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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI G.S.PANNU, AM & SHRI AMARJIT SINGH, JM
Assessee by: Shri Anuj Kisnadwala Department by: Shri Pradeep Kumar Singh सुनवाईकीतारीख / Date of Hearing:17.02.2016 घोषणाकीतारीख /Date of Pronouncement: 31.03.2017 आदेश / O R D E R PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 29.07.2013 passed by the Commissioner of Income Tax (Appeals)-27, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the assessment year 2010-11. 2. The assessee has raised the following grounds:-
A.Y. 2010-11 “1. The learned CIT(A) has erred in law and on facts in upholding the order of the Assessing Officer which is illegal and bad in law.
2. The learned CIT(A) has erred in law and on facts in sustaining the order of the Assessing Officer computing the total income of the appellant at Rs.65,12,480/- as against the returned income of Rs.11,16,013/-.
3. The learned CIT(A) has erred in law and on facts in confirming the order of the Assessing Officer assessing the LTCG offered by the appellant on sale of residential premises at Neelkanth Palm, Thane as STCG and consequently denying the benefit of exemption claimed u/s.54 of the Act.
4. Without prejudice to the above and in the alternative, the learned CIT(A) ought to have directed the Assessing Officer to adopt the market value of the residential premises as on the date of acquisition considered by him as the cost of acquisition for the purpose of computation of capital gain.
5. The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal.”
3. The brief facts of the case are that the assessee filed return of income on 30.07.2010 declaring total income to the tune of Rs.11,16,013/-. The return was processed u/s.143(1) of the Income Tax Act, 1961( in short “the Act”). Thereafter, the case was selected for scrutiny and notice u/s.143(2) of the Act was issued on 24.08.2011 and duly served upon the assessee. The source of income of assessee was from the interest income being income from other sources, capital gain and house property. During the said assessment year, the assessee showed the Long Term Capital Gain to the tune of A.Y. 2010-11 Rs.45,58,478/- on sale of two registered flats No.A-801 and A-802, at Neelkanth Palm Realty. The assessee claimed exemption upon the entire capital gain u/s.54 of the Act on the ground of that the capital gain was used for purchase of capital asset being Flat No.701, Krishna Building, A Wing, Neelkjanth Palm Thane for a sum of Rs.68,26,400/-. On verification of the claim of the assessee, it was found that the assessee has taken the date of acquisition of the property sold i.e.No.A-801 and A-802, at Neelkanth Palm Realty and claimed the benefit accordingly. The capital gain shown by the assessee is hereby reproduced as under:-
Amount (Rs.) Amount (Rs.) Sale consideration of 2 flats 80,42,760 Less: Indexed Cost of acquisition Cost of Flat No.A-801 11,19,310 Cost of Flat No.A-802 15,26,980 Total Cost 26,46,290 Indexed Cost = 34,84,282 34,84,282 = 26,46,290 x 632 [CII of 2009-10] 480 [CII of 2004-05] Long Term Capital Gain 45,58,478 Exemption u/s.54 45,58,478 LTCG for the year NIL
On going through the details furnished by the assessee, it was observed that the agreement for purchase of aforesaid flat No.A-801 and A-802, were entered into by the assessee with M/s Neelkanth Palm Realty on 26.03.2009 and 27.03.2009 respectively whereas the assessee has adopted the date of acquisition of these properties as A.Y. 2010-11 30.03.2005. If the date 26.03.2009 and 27.03.2009 were to be adopted on the basis of purchase agreements then in the said circumstances, the holding period would be below then three years hence the capital gain was required to be considered as Short Term Capital Gain, hence notice dated 17.12.2012 was issued and served upon the assessee. Thereafter, by considering the reply of the assessee, the Assessing Officer considered the holding of the assessee from the date of agreement i.e. 27.03.2009 which was sold on 28.02.2010 and purchased of new asset was taken into consideration on 28.07.2010 hence the Short Term Capital Gain was assessed to the tune of Rs.53,96,470 and accordingly assessed the income of the assessee to the tune of Rs.65,12,480/-. Aggrieved from this order, the assessee filed the appeal before the CIT(A) who confirmed the order of the Assessing Officer, therefore the assessee has filed the present appeal before us.
