Commissioner of Income-tax Vs. Shahzada Begum - Court Judgment

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direct taxation - exemption - section 54 (1) of income tax act, 1961 - assessee sold her house - income tax officer assessed assessee for capital gain arising from sale of house - revenue contended that date of purchase of another residential house fell outside period of one year from date of sale of earlier house - court observed that assessee secured possession of new house within stipulated period of one year by paying part of purchase consideration - held assess entitled for exemption under section 54 (1). head note: income tax capital gains--exemption under s. 54--sale of property used for residence--registration beyond one year period held: the expression `purchased' would not connote the domain and control of the property given into the assessee's hands. apart from the payment of substantial purchase consideration, the assessee secured possession of the property on 10-8-1976, which date fell within the period of one year specified under s. 54(1). there might have been some procedural delay in obtaining formal registration of the sale deed, but that was immaterial. in the circumstances, the assessee was eligible for exemption under s. 54(1). income tax act 1961 s.54 - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to defend the action only on grounds enumerated in sub-section (2) of section 149 of the act, and no other grounds are available to it. the insurer is not allowed to contest the claim of the injured or heirs of the deceased on other grounds, which are available to the insured. if insurer is permitted to contest the claim on other grounds it would mean adding more grounds of contest to the insurer and will be negation of the intention of the legislature and annihilate mandate of the provisions of sections 170 and 149 of the act. the insured can pursue appeal only after giving up the insurer as the appellant and not otherwise. in the instant case, the insurer has not withdrawn from party array but has remained prosecuting the appeal with the insured on the grounds which are available only to the insured. therefore, the joint appeal as filed by the insured and the insurer is not maintainable. section 166: [v. gopala gowda & jawad rahim, jj] claim for compensation accident due to mechanical defect in the vehicle held, it is not in dispute that the claimant suffered injuries in an accident, which occurred during the course of his employment, albeit due to his negligence but law does not render him remediless. statutory right is conferred on him, accruing by virtue of his employment under insured to claim compensation under workmens compensation act. the insurer is statutorily duty bound to discharge the liability of the owner of the vehicle, to pay such compensation to the employee, as mandated under the provisions of section 149 of the act. the right of an injured employee or his dependents as the case may be to be compensated, when injury is suffered or death occurs during his employment, is recognised not only under workmens compensation act, but also under benevolent provisions under section 166 and 167 of the m.v. act. the right of driver to seek compensation is not restricted only to the workmens compensation act, it has been enlarged to enable such person to seek just compensation (sections 166 and 168), conferring upon him the right of election engrafted under section 167 of the act to choose either of the two forum. the only defence which the insurer could take is limit of its liability as enumerated under section 147 of the act, leading to contest, inter alia, only between insured and insurer and does not impact claimants right to recover the compensation determined by the tribunal which crystallizes into enforceable right against both. in the instant case, the claimant/driver has exercised right of election under section 167 of the act to seek compensation under section 166 of the act resulting in award passed by the tribunal. therefore, the insured and the insurer have no escape but to discharge the said award as directed. undisputedly, in this case as deduced for proved facts, the vehicle in question was not properly maintained by the owner and despite faulty brake system, the claimant had undertaken the hazardous journey to his peril at the behest of and at the instruction of the owner. the owner is therefore, tortfeasor. section 168: [v. gopala gowda & jawad rahim, jj] insurers limit of liability - held, it is well settled that the liability of the insurance company for payment of compensation can be statutory or contractual. is for the insurance company to show that the insurance policy was a statutory policy and not a contractual policy to restrict its liability. that issue was neither raised before the tribunal nor is raised in this appeal requiring decision. thus, if at all the insurer has any valid ground to restrict its liability, it can proceed against the insured but firstly it has to discharge the award as required under section 149 (1) of the act. where the owner/insured has failed to maintain the vehicle as per prescribed safety standards and has caused the claimant to drive the vehicle with mechanical defects, the owner would be the tortfeasor and the claimant can maintain a petition seeking compensation under the provisions of the act, instead of seeking compensation under the workmens compensation act. on facts, held, the material evidence on record, particularly, with regard to the income of the claimant, his age, medical evidence and the evidence relating to pecuniary loss has not been considered by the tribunal in the correct perspective, which has resulted in passing of the impugned award, disproportionate to the pecuniary loss and the loss of future income of the victim. the settled principles governing determination of compensation has been given a go-bye. compensation of rs.4,15,150/- awarded by the tribunal was enhanced to rs.8,20,000/-. y.v. anjaneyulu, j.1. the income-tax appellate tribunal made this reference under section 256(1) of the income-tax act, 1961, in connection with the assessment year 1976-77. the question referred for the consideration of this court is : 'whether, on the facts and in the circumstances of the case, the income-tax appellate tribunal is correct in law in holding that the assessee is eligible for exemption under section 54(1) of the income-tax act ?' 2. the assessee was the owner of a small house property, admittedly under her self-occupation. she sold this for a consideration of rs. 38,750 on august 12, 1975. the original cost of the above property was rs. 15,000 (purchased on december 30, 1969). the assessee claimed that the house property sold was under her self-occupation and that she utilised the proceeds of the house sold for acquiring another house for her self-occupation and, consequently, the capital gain arising on the sale of the residential house was not liable to be taxed under section 54(1) of the act. the assessee pointed out that the entered into an agreement for the purchase of another property for a consideration of rs. 47,000 and that that agreement was dated june 27, 1976. at the time of the agreement, the assessee paid a substantial sum of rs. 29,000 through cheque. the stipulation in the agreement was that a further sum of rs. 11,000 would be paid soon and the balance of rs. 7,000 would be paid on delivery of possession. from the facts on record, it would appear that the vacant possession of the house property was delivered on august 10,1976, on which date the amount of rs. 11,000 was paid. in other words, a sum of rs. 40,000, out of rs. 47,000, was paid out of the sale consideration by august 10, 1976. it, however, transpired that the sale deed was registered only on august 22, 1977. the income-tax officer held that the crucial date for the purpose of determining when the property was purchased was the date of registration of the sale deed in favour of the assessee. and inasmuch as the date of the sale deed fell outside the period of one year from the date of sale of the property earlier, the assessee was not entitled to claim exemption under section 54(1) of the act. the above view was upheld on appeal by the appellate assistant commissioner but was reversed by the tribunal on second appeal. the tribunal held that, on the facts and circumstances, the question is as to when the assessee 'purchased' the property. the tribunal felt that the matter need not be decided on the basis as to when the property was sold in favour of the assessee. the expression 'purchased' would undoubtedly connote the domain and control of the property given into the assessee's hands. from the facts on record, it is clear that, apart from the payment of substantial purchase consideration, the assessee secured possession of the property on august 10, 1976, which is within the period of one year specified under section 54(1) of the act. there might have been some procedural delay in obtaining formal registration of the sale deed. but, that, in our opinion, is immaterial. in the facts and circumstances, the tribunal was right in coming to the conclusion that the assessee purchased another residential house within the period of one year as stipulated under section 54(1) of the act. the house property purchased by the assessee had come into the full domain and control of the assessee within the period of one year. 3. in the circumstances, our answer to the question referred is in the affirmative, i.e., in favour of the assessee and against the revenue. no costs.