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Friday, July 25, 2014

Test Identification Parade - Identification in court at the time of trail - effects in other than rape cases - Apex court held that It is argued that identification made in court is sufficient. Reliance is placed on Malkhansingh where this Court has held that substantive evidence is the evidence of identification in court. The test identification parade provides corroboration to the identification of the witness in court if required and what weight must be attached to the evidence of identification in court, is a matter for the court of fact to examine. There can be no dispute about this proposition. But in Malkhansingh this Court was dealing with a case of gang rape. This Court noted that courts below had concurrently found the evidence of prosecutrix to be implicitly reliable. This Court noted that the appellants raped the prosecutrix one after another. She was threatened and intimidated. All this must have taken time. This Court noted that it was not a case where the identifying witness had only a fleeting glimpse of the appellants. The prosecutrix had a reason to remember the faces of the appellants as they had committed a heinous offence and put her to shame. She had abundant opportunity to note the appellants features and due to the traumatic experience the faces of the appellants must have been imprinted in her memory and there was no chance of her making a mistake about their identity. The observations of this Court will have to be read against the backdrop of these facts. Facts of this case are different. The incident does not seem to have lasted for a long time. The eye-witnesses were sitting outside the Satsang hall. It cannot be said that they had sufficient opportunity to see the faces of the accused who were on the run. In such a case failure to hold identification parade is a serious drawback in the prosecution case. = Balbir …Appellant Versus Vazir & Ors. …Respondents = 2014 – July. Part – http://judis.nic.in/supremecourt/filename=41741

 Test Identification Parade - Identification in court at the time of trail - effects in other than rape cases - Apex court held that It   is   argued   that identification  made  in  court  is  sufficient.  Reliance  is   placed   on Malkhansingh where this Court has held  that  substantive  evidence  is  the evidence  of  identification  in  court.  The  test  identification  parade provides corroboration to the identification of  the  witness  in  court  if required and what weight must be attached to the evidence of  identification in court, is a matter for the court of fact to examine.   There  can  be  no dispute about this proposition.  But in Malkhansingh this Court was  dealing with a  case  of  gang  rape.   This  Court  noted  that  courts  below  had concurrently found the evidence of prosecutrix to  be  implicitly  reliable. This Court noted  that  the  appellants  raped  the  prosecutrix  one  after another.  She was threatened and intimidated.   All  this  must  have  taken time.  This Court noted that  it  was  not  a  case  where  the  identifying witness had only a fleeting glimpse of the appellants.  The prosecutrix  had a reason to remember the faces of the appellants as  they  had  committed  a heinous offence and put her to shame.  She had abundant opportunity to  note the appellants features and due to the traumatic  experience  the  faces  of

the appellants must have been imprinted in  her  memory  and  there  was  no chance of her making a mistake about their identity.   The  observations  of this Court will have to be read against the backdrop of these  facts.  Facts of this case are different.  The incident does not seem to have  lasted  for a long time.  The eye-witnesses were sitting outside the Satsang  hall.   It
cannot be said that they had sufficient opportunity to see the faces of  the accused who were on the run.  In such a case failure to hold  identification parade is a serious drawback in the prosecution case. =

Another significant aspect of this case is absence  of  identification
parade. 
Persons who were named in the FIR and others, who had witnessed  the
incident at different stages did  not  know  all  the  assailants  but  they
claimed that they  could  identify  the  assailants.   
But  the  prosecution
failed  to  hold  test   identification   parade.    
It   is   argued   that
identification  made  in  court  is  sufficient.  Reliance  is   placed   on
Malkhansingh where this Court has held  that  substantive  evidence  is  the
evidence  of  identification  in  court.   
The  test  identification  parade
provides corroboration to the identification of  the  witness  in  court  if
required and what weight must be attached to the evidence of  identification
in court, is a matter for the court of fact to examine.   There  can  be  no
dispute about this proposition.  But in Malkhansingh this Court was  dealing
with a  case  of  gang  rape.   This  Court  noted  that  courts  below  had
concurrently found the evidence of prosecutrix to  be  implicitly  reliable.
This Court noted  that  the  appellants  raped  the  prosecutrix  one  after
another.  She was threatened and intimidated.   All  this  must  have  taken
time.  This Court noted that  it  was  not  a  case  where  the  identifying
witness had only a fleeting glimpse of the appellants.  The prosecutrix  had
a reason to remember the faces of the appellants as  they  had  committed  a
heinous offence and put her to shame.  She had abundant opportunity to  note
the appellants features and due to the traumatic  experience  the  faces  of
the appellants must have been imprinted in  her  memory  and  there  was  no
chance of her making a mistake about their identity.   The  observations  of
this Court will have to be read against the backdrop of these  facts.  Facts
of this case are different.  The incident does not seem to have  lasted  for
a long time.  The eye-witnesses were sitting outside the Satsang  hall.   It
cannot be said that they had sufficient opportunity to see the faces of  the
accused who were on the run.  In such a case failure to hold  identification
parade is a serious drawback in the prosecution case.

23.   Having applied our mind to the evidence  on  record,  we  are  of  the
opinion that the prosecution has failed to prove its case beyond  reasonable
doubt.  We are mindful of the fact that this case involves two  murders  and
use of firearms. Crime is grave. But the  High  Court  has  scrutinized  the
evidence correctly in light of settled legal principles.   The  evidence  on
record creates some suspicion, but does not prove the offence to  the  hilt.
The accused are, therefore, entitled to benefit of doubt.   Besides,  as  we
have already noted the instant appeals challenge  the  order  of  acquittal.
We do not find the High Court’s judgment to be perverse.   The  High  Court,
in our opinion, was justified in interfering  with  the  conviction  of  the
accused.  The view taken by the High Court is  legally  unassailable  and  a
factually possible view. We, therefore, affirm it.

24.   In the result, the appeals are dismissed.



2014 – July. Part – http://judis.nic.in/supremecourt/filename=41741


NON-REPORTABLE


                        IN THE SUPREME COURT OF INDIA
                       CRIMINAL APPELLATE JURISDICTION
                    CRIMINAL APPEAL NOs.1535-1538 OF 2004


Balbir                                        …Appellant

                                   Versus

Vazir & Ors.                                       …Respondents

                                    WITH

                       CRIMINAL APPEAL NO.1539 OF 2004

State of Rajasthan                            …Appellant

                                   Versus

 Lichman & Anr                               …Respondents

                                    WITH

                       CRIMINAL APPEAL NO.1540 OF 2004


State of Rajasthan                            …Appellant

                                   Versus

Vazir & Ors.                                       …Respondents

                                    WITH

                      CRIMINAL APPEAL NO. 1541 OF 2004


State of Rajasthan                            …Appellant

                                   Versus

Hoshiyar Singh & Ors.                      …Respondents


                               J U D G M E N T


(SMT.) RANJANA PRAKASH DESAI, J.


1.    These  appeals  arise  out  of  a  common  judgment  and  order  dated
23/1/2004 passed by the Rajasthan  High Court  in D.B. Murder Reference  No.
1 of 2002, D.B. Criminal Appeal No. 781 of 2002, D.B.  Criminal  Appeal  No.
718 of 2002 and D.B. Criminal Appeal No. 105 of 2003. Criminal  Appeals  No.
1535-1538 of 2004 are filed by PW-4 Balbir and Criminal  Appeal  Nos.  1539,
1540 and 1541 of 2004 are filed  by  the  State  of  Rajasthan  against  the
acquittal of the  accused.  Since  these  appeals  arise  out  of  the  same
judgment they are being disposed of by this common judgment.


Gist of the prosecution case:
2.     Deceased Krishna Gir (also referred to  as  ‘Krishna  Gir’)  was  the
Head Priest of ‘Balakdera Ashram’  situated at Hissar in  Haryana.   Krishna
Gir was also having ultimate supervision  and  control  over  other  Ashrams
associated with this Ashram. Baba Lal  Gir  Ashram  at  village  Rampura  in
Rajasthan  where the incident occurred was also one of  such  Ashrams  which
was under  the  supervision  and  control  of  ‘Balakdera  Ashram’.  Amongst
others, one Pokhar-Khedi Ashram situated at  village  Pokhar-Khedi  in  Jind
District of  Haryana  and  its  Priest  were  also  under  the  control  and
supervision of ‘Balakdera Ashram’.  Pokhar-Khedi Ashram had about 100  acres
of land.  In the past, it was  managed  by  its  Priest  Mangeram.    Priest
Mangeram transferred that land in the names of his nephew Joragir and  other
members of his family.  He also executed a  Will  in  respect  of  the  said
land. When this fact came to  the  knowledge  of  Krishna  Gir  through  the
villagers of Pokhar-Khedi, he filed a civil suit  for  cancellation  of  the
transfer of said land made by Priest Mangeram. The civil  suit  was  decreed
in favour of Krishna Gir.  The decree  was  maintained  by  the  Punjab  and
Haryana High Court as well as by the Supreme Court.  During the pendency  of
the said litigation,   Priest Mangeram  died. Joragir, the nephew of  Priest
Mangeram, claimed to be his successor   but  he  was  not  allowed  to  take
charge. Subsequently, Krishna Gir was appointed as  Priest  of  Pokhar-Khedi
Ashram. Krishna Gir  recovered the possession of the  land  of  Pokhar-Khedi
Ashram in execution of the  decree.  Because  of  this  dispute   there  was
enmity between Krishna Gir and the accused.  An  attempt  was  made  on  the
life of Krishna Gir in Jind Court premises.   The  accused  party  tried  to
regain  possession  of  the  land.   In  that  dispute   one   child   died.
Thereafter, Krishna Gir was assaulted with knife  at  Balakdera.   Cases  in
relation to all these incidents  are  stated  to  be  pending  in  different
courts in Haryana State.  It is the prosecution case  that  on  12.7.2000  a
conspiracy was hatched in the house of  accused  Hoshiyar  Singh  at  Pokhar
Khedi whereby Hoshiyar Singh, Rajmal, Jage Gir, Joragir,  Vazir,  Sohan  Gir
and Lichman conspired to kill  Krishna  Gir.   In   pursuance  of  the  said
conspiracy Krishna Gir  and his disciple Sewanand  Gir  were  shot  dead  on
23.7.2000 at 11.05 A.M at Baba Lalgiri Ashram in village Rampura.