Issue n.1 to 3 :-
All the issues lead to the question that which period is required to be considered as holding of the sold property for assessing the income as Short Term / Long Term Capital Gain for assessing the entitlement of exemption u/s 54 of the Act on account of purchase of new property to assess the income accordingly as Short Term / Long Term Capital Gain. At the very out set, the learned representative of the assessee has argued that in case of assessee’s sister titled as Mrs. A.Y. 2010-11 Anupama Agarwal Vs. DCIT in dated 23.09.2016 the holding period of the sold property was taken in to consideration from the allotment letter dated 30.03.2005, therefore in the said circumstances in case of assessee also the date of the allotment letter as well as the date of the payment of first installment is required to be consider to assess the Long Term / Short Term Capital Gain at the time of the sale of the said property hence the order of the CIT(A) in question is wrong against law and facts and is liable to be set aside. In support of her claim, the learned representative of the assessee has also placed reliance upon the judgment of Hon’ble Punjab & Haryana High Court in the case of Mrs. Madhu Kaul Vs. CIT and another [ 363 ITR 54] and the judgment of the Hon’ble Madras High Court in the case of CIT Vs. S.R.Jeyshankar [373 ITR 120] and the order of Hon’ble Tribunal in the case of ACIT Vs. Sharad Tadani [104 TTJ 567 etc. However, the Ld departmental representative has supported the order passed by the CIT(A) in question. On appraisal of the order passed by the Mumbai Tribunal in case of Mrs. Anupama Agarwal Vs. DCIT in ITA No.472/M/2015 dated 23.09.2016, it is quite clear that in the case of the sister of the assessee the date of allotment and payment of first installment was considered by the ITAT, Mumbai bench while assessing the Long Term / Short Term Capital Gain at the time of sale of the said property. The case of the assessee is squarely covered by the case of Mrs. Anupama Agarwal (supra) in which the date of the A.Y. 2010-11 allotment i.e.30.03.2005 has been considered to assess the Long Term / Short Term Capital Gain at the time of the sale of the property. We also find necessary to advert the finding of the Hon’ble ITAT, Mumbai bench in case of Mrs. Anupama Agarwal:-
“7. On hearing both the parties, we find there is no dispute on the facts. However, the dispute exists with reference to the holding period qua the date of booking / date of allotment. In this regard, we have perused the orders of the Tribunal cited above. For the sake of completeness of this order, relevant paras 6 to 8 of the Tribunal’s order in the case of Richa Bagrodia (supa) are extracted as under:-
“6. We heard both the parties and perused the orders of the Revenue Authorities as well as the judgments of the Hon’ble High Court and the decisions of the Tribunal cited by learned representatives of both the parties. The only issue that is to be decided is whether the date of allotment of the flat or the date of possession of the flat by the assessee should be considered as the date for computing the holding period of 36 months. On perusal of the cited orders of the Tribunal (supra), we find that an identical issue came up for adjudication before the Tribunal in the case of Meena A Hemnani (supra), order dated 17th January, 2014 wherein one of us (AM) is a party and the issue was decided in favour of the assessee by relying on various decisions of the Tribunal as well as the judgment of the Hon’ble Gujarat High Court in the case of CIT vs. Anilaben Upendra Shah (2003) 262 ITR 657 (Guj). Relevant discussion is given in paras 3 & 4 of the said order of the Tribunal which read as under: “ 3. There are couple of issues raised in this appeal. Rest of the grounds raised in the appeal are either consequential or general in nature. Accordingly, they are dismissed as general or consequential. The issues, which need to be adjudicated in this appeal are (i) if the capital gains earned by the assessee are in the nature of the short term as held by the AO or long term capital gains as offered by the assessee in the return. At the outset, Ld Counsel for the assessee mentioned that the assessee purchased a flat vide the allotment letter dated A.Y. 2010-11 