SHRI MITHUN H. BHAYANI,AHMEDABAD vs. ITO,-5(1)(4),, AHMEDABAD

The assessee has contested two grounds of appeal

Regarding first ground of appeal pertaining to treating capital gain of Rs. 9,78,995/- as short term capital gain, the fact in brief is that during the course of assessment proceeding u/s. 143(3) of the act, the assessing officer has noticed that assessee has sold residential property located at Vejalpur, Ahmedabad for consideration of Rs. 22 lacs and has not offered any capital gain or working of capital gain in his return of income filed for the assessment year under consideration. On query, the assessee has explained that he was owner of the property w.e.f. 4th May, 2009 as per share certificate No. 141 issued by Sakal Co-operative Housing Society Ltd. and the same property was sold on 8th January, 2013 after 43 months, therefore, long term capital gain to the amount of Rs. 4,07,025/- was earned. The assessee has further stated that the aforesaid computation of long term capital gain was not taxable since he has made investment in the new residential house for a total price of Rs. 56,10,225/- on sale of the said property on 14th August, 2013. The assessing officer has not accepted the submission of the assessee stating ownership of the property was to be taken from the date of acquisition of the sold property as per the registered document dated 23rd August, 2010. There was no allotment letter issued by Sakal Co-operative Society Ltd. on 4th May, 2009, therefore, the claim of exemption u/s. 54F was disallowed. Consequently, the short term capital gain was computed at Rs. 9,78,995/- holding that assessee was not entitled for exemption u/s. 54 of the act.

The assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee stating that there was nothing on record which show that flat has been allotted to the assessee before the date of purchase i.e. 23rd August, 2010 as per the registered document.

During the course of appellate proceedings before us, the ld. counsel has contended that ownership of the property was allotted to the assessee w.e.f. 04-05-2009 when the assessee was allotted the share certificate of the society. The ld. counsel has also submitted paper book and referred page no. 66 comparing share certificate no. 141 and submitted that it is allotted to the assessee on 04-05-2009 as owner of the property. The ld. counsel has also placed reliance on the decision of the High Court of Bombay in the case of PCIT vs. Vaidyanathan vide Appeal No. 1459 of 2016 dated 22-01-2016 stated that in this case it is held that allotment would be date on which purchases of a residential unit could be stated to be acquired property. On the other hand, the ld. Departmental Representative has supported the order of the lower authorities.

We have heard rival contentions and perused the material on record. During the course of appellate proceedings before us, the ld. counsel has referred page no. 66 of the paper book pertaining to the share certificate no. 141 demonstrating that ownership was provided to the assessee on 4th May, 2009, by the Sakal Co-operative Housing Society. In the light of the above facts and circumstances, it is clear that sold residential property allotted to the assessee on 4th May, 2009. In view of the above, we consider that the assessee has earned capital gain on sale of the said property which was Page No 4 Shri Mithun H. Bhayani vs. ITO invested in the purchase of other residential property on 14th August, 2013 for which the assessee is entitled for exemption u/s 54 of the act. Accordingly, the appeal of the assessee is allowed.

Regarding second ground of appeal of the assessee pertaining to disallowance of interest on housing loan installment of Rs. 80,596/-. In this regard, it is noticed that it is undisputed fact that the property on which housing loan was availed was sold within five years of purchase, after considering the rival contention, we are of the view that assessee is not entitled for deduction u/s. 80C of the Act. Accordingly, this ground of appeal is dismissed.

In the result, the appeal of the assessee is partly allowed.