AI Drafter 
TaxTMI 
TaxTMI 
1986 (7) TMI 182
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and, therefore, he is not entitled for exemption allowed under section 54 by the ITO in the assessment of the assessee for the assessment year 1981-82. 3. The short point that arises for consideration in this appeal is whether the appellant can be said to have purchased the residential flat within a period of one year after the sale of residential property from which capital gains arose and, therefore, whether the appellant is entitled to the benefit of exemption under section 54. The main contention urged on behalf of the appellant before us is that the Commissioner erred in holding that the date, viz., 3-3-1983 on which the sale deed was executed and registered in favour of the assessee must be taken to be the date of purchase of the flat by the appellant for purposes of exemption under section 54. It was urged by Shri M.J. Swamy for the assessee that the provision in section 54 for purchase of residential house within a period of one year before or after the transfer of the capital asset from which the capital gain had arisen is directory and not mandatory and, therefore, substantial compliance with that requirement is sufficient for the assessee to be entitled to exemption ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of Shri Swamy. He submitted that the assessee had paid only Rs. 5,000 at the time of agreement and within one year from the date of sale of the flat by the assessee, nothing had happened except signing an agreement to purchase a residential flat. The payments towards the purchase were all made only after the expiration of one year from the date of sale. The residential flat was not in existence at the time of entering the agreement by the assessee with the construction company. The residential flat was conveyed to the assessee only on 3-3-1983 and till then the construction company was the owner of the flat. In the circumstances of the case, the conditions stipulated in section 54(1) are not satisfied. 6. As regards the alternative plea of the assessee that these agreements should be construed as agreements for construction, Shri Santhanam contended that such an interpretation is not called for. Section 54 contemplates exemption to the assessee and the said section should be strictly construed. He relied on a number of decisions in support of his contentions, chief among them being M. Ramanamma v. CWT [1986] 157 ITR 555 (AP) and Dr. (Mrs.) Mrudula A. Talwar v. ITO [1984] 10 IT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0 ------------- (b) During the assessment year 1983-84 (i.e., from 1-4-1982 to 31-3-1983): Rs. Rs. 7-4-1982 Cheque No. 102046  ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....chase consideration 2,05,000 Registration and stamps 21,116 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....slature, the date on which the assessee had entered into the transaction of purchase which eventually resulted or crystallised into purchase under a duly registered conveyance deed, could be taken as the date of purchase. No doubt, section 47 of the Registration Act provides that registration, as and when it takes place, takes effect from the date of execution of the deed. That may be the position so far as transfer of legal title is concerned. Here we are not concerned with ownership and hence this legal position does not stand in the way of taking the date of the agreement (to purchase) as the date of purchase for the purposes of section 54 in a case where the agreement has eventually crystallised into purchase, though after the statutory period of one year. In fact the Supreme Court in T.N. Aravinda Reddy's case, held that acquisition through release from other co-owners amounts to purchase within the meaning of section 54(1). In that case, the Hon'ble Supreme Court found no reason to divorce the meaning of the word 'purchase' as buying for a price or the equivalent of price by payment in kind or adjustment towards old debt or for other monetary consideration, from the legal mea....