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TMI Blog2016 (11) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... exed cost of acquisition of office by wrongly treating the office as short term capital asset instead of long term capital asset as claimed by the Appellant. 2. The AO has wrongly levied interest u/s 234 and wrongly initiated penalty under section 271(1)(c). Relief prayed a) To treat the booking of the office as long term capital asset and allow indexation thereon b) To delete interest under section 234 and initiation of penalty under section 271 (1)(c)." 3. The brief facts of the case are that assessee is an individual deriving income from house property, business income, capital gains and income from other sources. It was observed by the A.O. during the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Act , that the assessee has shown long term capital loss of Rs. 2,84,844/- on sale of property which was claimed to be carried forward. The details with respect to the transaction were sought from the assessee including sale and purchase agreement. Despite repeated requests by the AO , the assessee merely filed a copy of rough purchase agreement wherein there were no dates mentioned and there was no registration evidence or payment of stamp duty. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered as sales consideration receivable/ accrued to the assessee from the said property and accordingly the A.O. worked out the long term capital gain at Rs. 20,19,850/- being the difference of gains receivable u/s 50C of the Act at Rs. 25 lacs and cost of asset at Rs. 4,80,150/- and the gain was taxed as long term capital gain as prima facie evidence indicated that the assessee should have held property for more than three years the gain was taxed as long term capital gains , as against the loss of Rs. 2,84,844/- as claimed by the assessee in the return of income filed with the Revenue vide assessment order dated 22-12- 2010 passed by the AO u/s. 143(3) of the Act. 4. Aggrieved by the assessment order dated 22-12-2010 passed by the A.O. u/s. 143(3) of the Act, the assessee filed first appeal before the ld. CIT(A). 5. Before the ld. CIT(A), the assessee submitted the letter of allotment received by the assessee on 26th July, 1992. The assessee submitted that the payments were made slab wise from time to time after the booking was made and the A.O. has erred in treating the asset as short term capital asset and disallowed the indexation of cost because no agreement was entered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was created in favour of the assessee, hence, the claim of the assessee that the right in the property was created from the time the investment was made is not tenable. The AO referred to provisions of Section 54 of the Transfer of Property Act to contend that no interest in or charge on such property is created by contract for the sale of immovable property. The assessee did not submit any documentary evidence to show the date on which the assessee acquired ownership of the flat by way of sale agreement. Only a rough purchase agreement was filed by the assessee. Thus, it was observed by learned CIT(A) that the date on which the assessee acquired ownership right in the property was not proved. The evidence filed by the assessee shows that the flat and the ownership right in the flat would have vested only subsequent to year 1994. The copy of letter issued by the builder dated 5th April, 1993 filed by the assessee showed that the builder called upon the assessee to deposit the amount of Rs. 80,000/- which clearly indicates that till 5th April, 1993 full payment of the flat had not been made and the assessee had not acquired ownership rights as on this date and thus the date of acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assesses that vide letter dated 10-3-2008 addressed to the Builder in context of transfer of flat by the assessee, the assessee mentioned the date of allotment to be 01-08-1994 which is placed in paper book page 22. The assessee relied on the decision in the case of CIT v. Tata Services Ltd., 122 ITR 594(Bom.) and the decision in the case of Ms. Nita A Patel, 7 ITR 659(Mum.) and several other decisions as placed in paper book and contended that the assessee is entitled for treating this property as long term capital asset as the flat was allotted to the assessee on 26th July, 1992 based upon the letter issued by the Builder confirming the booking of flat. The assessee also relied upon the Circular No. 471 dated 15th October 1986 and also circular no. 672 dated 16-12-1993 issued by CBDT whereby the date of allotment will be treated as date of construction of the flat for the purposes of Section 54/54F of the Act. 8. The ld. D.R., on the other hand, relied upon the decision in the case of Hon'ble Delhi High Court in the case of Gulshan Malik v. CIT (214) 43 taxmann.com 200 (Delhi) and submitted that the flat shall be deemed to be acquired when the agreement to sell has been entered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO did mention about this allotment letter dated 01-08-1994. CBDT Circular No. 471 dated 15th October 1986 and also CBDT circular no. 672 dated 16-12-1993 stipulates that in case of allotment of flat under self financing scheme of Delhi Development Authority(DDA) and co-operative societies , the date of allotment shall be the date of construction for the purpose of Section 54/54F of the Act. Thus, by virtue of allotment letter dated 01-08-1994 , prima facie it appears that the assessee has acquired the interest , rights and title in the property but the said allotment letter dated 01-08-1994 is not placed on record by the assesssee to enable us to study detailed terms and conditions. The matter in our considered view, need to be set aside and restored to the file of the AO for re-determination of the issue on merits by the AO after examining the terms and conditions of allotment letter dated 01-08-1994 to enable the AO to determine whether the assessee has in-fact acquired rights , title and interest in the said flat by virtue of the said allotment letter dated 01-08-1994 . The assessee has sold the flat in March 2008 and hence if it is held by the AO that the assessee acquired rig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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