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Shri S. Shankaranarayan Versus Income-tax Officer (TDS) Ward 16 (2) , Bangalore

2015 (11) TMI 1269 - ITAT BANGALORE

Gain received on the transfer of the land - Short term capital gain or long term capital gain - interpretation of the expression ‘held by the assessee’ - Held that:- As on 28/4/2001, all the other acts and process of acquisition of land in question were completed except registration of the conveyance deed. Since the assessee was allotted the land in question subsequent to the open auction and was issued allotment letter dated 14/2/2001 subject to the payment of consideration which the assessee p .....

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to payment of the entire consideration within the period stipulated as per allotment conditions. See A.Suresh Rao vs. ITO [2013 (4) TMI 743 - ITAT BANGALORE]

Thus the assessee was holding the land in question from the date of allotment on 14/2/2001 and consequently the capital gain arising from the sale of the property on 16/9/2014 would be LTCG. Accordingly, orders of the authorities below qua the issue are set aside and the claim of the assessee being LTCG is allowed.

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ant Member And Shri Vijay Pal Rao, Judicial Member For the Appellant : Shri Chavali Narayan For the Respondent : Shri Sunil Kumar Agarwala, JCIT(DR) ORDER Per Vijay Pal Rao, JM This appeal by the assessee is directed against the order dated 28/01/2014 of the CIT(A)-LTU, Bangalore, for the assessment year 2005-06. 2. The assessee has raised the following grounds: On the facts and in the circumstances of the case: 1. The learned CIT(A) has erred in law and on facts in upholding the action of the l .....

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ppellant has complied with all the payment terms of allotment of land thereby amounting to deemed possession of land which BDA has stipulated for allotment of land; 4. In the learned CIT(A) has erred in law and on facts in upholding the action of theAO by merely going on the basis of form of transaction thereby ignoring the spirit of provisions of section 2(47)(v) of the Income Tax Act, 1961. 5. the learned CIT(A) has erred in law and on facts by upholding the action of the learned AO by ignorin .....

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fer of the land in question viz. site No.159, 4th Cross, Dollars Layout, JP Nagar IV Phase, Bangalore, is a Long-term capital gain (LTCG) or Short-term capital gain (STCG). The assessee is an individual and acquired the land in open auction from the Bangalore Development Authority (BDA) on 5/2/2001. Consequently, an allotment letter was issued by the BDA in favour of the assessee on 14/2/2001. The assessee was required to make payment of the entire consideration of ₹ 25,13,664/- as per ter .....

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at capital gain derived by the assessee is STCG because the actual date of acquisition of the property in question is the date on which conveyance deed registered on 23/9/2002 and not the allotment date i.e. 14/2/2001 or the payment date i.e. 28/4/2001. Thus, the AO held that the sale of the property in question on 6/9/2004 is within three years from the date of acquisition i.e. 23/9/2002 and accordingly, treated capital gain on sale of the property as a STCG. 4. The assessee challenged the acti .....

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f the conveyance deed after some time was not in the control of the assessee as it was at the end of the BDA and therefore, registration was mere a formality which does not affect the acquisition of the property by the assessee in the auction. The CIT(A) did not accept the contention of the assessee and confirmed the action of the AO by treating the capital gain arising from sale of the property as STCG. 5. Before us, learned AR of the assessee has submitted that there is no dispute that the ass .....

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es that the asset need not be held as a legal owner and therefore, registration of the conveyance deed has nothing to do with the holding of the asset by the assessee. In support of his contention, he has relied upon the following decisions: i) CIT vs. A. Suresh Rao (ITA No.417 2013)(Kar) ii) A.Suresh Rao vs. ITO (ITA No.761/Bang/2011)(Trib) iii) Vinod Kumar Jain vs. CIT (344 ITR 501)(Punjab & Haryana) iv) CIT vs. K.Ramakrishnan (363 ITR 59)(Delhi) Thus, the learned AR of the assessee has su .....

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gal title over the property only when the conveyance deed was executed and registered on 28/9/2002 and therefore, when the property was sold on 16/9/2004 it was within the period of three years and the capital gain arising from the sale of the property is STCG. 7. We have considered the rival submissions as well as the relevant material on record. There is no dispute that the assessee has acquired the land viz. site bearing No.159, 4th Cross, Dollars Layout, JP Nagar IV Phase, Bangalore, in an o .....

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auction and was issued allotment letter dated 14/2/2001 subject to the payment of consideration which the assessee paid by 28/4/2001 therefore, the date of acquisition would be when the assessee performed his part and complied with terms and conditions of allotment. The capital gain is treated as LTCG if the said asset is held by the assessee held by the assessee for more than 36 months (3 years) as per the provisions of sec.2(42A)/2(42B) of the Act. Therefore, for the purpose of sec.2(42A) and .....

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in substantial question framed by the Hon'ble jurisdictional High Court in para.6 is as under: Whether in the facts and circumstances of the case, the Tribunal is right in law in holding that the expression held by the assessee in section 2(42-A) of the Income Tax Act implies a person in whose favour an allotment of a site made in the first instance, when the entire consideration was paid in pursuance of such allotment? Thus it is clear that the question before the Hon ble High Court was reg .....

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ourt, the reasons for amendment even in the absence of a registered deed of transfer, if the transaction in question demonstrates the intention of the parties and after paying the entire consideration agreed upon, the purchaser enjoys the property. The fact that the transaction is not completed by execution of the registered sale deed makes no difference in the eye of law for the purpose of taxes. If the Revenue is entitled to collect tax on such capital gains, even in the absence of a registere .....

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nd justly administered. The Courts should place an interpretation making a benevolent and justice oriented inference and the facts must be viewed in the social milieu of a country. Now in this background, let us see the facts of this case. 16. The assessee was allotted a site on 21.9.1988 in R M V Extension Bangalore The assessee paid a sum of ₹ 1,11,480/- on such allotment He was also put in possession of the property and possession certificate was issued. On compliance, with other legal .....

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e site being allotted, went to the spot, he found that there was a construction, which was also involved in a legal dispute. In spite of the orders of the court to demolish the structure, it has not been done. When he reported the matter to the authorities, the allotment of site Hennur-Banaswadi road was cancelled on 9 1 2008 and in lieu of the same, the present site was allotted on 15.2.2008. A registered sale deed came to be executed on 27.2.2008. No consideration was paid under the said sale .....

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ich was allotted was cancelled, yet another site was allotted and the said site was also cancelled and thereafter the present site was allotted, in law would make no difference. Admittedly, the consideration paid on 21.9.1988 is treated as the consideration for the sale dated 27.2.2008. In other words, the cost of acquisition of the asset was paid on 21.9.1988 and no cost was paid either on the date of allotment, on 15.2.2008 or on the date of registered sale deed on 27.2.2008. For the purpose o .....

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r of the said asset was ₹ 1,08,73,892/- as it was a long-term capital gain. He invested an amount of ₹ 28 lakhs in Rural Electrification Corporation Limited and an amount of ₹ 22 lakhs in the National Highways Authority of India in terms of Section54EC of the Act. Similarly he purchased an apartment at Hebbal, Bangalore, for a sum of ₹ 56,03,590/- in terms of Section 54F of the Act and sought an exemption For the balance of ₹ 2,70,296/-, he has paid the long-term ca .....

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