of 247.122 sq.mtrs. (2660 sq.ft.) on the third floor with 11.148 sq.mtrs. (120 sq.ft.) undivided share in the recreation room valued at Rs. 32,66,500/-.

ii. A flat of 154.50 sq.mtrs. (1662 sq.ft.) on the ground floor with 6.968 sq.mts. (75 sq.ft. undivided share in the recreation room valued at Rs. 20,40,975/-.

The Assessee is accordingly entitled to total area of 4332 sq.ft. of flat together with 195 sq.ft. undivided share in the recreation room.

The Assessee has taken two different floors as the Assessee's mother who is entitled to be provided with accommodation by the Assessee is to stay in the property was finding it difficult to stay in the upper floor due to old age and health, required the accommodation in the ground floor. As a matter of fact, the Assessee's mother, Smt. Seela Sokar is occupying the ground floor and Sri P.C. Ramakrishna along with his wife and daughters occupied the third floor. The Assessee claimed exemption under Section 54 of the Act. In view of the above facts, the Assessing Officer allowed the exemption in regard to the investment in house property in respect of third floor flat and recomputed the capital gains. Aggrieved, the Assessee preferred an appeal before the C.I.T.(Appeals) who allowed the claim of the Assessee. Aggrieved, the Revenue is in second appeal before the Tribunal.

18. The Id. Departmental Representative relied on the grounds of appeal as well as the order of the Assessing Officer. On the other hand, the Id. Counsel for the Assessee, Shri T.N. Seetharaman argued that Section 54F which is para materia with Section 54F of the Act clearly restricts the claim for exemption of one residential house but there is no such restriction under Section 54F of the Act. In view of this, he argued that there is no case for restricing the claim for relief under Section 54 of the Act to one house. In support of this, he relied on the Circular dated 25.3.1997. He also relied on the following decisions of the various High Courts and the Tribunals: 1. CIT v. DR. Laxmichand Narpal Nagda (deceased) [1995] 211 ITR 804 (Bom.)CIT v. Mrs. Hilla J.B. Wadia 19. We have considered the submissions of both the sides. The facts are undisputed. First of all we have gone through the provisions of Section 54(1) which reads as under: Section 54 Profit on sale of property used for residence - (1) [Subject to the provisions of Sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of a "long term capital asset" being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereinafter in this section referred to as the original asset), and the asset has within a period of [one year before or two years after the date on which the transfer took place purchased], or has within a period of three years after that date constructed, a residential house, 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, - Further, we have also gone through the provisions of Section 54F(1) which reads as under: Section 54F Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house -(1) [Subject to the provisions of Sub-section (4), where, in the rase of an assessee being an individual or a Hindu undivided family], the capital gain arises rom the transfer of any long term capital asset, not being a residential house (hereafter in was section referred to as the original asset), and the assessee has, within a period of one (sic) before or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereinafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section that to say,- Provided that nothing contained in this sub-section shall apply where the assessee owns on the date of the transfer of the original asset, or purchases, within the period of one year after such date, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset." On a comparison of the phraseology of Sections 54(1) and 54F of the Act as above, it appears that the subject matter of the transfer in Section 54(1) of the Act is residential house whereas in Section 54F of the Act is any long term capital asset, not being a residential house, whereas in order to gain full exemption Under Section 54(1)(a) of the Act, only the whole of the amount of capital gains arising out of transfer of the original asset, as distinguished from the gross or net consideration for the transfer, need be invested in the purchase of construction, as the case may be, of the new asset. The requirement Under Section 54F(1)(a) of the Act demands the investment of the entire "net consideration" on such purchase or construction, as the case may be. It does not affect another residential house having already been allowed exemption. Whereas in the case of Section 54F of the Act benefit, such as purchase or construction of another residential house forfeits the already-allowed exemption. The Assessee can claim exemption Under Section 54F of the Act only to one residential house. There is distinction between Section 54 and 54F of the Act. In view of the facts narrated above, we have to see as to whether the Assessee is entitled for deduction Under Section 54 of the Act in respect of both the flats acquired or not. The deduction Under Section 54 is allowable in respect of a residential house as worded in this section. Here, the Assessing Officer has denied exemption only on the basis that residential house means, one residential house and not more than one. But the contention of the Assessee is that residential house means any residential house and not only one residential house. The Assessee in this case acquired two flats, one on ground floor and the other on third floor. The reasons stated by the Assessee for acquiring the ground floor is that the Assessee's mother who is entitled to be provided with accommodation by the Assessee is to stay in the property and she was finding it difficult to stay in the upper floor due to her old age and health. The Assessee's mother is staying in the ground floor and they are having common kitchen on ground floor flat and there is no kitchen on third floor flat. These flats fall under one building i.e. ground floor and third floor. The desire of the Assessee is that these two flats are to be used as one house as it is seen from the case law of the Tribunal of the Bombay Bench in the case of K.G. Vyas (supra). The Tribunal allowed the claim of the Assessee Under Section 54 of the Act by holding that since all the four apartments were in one building though on different floors under occupation of the same family. Further it was held as under: 9. In the present case all the four flats have been purchased by the assessee in the same building for the purpose of his own residence and are being used by him for that purpose only. The mere fact that the assessee had purchased them jointly either in the name of his wife or in the names of his sons would not materially affect or alter the factual position that he is the owner of all the four flats and that he is also living in them along with the members of his family. The fact that on a future date the assessee may divide these properties among the members of his family is of no relevance or consequence for the purpose of allowing relief to the assessee under Section 54, since the assessee has fulfilled the conditions laid down under Section 54, namely, that he had purchased a house for his own residence by investing the sale proceeds of his former residential house in the purchase of the assessee's family with ten members, the accommodation acquired by the assessee in the form of four flats in the same building is commensurate to his requirements.

