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

IN THE INCOME-TAX APPELLATE TRIBUNAL “G” BENCH,
MUMBAI
BEFORE JUSTICE (RETD.) C. V. BHADANG, PRESIDENT
&
SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER
Zulekha
Haji
Attarwala through
L/H
Md.
Yunus
Attarwala
5/Nagree
Compound,
234C
Nagree Compound Maulana
Azad Road Nagpada, Mumbai
– 400 008, Maharashtra v/s.
बनाम
Income
Tax
Officer–
20(2)(1), Piramal Chambers,
Dr.
SS
Rao
Marg,
Parel,
Mumbai
–
400
012,
Maharashtra
स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AFVPA6704P
Appellant/अपीलार्थी
..
Respondent/प्रतिवादी

Appellant by :
Shri Bhupendra Shah, AR
Respondent by :
Shri Swapnil Choudhary, (Sr. DR)

Date of Hearing
11.11.2025
Date of Pronouncement
03.12.2025

आदेश / O R D E R

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. P a g e | 2
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Zulekha Haji Attarwala, Mumbai

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Zulekha Haji Attarwala, Mumbai

Realtors was Rs.48,56,250/- towards purchase of immovable property.
As per the firstproviso to section 56(2)(x)(b) of the Act,Stamp duty value was required to be taken into consideration. The stamp duty value i.e.
Market Value of the property in question was Rs.2,20,38,408/- as on 15/05/2015.Thus, there was difference of Rs.41,50,908/- (2,20,38,408-
1,78,87,500). The assessee was requested to justify as to why the differential amount should not be treated as deemed income and added back to the total income. It was explained that for purchasing the Flat
No-5201-B & 5301-B in Orchid Enclave CHS Ltd, she made payment of Rs.40,87,500/- from 01.09.2010 till 02.12. 2010 which was more than 45% of the cost of Flats. The cost of flat amounted to Rs.1,78,87,500/- as per the agreement of which 50% was the share of Mrs. Zulekha
Attarwala i.e. Rs.89,43,750/-. The Stamp duty on the above flat was paid on the market value as on the date of registration of the above flat i.e.
30.10.2017. It was submitted that as per the orders of the various
Authorities and CBDT Circulars, the date of allotment was relevant date for computation of "CapitalGain". As per Sec. 2(14) of the Act, the right to acquire is also a capital asset and the allottee gets title to the property on the issuance of the allotment letter where the payment of instalments is only a follow-up action and taking the delivery of possession is only a formality as per CBDT Circular No. 471 dated 15/10/1986.Therefore, she

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Zulekha Haji Attarwala, Mumbai got the title to the property on the issuance of the Allotment Letter on 30.11.2010 from the builder and this date of allotment was considered as the date of acquisition of property. The AO observed that theallotment letter doesn’t confer anyrights in a property to the allottee and it is merely intimation that the property has been allotted under certain conditions. The actual rights in the property confer only under the notarized agreement between seller and buyer. The allotment letter cannot take place of an agreement. Further, the first proviso to section 56(2)(x)(b) also talked about the date of agreement and not the allotment. The assessee submitted the computation of Long Term
Capital Gains claiming that the payment of Rs.8,75,000/- and Rs.3,12,500/- had been made by her daughter-in-law Salma Rizwan
Attarwala. However, on perusal of the bank details of Salma Rizwan
Attarwala furnished by the assessee, no such payments are seen therein.
In fact, Salma Rizwan Attarwala had made payments to M/s. Neelkamal
Realtors and Builders Pvt Ltd i.e14.09.2010-Rs 25,00,000/-,on 14.09.2010 Rs 70,00,000/-,on 30.11.2010 -Rs 12,50,000/- and on 08.12.2010-Rs 16,50,000/-.From the above, it could not be ascertained that these payments hadbeen made towards the cost of the property in question on behalf of the assessee. The first payment of Rs.48,56,250/- in respect of the property in question had been made by the assessee

