Legal meaning of "sold" under income-tax law requires complete transfer by registered instrument, not mere possession or agreement.

The expression "sold" in section 10(2)(vii) of the Indian Income-tax Act, 1922 was construed in its legal sense, not a commercial one. For immovable property, a sale is complete only on transfer of ownership by a registered instrument; a mere agreement to sell, delivery of possession, allotment of shares, or part performance under section 53-A of the Transfer of Property Act, 1882 does not constitute a sale for this purpose. The reference to property that has been "sold or discarded or demolished or destroyed" also indicates complete severance of the assessee's interest as the basis for the deduction.

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Issues: Whether the transfer of Crown Flour Mills amounted to a sale within section 10(2)(vii) of the Indian Income-tax Act, 1922 so as to entitle the assessee to deduction of the loss claimed.

Analysis: The expression "sold" in section 10(2)(vii) was held to bear its legal meaning and not a popular or commercial meaning. In the case of immovable property, sale is complete only when ownership passes by a registered instrument. Mere agreement to sell, delivery of possession, allotment of shares, or part performance under section 53-A of the Transfer of Property Act, 1882, did not amount to a sale for this purpose. The statutory context of section 10(2)(vii), referring to property that has been "sold or discarded or demolished or destroyed," also indicated complete severance of the assessee's interest as a condition for allowance.

Conclusion: The transfer was not a sale within section 10(2)(vii); the assessee was not entitled to the claimed deduction and the question was answered in the negative, in favour of the Revenue.

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