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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI S. RIFAUR RAHMAN, AM & SHRI RAM LAL NEGI, JM
ITO – 32(3)(2), Sahil Shailesh Kumar Room No. 106, C-11, 1st Gosalia, 1205, Prathmesh floor, BKC, बिधम/ Tower, New Link Road, Mumbai-400 051 Opp Don Bosco School, Vs. Borivali (W), Mumbai – 400 092 स्थायीलेखासं./जीआइआरसं./PAN No. AGUPG9179N (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant : Shri Reepal Tralshawala, AR by प्रत्यथीकीओरसे/Respondentby : Shri C. S. Sharma, DR सुनवाईकीतारीख/ : 26.09.2019 Date of Hearing घोषणाकीतारीख / : 30.10.2019 Date of Pronouncement आदेश / O R D E R
Per S. Rifaur Rahman, Accountant Member:
The present Appeal has been filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals) - 44 in Sahil Shailesh Kumar short referred as ‘Ld. CIT(A)’, Mumbai, dated 10.08.18 for Assessment Year (in short AY) 2014-15.
The brief facts of the case are, assessee filed his return of income for the assessment year 2014–15 on 13.02.2015 declaring total income of Rs. 5,92,290/-. The return was processed under section 143 (1) of the Income Tax Act 1961 (in short ‘Act’). The case was selected for scrutiny under CASS. Accordingly notices under section 143 (2) and under section 142 (1) of the Act were issued and served on the assessee. In response, AR of the assessee and father of the assessee appeared and filed the relevant information as called for.
Assessee is a partner in the firm M/s Sidhdhi Vinayak Enterprise, a retail business dealing in car accessories. During this year, assessee derived income from business and income from other sources. During the assessment proceedings, AO noticed from the AIR information that the assessee had purchased immovable property at flat number 1203, a wing, Orchid Suburbia on 21.10.2013 for Rs. 60,14,280/- and sold the same flat on 28.10.2013 for a consideration of Rs. 80 lakhs. In Sahil Shailesh Kumar computation of income, assessee had claimed long-term capital loss on sale of the above flat. In order to verify the above claim assessee was called upon to explain how assessee can claim long- term capital gain/loss when the asset was held by assessee less than 12 months. In response, the assessee submitted that the flat was originally purchased on 18 November 2008 and assessee has made the payment and submitted the relevant proof before the Assessing Officer, however assessee accepted that actual registration was carried on 21.10.2013. Further assessee submitted the calculation of long-term capital loss based on the year of payment and applied the indexation cost of the relevant year of payment. After considering the submissions of the assessee, Assessing Officer rejected the contention of the assessee and observed that assessee can claim long-term loss or gain based on the period of holding that is assessed should held more than 36 months from the date of registration. By relying on the decisions of jurisdictional High Court in the case of CIT versus Dr D.A. Irani 111 taxmann.com 600 (Bom) and decisions of jurisdictional ITAT Mumbai. Accordingly, Assessing Officer determined the capital gains earned by the assessee in this 4 Sahil Shailesh Kumar transaction and treated the gain of Rs. 14,60,056/- as short-term capital gains.
Aggrieved with the above order, assessee preferred an appeal before Ld. CIT(A) and Ld. CIT(A) after considering the submissions of the assessee, dismissed the appeal filed by the assessee.
Aggrieved with the above order, assessee preferred an appeal before us by raising the following grounds of appeal:-
1. In law and in the facts & circumstances of the appellant's case, the Hon'ble C.I.T.(A) erred in relying on and misinterpreting the decision of the Hon'ble Bombay High Court in the case of Com. Of Income Tax - 2 v/s Milleniun Estates Private Limited for determining the period of holding of the asset by the appellant and thus the addition made deserves to be deleted.
2. In law and in the facts & circumstances of the appellant's case, the Hon'ble C.I.T.(A) erred in applying the ratio of the above judgment which is on time of recognition of revenue in the case of Builder / Developer viz. date of possession, and linking it to the period of holding for denying the claim indexation Sahil Shailesh Kumar from the date of allotment and consequential claim of the exemption to the appellant.
3. In law and in the facts & circumstances of the appellant's case, the Hon'ble C.I.T.(A) erred in not dealing with the decisions relied upon by the appellant including decisions of the jurisdictional tribunals and thereby not following the principle of judicial discipline and thus the order is bad in law and deserves to b« quashed.
4. The appellant craves leave to add, amend, alter or modify any of the grounds c Appeal before or at the time of the hearing.