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Zulekha Haji Attarwala, Mumbai only on 15.05.2015 as per her bank passbook. Thus, she got the right in flat No.4902-B only on26.01.2015 i.e. the date of allotment. The right could not be allowed retrospectively from the date of allotment of flats bearing No.5201 and 5301 i.e. 30.11.2010. Hence, the difference of Rs.41,50,908/- was required to be disallowed. Since, the assessee held
50% of share in the property, 50% of Rs.41,50,908/- i.e. Rs 20,75,454/- was added to the total income of the assessee, being deemed income under section 56(2)(x)(b) of the Act.
3.1 It was further noted by the AO from the ITR that the assessee had shown Long Term Capital Gain (LTCG) of Rs.48,52,863/- on account of sale of property and claimed the entire LTCG as deduction u/s 54 of the Act during the year under consideration. On perusal of the documents submitted, it was seen that the assessee holding property jointly situated at Flat No.4902, Orchid Enclave ‘B’ Wing, Bellasis Road,
Mumbai, had sold it for the sale consideration of Rs.3,50,00,000/-. The detailed scrutiny of the computation submitted revealed that the assessee had claimed to have acquired the property on 30.11.2010. However, on perusal of the purchase deed between M/s. Neelkamal
Realtors and Builders Pvt Ltd and the assessee, it was noticed that the property in question had been acquired jointly by the assessee only on30.10.2017 for Rs.1,78,87,500/-and also sold the property on the P a g e | 6
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Zulekha Haji Attarwala, Mumbai same day for a sale consideration at Rs.3,50,00,000/-. On perusal of the computation of LTCG , it was seen that the assessee had claimed the indexed cost of acquisition at Rs.66,57,485/- and indexed cost of improvement at Rs.59,89,652/-in respect of the property sold during the year resulting in net LTCG at Rs.48,52,863/-. The assessee had also claimed deduction for entire LTCG under section 54 of the Act. The AO observed that the assessee had not acquired the property on 30.11.2010
but only allotment had been made on this date. In fact, the assessee acquired the flat only on 30.10.2017 for Rs.1,78,87,500/- and sold it on the same day. Hence, no question of Long Term Capital Gain arose.
Actually, the assessee had earned Short Term Capital Gain(STCG) which was worked out at Rs. 85,56,250/-. Thus, the assessee was neither eligible for claiming cost of improvement nor the deduction u/s.54 of the Act. In response, the assessee submitted she had purchased flat
No.5201-B & 5301-B in F.Y-2010-11 vide allotment letter dated
30/11/2010 in Orchid Enclave from M/s Neelkamal Realtors & Builders
Pvt Ltd. The flat registration was done on 30.10.2017 and it was transferred on the same date to Mr. Syed MohdArshad and Mrs.
Mahvash Arshad Syed Shaikh. She got the title to the property on the issuance of the allotment letter on 30.11.2010 from the builder and this date of allotment was considered as the date of acquisition of property

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Zulekha Haji Attarwala, Mumbai andhence the Indexation Cost of Flat was calculated as Rs.1,26,47,137/- accordingly. The Sale consideration was Rs.3,50,00,000/- (of which 50% is the share of Mrs. Zulekha Attarwala i.e Rs.1,75,00,000/-) and the difference of Rs. 48,52,863/- was rightly offered as Long Term Capital
Gain. She had been allotted flat No 5201-A and 5301-A in under construction building known as Orchid Enclave vide allotment letter dated 30th November, 2010. The construction of the same was started in the year 2006 where the builder had received permission for construction up to 48 floors. In the year 2010, the builder had applied for permission for construction up to 55 floors and therefore she had booked flat No.5201-A and 5301-A in under construction building. In the year 2011, the project had been stopped by B.M.C. However, in the year 2015, the builder said that he received permission of only 50 floors.
Hence he shifted her flats to another wing i.e. from Flat No. 5201-A and 5301-A to Flat No. 4902-B in the same complex and subsequently issued revised allotment letter 25.01.2015 for the same. This new allotment letter was issued only on the strength of the original allotment letter dated 30.11.2010. The Long Term Capital Gain on sale of the above flat i.e. 4902-B should have been reinvested as per Sec. 54 of the Act within a period of one year before or two years after the date on which the transfer took place for claiming the deduction. Hence, she jointly

