Judgment:
V.A. Mohta, J.
1. This is an application under section 256(2) of the Income-tax Act, 1961, By the Commissioner of Income-tax, Vidarbha Region, Nagpur, for a direction to the Tribunal to state the case and to refer the following questions of law for the opinion of this court :
'(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the assessee is entitled for exemption under section 54(1) of the Income-tax Act, 1961
(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in giving a liberal construction to the meaning of the word 'purchase' in violation of the provisions of the Transfer of Property Act ?'
2. Late Dr. Laxmichand Nagda had sold his self-occupied dwelling house at Khamgaon, on April 5, 1977, for a sum of Rs. 3 lakhs. On this sale transaction, a capital gain of Rs. 2 lakhs had accrued. He entered into an agreement for purchase of a flat in Bombay for self-occupation on February 19, 1977, paid the full price of Rs. 2,23,735 in instalments before June 18, 1977, when he took possession of the flat where he lived till his death. His legal representatives claimed in the assessment year 1978-79 exemption under section 54 of the Income-tax Act, but the Income-tax Officer declined to grant exemption on the ground that the registered sale deed for the said flat was not executed within a period of one year of the sale of Khamgaon house. The assessee's appeal was allowed by the Commissioner of Income-tax (Appeals). Exemption as claimed was granted and the Tribunal upheld the order of the Commissioner of Income-tax (Appeals).
3. Shri P. N. Chandurkar, learned standing counsel for the Revenue, submitted that unless a regular registered sale deed was executed and title passed to the purchaser, it could not be said that there was 'purchase' within the meaning of the said word occurring in section 54 of the Income-tax Act. It is not possible to accept this submission. The word 'purchase' is not defined under the Income-tax Act and, therefore, resort to its ordinary meaning, as understood by a lay man, will have to be made. In many dictionaries, the word 'purchase' means the acquisition of property by a party's own act, as distinguished from acquisition by act of law. The context demands not a literal interpretation but a liberal and wider interpretation. Giving the contextual meaning to the word 'purchase' in an insurance policy, the Madras High Court in the case of C. Duraiswami Iyangar v. United India Life Assurance Co. Ltd. [1956] 26 Com Cas 12: AIR 1956 Mad 316 (at page 27 of 26 Comp Cas (Ins)) :
'We consider that the word 'purchase' in article 116 must be given a wider meaning so as to include the construction of a new building; that is to say, the word 'purchase' has got the same connotation as 'acquisition'.'
4. The Supreme Court in the case of CIT v. T N. Aravinda Reddy : [1979]120ITR46(SC) though in the context of a different factual background observed that the word 'purchase' in section 54 has to be construed in a wider sense.
5. In the case of CIT v. Mrs. Shahzada Begum : [1988]173ITR397(AP) , the Andhra Pradesh High Court, rejecting the submission that the crucial date for the purpose of determining when the property is purchased within the meaning of section 54 is the date of registration of the sale deed in favour of the assessee when the title passes, came to the conclusion that the expression 'purchase' would connote the domain and control of the property given into the assessee's hands.
6. Taking into consideration the letter as well as the spirit of section 54 and the word 'towards' used before the word 'purchase' in sub-section (2) of section 54, it seems to us that the said word is not used in the sense of legal transfer and, therefore, the holding of a legal title within a period of one year is not a condition precedent for attracting section 54. In the instant case, the whole consideration was paid, possession of the flat was obtained and it was actually put to use for dwelling within four months, as a result exemption contemplated under section 54 was clearly attracted.
7. Our pointed attention was drawn by the Revenue to the decision of the Supreme Court in the case of Alapati Venkataramiah v. CIT : [1965]57ITR185(SC) wherein the word 'transfer' as found in section 12(b) of the Indian Income-tax Act, 1922, is interpreted as meaning 'passing of title'. Since the word interpreted as well as its context are different, the ratio of that decision will have no application to the instant case.
8. Under the circumstances, no question of law arises out of the order of the Tribunal and the Tribunal was justified in not making a reference.
9. This application is dismissed. Rule discharged. No order as to costs.