RUKSHMANI DEDHIA, LEGAL HEIR OF JAYANTILAL TOKERSHI DEDHIA ,MUMBAI vs. ITO WARD 2(2), KALYAN

The brief facts are that assessee has riled return of income for A.Y.2015-16 filed on 31/08/2015 had declared total income of Rs.70,41,660/- which included long term capital gain of Rs.64,11,000/-. The genesis of long term capital gain was that assessee with two others had entered into development agreement with M/s. Ami Infra vide agreement dated 23/01/2022, wherein M/s. Ami Infra agreed to give 9.66% of total project including flats and shops, i.e., 9 flats and 5 shops out of which assessee had sold 4 shops and one flat for consideration of Rs.67,20,000/-. As per the sale agreement, the development agreement entered by the assessee with two of his siblings being co-owner of the land, the assessee was to receive certain instant payment and 9.6% of the constructed area. Accordingly, at the time of agreement assessee has granted possession of the said property in part performance of the contract. However, according to the ld. AO, assessee should have offered capital gain in A.Y.2012-13 itself which was not offered. According to ld. AO the developer has constructed these flats and shops in the current year only and therefore, the said asset has come into existence in this year only and since assessee had sold the said flat in this year, the income was to be taxed as short term capital gain, because the period was less than 36 months. It has been brought on record that this Tribunal in the case of another co-owner Shri Jayantilal T Dedia had remitted this matter back to the file of the ld. AO on the same reasoning given by the ld. AO stating that in A.Y.2012-13 assessee has accepted Rukshmani Dedhia, Legal Heir of Jayantilal Tokershi Dedhia the assessment order and relief to the extent of the value of flats /shops which has been valued for A.Y.2012-13 should be given and the matter was restored back for rebutting the capital gains earned by the assessee in line of the re-assessment proceedings for A.Y.2012-13. Similar facts are permeating in this appeal also. Now the ld. AO has levied the penalty for furnishing of inaccurate particulars of income instead of long term capital gain offered by the assessee should be taxed as short term capital gain. This penalty has also been confirmed by the ld. CIT (A).

After hearing both the parties and on perusal of the records, it is seen that assessee had offered long term capital gain in the A.Y.2015-16. According to him, assessee should have offered long term capital gain in A.Y.2012-13, subsequent to the sale cum development agreement and has not claimed any cost against the sales. Accordingly, he held that since developer has constructed the flat in the current year and therefore, the said assets came into existence in this year and accordingly, the long term capital gain declared by the assessee has to be treated as short term capital gain. Thus, instead of claim of long term capital gain, the ld. AO has taxed the capital gain as short term capital gain. Once assessee has furnished all the details and he has declared the income as long term capital gain which according to ld. AO should have been short term capital gain that does not tantamount to furnishing of any inaccurate particulars of income. Assessee has computed the long term capital gain on the premise that assessee has given all its right and possession in the property to developer in the assessment Rukshmani Dedhia, Legal Heir of Jayantilal Tokershi Dedhia year when development agreement was signed, i.e., in the A.Y 2012-13, which even according to the AO should have been offered as Long term capital gain in that year. Thus, penalty cannot be levied by treating the LTCG and taxing as STCG in this year. Accordingly, the penalty levied by the ld. AO is deleted.

In the result, appeal of the assessee is allowed. Order pronounced on 23rd April, 2025.