6. Before us, Ld. AR brought to our notice the written submissions filed by the assessee before Ld. CIT(A) and submitted that in the case of PCIT vs Vembu Vaithyanathan, the Hon’ble jurisdictional High Court considered the fact that the assessee acquired the residential unit on which the allotment letter was issued by the builder which is on 31st December 2004, but the agreement of sale was executed on 17th May 2008. The Honorable Court held that the date of such allotment would be relevant date for the purpose of capital gain tax as a date of acquisition. It was noted that such allotment is final unless it is Sahil Shailesh Kumar cancelled or allottee withdraw from the scheme and such allotment would be cancelled only under exceptional circumstances. Further he brought to our notice the circular number 672 dated 16th December 1993. Further Ld. AR relied on the decision of Coordinate Bench of ITAT in the case of ACIT versus Shri Keyur Hemant Shah. He submitted that similar view was considered by the Honorable bench by relying on Bombay High Court decision in the above said case of Vembu Vaithyanathan(supra). Further Ld. AR submitted that Ld CIT(A) relied in the decision of CIT Vs Millenium and he submitted that the above decision is distinguishable as the above case is relating to builder whereas in the case of assessee, is the buyer.
7. On the other hand, Ld. DR submitted that this information was received by the Assessing Officer through the AAR and submitted that the facts in the given case are not similar to the facts relied on by the assessee and he supported the findings of Ld. CIT(A).
8. Considered the rival submissions and material placed on record, we notice that assessee has sold the property which is in Sahil Shailesh Kumar Orchid Suburbia flats, during this assessment year. The assessee purchase this flat from the developer who has allotted this flat to the assessee by the allotment letter dated 18th November 2008, however assessee preferred to register the above document on 21.10.2013. Now assessee claims that the about transactions falls under long-term capital gains because the assessee got the allotment letter in the assessment year 2008-09. On careful observation we notice that assessee has paid Rs. 5.71 lakhs in the assessment year 2008-09, 12.17 lakhs in assessment year 2010- 11, 21.20 lakhs in assessment year 2011-12, 15.03 lakhs in assessment year 2012-13 and balance in the assessment year 2013-14. Before us assessee has not filed any sale document or purchase document in support of the above claim, however assessee relies heavily on the jurisdictional High Court decision and Coordinate Bench of this Tribunal. The Honorable High Court in the case of Vembu Vaithyanathan(supra), observed that CBDT in its circular number 672 dated 16th of December 1993 has clarified that in cases of allotment of flats or houses by cooperative societies or other institutions whose scheme of allotment and consideration are similar to those of DDA, the date Sahil Shailesh Kumar of allotment would be date on which the purchaser of a residential unit can be stated to have acquired the property. We respectfully agree with the above observation of the Hon’ble High Court. But in the given case, the assessee has purchased the above flat from the builder who is not similar to DDA or any cooperative Society as clarified by CBDT. At least, assessee has not brought on record any agreement to show that this flat was purchased from such cooperative society. In our considered view, in order to take advantage of the above circular or the decision of the Honorable High Court, assessee has to first substantiate that the flat was purchased from such cooperative society. Since there is no record submitted before us, we are not in a position to appreciate at present. Assessee heavily relies on the decision of Honorable High Court, but the facts are not similar to the facts in the case of Vembu Vaidhranathan (supra).
We further observed that even though assessee has the letter of allotment but assessee has not made substantial amount to the builder and also not submitted any agreement of sale in order to appreciate whether the assessee has got the right to transfer the property at the stage of allotment of letter. Even Sahil Shailesh Kumar assessee has not brought on record any allotment letter to support that assessee has actually have a right to transfer the property on the date of receipt of allotment letter. In the absence of above such documents of evidence, assessee has merely relies on the case law.
The modus operandi of the small-time investors who invest in the real estate and they get the allotment letter and they make the settlement to the builder in the instalments. As soon as the building is complete, they resort to sell the property to the new prospective buyers and makes a profit. In this transaction, the builder will not give the right to transfer the property unless they get a full settlement. Since the settlement of the payment to the builder indicates that assessee has paid the cost of the flat spread over in five assessment years. Therefore, in our considered view, the facts in this case are similar as per our above observation, therefore unless assessee establishes that the assessee has purchased the above flats from a cooperative society then only the assessee can take the advantage of the circular issued by CBDT or the ratio of the Vembu Vaithyanathan case. Accordingly, grounds raised by the assessee are dismissed.