TaxTMI 
TaxTMI 
1985 (2) TMI 110
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....ented betel nuts known as 'Asoka'. By a subsequent deed dated 13-4-1972, there was a change in the inter se shares. A further instrument of partnership was executed on 11-5-1973 by which the minors came to be excluded from the benefits of the partnership. By yet another partnership deed dated 6-9-1976, the limited company 'Asoka Betelnut Co. (P.) Ltd.' was taken as a partner by the three brothers. An item of property known as 'Asoka Building', which comprised of land on which was situated residential house as well as factory premises, was purchased out of the funds of the firm on 25-1-1973. The factory building and the land appurtenant thereto were utilised for purposes of business of the firm and the residential building and the land appur....
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....e to Asoka Betelnut Co. (P.) Ltd. Each of the brothers invested in approved securities an amount slightly exceeding Rs. 4 lakhs. Thus, in respect of the sale consideration of Rs. 4 lakhs, full exemption became available under section 54E of the Income-tax Act, 1961 ('the Act'), in the case of each of the brothers. 2. Shri Chandrakant sold his one-third share in the residential property by document No. 3962 of 1978, dated 1-12-1978 to Smt. Gualani. Consequent to this, Smt. Gualani became a joint owner with the remaining two brothers in the property. The remaining two brothers Shri Kuppuraj and Shri Ananthakumar in their turn released their interest in the property to Smt. Gualani by a document dated 24-2-1979. Shri Chandrakant showed the ....
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....r section 54 and under section 54E and, therefore, the assessment should be redone giving exemption only under section 54E and withdrawing the exemption under section 54. 7. The objection of the Commissioner to the grant of exemption under section 54 was that the house property in which the brothers were residing was not owned by them for more than two years, since the property was obtained only on 1-4-1977 by them, when the firm, in which they were partners and which firm owned the property, was dissolved. Though the partners were staying in the said property earlier, as observed in the order of the Commissioner, he also did not consider that the requirement of their stay in the property for two years prior to its transfer was satisfied....
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....al gain is greater than the cost of the new asset, the difference between the amount of the capital gain and the cost of the new assets shall be charged under section 45 as the income of the previous year ; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil ; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45 ; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the ca....
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....least prior to the date of transfer apart from the factum of residence for that period. The learned departmental representative also relied on the reasoning in the order of the Commissioner, which is common to all the cases. 10. We have considered the rival submissions. Each of the brothers was a partner in the erstwhile firm, which owned he property. They got the property consequent to the dissolution of the firm and distribution of assets. Therefore, the property became the property of each of the brothers in the manner prescribed under section 49(1)(iii)(b) of the Act. They obtained the property on 1-4-1977. From this date, no doubt, the sale took place within a period of less than two years. If this period subsequent to 1-4-1977 is t....
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....tative that the word 'which' would imply that the asset should also have been owned for two years prior to the date of transfer. A plain reading of the section does not warrant any such interpretation. We would also add that the qualifying nature attributed to the word 'which' in CIT v. C. Jayalakshmi [1981] 132 ITR 82 (Mad.) relied on by the learned departmental representative, does not help the proposition sought to be canvassed. As far as the user is concerned, even according to the order of the Commissioner and the facts as found by us, admittedly, each of the brothers was using the building for the purpose of residence even when it belonged to the firm. Thus, prior to the transfer by them, they were using the building for purposes of t....