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2017 (11) TMI 1233 - AT - Income TaxEligible for exemption u/s 54 - denial of claim as long term capital gain is not on account of sale of residential house but from sale of right in the property - whether the gain in question is long term capital gain or short term capital gain? - Held that:- In the present case, admittedly, the letter of allotment was issued in favour of the assessee on 26.11.2006 and agreement was entered into on 21.08.2012. Further agreement to sell the said property was entered into on 27.08.2012. Therefore, the Ld. CIT(A) has rightly, held the gain as long term gain by computing the holding period from the date of allotment of letter and not from the subsequent agreement. Hence, in the light of the cases discussed above, we uphold the findings of the Ld. CIT(A) and direct the AO to treat the gain in question as long term capital gain. As has been held by the Hon’ble Bombay High Court in CIT vs. Tata Services Ltd.[1979 (1) TMI 26 - BOMBAY High Court ] the word “property” used in section 2(14) of the Act is a word of the widest amplitude and the definition has emphasized the same by the words “of any kind”. Therefore anything which can be called property will be included in the definition of capital asset. Therefore, in the light of the ratio of law laid down by the Hon’ble High Court, we hold that the assessee’s rights and interest whatsoever in the flat in question is an asset within the definition of section 2(14) of the Act. Hence, the Ld. CIT(A) has rightly held that the assessee’s right to obtain property being capital asset gives rise to capital gain. No doubt, the asset sold by the assessee, is not a building or land appurtenant thereto and a residential house, the income of which is chargeable under the head “income from house property” within the meaning of section 54 of the Act so as to get benefit of the said section. Section 54F clearly says that where the assessee being an individual, earns capital gain from transfer of any long term capital asset, not being a residential house and purchases residential house within a period of one year before or two years after the date from the date of such transfer, the capital gain shall be dealt with in accordance with the provisions of this section. Since, we have held the transfer of asset by the assessee as transfer of long term capital asset and the consequential gain as long term capital gain and since the assessee has invested the said capital gain for purchasing residential house in the same year, the assessee fulfills all the conditions contemplated under section 54F of the assessee. Although it appears from the record that the assessee has not taken the alternative plea of section 54F in the first appeal before the Ld. CIT(A) however, the benefit of the provisions of this section cannot be denied on this ground. We accordingly, modify the order of the Ld. CIT(A) to that extent and allow the benefit u/s 54F of the Act to the assessee. Accordingly, we direct the AO to compute the claim of the assessee in accordance with the provisions of section 54F of the Act. Since, we have allowed the assessee’s claim u/s 54F of the Act by holding the gain as long term capital gain we also direct the AO to allow the benefit of indexation of cost of acquisition from the date of each payment. - Assessee appeal allowed.
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