SHRI ANIL MURARILAL AGARWAL,MUMBAI vs. INCOME TAX OFFICER, WARD- 18(1)(1), MUMBAI, MUMBAI

In response to show cause notice, i In response to show cause notice, it was submitted t was submitted by the assessee said that those those two flats were purchased in purchased in joint name of the assessee and his wife Smt. Lata the assessee and his wife Smt. Lata Agarwal. He submitted that . He submitted that those flats were booked on 07.10.2005 those flats were booked on 07.10.2005, but subsequently in but subsequently in financial year 2009-10 corresponding to 10 corresponding to assessment assessment year 2010-11 were sold/transfered tohis sons namely Shri. Abhishek Agarwal and . Abhishek Agarwal and Shri. Aadesh Agarwal Aadesh Agarwal respectively. The corresponding long term The corresponding long term capital gain arising from capital gain arising from sale of those two flats was offered by the as offered by the assessee and his wife in their respective of return his wife in their respective of returns s of income filed for A.Y. 2010-11. It was submitted 11. It was submitted that those returns have been returns have been duly accepted by the department and, therefore, the transaction duly accepted by the department and, therefore, the tr duly accepted by the department and, therefore, the tr which has been already which has been already offered and accepted by the department offered and accepted by the department, cannot be subjected to tax again in A.Y. cannot be subjected to tax again in A.Y. under consideration onsideration. Those contentions of the assessee were not accepted by Assessing Officer. assessee were not accepted by Assessing Officer. assessee were not accepted by Assessing Officer. The Assessing Officer observed that those flats fficer observed that those flats had been booked by the assessee in violation of the slum rehabilitation scheme (SRA) of the assessee in violation of the slum rehabilitation scheme the assessee in violation of the slum rehabilitation scheme Government of Maharashtra Government of Maharashtra. Further the Assessing O er the Assessing Officer observed that the assessee did not that the assessee did not receive full payment against sale to Shri against sale to Shri Abhishek Agarwal and Shri bhishek Agarwal and Shri Aadesh Agarwal. The Assessing O . The Assessing Officer noted that part payment of Rs. 3 noted that part payment of Rs. 3,00,000/- and Rs. 2,31,500/ and Rs. 2,31,500/- respectively was paid was paid by the assessee to builder assessee to builder against the purchase price of Rs. 12,33,000/ purchase price of Rs. 12,33,000/- of each flat and of each flat and the balance amount had been paid by Shri Abhishek Agarwal and Shri had been paid by Shri Abhishek Agarwal and Shri Aadesh had been paid by Shri Abhishek Agarwal and Shri Agarwal to the builder. The Assessing O to the builder. The Assessing Officer was of the view that was of the view that the assessee could claim claim capital gain on the part of the investment on the part of the investment made by him. The long term capital gain declared by the assessee in made by him. The long term capital gain declared by the assessee in made by him. The long term capital gain declared by the assessee in assessment year 2010 assessment year 2010-11 though noted by the assessing officer though noted by the assessing officer, was found not to be pro to be properly calculated. According to Assessing perly calculated. According to Assessing Officer, the assessee should have offered long term capital gain see should have offered long term capital gain see should have offered long term capital gain on sale of properties sale of properties at Rs.4,90,691/- for A.Y.2010 for A.Y.2010-11, but the assessee availed benefit of benefit of exemption/deduction u/s 54 u/s 54/54F of the Act and no long term capital gain was offered for the tax purpose and no long term capital gain was offered for the tax purpose and no long term capital gain was offered for the tax purposes. The relevant observations of the Assessing Officer are observations of the Assessing Officer are reproduced as observations of the Assessing Officer are under:

Flat No.1404, Aadesh 16.01.2016 43,11,000 43,11,000 93,89,191 14th Floor, Agarwal Rashmi Heights, Malad Mumbai

