Section 54 purchase date may track the agreement date where a flat acquisition later matures into registered conveyance.

Section 54 exemption is construed liberally, and "purchase" is not confined to the date when legal title formally passes. Where a residential flat was acquired through an agreement within the statutory period and that transaction later crystallised into a registered conveyance, the agreement date was treated as the date of purchase. Substantial payment made after the period did not by itself defeat the exemption, because the provision does not require strict cash-and-carry completion or full consideration within that time.

---

---

Issues: Whether, for the purpose of exemption under section 54 of the Income-tax Act, 1961, the date of an agreement to purchase a residential flat could be treated as the date of purchase even though the conveyance deed was executed and registered after the statutory period, and whether payment of the major part of the consideration after that period disentitled the assessee to the exemption.

Analysis: Section 54 is a beneficial provision and the word "purchase" in that section was held not to be confined to the date on which legal title formally passes. The transaction had begun within the statutory period by an agreement to acquire the flat, the assessee had obtained rights in the property, and the agreement ultimately crystallised into a registered conveyance. The provision was construed liberally to further its object, and the absence of full payment within one year was held not to be decisive because the section does not require a strict cash-and-carry completion within that period.

Conclusion: The date of the agreement to purchase was taken as the date of purchase for section 54, and the assessee was entitled to exemption notwithstanding that registration and substantial payment occurred later.

Ratio Decidendi: For exemption under section 54 of the Income-tax Act, 1961, "purchase" is to be construed liberally as covering a transaction begun by a purchase agreement that later matures into a registered conveyance, and full payment or passage of legal title within the statutory period is not mandatory.

---