TMI Blog2019 (4) TMI 1657X X X X Extracts X X X X X X X X Extracts X X X X ..... to claim deduction u/s 54F - the assessee has made the payment within stipulated time as envisaged by Section 54F and the allotment in a specific property has been obtained by the assessee on 14/04/2012 which is evident from allotment letter as placed. Therefore, since all the conditions of Section 54F was fulfilled by the assessee, there could be no occasion to deny the benefit of deduction to the assessee - Decided against revenue - ITA No.5149/Mum/2017 - - - Dated:- 24-4-2019 - Shri Sandeep Gosain, JM And Shri M. Balaganesh, AM For the Assessee : Shri Vipul J. Shah For the Revenue : Shri Ashutosh Rajhans ORDER PER M. BALAGANESH (A.M): This appeal in ITA No.5149/Mum/2017 for A.Y.2013-14 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-41, Mumbai in appeal No.CIT(A)-41/IT-459/15-16 dated 01/05/2017 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3)of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 19/02/2016 by the ld. Income Tax Officer 30(2)(3), Mumbai (hereinafter referred to as ld. AO). 2. The only issue t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2007 allotting the specific Galas with specific Galas with corresponding galas marked on the floor plan. 3.3. The construction of the said Industrial Estate was completed in the year 2012 and therefore Homeland Realtors and Developers Private Limited sent a demand letter showing full payment made, asking to enter into agreement and entered into the formal purchase agreement of all galas (except Gala bearing No. 126) on 26th March, 2012 and in respect of Gala No.126 formal purchase agreement was entered on 15th May 2012. Upon execution of the agreement the possession was given to the assessee. The assessee sold the said 7 Nos. of Galas in F.Y.2012-13 for an aggregate consideration of ₹ 2,12,00,000/-. The assessee invested the amount received on the sale of the said Galas for acquiring a residential flat by making payment of ₹ 50,00,000/- and ₹ 72,14,800/- on 04th March 2013 and 19th April 2013 to M/s. Adarsh Industrial Estate Pvt. Ltd., and claimed the deduction u/s.54F. 3.4. The ld. AO from the perusal of the various documents of the assessee has submitted, prepared the following tabulation in respect of purchase and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act, 1961. 5.1. The appellant has also demonstrated successfully that the allotment letters of galas were issued on 22/10/2007. It is further observed that the entire consideration for purchase of galas was paid before the allotment letter through adjustment of loan from sister concern and payments from the bank accounts of the husband of the appellant. 5.2 As per Section 2 (42A) of the Act, Short -term capital asset means a capital asset held by an assessee for not more than thirty-six months immediately preceding the date of its transfer 5.3 After going through decisions relied on by the appellant, it is found that for the purpose of holding an asset, it is not necessary that the assessee should be the owner of the asset with a registered deed of conveyance conferring title on him. As per section 2(47); sale, exchange or relinquishment of the asset or the extinguishment of any right: therein is to be treated as transfer in relation to a capital asset. Even in the absence of a title deed, the assessee holds that property and therefore, it is the point of time at which he holds the property, which Is to be take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Aggrieved, the revenue is in appeal before us. 5. We have heard rival submissions. We find that the factual findings recorded by the ld. CIT(A) that the allotment letters of Galas were issued to the assessee on 22/10/2007; that the entire consideration for purchase of said Galas was paid by the assessee before the allotment letter through adjustment of loan from sister concern and payments from the bank accounts of the husband of the assessee, remain uncontroverted by the revenue before us. We find that the ld. CIT(A) had reckoned the specified date to be the date of allotment i.e., 22/10/2007 and accordingly held that assessee had held Galas for more than three years before the date of transfer and accordingly treated the same as long term capital gain and consequently granting benefit of exemption u/s.54F of the Act. It is not in dispute that assessee had indeed made investigation within the prescribed time in a new residential property making her eligible to claim benefit of exemption u/s.54F of the Act. The only dispute to be decided is whether the resultant gain on sale of industrial Galas by the assessee would be long term capital gain or sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties, we notice that the CBDT in its circular No.471 dated 15th October, 1986 had clarified this position by holding that when an assessee purchases a flat to be constructed by Delhi Development Authority ( D.D.A. for short) for which allotment letter is issued, 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 cancelled or the allottee withdraw from the scheme and such allotment would be cancelled only under exceptional circumstances. It was noted that the allottee gets title to the property on the issue of allotment letter and the payment of installments was only a followup action and taking the delivery of possession is only a formality. 