TMI Blog2005 (8) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessees and therefore, when they transferred the same, it would have been subjected to capital gains tax. Therefore, when the flat as such was sold, this right also got extinguished and therefore, it will be liable for long-term capital gain. The Revenue can raise one more plea that in the present case the capital asset transferred was not the right to obtain conveyance of the flat itself. This argument, in our opinion, will not hold good because of the definition of capital asset as per which property of any kind held by an assessee is a capital asset. The flat in its physical form at best can be said to have additional rights added to the rights originally held by the assessees flowing from the original agreement. Thus, we confirm the order of the learned CIT(A) in all the three cases. In the result, all the three appeals filed by the Revenue are dismissed. - HON'BLE B.R. MITTAL, J.M. AND S.V. MEHROTRA, A.M. For the Appellant : K.K. Pandey, Adv. For the Respondent : S.K. Garg, Adv. ORDER S.V. Mehrotra, A.M.: 1. All the appeals have been filed by the Revenue for asst. yr. 1996-97. While the appeals in the case of Shri Sharad Thadani and Shri Manav Thadani arise out of separ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 471 dt. 15th Oct., 1986. The AO negated this claim on the ground that the said circular pertained to purchase of flats under self-financing of the DDA and was also relevant only for purchase of new assets. Thereafter, the assessees claimed that since the possession of above flat was given to them on 3rd March, 1992 by the builder for carrying out interior work vide builder's letter dt. 13th Jan., 1999, it was a long-term capital asset held by them before the transfer on 30th March, 1995. The AO, after examining the terms of agreement, concluded that the possession was transferred to the assessees on 6th Dec., 1994 and thereafter only they were entitled to transfer or sell their interest in this flat. He also examined the schedule of payments which were made by the assessees against the above flat to the builder. The major chunk of payments were made after 3rd March, 1992 which had been claimed to be the date of taking over possession for carrying out interior work by the assessees. He observed that as per cl. 44 of the agreement to sell in between the builder and the buyers i.e., the assessees, no right, title or interest would pass on to the buyer unless all the money due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s early as on 10th Sept., 1990 when Shri Gullu Thadani died and Will became operative. Therefore, I direct the AO to compute long-term capital gain instead of short-term capital gain computed by him. 5. The learned CIT/senior Departmental Representative referred to the assessment order and explained the factual background as noted earlier. The learned CIT/senior Departmental Representative submitted that the assessees got the possession of property on 6th Dec., 1994 and on 3rd March, 1992 only the flat was given for interior work. The learned CIT/senior Departmental Representative referred to the details of payment and pointed out that major chunk of payments had been made between November, 1992 to 14th June, 1994 as noted in para 9 of AO's order. He referred to various clauses of agreement reproduced in the assessment order and pointed out that as per cl. 14, under no circumstances, possession of the residential flat and garage shall be given by the sellers to the buyer(s) until and unless all payments required to be made under the agreement by the buyer(s) have been paid in full to the sellers. He further referred to cl. 44 of the agreement and pointed out that no right, titl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied on following case laws: (i) Ahmed G.H. Ariff vs. CWT (1970) 76 ITR 471 (SC); (ii) CIT vs. Tata Services Ltd. (1979) 13 CTR (Bom) 227: (1980) 122 ITR 594 (Bom); (iii) Sunil Siddharthbhai vs. CIT (1985) 49 CTR (SC) 172 : (1985) 156 ITR 509 (SC); (iv) CIT vs. Anilaben Upendra Shah (2003) 184 CTR (Guj) 129 : (2003) 262 ITR 657 (Guj). 6. In the rejoinder, the learned CIT/senior Departmental Representative submitted that as per s. 2(14), it is the property held by assessee which has been contemplated therein. He pointed out that it is to be seen whether the property was held or not. He submitted that in 1988 nothing was held, only agreement had been entered into. As far as clearance from authorities is concerned, the same is only an administrative action but since actual payments have been completed in 1994 as per the terms of agreement, the possession could be given only thereafter. 7. We have considered the rival submissions and have perused the record of the case. Sec. 2(14) of the Act defines the term capital asset as under: 'capital asset' means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include.... 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the definition of capital asset . It was held that a right to obtain conveyance of immovable property is clearly property as contemplated by s. 2(14) of the Act. The next case law referred to by the learned counsel is the decision of the Hon'ble Supreme Court in the case of Sunil Siddharthbhai vs. CIT, wherein it was held that the expression transfer of property connotes the passing of rights in property from one person to another. In one case there may be a passing of the entire bundle of the rights from the transferor to the transferee. In another case, the transfer may consist of one of the estates only out of all the estates comprising the totality of rights in the property. In the third case, there may be a reduction of the exclusive interest in the totality of rights of the original owner into a joint or shares interest with other persons. The exclusive interest in property is a larger interest than a share in that property. To the extent to which the exclusive interest is reduced to a shared interest, it would seem that there is a transfer of interest. The learned counsel further referred to the latest decision of the Hon'ble Gujarat High Court in the case of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty would not have come into existence and prior to that itself the assessees preferred to sell the allotment letter per se for consideration. Whether this would have been covered within the purview of capital gain or not needs to be addressed to in view of the definition of capital asset as per s. 2(14). It cannot be denied that the allotment letter per se was a valuable right vested in the assessees and therefore, when they transferred the same, it would have been subjected to capital gains tax. Therefore, when the flat as such was sold, this right also got extinguished and therefore, it will be liable for long-term capital gain. The Revenue can raise one more plea that in the present case the capital asset transferred was not the right to obtain conveyance of the flat itself. This argument, in our opinion, will not hold good because of the definition of capital asset as per which property of any kind held by an assessee is a capital asset. The flat in its physical form at best can be said to have additional rights added to the rights originally held by the assessees flowing from the original agreement. In view of the aforesaid discussion, we confirm the order of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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