Commissioner of Income-Tax, Andhra
Pradesh Vs. T.N. Arvinda Reddy  INSC 198 (5 October 1979)
CITATION: 1980 AIR 96 1980 SCR (1) 872 1979
SCC (4) 421
Income-tax Act-1961 Section 54(1)-Scope of-Words
& Phrases-Purchase-Meaning of.
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]
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 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, 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
N.K.A. Petition dismissed.