TaxTMI 
TaxTMI 
1988 (6) TMI 86
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty along with the movable assets like furniture, cutlery, potted plants, etc., were sold by the assessees to the trustees of L & T Educational and Welfare Trust, Bombay, on 22-3-1982 for a total consideration of Rs. 11 lakhs. The share of each assessee-HUF comes to Rs. 3,66,667. Out of this, a consideration of Rs. 1 lakh was received by these assessee towards the sale price of the items of furniture, cutlery, potted plants, etc. The assessee in their income-tax returns for the assessment year 1982-83 claimed exemption of the sale price of these movable assets from capital gains-tax on the ground that they are the "personal effects" of the assessee-HUFs and are, therefore, not capital assets within the meaning of section 2(14) of the Income-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e sold are the personal efforts of the HUF's which consisted of several individual members of the family, that a HUF can have personal effects and that, therefore, the value of these personal effects has to be deducted while arriving at the value of the assets under section 2(14) of the Act. It is further submitted that the Madhya Pradesh High Court's judgment in Shrigopal Rameshwardas's case which was ruled on by the Commissioner (Appeals) deals with the interpretation of the provisions contained in section 54 of the Act whereas the assessee's case concerns with the interpretation of section 2(14)(ii) of the Act. In support of the fact that the HUF can have personal effects as contemplated in section 2(14)(ii) of the Act, the assessee's co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onsidered the respective contentions of the parties. The assessees in these cases are Hindu undivided families by status. The question, therefore, that arises for consideration is whether such HUFs can claim the benefit of "personal effects" contemplated in section 2(14)(ii) of the Income tax Act. 5. In Shrigopal Rameshwardas's case, the Madhya Pradesh High Court while interpreting the provisions of section 54 of the Act has taken the view that the word 'assessee' should normally refer to living persons and not to an artificial juridical person or a fictional person. While so doing, it denied the benefit of exemption to the assessee-HUF under section 54 since it is not a living person. The same view was affirmed by the Madhya Pradesh Hig....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... HUF is a legal entity for the purposes of taxation, it is nothing but a group of individual consisting of coparceners and their families. Shortly, a HUF is a group of individuals. When a HUF owns movable assets, it means all the members of the HUF own them. In fact, the learned author Mulla on Hindu Law (15th Edn. at page 314) while dealing with the rights of coparceners has stated that no coparcener is entitled to any special interest in the coparcenery property nor is entitled to exclusive possession of any part of the property. It is further stated that each coparcener is entitled to joint possession and enjoyment of the family property and if any coparcener is excluded from joint possession or enjoyment, he is entitled to enforce his r....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... it would be reasonable to construe the expression 'assessee' occurring in section 2(14) to be a group of individuals in the case of a HUF. 8. Again, the object of section 2(14) is to give relief to the see with regard to the personal effects while computing the assessee's capital asset. One of the fundamental canons of construction of statutes is that an interpretation which would further the object rather than that which defeats it shall be preferred. Here, the assessee is a HUF which is a ground of individuals. Section 2(14)(ii) provides that the personal effects of the assessee are to be excluded while computing the capital assets of the assessee. If the interpretation as advanced by the revenue, namely, that the assessee means an in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....qualify as personal effects. Since such a large number of silver articles cannot be taken to have been held by the assessed for personal use, the High Court came to the conclusion that all these silver articles cannot, therefore, be treated as the 'personal effects' of the assessee within the meaning of section 2(14)(ii) of the Act. 9. From the above decision, it is seen that though the Madras High Court has dismissed the Reference Application of the assessee, the High Court has clearly recognized the position that HUF can have personal effects. Following the decision of the madras High Court, we are inclined to take the view that the assessee-HUF can also have personal effects as contemplated in section 2(14)(ii) of the Act. 10. The ....