9.9.2003 from the builder namely Prestige Estates Projects Pvt. Ltd. There was a construction agreement between the parties dated 1.12.2003 and the registered deed of the same was dated on 22.9.2006. The said flat was sold by the assessee to Bennet Coleman & Company on 10.11.2006. The assessee earned capital gains on this transaction and offered the same as long term capital gains reckoning the date of allotment i.e., 9.9.2003 for the purpose of determining the holding period of three years relevant for the long term capital gains. However, in the assessment proceedings, AO considered the date of registration i.e., 22.9.2006 the date of registration and determined the short term capital gains. Therefore, now the issue to be decided by the Tribunal relates to if the date of allotment should be considered for the purpose of computing the said long term capital gains. In this regard, Ld Counsel filed various decisions to suggest that the date of allotment must be considered for the purpose of computing the long term capital gains instead of date of registration. Ld Counsel filed the order of the Tribunal in the case of ACIT vs. Smt. Vandana Rana Roy vide (AY 2007-2008) dated 7.11.2012, wherein one of us (AM) is a party, and stated that the “date of allotment” should be reckoned as relevant date for computing the holding period for the purpose of computing the capital gains. In this regard, Ld Counsel brought our attention to para 7 and 8 of the said order of the Tribunal to support his case. The said judgment was decided considering the judgment of the Gujarat High Court in the case of CIT vs. Anilaben Upendra Shah (2003) 262 ITR 657 (Guj) apart from other decisions of the Tribunal in the case of Jitendra Mohan vs. ITO (2007) 11 SOT 594 (Del) and also another decision of the ITAT in the case of Pravin Gupta vs. ACIT and the relevant propositions are extracted in para 7 of the Tribunal’s order dated 7.11.2012. The said paras 7 and 8 from the order of the Tribunal in the case of Smt. Vandana Rana Roy read as under:
7. We have heard both the parties, perused the cited decisions and we find that there is no dispute on the facts. The only issue that is to be decided is whether date of allotment of the flat or the date of possession of the flat by the assessee should be considered as date of holding for computing the holding period of 36 moths. In alternative, the “date of registration should be the relevant date. On perusal of the said decisions relied upon by the Ld Counsel, we find that the decisions are relevant and applicable to the facts of the present case. The conclusion of the Hon’ble Gujarat High Court judgment in the case of CIT vs. Jindas Panchand Gandhi reads as under:
Assessee having sold the flat allotted to him by a co-operative housing society after a period of 36 months from the date of allotment, capital gains arising to him were long-term capital gains despite the fact that the physical possession of the flat was given to the assessee much later and, therefore he was entitled to deduction from such gains as per law.
7.1 The conclusion of the Hon’ble Gujarat High Court judgment in the case of CIT vs. Anilaben Upendra Shah reads as under: A.Y. 2010-11 “Assessee having held the shares and allotment of a flat in a co- operative housing society for a period of more than 36 moths the capital gain arising from sale of said flat was long-term capital gain and assessee was entitled to benefit of section 80T irrespective of the fact that the assessee did not get possession of the flat in question at the time of allotment and it was constructed later on.”
7.2. The conclusion of Hon’ble ITAT, Delhi Bench in the case of Jitendra Mohan vs. ITO reads as under:
On the facts of the case, assessee held the capital asset (shed) allotted to it on installment basis from 28th December, 1994, the date of payment of second installment and sale thereof on 15th December, 2000, gave rise to long term capital loss even though possession of shed was handed over by DSIDC to assessee on 28th May, 1998.
7.3. The conclusion of Hon’ble ITAT, Delhi Bench in the case of Praveen Gupta vs. ACIT reads as under: “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 payment to the builder and not from the date of execution of conveyance deed in 2001.”