5.This aspect was further clarified by the CBDT in its later circular No.672 dated 16th December. In such circular representations were made to the board that in cases of allotment of flats or houses by cooperative societies or other institutions whose schemes of allotment and consideration are similar to those of D.D.A., similar view should be taken as was done in the board circular dated 15th October, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Aforesaid appeal by revenue for Assessment Year [in short referred to as AY‟] 2013-14 contest the order of Ld. Commissioner of Income-Tax (Appeals)-37, Mumbai, [in short referred to as CIT(A)‟], Appeal No. CIT(A)- 37/IT-886/ACIT-25(2)/15-16 dated 27/09/2017 on following grounds of appeals: - 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition on account of Short-Term Capital Gain stating that the right in a property is created once its title is allotted to the purchaser and more so, if full consideration is paid. As the assessee had received an allotment vide letter dated 26.02.2008 and paid full consideration by 24.07.2008. Therefore, the assessee got the title to the property on the issuance of the allotment letter by the builder / seller. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the deduction claimed u/s.54F of Rs.l,09,40,072/-, stating that the house was purchased within two years of sale, as required u/s 54F 3. On the facts and in the circumstances of the case and in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of certain capital gains earned by the assessee in the impugned AY and the assessee‟s eligibility to claim deduction u/s 54F. 2.2 During assessment proceedings, it transpired that the assessee sold a duplex apartment Flat No.1201 with 4 car parking in the building Natura of Tapovan Cooperative Society Ltd., Santa Cruz (W), Mumbai [flat] on 04/04/2012 for a sale consideration of ₹ 1200 Lacs, the assessee‟s share being 50% in the same. The assessee after adjusting the indexed cost of acquisition worked out Long-Term Capital Gains [LTCG] for ₹ 288.73 Lacs and after claiming deduction u/s 54F for ₹ 109.40 Lacs against the same, offered balance LTCG of ₹ 179.33 Lacs to tax. 2.3 It transpired that the said flat was purchased by the assessee vide Registered Agreement for Sale on 25/03/2010 and counted from this date, the assessee‟s holding period was less than 36 months which led to Ld. AO to treat the resultant gains as short-term capital gains [STCG]. The assessee defended the same by submitting that the said flat was purchased vide allotment letter dated 26/02/2008 and substantial payment of ₹ 185.50 Lacs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court 244 CTR 346 2. Sanjeev Lall Vs CIT Hon‟ble Supreme Court 365 ITR 389 3. CIT Vs. Vijay Flexible Containers Hon‟ble Bombay High Court 186 ITR 693 4. CIT Vs Ram Gopal Hon‟ble Delhi High Court ITA 70/2015 09/02/2015 5. Snehabimal Vs PCIT Mumbai Tribunal ITA 5489/M/ 6. Seeta Prabhu Vs ITO Mumbai Tribunal ITA 1020/M/ The case law of Gulshan Malik Vs. CIT [supra] was held to be distinguishable on facts since in that case the confirmation letter specifically provided that no right to provisional / final allotment accrues until the buyers‟ agreement is signed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 371 Lacs. The said allotment is not a conditional allotment and do not envisages cancellation of the allotted property, in any manner. Therefore, the assessee has acquired right in a specific property which is clearly earmarked in the layout plan. The full payment of the same has been made by the assessee by 24/07/2008 which is evident from assessee‟s letter containing payment details as placed on page no. 4 of the paper-book. Subsequently, agreement of sale has been executed by the builder in assessee‟s favor on 25/03/2010 which was nothing but mere improvement in assessee‟s existing rights to acquire a specific property and part parcel of the same transaction. This being the case, the case laws being relied upon by the revenue do not apply to the factual matrix of the case and therefore, rightly, distinguished by the Ld. first appellate authority. 5.2 We find that the factual matrix of the present case is squarely covered by the recent decision of Hon‟ble Bombay High Court rendered in PCIT Vs. Vembu Vaidyanathan [ITA No. 1459 of 2016 dated 22/01/2019], wherein the issue has succinctly been clinched by Hon‟ble Court in the following manner: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and consideration are similar to those of D.D.A., similar view should be taken as was done in the board circular dated 15th October, 1986. In the circular dated 16th December, 1993 the board clarified as under: 2. The Board has considered the matter and has decided that if the terms of the schemes of allotment and construction of flats/houses by the co-operative societies or other institutions are similar to those mentioned in para 2 of Board's Circular No.471, dated 15-10-1986, such cases may also be treated as cases of construction for the purposes of sections 54 and 54F of the Income-tax Act. It can thus be seen that the entire issue was clarified by the CBDT in its above mentioned two circulars dated 15th October, 1986 and 16th December, 1993. In terms of such clarifications, the date of allotment would be the date on which the purchaser of a residential unit can be stated to have acquired the property. There is nothing on record to suggest that the allotment in construction scheme promised by the builder in the present case was materially different from the terms of allotment and construction by D.D.A.. In that view of the matter, C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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