3.    FIR relating to the incident:
      On 23/07/2000  at 11.05 a.m. PW-23 Lakhma Ram Rathore,   Station House
Officer of RPS, Hamirvas, Rajasthan received  an   intimation   from  Police
Station In-charge, Rajgarh, District Churu, Rajasthan that there was  firing
at the Ashram of Baba Lal Giri in Rampura Village.  On  the  basis  of  this
information, PW-23 Lakhma Ram Rathore along with one ASI  and  police  force
reached the site of occurrence  where  PW-1  Puranmal  submitted  a  written
report.  According to this  report,  Baba  Lalgiri  Ashram  is  situated  in
village Rampura, Tehsil Rajgarh, District Churu, Rajasthan and  there  is  a
‘Samadhi’ of  Baba Lalgiri. The Ashram was under the supervision  of  Priest
Mangal  Gir.  Every  year,  at  the  Samadhi,  on  the  occasion  of   death
anniversary of Baba Lalgiri, a ‘Yagya’ was being performed.   Following  the
said tradition, on 17/7/2000,  a ‘Yagya’ was  arranged at the  Baba  Lalgiri
Ashram.   The  ‘Yagya’  was  scheduled  to  culminate  on   23/7/2000.    On
23/7/2000, a community lunch  was  in  progress.     Number  of  Saints  and
community people  had  gathered  to  take  part  in  this  ‘Yagya’.   Priest
Krishna Gir was supervising the ‘Yagya’.   Priest Krishna  Gir  was  sitting
alone on a wooden  bench  in  the  Satsang  Hall  of  Baba  Lalgiri  Ashram.
Disciple Sewanand  was sitting on a mat  at a distance of 2  feet  from  the
wooden bench. Some other villagers including  PW-4  Balbir  Singh  and  PW-5
Pratap Singh were sitting at a distance of 10 feet from  the  wooden  bench.
The Priest  Mangal Gir was sitting  near  the  gate  of  the  Ashram.   PW-1
Puranmal (informant) was sitting in the store room of  the  Ashram.    PW-10
Ummed Singh of Beri village was also sitting  in  the  Ashram.  People  were
moving around for paying their respect to  Krishna Gir.  All  of  a  sudden,
between 10.30 a.m to 10.45 a.m,  two persons  armed with fire  arms  entered
the Satsang Hall from the rear gate of the Ashram.  One of them was  wearing
pant and bush shirt and another was in kurta pyjama. The  man  wearing  pant
and bush shirt fired at  Krishna Gir.   Resultantly,   Krishna  Gir  started
bleeding  profusely.  Sewanand  tried  to  grab  the  person  who  fired  at
Krishna Gir.  Then the man wearing kurta  payjama  fired  at  Sewanand  with
intention to kill him. Consequently, Sewanand also  became  unconscious  and
fell down. Seeing this, PW-1 Puranmal, PW-10 Ummed Singh and  Priest  Mangal
Gir   raised cries and ran after  the  assailants.  They  noticed  one  more
person  standing at the rear gate armed with a double-barrel gun.  This  was
also witnessed by PW-12 Jagdish Prasad,  Prajapat  of  village  Rampura  and
Baba Samundra Gir of Bhiwani. All these three persons ran  towards  the  car
which was parked on the road. One person was standing near the  parked  car.
The man armed with double-barrel gun fired in the air  after  reaching  near
the car.  Those four persons sat in the  car  and  escaped  towards  railway
station.   This was witnessed by PW-9 Veer Singh and Krishan Singh.   Manish
Singh  noted the number of car parked on the  road  as  HR-26-G-8928   which
was of Ceilo make  and of Grey colour.  Krishna Gir and Sewanand were  taken
to ‘Bedwal Nursing Home’  at  Pilani  in  injured  state  by  two  different
vehicles. Sewanand (‘deceased Sewanand’) died on the way.   PW-2  Dr.  Tarun
Bedwal of ‘Bedwal Nursing Home’  after  giving  first  aid  to  Krishna  Gir
advised to take Krishna  Gir   either    to  Hissar  or  Delhi  for  further
treatment. Krishna Gir was taken to CMC Hospital, Hissar where he  succumbed
to the injuries.

4.    At 12.30 p.m. report was forwarded to Police Station, Hameervas by PW-
23 Lakhma Ram Rathore through Constable PW-18 Kunad Ram, which was  recorded
by PW-19 Sugan Singh at 2.00 p.m. as Case  No.130/2000  under  Section  302,
307, 120-B read with Section 34 of IPC and Section 3 read  with  Section  25
of the Arms Act.

5.     On completion  of  investigation,  the  case  was  committed  to  the
Sessions Court, Rajgarh for trial  and  charges   were  framed  against   11
accused persons  namely:  Vazir (A1),  Joragir (A2),  Hoshiyar  Singh  (A3),
Rajmal (A4),  Jage Gir (A5),  Balraj (A6),  Lichman (A7),  Sohan  Gir  (A8),
Kulveer (A9),  Ramniwas (A10) and Lila @ Jogendra  (A11).  A1  and  A2  were
charged for  the offences punishable under Sections 148  and  302,  308   of
the IPC  as well as under Section 3 read with Section 25  of  the  Arms  Act
for committing the murder of  deceased Krishna Gir  and  deceased  Sewanand.
A3, A4, A5, A6, A8 and A9 were charged for  the  offences  punishable  under
Sections 148 and 120B of the IPC.  In addition to charge under Sections  148
and 120B, A4 was also charged  under Section 3 read with Section 30  of  the
Arms Act and A9  was  charged  under Section 302 read with  Section  149  of
the IPC.  A7, A10 and A11 were charged under Sections 148 and 302 read  with
Section 149 of the IPC. The prosecution, in support of  its  case,  examined
as many as 31 witnesses (PW-1 to PW-31).  No defence evidence  was  adduced.
In their statements recorded under Section  313  of  the  Code  of  Criminal
Procedure, (for short, “the Cr.P.C.”), the appellants stated that they  were
innocent.



6.      The trial court convicted  A1 and A2 under Sections  120B,  148  and
302  of the IPC for committing the murder of   Krishna  Gir  and   Sewanand.
They were sentenced to death for offence punishable  under  Section  302  of
the IPC. They were further sentenced to two years rigorous imprisonment  for
offence punishable under Section 148 of the IPC. However,  A1  and  A2  were
acquitted of charges under Section 308 of the IPC as well as  under  Section
3 read with Section 25 of the Arms Act.  A6  and  A7  were  convicted  under
Sections 120B,  148  and  302    read  with  Section  149  of  the  IPC  for
committing murder of  Krishna Gir and  Sewanand.   They  were  sentenced  to
undergo imprisonment for life under Section 302 read  with  Section  149  of
the IPC and to pay Rs. 5,000/- each as fine, in default of payment of  fine,
to undergo further rigorous  imprisonment  for  3  months.  They  were  also
sentenced to two years rigorous imprisonment for  offence  punishable  under
Section 148 of the IPC.     Rest  of  the  accused  were  acquitted  of  all
charges.

7.    A D.B. Murder Reference No. 1/2002 was made by the trial court to  the
High Court under Section 366 of the Cr.P.C.  A1 and A2 filed  D.B.  Criminal
Appeal No. 781/2002 and A6 and A7 filed Criminal Appeal No. 718/2002  before
the High Court against their conviction and sentence.   The  High  Court  by
the impugned order allowed the Criminal Appeals of A1, A2,  A6  and  A7  and
set aside their conviction and sentence awarded  by  the  trial  court.  The
High Court confirmed the acquittal of rest of the accused  recorded  by  the
trial court.  Hence  the instant appeals.


8.    We have  heard  Mr.  Rishi  Malhotra  learned  counsel  appearing  for
appellant Balbir, Mr. Ansar Ahmad Chaudhary and Ms.  Ruchi  Kohli  appearing
for State of Rajasthan and Mr. Makrand D. Adkar  with  Mr.  Vishwajit  Singh
appearing  for  the  respondents.   We  have  also   perused   the   written
submissions filed by them.

