Full Judgment Text
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PETITIONER:
COMMISSIONER OF INCOME-TAX, ANDHRA PRADESH
Vs.
RESPONDENT:
T.N. ARVINDA REDDY
DATE OF JUDGMENT05/10/1979
BENCH:
KRISHNAIYER, V.R.
BENCH:
KRISHNAIYER, V.R.
DESAI, D.A.
CITATION:
1980 AIR 96 1980 SCR (1) 872
1979 SCC (4) 421
ACT:
Income-tax Act-1961 Section 54(1)-Scope of-Words &
Phrases-Purchase-Meaning of.
HEADNOTE:
The respondent sold his house at a price sufficient to
attract capital gins but he pre-empted the demand of tax by
acquiring the common house from his brothers for a
consideration of Rs 30,000/- each through separate release
deeds. On behalf of the Petitioner, it was contended that
release deeds by sharers in favour of one of them amounts to
purchase within the meaning of s. 54 (1) of the Act. The
High Court having held it is, the Revenue came by way of
Special Leave.
Dismissing the Petition,
^
HELD: Each release is a transfer of the releaser’s
share for consideration to the release. In plain English,
the transferee purchases the share of each of his brothers
for a price. Had this been taken from non-fraternal owners
of shares or from one stranger owner, plain spoken people
would have called it a purchase. The reason is supported by
decision in Hobshaw Brothers Ltd. v. Mayer, [1956(3) AER 833
and 835] that purchase primarily means acquisition for money
paid, not adjusted. There is no reason to divorce the
ordinary meaning of the word ’purchase’ as buying for price
or equivalent of price by payment in kind or adjustment
towards an old debt or for other monetary consideration from
the legal meaning of that word in s. 54(1) of the Act. [873
B-D]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Special Leave Petition
(Civil) No. 1557 of 1979.
From the Judgment and Order dated 1-2-1978 of the
Andhra Pradesh High Court in Case Referred No. 114 of 1976.
Soli J. Sorabji, Solicitor General and Miss A.
Subhashini for the petitioner.
S.T. Desai, K. J. John and A. K. Verma for the
Respondent.
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The order of the Court was delivered by
KRISHNA IYER, J. -We regard the single point,
persuasively presented by the learned Solicitor General on
behalf of the petitioner (The Commissioner of Income Tax,
Andhra Pradesh), as deserving of a speaking order, although
in dissent, since the question may arise again and needs to
be silenced.
873
Briefly, the facts. Four brothers, members of a
coparcenery, partitioned their family properties, leaving in
common a large house in the occupation of their mother. The
eldest, who is respondent before us, sold his own house at a
price sufficient to attract handsome capital gains tax, but
he pre-empted the demand for tax by acquiring the common
house from his three brothers who executed three release ,,
deeds for a consideration of Rs. 30,000/- each, adjusted
towards the extra share (Jeshtabhaga) agreed to be given to
the eldest by the next three. It is common ground that if
these release deeds did .. amount to purchase of the house,
s. 54(1) of the Income Tax Act, 1961, would save the
respondent from exigibility to tax. So the short question,
neatly identified by the learned Solicitor General is
whether release deeds by sharers in favour of one of them
whereby the joint ownership of all became separate ownership
of one amount to purchase of house property within the
meaning of s. 54(1) of the Act. The High Court has held it
is and we concur. Undoubtedly, each , release, in these
circumstances, is a transfer of the releaser’s share for
consideration to the release. In plain English, the
transferee purchases the share of each of his brothers. It
is for a price of i Rs. 30,000/- each. Had this been taken
from non-fraternal owners of shares or from one stranger-
owner, plain-spoken people would have called it a purchase.
Why, then, should legalist be allowed to play this
linguistic distortion. The reason, supposedly supported by
an English decision, is that purchase primarily means
acquisition for money paid, not adjusted Upjohn, J. in
Habshaw Brothers Ltd. v. Mayer has circumspectly said :
There are no doubt to be found authorities and
statutes which have extended that meaning. In Mr. T.
Cyprian Williams book, the Contract of Sale of Land, at
p. 3 he says: "’sale’, in the strict and primary sense
of the word, ’means’ an agreement for the conveyance of
property for a price in money; but the word ’sale’ may
be used in law in a wider sense and so applied to the
conveyance of land for a price consisting wholly or
partly of money’s worth other than the conveyance of
some other land."
Apparently he considered that a sale for something
other than money can in a wider sense be properly
described as a sale.
We agree. The signification of a word of plural semantic
shades may, in a given text, depend on the pressure of the
context or other indicia. Absent such compelling mutation of
sense, the speech of the lay is also the language of the
law.
874
We find no reason to divorce the ordinary meaning of
the word ’purchase’ as buying for a price or equivalent of
price by payment ill kind or adjustment towards an old debt
or for other monetary consideration from the legal meaning
of that word in Sec. 54 (1). If you sell your house and make
a profit, pay Caesar what is due to him. But if you buy or
build another subject to the conditions of Sec. 54(1) you
are exempt. The purpose is plain; the symmetry is simple,
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the language is plain. Why mutilate the meaning by lexical
legalism. We see no stress in the section on ’cash and
carry’. The point pressed must, therefore, be negatived. We
have declined lo hear Sri S. T. Desai’s artillery fire
although he was armed cap a pie with Mitakshara lore and
law. A point of suffocating scholarship sometimes arrives in
court when one nostaligically remembers the escapist verse:
"Where ignorance is bliss,
"Tis folly to be wise."
Amen !
A passing reference to avoidance and evasion of tax was
made at the bar, a dubious refinement of a dated legal
culture sanctified, though, by judicial dicta. The court is
not the mint of virtue and one day in our Welfare State
geared to Social Justice, this clever concept of ’avoidance’
against ’evasion’ may have to be exposed. Enough unto the
day is the evil thereof.
N.K.A. Petition dismissed.
875