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Zulekha Haji Attarwala, Mumbai purchased a flat with others from Mr. JayantKhosla and others vide saledeed dated 27/07/2018. The payment towards share of cost of flat amounting to 60,00,000/- was done before the date of furnishing the return of income as per section 139(1).
3.2 The AO opined that the submission was not tenable as mere allotment of a property did not confer right of ownership to the assessee.
Hence the date of allotment could not be considered as the date of acquisition of property. The right of ownership transfers only after executing the registered sale deed. In the case of the assessee, the registered sale deed had been executed only on 30.10.2017. Thus, the assessee’s claim of ownership of flat no.4902-B from 30.11.2010 was baseless and not tenable. Accordingly, he held that the assessee was neither eligible for claiming cost of improvement nor deduction u/s 54
of the Act as the assessee had earned Short Term Capital gain only.
4. In the subsequent appeal before the ld.CIT(A), the assessee reiterated the same contentions as made before the AO inter alia stating that the builder issued revised Allotment letter dated 26th January, 2015
for the same, which was simply an extension of the original allotment letter dated 30th November, 2010. Original Allotment Letter dated
30thNovember, 2010 and revised Allotment Letter dated 26th January

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2015 were submitted at the time of assessment proceedings. The payments aggregating to Rs. 40,87,500/- made to the builder by the Appellant towards Flat No 5201-A and 5301-A were appropriated towards Flat 4902-B. Purchase consideration of Rs. 1,78,87,500/- of the entire residential property was much higher than the Stamp Duty Ready
Reckoner valuation of Rs. 1,15,25,238/- in the year 2010.In respect of LTCG,Indexation of cost and cost of improvement, contentions made before the AO were repeated.
4.1 It was also submitted that the Letter of Allotment is an agreement as per section 2(h) of the Indian Contract Act, in as much as it is a contract made between two or more parties which is enforceable in law. As per Indian Contract Act, an agreement is enforceable under section 10 if it is made by competent parties, out of their free consent and for lawful object and consideration. Since, all essential constituents of a Contract are present in an allotment letter, the same is considered as a binding Contract between the owner and the buyer. Maharashtra
Ownership Flats (Regulation of the Promotion of Construction, Sale,
Management, Transfer) Act 1963 (the MOFA) contains section 4A which states that the allotment letter issued by the Builder shall be enforceable against the Builder notwithstanding the provisions of the Indian
Registration Act. Reliance was also reliance on CBDT Circular No. 471

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Zulekha Haji Attarwala, Mumbai