9.    Gist of the submissions on behalf of appellant-Balbir.

i)    The prosecution case  basically  hinges  upon  the  evidence  of  PW-3
      Prithvi Gir, PW-4 Balbir Singh and PW-5 Pratap Singh.  The High  Court
      wrongly overlooked their evidence.

ii)   PW-2 Dr. Bedwal had testified that on 23/07/2000 deceased Krishna  Gir
      was brought by PW-3 Prithvi Gir at his nursing  home.   At  that  time
      deceased Krishna Gir was conscious and was in a position to speak.

iii)  PW-3 Prithvi Gir stated that deceased Krishna Gir  was  taken  to  the
      hospital of PW-2 Dr. Bedwal and Krishna Gir made dying declaration  in
      the car.  PW-3 Prithvi Gir also stated that deceased Krishna Gir  told
      him that he was shot at by accused Vazir and his disciple Sewanand was
      shot at by accused-Joragir.

iv)    Eyewitnesses  PW-4  Balbir  Singh  and   PW-5   Pratap   Singh   have
      corroborated PW-3 Prithvi Gir.

v)    PW-3 Prithvi Gir gave detailed narration of the motive as well as  the
      earlier two attempts made by the accused to kill deceased Krishna Gir.
       He stated that the accused had grudge against deceased Krishna Gir as
      he had taken possession of the Dera Land  situated  at  Village  Pokar
      Kheri from their uncle Mange Giri.  He also stated that accused  Wazir
      was a habitual criminal and he  had  made  earlier  attempts  to  kill
      deceased Krishna Gir.  PW-4  Balbir  Singh,  PW-5  Pratap  Singh  have
      corroborated PW-3 Prithvi Gir on the aspect of motive.

vi)   This is a case of strong motive.  The accused had lost  possession  of
      the  Dera  land  which  was  taken  by  deceased  Krishna  Gir.    The
      complainant cannot be said to have any ill-design as they were already
      in possession of the land.

vii)  The first attempt on the life of deceased Krishna Gir was made in  the
      year 1996 when the deceased had gone  to  court  to  pursue  the  case
      against the accused.  The second attempt was  made  in  Hissar  court.
      This attempt was also unsuccessful.

viii) The conduct of  accused Vazir speaks for itself  as  he  escaped  from
      jail and killed deceased Krishna Gir in broad daylight.  Thus, he  has
      no fear of law.

ix)   The High Court has not come to the conclusion that  evidence  of  PW-4
      Balbir Singh and PW-5 Pratap Singh was, in any way, infirm as  regards
      the actual occurrence. The High Court  has  unnecessarily  given  much
      importance to technical flaws in the investigation.  The High  Court’s
      judgment  is  perverse.    It  has  acquitted  the   accused   thereby
      completely effacing the cogent  eye-witness  account  of  PW-4  Balbir
      Singh and PW-5 Pratap Singh, the consistent evidence of  PW-3  Prithvi
      Giri and other relevant evidence on record.

x)    As held in  Swami  Shradanand(2)  alias  Murali  Manohar  Mishra    v.
      State of Karnataka [1] at the most sentence could have  been  commuted
      to life imprisonment.  It could have been altered to 20  years  or  30
      years imprisonment without remission. The  accused  certainly  do  not
      deserve any leniency.    Their  acquittal  is  totally  erroneous  and
      unjust.

10.   Written submissions on behalf of respondents-accused.

i)    Deceased Krishna Gir and deceased Sewanand were shot at on  23/07/2000
      at 10.30 a.m.  Krishna Gir died at 3.10 p.m. in hospital at Hissar and
      Sewanand died while being taken to hospital.  PW-1  Puranmal  who  was
      present at the site filed written complaint at 12.30 p.m. and FIR  No.
      30 of 2000 came to be registered at 2.00 p.m.   Written  complaint  or
      the FIR does not disclose the names of the  assailants,  though,  they
      were recorded promptly after the incident.

ii)    There  are  two  prosecution  stories,  one  is  introduced  by  PW-1
      Puranmal, who has filed the FIR and the other is  introduced  by  PW-3
      Prithvi Gir, 3 days after the incident.  These two versions differ.

iii)  PW-1 Puranmal in complaint/FIR specifically says that  the  assailants
      could be identified if seen.  However, no  identification  parade  was
      held.

iv)   Presence of PW-3 Prithvi Gir is not mentioned in  any  contemporaneous
      documents. The prosecution story introduced in  the  complaint/FIR  is
      not supported by the evidence of witnesses.

v)    Three days after the incident PW-3  Prithvi  Gir  came  out  with  the
      story of oral dying declaration.  A bare look at the contents  of  the
      dying declaration show that it is a concocted piece of evidence.

vi)   The High Court has correctly analysed the  evidence  of  PW-3  Prithvi
      Gir, PW-4 Balbir Singh and PW-5 Pratap Singh and rightly come  to  the
      conclusion that the entire evidence  is  concocted  and  suffers  from
      improvements and contradictions.  The High Court  has  rightly  stated
      that the story is concocted by the successor of  Balakdera  i.e.  PW-3
      Prithvi Gir to implicate as many rivals as possible  due  to  existing
      bitter rivalry.

vii)  The presence of PW-3 Prithvi Gir, PW-4 Balbir Singh  and  PW-5  Pratap
      Singh at the scene of offence is  not  proved.    After  perusing  the
      evidence   on  record  and  having  regard  to  the  other   attendant
      circumstances,  the High Court has  rightly  observed  that  the  said
      witnesses were not present at all. They  directly  reached  Hissar  at
      about 4.30 p.m. i.e. much after the death of deceased-Krishna Gir.

viii) The High Court has rightly acquitted the  accused  after  disbelieving
      the evidence of PW-3 Prithvi Gir and PW-4 Balbir Singh and PW-5 Pratap
      Singh.  The High Court’s judgment does not merit any interference.

11.   Gist of submissions on behalf of State of Rajasthan:

i)    It is an admitted position that there was enmity between the  deceased
      and the accused on  account  of  land  dispute  which  fact  has  been
      corroborated by the evidence of PW-3 Prithvi Gir, PW-4  Balbir  Singh,
      PW-5 Pratap Singh, PW-6 Maha  Singh.    PW-13  SI  Chandrabhan,  PW-17
      Kartar Singh and PW-26 Randhir Singh  have  confirmed  FIRs  in  cases
      relating to previous attempts made on the  life  of  deceased  Krishna
      Gir.  The High Court has ignored and not dealt with the statements  of
      above mentioned witnesses in relation to motive.

ii)   Both PW-4  Balbir  Singh  and  PW-5  Pratap  Singh  have  given  vivid
      description of how Krishna Gir was  killed.  They  have  stated   that
      accused Vazir shot at Krishna Gir and that  accused  Joragir  shot  at
      Sewanand.

iii)  There is no  discussion  in  the  impugned  judgment  as  regards  the
      details given by both the prosecution witnesses of the   incident   of
      killing of Krishna Gir and Sewanand by the accused  with  the  use  of
      firearms.  The High Court has wrongly overlooked the evidence of  PW-4
      Balbir Singh and PW-5 Pratap Singh.

iv)   There is  nothing  unnatural  about  the  dying  declaration  made  by
      deceased Krishna Gir.  Deceased Krishna Gir was taken to  hospital  at
      Pilani by PW-3 Prithvi Gir, which is corroborated by the statement  of
      PW-2 Dr. Bedwal.   Further, deceased Krishna Gir was with PW-3 Prithvi
      Gir from 11 a.m. to approximately 3.30 –  3.45  p.m.,  therefore,  the
      possibility of his making dying declaration during this period  cannot
      be ruled out as he was alive at Pilani.  This is corroborated by  PW-2
      Dr. Bedwal who referred deceased Krishna Gir to Hissar hospital.   The
      High Court fell  into  a  grave  error  in  not  believing  the  dying
      declaration.

v)    The eye-witnesses were disciples of deceased Krishna Gir  and  have  a
      reasonable and justified explanation as to why they gave statements on
      26/7/2000.  The evidence of   these witnesses is corroborated by other
      evidence on record.   There exists no  discrepancy  in  the  same  and
      cannot be discarded merely because  they  were  recorded   three  days
      after the incident.   In  the  circumstances  of  the  case  delay  in
      recording  statements  of  the  witnesses  does  not   discredit   the
      prosecution case.

vi)   The accused were identified by  PW-4  Balbir  Singh  and  PW-5  Pratap
      Singh in court.  Identification of the accused in court  is  not  bad.
      Failure to hold Identification Parade would not make inadmissible  the
      evidence of identification  in  court.   The  High  Court  gave  undue
      importance to absence of identification parade.   In  this  connection
      reliance can be placed  on  Malkhansingh  and  Ors.    v.    State  of
      M.P.[2].

vii)  The High Court’s judgment is perverse.  The  High  Court  has  ignored
      cogent evidence of eye-witnesses and given undue importance  to  minor
      discrepancies.  The High Court grossly erred in setting aside the well
      reasoned judgment of the trial court.   This  has  resulted  in  grave
      miscarriage of justice.  It is, therefore, necessary to set aside  the
      impugned judgment.

12.   We are dealing with an appeal against  acquittal.   The  acquittal  is
not recorded by the trial court but by the High Court.  We  shall  therefore
see whether there were sufficient reasons for the High Court  to  set  aside
the conviction.  We must however bear in mind that if the view taken by  the
High Court is a reasonably possible view it should not be disturbed  because
the acquittal of the  accused  by  the  High  Court   has  strengthened  the
presumption of their innocence.  We must also mention that according to  the
prosecution this is a case of strong motive.  Land disputes between the  two
sides and earlier attacks made on deceased Krishna Gir have been deposed  to
by the witnesses.  The High Court has observed that no documentary  evidence
is produced by the prosecution in support of this case.  However, we  cannot
dismiss the prosecution  case  of  enmity  between  the  two  sides  lightly
because reference to it is made by several witnesses.  But  that  by  itself
does not help the prosecution.  Just as there is a  possibility  of  murders
having been committed because of motive due  to  enmity,  there  is  also  a
possibility of false implication of innocent people to settle  past  scores.
That is why it is said that motive is a double edged weapon.  We shall  keep
this in mind and approach the case.

