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2017 (3) TMI 1717 - AT - Income TaxComputation of capital gains on two properties and allowability of deduction u/s 54/54F - whether the period for computing the capital gains and for allowing deduction u/s 54/54F should be the date of allotment letter or the date of registration of the property in the name of the Assessee is to be adopted - whether the holding period of the properties for the purpose of computing capital gains should be considered from the date of allotment of properties by the builder or from the date of purchase agreement entered into by the Assessee? - Period of holding - Held that:- We find that an identical issue has been considered by the Coordinate Bench of this Tribunal in the case of Anita D Kanjani Vs. ACIT [2017 (2) TMI 788 - ITAT MUMBAI] wherein the Coordinate Bench after analyzing various decisions of High Courts held that the holding period is to be determined in terms of section 2(42A) and therefore holding period should be computed from the date of allotment letter issued by the builder. It was also held that the issue of transfer of ownership is not the issue to be decided for computing the holding period but holding period is to be determined in terms of section 2(42A). The Delhi High Court in the case of Gulshan Malik Vs. CIT [2014 (3) TMI 474 - DELHI HIGH COURT] though held that in terms of section 2(42A), the period of 36 months in respect of booking rights of an apartment with a builder has to be counted from the execution of agreement to sale i.e. buyers agreement but not the provisional allotment letter issued by the seller/developer, we would prefer to follow the decisions of various other High Courts which are in favour of the Assessee since as rightly pointed out by the A.R the allotment letter issued in this case is a conditional one and whereas in the Assessee’s case it is a non conditional allotment letter issued by the builder. Further in view of the decision in the case of CIT Vs. Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME COURT] wherein it was held that when two constructions are possible the view in favour of the Assessee is to be adopted. Therefore, we hold that holding period of the properties should be computed from the date of issue of allotment letter and in this case, if the date of allotment letter is considered the holding period becomes more than 36 months and consequently the property sold by the Assessee would be the long term capital asset in the hands of the Assessee taxable under long term capital gain. With regard to the contention of the AO that since the Assessee has claimed depreciation on one of the properties and therefore by virtue of the provisions of Section 50 gain arising from the transfer of such asset should be considered as short term capital gain, we find that this issue has been decided by the Jurisdictional High Court in the case of CIT Vs. Ace Builders Pvt. Ltd. [2005 (3) TMI 36 - BOMBAY HIGH COURT] wherein the Hon’ble High Court answered the following question in favour of the Assessee. Income earned by the Assessee on sale of factory shed should be treated as long term capital gains and is eligible for deduction u/s 54EC of the Act. Respectfully following the decision of the Jurisdictional High Court, we hold that the Assessee is entitled for deduction u/s 54/54F in respect of both the properties. Thus the grounds 1 to 4 raised by the revenue are rejected. Profit on sale of shares as short term capital gains and not as business income - Held that:- No valid reason to disturb the reasoning of the CIT (Appeals) in holding that the gain on sale of shares held for less than 30 days should be assessed as business income and more than 30 days as short term capital gains. In the circumstances, we uphold the order of the Ld. CIT (Appeals) and reject the grounds of revenue on this issue.
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