TMI Blog2023 (1) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... ove decision, we allow the ground raised by the assessee. - ITA NO. 645/MUM/2022 - - - Dated:- 10-11-2022 - Shri Kuldip Singh, Hon'ble Judicial Member And Shri S. Rifaur Rahman, Hon'ble Accountant Member For the Assessee : Shri Rahul Sarda For the Department : Shri Manoj Sinha ORDER PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the assessee against order of the Learned Commissioner of Income Tax, National Faceless Appeal Centre, Delhi [hereinafter in short Ld.CIT(A) ] dated 11.03.2022 for the A.Y. 2013-14. 2. Brief facts of the case are, assessee filed its return of income on 28.09.2013 declaring total income of ₹.1,67,34,250/-. The return was processed u/s. 143(1) of Income-tax Act, 1961 (in short Act ). Subsequently case was selected for scrutiny under CASS and notice u/s.143(2) and 142(1) of the Act were issued and served on the assessee. In response AR of the assessee attended and submitted the relevant information as called for. 3. Assessee is engaged in the business of manufacturing and trading in Cut and polished diamonds. During the assessment proceedings, Assessing Officer observed that vide Sale Deed dated 19.05.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the asset was created in the year 1998-99 and the question arises that weather night to own property is a capital asset or not? The answer to this question has been given by Hon'ble Mumbai High court with reference to capital asset as defined u/s. 2(14) of the IT Act in the case of CIT vs Tata Teleservice Ltd 1221TR 594 and has held as follows: What is a capital asset is defined in section 2(14) of the IT. Act, 1961. Under that provision, a capital asset means property of any kind held by an assessee, whether or not connected with his business or profession. The other sub-clauses which deal with what property is not included in the definition of capital asset are not relevant. Under section 2(47), a transfer in relation to a capital asset is defined as including the sale, exchange or relinquishment of the asset or the astonishment of any night therein or the compulsory acquisition thereof under any law. The word property , used in section 2(14) of the I.T. Act, is a word of the widest amplitude and the definition has re-emphasised this by use of the words of any kind. Thus, any right which can be called properly will be included in the definition of capital asset . A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Mum.) where is the facts of the case were as under FACTS The assessee vide unregistered agreement with a developer purchased a flat in 1993 which was constructed in the year 1997 and registered in the year 1998. During the relevant year, the assessee sold said flat and after claiming the indexed cost at Rs. 18.74 lakhs showed long-term capital gain at Rs. 39.42 lakhs. The Assessing Officer worked out indexed cost of acquisition on the basis of purchase price from 1993 and completed the assessment. However, the Commissioner was of the view that the assessee had not tiled any evidence with respect to various payment made towards the purchase price and the indexed cost of acquisition worked out on the basis of financial year 1993 was incorrect and, hence, the assessment order was erroneous and prejudicial to the interest of revenue. Accordingly, he initiated revision proceedings under section 263. The Commissioner, however, set aside the order of Assessing Officer and directed the Assessing Officer to compute the correct long-term capital gain by adopting the indexed cost of acquisition on the basis of the date on which the property was held after registration of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation to section 48 mentions Cost of acquisition and not the actual payments. Here we would also like to refer judgment of Delhi ITAT in the case of Praveen Gupta vs ACITITA No. 2558/Del/2010: Asst. Year 2007-08 in which Honourable ITAT has taken indexation on the basis of Payment made by the Assessee but since Assessee is based in Muhu so for us ITAT Mumbai Judgment is more relevant and at the same time same is more beneficial to us too. All the relevant documents to prove our contention was filed before your good self kindly take into consideration the above facts and various judgments by Hon'ble high courts and tribunals and allow the long term capital gain and allow the claim of your assessee. 