We are, therefore, inclined to accept the contentions of the learned Counsel for the appellant and hold that the assessee is entitled to full relief under Section 54 in respect of the entire amount of Rs. 1,77,750/ as invested by him in the purchase of four flats for the purpose of his own residence under Section 54(1). Accordingly, we accept the contentions of the learned Counsel for the assessee and direct the ITO to allow deduction of the balance of Rs. 1,28,250 in the computation of capital gains under Section 54(1) to the appellant.

20. Now, the only issue that arises for consideration is that whether a residential house should be treated as allowable Under Section 54 or whether more than one residential house can be considered as allowable Under Section 54 of the Act. A bare leading of Section 54 of the Act, clearly infers that there is no bar to claim deduction for more than one residential house and if the Assessee is holding a residential house and on sale of such property, the Assessee requires another property, the A' essee is eligible for deduction Under Section 54 of the Act. If the Assessee, in the same year sell a residential house and acquires a house property out of such transacton, still the Assessee is eligible for deduction Under Section 54 of the Act. There is no bar in acquiring more than one house residential house Under Section 54 unlike Under Section 54F of the Act. It can easily be held that if the Assessee purchases two houses to meet his needs out of the sale proceeds of one residential house, he cannot be denied exemption Under Section 54 of the Act. What is to be examined is whether the other conditions as specified in Section 54 are satisfied at the time of investment in each of the property or not. In the present case, it is clear that these two flats are acquired simultaneously under the terms of agreement entered into on 29^th October, 1993 and on the same date the possession of these flats were given in the same year, simultaneously. The meaning of term 'residential house' as used in Section 54 of the Act can be understood by referring the decision of the Allahabad High Court in the case of Shiv Narain Chaudhari (supra) wherein the Hon'ble Allahabad High Court has held that exemption Under Section 5(1)(vi) of the W.T. Act, 1957 is allowable in respect of one house or part of house to the Assessee and the relevant discussion in pages 107 & 108 reads as under: To attract the exemption under Clause (iv) of Section 5(1) of the Act the house owned by the assessee should be used by the assessee exclusively for residential purpose In the present case the assessee is a Hindu undivided family consisting of four adult male members.

Each of them is occupying one residential unit in the building bearing door Nos. 92 and 92-A It is well settled that though a Hindu undivided family is ordinarily joint not only in estate but also in food and worship, the members of such family need not have a common residence. In other words, the family may continue to remain undivided even though different members of the family are residing separately If a building otherwise comes within the meaning of the word "house", the mere fact that different members of the Hindu undivided family who own that building, are living separately in different self-contained portions thereof, will not, in our opinion, constitute that building into many houses.

