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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI D.T. GARASIA
Per D.T. Garasia, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 23.05.2017 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2013-14.
The short facts of the case are as under: Assessee is working at Hong Kong. She had purchased a flat in 1991. The Assessing Officer (hereinafter referred to as the AO), while calculating the indexed value of cost from the date of registration of the agreement, has not allowed the exemption under section 44EF. The assessee has sold the flat No.901 in the building called Sky-Pan, off Link Road, Oberoi Complex, Andheri (W) on 2 Mrs. Manju Ashok Gopwani 14.02.2013 at a consideration of Rs.1,33,22,000/-. The property is claimed to have been purchased in the year 1991 at a price of Rs.22,26,000/- only. The assessee claimed all the rights, title and interest in the flat is vested from November 1991. Therefore, he is entitled to income tax from November 1991 and not from the date of registering the amount in 2001. Accordingly, the assessee wanted to work out long term capital gain after indexation from 1991. The Ld. CIT(A) did not allow the same. Therefore, assessee is in appeal before us.
The Ld. A.R. submitted that assessee has entered into agreement for purchase of flat for Rs.22,26,000/- for which amount of Rs.2,00,000/- has been paid on 04.11.91 and balance was paid in 1994 and the possession of flat was received on 04.01.95. The purchase agreement was registered on 04.01.01. As per the assessee, the date of acquisition of flat is 04.01.91. Therefore, indexation cost may be allowed. He relied upon the decision of Tribunal in the case of Praveen Gupta vs. ACIT (2011) 137 TTJ (Del) 307.
The Ld. D.R. relied upon the orders of the Revenue Authorities.
I have heard the rival contentions of both the parties. I find that assessee has produced the original deed of agreement before us by way of paper book wherein it is stated as under: DEED OF CONFIRMATION “THIS DEED OF CONFIRMATION is made at Mumbai on this 4th day of January, in the Christian Year Two Thousand One by MRS. MANJU A. GOPWANI MR. & ASHOK
3 Mrs. Manju Ashok Gopwani G. GOPWANI residing at Flat No.901, Sky Pan-A, Off. New Link Road, Andheri (West), Mumbai 400 053, hereinafter referred to as “the Purchaser” (which expression shall unless it be repugnant to the context or meaning thereof, be deemed to mean and include, his heirs, executors, administrators and assigns) WHEREAS, by an Agreement for Sale dated 4th November1991, (hereinafter called "the said Agreement") Messrs. Oberoi Property Developers, agreed to allot to the Purchaser and the Purchaser agreed to purchase Flat No.902, on the 9th floor, of the building "Sky Pan-A", at Oberoi Complex, Off. New Link Road, Andheri (West), Mumbai 400 053 (hereinafter referred to as "the said flat") at the price and on the terms and conditions therein contained.
AND WHEREAS, the said Agreement through inadvertence remained to be lodged for registration with the Sub-Registrar of Assurances, within the time limit specified under law for registration.
NOW with this Deed of Confirmation, the Purchaser hereby confirms the said Agreement dated 0 November1991, which is annexed hereto and marked as Exhibit "A".”
From the above it is apparent that by an agreement for sale dated 04.11.91 M/s. Oberoi Property Developers, agreed to allot to the Purchaser and the Purchaser agreed to purchase Flat No.902. It is also borne out from this agreement that assessee has also made payment of Rs.2 lakhs by cheque on 04.11.91. Therefore, it is clear that assessee has acquired the property from 01.11.91. I find that the decision of Delhi Bench in the case of Praveen Gupta (supra) wherein the Tribunal has held as under: “Capital gains – Cost of acquisition – Indexed cost of acquisition of flat – By entering into an agreement to acquire a flat in 1995, assessee had identified a particular property which he intended to buy and the builder was also bound to provide that property by accepting certain advance payment and making agreement for balance payment—Assessee had acquired a right to get a particular flat from the builder and that right itself is a capital asset— Word ‘held’ used in s. 2(14) as well as in cl. (iii) of Explanation to s. 48 clearly depicts that the assessee must have some right in the capital asset which is subject to transfer—Assessee can be said to have held the flat when he made the payment to the builder and received the allotment letter— Therefore, benefit of indexation of cost of acquisition of the flat has to be granted to the assessee from 1995 and not from the date of execution of conveyance deed in 2001
4 Mrs. Manju Ashok Gopwani Held : The flat was allotted to the assessee vide allotment letter dt. 2nd Aug., 1995 and agreement was executed on 27th Sept., 1995. The assessee started making payment from 2nd Aug., 1995 and was making payment till 28th Sept., 2001. The AO was therefore wrong in holding that the benefit of indexation will be available to the assessee from 27th Dec., 2001 i.e., from the Cate of execution of the conveyance deed and not from 27th Sept., 1995. By entering into an agreement to allot a flat, the assessee has identified a particular property which he intended to buy from the builder and the builder is also bound to provide the applicant with that property by accepting certain advance amount and making agreement for balance payment as scheduled in the agreement. Thus, going into the provisions, it/s not necessary that to constitute a capital asset the assessee must be the owner by way of a conveyance deed in respect of that asset for the purpose of computing capital gain. The assessee had acquired a right to get a particular flat from the builder and that right of the assessee itself is a capital asset. The word held' used in s. 2(14) as well as Explanation to s. 48 clearly depicts that assessee must have some right in the capital asset which is subject to transfer. By making the payment to the builder and having received allotment letter in lieu thereof, the assessee will be holding capital asset and, therefore, the benefit of indexation has to be granted to the assessee on the basis of payments made by him for acquiring the said asset and the assessee has rightly claimed the indexation benefit from the dates when he has made the payments to the builder. The AO is directed to provide the benefit of indexation to the assessee in the manner in which the assessee has claimed. (Paras 17, 18 & 29)
Conclusion: Assessee can be said to have held the flat when he made the Payment to the builder and received the allotment letter and, therefore, benefit of Indexation of cost of acquisition of the flat has to be granted to the assessee from the date (1995) when he started making payments to the builder and not from the date of execution of conveyance deed in 2001.”
Respectfully following the decision of the Tribunal, I hold that assessee has made payment of Rs.2 lakhs by cheque on 04.11.91. Therefore, assessee has acquired the property and he made the payment. Therefore, indexation benefit starts from the date when he made the payment to the builder. I therefore, direct the AO to provide the benefit of indexation to the assessee from 04.11.91.
Order pronounced in the open court on 22.01.2018.