TMI Blog2013 (4) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.1,08,62,122 Add: Registration Fee etc. paid on 27.2.2008 ₹ 11,770 Rs.1,08,73,892 3. The Assessee invested a sum of ₹ 28,00,000 and ₹ 22,00,000 respectively in REC Bonds and Bonds issued by National High Authority. In addition to the above, the Assessee also invested a sum of ₹ 56,03,596 in purchase of an apartment at Hebbal, Bangalore. After claiming exemption u/s.54EC /54F of the Income Tax Act 1961 (the Act), the Assessee offered to tax LTCG of ₹ 2,70,296/-. 4. The dispute between the Assessee and the Revenue is as to whether the gain on sale of the property can be said to be a LTCG. Under the Act exemption from charge to tax on capital gain u/s.54EC and 54F of the Act are available only when the capital gain arises on transfer of a Long term capital asset. Sec.2(29B) of the Act defines Long term capital gain as follows: long-term capital gain means capital gain arising from the transfer of a long-term capital asset; Sec.2(29A) of the Act defines Long term Capital asset as follows: long-term capital asset means a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out any payment and on the basis of holding of any other financial asset, the period shall be reckoned from the date of the allotment of such financial asset; (g) in the case of a capital asset, being a share or shares in an Indian company, which becomes the property of the assessee in consideration of a demerger, there shall be included the period for which the share or shares held in the demerged company were held by the assessee; (h) in the case of a capital asset, being trading or clearing rights of a recognised stock exchange in India acquired by a person pursuant to demutualisation or corporatisation of the recognised stock exchange in India as referred to in clause (xiii) of section 47, there shall be included the period for which the person was a member of the recognised stock exchange in India immediately prior to such demutualisation or corporatisation (ha) in the case of a capital asset, being equity share or shares in a company allotted pursuant to demutualisation or corporatisation of a recognised stock exchange in India as referred to in clause (xiii) of section 47, there shall be included the period for which the person was a member of the recognised stock exch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 4,000 sft. of vacant site bearing No.262 in Rajmahal Vilas extension, Bangalore on 25th August, 1988. On the said date a Lease cum Sale Agreement was entered into between the BDA and the assessee and as required, the assessee had paid the consideration of ₹ 1,11,480/-, for the site. The said Lease cum Sale Agreement was registered before the Sub-registrar at Gandhinagar, Bangalore, on 21.09.1988 as document No.1928/88-89. Earlier to it on 2nd September, 1988, the assessee received a Possession Certificate from the BDA to the effect that the possession of the site in question was handed over to the assessee in pursuance of its allotment of even date. Subsequently, on 06.08.1990, the assessee received the Khatha Pathra , in the name of the assessee. 7. As per the Terms of Lease cum Sale Agreement : (i) The lessee has to pay a sum of ₹ 10/ per year as rent during the subsistence of the lease (Clause 2 of the Agreement); (ii) On the expiry of the lease/cum sale period of ten years, the lesser shall, register the property in favor of lessee (Clause 1 of the Agreement); (iii) Within three years of the agreement, the lessee shall get the plan of the buildin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their respective sites registered in their respective names. 10. In view of the above facts, some site allottees including the assessee were advised by the BDA to register the allotted sites in their respective names. The site No.262, the possession whereof was handed over to the assessee in 1988, was registered in assessee s name on 5th October, 2005. The sum of ₹ 1,11,480 paid by the assessee at the time of registration of Lease cum Sale Deed on 25.08.1988 was adjusted as sale consideration, in the said Sale Deed. In the recital to the Registered Transfer Deed, the antecedents of this document were elucidated. 11. However, when the assessee visited the site No.262 after its registration, it was found that some construction work had already been done and the process was is in progress on the said site. The assessee called on the BDA authorities, and he was informed that the aggrieved parties have filed appeals before Hon ble Supreme Court against the orders of the Hon ble Karnataka High Court. Since all the site allottees, including the assessee had been demanding specific performance of the contracts entered into by the BDA in 1988, it agreed to allot each of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of was handed over to the assessee. 