3. The short point that arises for consideration in this appeal is whether the appellant can be said to have purchased the residential flat within a period of one year after the sale of residential property from which capital gains arose and, therefore, whether the appellant is entitled to the benefit of exemption under Section 54. The main contention urged on behalf of the appellant before us is that the Commissioner erred in holding that the date, viz., 3-3-1983 on which the sale deed was executed and registered in favour of the assessee must be taken to be the date of purchase of the flat by the appellant for purposes of exemption under Section 54. It was urged by Shri M.J. Swamy for the assessee that the provision in Section 54 for purchase of residential house within a period of one year before or after the transfer of the capital asset from which the capital gain had arisen is directory and not mandatory and, therefore, substantial compliance with that requirement is sufficient for the assessee to be entitled to exemption under Section 54. It was further contended that where within the statutory period of one year specified in Section 54, the assessee had entered into an agreement to purchase a residential house, paying the consideration wholly or in part, and the agreement had eventually resulted or crystallised in the purchase under a duly executed and registered conveyance deed, though such crystallisation took place after the expiry of the statutory period of one year, he must be deemed to have substantially complied with the condition of purchase of the residential flat within the statutory period so as to be eligible for exemption under Section 54. Shri Swamy further submitted that the word 'purchase' occurring in Section 54 must be construed liberally and not strictly so as to further the object for which that provision has been made. It was his plea that the Hon'ble Supreme Court in the case of CIT v. T.N. Aravinda Reddy [l979] 120 ITR 46, affirmed the decision of the Hon'ble Andhra Pradesh High Court in CIT v. T.N. Aravinda Reddy [l979] 116 ITR 551 and construed the release by co-owners whereby the assessee therein obtained a release of undivided interest of his brothers in the property, as a transaction of purchase within the meaning of Section 54. He pleaded that if such a liberal construction is adopted for the purpose of effectuating the intention of the Legislature, it is reasonable to construe the date of agreement of purchase as the date of purchase in a case where the agreement has eventually crystallised into a concluded purchase, though such crystallisation might have taken place after the expiry of the statutory period.
8. The dispute is with regard to the construction that is to be placed on the word 'purchase'. In our view, the expression 'purchase' occurring in Section 54 is not synonymous with 'ownership' or 'transfer of legal title' whereas in Sections 22 and 45 of the Act, which are the charging sections creating tax liability, the words used are 'owner' and 'transferor' and they connote legal title. These words are conspicuous by their absence in Section 54 which provides exemption. Therefore, the date of purchase for purposes of Section 54 need not necessarily be the date on which the legal title is vested in the purchaser. Construing Section 54 liberally in order to effectuate the object of the Legislature, the date on which the assessee had entered into the transaction of purchase which eventually resulted or crystallised into purchase under a duly registered conveyance deed, could be taken as the date of purchase. No doubt, Section 47 of the Registration Act provides that registration, as and when it takes place, takes effect from the date of execution of the deed. That may be the position so far as transfer of legal title is concerned. Here, we are not concerned with ownership and hence this legal position does not stand in the way of taking the date of the agreement (to purchase) as the date of purchase for the purposes of Section 54 in a case where the agreement has eventually crystallised into purchase, though after the statutory period of one year. In fact the Supreme Court in T.N. Aravinda Reddy's case (supra), held that acquisition through release from other co-owners amounts to purchase within the meaning of Section 54(1). In that case, the Hon'ble Supreme Court found no reason to divorce the meaning of the word 'purchase' as buying for a price or the equivalent of price by payment in kind or adjustment towards old debt or for other monetary consideration, from the legal meaning of that word in Section 54(1). Their Lordships further observed :