Further, the Hon'ble Tribunal in the case of D. Anand Basappa (supra) has discussed the words and phrases "a residential house' which reads as under: 7.6 It is also observed in Mrs. Gulshanbanoo R. Mukhi's case (supra) that the intention of the Legislature is clear to grant exemption for only one house. We are unable to find any such intention anywhere stated It cannot be presumed that if the Legislature intended more than one residential unit, it could have used the words 'house or houses'. It can equally also be held that if the intention of Legislature is to restrict the deduction for only one house, then instead of using the word 'a residential house' the words 'one residential house' would have been used therein. It may also be noted that under General Clauses Act, as per Section 13, singular shall include plural and vice versa. Reliance placed on the decision of Hon'ble Supreme Court in Vegetable Products Limited case to the extent that if the language of the statute is plain, the fact that the consequences of giving effect to it may lead to absurd result, is of no effect in interpreting the provisions. However, the same decision also holds that if there is ambiguity in interpretation of the provisions, the one which is in favour of the assessee, should be adopted. The varying decisions at extreme ends can definitely result into saying that there is an ambiguity in the provision. Thus the one in favour of the assessee is to be adopted rather than applying a strict meaning by saying that there is no ambiguity. Thus this issue is decided in favour of the assessee.

Even the CBDT has discussed the scope and effect of amendment on Section 54 with effect from 1.4.1983 which is explained in Circular No.346 dated 30.6.1982 138 ITR(St.) 23) which reads as under: Modification of the provisions relating to exemption of capital gains on transfer of self-occupied house property on investment in other house property for self-occupation -Section 54.

19.1 Under Section 54 of the Income-ax Act, capital gains arising on the transfer of a house property which in the two years immediately preceding the date of its transfer was used by the assessee or a parent of his for self-residence is exempted from income-tax if the assessee, within a period of one year before or after that date, purchases or within a period of two years after the date of such transfer constructs a house property for the purpose of his own residence. The exemption of capital gains is restricted to the amount of such capital gain utilized for the purchase or construction of the new house property. Where the amount of capital gain is greater than the cost of the house property so purchased or constructed, the balance amount of the capital gains is charged to tax. If, however, the amount of capital gain is equal to or less than the cost of the house property purchased or constructed, the capital gain is completely exempted from income-tax. If such house property purchased or constructed is transferred within a period of three years of its purchase or construction the capital gain on the property so transferred is calculated by reducing the cost of its acquisition by the amount of the capital gain exempted Torn income-tax.

19.2 The conditions of self-occupation of the property by the assessee or his parent before its transfer and the purchase or construction of the new property to be used for the residence of the assessee for the purposes of exemption of capital gains created hardship for assessees. This was usually due to the fact of employment or business of the assessee at a place different from the place where such property was situated.

19.3 The Finance Act has made the following modifications in Section 54 of the Income-tax Act, namely: (i) The conditions of residence by the assessee or his parent in the property which was transferred, as also residence by the assessee in the new property purchased or constructed by him have been removed.

(ii) The period for construction of a new property has been raised from two years to three years since assessees sometimes experience difficulty in complying with the existing time-limit of two years for the construction of a house property.

(iii) It is clarified that this exemption will be allowed only in the case of individual assessees.

(iv) It has. been provided that this exemption will apply only in relation to long-term capital gains, that is gains arising from the transfer of a house property which had been held by the assessee for a period exceeding 36 months.

19.4 This provision will take effect from 1^st April, 1983, and will accordingly apply in relation to the assessment year 1983-84 and subsequent years.

In view of the above facts and the provisions including the case laws referred, we are of view that both the flats are acquired by the Assessee, simultaneously and hence the conditions for acquiring the residential house within the time specified under Section 54 of the Act are complied with. There is no bar in acquiring more than one residential houses to claim deduction Under Section 54 of the Act unlike Section 54F of the Act. Therefore, the Assessee is eligible for deduction Under Section 54 of the Act in respect of the investment made in both the flats simultaneously for computation of capital gains. In view of this, the Revenue's appeal deserves to be dismissed.

21. In the result, the appeal of the Revenue is dismissed and the Assessee's appeal is allowed.