ITO-16(1)(4), MUMBAI vs. THAKERSHI A. VEERA, MUMBAI

सुनवाई की तायीख / Date of Hearing : 03.11.2016 घोषणा की तायीख /Date of Pronouncement : 11.11.2016 आदेश / O R D E R

PER D. KARUNAKARA RAO, AM:

2. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred to hold that the flat was let out by the assessee under the leave and license agreement and such agreement does not perpetrate to be sale agreement and hence, transfer u/s 2(47) has not taken place even though 98% of total consideration was paid by transferee.”

2. Briefly stated relevant facts of the case are that the assessee owns a flat in a redeveloped building in July, 2008. The said flat was rented out for a period of three years and earned rent in advance vide rental agreement dated 1.8.2008. The lease period is for three years. The agreement is signed between the assessee and Shri Chetan R. Shah (Chetan). During the period of this license agreement on 6.1.2009, assessee sold the said flat to Mrs. Neeta Chetan Shah (Neeta), wife of Shri Chetan R. Shah, tenant of the property. She paid a sum of Rs. 49,41,000/- out of the total consideration of Rs. 52,11,000/- in the month of January, 2009. At the time of sale, the buyer of the flat, Mrs. Neeta is living in the said Flat No.303 in „Kinja Heights‟ and along with her husband (Chetan). The balance amount of Rs. 2,70,000/- was subsequently paid at the termination of license agreement period. On these facts, AO considered the date of agreement to sale ie 6.1.2009 is not relevant date for computing the holding period of 36 months, rather AO considered the last payment of Rs. 2.7 lakhs paid on the termination of the license agreement period and offered the gains under the head „long term capital gains‟ and paid taxes accordingly. But, assessee is of the view that the date of possession of the property becomes relevant legally ie when the license period of three years ends in 31.7.2011. As per the license agreement dated 12.8.2008, the three years period starts from 1.8.2008 and ends on 31.7.2011. The long term capital gains were offered by the assessee on this sale of flat in the AY 2012-13. In the scrutiny assessment, the Assessing Officer restricted his attention to the method of computing the holding period of the asset and relied heavily on the date of sale agreement ie 6.1.2009 and computed the gains under the head short term capital gains. This gave raise to the dispute / litigation before us. CIT (A) granted relief to the assessee relying heavily on various decisions including the judgment of the Hon‟ble jurisdictional High Court in the case of Chaturbhuj Dwarkadas Kapadia vs. CIT (260 ITR 491) (Bom.) and another decision of the Bombay High Court in the case of CIT vs. Geetadevi Pasari (2009) (17 DTR 280) (Bom.) apart from many other decisions. Para 2.4.4 of the CIT (A)‟s order is relevant in this regard. CIT (A) opined that the facts of the present case are in parimateria with the above cited decisions (Para 2.4.5 is relevant). However, CIT (A) has remarked that the assessee had planned to transfer the flat only to save taxes and also highlighted the AO‟s failure in bringing some facts to the records in this regard. Eventually, CIT (A) granted relief and allowed the appeal of the assessee. Aggrieved with the same, Revenue is in appeal before us.