13.   PW-1 Puranmal a resident of Rampura lodged the FIR  (Ex.P1)  at  12.30
P.M on 23/7/2000.  He involved four persons as assailants but did  not  name
them.  He turned hostile.  We shall advert to the FIR a little later.

14.   The prosecution relied on two eye-witnesses.   They  are  PW-4  Balbir
Singh and PW-5  Pratap  Singh.  Before  turning  to  their  evidence  it  is
necessary to refer to evidence of PW-3 Prithvi Gir, a disciple  of  deceased
Krishna Gir who deposed about the  presence  of  the  eye-witnesses  at  the
scene of offence  and also about the dying  declaration  allegedly  made  by
deceased Krishna Gir to him. PW-3 Prithvi Gir is not an eye witness  to  the
incident.  He stated that deceased Krishna Gir had asked him to come to  the
Dera of Lalgiri Maharaj situate at Rampura on 23/7/2000, as the Yagya  which
deceased  Krishna  Gir  was  supervising  was  to  conclude  on  that   day.
Accordingly, PW-3 Prithvi Gir went to Rampura on  22/7/2000.   According  to
PW-3 Prithvi Gir at 10.30 in the morning of 23/7/2000 deceased  Krishna  Gir
was sitting on a bench in the small Satsang room inside the Dera.   Deceased
Sewanand was sitting at a distance of 2’ from  deceased  Krishna  Gir  on  a
mat.  PW-4 Balbir Singh, PW-5 Pratap Singh, Hari Singh,  Rajvir  Singh  were
sitting at a distance of 10’ from deceased  Krishna  Gir.  Deceased  Krishna
Gir’s driver Leela was also sitting there.  PW-3 Prithvi Gir further  stated
that at 10.30 in the morning there was a sound of gunfire and stampede.   He
and Ramgiriji ran towards deceased Krishna Gir.  They saw him lying  on  the
bench with blood on his body.  Deceased Sewanand  was  lying  on  the  floor
with bullet injuries.  PW-3 Prithvi Gir further  stated  that  Sewanand  was
put in one vehicle and deceased Kirshna Gir was put in a  Sumo  vehicle  for
being taken to hospital at Pilani.  Along with PW-3 Prithvi Gir,   Ramgiriji
and one person from Rampura were there in the  Sumo  vehicle.  PW-3  Prithvi
Gir further stated that deceased Krishna Gir  was  conscious  and  told  him
that he and deceased Sewanand were shot at by Vazir son  of  Hoshiar  Singh,
Caste Gosain and Joragir son of Dunigir, caste  Gosain,  both  residents  of
Pokarkhedi; both of whom he  recognized  at  the  spot.  According  to  PW-3
Prithvi Gir deceased Krishna Gir further told him that  in  this  conspiracy
to kill him Dalelgiri disciple Ram Gir resident  of  Maham,  Hoshiar  Singh,
Rajmal, Jageram resident of Pokarkhedi and Sohangir disciple of  Gulab  Gir,
caste Gosain resident of Sukhura, District Jind and Baljit Singh, caste  Jat
 Gosain, village Pokarkhedi  and  Devnand  village  Mahiwal,  caste  Gusain,
presently employed with Delhi Police are also involved and  Lichman  son  of
Jagannath, caste Gusain, Village Pinjpura, District Kaithal, maternal  uncle
of Vazir conspired to shoot him.  According to PW-3 Prithvi Gir  the  doctor
at  the hospital at Pilani asked him to  take  deceased  Krishna  Gir  to  a
bigger hospital.  He was taken to CMC hospital at  Hissar,  where  he  died.
Deceased Sewanand died on way to Pilani.

15.   The prosecution heavily relied on  this  dying  declaration  allegedly
made by deceased Krishna Gir to PW-3 Prithvi Gir.  It is submitted that  the
fact that PW-3 Prithvi Gir took deceased Krishna Gir to hospital  at  Pilani
is corroborated by PW-2 Dr. Bedwal.  Presence of PW-3 Prithvi Gir  has  also
been mentioned in the inquest proceedings  conducted  by  PW-31  Prem  Singh
Huda after the death of deceased Krishna Gir. It is submitted that PW-2  Dr.
Bedwal stated  that  deceased  Krishna  Gir  was  in  a  position  to  talk.
Assuming, however, that deceased Krishna Gir could talk  and  make  a  dying
declaration, the question is how far the narration of  the  facts  contained
in the alleged dying  declaration  is  true  and  whether  it  inspires  any
confidence.  Deceased Krishna Gir was seriously injured.   He  succumbed  to
those injuries in the Hissar hospital.  He must have  been  in  great  pain.
It is inconceivable that deceased  Krishna  Gir  would  make  such  a  dying
declaration giving minute particulars like fathers name, caste  and  village
of each  alleged conspirator when he was  on  death  bed  with  excruciating
pain. It would have been natural for him to just give the names.  But he  is
stated to have given details of each of the  ten  alleged  conspirators  and
that makes this dying declaration suspect.  A bare  reading  of  this  dying
declaration makes it evident that it is a doctored document.   Such  details
could not have been given by deceased Krishna Gir  at  that  stage.   It  is
possible that they have been supplied by PW-3 Prithvi Gir.  The  High  Court
in our   opinion has rightly observed that such  a  dying  declaration  does
not appear to be natural, but  portrays  an  attempt  by  the  successor  of
Balakdera i.e. PW-3 Prithvi Gir to plant  names  of  all   those  with  whom
Balakdera  had axe to grind through the  statement  attributed  to  deceased
Krishna Gir.   We  find  it  difficult  to  place  reliance  on  this  dying
declaration.

16.   It is well settled that an oral dying declaration can  form  basis  of
conviction if the deponent is in a fit condition  to  make  the  declaration
and if it is found to be truthful.  The courts as a matter of prudence  look
for corroboration to oral dying declaration. As we have already  noted,  the
dying declaration of deceased Krishna Gir does not inspire confidence.   One
can perceive an effort to involve number of persons by giving  their  minute
particulars.  It does not appear to be a natural voluntary  statement  of  a
dying man.  The prosecution could have infused some credibility in it if  it
had examined the driver of the car in which deceased Krishna Gir  was  taken
to the hospital  and  Ramgiriji  who  was  also  in  the  car.   It  is  not
understood why such  vital  evidence  is  kept  back.   Thus,  there  is  no
corroboration to  lend  assurance  to  the  dying  declaration  of  deceased
Krishna Gir.  In this connection, we may usefully refer to Heikrujam  Chaoba
Singh vs. State of Manipur[3] where the deceased was stated to have  made  a
dying declaration to his brother in the ambulance.  There  were  four  other
persons in the ambulance.  None of them was examined.   This  Court  refused
to place reliance on the dying  declaration  as  the  disinterested  persons
sitting in the van were not examined.  In the instant case, admittedly  PW-3
Prithvi Gir was very close to deceased Krishna Gir.  He  was  the  successor
of deceased Krishna Gir.  There was enmity between the accused and  deceased
Krishna Gir’s followers.  The prosecution should have,  therefore,  examined
the driver or Ramgiriji who was in the car.  This is  an  additional  reason
why alleged dying declaration of  deceased  Krishna  Gir  cannot  be  relied
upon.  Besides PW-3 Prithvi Gir’s statement was recorded  three  days  after
the incident casting further doubt  on  the  dying  declaration.   We  shall
advert to that aspect now.

17.   The dying declaration is allegedly made by deceased  Krishna  Gir  and
names of PW-4 Balbir Singh, PW-5 Pratap Singh, Hawa Singh and  Rajvir  Singh
were disclosed by PW-3 Prithvi Gir first  time  on  26/7/2000  at  Balakdera
when his statement was recorded by the police.   PW-3 Prithvi Gir’s  silence
for three days creates a grave doubt about the truthfulness  of  prosecution
story.  He was the  principal disciple and  successor  of  deceased  Krishna
Gir.  If deceased Krishna Gir had made a dying declaration and  communicated
the names of the assailants to him, his devotion to  his  Guru  should  have
prompted him to immediately disclose the names  of  the  assailants  to  the
police and others. His  silence  gives  scope  to  the  possibility  of  his
concocting a story involving number of persons from the  opposite  group  as
the perpetrators of crime.   As already  stated  by  us  in  this  statement
recorded three days after the incident PW-3 Prithvi Gir came out with  names
of four  persons  as  eye-witnesses.   If  PW-3  Prithvi  Gir  had  so  much
information, he should not have waited for three days to  disclose  it.   We
shall soon go to the evidence of the eye-witnesses  named  by  PW-3  Prithvi
Gir.  But the fact that their names surfaced three days after  the  incident
creates a doubt as to whether they were  really  present  at  the  scene  of
offence or whether this was a conscious decision  taken  within  three  days
after the incident to  create  evidence  by  citing  four  persons  as  eye-
witnesses.