Flat No. 1405, Abhishek 28.09.2015 43,11,000 43,11,000 93,89,189 14th Floor, Agarwal Rashmi Heights, Malad, Mumbai During the assessment proceedings, the assessee claimed that he During the assessment proceedings, the assessee claimed that he has sold two properties (Flat No. 1404 & 1405) in F.Y. 2009 has sold two properties (Flat No. 1404 & 1405) in F.Y. 2009-10 i.e. A.Y. has sold two properties (Flat No. 1404 & 1405) in F.Y. 2009 2010-11 and consequently, long term capital gains on from transfer/sale 11 and consequently, long term capital gains on from transfer/sale 11 and consequently, long term capital gains on from transfer/sale of these flats were offered in A.Y. 2010-11. In support of his claim he has of these flats were offered in A.Y. 2010 11. In support of his claim he has submitted letter dtd. 12 letter dtd. 12.12.2009 written to M/s. Rashmi Infra 2009 written to M/s. Rashmi Infra-structure Developers Ltd. for transfer of flats to Shri. Abhishek Agarwal and Shri Developers Ltd. for transfer of flats to Shri Abhishek Agarwal and Shri Aadesh Agarwaland in turn M/s. Rashmi Infra-structure Developers Ltd. Aadesh Agarwaland in turn M/s. Rashmi Infra structure Developers Ltd. has written letter dtd. 13.12.2009 to Shri Abhishek Agarwal and Shri has written letter dtd. 13.12.2009 to Shri Abhishek Agarwal and Shri has written letter dtd. 13.12.2009 to Shri Abhishek Agarwal and Shri Aadesh Agarwal for accepting the transfer. The assessee also submitted Aadesh Agarwal for accepting the transfer. The assessee also submitted Aadesh Agarwal for accepting the transfer. The assessee also submitted the copy of return of Income for A.Y. 2010 of Income for A.Y. 2010-11 alongwith computation of 11 alongwith computation of income of Shri Anil Agarwal and Smt. Lata Agarwal. income of Shri Anil Agarwal and Smt. Lata Agarwal. As per computation filed by the assessee, he has offered LTCG on As per computation filed by the assessee, he has offered LTCG on sale of the property in A.Y. 2010-11 as under. sale of the property in A.Y. 2010 Flat No. Sale Date Sale Value Indexed LTCG LTCG Investment Cost in new Cost Date Cost Value property (Rs)

The Ld. Assessing O The Ld. Assessing Officer accordingly rejected the fficer accordingly rejected the contentions of the assessee and assess of the assessee and assessed the d the difference of sale consideration consideration consideration and and and purchase purchase purchase consideration consideration consideration recorded in registered sale deeds registered sale deeds amounting to Rs. 1,42,86,671/ ,42,86,671/- as short term capital gain in the assessment term capital gain in the assessment order passed u/s 143(3) of passed u/s 143(3) of the Act on 29/12/2018 29/12/2018. On further appeal, the the Ld. CIT(A) also noted that, firstly firstly the assessee had purchased purchased flats in violation of the SRA Scheme, Secondly, the assessee violation of the SRA Scheme the assessee failed to furnish any agreement to the effect of transfer of the property agreement to the effect of transfer of the property agreement to the effect of transfer of the property 11, Thirdly, the by the assessee in assessment year 2010 assessee in assessment year 2010-11 assessee failed to furnish any document/evidence evidence in support of the possession possession of of the the immovable immovable property property under under consideration.

Before us the Ld. counsel for the assessee has filed a paper Before us the Ld. counsel for the assessee has filed a paper Before us the Ld. counsel for the assessee has filed a paper book containing pages 1 to 152. The Ld. counsel for the book containing pages 1 to 152. The Ld. counsel for the book containing pages 1 to 152. The Ld. counsel for the assessee referred red to the purchase and sale purchase and sale deed registered under the year under consideration in respect year under consideration in respect of flat No. 1404 and 1405, which are available on paper book pg. No. 89 to which are available on paper book pg. No. 89 to which are available on paper book pg. No. 89 to 101 and 102 to 136 of the paper book and 102 to 136 of the paper book respectively. The Ld. counsel also referred to the allotment letter also referred to the allotment letter of the flat No 1404 and of the flat No 1404 and 1405, which are available on paper book page which are available on paper book pages No.1 to 3 and 4 of the paper book er book respectively. The Ld. counsel also referred to . The Ld. counsel also referred to the income tax return the income tax return and computation of income of of income of the assessee for A.Y. 2010 assessee for A.Y. 2010-11, available on paper book available on paper book page No. 27 to page No. 54 and return of income filed by his wife S rn of income filed by his wife Smt. Lata Agarwal, a copy of a copy of which is available on paper book page which is available on paper book page no. 55 to page no. 80 of the paper book. no. 55 to page no. 80 of the paper book. The The Ld. counsel for the assessee filed copy of the memorandum the assessee filed copy of the memorandum the assessee filed copy of the memorandum of agreement entered into by the assessee with his sons by the assessee with his sons Shri. Abhishek Agarwal and Shri. Agarwal and Shri. Aadesh Agarwal for sale of the respective for sale of the respective flats in financial year 2009 in financial year 2009-10. In view of the above . In view of the above documents, the Ld. counsel for the assessee s the Ld. counsel for the assessee submitted that the Ld. counsel for the assessee s the capital gain arising on the capital gain arising on the sale of those those two flats has already been offered by the assessee in return of incom been offered by the assessee in return of incom been offered by the assessee in return of income for A.Y. 2010-11. He submitted that only registration document 11. He submitted that only registration document 11. He submitted that only registration documents have have been been prepared prepared in in the the assessment assessment year year under under consideration, in view of the conditions imposed by the builder n view of the conditions imposed by the builder n view of the conditions imposed by the builder and in effect the flat the flats had already transferred in the name of Shri. Abhishek Shri. Abhishek Agarwal and Shri. Aadesh Agarwal Aadesh Agarwal, who are sons of the assessee. sons of the assessee. The Ld. counsel for the assessee re The Ld. counsel for the assessee relied on the decision of the Hon’ble High Court of Delhi in the case on the decision of the Hon’ble High Court of Delhi in the case on the decision of the Hon’ble High Court of Delhi in the case of K. Ramakrishna Ramakrishnan reported in (2014) 48 taxman.com 55 reported in (2014) 48 taxman.com 55 (Delhi)/[2014] 225 Taxman 123 (Delhi)/[2014] 225 Taxman 123 (Delhi), wherein the date of wherein the date of allotment has been held to be date of purchase of the property allotment has been held to be date of purchase of the property allotment has been held to be date of purchase of the property and not the date of registration of conveyance deed and not the date of registration of conveyance deed and not the date of registration of conveyance deed. The Ld. counsel also relied counsel also relied on the decision of the coordinate bench of on the decision of the coordinate bench of the Tribunal in the case of Anita D Kanjani ani in Tribunal in the case of 2291/Mum/2015 for A.Y. 2011 2291/Mum/2015 for A.Y. 2011-12, wherein also the holding wherein also the holding period of the property has been held to be computed from the period of the property has been held to be computed from the period of the property has been held to be computed from the date of issue of the allotment letter. The Ld. counsel submitted date of issue of the allotment letter. The Ld. counsel submitted date of issue of the allotment letter. The Ld. counsel submitted that in the instant case that in the instant case those flats were allotted in the flats were allotted in the financial year 2004 financial year 2004-05 and, therefore, sale in the A.Y. 2010 sale in the A.Y. 2010-11 was liable for long term capital gain was liable for long term capital gain, which has already been which has already been declared by the assessee declared by the assessee and hence no addition hence no addition for short term capital gain was was required to be assessed in the year under in the year under consideration.

