These two appeals, one by Revenue and one by assessee are directed against two different orders of CIT (Appeals). appeal of assessee in ITA. No.783/Mds./2001 is against order of CIT (Appeals)-XII, Chennai dated 19-2-2001 confirming order of Assessing Officer regarding refusal to recognize partition of HUF under section 171 of Income-tax Act, 1961. appeal of Revenue in ITA No. 907/Mds./2001 is directed against order of CIT (Appeals)-XII, dated 19-2-2001 in respect of assessment framed by Assessing Officer under section 143(3) of Act. 2. First we will take up assessee's appeal in ITA No.783/Mds./01. only issue in this appeal relates to confirming order of Assessing Officer by CIT (Appeals) in regard to refusal to grant recognition to family partition of Hindu Undivided Family under section 171 of Act which took place on 16-9-1994. 3. briefly stated facts of case are that assessee Hindu Undivided Family of Shri P.C. Ramakrishna consists of Shri P.C. Ramakrishna, his wife and his two daughters viz., Ms. Samyuktha Ramakrishna and Ms. Saranya Ramakrishna. There was oral total partition of HUF on 16-9-1994 between Sri P.C. Ramakrishna, his wife, Smt. Hymavathi Ramakrishna and two daughters. Under this oral partition, two daughters, Ms. Samyuktha Ramakrishna and Ms. Saranya Ramakrishna were allotted Rs. 12,50,000 each and these amounts were adjusted against sum of Rs. 12,50,000 advanced to each of them earlier as loan by HUF. In said partition, all other properties of HUF were allotted to Sri P.C. Ramakrishna. This oral partition took place on 16- 9-1994 which was subsequently confirmed by Deed of Declaration confirming partition. In this Deed of Declaration of confirmation dated 9-3-1995 which was signed by Sri P.C. Ramakrishna for himself and as guardian for his minor daughter, Ms. Saranya Ramakrishna and elder daughter, Ms. Samyuktha Ramakrishna, Shri P.C. Ramakrishna was allotted all properties indicated in Schedule II besides all liabilities of HUF existing on date of partition and other liabilities that may be attributable to Undivided HUF besides any other liability not specifically allocated to any other person under terms of partition. allocation made to Ms. Samyuktha Ramakrishna and Ms. Saranya Ramakrishna in oral partition dated 16-9-1994 have been indicated in Schedules III and IV of Deed of Declaration confirming partition dated 9th March, 1995. This partition was filed before Assessing Officer under section 171 of Act seeking recognition of partition as provided under Act. petition was proceeded by Assessing Officer who vide his order dated 17-3- 1998 held that partition is sham one and mere contrivance to divest family funds to reduce incidence of tax and accordingly, he declined to grant recognition to partition in exercise of his powers under section 171 of Act. Assessing Officer considered declaration of partition and in view of partition, Sri P.C. Ramakrishna who is Kartha of HUF is allotted immovable properties at Schedule I which consists of: (a) one flat on third floor of property No. 9, 2nd Street, Venus Colony, Alwarpet and (b) flat at ground floor of very same premises. Apart from above immovable properties, he has been allotted all shares, bank balances, all monies receivable by family together with corresponding liabilities and both daughters, Ms. Samyuktha Ramakrishna and Ms. Saranya Ramakrishna were allotted sum of Rs. 12,50,000 each which was reported to be loans due from these daughters to HUF. Before Assessing Officer, it was claimed that partition is on basis of recently brought out amendment to Hindu Succession Act i.e. Hindu Succession (Tamilnadu Amendment) Act, 1989 by T.N. Assembly. Assessing Officer has rejected claim of assessee by discussing amendment as well as "inherent right" and term "suijuris". Whether right to property and partition is to limited extent qua daughters for enforcing clear right over property or at par with sons of family in event of partition and he has held as under: "What has been amended is only Hindu Succession Act which provides for succession by survivorship of family members which is 'SPES SUCCESSIONIS'. provision obtaining prior to amendment was that in regard to coparcenary property, only coparceners (male members) had right to claim partition after providing for marriage and maintenance expenses of female members of HUF. By making amendment to Succession Act, what Legislature has intended to enact was, to provide opening by way of right for female members of family out of ancestral property belonging to family, whenever partition takes place. contradistinction in this context is that mere right and not inherent right has been provided which is "sui-juris" to limited extent of enforcing clear right over property, on par with sons of family, in event of partition. In this case, partition is reported to have been effected unilaterally and recourse is had to be amendment made by Tamilnadu Amendment Act. amendment does not enjoin right on female members to ensure inherent right of partition." Another reason to reject assessee's claim of partition is that assessee's wife, Smt. Hymavathi Ramakrishna has not been provided any sum for her maintenance in declaration of partition. In view of these reasons, he refused to recognize partition under section 171 of Act. Aggrieved, assessee preferred appeal before CIT (Appeals). CIT (Appeals) has held that provisions of section 171 of Act cannot confer any right to partition which is not available to any person under Hindu Law and according to him, under Hindu Law, there should be partition between two or more coparceners and therefore, it cannot be partition where H.U.F. consists of only one coparcener. For this, he relied on following case laws: 1. V.V.S. Natarajan v. CIT [1978] 111 ITR 539 (Mad.) 2. S. Sadasivam v. Commissioner of Agrl. IT (CAIT) [1979] 116 ITR 438 (Mad.) 3. T.G.K. Raman v. CIT [1983] 140 ITR 876 (Mad.) 4. Kundan Lal v. CIT [1981] 129 ITR 755 (Punj. & Har.) 5. Satpal Bansal v. CIT [1986] 162 ITR 582 (Punj. & Har.) (FB) 6. B.T. Ravindranath Punja v. CIT [1989] 179 ITR 243 (Kar.) Finally, he held that even after introduction of amendment in Tamil Nadu in 1989, daughters cannot claim partition in joint family property of HUF and accordingly, he confirmed action of Assessing Officer. Aggrieved, assessee is in second appeal before Tribunal. 4. Before us, ld. Counsel for assessee filed paper book containing following documents at pages 1 to 21: 1. Hindu Succession (Tamil Nadu Amendment) Act, 1989 (Act No. 1 of 1990). 2. Hindu Succession (Amendment) Act, 2005 (Act No. 39 of 2005). 3. Statement of facts and grounds of appeal before CIT (Appeals) - in appeal against order under section 171 of Act - may be taken as written submissions in present appeal before Hon'ble ITAT. 4. Deed of declaration dated 9-3-1995 confirming oral partition on 16-9- 1994. 5. ld. Counsel for assessee relied on Hon'ble Apex Court judgment in case of S. Sai Reddy v. S. Narayanan Reddy [1991] 3 SCC 647 and argued that what has been considered by Hon'ble Apex Court is amendment by introduction of section 29A in Hindu Succession Act, 1956 as amended by State Legislature by Hindu Succession (A.P. Amendment) Act, 1986. Similar is amendment of Hindu Succession (Tamil Nadu Amendment) Act, 1989 as per Chapter II-A, succession by survivorship. He further argued that Hon'ble Apex Court has laid down principle regarding concept of partition that Legislature has in mind cannot be equated with mere severance of status of joint family which can be effected by expression of mere desire by family member to do so. partition that Legislature has in mind is partition complete in all respects which has brought about irreversible situation. Where partition of property is effected by metes and bounds, daughters cannot be deprived of benefits conferred by Act. According to ld. Counsel for assessee, Hon'ble Supreme Court has held that legislation is beneficial and placed on statute book with avowed object of benefiting daughter which is vulnerable section of society in all its stratas, it is necessary to give liberal effect to it. Further he argued that as per amended provisions in Hindu Succession (Tamilnadu) Act, difference between daughter and son of Mitakshara Hindu Family is removed and daughter is conferred coparcenary rights in joint family property by birth in same manner and to same extent as son. In view of new provisions, daughter is entitled to claim partition of H.U.F. Hence, family partition of Shri P.C. Ramakrishna is perfectly in accordance with provisions of law and same should be recognized as family partition under section 171 of Act. Accordingly, he urged Bench to recognize partition and reverse orders of lower authorities. 6. ld. Departmental Representative relied on orders of lower authorities and supported orders as these are based on judicial pronouncements as mentioned in order of C.I.T. (Appeals). Accordingly, he urged Bench to confirm orders of authorities below. 7. We have heard rival contentions. facts are undisputed. First of all, we have to go through case law of Hon'ble Apex Court cited supra wherein by way of amendment, section 29A was introduced by Hindu Succession (A.P. Amendment) Act, 1986. Hon'ble Apex Court has considered newly inserted section 29A and same reads as under: "29A. Equal rights to daughter in coparcenary property. - Notwithstanding anything contained in section 6 of this Act- (i) in Joint Hindu Family governed by Mitakshara law, daughter of coparcener shall by birth become coparcener in her own right in same manner as son and have same rights in coparcenary property as she would have had if she had been son; inclusive of right to claim by survivorship; and shall be subject to same liabilities and disabilities in respect thereto as son; (ii) at partition in such Joint Hindu Family coparcenary property shall be so divided as to allot to daughter same share as is allottable to son: Provided that share which predeceased son or predeceased daughter would have got at partition if he or she had been alive at time of partition shall be allotted to surviving child of such predeceased son or of such predeceased daughter: Provided further that share allottable to predeceased child of predeceased son or of predeceased daughter, if such child had been alive at time of partition, shall be allotted to child of such predeceased child of predeceased son or of predeceased daughter as case may be; (iii) any property to which female Hindu becomes entitled by virtue of provisions of clause (i) shall be held by her with incidents of coparcenary ownership and shall be regarded, notwithstanding anything contained in this Act or any other law for time being in force, as property capable of being disposed of by her by will or other testamentary disposition; (iv) nothing in clause (ii) shall apply to daughter married prior to or to partition which had been effected before commencement of Hindu Succession (Andhra Pradesh Amendment) Act, 1986." 