18.   PW-4 Balbir Singh stated that on 23/7/2000 at about 8.00  a.m  in  the
morning, deceased Krishna Gir was sitting on a ‘Divan’  in  Satsang  Bhawan.
Sewanand was sitting on a mat  and  some  other  saints  were  also  sitting
there.   He stated that he and other saints were sitting under  a  Zal  tree
outside the Satsang Bhawan where deceased Krishna Gir was sitting.   But  he
also added that they were sitting 10 to 12 feet away from  deceased  Krishna
Gir.  It is pertinent to note that his statement that he was sitting  10  to
12 feet away from deceased Krishna Gir does not find place in his  statement
recorded under Section 161 of the Cr.P.C. and, therefore, it is  clearly  an
afterthought.  He and the other saints were, therefore,  sitting  under  the
Zal tree situated outside the Satsang Bhawan. Before we proceed further,  it
is necessary to note that the High Court has observed that according to  the
site plan, the situation of two Zal trees standing in  the  Ashram  is  such
that from that place it is not possible to  see  what  is  happening  inside
the Satsangh Bhawan.  PW-23 Lakmaram Rathore also stated that  according  to
the site plan, it is not possible  to  see  what  is  happening  inside  the
Satsangh Bhawan from the Zal  tree  standing  outside  the  Satsang  Bhawan.
Counsel for the State tried to argue  that  what  is  happening  inside  the
Satsang Bhawan is visible from  the  Zal  tree.   We  are  not  inclined  to
disturb this finding of fact recorded by the High Court which  we  are  sure
has been recorded after  carefully  perusing  the  evidence  on  record  and
scrutinizing the site plan. If the witnesses  including  PW-4  Balbir  Singh
were sitting under a Zal tree from  where  what  was  happening  inside  the
Satsang Bhawan was not visible, their  claim  that  they  saw  the  incident
become suspect.  Even otherwise, the  tenor  of  their  evidence  and  their
conduct make their evidence  suspect.  PW-4  Balbir  Singh  stated  that  at
around 10.30 a.m two persons came through the crowd  near  deceased  Krishna
Gir. The man in front was  wearing pant and shirt and he fired  as  soon  as
he reached near the door of the Satsangh Bhawan.  He  fired  three  to  four
times. Sewanand grabbed the person who had fired at  deceased  Krishna  Gir.
The man, who was  behind the man in pant  and  shirt  and  who  was  wearing
kurta pyjama  fired  at Sewanand and Sewanand  fell  down.   The  assailants
ran towards the gate. They went out firing at a  wall.   He  further  stated
that he recognized them when they turned around. According to him,  the  man
who fired at deceased Krishna Gir was Vazir s/o Hoshiar Singh,  and the  man
who fired at Sewanand was Jora Giri s/o Duni  Gosain.   He  stated  that  he
along with Pratap Singh, Hawa Singh  and  Rajveer  followed  the  assailants
after the assailants had gone out of the gate.  He stated that at the  gate,
Balraj s/o Krishan Chand was firing in the air with his  double-barrel  gun.
At some distance, Lachman s/o Jagannath was standing.  At some  distance,  a
car was parked.  Two persons were standing near the car, whom he  could  not
identify. Thus, according to PW-4  Balbir  Singh,  there  were  in  all  six
persons whereas as per FIR Ex. P/1, only four persons were involved  in  the
incident. It is pertinent to note that PW-4 Balbir Singh stated that all  of
them reached Hissar at about 4.30 to  5.00  p.m.   By  that  time,  deceased
Krishna Gir had died and  after they reached  the  hospital,  Hissar  Police
came there.  But PW-4 Balbir Singh did not tell anything to the police.   He
further stated that he had met Mangal Gir  immediately  after  the  incident
and he had told Mangal Gir about the entire incident.   If Mangal   Gir  was
communicated the names of the assailants Mangal Gir  should  have  disclosed
them to the police. Mangal Gir’s statement was recorded only  on  30/8/2000,
in which, Mangal Gir did not disclose the names of  assailants.   Therefore,
PW-4 Balbir Singh’s claim that he disclosed  the  names  to  Mangal  Gir  is
suspect. Moreover, Mangal Gir was  not  examined  by  the  prosecution.   He
further stated that  when  he  went  inside  the  Satsangh  Bhawan  deceased
Krishna Gir was talking. He had heard deceased Krishna Gir.  If that was  so
he should have  reported the incident to the police. He did not do  so.  His
statement came to be recorded after  three  days  on  26/7/2000  after  PW-3
Prithvi Gir disclosed the dying declaration to the police and names  of  the
eye-witnesses.  The High Court has referred to  several  inconsistencies  in
the evidence of PW-4 Balbir Singh.  In  our  opinion,  the  High  Court  has
rightly not placed reliance on  his  statement.   Evidence  of  PW-5  Pratap
Singh also suffers from  the  same  infirmities.   His  statement  was  also
recorded three days after the incident. No reliance can  be  placed  on  his
evidence.  The other two witnesses Rajveer Singh and Hawa Singh named by PW-
3 Prithvi Gir  have  not  been  examined  by  the  prosecution.   Thus,  the
evidence of so-called eye-witnesses does not inspire confidence.

19.    We have already noted that PW-1 Puranmal who claimed  to  be  at  the
scene of offence lodged FIR (Ex.P1).   He turned hostile.  It  is,  however,
pertinent to note that in the FIR, PW-1   Puranmal  involved  four  persons.
He did not name them but he stated that he could identify  them.   According
to the FIR, deceased Krishna Gir and deceased Sewanand were sent in a  Ceilo
Car to Pilani.  This version differs from the version of  PW-3  Prithvi  Gir
because PW-3 Prithvi Gir states that they were taken in two different  cars.
 The FIR further states that on the way  Sewanand died and deceased  Krishna
Gir was taken to hospital at Hissar.  Thus, when  the  FIR  was  written  at
12.30 P.M on 23/7/2000, information about Sewanand’s death and departure  of
deceased Krishna Gir to Hissar was conveyed at Rampura village. No names  of
persons who accompanied the deceased to hospital were  stated  in  the  FIR.
Names of Ummed Singh,  Jagdish  Prakash,  Baba  Samundra  Gir,  Veer  Singh,
Krishna Singh and Manish Singh were mentioned as persons who  had  seen  the
incident.  Out of them Veer Singh was examined  as  PW-9,  Ummed  Singh  was
examined as PW-10 and Jagdish Prakash was examined as PW-12.   Rest  of  the
persons were not examined.  The persons named in the FIR did  not  know  the
assailants.  They stated that they could identify  the  assailants  if  they
are brought before them.  However, no identification parade was  held.    We
shall advert to the absence of identification parade a little   later.  PW-9
Veer Singh, PW-1 Ummed Singh and PW-12 Jagdish Prakash  turned  hostile  and
hence their evidence is of no use to the prosecution.

20.   The High Court has rightly noted that when the FIR was lodged by  PW-1
Puranmal at about 12.30 P.M, the fact that deceased  Sewanand  had  died  on
the way to Pilani and deceased Krishna Gir was taken to Hissar was known  at
the Ashram at Rampura village.  By the time, alleged dying  declaration  was
also made by deceased Krishna Gir.  Therefore, the names of  the  assailants
also should  have  reached  Rampura  village  along  with  information  that
deceased Krishna Gir was being taken to Hissar.   PW-3  Prithvi  Gir  should
have communicated the names  of  the  assailants.   However,  names  of  the
assailants were not disclosed by anyone to the police.    PW-4 Balbir  Singh
stated that Sewanand was taken to Pilani  by  Raghavanand.   When  he  along
with others reached Pilani, Raghavanand told him that Krishna Gir  has  been
taken to Hissar.  The  prosecution  should  have  examined  Raghavanand  who
could have said whether any information about  assailants  was  communicated
to him.  The prosecution failed to examine Raghavanand.  All  this  casts  a
shadow of doubt on PW-3 Prithvi Gir’s evidence  that  deceased  Krishna  Gir
made a dying declaration to him in which  he  disclosed  the  names  of  the
assailants.  It may also be mentioned that PW-12 Jagdish Prakash who  turned
hostile made a statement that Mangal  Gir  who  was  present  disclosed  the
names of the  assailants  to  him,  but  he  did  not  remember  the  names.
Pertinently Mangal Gir’s name is mentioned in the FIR hence he  was  present
at the scene of offence. However, Mangal Gir’s  statement  was  recorded  by
the police as  late  as  on  30/8/2000  and  he  was  not  examined  by  the
prosecution.  It bears repetition to state that in  his  statement  recorded
on 30/8/2000, Mangal Gir did not disclose names of the assailants.

21.   PW-3 Prithvi Gir stated that he disclosed the names of the  assailants
to PW-31 Prem Singh  Huda  at  Hissar  where  PW-31  conducted  the  inquest
proceedings.  However, the names  of  the  assailants  find  no  mention  in
inquest report.  In fact, PW-31 Prem Singh Huda stated that he had  recorded
the statement of PW-3 Prithvi Gir, but PW-3 Prithvi Gir  had  not  disclosed
to him the dying declaration or the names of the  assailants.   PW-29  Laxmi
Narayan, the  Investigating  Officer  stated  that  he  went  to  Hissar  on
23/7/2000 and met PW-31 Prem Singh Huda.  He got a lot of information  about
the incident from PW-31 Prem Singh Huda except the names of the  assailants.
 According to PW-29 Lakshmi Narayan, he went to Balakdera on 25/7/2000,  but
nobody disclosed the names of the assailants to  him.    The  names  of  the
alleged  assailants  surfaced  three  days  after  the  incident  when   the
statements of PW-3 Prithvi Gir, PW-4 Balbir  Singh  and  PW-5  Pratap  Singh
were recorded.  No acceptable explanation is given for  delay  in  recording
the statements. The reluctance of the  prosecution  witnesses  to  come  out
with the  truth  and  name  the  assailants,  the  delay  in  recording  the
statements  of  eye-witnesses  and  statement  of  PW-3  Prithvi  Gir,   the
unnatural dying declaration giving  minute  diverse  particulars  about  the
assailants reflect on the credibility of the prosecution case.