8. All the above decisions are uniform in concluding that the “date of allotment” is reckoned as the date for computing the holding period for the purpose of capital gains. The date of allotment in this case being 19.11.2001 and the date of sale is 23.8.2006, therefore, the holding period is much more than 36 months. In this case, the gains earned by the assessee on the sale of flat have to be computed as capital gains. Without prejudice, even if the date of possession, being 14.8.2003, is considered; the assessee is still entitled to the benefits of the Long Term Capital Gains. Therefore, in our opinion, order of the CIT (A) does not call for any interference. Accordingly, the grounds raised
by the Revenue are dismissed.”
4. Considering the above settled nature of this issue, we are of the opinion that the assessee must succeed on this issue. Accordingly, the relevant grounds of appeal are allowed.”
7. From the above settled position of the issue, it can be safely concluded that the “date of allotment” should be reckoned as the date for computing the holding period for the purpose of capital gains. In the instant case, the date of allotment is 11.04.2003 (FY 2003- 2004) and the date of sale of the property is 14.10.2007, therefore the holding period is more than 36 months. Therefore, the capital gains earned by the assessee on the sale of the flat have to be treated as ‘long term capital gains’. The assesee paid the first A.Y. 2010-11 installment on 11.4.2003, thereby conferring a right to hold a flat, which was later identified and possession delivered on later date. The Hon’ble Punjab & Haryana High Court in the case of Mrs. Madhu Kaul vs. CIT vide Income Tax Appeal No.89 of 1999, dated 17th January, 2014 held that the mere fact that possession was delivered later, does not detract from the fact that the allottee was conferred a right to hold property on issuance of an allotment letter. Thus, the ld DR’s arguments on non-existence of the flat at the time of issuing of allotment letter stands answered by the said judgment of the Hon’ble High Court of Punjab & Haryana (supra). The same view was supported by various decisions of the Tribunal as well as the judgments of the Hon’ble Gujarat High Court and the relevant conclusions were already extracted in the above paragraphs of this order. Regarding the judgments of the Hon’ble jurisdictional High Court relied on by the Ld DR are distinguishable on facts. Therefore, considering the above settled nature of the issue as well as the following the principle of consistency, we are of the considered opinion that the ground no.1 raised by the assessee should be allowed. Accordingly, ground no.1 is allowed.”
The facts and circumstances of the present case is quite similar. Moreover, the above said case is the case of the sister of the assessee in which the date of allotment is the same in the same vicinity and accordingly she is entitled to get the exemption u/s.54 of the Act. Moreover, the ratio given in the case titled Mrs. Madhu Kaul Vs. CIT and another [ 363 ITR 54] (supra) and CIT Vs. S.R.Jeyshankar [373 ITR 120] (supra) are also quite applicable to the facts of the present case in which the date of allotment letter was considered to assess the holding period to ascertain the entitlement of exemption u/s.54 of the Act. In view of the said circumstances we are of the view that the finding of the CIT(A) on this said issue is wrong A.Y. 2010-11 against law and facts and is not liable to be sustainable in the eyes of law. Hence, we set aside the finding of the CIT(A) on this issue and direct the Assessing Officer to consider the allotment letter dated 30.03.2005 to determine the Long Term / Short Term Capital Gain and accordingly entitlement of exemption u/s.54 of the Act. Accordingly these issues are decided in favor of assessee against the revenue.
Issue no. 4:-
Since the above said issues have been decided in favour of assessee therefore there is no need to decide this issue being academic in nature.
Issue no.5 :-
This issue is formal in nature nowhere requires adjudication.
In the result appeal filed by the assessee is hereby Allowed.
Order pronounced in the open court on 31st March, 2017 (AMARJIT SINGH) (G.S.PANNU) लेखासद" / ACCOUNTANT MEMBER "ाियकसद"/JUDICIAL MEMBER मुंबई Mumbai; िदनांकDated : 31st March, 2017 MP MP MP MP A.Y. 2010-11