8. Hon'ble Apex Court has considered issue regarding preliminary decree which has already been passed prior to amended provisions and High Court committed error in directing trial court to allot shares to unmarried daughters. This was pleaded before Hon'ble Apex Court. Hon'ble Apex Court has admitted that under unamended Act, unmarried daughters of Hindu Mitakshara family were not entitled to any share in joint family property. But State of Andhra Pradesh removed injustice to daughters so far as that State was covered by newly introduced section 29A in Act and Hon'ble Apex Court has held in para 6 that by way of amendment, daughter is conferred coparcenary rights in property b y birth in same manner and to same extent as son, para 6 of judgment reads as under: "6. It is obvious that under aforesaid provision, difference between daughter and son of Mitakshara Hindu family is removed and daughter is conferred coparcenary rights in joint family property by birth in same manner and to same extent as son. She is, therefore, now entitled to claim partition and her share in family property. amending provision is beneficial legislation which, among other things, is also directed towards eradicating social evils such as dowry and dowry deaths. It also achieves constitutional mandate of equality between sexes." Hon'ble Apex Court further has held in paragraph 7 as under: "7. question that falls for our consideration is whether preliminary decree has effect of depriving respondents 2 to 5 of benefits of amendment. learned counsel placed reliance on clause (iv) of section 29A t o support his contention that it does. Clause (ii) of section provides that daughter shall be allotted share like son in same manner treating her to be son at partition of joint family property. However, Legislature was conscious that prior to enforcement of amending Act, partitions will already have taken place in some families and arrangements with regard to disposition of properties would have been made and marriage expenses would have been incurred etc. Legislature, therefore, did not want to unsettle settled positions. Hence, it enacted clause (iv) providing that clause (ii) would not apply to daughter married prior to partition or to partition which had already been effected before commencement of amending Act. Thus if prior to partition of family property daughter had been married, she was disentitled to any share in property. Similarly, if partition had been effected before September 5, 1985 date on which amending Act came into force, daughter even though unmarried was not given share in family property. crucial question, however, is as to when partition can be said to have been effected for purposes of amended provision. partition of joint Hindu family can be effected by various modes, viz., by family settlement, by registered instrument of partition, by oral arrangement by parties, or by decree of court. When suit for partition is filed in court, preliminary decree is passed determining shares of members of family. final decree follows, thereafter, allotting specific properties and directing partition of immovable properties by metes and bounds. Unless and until final decree is passed and allottees of shares are put in possession of respective property, partition is not complete. preliminary decree which determines shares does not bring about final partition. For, pending final decree shares themselves are liable to be varied on account of intervening events. In instant case, there is no dispute that only preliminary decree had been passed and before final decree could be passed amending Act came into force as result of which clause (ii) of section 29A of Act became applicable. This intervening event which gave shares to respondents 2 to 5 had effect of varying shares of parties like any supervening development. Since legislation is beneficial and placed on statute book with avowed object of benefiting women which is vulnerable section of society in all its stratas, it is necessary to give liberal effect to it. For this reason also, we cannot equate concept of partition that Legislature has in mind in present case with mere severance of status of joint family which can be effected by expression of mere desire by family member to do so. partition that Legislature has in mind in present case is undoubtedly partition completed in all respects and which has brought about irreversible situation. preliminary decree which merely declares shares which are themselves liable to change does not bring about any irreversible situation. Hence, we are of view that unless partition of property is effected by metes and bounds, daughters cannot be deprived of benefits conferred by Act. Any other view is likely to deprive vast section of fair sex of benefits conferred by t h e amendment. Spurious family settlements, instruments of partitions not to speak of oral partitions will spring up and nullify beneficial effect of legislation depriving vast section of women of its benefits." 