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Mrs. Sneha Bimal Parekh Versus Principal Commissioner of Income Tax 19, Mumbai

2016 (7) TMI 641 - ITAT MUMBAI

Revision u/s 263 - as per CIT(A) assessee has wrongly claimed the benefit of indexation on cost of acquisition from the date on which the allotment letter was issued to the assessee - AO ought to have treated the gain on sale of flat as Short Term Capital Gains (STCG) by treating the date of possession/registration as the date of acquisition of flat - Held that:- The assessee acquired the ownership right in the flat on the date of letter of intent when the assessee booked the flat and paid booki .....

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Decided in favour of assessee. - I.T.A. No.5489/Mum/2015 - Dated:- 30-6-2016 - SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI RAJESH KUMAR, AM Assessee by : Shri Rajiv Khandelwal Revenue by : Shri Manjunatha Swamy O R D E R PER RAJESH KUMAR, A. M: This is an appeal filed by the assessee and challenging the order dated 21.10.2015 of Commissioner of Income Tax-19, Mumbai, for assessment year 2012-13. 2. The issue raised in the various grounds of appeal taken by the assessee is against the setting aside .....

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acquisition of flat. The Principal Commissioner of Income Tax (PCIT) also noted the fact that the area of the flat was 1215 sq.ft. as per letter of allotment dated 27.11.2006 (112 Sq.M) whereas the agreement for sale dated 28.6.2011, the area of the flat sold was 847 sq.ft.(78.69 Sq.Mtr) which was not noticed by the AO in the assessment proceedings. It was also mentioned in the order of PCIT that the assessee has not filed any documentary evidence in respect of long term capital gains except the .....

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case are that the assessee during the year sold his flat No.92 in Wing B of Building No.2 LBS Marg, in the Complex known as Kalpataru Aura for a total consideration of ₹ 1,17,60,145/- vide agreement dated 28.6.2011. The said flat was admeasured 1214 sq.ft i.e.112.80 sq.mt. as per letter of intent/allotment dated 27.11.2006, whereas as per agreement for sale of said flat stated the area of 847 sq.ft. (78.69 Sq.Mtr.). This was pursuant to Supreme Court Judgment that only carpet area is to b .....

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670/-. Thereafter the PCIT set aside the assessment made by the AO u/s 263 of the Act as being erroneous and prejudicial to the interest of the revenue on the ground that the gain on sale of flat No.92 in Wing B of Building No.2 in the Complex known as Kalpataru Aura on 28.6.2011 ought to have been treated as STCG whereas the AO allowed the claim of the assessee by treating the said surplus on sale of flat as LTCG by taking the date of allotment of flat as date of acquisition and thus wrongly al .....

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r of intent and is not and does not purport to be an agreement for sale/purchase of the said Flat! the Premises by you, your rights and obligations shall become effective only on execution of the Agreement for Sale. All the amounts paid by you till then shall remain as deposit (interest free) with us Finally, the PCIT set aside the assessment after considering the reply of the assessee by observing and holding that the assessment order dated 19.2.2015 was erroneous and prejudicial to the interes .....

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as Kalpataru Aura on 28.6.2011. The ld. AR drew our attention to pages no.37 and 38 of the paper book which is a letter of intent allotting the flat to the assessee. The ld.AR also brought to our notice the payment schedule as contained at page 39 of the paper book which is reproduced below for the purpose of convenience and better understanding of the fact. Sr. No. Particulars Payment Installment Percentage Amount in Rs. 1 On Booking (Within 07 days) 27th November 2006 5% ₹ 3,34,919/- 2 .....

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7; 3,34,919 12 On Completion of Top slab 5% ₹ 3,34,919 14 On Completion of Brick work 5% ₹ 3,34,919 15 On Completion of Internal plaster 5% ₹ 3,34,919 16 On Completion of Tilting 5% ₹ 3,34,919 17 On Completion of Possession 10% Rs.6,69,834 100% Rs.66,98,375 6. At Sr.No.1 of the above table, we find that the assessee paid booking amount of ₹ 3,34,919/- on 27.11.2006 which constitutes 5% of the total payment to be made by the assessee to the builder i.e ₹ 66,98, .....

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red the interest in the property the movement the assessee was issued letter of intent by the builder on 17.11.2006 and the assessee made the payment of first installment as stated in the schedule of payment. The ld.counsel strongly submitted that the action of the PCIT is patently wrong in taking the date of registration of flat in the name of the assessee as the date of acquisition/purchase. It is the date of allotment of flat on 27.11.2006 when the assessee acquired interest/rights in the pro .....

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wnership as per the provisions of Act and in support of this the ld.AR relied on the following case laws: a) Smt.Lata G Rohra V/s DCIT - (2008) 21 SOT 541 (Mum); b) Ms.Madhu Kaul V/s CIT -(2014) 263 ITR 54 (P&H); c) Vinod Kumar Jain Vs. CIT -344 ITR 501 (P&H); d) CIT V/s Ved Parkash And Sons (Huf) (1994) 207 ITR 148 P H, ; e) ACIT V/s Sanjay Kumath (2014) 63 SOT 90 (Indore) f) Charanbir Singh Jolly V/s ITO (2006) 5 SOT 89 (MUM) g) CIT V/s K Ramakrishnan (2014) 363 ITR 59(Del) 7. The lf. .....

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263 were not satisfied and therefore the order as passed by the PCIT is wrong and be set aside by taking into considerations the ratio laid down in the above referred decisions. 8. The ld. DR, on the other hand, objected to the arguments of the ld.AR and supported the order of the PCIT heavily. The ld. DR submitted that the date of acquisition of the property is the date of registration in the name of the assessee as provided in the Transfer of Property Act. The ld.DR submitted that as per the .....

