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2006 (11) TMI 371 - AT - Income TaxSale of the industrial shed - Profit arising from the transfer - Short-term Or a long-term capital gain/loss - holding period of asset - ‘Capital Assets’ in section 2(14) - Principle of merger - HELD THAT:- In the instant case wherein by a draw of lots the assessee was declared successful for the allotment of a shed, subject to payment of all outstanding dues and interests and in lieu thereof the assessee paid an instalment on 28-12-1994 and thereafter continued paying the remaining instalments to DSIDC, on account of which a particular Shed No. D-13 was allotted to the assessee and ultimately the possession of the same was handed over to the assessee on 28-5-1998 and thereafter the assessee sold the same on 15-12-2000. It means that when in a draw of lots an allotment of a shed was made to the assessee on instalment basis after a payment of instalment on 28-12-1994 as per the wider meaning of the word ‘property’ used in the definition of ‘capital asset’ in section 2(14) of the Act the property/shed was held by the assessee for bringing the shed within the meaning of definition of the words ‘capital asset’ on 28-12-1994 on payment of instalment, hence, the sale of the shed by the assessee on 15-12-2000, after holding the same for a period of more than 36 months is to be treated as long-term capital asset and the sale of the same resulting into loss/gain also amounted to long-term capital loss/gain. Thus, the tax authorities below without considering the proper meaning of the words ‘capital asset’ held by the assessee and ‘property’ used in section 2(14) of the Act have wrongly applied the decision of Bombay High Court in Smt. R.R. Sood’s [1985 (10) TMI 79 - BOMBAY HIGH COURT] while concluding that only when the assessee paid the final instalment on 19-12-1997 and got the possession on 18-5-1998 the assessee held the asset/shed on 18-5-1998 and the sale of the same by the assessee on 15-12-2000 has to be treated as short-term capital asset in the hands of the assessee resulting into short-term capital gain. Hence, we set aside the orders of tax authorities below and allow the grounds of appeal taken by the assessee. In the result the appeal filed by the assessee is allowed.
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