9. Now, we will go through Hindu Succession (Tamilnadu Amendment) Act which came into force on 25th day of March, 1989 and Hindu Succession c t , 1956 as applicable to State of Tamilnadu amended by Hindu Succession (Tamilnadu Amendment) Act, 1989. Chapter II-A-Succession by survivorship as amended reads as under: "29A. Equal rights to daughter in coparcenary property. Notwithstanding anything contained in section 6 of this Act.- (i) in Joint Hindu Family governed by Mitakshara Law, daughter of coparcener shall by birth become coparcener in her own right in same manner as son and have same rights in coparcenary property as she would have had if she had been son, inclusive of right to claim by survivorship; and shall be subject to same liabilities and disabilities in respect thereto as son; (ii) at partition in such Joint Hindu Family coparcenary property shall be so divided as to allot to daughter same share as is allowable to son: Provided that share which predeceased son or pre-deceased daughter would have got at partition if he or she had been alive at time of partition shall be allotted to surviving child of such predeceased son or of such predeceased daughter: Provided further that share allottable to predeceased child of predeceased son or of predeceased daughter, if such child had been alive at time of partition, shall be allotted to child of such predeceased, child of predeceased son or of predeceased daughter, as case may be; (iii) any property to which female Hindu becomes entitled by virtue of provisions of clause (i) shall be held by her with incidents of coparcenary ownership and shall be regarded, notwithstanding anything contained in this Act or any other law for time being in force, as property capable of being disposed of by her by will or other testamentary disposition; (iv) nothing in this Chapter shall apply to daughter married before date of commencement of Hindu Succession (Tamil Nadu Amendment) Act, 1989; (v) nothing in clause (ii) shall apply to partition which had been effected before date of commencement of Hindu Succession (Tamil Nadu Amendment) Act, 1989. 29B. Interest to devolve by survivorship on death. When female Hindu dies after date of commencement of Hindu Succession (Tamil Nadu Amendment) Act, 1989, having at time of her death, interest in Mitakshara coparcenary property by virtue of provisions of section 29A, her interest in property shall devolve by survivorship upon surviving members interest in property shall devolve by survivorship upon surviving members of coparcenary and not in accordance with this Act: Provided that if deceased had left any child or child of pre-deceased child, interest of deceased in Mitakshara coparcenary property shall devolve testamentary or intestate succession, as case may be under this Act and not by survivorship." 10. Prior to amendment to Hindu Succession Act, 1956 by Hindu Succession (Tamil Nadu Amendment) Act, 1989, rules of ancient Hindu Law governing rights of women in family in Mitakshara School of Hindu Law, no doubt female members had no right to claim partition of family properties but had right to maintenance and even share in property can be allotted equal to that of son. This custom is still prevalent under Benares and Bombay School of Mitakshara Hindu Law. However, in Southern India, or Madras School of Mitakshara Hindu Law, this custom has became obsolete as observed by learned Author Mulla on Hindu Law at paras 3 & 15 of page 436 of 15th Edition but diverse view has been taken in case of K.V. Thangavelu v. Court of Wards [1946] 2 MLJ 143 (Mad.) at page 148 wherein their Lordships of Madras High Court have observed as under: "No doubt as pointed out in Mayne's Hindu Law (10th edition) page 543, t h e rules of Mitakshara allotting share to wives, widows, mothers and grandmothers have became obsolete in Southern India owing to influence of Smriti Chandrika and Saraswathi Vilasa, but in Northern provinces, rules are still in force." above decision clearly indicates that asfaras Southern or Madras School of Mitakshara Law is concerned, females in family have got no right to share in family property in event of partition. 11. Similarly, this question again came up for consideration before Karnataka High Court while dealing with tax laws itself, in case of Controller of Estate Duty v. Ramachandra Bhat [1980] 123 ITR 841 (Kar.). In above case, issue involved is as under: 11.1 Consequent to death of one Govinda Bhat, question arose as to estate passing on death chargeable to estate duty under Estate Duty Act, 1953, family of said Govinda Bhat at time of his death consisted of himself, his wife and two sons and he was manager of Joint Hindu Family. Before Asstt. Controller of Estate Duty it was contended by accountable person that only 1/4th interest in joint family property passed on death of Govinda Bhat on basis that wife of Govinda Bhat also had share in joint family property. Asstt. CED rejected said contention. Appellate CED also rejected it in appeal filed by accountable person. Aggrieved by order of Appellate Controller, accountable person filed appeal before Tribunal, Bangalore Bench. In that appeal, in addition to contention referred to above, he raised further contention that by virtue of section 33(1)(n) of Act, value of interest of lineal descendants in residential house in which deceased was living, was also not liable to be included for purpose of rate under section 34(1)(c) of Act. Tribunal held that entire value of residential house had to be excluded from consideration both under section 34(1)(a) and under section 34(1)(c), in view of section 33(1)(c) of Act. But contention of accountable person that wife had also share in joint family property during lifetime of Govinda Bhat was rejected. 