TMI Blog1996 (6) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... -------------------------------------------------------------------------------------- Date of Premises No. Purchased From Amount Agreement --------------------------------------------------------------------------------------------------------------------------------------------------- 24-2-1992 1407, Prasad Chambers Mrs. Chitralekha P. Shah 40,41,001 30-2-1992 134, Panchratna Ramesh D. Shah 16,60,000 Total Purchase Value 57,01,001 -------------------- --------------------------------------------------------------------------------------------------------------------------------------------------- The above agreements are at pages 57 to 70 of the assessee's paper book. The relevant portion of the agreement dated 24-2-1992 entered into between Mrs. Chitralekha P. Shah and another and the assessee-company reads as under :-- "Whereas the vendors are members of the Prasad Chambers Premises Co-op. Society Ltd., (hereinafter referred to as 'THE SAID SOCIETY' who are the owner of the building known as Prasad Chambers) and as such member, the Vendors have 5 (five) shares of the face value of Rs. 50 each of the said Society and are in sole and exclusive use and occupat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer is whether there is any transfer of the two premises in favour of the assessee before 31-3-1992 and in the circumstances, whether the assessee is eligible for deduction of the cost of acquisition of these two premises from the sale proceeds of the other premises sold for arriving at the short-term capital gains in terms of section 50 of the Income-tax Act. 7. The assessee has worked out the short-term capital gains at a 'nil' figure as per the working given below :-- Sale proceeds of the Premises Sold Rs. 52,21,000 Less : W.D.V. of the Premises Sold Rs. 7,88,738 (Wrongly described as Original Cost in the assessment order). Premises transfer charges Rs. 28,470 New Premises purchased Rs. 57,01,001 ---------------------------- Rs. 65,18,209 ---------------------------- Short-term capital gains under section 50 'nil'. 8. The Assessing Officer was of the view that as the No Objection Certificate from the appropriate authority was not received before 31-3-1992, there was no transfer of the premises in favour of the assessee within the financial year 1991-92 and so, the assessee-company is not eligible for taking advantage of the deduction of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also pleaded that once a sale agreement is entered into, the assessee has done everything legally required to acquire new assets. The No Objection Certificate granted by the appropriate authority under Chapter XXC operates retrospectively from the date of the sale agreement. It is also pleaded that under the terms of section 50, the word used with reference to the new assets is "acquired" in contradistinction towards like "purchased" or "transferred". The word "acquired" which is used in sub-clause (3) of section 51 is, it is argued, of a very amorphous nature and it is much wider than the specific terms like "purchased" or "owned' or "transferred." 13. The learned counsel for the assessee agreed that the issue raised in this appeal is res integra but sought to take support from certain decisions given under section 54 of the Income-tax Act. 14. Under section 54, for claiming exemption from the levy of capital gains on the transfer of a residential property, another property has to be purchased two years after the date of the transfer of the original properly. In this section, the word used is "purchased" and not "acquired." 15. The learned counsel for the assessee referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. It may be observed that what is laid down in the above case is domain over the flat and investment in it and not legal title to ownership. It is pleaded that in the case of the appellant, the conditions laid down by the Hon'ble High Court in the above case are satisfied. The cheques were delivered in the accounting year on the dates of the agreement even though they were cleared in the subsequent accounting year. According to the assessee, possession of the two premises was obtained and this fact has not been controverted by the Revenue authorities in their orders or even before us. So, it is claimed that the light of the ratio of the decision of the Bombay High Court, it has to be regarded that the assessee has "acquired" the properties within the meaning of section 50. It is also claimed that, as already mentioned, the word "acquired" is amorphous and much more non-specific than the word "purchased" used in section 54 and considered by the Hon'ble Bombay High Court. Actually, the learned counsel for the assessee pleaded that even the sale agreement is sufficient for an assessee to claim that he has acquired a properly within the meaning of section 50. The satisfaction of ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee pleaded that if the proposition made on behalf of the revenue is accepted, the assessee who wants to buy a new asset and thus claim a suitable relief under section 50 cannot enter into a transaction after say November or December of the financial year as almost three or four months have to be allowed to the appropriate authority for the issue of the No Objection Certificate. Such a restriction on the option available to the assessee would go to defeat the very purpose of section 50 which is supposed to encourage investment in new assets. He also referred to the decision of the Hon'ble Supreme Court in the case of Addl. CIT v. Surat Art Silk Cloth Mfrs'. Association [1980] 121 ITR 1/[1979] 2 Taxman 501 and mentioned that in case of doubt, the Court has to resort to some construction to further the purpose of the statute. The relevant portion of the Head Notes regards as follows : " If the language of a statutory provision is ambiguous and capable of two constructions, that construction must be adopted which will give meaning and effect to the other provisions of the enactment rather than that which will give none. " 22. The learned Departmental Representative contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quisition passed by the appropriate authority becomes final only after the period for filing the appeal to the ITAT expired. In case an appeal was filed, it became final only after the decision of the Income-tax Act or the High Court, as the case may be, became available or the time for filing the appeal expired. In other words, an order of acquisition did not automatically vest the property acquired in the Central Government. 26. Under the provisions of section 269-I(5), property vested in the Central Government only after the order of acquisition became final i.e. after all the appellate proceedings were exhausted. This shows that there could be a considerable time gap between the acquisition and vesting of rights. In other words, acquisition of a property precedes and is not synonymous with the title to the property. To our mind, this seems to be an internal evidence available in the Act itself to support the proposition made by the learned counsel for the assessee that the word 'acquired' used in section 50 is of a very amorphous nature. 27. At any rate, the contentions of the learned counsel are supported by the decision of the jurisdictional High Court in the case of Mrs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights of the owner, not on behalf of the owner but in his own right. He has also relied upon the cases considered in the context of the liability to short-term capital gains under section 50 discussed above. 31. The learned Departmental Representative has also relied upon the decisions cited by him supra. 32. We are of the view that this claim of the assessee cannot be entertained under the provisions of section 32 of the Income-tax Act. Under section 32, it is mandatory that an asset has to be owned for the assessee to be eligible for depreciation. It has to be considered whether the assessee has really owned the two premises in question. As mentioned hereinbefore, sale agreements were executed, sale consideration was paid by cheque during the year of account and possession was also obtained. The sale deeds were not executed in the year of account and the cheques were cleared only in the subsequent year of account. In the course of the hearing, it was explained to us that in the present case, no sale deeds had to be executed and no registration was also necessary. Only, the entries by way of a transfer of share certificates in the books of the concerned society had to be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but is also registered. 36. In the present case, as already mentioned, the transfer of the share certificates in the books of the society in support of the transfer of the title has not been effected within the accounting year. Further, the transfer is barred by the provisions of Chapter XXC. Under the provisions of this Chapter, there cannot be a transfer unless the appropriate authorities issue the No Objection Certificate. The prior and pre-emptive claim of the Central Government cannot be denied. In this view of the matter, we are of the view that it cannot be held that the assessee "owned" the premises within the meaning of section 32 of the Act even though we have held hereinbefore that it has "acquired" those two premises within the meaning of section 50 of the Income-tax Act. In other words, even if the premises are included in the block of assets, no depreciation can be granted. To our mind, there is no irreconcilable contradiction in such a situation. 37. Before we part with this order, we would make it clear that we are not expressing any view in this appeal as to what would happen in a similar situation in the case of a seller for liability to capital gains tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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