TMI Blog2016 (7) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... 016 - 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 the order of Income Tax Officer-19(3)(4) vide order dated 21.10.2015 passed under section 263 of the Income Tax Act, 1961 by the Principal Commissioner of Income Tax on the ground that the 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. Whereas the 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal gains at ₹ 29,938/-. The PCIT while refereeing to the provisions of section 2(47) of the Act observed that for the purpose of acquisition of property the date of letter of intent/allotment does not satisfy the condition of transfer of property. The ld. PCIT relied heavily on para 12 of the letter of intent which reads as under : This writing is merely a letter 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 interest of the revenue with the direction to the AO to determine the income and gain of the assessee. Being aggrieved by the order of the PCIT, the assessee is in appeal before us.. 5. We have carefully considered the rival contentions and perused the materials placed before us including the orders of authorities below an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ick 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 ₹ 66,98,375/- during various stages on completion/progress of the building. The ld. Counsel submitted before us that the ground on which the PCIT set aside the assessment was totally wrong as the order of AO is neither erroneous and nor prejudicial to the interest of revenue. The ld. Counsel submitted that these are twin conditions which were to be satisfied before any assessment order could be set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 provisions of section 2(47) of the Act the transfer is complete when the possession of immovable property is taken under the Transfer of Property Act, 1982 and thus the ld.PCIT has rightly exercised his revisionary power under section 263 of the Act as the order passed by the AO is erroneous as well as prejudicial to the interest of the revenue in view of the fact that the STCG has been treated as LTCG by allowing indexation of cost of acquisition from the date of letter of intent instead of date 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the asset and not actual payments made by the assessee. Hence, there was no merit in the contention of the revenue that the benefit 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 order, the same could not be said have been passed without application of mind. In this view of the matter, the order under section 263 passed by the Commissioner was to be set aside. [Para 9] In the result, the appeal filed by the assessee stood allowed. [Para 10] In the case of Ms.Madhu Kaul (supra) it has been held by the Hon‟ble Punjab and Hariyana High Court as under : Admittedly the flat was allotted to the assessee on 7-6-1986 vide letter conveyed on 30-6-1986. The assessee paid the first instalment on 4-7-1986. Thereby conferring a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tgagees with possession or persons in possession as part performance of the contract would not in strict parlance come within the purview of owner . As per the Shorter Oxford Dictionary, edition 1985, owner means one who owns or holds something; one who has the right to claim title to a thing. 15. The apex court in the case Jagdish Chand Radhey Shyam v. State of Punjab, AIR 1972 SC 2587 ; [1972] PLJ 566, while examining the provisions of the Capital of Punjab (Development andRegulation) Act (27 of 1952) held that 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 enjoyment of the property and declared the same ultra vires. In the instant case, the sale though made by a private entrepreneur appears to be in identical terms as normally stipulated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 after receipt of entire amount, the builder has executed agreement with the assessee on 27-2-2009. The assessee has sold the said flat on 5-3-2009. Since the assessee has acquired all the rights in the flat on 22-1-2005, the period of holding is to be computed with respect to the date of allotment i.e. 22-1-2005. Taking the date of sale as 5-3-2009, the holding period of flat with the assessee was more than 36 months, therefore, there is no infirmity in the order of Commissioner (Appeals) for allowing 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 ori ..... X X X X Extracts X X X X X X X X Extracts X X X X
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