ZULEKHA HAJI ATTARWALA,MUMBAI vs. ITO 20(2)(1), LALBAUG

ITA 4978/MUM/2025Status: DisposedITAT Mumbai03 December 2025AY 2018-1917 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee's contentions were without basis. The Tribunal found that the flat allotted in 2015 was completely different in area and configuration from any earlier allotment. Crucially, the assessee made the first payment only in 2015. The Tribunal agreed with the lower authorities that the allotment letter dated 26.01.2015 was the operative document and the date of acquisition of the capital asset was 26.01.2015. Since the property was sold on 30.10.2017, the period of holding was less than 36 months, and therefore, it could not be treated as a Long Term Capital Asset as per section 2(42A) of the Act. Consequently, there was no question of any LTCG arising on the transfer. The AO was justified in applying section 56(2)(x) and treating LTCG as STCG, disallowing claims for indexation of cost and cost of improvement, which are not available for STCG. All grounds of appeal were dismissed.

What were the facts?

The assessee, Zulekha Haji Attarwala, filed an appeal against the order of the CIT(A) for AY 2018-19. The assessment order was passed under section 143(3) of the Income-tax Act, 1961. The assessee had acquired a flat for Rs. 1,78,87,500/- on 30.10.2017. The first payment was made on 15.05.2015. The Assessing Officer (AO) added Rs. 20,75,454/- (50% of Rs. 41,50,908/-) as deemed income under section 56(2)(x) due to the difference between the purchase consideration and the stamp duty value. The AO also treated the gain on sale of the flat as Short-Term Capital Gain (STCG) of Rs. 85,56,250/-, denying Long-Term Capital Gain (LTCG) and exemption under section 54. The assessee contended that the property was acquired in 2010 based on an allotment letter, making it a long-term asset.

What were the issues?

1. Whether the addition of Rs. 20,75,454/- as deemed income under section 56(2)(x) of the Income-tax Act, 1961, is justified, considering the date of acquisition and the difference between purchase consideration and stamp duty value? 2. Whether the gain on the sale of the flat should be treated as Short-Term Capital Gain or Long-Term Capital Gain, and consequently, whether the assessee is eligible for exemption under section 54 of the Income-tax Act, 1961? Assessee's Contentions: - The property was acquired in 2010 based on an allotment letter which conferred legal rights, thus attracting the stamp duty valuation applicable in 2010. - Due to BMC objections, a different flat was received in 2015, which should be considered a continuation of the 2010 allotment, not a separate transaction. - The builder considered earlier payments made in 2010. - The holding period exceeded 36 months, making it a long-term asset eligible for section 54 exemption. Revenue's Contentions: - The AO correctly applied section 56(2)(x) as the first payment was made in 2015 and the allotment letter in 2010 did not confer enforceable rights. - The property was acquired on 30.10.2017 and sold on the same day, resulting in STCG, not LTCG. - The allotment letters of 2010 and 2015 were for different flats with different areas and considerations, and were not linked.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 56(2)(x),Section 54,Section 2(14),Section 2(42A),Section 270A,Section 274,Section 234A,Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Before: JUSTICE (RETD.) C. V. BHADANG & SHRI PRABHASH SHANKAR

For Appellant: Shri Bhupendra Shah, AR
For Respondent: Shri Swapnil Choudhary, (Sr. DR)
Hearing: 11.11.2025Pronounced: 03.12.2025

PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 26.06.2025 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)"] pertaining to assessment order passed u/s.143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 09.04.2021 for the Assessment Year [A.Y.] 2018-19. Page 2 A.Y. 2018-19 Zu

The order continues below.

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