TMI Blog2014 (5) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... would be the cost of its acquisition – the cost is to be deductible while computing income by way of capital gains, whether long term capital gain - This is as the holding period of the capital assets, being the residential flat, would only commence from the date the assessee is put in possession after its completion – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh adjudication – AO was directed to take the value of the flat for the purpose of cost of acquisition from the year in which the assessee got the actual possession of the flat and then only he shall compute the capital gain – Decided partly in favour of Assessee. - ITA No. 8862/Mum./2011 - - - Dated:- 2-5-2014 - Shri Sanjay Arora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tenancy rights, the builder had offered two flats admeasuring 728 sq.ft. and 500 sq.ft. on ownership basis as permanent alternate accommodation. The assessee was also required to deposit Rs. 2,000 with the builder towards society deposit. The assessee has taken the value of the allocated flat as on 16th May 1982, at Rs. 3,64,000 @ Rs. 500 per sq.ft. which was on the basis of sale agreement entered into by the builder in the same month in the same building with other persons. Hence, it was submitted that the cost of acquisition of the flat which was acquired by way of surrendering of tenancy right should be taken as Rs. 3,64,000. 4. However, the Assessing Officer rejected the assessee s contention and held that under section 48, only th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Less: Indexed cost of acquisition as per the original return Rs. 8,862 Less: Exemption u/s 54 Rs. 10,90,340 Long term capital gain Rs. 27,44,173 5. The learned Commissioner (Appeals) also confirmed the action of the Assessing Officer in adopting the cost of acquisition at Rs. 2,000 instead of Rs. 3,64,000 and upheld the calculation of the long term capital gain at Rs. 27,44,173, worked out by the Assessing Officer. 6. The learned Counsel for the assessee, after explaining the entire facts submitted that the assessee has got the ownership right of the property in exchange of tenancy rights as the assessee was an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant findings of the authorities below. The assessee, in the present case, is an old tenant in a building wherein, she was residing with her son in the flat area admeasuring 1,200 sq.ft. The said premise was under the joint tenancy along with her son. On 6th May 1982, the agreement was entered into by a builder, M/s. Abis Construction, whereby the builder undertook to develop the said property and in order to rehabilitate the tenants, he allocated two flats, one to the assessee and other to her son, admeasuring 728 sq.ft. and 500 sq.ft. respectively, on ownership basis as a permanent alternative accommodation. In this manner, the assessee got the acquisition of the flat on ownership basis in the proposed new building. Besides this, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch acquisition has to be given while computing the tax on capital gain. In the present case, the tenancy right got converted into acquisition of a flat, when the assessee must have got the possession of new flat constructed by the builder. Thus, the market value of the said flat as on the date of its possession would be the cost of its acquisition and, accordingly, such cost deductible while computing income by way of capital gains, whether long term capital gain, as the case may be. This is as the holding period of the capital assets, being the said residential flat, would only commence from the date the assessee is put in possession thereof after its completion. Accordingly, we set aside the impugned order passed by the learned Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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