Dated 15th October, 1986 and also on decision of juri ictional High
Court of Bombay in case Vembu Vaidyanathan (2019) 413 ITR
248(Bom) in this regard.
4.2 All the grounds being interlinked were adjudicated by the ld.CIT(A) together. After narrating the contents of the assessment order and the replies of the assessee, he concluded his final observations and conclusions as below:
“5.6 I have comprehensively gone through the submission of the appellant, argument of the AO in the impugned Assessment Order and have also deeply examined the Allotment Letters issued to the appellant by M/s Neelkamal Realtors and Builders Pvt. Ltd. as well as the Agreements for sale as uploaded by the appellant on ITBA. The following key observations are being made for the sake of clarity, brevity and ideation on this matter as per my considered deliberation:
i) In the assessment proceedings, the Assessing Officer (AO) has considered the ALLOTMENT date as 26.01.2015 as the date of acquisition and has treated the date of sale on 30.11.2017 as deemed income u/s 56(2). Further, the AO noticed that the stamp duty value of the property was Rs. 2,20,38,408/-, while the consideration paid after the ALLOTMENT date as 26.01.2015 reflected was lower at Rs.1,78,87,500. Accordingly, he made an addition under section 56(2)(x)(b) of the Income Tax Act for the differential value of Rs.41,50,908/-. Since, the assessee was holding 50% of share in the property, 50% of Rs.41,50,908/- i.e. Rs. 20,75,454/- was added to the total income of the assessee being deemed income from other sources under section 56(2)(x)(b) of the Act.
ii) Assessee’s contentions was that the original allotment letter dated30.11.2010 created enforceable rights in the property.
Relying on CBDT Circulars 471 (1986) and 672 (1993) and judicial precedents (e.g., CIT v. Balbir Singh Maini, Vinod Chopra v. ITO), the appellant contended that the date of allotment should be treated as the P a g e | 11
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Zulekha Haji Attarwala, Mumbai date of acquisition, thereby qualifying for long-term capital gains
(LTCG).
The appellant argued that Section 56(2)(x)(b) should not apply, since consideration was agreed upon in 2010, and registration in 2017 was a formality arising from that original agreement. On the other hand the Revenue’s Contentions are the ‘revised’ allotment in 2015 superseded the ‘original one. The final terms of sale crystallized only then. The registered title deed was executed only on 30.10.2017, and no possession or legal right was conferred before that date. iii) As per Section 56(2)(x)(b) (applicable w.e.f. 01.04.2017), the difference between stamp duty value and actual consideration is deemed income in the hands of the buyer when the property is acquired for inadequate consideration. Since acquisition occurred in 2015 Vide ALLOTMENT Letter dated as 26.01.2015, and sale happened 30.10.2017, this would be deemed income as per Section 2(42A) rws. 56(2)(x)(b) of the Act.
5.7. POINTS FOR DETERMINATION: There are key issues and pointers which require judicious consideration of the matter and the grounds of appeal as under:
• (i) Whether the date of acquisition is 30.11.2010 (1st allotment) or 26.01.2015 (2nd allotment)?
• (ii) Whether the gain on sale of property is short-term or long term?
• (iii) Whether the provisions of Section 56(2)(x)(b) are attracted?
6. FINDINGS AND DECISION: In my considered view, the above key pointers have been taken up for determination and decision based on findings of the fact and relevant legal interpretation on the issues.
6.1 With regard to the date of Acquisition, it is stated that while it is true that allotment may confer rights for capital gains purposes if it is supported by an agreement. However, in the present case, it is clear that the builder had issued (original) 1st ALLOTMENT dated
30.11.2010. Subsequently, another ALLOTMENT LETTER was issued to the appellant on 26.01.2015. From the perusal of key vitals of the both ALLOTMENT LETTER as stated above it is seen that the Flat
No.’s, the Carpet Area measurements, Number of Flats, the Floors of the Flats as well as the amount of consideration enumerated in the P a g e | 12
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Flat description in the Two ALLOTMENT LETTERS are completely different so much so that even in the wildest imagination and even after stretching the limits of reasonableness it is difficult and not rational to even term the two ALLOTMENT LETTERS as original and revised. For the reasons of financial and spatial considerations including the dates mentioned in the ALLOTMENT LETTERS, in my considered view, the two ALLOTMENT LETTERS are not linked nor can it be termed as either ‘original’ or ‘revised’. These are two different
ALLOTMENT LETTERS, one different from another and the AO was completely justified in considering the second ALLOTMENT LETTER dated 26.01.2015 as the date of acquisition of the property bearing
Flat no. 4902 in the building nameOrchid Enclave. There is no evidence of possession, registered agreement to sell, or irrevocable rights created in 2010 as no justified documentation is available and connected. The ALLOTMENT LETTER dated 26.01.2015 substantially altered the earlier arrangement and became the operative document.
Therefore, I hold that the date of acquisition of the capital asset is 26.01.2015, as the earlier allotment did not culminate into enforceable ownership.
5.2 On Nature of Capital Gains: As the sale of the above flat took place on 30.11.2017, as a corollary, the holding period from 26.01.2015
to30.11.2017 is less than 36 months. Hence, the Long Term Capital Gain has been correctly disallowed by the AO in consideration of the provisions as per Section 2(42A).
5.3 On Applicability of Section 56(2)(x)(b): Evidently, the registration of the flat took place on 30.11.2017, the incidence of taxation is covered under Section 56(2)(x) in such category of transaction.
Therefore, the difference between stamp duty value and actual consideration was correctly correctly added Income From other Sources under section 56(2)(x)(b). In view of the above findings of facts as it has been held that that as the AO correctly held that the date of acquisition as 26.01.2015. the income is in the nature of Deemed Income u/s 56(2).
Under the above circumstances and in my considered view, in conclusion therefore, the addition made by the AO under Section 56(2)(x)(b) is found to be legally tenable and the same is sustained and the relevant issue as per this ground no.3 of appeal on this issue is dismissed. However as noted by the AO himself and verifiable from the facts as the appellant holds only 50% of share in the property, 50% of Rs.41,50,908/- i.e.

