BALRAJ Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The question which arises for consideration in this reference is as under :

(2.) The basic fact of the matter is not in dispute. The assessee sold a property, 15/16, East Patel Nagar, New Delhi, belonging to him on 3/12/1974 for Rs. 98,000.00. By reason of the agreement of sale coupled with possession the assessee purported to have purchased a property No. 12, West Patel Nagar, New Delhi for Rs. 2,03,000.00 on 6/2/1975. It is not in dispute that if the aforementioned transaction amounts to purchase of property, the same would be within a period of one year. The only question, which therefore arises for consideration is whether the aforementioned agreement dated 6/2/1975 would answer the description of purchase within the meaning of Section 54 of the Income-tax Act. Out of the consideration of Rs. 2,03,000.00, the assessee admittedly at the time of entering into the aforementioned agreement paid a sum of Rs. 1,73,000.00 which would be more than the amount of Rs.98,000.00. which he received by way of consideration in terms of the transaction which took place on 3/12/1974. Section 54 of the Income-tax Act relates to profit on sale of property used for residence. The said provision reads thus :-

(3.) The assessing officer, the appellate authority as well as the Tribunal rejected the claim of the assessee in respect of the assessment year 1975-76 on the ground that he did not become the owner of the property, as the said transaction was not evidenced by registration thereof as provided sunder. For the purpose of attracting the provisions of Section 54 of the Income-tax Act, it is not necessary that the assessee should become the owner of the property. Section 54 of the said Act speaks of purchase. Moreover, the ownership of the property may have different connotation in different statutes The question which arises for consideration appears to be squarely covered by a decision of the Apex Court in CIT v. v. TN Aravinda Reddy CIT vs. 120 ITR 46, where it has been held that "the word "purchase " occurring in Section 54(1) of the Act had to be given its common meaning, viz, buy for a price or equivalent of price by payment in kind or adjustment towards a debt or for other monetary consideration. Each release in this case was a transfer of the releaser's share for consideration to the release and the transferee, the assesses, "purchased" the share of each of his brothers and the assessee was, therefore, entitled to the relief under Section 54(1)" The question now is no longer res Integra having regard to the decision of the Aped Court in CIT V. Podar Cement Pvt Ltd, [1997] 226 ITR 625. The Apex Court categorically held that Section 22 of the Income-tax Act, 1961 does not require registration of sale deed. The meaning of the word "owner" in the context of Section 22 has been held to be a person who is entitled to receive income in his own right. The Apex-Court in Mysore Minerals Ltd v. Commissioner of Income-tax [ 1999 1 239 ITR 775 and this Court in CIT v. RL Sood [2000] 245 ITR 727 have held that registration of the document is not mandatory for claiming depreciation on the property. In this view of the matter we have no doubt in our mind that learned Tribunal went wrong in holding that for the purpose of applicability of section 54, registration of document is imperative. We, therefore answer the question in negative i.e. the assessee is entitled to exemption in terms of Section 54 of the Act. reference is disposed of.