SH. SANJEEV LAL ETC.ETC. versus COMMISSIONER OF INCOME TAX, CHANDIGARH & ANR.

Citation: [2014] 8 S.C.R. 795 · Decided: 01-07-2014 · Supreme Court of India · Bench: ANIL R. DAVE · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2014] 8 S.C.R. 795 
SH. SANJEEV LAL ETC.ETC. 
V. 
COMMISSIONER OF INCOME TAX, CHANDIGARH & 
ANR. 
(Civil Appeal Nos.5899-5900 of 2014) 
- JULY 01, 2014 
[ANIL R. DAVE AND SHIVA KIRTI SINGH, JJ.] 
A 
B 
Income Tax Act, 1961: s. 54 - Long term capital gain -
Assessee-appellant entered into an agreement to sell his 
C 
residential house on 27. 12. 2002 and on 30. 04. 2003 
purchased another house but could not complete sale 
transaction of his residential house due to a suit filed against 
him restraining him from dealing with the sale of said house 
- When the suit was dismissed and stay was vacated, he D 
executed sale deed and got it registered on 24. 09. 2004 -
Entitlement of appellant to avail benefit of s. 54 - Held: Due 
to interim order, appellant was restrained from dealing with 
the sale of his residential house - In the circumstance, for a 
justifiable reasons which was not within the control of E 
appellant, he could not execute the sale deed and sale deed 
could be registered only on 24.9.2004 - In view of definition 
of term 'transfer' uls.2(47) of the Act, some right in respect of 
capital asset had been transfe"ed in favour of vendee and 
some right which appellant had in respect·of the capital asset 
F 
had been extinguished because after execution of agreement 
to sell it was not open to appellant to sell property to someone 
else - s. 54 gives relief to a person who has transferred his 
residential house and is purchasing another house either 
before one year of transfer or even two years after the transfer 
G 
- The intention of legislature is to give relief in the matter of 
payment of tax on long term capital. gain - Sale deed could 
not be executed as the appellant could not have violated the 
order of the court - Therefore, in view of peculiar facts of the 
795 
H 
796 
SUPREME COURT REPORIS 
[2014] 8 S.C.R. 
A 
case, appellant is entitled to benefit u/s. 54 of the Act. 
Interpretation of statutes: Taxing statutes - Harmonious 
construction - Held: While considering a claim for exemption ; 
from tax, a purposive interpretation of the provisions of the · 
8 
Income Tax Act should be given - Harmonious construction 
of provisions which subserve the object and purpose should. 
also be made while construing any of the provisions of the 
Act - Income Tax Act, 1961. 
Words and phrases: Transfer - Meaning of, in the context 
C of s.2(47) of the Income Tax Act, 1961. 
The appellant entered into an agreement to sell his 
residential house on 27th December, 2002 for -a 
consideration of Rs. 1.32 crores. The appellant received 
0 Rs. 15 lakhs by way of earnest money. On 30th April, 
2003, the appellant purchased another house. Meanwhile, 
dispute arose as to the residential house sold by 
appellant and in a suit the court restrained the appellant 
from dealing with the said house. Due to stay order, the 
E appellant could not execute the s.ale deed till the suit 
came to be dismissed. Thereafter, the appellant executed 
the sale de'ed in 2004 and the same was registered on 
24th September, 2004. The Income Tax Authorities made 
the appellant liable to pay income tax on the capital gains. 
under Section 54 of the Income Tax Act for the reason that 
F the transfer of the original asset was effected on 24th 
September, 2004 whereas the appellants had purchased 
another residential house on 30th April, 2003 i.e. more ' 
than one year prior to the purchase of the new asset. The • 
Assessing Officer did not grant benefit under Section 54 
G of the Act. The Commissioner, the Tribunal and the High 
Court all upheld the view of the assessing officer. Hence 
the appeal. 
Allowing the appeals, the Court 
H 
SH. SANJEEV LAL v. COMMISSIONER OF INCOME 797 
TAX, CHANDIGARH 
HELD: 1. A plain reading of Section 54 of the Income 
A 
Tax Act shows that so as to avail the benefit under 
Section 54 of the Act, one must purchase a residential 
house/new asset within one year prior or two years after 
the date on which transfer of the .residential house in 
respect of which the long term capjtat gain had arisen, 
has taken place. In the instant .Case, ·the following three 
B 
dates are not in dispute. The reside.ntial house was 
transferred by the appellants and the sale deed had been 
registered on 24th Septem~' ~004. Ttte sale deed had 
been executed in pursuance of an agreement to sell c 
, which had been executed 611 27th December, 2002 and 
. out of the total consideration of Rs.1.32 crores, Rs. 15 
' lakhs had been receive

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