11.2 Against said order of Tribunal, accountable person went on reference to High Court on question whether Tribunal was right in law in holding that wife of deceased had no share in Hindu Undivided Family Property and also no amount was to be allotted towards maintenance. This reference was decided by Karnataka High Court in case of N. Ramachandra Bhat (supra). While deciding issue Hon'ble Court held as follows: "The second question relates to contention of accountable person that on death of Govinda Bhat only 1/4th share in coparcenary property passed and not 1/3rd as held by Authorities under Act. This contention is based on assumption that wife of Govinda Bhat had share in family property before his death. Since it is admitted that joint family in question was governed by Madras School of Mitakshara Law, it has to be held that wife of Govinda Bhat had no share in family property during his lifetime." wife of Govinda Bhat had no share in family property during his lifetime." above case law clearly indicates preposition of law that under Madras or Southern School of Mitakshara Law, female member such as wife had no share in property of Hindu undivided family. In circumstances, it is submitted that partition in present case does not suffer from any legal infirmity and has to be taken as total partition and not partial partition. 11.3 Incidentally, Madras High Court in case of Smt. G. Shenbagammal v. CED [1986] 162 ITR 445 has held that while under general rules of Hindu Law, husband has got obligation to maintain his wife and this obligation is independent of possession of any property by husband, this obligation is not fixed or fastened to any particular property. This right of wife to be maintained by husband and obligation of husband to maintain wife will not, by themselves create any charge of encumbrance over property of husband and unless and until it is made charge on property, it is not enforceable, like any other liability. 11.4 While above decision does not deal directly with right of wife in family property, still it is indicative of preposition that maintenance of wife is personal obligation of husband, which does not result in any share in husband's property; which is indicative of fact that wife has got no legal right to claim any share in husband's property whether it is his individual property or his right in joint family property. 12. Assessing Officer while refusing recognition to partition has also stated that partition was by reason of unilateral action on part of father and hence cannot be accepted as genuine. Factually, this view of Assessing Officer is incorrect and has probably arisen as result of misunderstanding on part of Assessing Officer in interpreting provisions of Tamil Nadu Amendment Act, 1989, incorporating section 29A to Hindu Succession Act, 1956. Assessing Officer has started with preposition that effect of Amending Act of 1989 is not to make daughters coparceners but only confers on them right to claim share equal to that of coparcener (male members) in event of partition. reading of sub-section (1) of section 29A clearly indicates that daughter of coparcener shall become coparcener in her own right in same manner as son and have same rights in coparcenary property as she would have had if she had been son, inclusive of right to claim by survivorship and shall be subject to same liabilities and disabilities in respect thereto as son. In circumstances and in light of fact that one of daughters of Sri P.C. Ramakrishna, namely Ms. Samyuktha had attained majority and has signed Declaration dated 9-3-1996 confirming partition on 16-9-1994. Assessing Officer is factually wrong in holding that partition was by unilateral action of father and hence cannot be accepted as genuine. Further, Assessing Officer has also said that since no provision was made for maintenance and marriage of daughters in partition, this will be another ground for holding that partition was not genuine. This conclusion of Assessing Officer is also flows from misunderstanding of provisions of amending Act by Assessing Officer. Once daughter becomes coparcener in her own right with same rights and liabilities as that of son with right to claim partition and share in family property, it is not necessary to provide separately for maintenance and marriage of said daughters in family partition. After all, under pre-amended provisions, it has never been stated that provision for maintenance and marriage of sons has to be made in family partition. 