TMI Blog2006 (3) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... . 48,59,900 as short-term capital gain as against Rs. 44,44,725 assessed by the learned Assessing Officer as long-term capital gain and Rs. 43,36,235 shown by the assessee as long-term capital gain, thereby enhancing the assessment. It is submitted that long-term capital gain as shown by the assessee may kindly be upheld as correct. 2. Without prejudice to ground No.1 above, the learned CIT(A) erred in not allowing deduction of Rs. 69,010 being stamp duty paid by the assessee on agreement dated 16-11-1990 paid by the assessee on demand by the registering authorities. It is requested that the said amount be allowed to be deducted in computing the capital gain. 3. Without prejudice to ground Nos. 1 and 2 and alternately, without admitting the correctness of the order of the learned CIT(A), if his finding that the transfer took place on 12-5-1998 is to be upheld, then, the entire capital gain would be assessable in assessment year 1999-2000 in which case the capital gain even as declared by the assessee may kindly be directed to be deleted from the income of the assessment year 1997-98. 4. Further without prejudice to ground Nos. 1 and 2, if the order of the learned CIT(A) is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The aggregate amount of Rs. 6,83,100, which included registration charges of Rs. 7,000, was paid in four financial years, starting from financial year 1990-91 to financial year 1995-96, the details of which have been furnished on page 3 of the assessment order. On the basis of the aforesaid facts, it was contended that on payment of the first instalment of Rs. 1,19,465 on 1-11-1990, the assessee acquired the right to conveyance etc. in respect of the three shops. It was further explained that the assessee entered into agreement with the IDBI on 15-12-1995 by way of an agreement titled "assignment deed" for a consideration of Rs. 55,50,000 by which the rights in shops were assigned to IDBI. As per the provisions of section 269A of the Act, the assessee applied to the Appropriate Authority for No Objection Certificate (NOC) by filing Form No. 37-I. In this form, the assessee and the IDBI were shown as assignor and assignee. Acting on the application, the Appropriate Authority granted the NOC. Thereafter, the assessee transferred and handed over the rights in the shops to the IDBI. On the basis of the aforesaid arguments and certain case laws quoted before the Assessing Officer, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is reproduced below for the sake of ready reference: -------------------------------------------------- "Sales consideration received Rs. 55,50,000 Less: Cost of acquisition of right of assignment 10% of agreed price (Rs. 68,310) Indexed cost of acquisition Rs.1,14,475 Add: Payments made later on Rs.6,14,790 Add: Stamp duty charges as claimed by the assessee Rs. 69,010 Rs. 5,69.325 ------------ ------------- Rs.61,19,325" -------------------------------------------------- 2.2 Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the learned CIT(A). The arguments of the assessee before the learned CIT(A) were more or less the same as the arguments made before the Assessing Officer. The learned CIT(A) considered various agreements of the assessee including the cases cited before him. He pointed out that the assessee had not directly received the possession of the property, which was handed over by the owners to the IDBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of shops to IDBI 3 21-3-1996 Date of NOC 4 24-12-1996 Completion certificate from Pune Municipal Corporation 5 12-5-1998 Assignment and sale agreement, sale deed ---------------------------------------- The learned counsel also referred to various dates on which the sale consideration was received. These dates may also be reproduced here: ---------------------------------------------- Sl.No. Date Sale Remarks consideration received ---------------------------------------------- 1 16-12-1995 27,75,000 - 2 28-5-1996 16,65,000 On receipt of NOC 3 12-5-1998 11,10,000 Sale deed Total 55,50,000 ---------------------------------------------- 3.2 The learned counsel referred to pages 13 to 31 of the paper book, which is an agreement for purchase of Shop No. 14, executed on 1-11-1990. Agreements in respect of other shops were stated to be identical to this agreement. As per para 2 on page 5, the assessee agreed to purchase the shop in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned that the Appropriate Authority had no objection to the transfer of the said property for consideration of Rs. 55,50,000. 3.5 The learned counsel also drew our attention to page 63 of the paper book being the completion certificate issued by the PMC on 24-12-1996. 3.6 The learned counsel also referred to pages 67 to 101 of the paper book, being the indenture of assignment and sale made on 12-5-1998. The agreement was executed between the assessee, owner and the IDBI. According to this agreement, the assessee and the owners were required to execute a deed of conveyance in favour of the IDBI for conveying, transferring and assigning the shops to it on ownership basis and, therefore, they joined in execution of this deed. References were made to the purchase agreement and the earlier payments made to the assessee. The remaining amount of Rs. 11,10,000 was paid to the assessee on execution of this deed, bringing the full payment to Rs. 55,50,000, the consideration for purchase of the property. It may be noted that this agreement was one of assignment and sale. 3.7 The case of the learned counsel was that what the assessee transferred was the right of assignment in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to the definition of 'capital asset' given in section 2(14) of the Act and pointed out that it has a wide ambit. The Hon'ble Court also referred to the provisions of section 2(47) of the Act, which defines the term 'transfer' to include the sale, exchange, relinquishment of asset or extinguishments of any right therein etc. It was also pointed out that a contract of sale of land is capable of specific performance. It is also assignable. Therefore, such right to obtain conveyance was 'property' as contemplated by section 2(14). This right was assigned in favour of M/s. Advani and Batra and, therefore, it amounted to transfer of right by way of extinguishment of any right therein. 