TMI Blog2003 (2) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Commissioner of Income-tax (Appeals) has erred in confirming the disallowance of Brokerage of ₹ 1,50,000, paid to the Brokers for sale of the rights in Flat. 4. The learned representatives of the parties have been heard, their arguments considered and records perused. 5. We first take up the appeal of the revenue. 6. Apropos Ground No. 1 above. The relevant facts are these. The assessee is an individual. She derives share of profit from M/s. Associated Chemical Corporation as a partner. She filed her return for the assessment year 1992-93 on 22-10-1992, declaring total income at ₹ 8,68,290. After initial processing of the return under section 143(1)(c), the case was taken up for regular assessment. The Assessing Officer found that the assessee had booked a flat of 2511 square feet built up area in a Housing Society namely, Jeevan Villa Co-operative Housing Society Ltd., somewhere in June, 1981 for a total cost of ₹ 6,50,000. However, before completion of the building and naturally before taking the possession of the flat, the assessee sold her right to occupy that flat under construction to Shri Mural Manohar Agarwal, his wife and his HUF by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had obtained possession of a flat in June, 1981 and sold the same in April, 1983 and claimed the transaction as long term capital gain but in the case of the assessee there was no flat in existence and what was transferred is a share in a Co-operative Housing Society. With these observations, he brought to tax ₹ 94,85,860 (Rs. 1,13,01,111-cost of ₹ 17,00,251 transfer fee of ₹ 1,15,000) as income from other sources/short term capital gain on sale of right of acquiring a flat, denying the assessee s claim of exemption under section 54E. 7. On appeal, the assessee contended as follows: (1) The right in the flat was held by the assessee from 1980-81 to 1990-91, i.e. more than 10 years. The right in that flat was a long-term capital asset and liable to long-term capital gain. (2) The assessee was not a dealer in flats. She had purchased the above flat for her own residence. The question of considering the same as an adventure in the nature of trade did not arise. (3) The assessee never claimed to have sold a house property nor claimed any exemption under section 53 or section 54. (4) The question whether the assessee sold a flat or a right in the fla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable at PP 22-31 of the said compilation, details of payments appearing at page 50 thereof and argued that admittance of the assessee as Member of the Society and allotment of a flat on the 4th floor of the new building and two car parking spaces were subject to fulfilment of conditions enumerated in para 1(a)(b )(c) of the said allotment letter. According to the above terms and conditions, ₹ 1,25,000, was payable on or before September, 1981, ₹ 5,04,000, in instalments and the balance of ₹ 21,000, on possession of the flat. Thus, as per the allotment letter, the assessee was required to pay an aggregate amount of ₹ 6,50,000, towards the cost of the flat and two car parking spaces. According to the learned D.R. by 30-11-1989, the assessee had paid ₹ 6,45,000, in instalments. A further sum of ₹ 4,50,000, was paid by the assessee by 23-11-1990 in instalments. The total payment by the assessee to the Society as per the allotment letter by 23-11-1990, aggregated ₹ 10,95,000. The cost of the flat had increased to ₹ 17,00,000. The learned D.R. therefore, argued that the assessee had not made full payment towards the cost of the flat by 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m capital gain, it was stated in this letter that the assessee had acquired the interest in shares and flat in the Society on allotment of the same to her in June, 1981 and September, 1981, respectively. The aforesaid interest was a capital asset in the hands of the assessee. As per the definition of the capital asset, even interest in shares in Co-operative Society or in a flat of the Co-operative Housing Society is capital asset. It was also stated therein that the date of acqui-sition of the interest is the date on which interest is acquired by the assessee by way of allotment to the assessee or by way of agreement which is in September, 1981 when she was allotted the flat on payment of ₹ 1,25,000 and the balance amount being payable in instalments as stated in the letter of allotment. It was also stated herein that the assessee had not received the possession of the flat up to 31-5-1991, the date of sale. She was not in legal and physical possession of the impugned premises. The assessee held the right to possession for occupation of the flat since September, 1981 and accordingly, the said interest is held by her for more than 3 years. The transaction therefore, resulted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not