13. In view of above discussions, considering provisions of Hindu Succession Act, 1956 as amended by Hindu Succession (A.P. Amendment) Act, 1986, introduction of section 29A which was confirmed by Hon'ble Apex Court in case of S. Sai Reddy (supra) and also amendment of Hindu Succession Act, 1956 by Hindu Succession (T.N. Amendment) Act, 1989, which are provisions similar to Hindu Succession (A.P. Amendment) Act, we are of considered opinion that difference between daughter and son of Mitakshara Hindu Family is removed and daughter is conferred coparcenary rights in joint family property by birth in same manner and to same extent as son. Daughter is entitled to claim partition and her share in joint family property i.e. H.U.F. property, is without dispute. In present case, Sri P.C. Ramakrishna, H.U.F. apart from P.C. Ramakrishna, Karta, two daughters viz., Ms. Samyuktha Ramakrishna and Ms. Saranya Ramakrishna along with his wife, Smt. Hymavathi Ramakrishna are members of H.U.F. After amendment of Hindu Succession (T.N. Amendment) Act, 1989 vide clauses (i) and (ii), daughter in H.U.F. shall by birth become coparcener in her own right in same manners as son and have same rights in coparcenary property as she would have had if she had been son, inclusive of right to claim by survivorship and shall be subject to liabilities and disabilities in respect thereto as son. She is entitled to partition of Joint Hindu Family coparcenary property and in such partition, Hindu Family coparcenary property shall be so divided to daughter so as to allot same share as is allottable to son. amendment brought out w.e.f. 25th March, 1989 has removed distinction as regards to son or daughter in respect thereto coparcenary property of Joint Hindu family as governed by Mitakshara law and daughters are clearly treated as coparceners. In present case, there are two daughters to Karta. Hence, there are three coparceners in Joint Hindu Family and daughters have been allotted sum of Rs. 12,50,000 i.e. Ms. Samyuktha Ramakrishna & Ms. Saranya Ramakrishna each. Hence, we find no infirmity in partition of Joint Hindu Family which is in accordance with Hindu Succession (T.N. Amendment) Act, 1989. In view of this, we hold that partition is as per amended provisions of Hindu Succession (T.N. Amendment) Act, 1989. Hence, there is no reason to refuse Registration to family partition of Joint Hindu Family property. Accordingly, partition of H.U.F. is recognized under section 171 of Act and Assessing Officer is directed to pass consequential order recognizing partition of H.U.F. In result, assessee's appeal is allowed. 14.-18. [These paras are not reproduced here as they involve minor issues.] 19. We have considered submissions of both sides. facts are undisputed. First of all we have gone through provision of section 54(1) which reads as under: "54. Profit on sale of property used for residence.-(1) Subject to provisions of sub-section (2), where, in case of assessee being individual or Hindu undivided family, capital gain arises from transfer of "long term capital asset", being buildings or lands appurtenant thereto, and being residential house, income of which is chargeable under head "Income from house property" (hereinafter in this section referred to as original asset), and asset has within of period of one year before or two years after date on which transfer took place purchased, or has within period of three years after that date constructed, residential house, then, instead of capital gain being charged to income-tax as income of previous year in which transfer took place, it shall be dealt with in accordance with following provisions of this section, that is to say,-" Further, we have also gone through provisions of section 54F(1) which reads as under: "54F. Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house.-(1) Subject to provisions of sub- section (4), where, in case of assessee being individual or Hindu undivided family, capital gain arises from transfer of any long term capital asset, not being residential house (hereafter in this section referred to as original asset), and assessee has, within period of one year before or two years after date on which transfer took place purchased, or has within period of three years after that date constructed, residential house (hereinafter in this section referred to as new asset), capital gain shall be dealt with in accordance with following provisions of this section that is to say,- (a) & (b) ** ** ** Provided that nothing contained in this sub-section shall apply where assessee owns on date of transfer of original asset, or purchases, within period of one year after such date, or constructs, within period of three years after such date, any residential house, income from which is chargeable under head "Income from house property", other than new asset." On comparison of phraseology of sections 54(1) and 54F of Act as above, it appears that subject matter of transfer in section 54(1) of Act is residential house whereas in section 54F of Act is any long term capital asset, not being residential house, whereas in order to gain full exemption under section 54(1)(a) of Act, only whole of amount of capital gains arising out of transfer of original asset, as distinguished from gross or net consideration for transfer, need be invested in purchase of construction, as case may be, of new asset. requirement under section 54F(1)(a) of Act demands investment of entire "net consideration" on such purchase or construction, as case may be. It does not affect another residential house having already been allowed exemption. Whereas in case of section 54F of Act benefit, such as purchase or construction of another residential house forfeits already-allowed exemption. assessee can claim exemption under section 54F of Act only to one residential house. There is distinction between sections 54 and 54F of Act. In view of facts narrated above, we have to see as to whether assessee is entitled for deduction under section 54 of Act in respect of both flats acquired or not. deduction under section 54 is allowable in respect of residential house as worded in this section. Here, Assessing Officer has denied exemption only on basis that residential house means, one residential house and not more than one. But contention of assessee is that residential house means any residential house and not only one residential house. assessee in this case acquired two flats, one on ground floor and other on third floor. reasons stated by assessee for acquiring ground floor is that assessee's mother who is entitled to be provided with accommodation by assessee is to stay in property and she was finding it difficult to stay in upper floor due to her old age and health. assessee's mother is staying in ground floor and they are having common kitchen on ground floor flat and there is no kitchen on third floor flat. These flats fall under one building i.e. ground floor and third floor. desire of assessee is that these two flats are to be used as one house as it is seen from case law of Tribunal of Bombay Bench in case of K.G. Vyas v. ITO [1986] 16 ITD 195. Tribunal allowed claim of assessee under section 54 of Act by holding that since all four apartments were in one building though on different floors under occupation of same family. Further it was held as under: "9. In present case all four flats have been purchased by assessee in same building for purpose of his own residence and are being used by him for that purpose only. mere fact that assessee had purchased them jointly either in name of his wife or in names of his sons would not materially affect or alter factual position that he is owner of all four flats and that he is also living in them along with members of his family. fact that on future date assessee may divide these properties among members of his family is of no relevance or consequence for purpose of allowing relief to assessee under section 54, since assessee has fulfilled conditions laid down under section 54, namely, that he had purchased house for his own residence by investing sale proceeds of his former residential house in purchase of assessee's family with ten members, accommodation acquired by assessee in form of four flats i n same building is commensurate to his requirements. We are, therefore, inclined to accept contentions of learned counsel for appellant and hold that assessee is entitled to full relief under section 54 in respect of entire amount of Rs. 1,77,750 as invested by him in purchase of four flats for purpose of his own residence under section 54(1). Accordingly, we accept contentions of learned counsel for assessee and direct ITO to allow deduction of balance of Rs. 1,28,250 in computation of capital gains under section 54(1) to appellant." 20. Now, only issue that arises for consideration is that whether residential house should be treated as allowable under section 54 or whether more than one residential house can be considered as allowable under section 54 of Act. bare reading of section 54 of Act, clearly infers that there is no bar to claim deduction for more than one residential house and if assessee is holding residential house and on sale of such property, assessee requires another property, assessee is eligible for deduction under section 54 of Act. If assessee, in same year sell residential house and acquires house property out of such transaction, still assessee is eligible for deduction under section 54 of Act. There is no bar in acquiring more than one house/residential house under section 54 unlike under section 54F of Act. It can easily be held that if assessee purchases two houses to meet his needs out of sale proceeds of one residential house, he cannot be denied exemption under section 54 of Act. What is to be examined is whether other conditions as specified in section 54 are satisfied at time of investment in each of property or not. In present case, it is clear that these two flats are acquired simultaneously under terms of agreement entered into on 29th October, 1993 and on same date possession of these flats were given in same year, simultaneously. meaning of term 'residential house' as used in section 54 of Act can be understood by referring decision on Allahabad High Court in case of Shiv Narain Chaudhari v. CWT [1977] 108 ITR 104 wherein Hon'ble Allahabad High Court has held that exemption under section 5(1)(vi) of Wealth-tax Act, 1957 i s allowable in respect of one house or part of house to assessee and relevant discussion in pages 107 & 108 reads as under: "To attract exemption under clause (iv) of section 5(1) of Act, house owned by assessee should be used by assessee exclusively for residential purpose. In present case assessee is Hindu undivided family consisting of four adult male members. Each of them is occupying one residential unit in building bearing door Nos. 92 and 92A. It is well settled that though Hindu undivided family is ordinarily joint not only in estate but also in food and worship, members of such family need not have common residence. In other words, family may continue to remain undivided even though different members of family are residing separately. If building otherwise comes within meaning of