TMI Blog2018 (2) TMI 978X X X X Extracts X X X X X X X X Extracts X X X X ..... For The Appellant : Shri M.C. Omi Ningeshen For The Respondent : Shri P.P. Sagar ORDER Per Rajesh Kumar, AM This appeal has been filed by the Revenue against the order of the CIT(A)-33, Mumbai dated 17.03.2016 for A.Y. 2012-13. 2. The various grounds raised by the Revenue are as under: - 1. On the facts and circumstances of the case and law, the Ld. CIT(A) has erred in not appreciating the action of the A.O. in making an addition of ₹ 2,,88,65,116/- treating the capital gain arising as a result of sale of flat No. 1807, Ashok Towers, Mumbai, as short term capital gain. 2. On the facts and circumstances of the case and law, the Ld. CIT(A) has erred in not appreciating the action of the A.O. where it is held by the A.O. that short term capital gain is arising as a result of the sale of flat since the assessee has received physical possession of the property is not held for more than 36 months. 3. On the facts and circumstances of the case and law, the Ld. CIT(A) has erred in not appreciating the action of the A.O. where it is held by the A.O. that the assessee is not eligible to get benefit of exemption u/s. 54 of the Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement of purchase dated 18.12.2006 and the contention of the assessee that the property was held for more than 36 months as it was purchased vide agreement of purchase dated 18.12.2006 and it was sold on 11.05.2011. Ultimately the AO added a sum of ₹ 2,88,65,116/- as short term capital gain on the sale of said property by framing the assessment under Section 143(3) of the Act vide order dated 09.02.2015. 4. Aggrieved by the order of the AO assessee preferred appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee by holding as under:- 11. I have carefully considered the impugned assessment order, submissions of the appellant, paper book and material available on record. My observations are as under:- 12. The main question to be decided is whether the property being Residential flat no. 1807. Ashok Towers, Mumbai sold by the assessee on 11.05.2011 was acquired by the appellant, for the purpose of transfer of capital assets under the Income tax Act, on taking physical possession of the flat on 19.01.2011, as adopted by the AO or as a result of booking of the flat vide agreement dated 18.12.2006 as contended by the appellant. In case the argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 53A of the Transfer of Property Act, 1882. This, agreement to purchase was duly confirmed by the appellant by making various payments subsequently. 15. As per the provisions of Section 2(47)(ii). Transfer in relation to capital assets includes the extinguishment of any right therein. The agreement to purchase extinguishes the rights of the builder in the said Units in favour of the appellant and by signing this agreement to purchase, the appellant agreed to by the same and for which payments are regularly made. The enforceability of letter of allotment has been clarified by the CBDT vide Circulars No. 471 dt. 15.10.1986 and No. 672 dt. 16.10.1993. It is held that: The allottee gets title to the property on the issue of the allotment letter and the payment of installment is only a follow up action and taking the delivery of possession is only a formality.'' The Board vide circular no. 672 after referring to Circular No. 471 extended the facility of exemption u/s 54 54F in respect of allotment of flat/house. On careful reading of the circulars, it is clear that an allottee of the flat gets a title to the property on issuance of the allotment letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2005. Taking the date of sale as 05.03.2009, the holding period of flat with the assessee was more than 36 months, therefore, there is no infirmity in the order of CIT(A) for allowing assessee's claim for exemption u/s 54/54F by treating the capital assets so sold as long term capital assets. In short, the signing the letter of allotment and paying the booking the amount the assessee acquired the rights in the flat. All the rights in the flats are duly acquired when the assessee is given the letter of allotment, which clearly described the prescribed number of the flat so allotted. The holding period is therefore to be computed from date of allotment even if agreement was registered at a later date. 3. Addl. Director of Income tax v. Anindya Dutta (ITA no 613/KOL/2012) The Hon'ble Tribunal, in this case held that the assessee acquires rights over the property bearing No.1103 1104 in Ashoka Tower, Parel, Mumbai on 12.05.2004 on issue of letter of allotment and such right was held by the assessee for a period of more than thirty-six months before it was transferred. It concurred with the decision of the CIT(A) who held the gains to be LTCG. The tribunal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and possession delivered on 15-5-1986. The right of the assessee prior to 15-5-1986 was a right in the property. In such a situation, it cannot be held that prior to the said date, the assessee was not holding the flat. 17. Apart from that I find the reliance of the AO in the case of ACIT 19(2), Mumbai vs. Jaimal K Shah 24 taxmann.com 91 (Mum.) is misplaced, as facts are distinguishable. In that case the owner of the land had entered into an agreement on 4-10-2001 with the builder for development-cum-sale agreement for the purpose of development of his property. The builder had to construct flats on the land and in consideration of transfer of 45% of land rights had to give 55% share of the built-up area apart from ₹ 61 lakh. The land owner had considered the transfer of the land rights to the extent of 45% in A.Y. 2002-03 and had accordingly, given capital gain with reference thereto. The builder had constructed the premises from 2002 to 2005 and had given possession of flats to the land owner on 24-2-2005. The land owner thereafter sold the flats in April /May, 2006. In these circumstances the issue arose whether the period of holding of flat by the land owner was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conclusion, I rely on the following decisions: ( i) Praveen Gupta vs ACIT(137TTJ 307) (Del.) ( ii) Nita A. Patel vs ITO (132TTJ 468) (2009) (Mum.) ( iii) LataG. Rohra vs DCIT (2008) (21 SOT 541) (Mum.) ; ( iv) ACIT vs Credit Rating Information Services of India Ltd. (ITA no. 9396/Mum/2004 ( v) Praveen Gupta vs ACIT 2011 -(052)- DTR-0334-TDEL 21. In view of the above, the AO is directed to re-compute the long term capital gain taking the indexation for cost of acquisition as on 18.12.2006 . Hence, grounds of appeal no. 2(a)-(j) and 4 are allowed. 5. We have heard the rival submissions and perused the relevant material on record. We find that the assessee purchased flat No. 1807, Ashok Towers from M/s. Peninsula Land Ltd. vide agreement of purchase dated 18.12.2006 and sold the same on 11.05.2011. The assessee was given possession of the flat on 19.01.11. Now the question is whether the asset was held for a period of 36 months or less. In our considered view the interest in the property is created the movement the agreement to purchase is entered into in favour of the assessee accompanying with part payment. The date of possession is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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