Gujarat High Court
Commissioner Of Income Tax vs Gunvantlal Ratanchand on 18 August, 1993
Equivalent citations: [1994]208ITR1028(GUJ)
JUDGMENT G.T. Nanavati, J.
1. At the instance of the Revenue, the Tribunal has referred the following question to this Court for its opinion :
"Whether, on the facts and in the circumstances of the case, the capital gains on the sale of ornaments of Rs. 48,465 is not exigible to tax and is entitled to relief and exemption under s. 54C of the IT Act, 1961 ?"
2. The assessee is an HUF. During the previous year relevant to the asst. yr. 1975-76, it sold jewellery and gold ornaments for Rs. 57,089. The sale proceeds were reinvested by purchasing new jewellery and ornaments. According to the assessee, it was entitled to the relief/exemption under s. 54C of the Act. But the ITO took a different view and worked out capital gains in respect of sale of the said ornaments at Rs. 48,465. The reason why the ITO took that view was that the provisions of s. 54C apply to individuals any and not to HUFs. This view of the ITO was confirmed by the AAC in appeal. The Tribunal, however, held otherwise and, therefore, the Revenue moved the Tribunal to refer the above stated question to this Court.
3. Section 54C as it stood at the material time read as under : "Where the capital gains arise from the transfer of a capital asset, being jewellery held for personal use by the assessee or any member of his family dependent on him and the assessee has, within a period of six months after such transfer, acquired any other jewellery for personal use by the assessee or any member of his family dependent on him, the capital gain shall be dealt with in accordance with the following provisions of this section, this is to say :
(i) if the cost of the jewellery so acquired is not less than the full value of the consideration received or accruing in respect of the transferred jewellery, the whole of such capital gain shall not be charged under s. 45; or
(ii) if the cost of the jewellery so acquired is less than the full value of the consideration received or accruing in respect of the transferred jewellery, so much of the capital gains as cost of the jewellery so acquired bears to the full value of the consideration received or accruing in respect of the transferred jewellery shall not be charged under s. 45."
4. What is contended by the learned counsel for the Revenue is that though the word 'assessee' would include an individual, HUF and others, in the context in which it is used, it would mean an individual only. He submitted that the use which is contemplated by the section is personal use and, therefore, the assessee contemplated by the section is that assessee who can personally use jewellery. He also drew our attention to the expression 'any member of his family' and particularly emphasised the use of the word 'his' and submitted that these words also indicate that what was in contemplation of the legislature was an individual and not an HUF.
5. The word 'assessee' is defined by the Act to mean 'a person by whom any tax or a sum is payable under the Act'. The said definition includes other persons also but since that is not relevant for our purpose, we are not referring to that part of the definition. The word 'person' is also defined by the Act and it includes an HUF, company, firm, etc. Thus, the word 'assessee' would include not only an individual but also HUF and others who are included within the meaning of the word 'person'. But the learned advocate for the Revenue is right in submitting that only such person was within the contemplation of the legislature who had the capacity of using jewellery personally as the relief or exemption was sought to be given only to those assessees. Even though we are inclined to accept this submission, it is difficult for us to accept the contention that only an individual was within the contemplation of the legislature and not an HUF. Family members of a Hindu constitute an HUF. Use of jewellery by family members is not inconsistent with the extent of exemption granted by the legislature. On the contrary, use by dependent family members is regarded as permissible for qualifying for exemption. We, therefore, fail to appreciate how an HUF cannot be regarded as incapable of using jewellery personally. Therefore, there is nothing in the context in which the word 'assessee' is used which would persuade us to hold that the word 'assessee' would mean an individual only and not an HUF. The words "or any member of his family" does not have any bearing upon the meaning to be given to the word 'assessee' in the preceding part of the section as the succeeding part consisting of those words was, in our opinion, enacted by the legislature with a view to extend the said benefit or relief even if the use was not by the assessee himself but by his family members. The assessee was granted the benefit of exemption not only in respect of jewellery which was in his personal use but also in respect of the jewellery which was held by him but was used by any member of his family provided such member was dependent upon him.
6. In our opinion, the Tribunal was right in extending the benefit of s. 54C of the Act to the assessee who is an HUF.
7. For the reasons stated above, we answer the question in the affirmative, that is against the Revenue and in favour of the assessee. Reference is disposed of accordingly. No order as to costs.