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ACIT – 19 (2) , Mumbai Versus Ms. Jenifer Noshir Sanjana

2016 (7) TMI 458 - ITAT MUMBAI

Eligibility for claim of deduction u/s 54F - whether the consideration received by the assessee on sale of her rights to get the conveyance of the flat in her favour is to be treated as capital gain eligible for claim of deduction - Held that:- While making the payment to the builder, the intention of the assessee was not to earn any quick profits but the purpose was of investment. The assessee not only paid the earnest money in the year 2004 but subsequently paid installments to the builder at .....

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lments were made at different stages of the completion of the construction. There accrued a right to get the possession/conveyance of the said flat in favour of the assessee from the said builder. A tripartite agreement was executed vide which the assessee, with the consent of the builder, had agreed to sale his rights in favour of the third party. So far as the observation of the AO that the assessee had to exercise his option within 30 months, the Ld. A.R. of the assessee has brought our atten .....

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and conveyance of the flat in her favour. Hon’ble Bombay High Court in the case of “CIT vs. Vijay Flexible Containers” (1989 (9) TMI 16 - BOMBAY High Court ) wherein the Hon’ble Bombay High Court has held that the right to obtain conveyance of immovable property is a capital asset and giving up of the right to obtain conveyance of immovable property amounts to transfer of a capital asset. - Decided in favour of assessee. - ITA No. 7667/M/2013 - Dated:- 30-6-2016 - Shri G. S. Pannu, Accountant Me .....

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et the conveyance of the flat in her favour is to be treated as capital gain eligible for claim of deduction under section 54F of the Act. 3. The brief facts of the case are that the assessee during the year declared long term capital gains of ₹ 28,05,075/- on account of sale proceeds of rights in O zone flat on 27.03.09 for ₹ 69,30,000/-. The value of the above flat as on 17.08.04 was taken at ₹ 34,02,000/- and the indexed cost at ₹ 41,24,925/- and the capital gains were .....

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ee of his rights in the flat was registered as per the provisions of the Registration Act. He observed that the amount paid by the assessee to the builder was in the nature of advance and security and that the same was not the consideration for the purchase of the flat. He further observed from the allotment letter that the allotment letter was a tentative letter only evidencing the money received by the developer and that there existed no property or right in respect of any tangible asset as on .....

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r the purchase of said flat, hence no rights had accrued to the assessee in the said flat. He therefore held that the entire receipt on sale of said property could at the most be considered as being return of advance in nature of income under section 56 of the Act. That there was no property in existence or right of the assessee in such a property and hence no capital asset was sold by the assessee and thereby no capital gains had been earned by the assessee. Therefore, the benefit under section .....

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sideration amount of ₹ 69,30,000/- was received by the appellant on account of agreement for sale of his flat in flat no.1202 in tower no.01 in 0 Zone building vide tripartite agreement dtd.27.03.2009 between the developer , the appellant and the purchaser. The appellant's right in the said flat has been recognised in the above agreement for sale, which is duly registered. The said right is arising out of booking made on 17.06.2004 being option money given by the appellant for the abov .....

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right, there could not have been "Agreement for Sale" between the purchaser and the transferor (the appellant). The appellant, was thus holding the above right for a period of more than 3 years. 5.4 As far as the position whether there has been a transfer of capital asset is concerned, under section 2(14) "capital asset" means property of any kind held by an assessee, whether or not connected with his business or profession, and u/s 2(47) "transfer" in relation to .....

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persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. Under Explanation 1 inserted by the Finance Act 2012, w.r.e.f. 01.04.1962, for the purposes of sub-clauses (v) and (vi), "immovable property" shall have the same meaning as in clause (d) of the section 269UA. The meaning of immovable property under section 269UA has been defined as; "(i) any land or any .....

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g or a part of a building (whether or not including any machinery, plant, furniture, fittings or other things therein) which has been constructed or which is to be constructed, accruing or arising from any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other AOP or by way of any agreement or any arrangement of whatever nature), not being a transaction by way of sale, exchange or lease of such land, building or part of a building&qu .....

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made on the basis of allotment letter only and proposed plan of the building and the flat was not in place. In the case of the appellant, the claim u/s 54 of the Act, has been disputed not on the ground that investment of sale consideration has been made in a capital gain saving scheme but, when the offer/allotment letter dtd.31.01.2005 to purchase the above flat was made by the developer, the flat did not exist. The assessing officer has, thus, applied the above decision on a reverse situation .....

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tating the action of the Ld. CIT(A) in treating the rights of the assessee in the said flat as capital asset and thereby allowing of her claim under section 54F of the Act. 6. We have heard the rival contentions and have also gone through the records. It is not disputed that the amount of ₹ 69,30,000/- was received by the assessee on sale of her rights in the flat in question. The property in which the alleged rights were sold was earmarked and distinguishable as flat No.202 at 12th floor .....

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allotment letter. The period of the said installments paid as observed above was running into four years. The assessee had to pay the installments at the different stages of the construction of the property/flat in question e.g. on the completion of first slab; on the condition of third slab; on the completion of 11th slab and so on and the last installment was payable on possession of the flat being given to the assessee. From the above circumstances it clearly reveals that while making the pay .....

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. From the facts narrated above it clearly reveals that the payment made by the assessee was not an advance or security but it was towards the consideration of the flat in question which was under construction and payment of the installments were made at different stages of the completion of the construction. There accrued a right to get the possession/conveyance of the said flat in favour of the assessee from the said builder. A tripartite agreement was executed vide which the assessee, with th .....

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