TITLE: S. 2(47)/ 54: If an agreement to sell is entered into within
the prescribed period, there is a transfer of some rights in favour of the
vendee. Fact that sale deed could not be executed within the time limit owing
to supervening problem is not a bar for s. 54 exemption
Consequences of execution of the agreement to sell are
very clear and they are to the effect that the appellants could not have sold
the property to someone else. In practical life, there are events when a
person, even after executing an agreement to sell an immoveable property in
favour of one person, tries to sell the property to another.
In our opinion, such an act would not be in accordance with law
because once an agreement to sell is executed in favour of one person, the said
person gets a right to get the property transferred in his favour by filing a
suit for specific performance and therefore, without hesitation we can say that
some right, in respect of the said property, belonging to the appellants had
been extinguished and some right had been created in favour of the
vendee/transferee, when the agreement to sell had been executed. A right in
respect of the capital asset, viz. the property in question had been
transferred by the appellants in favour of the vendee/transferee on 27.12.2002.
The sale deed could not be executed for the reason
that the appellants had been prevented from dealing with the residential house
by an order of a competent court, which they could not have violated.
As
held in Oxford
University Press vs. CIT [(2001) 3 SCC 359] a purposive interpretation of the
provisions of the Act should be given while considering a claim for exemption
from tax and one can very well interpret the provisions of Section 54 read with
Section 2(47) of the Act, i.e. definition of “transfer”, which would enable the
appellants to get the benefit under Section 54 of the Act.