in dispute. The assessee jointly with Shri C.R. Parekh had applied for membership of the Jeevan Villa Co. Op. Society Ltd. and paid ₹ 251 as entrance fee and for 5 shares on 17-7-1980 consequent thereto the Society admitted them as member of the Society. The assessee had also desired for allotment of flat/car parking space in the new building to be constructed by the Society. The Society agreed to allot them a flat on the 4th floor and two car parking spaces. This was done vide society s allotment letter No. JV/Allot/4/80 dated Sept. 1981. However, the allot-ment was subject to payment of ₹ 1,25,000 before September, 1981 which the assessee did. The assessee was required under the allotment letter to pay another sum of ₹ 5,04,000, in instalments and the balance ₹ 21,000, on delivery of possession of the flat. The assessee paid ₹ 6,45,000, in instalments including initial amount of ₹ 1,25,000 by 30-11-1989 and further sum of ₹ 4,50,000 in instalments by 23-11-1990. This amount of ₹ 4,50,000 represented the part of escalation towards cost of the property as per para 4 of the allotment letter. The assessee decided to sell her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong-term capital asset and capital gain arising from transfer of a long-term capital asset will result in long-term capital gain. 14. It is an admitted position that the assessee jointly with Shri C.R. Parekh had held 5 equity shares of ₹ 50 each in the capital of the Society as revealed by share certificate No. 9 Dt. 8-5-1981. Admittedly, the assessee is member of the Society which vide letter of allotment No. JV/Allot/4/ 80 dt. Nil, allotted to the assessee, a flat on the 4th floor of the society s building under construction measuring about 2511 sqf. along-with two car parking spaces. The CIT(A) has taken note of the fact that the assessee held 5 shares in the Co-operative Housing Society which owned the land which is undeniably a capital asset. The CIT(A) has further observed that it is to this immovable property to which the 5 shares and the right of enjoyment of occupation were also attached. In other words, the interest of the assessee in the property was not by way of right of occupation of the flat but it also included the limited ownership of the land on which the flat was to come into existence. The CIT(A) on the basis of holding by the assessee of 5 equity shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When the matter was brought by the revenue before the Hon ble Bombay High Court, the Court endorsed the above findings of the Tribunal and held that no question of law arose out of the order of the Tribunal. The decisions (supra) fully support the view taken by the CIT(A). Similar view has been taken by the Hon ble Bombay High Court in Ms. Rashmi S. Desai s case (supra). We therefore, endorse his findings that the gains arising from the transfer of assessee s rights referred to above under the agreement in May, 1991 constituted long-term capital gains and consequently reject this ground of the revenue. 15. Apropos ground No. 2 above. The assessee deposited ₹ 1 crore in the National Housing Bank on 10-9-1991 for a period of 3 years i.e. upto 9-9-1994. As per the scheme, the principal amount along with interest of ₹ 24 lakhs was to be received by the assessee after 9-9-1994. However, the assessee discounted the said interest and received ₹ 23,50,000, during the accounting year relevant to the assessment year 1992-93. The Assessing Officer found that the assessee offered only an amount of interest of ₹ 4,37,808, for tax in the return. On query, it was state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settle the deal for transfer of right to occupy a flat in Bombay and that to when both the purchaser and seller were staying in Bombay. The Assessing Officer therefore, disallowed the assessee s claim of impugned brokerage. 19. On appeal, it was contended before the CIT(A) that at the time of sale, the brokers were staying at Borivali but thereafter, they left Bombay and settled in Ahmedabad. The Assessing Officer required the brokers to be present before him, but in spite of repeated reminders, the brokers did not respond possibly because it might have been costly for them to attend unless summons were issued. The submissions of the assessee did not find favour with the CIT(A) as well, who sustained the disallowance observing that the address given was sketchy and no one was traced at that address and therefore, there was no question of issuing summons. Aggrieved, the assessee is in appeal before us. 20. On consideration of the arguments advanced by the parties, we are of the view that the assessee will not succeed. Since the assessee claimed deduction of payment of the impugned brokerage, the onus lay on the assessee to substantiate her claim. Perusal of the assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