3.8 The learned counsel also relied on the decision of Hon'ble Bombay High Court in the case of CIT v. Sterling Investment Corpn. Ltd. [1980] 123 ITR 441, a case arising under section 12B of the Income-tax Act, 1922. In that case, the assessee entered into an agreement for purchase of certain properties in 1946. Earnest money of Rs. 1,50,000 was paid in October, 1946. A further sum of Rs. 1,50,000 was paid by way of earnest money. The agreement for sale stipulated a period of four months for comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sset held by the assessee. 3.9 The learned counsel also relied on the decision of the Hon'ble Bombay High Court in the case of CIT v. Vimal Lalchand Mutha [1991] 187 ITR 613. The [acts of the case were that the assessee entered into agreement on 8-11-1977 for purchase of a flat in Mittal Towers, Bombay. A formal agreement was executed with Bharat Trading Corporation on 4-12-1978. She obtained possession of the flat in June, 1981. No conveyance, however, was executed in her favour or in favour of the co-operative society of the said building. She entered into agreement on 28-4-1983 with Chanraj Uttamchand, transferring her right, title and interest in the flat. Thus, all rights acquired under the agreement dated 8-11-1977 and 4-12-1978 were transferred on 28-4-1983 to the said Chanraj Uttamchand. The Hon'ble Court came to the conclusion that the assessee held rights under the said two agreements for more than three years and, therefore, upheld the decision of the Tribunal that the capital gains amounted to longterm capital gains. 3.10 The learned counsel also relied on the decision of Hon'ble Punjab and Haryana High Court in the case of CIT v. Ved Parkash Sons (HUF) [1994] 207 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion company placed in paper book on pages 32 to 61. It was pointed out that when the construction was in progress, the assessee assigned her rights and title in the property to the IDBI, for which the said Sarswathi Construction company acted as a consenting party. It was also case of sale of shops when they were not fully constructed. The assessee had not taken possession of the shop on 15-12-1995, when the said agreement for assigning was signed. The possession was given after completion certificate had been obtained from PMC on 24-12-1996. The case of the learned DR was that the handing over the possession of the completed shop to the IDBI, for which the agreement was initially entered into with the owner and subsequently with the IDBI, was taken and given simultaneously. In other words, his case was that direct handing over of the possession to the IDBI by the owner amounted to giving possession to the assessee and thereafter giving possession by the assessee to the IDBI on the same day. He referred to the provisions of section 2(47)(vi) of the Income-tax Act, which provide that any transaction of acquiring shares in a co-operative society etc., which has the effect of transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad to the inference of short-term capital gains. 3.13 In the alternative, it was argued by the learned DR that if it is held that it is a case of transfer of right to conveyance etc., as argued by the learned counsel, then, such right was acquired on payment of first instalment. Subsequent instalments were paid not for acquiring that right but for acquiring the shop itself. Therefore, if the capital gains are to be computed on the basis that the assessee transferred the right of conveyance, then, benefit of indexation cannot be given for the subsequent payments. 3.14 In the rejoinder, the learned counsel of the assessee referred to page 57 of the paper book, which is a part of application in form 37-I wherein it is mentioned that what was transferred was right to get possession of the shops and right to get the conveyance deed executed. 4.1 We have considered the facts of the case and rival submissions. We find that the facts of the case of Tata Services Ltd and Sterling Investment Corpn. Ltd. are totally different from the facts of the instant case. Those cases dealt with ready properties, which could be transferred to the assessee after going through the required formalitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer of Property Act shall apply in respect of these transactions also. The narration in Form No. 37-I that the right to conveyance etc. was being transferred will not be conclusive of the matter as we have to see the subject-matter of purchase and the subject-matter of sale. The intention was to buy three shops. Similarly, the intention was to sell the three shops. The certificate for completion of the shops was obtained from the Pune Municipal Corporation on 24-12-1996. Before that the assessee could neither have taken possession of the shops nor handed over the possession of the shops. Sale deed with the IDBI was executed on 12-5-1998, whereby the possession was directly given to the IDBI. This was done by way of an agreement made by the assessee with the IDBI in which the owner also acted as a consenting party. Thus, giving possession to IDBI on 12-5-1998 also involved giving possession to the assessee by the owner on the same day. In terms of provisions of section 2(47)(v), the dates of transfer in respect of purchase and sale were, thus, the same, i.e., 12-5-1998. Therefore, we are of the view that it is a case of a short-term capital gain resulting as a consequence of sale an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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