5. After considering the submissions of the assessee, Assessing Officer rejected the same by observing as under: - 8. To summarize the matter, the assessee had transferred an office and 892 equity shares allotted to it by Bharat Diamond Bourse on 19.5.2012. This office and also the shares were allotted to him by Bharat Diamond Bourse only On 29.7.2010. Although the assessee has contributed to the funds of Bharat Diamond Bourse against which a provisional allotm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the year under consideration. The appellant filed his return of income declaring total income of Rs. 1,67,34,250/- on 28/09/2013. The case was selected for scrutiny under CASS Subsequently, Notice u/s.143(2) of the Income Tax Act. 1961 ACIT-19(3), Mumbai (Hereinafter referred as Assessing Officer ) dated 03/09/2014 was issued and Order under section 143(3) of the Income Tax Act, 1961 passed determining the Total Taxable Income at Rs.2.41,72,865/- on 28/03/2016 While completing the assessment, the assessing officer had made addition of Rs. 74,38.617/-ie.(1.47.42.958-73,04,341) which constitutes difference in the nature of capital gain from long term to short term on office premises sold during the year under consideration. GROUND NO. 1: ADDITION OF CAPITAL GAIN AMOUNTING TO RS. 74,38,617/ 1) Your appellant is engaged in the manufacturing and trading of cut polished diamonds during the year under consideration. Your appellant had sold the office premises Bearing No. BC-4021 in Bharat Diamond Bourse. BKC for consideration of Rs. 1,93,00,000/- to M/s Veer Gems on 19/05/2012 2) The addition was made on the basis that your appellant had shown the acquisition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is an individual. The assessee had filed the retum of income for the assessment year 2009-10 and claimed long term capital gain arising out of capital asset in the nature of a residential unit. During the course of assessment the Assessing Officer examined this claim and came to the conclusion that the gain arising out of sale of capital asset was a short term capital gain. The controversy between the assessee and the revenue revolves around the question as to when the assessee can be stated to have acquired the capital asset. The assessee argued that the residential unit in question was acquired on the date on which the allotment letter was issued by the builder which was on 31st December, 2004 The Assessing Officer however contended that the transfer of the asset in favour of the assessee would be complete only on the date of agreement which was executed on 17th May, 2008 CIT appeals and the Tribunal held the issue in favour of the assessee relying on various judgments of different High Courts including the judgment of this Court in case of Commissioner of Income Tax, Bombay City | Vs. TATA Services Limited Reliance was also placed on CBDT circulars CBDT in its c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as against the agreement for sale and part payment dt. 24-04-2008, the transferor has transferred all the right, title and interest in the favour of the transferee including five shares under share certificate no. 1/87 bearing distinctive no.11 to 15 allotted to transferor by the society In the instant case it is crystal clear that by virtue of agreement for sale dated 24-04-2008, and making a part payment, the assessee has acquired irrevocable tight, title and interest including possession in the house property in the form of Godown. The registration of the property which was done subsequently on 11-07-2008 was only a formality. And therefore the period of 36 months of holding of long term capital Assets should be reckoned from 24-04-2008 and not from 11-07-2008 as wrongly adopted by the LD AO. The holding period becomes more than 36 months and consequently, the property sold by the assessee would be long term capital asset in the hands of the assessee and the gain on sale of the same would be taxable in the hands of the assessee as Long Term Capital Gain. c) The decision pronounced by ITAT, D Bench, Mumbai in case of ITO 30(2)(3) vs. Smt. Meeta Bhavesh Ganatra, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. It is urged that the findings of the Tribunal, in effect upholding the assessee's contention that the amount sought to be taxed was in fact a long-term capital gains is not justified. The learned counsel submitted that the circumstance of the case especially the relevant dates set out in paragraph 7 of the impugned order, it could not be said that the assessee had acquired interest of the kind that can enable him to say that he held the asset for more than 36 months to entitle him to the benefit of long-term capital gain. This court is of the opinion that having regard to the findings recorded by the Tribunal, the assessee had acquired the beneficial interest to the property at least 96 per cent. In view of the reasons the courts is satisfied that the Tribunal's impugned In view of the reasons the courts is satisfied that the Tribunal's impugned order does not disclose any error calling for interference. GROUND NO. 2: INITIATION OF PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961: The Learned AO at the time of passing the assessment order levied penalty u/s 271(1)(c) for furnishing inaccurate particulars of income. Our client hereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iamond Bourse BKC and the said provisional allotment letter did not specify any floor/ carpet area / tower/ parking slot or share to be allotted at a later date. Even the said building of Bharat Diamond Bourse was completed only in 2009 for which MMRDA Mumbai finalized the lease agreement only on 31.03.2010. Then how can a property be said to be under assessee's physical possession prior to 2010 even when final allotment of shares along with the said space in Tower -B along with parking slot got allotted in 29.07.2010 ?. The said property with 200 shares was sold on 19.5.2012 wherein parking lot was not transferred. However, assessee instead of taking proportionate value of purchase consideration took entire purchase value for Capital Gain computation. In view of facts and circumstances narrated above, assessee's appeal in Gr No 1 fails as assessment order passed u/s 143(3) of the Act for AY 2013-14 is hereby sustained. 8. Aggrieved assessee is in appeal before us and filed the revised grounds of appeal which is reproduced below: - 1. The learned NFAC erred in denying the Appellant the benefit of indexation on the cost by holding that the capital gains earned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only the provisional allotment not the final allotment. 14. Considered the rival submissions and material placed on record, we observe from the record that assessee transferred the office No. BC4021 in Bharat Diamond Bourse, Bandra Kurla Complex, Bandra (E), Mumbai to M/s. Veer Gems on 19.05.2012. The office which assessee was transferred which belongs to Bharat Diamond Bourse which is a trade body of diamond merchants and Bharat Diamond Bourse has constructed the complex of buildings knowns as Bharat Diamond Bourse at Bandra Kurla Complex. The assessee being the member of Bharat Diamond Bourse has applied for allotment of office space at the above said building complex and Bharat Diamond Bourse allotted to the assessee by letter of allotment of equity shares and grant of occupancy rights dated 29.07.2010 and duly registered with the sub-registrar of Assurances, Mumbai Suburban District which comprises of block of shares of 892 equity shares of ₹.1000 each fully paid and office premises No. BC4021 admeasuring 624 sq.ft carpet area equivalent of 892 build-up area on the fourth floor in B Tower central wing of the complex which was constructed in the year 2009 on all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the assessee only from the said date, we are afraid does not find favour with us. In our considered view, for determining the holding period of the property, the date on which the valid title of the property was conferred upon the assessee would not be relevant. Admittedly, a valid title towards the aforesaid property was vested with the assessee on the basis of the registered document, dated 02.08.2010, however, the same would not be conclusive for determining the holding period of the property under consideration. On the basis of our aforesaid observations, we are unable to persuade ourselves to subscribe to the claim of the revenue that the acquisition of the property under consideration was to be reckoned from 02.08.2010 i.e. the date on which the valid title of the rights in the property got vested with the assessee on the basis of a registered document and equity shares were allotted in its favour. 11. As pursuant to the final and binding allotment carried out by lottery system, the assessee vide allotment letter dated 03.12.1999 was allotted the property under consideration i.e Office No. EE6011, Bharat Diamond Bourse (built up area of 5,750 sq. ft.), therefore, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of flats/houses by the co-operative societies or other institutions were similar to the terms of allotment and construction by D.D.A, then on the same basis the acquisition of the property was to be related to the date on which the allotment letter was issued. On the basis of its aforesaid observations, the Hon ble High Court had dismissed the appeal of the revenue. In the backdrop of our aforesaid deliberations, we are of the considered view that as no infirmity emerges from the order of the CIT(A), who we find had rightly concluded that the date of acquisition of the property under consideration was to be reckoned from the date of the allotment letter i.e 03.12.1999, therefore, we uphold his order. 16. Respectfully following the above said decision, since the issue is exactly similar and facts are also identical, we are of the view that date of acquisition of the property was to be reckoned from the date of the allotment i.e in the F.Y. 1998-99. Respectfully following the above decision, we allow the ground raised by the assessee. 17. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 10th November, 2022 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