15. However, in the said registered Sale Deed dated 27th February, 2008, recital was not given in respect of the fact that the same was given to the assessee as a replacement of the earlier site, viz., site No.262 in Rajmahal Vilas Extension, where the title was not clear. But in Allotment Letter dated 15.02.2008, it is clearly set out that that the same was allotted to the assessee in lieu of earlier site. The Sale Deed in favour of the assessee in respect of Site No.365/A executed on 27.02.2008 specifies that the consideration received thereof was Rs.l,20,510/- that has already been paid by the assessee. In fact, what was paid by the assessee was ₹ 1,11,480 at the time of execution of the Lease Cum Sale Agreement on 25th August,1988 and nothing more was paid by him at the time of Registration of the site (except ₹ 50 towards substituted site charges as stated in the Allotment letter). Perhaps the difference of ₹ 9,030 was attributed to adjustment of rent paid by the assessee from 1988, as specified in Clause 11 of Lease cum Sale Deed executed on 21.09.1988 and the aggregate of corporation tax. It is the claim of the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kind; and ix) that as the property in question was registered in his name only during February, 2008, the claim of long term capital gains is denied. 18. On appeal by the Assessee, the CIT(A) upheld the order of the AO. Some of the relevant observations of CIT(A) were as follows: 2.3 The argument of the appellant does not stand on merit for one simple reason. The allotment in 1988 is with reference to one property and there is no dispute that transfer has been effected with reference to that property. Having been allotted a specific site the right to receive the property is also only with reference to that site as on that day. The capital asset as defined in Sec. 2(14) is an exhaustive definition which encompasses all properties of any kind with certain exceptions but the key word is that the property should be held by the appellant. By analysing the chronology of events, it can be seen that by virtue of the initial allotment, the appellant got a right to receive a particular site in 1988 itself. Even if it is to be understood, as argued by the appellant, that he has got a right to receive a site by virtue of this agreement in 1988, it is not this right to receive the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submissions made on behalf of the Assessee are identical to the submissions made before the Revenue authorities. The learned counsel for the Assessee laid emphasis on the fact that the property was conveyed to the Assessee pursuant to an obligation/vested right which the Assessee had by virtue of the allotment of Site bearing No.262, Rajmahal Vilas Extension, Bangalore, on 25.8.1988 which was followed by a registered lease cum sale agreement in respect of the said site on 21.9.1988. It was argued that the Hon ble Punjab Haryana High Court in the case of Vinod Kumar Jain Vs. CIT 46 DTR (P H) 185 had taken the view that allottee of a flat under self-financing scheme of the DDA gets title to the property on issuance of allotment letter and the payment of instalments is only a consequential action upon which delivery of possession flows. Following Board Circular No.471 dated 15.10.1985, the Hon ble Court held that the date from which the property was held by the Assessee was the date of allotment and not the date of payment of instalments or delivery of possession. It was submitted that the property which was ultimately sold had its origin in the allotment letter dated 25.8.1988 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21. It is thus clear that the title of the Assessee to the property can be traced to the original allotment and lease cum sale agreement dated 25.8.1988 whereby site No.262, Rajmahal Vilas Extension, Bangalore was allotted to the Assessee. The conclusion of the revenue authorities that the property which was ultimately sold and the property that was allotted in 1988 were different properties cannot be accepted. The original allotment in 1988 of the site No.262, Rajmahal Vilas Extension, Bangalore, got substituted by different house sites. The conveyance of the site No.262, Rajmahal Vilas Extension, Bangalore has no effect due to the registered cancellation deed in respect of the said site executed by BDA. The Assessee had paid the entire consideration of ₹ 1,11,480 to the BDA as early as 25.8.1988. The Assessee paid rent for the site allotted till cancellation. Thus a sum of ₹ 1,20,510 had been paid by the Assessee for the original allotment of site No.262, Rajmahal Vilas Extension, Bangalore. This fact has been recognised in the sale deed registered by BDA in respect of the property which was ultimately sold and which gave rise to the capital gain. Thus the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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