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Ashutosh Gurunath Versus The ITO – 26 (2) (1) , Mumbai

2016 (11) TMI 1454 - ITAT MUMBAI

Sale of residential premises - LTCG OR STCG - nature of gain - A.O. has considered the date of agreement to sell which is 30th December, 2003 as the date of acquisition of the flat - assessee along with his wife had purchased the flat by jointly raising bank loan - Held that:- As observed that the CBDT Circular No. 471 dated 15th October, 1986 relating to allotment of flat under self financing scheme of Delhi Development Authority shall be applicable as we do not see any reason why the said circ .....

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ount of payment and date of payment, on progressive payments. Further it is observed that the assessee has raised additional grounds before the learned CIT(A) which were not admitted by the ld. CIT(A) and rejected at the threshold and hence consequently not adjudicated while framing appellate order dated 23.05.2014. In our considered view and in the interest of justice , these additional grounds raised by the assessee before the learned CIT(A) need to be admitted as they rise from the order of t .....

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ee, being ITA No. 5134/Mum/2014, is directed against the appellate order dated 23rd May, 2014 passed by learned Commissioner of Income Tax (Appeals)- 28, Mumbai (hereinafter called the CIT(A) ), for the assessment year 2007-08, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 24th December, 2009 passed by the learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income-tax Act,1961 (Hereinafter called the Act ). 2. The grounds of appe .....

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Appellant during the course appellate proceedings. 3. The Brief facts of the case are that from the return of income filed by the assessee, it was observed by the A.O. that the assessee had claimed loss of current year to be carried forward amounting to ₹ 14,515/- as per schedule CFL of the return of income. On perusal of the schedule CG-Capital gains of the return of income, it was observed that the assessee has arrived at a long term capital loss of ₹ 14,515/- , whereby the assess .....

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ment project coming on the land belonging to already registered Accolade Co-operative Society and the developers had development rights to develop the said project. It was observed by the AO that the assessee and his wife had paid a token amount of ₹ 4.5 lacs (not being more than 15% of the proposed value of consideration of the said flat of ₹ 38.50 lacs ) as earnest of deposit. . As per the agreement to sale, the possession of the flat was to be given in May, 2004 subject to the pay .....

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he said company , while assessee has a salary income of ₹ 9,55,700/- from MNC and her wife net salary income was ₹ 2,37,500/- . The A.O. observed that the ratio of ownership declared by the assessee and his wife did not match their income, hence, notice was issued u/s 142(1) of the Act to show cause that why only 10% of the capital gains/loss was declared by the assessee , while claiming that 90% of the flat was owned by wife Mrs. Malini Rao, which fact is not borne out from the sale .....

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the A.O. that the assessee has arrived long term capital gain considering the date of acquisition of the property bring date of allotment of flat vide letter of allotment dated 27th January, 2003 and date of sale as 24th November, 2006. The A.O. observed that the assessee along with his wife entered into agreement of sale dated 30th December, 2003 with respect to the purchase of said property from Sujana developers flat no 1202 , A Wing, on the then proposed construction to be known as Sun Cres .....

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han being a statutory body like DDA or MHADA. It was also observed that by paying this 10% of cost of the flat at the time of letter of allotment by a private builder, the assessee is also not even member of the Accolade Cooperative society and it will not create any right on the land owned by the society on which the project is constructed . Thus, the AO observed that the assessee has not owned the flat for more than 36 months as the AO calculated the date of acquisition from the date of agreem .....

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by the AO , vide assessment order dated 24.12.2009 passed u/s 143(3) of the Act. 4. Aggrieved by the assessment order dated 24.12.2009 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 contested the additions made by the A.O. The assessee has also raised additional ground before the ld. CIT(A) which reads as under: 1. On the facts and circumstances of the case and in law, the A.O. erred in assessing the entir .....

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of appeal filed. The ld. CIT(A) observed that the assessee has not made substantial investment in the flat nor has obtained a domain over the flat from the date of letter of allotment issued by the builder, hence, the property cannot be said to have been purchased on the date of letter of allotment and the A.O. has correctly concluded that the property was purchased by the assessee on the date of agreement of sale i.e. 30th December 2003 and the holding period comes to less than 36 months as the .....

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eard the ld. D.R. and also perused the material available on record. We have observed that the assessee along with his wife Mrs. Malini Rao had purchased the flat for which payments have been made by the assessee and his wife. The assessee and his wife had also jointly raised bank loan for the acquisition of the said flat . The assessee is claiming that he acquired the flat from the date of letter of allotment by the builder i.e. 27-01- 2003 while the A.O. has considered the date of agreement to .....

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the gains accrued to the assessee are long term capital gains as the asset is held for a period of more than thirty six months. The said CBDT Circular No. 471 dated 15th October, 1986 is reproduced hereunder: 74. Capital gains from long-term capital asset - Investment in a flat under the selffinancing scheme of the Delhi Development Authority - Whether to be treated as construction for the purposes of capital gains 1. Sections 54 and 54F provide that capital gains arising on transfer of a longt .....

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s to whether the acquisition of a flat by an allottee under the Self-Financing Scheme (SFS) of the D.D.A. amounts to purchase or is construction by the D.D.A. on behalf of the allottee. Under the SFS of the D.D.A., the allotment letter is issued on payment of the first instalment of the cost of construction. The allotment is final unless it is cancelled or the allottee withdraws from the scheme. The allotment is cancelled only under exceptional circumstances. The allottee gets title to the prope .....

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work on behalf of the allottee and that the transaction involved is not a sale. Under the scheme the tentative cost of construction is already determined and the D.D.A. facilitates the payment of the cost of construction in instalments subject to the condition that the allottee has to bear the increase, if any, in the cost of construction. Therefore, for the purpose of capital gains tax the cost of the new asset is the tentative cost of construction and the fact that the amount was allowed to b .....

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gly CII will be worked out with reference to amount of payment and date of payment, on progressive payments. Further it is observed that the assessee has raised additional grounds before the learned CIT(A) which were not admitted by the ld. CIT(A) and rejected at the threshold and hence consequently not adjudicated while framing appellate order dated 23.05.2014. In our considered view and in the interest of justice , these additional grounds raised by the assessee before the learned CIT(A) need .....

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