CIT vs. Hariprasad Bhojnagarwala (Gujarat High Court – Full Bench)

DATE: (Date of pronouncement)
DATE: April 17, 2012 (Date of publication)

Click here to download the judgement (hariprasad_bhojnagarwala_23_HUF.pdf)

S. 23(2): A HUF is “owner occupying house for own residence”

The assessee, a Hindu Undivided Family (HUF), claimed deduction u/s 23(2). The AO & CIT (A) took the view the view that as s. 23(2) applied to “a house or part of a house in the occupation of the owner for the purposes of his own residence“, a HUF was not eligible. The Tribunal took a contrary view and allowed the assessee’s claim. In view of the apparent conflict amongst various High Courts, the matter was referred to a Full Bench:

S. 23 (2) confers benefit “Where the property consists of a house or part of a house which (a) is in the occupation of the owner for the purposes of his own residence …“. A Hindu Undivided Family is not a fictional entity. It is nothing but a group of individuals related to each other by blood relations, or in a certain manner. A Hindu Undivided Family can be seen being a family of a group of natural persons. There is no dispute that the said family can reside in the house, which belongs to Hindu Undivided Family. A family cannot consist of artificial persons. U/s. 13 of the General Clauses Act, the words in masculine gender shall be taken to include females and words in singular shall include plural and vice versa. Therefore, the word ‘owner’ would include ‘owners’ and the words ‘his own’ would include ‘their own’. There is nothing, therefore, in the words used in s. 23(2), which excludes application of such provision to HUF, which is a group of individuals related to each other.

Note: See also Vineetkumar Bhalodia 46 SOT 97 where a HUF was held to be a “relative” for s. 56(2)(v)

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