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Income Tax Officer, Ward–14 (1) (1) , Mumbai Versus Legal Heir of Shri Ratansingh C. Pethani

2015 (9) TMI 376 - ITAT MUMBAI

Entitlement to indexed cost of acquisition for working of capital gains - addition made on account of denying the exemption claimed under section 54 by treating the LTCG claimed by the assessee as STCG, as the assessee has held the ownership of the flat for less than 36 months - holding period of the flat sold by the assessee during the year under consideration, should be counted from which date? - Held that:- The assessee is holding the possession of the flat since 15th April 1996 and this fact .....

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Shri Ratansingh C. Pethani, showing allotment of the impugned flat i.e., flat no.502, Ashirwad Building, 55, Shankar Lane, Kandiwali, Mumbai 400 067, in the name of the assessee. On a perusal of these documents and evidences, it is clearly established that the assessee has been the owner in possession of the said flat since 15th April 1996. Even otherwise, there cannot be any doubt on the fact that the assessee has been enjoying this property as a “defacto owner”. The concept of defacto ownershi .....

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order dated 11th November 2013, passed by the learned Commissioner of Income Tax (Appeals)-25, Mumbai, for the assessment year 2010-11. The grounds raised by the Revenue are reproduced below:- 1. On the facts and in the circumstances of the case and in law the learned CIT(A) has erred in deviating from the findings given by the A.O. in the assessment order after having accepted the same in principle that the assessee was not in the possession of the said flat prior to the family declaration / c .....

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period of the flat sold by the assessee during the year under consideration, should be counted from which date. According to the assessee, the holding period of the flat was more than 36 months whereas as per the Assessing Officer, the holding period was less than 36 months as a consequence of which the asset under consideration was short term capital asset and as a result of which the gain was short term capital gain and, hence, the exemption under section 54 of the Income Tax Act, 1961 (for sh .....

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he date of family settlement i.e., 8th August 2008, whereas the assessee s claim is that the holding period should be counted from 15th April 1996, as the assessee is in occupation of the flat as co-owner and has been holding the same and enjoying the fruits of the flats as an owner since 15th April 1996. The reasoning given by the Assessing Officer has been summarized by him in the assessment order and same is reproduced hereunder for the sake of ready reference:- 6. In view of the facts that i .....

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7.01.1995, out of 14 flats 7 flats were sold to various purchasers and 7 flat sold retained and allotted themselves in the month of April 1996 in the building of Shri Ashirwad Co-operative Housing Society Ltd. Out of 7 flats flat NO.502 got allotted to assessee Mr. Ratansinh C. Pethani admeasuring about 1124 sq. ft of built up area at the time of the construction in the year 1996. But, till, the ownership over all the 7 flats remained only with the 5 co-owner jointly, unless, the due date 23.09. .....

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e reckoning of the date for the purpose of short term capital gain and long term capital gain was only on 23:09.200. The assessee's representative argument that assessee got allotted the said flat in the 1996 may not be relevant merely on the basis of the mutual agreement taken between the owners, unless and until, registration took place in the eye of law, the immovable property does not get ownership respectively effect take place in the eye of law regarding, the conforming ownership of th .....

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ecome sole owner only after family declaration executed on 08.08.2008. Hence, assessee submission claiming the same as long term capital assets and capital gain on the sale of the same in long term capital gain in the hand of the assessee not acceptable. In this regards jurisdictional High Court decision in the case of Manjula J. Shah vide judgment dated 11.10.2011 held that the objection cannot be defeated by excluding the period for which the said assets was held by the previous owner determin .....

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learned CIT(A) to show possession and user of the flat by him e.g., electricity bills in his name from BSES., etc. The learned CIT(A) sent the submissions and evidences submitted by the assessee to the Assessing Officer for the comments of the Assessing Officer. The Assessing Officer sent his remand report dated 27th September 2013, in which the Assessing Officer commented that the evidences furnished by the assessee were examined on facts and nothing adverse was found therein and with regard to .....

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the facts and circumstances of the case, I find that the A.O. has made the addition based on the family declaration / confirmation dated 08.08.2008 which was duly registered with the registration authorities. On going through the copy of said document submitted by the appellant, I find specifically mentioned there that the co-owners had mutually agreed and allotted flat no.502 to the appellant at the time of the construction in the year 1996, in lieu of old premises (old bungalow) possessed and .....

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ty to themselves, and the purpose of entering into said document seems only to confirm the existing possession of said flat no.502 by the appellant and further to give a clear title of the flat in his favour by payment of stamp duty with late penalty and registration of the document. This however does not mean that before the registration of the said document, the appellant was not the co-owner or was not in possession of the property, as the registration of document has only given a clear title .....

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erein the flat no.502 allotted to the appellant was clearly specified. The appellant has indexed the land cost by index value 116 (i.e., for FY 1983-84) after the death of his father in 1983, and the construction cost by index value 389 (i.e., for FY 1999-2000) after the completion of construction of building, I find no infirmity in the calculation of indexed cost by the appellant. 5.1 In view of the above, I uphold the contention of the appellant to treat the capital gain as long term capital g .....

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short term capital asset and, therefore, the resultant gain was short term capital gain and, consequently, the action of the Assessing Officer in denying the exemption under section 54 of the Act, was legally and factually justified. 6. The learned Counsel for the assessee, on the other hand, contended that the impugned asset was a long term capital asset because the assessee has been holding this asset since the year 1996. 7. We have heard the rival contentions and perused the relevant materia .....

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