ORDER 1. to 21. (These paras are not reproduced here as they involved minor issues.) 22. last objection in Revenue's appeal is to decision of CIT (A) holding that exemption under s. 54 was available to assessee, who was assessed in status of HUF. During previous year, assessee sold his residential house at No. 110, West Sandaipettai Street, Madurai for Rs. 6 lakhs on 6th May, 1981. In respect of long-term capital gains arising on sale of this property, assessee claimed exemption under s. 54(1) of IT Act, which was disallowed by ITO for reason that assessee was not entitled to this relief, as he was being assessed in status of HUF. According to ITO only individuals can claim this relief under s. 54(1). CIT (A), however, disagreed with this view of ITO and held that language used in s. 54(1) was such that relief could be claimed either by individual or by HUF. He further held that in case of individual, benefit could be availed, whether individual himself uses building for his own residence or whether his parent used building for his residence and that in case of HUF, HUF alone must use building for residence of all members of HUF. In support of his conclusion, CIT (A) relied on decision of Tribunal, Madras Bench-D in case of T.N. Ramanathan vs. ITO (IT Appeal No. 3109 (Mad.) of 1977-78 dt. 8th Jan., 1979). According to CIT (A), condition was more liberal in case of individuals and less liberal in case of HUFs, but that relief applies to both. He also referred to s. 54(1) as amended by Finance Act of 1982 only w.e.f. 1st April, 1983, i.e. asst. yr. 1983-84 and subsequent assessments and pointed out that after this amendment, only individuals can claim benefit of s. 54(1), but that this amendment was not applicable to asst. yr. 1982-83. He therefore directed ITO to grant relief under s. 54(1) to present assessee. This is being objected to by Revenue in ground Nos. 9 to 11. 2 3 . Shri Seshagiri Rao, learned Departmental Representative submitted that decision of CIT (A) was contrary to law and that CIT (A) failed to apply principles enunciated in K.I. Viswambharan & Bros. vs. CIT (1973) 91 ITR 588 (Ker.) (FB) and Shrigopal Rameshwardas vs. Addl. CIT 1978 CTR (MP) 293 : (1979) 119 ITR 980 (MP). He further argued that amendment brought about by Finance Act of 1982 should be considered as of clarificatory nature and that therefore it would be applicable for asst. yr. 1982-83 also. Shri Seshagiri Rao further relied on decision of Karnataka High Court in CIT vs. C. Chandrashekar (1984) 38 CTR (Kar) 24 6 : (1984) 145 ITR 429 and of Madhya Pradesh High Court in case of Smt. Rampyaribai Narayandas vs. CIT (1984) 41 CTR (MP) 115 : (1984) 147 ITR 223 in support of his submissions. He therefore submitted that order of CIT (A) directing granting of exemption under s. 54(1) to assessee should be reversed and that of ITO restored. 24 . learned Chartered Accountant for assessee submitted that assessee's HUF consisted of only two members, namely assessee and his wife, that assessee was sole coparcener of said HUF and that assessee had sold property as individual only, as he had absolute powers of disposal of property of HUF as kartha of HUF. He therefore submitted that assessee would be entitled to relief of exemption under s. 54(1) of Act and that CIT (A) was therefore right in directing ITO to allow this exemption to assessee. In support of his submissions, learned counsel relied on following decisions: 1. M.S.P. Rajah vs. CGT (1981) 20 CTR (Mad) 336 : (1982) 134 ITR 1 (Mad.). 2. ITO vs. K.C. Sahni (HUF) (1979) 1 Taxman 239 (Del-Trib.). 3. ITO vs. K.L. Ramachandra (1984) 9 ITD 643 (Bang.) 4. CIT vs. Anil J. Chinai (1984) 42 CTR (Bom) 6 : (1984) 148 ITR 3 (Bom.). 25. In present case there is no dispute that assessee is sole surviving coparcener in his HUF which consisted of himself and his wife during previous year under appeal. In fact, this position is further proved from discussion under head 'status' in assessment order dt. 26th Sept., 1973 for asst. yr. 1971-72 when for first time assessee came to be assessed as HUF. For earlier assessment years, it appears, assessee has been assessed in status of individual. We quote below relevant portion of said assessment order: "Status-The assessee has all along been assessed in status of 'Individual' as he is only sole coparcener in his family. This was done in accordance with view prevailing before Supreme Court decision in Narendranath's case. All his business and assets were inherited by him from his father. He is married person. As per Supreme Court decision in Narendranath's case, his status is to be treated as HUF. return has been accordingly filed changing status as HUF. status declared is in order." It is because of this changed status in which assessee is assessed that Department is seeking to deny relief claimed by him under s. 54(1) of Act in respect of capital gains arising on sale of his residential property. In support of their contention, they rely on decision of Kerala High Court in K.I. Viswambharan & Bros.' case (supra), which was case of partnership firm claiming exemption under s. 54 in respect of house property purchased by firm. Full Bench of Kerala High Court held that neither partnership firm nor partners would be entitled to exemption under s. 54(1) of Act. We are unable to see how this decision would be of any relevance or help to Revenue in present case. 26. next decision relied on by Revenue is one in Shrigopal Rameshwardas's case (supra), which is wrongly quoted as 118 ITR in grounds of appeal. No doubt, this decision of Madhya Pradesh High Court is in favour of Revenue and this decision has been followed by same High Court in its latest judgment reported in Smt. Rampyaribai Narayandas's case (supra) and by Karnataka High Court in C. Chandrashekar's case (supra). 