On the contrary, Ld. DR relied on the order of the lower On the contrary, Ld. DR relied on the order of the lower On the contrary, Ld. DR relied on the order of the lower authorities.

We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record relevant material on record. The issue in dispute in the case is he issue in dispute in the case is whether the holding perio whether the holding period of the property should be d of the property should be computed from the date of the conveyance deed or from the computed from the date of the conveyance deed or from the computed from the date of the conveyance deed or from the date of the allotment letter. Firstly, in the case date of the allotment letter n the case the assessee has already file has already filed the copy of the allotment letter of the flats the copy of the allotment letter of the flats which are available on paper book page which are available on paper book pages 1 to 4. On perusal of to 4. On perusal of the relevant document the relevant documents, we find that builder M/s Rashmi we find that builder M/s Rashmi Infrastructure Developers ltd. Infrastructure Developers ltd. had allotted the two flat n had allotted the two flat nos.

Though, the Assessing officer ssessing officer has pointed out certain mistakes in the mistakes in the computation of the deduction u/s 54 computation of the deduction u/s 54F of the Act of the Act for AY 2010- 11, but said assessment year is not available before us and but said assessment year is not available before us and, but said assessment year is not available before us and therefore, we can’t go into correctness of the same. B we can’t go into correctness of the same. B we can’t go into correctness of the same. But the assessing officer cannot ignore the said long assessing officer cannot ignore the said long term capital gain term capital gain declared in A.Y. 2010 declared in A.Y. 2010-11 and assessee the gain arising from gain arising from the sale of the property in the year under consideration as the sale of the property in the year under consideration as the sale of the property in the year under consideration as short term capital gain, without any valid reason for rejection short term capital gain, without any valid reason for rejection short term capital gain, without any valid reason for rejection of capital gain shown in AY 2010-11. Thirdly, of capital gain shown in AY 2010 the Ld. counsel for the assessee has rightly pointed out for the assessee has rightly pointed out the assessee the assessee has purchased thos se flats under sale component of the SRA component of the SRA scheme and not under the and not under the slum occupation category. The pation category. The finding recorded by the Assessing O finding recorded by the Assessing Officer to that extent is fficer to that extent is incorrect.

In view of aforesaid discussion In view of aforesaid discussion, we are of the opinion that the the opinion that the registration of the flat No. 1404 and 1405 for purchase and registration of the flat No. 1404 and 1405 for purchase and registration of the flat No. 1404 and 1405 for purchase and sale entered into the year under consideration are liable for entered into the year under consideration are liable for entered into the year under consideration are liable for any capital gain tax as the assessee had already declared the any capital gain tax as the assessee had already declared the any capital gain tax as the assessee had already declared the said transaction of the sale nsaction of the sale in A.Y. 2010-11, which has been which has been duly accepted by the department duly accepted by the department. The grounds of the appeal of . The grounds of the appeal of the assessee are accordingly allowed. the assessee are accordingly allowed.

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