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TMI Blog2018 (2) TMI 978X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 1961. 4. 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, 1961. 5. On the facts and circumstances of the case and law, the Ld. CIT(A) has erred placing reliance on the CBDT Circulars No. 471, did. 15.10.1986 & No. 672, dtd. 16.12.1993 which is misplaced as the two circulars of CBDT are in respect of construction for the purpose of capital gain and deduction u/s. 54 & 54F of Incometax Act, 1961. 6. The appellant prays that the order of Ld.CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored." 3. The brief facts of the case are that the assessee filed return of income on 28.07.2012 declaring total income of Rs. 24,20,660/- which was processed under Section 143(1) of the Income Tax Act (hereinafter "the Act"). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 argument of the AO is accepted, it will be short term capital gain (STCG), alternatively it will be long term capital gain (LTCG). 13. In this regard, I find that while coming to the conclusion that the said transfer is STCG, the AO has noted that the physical possession of the flat was received on 19.01.2011 and the period of three years for the purpose of capital gain starts from the date of taking possession of the flat. According to the AO, vide agreement to purchase dated 18.12.2006, the assessee has just acquired "right to acquire flat" which cannot be equated with "ownership of flat". The AO has also observed that in the definition of the term short term capital gain the word "held" denotes complete ownership which only comes with possession of the capital asset. In support of this, the AO relied upon the ratio of the judgment in the case of ACIT vs Jaimal K. Shah (2012) 24 taxmann.com (Mum). With this the AO came to the conclusion that the agreement to purchase does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 & 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 and the construction by the developer of premises thereafter shall be said to have been carried out at the instance of and on behalf of the allottee. The payment of installments and receipt of possession of the premises as a consequence can be said to be the result of the follow-up arising out of the letter of Allotment and are therefore the formalities ensuing from the said letter of Allotment. The Board in their above referred circulars confirmed that payment under letter of allotment issued will be in due compliance to the provisions of s. 54 of the Act. All the rights, title and interest derived under the letter of Allotment or the agreement for allotment invariably gets transferred to the purchaser under the sale deed executed for transfer of the premises. 16. In coming to the above conclusion, I rely upon the following judgments, which are on the issue under consideration. 1. ITO vs. Smt. Kashmiraben M. Parikh, 44 TTJ 68(Ahd.) The Hon'ble Tribunal held that since the right in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 also allowed exemption u/s 54. 4. CIT v K. Ramakrishnan, 48 taxmann.com 55 (Del.) The Hon'ble High Court has held that it was date of allotment which was relevant for purpose of computing holding period and not the date of conveyance deed. 5. Vinod Kumar Jain v. CIT 344 ITR 501 (P & H) The Hon'ble Punjab & Haryana High Court allowed the claim of the assessee by holding that the assessee acquired rights under the letter of allotment which were to be treated as capital asset u/s. 2(14) of the Act by relying on the circular no. 471 dt. 15.10.1996 issued by the CBDT. The Court held that the right of the assessee prior to 15.05.1986 under the letter of allotment were rights in the property that were transferred. The Court also relied on the decision in the case of CIT v. Ved Prakash & Sons. (HUF) 207 ITR 148 (P & H) and CIT v. Smt. Beena K. Jain 217 ITR 363 (Bom.). The Court upheld the contention of the assessee that for the purpose of s. 2(14) and s. 2(42A) what was relevant was the holding of the property a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 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 long-term and short-term. The assessee in that case claimed that capital gain was in the nature of long term capital gain. The Tribunal, however, held that capital gain was short term capital gai and period of holding of the flats could be counted only from the date on which the possession of the flats had been given by developer to the land owner. With regard to the above decision of the Tribunal, in the facts of the case the issue was not for purchase of a flat from a builder with the intention to acquire the same. Moreover, that decision was in respect of development cum sale agreement which cannot be applied in the instant case of purchase of a flat from a builder with the intention to acquire the same. Hence, it is concluded that the said decision relied by the AO does not apply to the facts of the present case and hence distinguishable. 18. In the light of the discussion made in the preceding paragraphs, it is concluded that for the purpose of transfer of the residential flat no. 1807, Ashok Towers, Mumbai agreement to purchase da ..... X X X X Extracts X X X X X X X X Extracts X X X X
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