22.   Another significant aspect of this case is absence  of  identification
parade. Persons who were named in the FIR and others, who had witnessed  the
incident at different stages did  not  know  all  the  assailants  but  they
claimed that they  could  identify  the  assailants.   But  the  prosecution
failed  to  hold  test   identification   parade.    It   is   argued   that
identification  made  in  court  is  sufficient.  Reliance  is   placed   on
Malkhansingh where this Court has held  that  substantive  evidence  is  the
evidence  of  identification  in  court.   The  test  identification  parade
provides corroboration to the identification of  the  witness  in  court  if
required and what weight must be attached to the evidence of  identification
in court, is a matter for the court of fact to examine.   There  can  be  no
dispute about this proposition.  But in Malkhansingh this Court was  dealing
with a  case  of  gang  rape.   This  Court  noted  that  courts  below  had
concurrently found the evidence of prosecutrix to  be  implicitly  reliable.
This Court noted  that  the  appellants  raped  the  prosecutrix  one  after
another.  She was threatened and intimidated.   All  this  must  have  taken
time.  This Court noted that  it  was  not  a  case  where  the  identifying
witness had only a fleeting glimpse of the appellants.  The prosecutrix  had
a reason to remember the faces of the appellants as  they  had  committed  a
heinous offence and put her to shame.  She had abundant opportunity to  note
the appellants features and due to the traumatic  experience  the  faces  of
the appellants must have been imprinted in  her  memory  and  there  was  no
chance of her making a mistake about their identity.   The  observations  of
this Court will have to be read against the backdrop of these  facts.  Facts
of this case are different.  The incident does not seem to have  lasted  for
a long time.  The eye-witnesses were sitting outside the Satsang  hall.   It
cannot be said that they had sufficient opportunity to see the faces of  the
accused who were on the run.  In such a case failure to hold  identification
parade is a serious drawback in the prosecution case.

23.   Having applied our mind to the evidence  on  record,  we  are  of  the
opinion that the prosecution has failed to prove its case beyond  reasonable
doubt.  We are mindful of the fact that this case involves two  murders  and
use of firearms. Crime is grave. But the  High  Court  has  scrutinized  the
evidence correctly in light of settled legal principles.   The  evidence  on
record creates some suspicion, but does not prove the offence to  the  hilt.
The accused are, therefore, entitled to benefit of doubt.   Besides,  as  we
have already noted the instant appeals challenge  the  order  of  acquittal.
We do not find the High Court’s judgment to be perverse.   The  High  Court,
in our opinion, was justified in interfering  with  the  conviction  of  the
accused.  The view taken by the High Court is  legally  unassailable  and  a
factually possible view. We, therefore, affirm it.

24.   In the result, the appeals are dismissed.


                                                           …………………………………..J.
                                                     (RANJANA PRAKASH DESAI)


                                                            ……………………………………J.
                                                            (MADAN B. LOKUR)
NEW DELHI;
JULY 01, 2014.

-----------------------
[1] (2008) 13 SCC 767
[2] (2003) 5 SCC 746
[3] (1999) 8 SCC 458

Sec. 54 of Income Tax Act - PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE. - agreement of sale for 1.32 crores in the year 2002 - sale effected in year 2004 due to pending of disputes - in the mean while in the year 2003 a new house was purchased by the income of selling of old house - exemption - as such not shown in income tax returns as not taxable - A.O. assessed tax as the sale was effected in the year 2004 but not in the year 2003 or prior to it - discarded the agreement of sale - Apex court held that 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. Thus, 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 27th December, 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. In view of the aforestated peculiar facts of the case and looking at the definition of the term ‘transfer” as defined under Section 2(47) of the Act, we are of the view that the appellants were entitled to relief under Section 54 of the Act in respect of the long term capital gain which they had earned in pursuance of transfer of their residential property being House No. 267, Sector 9-C, situated in Chandigarh and used for purchase of a new asset/residential house. The appeals are, therefore, allowed with no order as to costs. The impugned judgments are quashed and set aside and the Authorities are directed to re-assess the income of the appellants for the Assessment Year 2005-2006, after taking into account the fact that the appellants were entitled to the relief, subject to fulfilment of other conditions.= Sh. Sanjeev Lal Etc. Etc. Appellants Versus Commissioner of Income Tax, Chandigarh & Anr. Respondents = 2014 – July. Part – http://judis.nic.in/supremecourt/filename=41729

      Sec. 54 of Income Tax Act -  PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE. - agreement of sale for 1.32 crores in the year 2002 - sale effected in year 2004  due to pending of disputes - in the mean while in the year 2003 a new house was purchased by the income of selling of old house - exemption - as such not shown in income tax returns as not taxable - A.O. assessed tax as the sale was effected in the year 2004 but not in the year 2003 or prior to it - discarded the agreement of sale - Apex court held that 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. Thus, 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 27th December, 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. In view of the aforestated peculiar facts of the case  and  looking  at  the definition of the term ‘transfer” as defined  under  Section  2(47)  of  the Act, we are of the view that the appellants were entitled  to  relief  under Section 54 of the Act in respect of the long term capital  gain  which  they had earned in pursuance of transfer  of  their  residential  property  being House No. 267, Sector 9-C, situated in Chandigarh and used for  purchase  of
a new asset/residential house. The appeals are,  therefore,  allowed  with  no  order  as  to  costs.   The impugned judgments are  quashed  and  set  aside  and  the  Authorities  are directed to re-assess the income of the appellants for the  Assessment  Year 2005-2006, after taking into account  the  fact  that  the  appellants  were entitled to the relief, subject to fulfilment of other conditions.=

Upon transfer of the house property, long term capital gain had arisen,  but
as the appellants had purchased a new residential house and  the  amount  of
the capital gain  had  been  used  for  purchase  of  the  said  new  asset,
believing that the long term capital gain was not chargeable to  income  tax
as  per  the  provisions  of  Section  54  of  the  Income  Tax  Act,   1961
(hereinafter referred to as ‘the Act’), the appellants did not disclose  the
said long term capital  gain  in  their  return  of  income  filed  for  the
Assessment Year 2005-2006.
In the assessment proceedings for the Assessment   Year   2005-2006   under
the Act, the Assessing Officer was of the view that the appellants were  not
entitled to any benefit under Section 54 of the Act for the reason that  the
transfer of the  original  asset,  i.e.  the  residential  house,  had  been
effected on 24th  September,  2004  whereas  the  appellants  had  purchased
another residential house on 30th April, 2003 i.e. more than one year  prior
to the purchase of the new asset and therefore,  the  appellants  were  made
liable to pay income tax on the capital gain under Section 45 of the Act.
“54. PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE.
(1)   Subject to the provisions of sub-section (2), where in the case of  an
assessee being an individual or a Hindu undivided family, the  capital  gain
arises from the transfer of a long-term capital asset,  being  buildings  or
lands appurtenant thereto, and being a  residential  house,  the  income  of
which is chargeable under the head “Income from house  property”  (hereafter
in this section referred to as the original asset),  and  the  assessee  has
within a period of one year before or two years after the date on which  the
transfer took place purchased, or has within a period of three  years  after
that date constructed, a residential house, then,  instead  of  the  capital
gain being charged to income-tax as income of the  previous  year  in  which
the transfer took place, it shall be  dealt  with  in  accordance  with  the
following provisions of this section, that is to say, –

(i) If the amount of the capital gain  is  greater  than  the  cost  of  the
residential house so purchased or constructed  (hereafter  in  this  section
referred to as the new asset), the difference  between  the  amount  of  the
capital gain and the cost of the new asset shall be  charged  under  section
45 as the income of the previous year; and for the purpose of  computing  in
respect of the new asset any capital gain arising from its  transfer  within
a period of three years of its purchase or construction,  as  the  case  may
be, the cost shall be nil; or

(ii) If the amount of the capital gain is equal to or less than the cost  of
the new asset, the capital gain shall not be charged under section  45;  and
for the purpose of computing in respect of the new asset  any  capital  gain
arising from its transfer within a period of three years of its purchase  or
construction, as the case may be, the cost shall be reduced  by  the  amount
of the capital gain.”

Upon perusal of Section 54(1) of the Act,  it  is  very  clear  that  relief
under Section 54 of the Act in respect of the long term capital gain can  be
availed only if a residential house i.e. a new  asset  is  purchased  within
one year before or within two years after the date on which the transfer  of
the residential house/original asset takes place.  In the instant case,  the
residential house had been transferred by the appellants-assessees  on  24th
September, 2004 whereas they had purchased  another  house  on  30th  April,
2003.  Thus, the new asset was purchased more than one  year  prior  to  the
date on which the transfer in respect of  the  residential  house  had  been
effected.
For the aforestated reasons, the Assessing Officer  did  not  grant  benefit
under Section 54 of the Act and therefore, the  assessment  order  had  been
challenged  by  the  appellants  before  the  Commissioner  of  Income   Tax
(Appeals).=
Consequences of execution of the agreement to sell are also 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.
Thus, 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 27th December, 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.
In view of the aforestated peculiar facts of the case  and  looking  at  the
definition of the term ‘transfer” as defined  under  Section  2(47)  of  the
Act, we are of the view that the appellants were entitled  to  relief  under
Section 54 of the Act in respect of the long term capital  gain  which  they
had earned in pursuance of transfer  of  their  residential  property  being
House No. 267, Sector 9-C, situated in Chandigarh and used for  purchase  of
a new asset/residential house.
The appeals are,  therefore,  allowed  with  no  order  as  to  costs.   The
impugned judgments are  quashed  and  set  aside  and  the  Authorities  are
directed to re-assess the income of the appellants for the  Assessment  Year
2005-2006, after taking into account  the  fact  that  the  appellants  were
entitled to the relief, subject to fulfilment of other conditions.