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20,75,454/- could only be added to the total income of the assessee being deemed income under section 56(2)(x)(b) of the Act.
5.4 With regard to another issue enumerated in the ground no 3 of theappeal about claim of Long- Term Capital Gain and subsequent claim of its deduction u/s 54 of the Act , the observation of the has been perusedonce again for the sake of clarity and brevity . It has been argued by him that “From the above discussion, it is crystal clear that the assessee has not acquired the property on 30.11.2010 but only allotment has been made on this date. In fact, the assessee acquired the flat only on 30.10.2017 for Rs.1,78,87,500/- and sold it on the same day. Hence, no question of Long-Term Capital Gain arises”. From the above adjudication on the interconnected issue, it has been clearly held that the date of acquisition of the property is 26.01.2015 and the date of its subsequent sale is 30.10.2017, and as the period of holding is less than 36 months the same cannot be treated as Long Term Capital asset as per s. 2(42A) of the Act. Therefore, there is no question of the idea of any LTCG arising on transfer of the property. The part ground of theGround No 3 of appeal is therefore decided against the appellant.”

Zulekha Haji Attarwala, Mumbai contentions of the assessee are that the impugned asset was acquired in the year 2010 on the basis of allotment letter conferring legal rights to the assessee, thus attracting the existing stamp duty valuation.Besides, since the said flats could not be competed due to legal objections by BMC, the assessee got some other flat in 2015.However,it was merely a formality and is to be considered as continuation of the same allotment in 2010 and not to be considered as separate allotment made in 2015.It is stated that this fact is confirmed by the Builder who has also taken into consideration the earlier considerations paid in the year 2010. Therefore, apart from the stamp duty applicable in 2010 was rightly applied by the assesse, for the computation of capital gains, the holding period of over 36 months made the transaction in the nature of long term eligible for exemption u/s 54 of the Act as well.
5.2 However, on careful consideration of all relevant facts and the circumstances of case, we find that there is absolutely no basis for claiming continuation of the transaction made first in 2010 since the flat allotted in 2015 is completely different in area, configuration etc.
Moreover, the assessee made the first payment only in 2015 and never before.The entire claim being made is to avoid higher taxation. The ld.CIT(A) is right in holding that from the perusal of key vitals of the both the allotment letters oof 2010 and 2015,the carpet area

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Zulekha Haji Attarwala, Mumbai measurements, number of flats, floors of the flats as well as the amount of consideration enumerated in the flat description in the two letters were completely different and by no stretch of imagination, the two allotment letter could be considered as original and revised. We also find that for the reasons of financial and spatial considerations including the dates mentioned in the allotment letters, the two allotment letters are neither linked nor can it be termed as either ‘original’ or ‘revised’. These are two different allotment letters, one different from another and the AO was completely justified in considering the second allotment letter dated 26.01.2015 as the date of acquisition of the property bearing Flat no. 4902 in the building nameOrchid Enclave. There is no evidence of possession, registered agreement to sell, or irrevocable rights created in 2010 as no justified documentation is available and connected.The allotment letter dated 26.01.2015 substantially altered the earlier arrangement and became the operative document. Therefore, the date of acquisition of the capital asset was 26.01.2015, as the earlier allotment did not culminate into enforceable ownership. We therefore, find ourselves in agreement with the decision of the appellate authority who categorically held that the date of acquisition of the property was 26.01.2015 and the date of its subsequent sale was 30.10.2017, and as the period of holding being less than 36 months, the same could not be P a g e | 16
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Zulekha Haji Attarwala, Mumbai treated as Long Term Capital asset as per s. 2(42A) of the Act. Therefore, there was no question of any LTCG arising on transfer of the property.Accordingly,affirming the appellate order, we hold that the AO was justified in applying the provisions of section 56(2)(x) of the Act and also treating LTCG as STCG and disallowing the claims of indexation of cost and cost of improvement which are not available to the income from Short Term capital gains. Thus, all the grounds of appeal as above stand dismissed.

Place: म ुंबई/Mumbai
ददनाुंक /Date 03.12.2025
Lubhna Shaikh / Steno

आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to :
1. अपीलार्थी / The Appellant
2. प्रत्यर्थी / The Respondent.

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Zulekha Haji Attarwala, Mumbai

सत्यावपि प्रवि ////
आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt.