COMMISSIONER OF INCOME-TAX vs. JINDAS PANCHAND GANDHI

ITR/56/1994HC GujaratGJHC24020134199414 September 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI8 pages
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What were the facts?

The assessee, an individual, was allotted flat No.G.8 in Venus Apartments (Galaxy Co-operative Housing Society) on 04.11.1980. The property was under construction and completed on 12.09.1983, with physical possession handed over on the same date. The assessee paid the purchase price in installments between 11.10.1980 and 11.10.1982. The flat was sold on 30.04.1984 for Rs.3,75,000/-. The assessee computed long-term capital gains. The Assessing Officer and CIT(Appeals) held that the property was held for less than 36 months, making the gains short-term. The Income Tax Appellate Tribunal (ITAT) held that the capital asset was acquired on the date of allotment (04.11.1980). The Commissioner of Income-tax (CIT) has referred the matter to the High Court.

What did the High Court hold?

The High Court held that the capital asset was acquired by the assessee on the date of allotment, which was 04.11.1980. The sale of the flat took place on 30.04.1984, which is after a period of 36 months from the date of allotment. Therefore, the assessee was justified in treating the surplus consideration as long-term capital gains. The Tribunal was justified in holding that the capital gains arising were long-term capital gains and the assessee was entitled to the relevant deductions. The Court relied on its own decision in CIT Vs. Anilaben Upendra Shah, (2003) 262 ITR 657, which held that for a member of a co-operative housing society, the relevant date for computing capital gains tax on the transfer of shares (and consequently the flat) is the date of acquisition of shares in the society. The question is answered in the affirmative, in favour of the assessee.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the capital gains arising out of the sale of the flat in Venus Apartments was long-term capital gains and thereby the assessee was entitled to deduction from such gains as per law? (Question of law) Assessee's contention (as per Tribunal's finding): The assessee acquired the capital asset at the time of allotment when the price was agreed upon. Subsequent installment payments related to an already acquired asset. The capital asset comprises a bundle of rights, and thus, the surplus should be taxed as long-term capital gains. Revenue's contention (as per Assessing Officer and CIT(Appeals)): The assessee held the property for a period of less than 36 months, making the gains short-term capital gains. The relevant date for determining the holding period is the date of completion/possession, not allotment.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 80T

AI-generated summary — verify with the full judgment below

ITR/56/1994 1/8 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No. 56 of 1994 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA

HONOURABLE MS.JUSTICE H.N.DEVANI ===================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ===================================================== COMMISSIONER OF INCOME-TAX - Applicant(s) Versus JINDAS PANCHAND GANDHI - Respondent(s) ===================================================== Appearance : MR KM PARIKH for Applicant(s) : 1, NOTICE SERVED for Respondent(s) : 1, ===================================================== CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 14/09/2005 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA)

ITR/56/1994 2/8 JUDGMENT 1 The following question has been

The order continues below.

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