Commissioner of Income Tax vs K.N. Srinivasan

Ramanujam, J.—The following two questions have been referred to this court for its opinion by the Income Tax Appellate Tribunal at the

instance of the Revenue :

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the sum of Rs. 37,435

was not assessable u/s 45 of the Income Tax Act read with section 54 in the hands of the assessee ?

Whether the Appellate Tribunal''s view that for allowing exemption u/s 54 of the Income Tax Act, unbroken or continuous period of two years

of residence is not necessary is sustainable in law ?

The substantial question to be considered is whether the assessee can claim exemption u/s 54 of the Income Tax Act, 1961, in respect of a

residential house, even though the house in question has not been used by the assessee or his parents for an unbroken or continuous period of two

years as residence. The Tribunal has taken the view that residence for an unbroken or continuous period of two years is not necessary for claiming

the exemption. Subsequent to the decision of the Tribunal in this case, this court has taken a uniform view that the residence should be proved for

an unbroken or continuous period of two years for claiming exemption u/s 54 in M. Viswanathan Vs. Commissioner of Income Tax, ,

COMMISSIONER OF Income Tax, MADRAS Vs. R. MALA., and S. Radhakrishna v. CIT [1984] 145 ITR 170. The above decisions clearly

cover the questions referred to us. The learned counsel for the assessee, however, refers to a decision of a single Judge of the Delhi High Court in

S. Harnam Singh Suri Vs. Central Board of Direct Taxes, , which has taken a view different from the one taken by this court in the decisions

referred to above. We would, however, prefer to follow the decisions rendered by this court in preference to the decision rendered by the Delhi

High Court in S. Harnam Singh Suri Vs. Central Board of Direct Taxes, . Following the decisions of this court referred to above, we answer the

questions in the negative and in favour of the Revenue. There will be no order as to costs.