2014 – July. Part – http://judis.nic.in/supremecourt/filename=41729


                                     REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                     CIVIL APPEAL Nos.5899-5900  OF 2014
                (Arising out of SLP (c) Nos.16958-59 of 2013)

Sh. Sanjeev Lal Etc. Etc.                          Appellants


                                   Versus


Commissioner of Income Tax, Chandigarh & Anr.      Respondents



                                  JUDGMENT


ANIL R. DAVE, J.


Leave granted.
As facts of both the appeals are similar, at  the  request  of  the  learned
counsel  appearing  for  the  parties,  both  the  appeals  had  been  heard
together.
Being aggrieved by the judgments delivered by the High Court of  Punjab  and
Haryana in ITA Nos. 153 & 154  of  2012  dated  29th  January,  2013,  these
appeals have been preferred by the assessees.
The facts giving rise to the present  litigation,  in  a  nutshell,  are  as
under:
A  residential  house,  being  House  No.  267  situated  in   Sector   9-C,
Chandigarh, was a self acquired  property  of   Shri  Amrit  Lal,   who  had
executed a Will whereby life interest in  the  aforestated  house  had  been
given to his wife  and upon death of his wife, the house was to be given  in
favour of two sons of his pre-deceased son - late  Shri  Moti  Lal  and  his
widow. One of the above stated grand children  and  the  daughter-in-law  of
Shri Amrit Lal are the appellants in these  appeals.   Upon  death  of  Shri
Amrit Lal, possession of the house was given to his widow.  His widow,  Smt.
Shakuntla Devi expired on 29th August, 1993.  Upon death of  Smt.  Shakuntla
Devi, as per the Will, the ownership in respect of  the  house  in  question
came to be vested in the present appellants and another grandchild  of  late
Shri Amrit Lal.
The appellants had decided to sell the house and with  that  intention  they
had entered into an agreement to sell the house with Shri Sandeep Talwar  on
27th December, 2002 for a consideration of Rs.  1.32  crores.   Out  of  the
said amount, a sum of Rs.15 lakhs had been received  by  the  appellants  by
way of earnest money.  As the appellants had decided to sell  the  house  in
question, they had  also  decided  to  purchase  another  residential  house
bearing house No. 528 in Sector 8, Chandigarh so  that  the  sale  proceeds,
including capital gain, can be used for purchase of  the  aforestated  House
No. 528.  The said house was purchased on 30th April, 2003 i.e. well  within
one year from the date on which the agreement to sell had been entered  into
by the appellants.
The validity of the Will had been questioned by Shri Ranjeet  Lal,  who  was
another son of the deceased testator Shri  Amrit  Lal,  by  filing  a  civil
suit, wherein the trial court,  by  an  interim  order  had  restrained  the
appellants from dealing with the house property.   During  the  pendency  of
the suit, Shri Ranjeet Lal expired on 2nd December, 2000 leaving behind  him
no legal heirs.  The suit filed by him had been dismissed in  May,  2004  as
there was no representation on his behalf in the suit.
Due to the interim relief granted in the above stated suit,  the  appellants
could not execute the sale deed till the suit came to be dismissed  and  the
validity of the Will was upheld.  Thus, the  appellants  executed  the  sale
deed in 2004 and the same was registered on 24th September, 2004.
Upon transfer of the house property, long term capital gain had arisen,  but
as the appellants had purchased a new residential house and  the  amount  of
the capital gain  had  been  used  for  purchase  of  the  said  new  asset,
believing that the long term capital gain was not chargeable to  income  tax
as  per  the  provisions  of  Section  54  of  the  Income  Tax  Act,   1961
(hereinafter referred to as ‘the Act’), the appellants did not disclose  the
said long term capital  gain  in  their  return  of  income  filed  for  the
Assessment Year 2005-2006.
 In the assessment proceedings for the Assessment   Year   2005-2006   under
the Act, the Assessing Officer was of the view that the appellants were  not
entitled to any benefit under Section 54 of the Act for the reason that  the
transfer of the  original  asset,  i.e.  the  residential  house,  had  been
effected on 24th  September,  2004  whereas  the  appellants  had  purchased
another residential house on 30th April, 2003 i.e. more than one year  prior
to the purchase of the new asset and therefore,  the  appellants  were  made
liable to pay income tax on the capital gain under Section 45 of the Act.
Relevant portion of Section 54 of the Act reads as under:
“54. PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE.
(1)   Subject to the provisions of sub-section (2), where in the case of  an
assessee being an individual or a Hindu undivided family, the  capital  gain
arises from the transfer of a long-term capital asset,  being  buildings  or
lands appurtenant thereto, and being a  residential  house,  the  income  of
which is chargeable under the head “Income from house  property”  (hereafter
in this section referred to as the original asset),  and  the  assessee  has
within a period of one year before or two years after the date on which  the
transfer took place purchased, or has within a period of three  years  after
that date constructed, a residential house, then,  instead  of  the  capital
gain being charged to income-tax as income of the  previous  year  in  which
the transfer took place, it shall be  dealt  with  in  accordance  with  the
following provisions of this section, that is to say, –

(i) If the amount of the capital gain  is  greater  than  the  cost  of  the
residential house so purchased or constructed  (hereafter  in  this  section
referred to as the new asset), the difference  between  the  amount  of  the
capital gain and the cost of the new asset shall be  charged  under  section
45 as the income of the previous year; and for the purpose of  computing  in
respect of the new asset any capital gain arising from its  transfer  within
a period of three years of its purchase or construction,  as  the  case  may
be, the cost shall be nil; or

(ii) If the amount of the capital gain is equal to or less than the cost  of
the new asset, the capital gain shall not be charged under section  45;  and
for the purpose of computing in respect of the new asset  any  capital  gain
arising from its transfer within a period of three years of its purchase  or
construction, as the case may be, the cost shall be reduced  by  the  amount
of the capital gain.”