word "house", mere fact that different members of Hindu undivided family who own that building, are living separately in different self contained portions thereof, will not, in our opinion, constitute that building into many houses." Further, Hon'ble Tribunal in case of D. Anand Basappa v. ITO [2004] 91 ITD 53 (Hyd.) has discussed words and phrases 'a residential house' which reads as under: "7.6 It is also observed in Mrs. Gulshanbanoo R. Mukhi's case (supra) that intention of Legislature is clear to grant exemption for only one house. We are unable to find any such intention anywhere stated. It cannot be presumed that if Legislature intended more than one residential unit, it could have used words 'house or houses'. It can equally also be held that if intention of Legislature is to restrict deduction for only one house, then instead of using word 'a residential house' words 'one residential house' would have been used therein. It may also be noted that under General Clauses Act, as per section 13, singular shall include plural and vice versa. Reliance placed on decision of Hon'ble Supreme Court in Vegetable Products Limited's case to extent that if language of statute is plain, fact that consequences of giving effect to it may lead to absurd result, is of no effect in interpreting provisions. However, same decision also holds that if there is ambiguity in interpretation of provisions, one which is in favour of assessee, should be adopted. varying decisions at extreme ends can definitely result into saying that there is ambiguity in provision. Thus one in favour of assessee is to be adopted rather than applying strict meaning by saying that there is no ambiguity. Thus, this issue is decided in favour of assessee." Even CBDT has discussed scope and effect of amendment on section 54 with effect from 1-4-1983 which is explained in Circular No. 346 dated 30-6-1982 [138 ITR (St.) 23] which reads as under: "Modification of provisions relating to exemption of capital gains on transfer of self occupied house property on investment in other house property for self occupation section 54. 19.1 Under section 54 of Income-tax Act, capital gains arising on transfer of house property which in two years immediately preceding date of its transfer was used by assessee or parent of his for self residence is exempted from income-tax if assessee, within period of one year before or after that date, purchases or within period of two years after date of such transfer constructs house property for purpose of his own residence. exemption of capital gains is restricted to amount of such capital gain utilized for purchase or construction of new house property. Where amount of capital gain is greater than cost of house property so purchased or constructed, balance amount of capital gains is charged to tax. If, however, amount of capital gain is equal to or less than cost of house property purchased or constructed, capital gain is completely exempted from income-tax. If such house property purchased or constructed is transferred within period of three years of its purchase or construction capital gain on property so transferred is calculated by reducing cost of its acquisition by amount of capital gain exempted from income-tax. 19.2 conditions of self occupation of property by assessee or h i s parent before its transfer and purchase or construction of new property to be used for residence of assessee for purposes of exemption of capital gains created hardship for assessees. This was usually due to fact of employment or business of assessee at place different from place where such property was situated. 19.3 Finance Act has made following modifications in section 54 of Income-tax Act, namely:- (i) conditions of residence by assessee or his parent in property which was transferred, as also residence by assessee in new property purchased or constructed by him have been removed. (ii) period for construction of new property has been raised from two years to three years since assessees sometimes experience difficulty in complying with existing time limit of two years for construction of house property. (iii) It is clarified that this exemption will be allowed only in case of individual assessees. (iv) It has been provided that this exemption will apply only in relation to long term capital gains, that is gains arising from transfer of house property which had been held by assessee for period exceeding 36 months. 19.4 This provision will take effect from 1st April, 1983, and will accordingly apply in relation to assessment year 1983-84 and subsequent years." In view of above facts and provisions including case laws referred, we are of view that both flats are acquired by assessee, simultaneously and hence conditions for acquiring residential house within time specified under section 54 of Act are complied with. There is no bar in acquiring more than one residential houses to claim deduction under section 54 of Act unlike section 54F of Act. Therefore, assessee is eligible for deduction under section 54 of Act in respect of investment made in both flats simultaneously for computation of capital gains. In view of this, Revenue's appeal deserves to be dismissed. 21. In result, appeal of Revenue is dismissed and assessee's appeal is allowed. *** INCOME TAX OFFICER, CITY WARD - 1 (6), CHENNAI v. P.C. RAMAKRISHNA (HUF)