Income Tax Appellate Tribunal - Mumbai
Smt. Shilavati Agarwal vs Fifth Income-Tax Officer on 14 July, 1992
Equivalent citations: [1993]46ITD230(MUM)
ORDER
M.K. Chaturvedi, Judicial Member
1. This appeal by the assessee is directed against the order of the CIT(A)-XV, Bombay and relates to the assessment year 1981-82.
2. The solitary ground taken in this appeal projects the following grievance:
On the facts and in the circumstances of the case the CIT (A) erred in confirming the addition of Rs. 2,07,000 made by the ITO by way of long-term capital gains. The CIT (A) erred in not accepting the appellant's claim for exemption under Secton 54 of the Act. The CIT (A) should have held that the appellant was not liable for any payment or long-term capital gain after giving exemption to the appellant under Secton 54 of the Act.
3. The assessee is an individual. Her accounting year corresponding to the relevant assessment year ended on 30-4-1980. On 30-1-1980, the assessee entered into an agreement to sell 3/4th share of property situated at Bharatiya Friends Housing Co-op. Society for a consideration of Rs. 2,62,500. The capital gains arising out of the sale of the said property claimed to be exempt under Secton 54 of the income-tax Act, 1961 (hereinafter called the Act). The assessee stated to have acquired another flat during the year. This flat bearing No. 132 in Maker Towers was occupied on 10-12-1979. The agreement for purchase of this flat was entered into on 12-3-1974. The purchase consideration was paid under the instalment scheme agreed upon with the builder. All the instalments were paid before occupation of the flat in December 1979.
4. The Assessing Officer took the view that exemption as contemplated under Secton 54 of the Act can be allowed only if the house is purchased within a period of one year before or after the date of transfer of property. Such benefit is also available if the property is constructed within two years from the date of transfer. Accordingly, the Assessing Officer opined that flat in Maker Towers was acquired on 12-3-1974 i.e. the date on which the agreement was entered into and as the date fell beyond the prescribed period as stated under Secton 54 of the Act reckoning from the date of 30-1-1980, the assessee was not entitled to benefit of Secton 54. He therefore, worked out the long-term capital gains at Rs. 2,07,000 by restricting the deduction to Rs. 55,500 from the sale price of Rs. 2,62,500. The amount of long-term capital gains was Rs. 2,07,000. This was, however, taxed as a protective measure as the capital gains was taxable in subsequent year when the actual conveyance was executed. It is pertinent to note here that only an agreement to sell the property was executed on 30-1-1980.
5. Shri D.M. Harish, ld. counsel for the assessee appeared before us and submitted that the Assessing Officer was not correct in holding that the date of acquisition of flat in Maker Towers was 12-3-1974. According to ld. counsel, on that date the land on which building was to be constructed was under water. This land was subsequently reclaimed and the construction was completed in 1979 only. The Municipal Corporation of Greater Bombay gave occupation certificate on 3-12-1979 and the assessee actually occupied it on 10-12-1979. Shri Harish, further, submitted that the prescription of Secton 54 requires the purchase of a flat. In 1974 the flat was not in existence. Therefore, it cannot be said that it was legally or physically acquired as on that date. The date of occupation falls within one year of the transfer i.e., 30-1-1980. Therefore, the ITO was not correct in disallowing the claim. He further relied on some precedents.
6. Shri Keshav Prasad, ld. Departmental Representative appeared before us and submitted that since the assessee is not complying with the conditions laid down for availing the exemption, the Assessing Officer has rightly disallowed the claim. According to Shri Keshav Prasad exemption as contemplated under Secton 54 is available if the property is purchased within one year before or after the date of transfer of capital asset giving rise to capital gainst In the assessee's case, the agreement for purchase of flat was entered into on 12-3-1974. The assessee did make all the payments as per the instalment plan and actually occupied on 10-12-1979. However, no conveyance deed was executed conferring legal title on the assessee. It is not a case of co-operative society. Shri Keshav Prasad invited our attention on some precedents to support the order of the revenue authorities.
7. We have heard the rival submissions in the light of material placed before us and precedents relied upon, We regard the solitary issue, persuasively presented by Shri D.M. Harish, as deserving of careful consideration. The short question neatly identified by Shri D.M. Harish is whether the flat at "Maker Towers" was purchased within the stipulated period as prescribed under Secton 54 of the Act. The assessee has complied the other conditions necessary for availing the benefit of this Secton. The dispute centres round the only point whether the new asset was purchased within the stipulated period.
8. One of the conditions to attract applicability of Secton 54(1) is that the assessee has either within a period of one year before or after the date of transfer purchased a house property for the purposes of his own residence or has within a period of two years from the date of the transfer constructed a house property for the purposes of his own residence.
9. According to Black's Law Dictionary (5th Edition, page 1110) the term 'purchase' includes any contract to purchase or otherwise acquire. The word is defined as transmission of property from one person to another by voluntary act and agreement founded on a valuable consideration. In technical and broader meaning relative to land, generally means the acquisition of real estate by any means whatever except by descent. In Stroud's Judicial Dictionary (Fourth Edition) at page 2209, entry (23) the case of Long v. Millar 4 CPD 450, is referred to in which the term "purchase" held to mean agreement to purchase also.
The Concise Oxford Dictionary, defines the word 'purchase' as acquisition of property by one's personal action, not by inheritance. According to Chamber's Twentieth Century Dictionary, the legal meaning of the word 'purchase' is to acquire; to get in any way other than by inheritance.
Justice Krishna Aiyar [CIT v. T.N. Aravinda Reddy [1979] 120 ITR 46 (SC)] said "the signification of a word of plural semantic shades may in a given text, depend on the pressure of the context or other indicia. Absence such compelling mutation of sense, the speech of the lay is also the language of law".
10. Most of the precedents cited before us deals with the concept of 'ownership'. For the present we are concerned with the meaning of the term 'purchase'. 'Ownership' and 'purchase" are two different terms. Therefore precedents dealing with the concept of ownership are not much relevant.
11. The intention of the Legislature appears to be that the assessee must invest the consideration received out of the sale proceeds of the original asset for acquiring new asset within the specified period. It is not necessary that within the specified period, the assessee must become the legal owner of the new asset.
12. The investment in house imply the payment of purchase consideration. Once the purchase consideration is paid, within the specified period, the assessee should be deemed to have complied with the requirement of the Secton, even if the legal ownership is not acquired. This is so because the assessee did his task and the delay which may result due to paper formalities cannot be attributed to the assessee and for this purpose the benefit of the Secton cannot be denied to him. In the present case, we find that the agreement for sale of original asset was entered into on 30-1 -1980. In respect of new asset, agreement for purchase was entered into on 12-3-1974. Therefore, it is obvious that the act of purchase of the new asset was not within a period of one year before or after of the transfer of the original asset. We find that, the requirement of Secton 54 of the Act was not fulfilled. We, therefore, hold that the revenue authorities have taken a correct view in the matter and the impugned order calls for no interference.
In the result, appeal of the assessee stands dismissed.