Upon perusal of Section 54(1) of the Act,  it  is  very  clear  that  relief
under Section 54 of the Act in respect of the long term capital gain can  be
availed only if a residential house i.e. a new  asset  is  purchased  within
one year before or within two years after the date on which the transfer  of
the residential house/original asset takes place.  In the instant case,  the
residential house had been transferred by the appellants-assessees  on  24th
September, 2004 whereas they had purchased  another  house  on  30th  April,
2003.  Thus, the new asset was purchased more than one  year  prior  to  the
date on which the transfer in respect of  the  residential  house  had  been
effected.
For the aforestated reasons, the Assessing Officer  did  not  grant  benefit
under Section 54 of the Act and therefore, the  assessment  order  had  been
challenged  by  the  appellants  before  the  Commissioner  of  Income   Tax
(Appeals).  The appeal, so far as it pertained to the benefit under  Section
54 of  the  Act  was  concerned,  had  been  dismissed  and  therefore,  the
appellants had approached the Income Tax Appellate Tribunal.   The  Tribunal
also upheld the  orders  passed  by  the  Commissioner  and  therefore,  the
appellants had approached the High Court by  filing  appeals  under  Section
260 A of the Act, which were dismissed by virtue of the impugned  judgments.
 Thus, the appellants are in appeal before this Court.
The learned counsel appearing for the appellants had mainly  submitted  that
the authorities  below  and  the  High  Court  had  committed  an  error  in
interpretation of Section 54 of the  Act.   According  to  him,  though  the
property in question had been  apparently  transferred  on  24th  September,
2004 and the new asset i.e. new residential  house  had  been  purchased  on
30th April, 2003 i.e. more than one year prior to  the  date  on  which  the
property had been sold, the authorities ought to have  considered  the  date
on which the agreement to sell had  been  effected  by  the  appellants  for
transfer of the property  in  question  as  the  date  of  transfer  of  the
house/original asset.  The said agreement had been signed on 27th  December,
2002 i.e. which was well within the period prescribed under  Section  54  of
the Act.  If one considers 27th December, 2002 as  the  date  on  which  the
property had been transferred or that a  right  in  the  property  had  been
transferred, the appellants would  become  entitled  to  the  benefit  under
Section 54 of the Act.
So as to substantiate his submissions, learned counsel  for  the  appellants
had submitted that  the  appellants  wanted  to  transfer  the  property  in
question and therefore, they had entered into an agreement to sell  on  27th
December, 2002,  but unfortunately they could not execute the sale  deed  on
account of the litigation which was pending in respect of  the  property  in
question and due to an order restraining the appellants  from  dealing  with
the property.  In  view  of  the  order  passed  by  the  civil  court,  the
appellants could not execute the  sale  deed  and  the  delay  was  only  on
account of a factor which was beyond the control of the appellants.
According to the learned counsel appearing for the appellants, the  date  on
which the agreement to sell had been executed ought to have been treated  as
the date of transfer.  He had referred to the provisions  of  Section  2(47)
of the Act which defines the term “transfer”.  The term “transfer” has  been
given  an  inclusive  definition  and  according  to  the  said  definition,
whenever there is an extinction of any right in respect of a capital  asset,
such an extinction would mean transfer of the property.  He had,  therefore,
submitted that by virtue of the agreement to sell, a right had been  created
in favour of the buyer of the property and certain right in respect  of  the
residential house, which the  appellants  had,  had  been  extinguished  and
therefore,  27th December, 2002 ought to have been considered  as  the  date
of transfer.
The learned counsel had also relied  upon  certain  judgments  delivered  by
different High Courts to support his submissions.
On  the  other  hand,  the  learned  counsel  appearing  for   the   Revenue
Authorities had vehemently submitted that by mere execution of an  agreement
to sell, right of the vendor/transferor in respect of  the  property  cannot
be extinguished.  According to him, no sale of the property in question  had
been effected, when  the  agreement  to  sell  had  been  executed  on  27th
December, 2002.  According to him, the  appellants  had  sold  the  original
asset on 24th September, 2004 and had purchased a  new  house/new  asset  on
30th April, 2003 i.e. one  year  before  sale  of  the  original  asset  and
therefore, the benefit under Section 54 of  the  Act  could  not  have  been
availed by the appellants and therefore, the Revenue Authorities as well  as
the High Court were absolutely correct by not granting the  benefit  claimed
by the appellants.
We had heard the learned counsel at length  and  have  also  considered  the
relevant provisions of the Act  and  the  judgments  cited  by  the  learned
counsel.
Upon plain reading of Section 54 of the Act, it is very clear that so as  to
avail the benefit  under  Section  54  of  the  Act,  one  must  purchase  a
residential house/new asset within one year prior or  two  years  after  the
date on which transfer of the residential house  in  respect  of  which  the
long term capital gain had arisen, has taken place.
In the instant case, the following three dates  are  not  in  dispute.   The
residential house was transferred by the appellants and the  sale  deed  had
been registered on 24th September, 2004.  The sale deed  had  been  executed
in pursuance of an agreement  to  sell  which  had  been  executed  on  27th
December, 2002 and out of the total consideration of Rs.1.32 crores, Rs.  15
lakhs had been received by the appellants by way of earnest money  when  the
agreement to sell had been executed and a new  residential  house/new  asset
had been purchased by the appellants on 30th April, 2003.  It  is  also  not
in dispute that there was a litigation wherein the Will of late  Shri  Amrit
Lal had been challenged by his son and the appellants  had  been  restrained
from dealing with the house in question by a judicial  order  and  the  said
judicial order had  been  vacated  only  in  the  month  of  May,  2004  and
therefore, the sale deed could not be executed before  the  said  order  was
vacated though the agreement to sell had  been executed on  27th  September,
2002.
If one considers the date on which it was  decided  to  sell  the  property,
i.e. 27th December, 2002 as the date of  transfer  or  sale,  it  cannot  be
disputed that the appellants would be entitled  to  the  benefit  under  the
provisions of Section 54 of the Act because long term  capital  gain  earned
by the appellants had been used for  purchase  of  a  new  asset/residential
house on 30th April, 2003 i.e.  well  within  one  year  from  the  date  of
transfer of the house which resulted into long term capital gain.
The question to be considered by this Court  is  whether  the  agreement  to
sell  which had been executed on 27th December, 2002 can be considered as  a
date on which the property i.e. the residential house had been  transferred.
 In normal circumstances by executing an agreement to sell in respect of  an
immoveable property, a right  in  personam  is  created  in  favour  of  the
transferee/vendee.  When such a right is created in favour  of  the  vendee,
the vendor is restrained from selling the  said  property  to  someone  else
because the vendee, in whose favour the right in personam is created, has  a
legitimate right to enforce specific performance of the  agreement,  if  the
vendor, for some reason is not executing the sale deed.  Thus, by virtue  of
the agreement to sell some right is given by the vendor to the vendee.   The
question is whether the entire property can be said to  have  been  sold  at
the  time  when  an  agreement  to  sell  is  entered   into.    In   normal
circumstances, the aforestated question has to be answered in the  negative.
 However, looking at the provisions of  Section  2(47)  of  the  Act,  which
defines the word “transfer” in relation to a  capital  asset,  one  can  say
that if a  right  in  the  property  is  extinguished  by  execution  of  an
agreement  to  sell,  the  capital  asset  can  be  deemed   to  have   been
transferred.   Relevant  portion  of  Section  2(47),  defining   the   word
“transfer” is as under:
“2(47) “transfer”, in relation to a capital asset, includes,-
(i)…………….
(ii) the extinguishment of any rights therein; or
………………………………”
Now in the light of definition  of   “transfer”  as  defined  under  Section
2(47) of the Act, it is clear that when any right in respect of any  capital
asset is extinguished and that right is transferred  to  someone,  it  would
amount to transfer of a capital asset.  In  the  light  of  the  aforestated
definition, let us look at the facts of the present case where an  agreement
to sell in respect of a capital asset had been executed  on  27th  December,
2002 for transferring the residential house/original asset in  question  and
a sum of Rs. 15 lakhs had been received by way  of  earnest  money.   It  is
also not in dispute that the sale deed could  not  be  executed  because  of
pendency of the litigation between Shri Ranjeet Lal  on  one  hand  and  the
appellants on the other as Shri Ranjeet Lal had challenged the  validity  of
the Will under which the property had  devolved  upon  the  appellants.   By
virtue of an order passed in  the  suit  filed  by  Shri  Ranjeet  Lal,  the
appellants were restrained from dealing with the said residential house  and
a law-abiding citizen cannot be expected  to  violate  the  direction  of  a
court by executing a sale deed in  favour  of  a  third  party  while  being
restrained from doing so.  In the circumstances, for a  justifiable  reason,
which was not within the control of the appellants, they could  not  execute
the sale deed and the sale deed had been registered only on 24th  September,
2004, after the suit filed by Shri Ranjeet Lal, challenging the validity  of
the Will, had been dismissed.  In the light of the aforestated facts and  in
view of the definition of the term “transfer”, one can come to a  conclusion
that some right in respect  of  the  capital  asset  in  question  had  been
transferred in favour of the vendee and  therefore,  some  right  which  the
appellants had, in respect of  the  capital  asset  in  question,  had  been
extinguished because after execution of the agreement to  sell  it  was  not
open to the appellants to sell the property to someone  else  in  accordance
with law.  A right in personam had been created in favour of the vendee,  in
whose favour  the  agreement to sell had been  executed  and  who  had  also
paid Rs.15 lakhs by way of earnest money. No doubt, such  contractual  right
can  be  surrendered  or  neutralized  by  the  parties  through  subsequent
contract or conduct leading to no transfer of the property to  the  proposed
vendee but that is not the case at hand.
In addition to the fact that the term  “transfer”  has  been  defined  under
Section 2(47) of the Act, even if looked at the provisions of Section 54  of
the Act which  gives  relief  to  a  person  who  has  transferred  his  one
residential house and is purchasing another residential house either  before
one year of  the  transfer  or  even  two  years  after  the  transfer,  the
intention of the Legislature is to give him relief in the matter of  payment
of  tax on the long term capital gain.  If a person, who  gets  some  excess
amount  upon  transfer  of  his  old  residential  premises  and  thereafter
purchases or constructs a new premises within  the   time  stipulated  under
Section 54 of the Act, the Legislature does not  want  him  to  be  burdened
with tax on the long term capital gain and therefore, relief has been  given
to him in respect of paying income tax on the long term capital  gain.   The
intention of the Legislature or the purpose with which  the  said  provision
has been incorporated in the Act,  is also  very  clear  that  the  assessee
should be given some relief.  Though  it  has  been  very  often  said  that
common sense is a stranger and an incompatible partner  to  the  Income  Tax
Act and it is also said that equity and tax are  strangers  to  each  other,
still this Court has often observed that purposive interpretation should  be
given to the provisions of the Act.  In the case of Oxford University  Press
v. Commissioner of Income Tax [(2001) 3 SCC 359]  this  Court  has  observed
that a purposive interpretation of the  provisions  of  the  Act  should  be
given while considering a claim for exemption from tax.  It  has  also  been
said that harmonious construction  of  the  provisions  which  subserve  the
object and  purpose  should  also  be  made  while  construing  any  of  the
provisions of the Act and more  particularly  when  one  is  concerned  with
exemption from payment of tax.   Considering  the  aforestated  observations
and the principles with regard to the interpretation of  Statute  pertaining
to the tax laws, 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.

Consequences of execution of the agreement to sell are also 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.
Thus, 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 27th December, 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.
In view of the aforestated peculiar facts of the case  and  looking  at  the
definition of the term ‘transfer” as defined  under  Section  2(47)  of  the
Act, we are of the view that the appellants were entitled  to  relief  under
Section 54 of the Act in respect of the long term capital  gain  which  they
had earned in pursuance of transfer  of  their  residential  property  being
House No. 267, Sector 9-C, situated in Chandigarh and used for  purchase  of
a new asset/residential house.
The appeals are,  therefore,  allowed  with  no  order  as  to  costs.   The
impugned judgments are  quashed  and  set  aside  and  the  Authorities  are
directed to re-assess the income of the appellants for the  Assessment  Year
2005-2006, after taking into account  the  fact  that  the  appellants  were
entitled to the relief, subject to fulfilment of other conditions.


                                        …………………….J.
                                        (ANIL R. DAVE)



                                        ……………………..J.
                                             (SHIVA KIRTI SINGH)
NEW DELHI
JULY 01, 2014.