2 7 . As against these decisions relied on by Revenue, learned counsel for assessee relied on decision of Madras High Court in M.S.P. Rajah's case (supra) for proposition that as sole surviving coparcener of his family assessee is entitled to dispose of coparcenary or joint Hindu family property as if it were his separate property and that he may sell, mortgage or make gift of it and that he should be deemed to have acted in his individual capacity when he sold property. In this decision it was held by Madras High Court that in case where joint Hindu family consists of only one male member and other members were females or only one male member was sole surviving coparcener, said male member is entitled to dispose of coparcenary or joint Hindu family property as if it were his separate property and that he may sell, mortgage or make gift of it. In case before them, their Lordships held that when sole member gifted property in favour of his wife, it was in his capacity as individual with all powers vested in him for disposition of joint family property as if it were his separate property and that accordingly he should be deemed to have acted in his individual capacity while making gift in favour of his wife. Their Lordships further held that same result would be reached even if father-Karta was sole surviving coparcener or only male member of joint family, that father coparcener has certain special powers of disposing of joint family or coparcenary property, that he can alienate without consent of other coparceners to extent authorised by Hindu Law and that he can also make gift, within reasonable limits of movable property belonging to family and that while making such gift, Karta does not act in representative capacity, but in his individual capacity. Their Lordships further held that in case before them gift was out of affection and was within reasonable limits and hence was valid gift made by Karta in his individual capacity and not by his HUF. That was case under GT Act, where assessee claimed exemption under s. 5(1)(viii) of said Act and it was held by their Lordships that for application of s. 5(1)(viii) it is nature of gift that is relevant and not status in which return was filed by assessee and that fact that assessee had submitted his return as that of HUF could not therefore be relevant. Their Lordships therefore held that assessee was entitled to exemption under s. 5(1)(viii) of GT Act. In this connection, their Lordships of Madras High Court have followed two decisions of Andhra Pradesh High Court in Jana Veera Bhadrayya vs. CGT (1966) 59 ITR 176 and Vadrevu Venkappa Rao vs. CGT (1974) 95 ITR 313 and of Punjab & Haryana High Court in CGT vs. Hari Chand (1974) 95 ITR 308. 28. In Anil J. Chinai's case (supra), their Lordships of Bombay High Court have also taken similar view and held that sole surviving coparcener of HUF can dispose of coparcenary property as if it were his separate property, that gifts made by assessee in his capacity as sole surviving coparcener out of immovable property of HUF to his minor daughters and wife were valid gifts and that therefore capital gains which arose to his wife and two trusts in said case could not be assessed in hands of assessee. Their Lordships followed decision of Supreme Court in case of Surjit Lal Chhabda vs. CIT 1976 CTR (SC) 140 : (1975) 101 ITR 776 and Anilkumar B. Laskari vs. CIT 91983) 37 CTR (Guj) 226 : (1983) 142 ITR 831 (Guj.). 2 9 . In our view, these two decisions of Madras and Bombay High Courts are directly applicable to facts of present case. decision of Bangalore Bench of Tribunal in K.L. Ramachandra's case (supra) indirectly supports assessee's contention, while decision of Delhi Bench of Tribunal in case of K.C. Sahni (supra) directly supports assessee's contentions, though it is contrary to decisions of Madhya Pradesh and Karnataka High Courts. However, in view of our conclusion that decisions of Madras and Bombay High Courts relied on by learned Chartered Accountant are applicable to facts of present case, we are of view that assessee could be held to have sold his property only as individual, even though he is assessed in status of HUF, as he is sole surviving coparcener in said HUF. Therefore, decisions relied on by Revenue are inapplicable to facts of present case. We would, therefore, respectfully follow two decisions of Madras and Bombay High Courts relied on by assessee and confirm order of CIT (A) directing grant of exemption under s. 54(1) of Act to assessee. 30. In result, appeal for year 1982-83 is also partly allowed. *** SECOND INCOME TAX OFFICER v. N. KANNAIYIRAM