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e of registration of property in the name of the assessee and finally the ld. DR prayed that the order of the PCIT be upheld by dismissing the appeal of the assessee. In support of his contentions, the ld.DR relied on the following case laws: i) CIT V/s Amitabh Bachchan in Civil Appeal No.5009 of 2016 (arising out of SLP C ) No.11621 of 2009) order dated 11.5.2016 (Supreme Court) ii) Horizon Investment Co.Ltd V/s CIT in ITA No.1593/Mum/2013 (AY-2008-09) dated 27.6.2014 Mumbai Tribunal. ii) Arvee .....

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,34,919/- as booking advance. The flat was registered in the name of assessee on 31.4.2009(correct date is 30.4.2009) vide register sale-deed placed at pages 43 to 56 of the paper book. A copy of the sale deed dated 28.6.2011 transferring the flat is filed at pages 8 to 18. Now, issue before us to be adjudicated is whether the gain resulted from transfer of flat which was allotted on 27.11.2006 registered in the name of assessee on 30.11.2009 and sold on 28.6.2011 is a LTCG or STCG. If assets tr .....

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gistration value etc and sold for ₹ 1,17,17,145/-. Upon looking into the facts of the case, we find that the assessee become owner of the flat on 27.6.2006 then the allotment letter was issued and advance amount/booking amount was paid to the builder. The case of the assessee also find strong support from the decisions cited before us during the course of hearing. In the case of Smt.Lata G Rohra (supra), the Tribunal has held as under : As per section 2(14), read with section 2(14)(vi), th .....

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t of indexation should be given on the basis of dates of actual payments made by the assessee. Thus, on merits, the issue was covered in favour of assessee. However, regarding jurisdiction for invoking the provisions of section 263, it was found that the assessee filed necessary details before the Assessing Officer and the Assessing Officer had passed assessment order after taking into consideration the same. Hence, merely for the reason that no specific findings had been given in the assessment .....

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e first instalment on 4-7-1986. Thereby conferring a right upon the assessee to hold a flat, which was later identified and possession delivered on a later date. The mere fact that possession was delivered later does not detract from the fact that the allottee was conferred a right to hold property on issuance of an allotment letter. The payment of balance instalments, identification of a particular flat and delivery of possession are consequential acts and relate back to and arise from the righ .....

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indicated the flat number and called upon the assessee-allottee to deposit the balance amount. The assessee sold the said flat on 6-1-1989 and claimed that capital gain arising on sale of said flat was long-term capital gain under section 2(29A) and as he had purchased another flat on 31-1-1989, such capital gain was to be set off under section 54. The Assessing Officer disallowed the assessee‟s claim holding that the possession of the flat was given to the assessee on 15-5-1986 and, ther .....

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of Section 2(42A) of the Act, the word "owner" has designedly not been used by the Legislature. The word "hold", as per dictionary meaning, means to possess, be the owner, holder or tenant of (property, stock, land ....). Thus, a person can be said to be holding the property as an owner, as a lessee, as a mortgagee or on account of part performance of an, agreement, etc. Conversely, all such other persons who may be termed as lessees, mortgagees with possession or persons in .....

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hat the event of some default with regard to payment of instalments which might have been committed by an allottee does not give a right to the Government to resume the land or building and at best it is entitled to recover the amount due on account of non-payment of some of the instalments. The court held that the stipulation in the agreement that in the event of default in making the payment the Government shall have the right to resume the property was an unreasonable restriction on the enjoy .....

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t be construed that he had no right or interest in the property but was a licensee as sought to be projected by counsel for the applicant. The assessee in terms of the agreement having been put in possession in May, 1970, remained in occupation as of right and thus for all intents and purposes was its beneficial owner from the start. The judgment of the Income-tax Tribunal, Chandigarh Bench in the case of Surjeet Singh v. ITO [1979] Tax 53(6)-28, though not binding upon this court, has all the s .....

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e. After signing the said letter of allotment and paying the booking amount, the assessee acquired the right in the said flat. [Para 8] After the entire payment was made by the assessee, agreement was executed on 27-2-2009. Thereafter, the assessee sold the flat on 5-3-2009. Thus, all the rights in the flat were duly acquired by the assessee on 22-1-2005, when he was given letter of allotment which clearly described the precise number of flat so allotted to him. As per the provisions of section .....

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sections 54 & 54F in respect of allotment of flat/house. Thus, as per the CBDT Circular also, the assessee acquired the rights/title in the flat by way of allotment letter on 22.1.2005. This allotment letter was duly confirmed by the assessee by making various payments. Out of total payment of ₹ 33.15 lakhs, the assessee made payment of ₹ 6.23 lakhs in the month of allotment itself i.e. January, 2005. Subsequent payment was also made as per the terms agreed with the builder. Only .....

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llowing assessee's claim for exemption under section 54/54F, by treating the capital assets so sold as long-term capital assets. [Para 10] In the case of Charanbir Singh Jolly (supra) Mumbai Bench of the Tribunal has held as under : The Assessing Officer had adopted the original cost of acquisition at the first instalment value, whereas the assessee had claimed the original cost of acquisition at the total payments made by him. Therefore, the real question was what was the cost of acquisitio .....

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The basic idea of bringing the principle of indexation is to give some sort of protection to the assessee from the onslaught of inflation. The effect of inflation could be measured only with reference to the total cost of acquisition of a property. If the effect of inflation is measured with the payment of the first instalment, the whole scheme becomes ridiculous. It is to be seen that the factor of inflation is not with reference to the payments made by the assessee but with reference to the v .....

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