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TMI Blog2018 (10) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... t term capital asset and thereby treating the gain on its sale as short term capital asset. 2. The learned CIT(A) failed to appreciate that the appellant has entered in agreement for purchase of the residential property on 06.10.2008 and has entered into agreement for its sale on 08.11.2011, holding the said residential property for more than 36 months, and consequently, a long term capital asset. 3. The learned CIT(A) erred in denying the benefit of deduction u/s 54 to the appellant against capital gains from sale of residential property. 4. The appellant craves leave to add, amend, modify or alter the above grounds of appeal to any stage of appellate proceedings. The assessment for impugned AY was framed by Ld. Assistant Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old immediately after taking possession and further the assessee was staying in rented accommodation and therefore the sold flat was not being used for residential purposes and therefore, not entitled for exemption u/s 54. The Ld. AO further opined that for a flat that was constructed and ready for occupation, the date of taking possession of the flat would be the purchase date for the purpose of determining the holding period. Since, the holding period, as counted from the date of possession, was less than 3 years, the resultant gains were treated as Short Term Capital Gains and accordingly, indexation of cost of acquisition as well as deduction u/s 54 was denied to the assessee, which resulted into impugned additions. 3. Aggrieved, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the date of agreement, the assessee had paid only 66.20%, the future payments in time were material as per the terms and percentage of payments made, the assessee cannot be held to be owning absolute right. Even on the legal aspect, the decision relied require the period of holding to be considered from date of possession. 7.11 As per the facts of the case and the above decisions, the period between possession and sale would be relevant for transfer of right and occupancy title as in the case of assessee. As the assessee got possession on 04-07- 2011 and sold it on 08-11-2011, the period of holding was only 3 months, and thus the capital gain was "short term" 7.12 In light of the above, the decision of the Assessing Officer in treatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of holding should be counted from date of possession i.e. 04/07/2011. 5.2 From the perusal of documents on record, it is evident that the origin of the subject property in assessee's favor spring from Premises Ownership Agreement dated 06/10/2008 entered into between the assessee and the developer namely Oberoi Constructions Private Limited. The said agreement has been duly registered on 13/10/2008 upon payment of stamp duty of Rs. 4.29 Lacs. As per recital Y, the assessee has expressed desire to acquire the aforesaid flat and approached the builder to allot the specific property Flat No. 308, admeasuring 889 Square Feets carpet area on 3rd Floor Wing-D of Building No.-1 of Oberoi Splendor. The perusal of the recital reveals th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssession to the property essentially sprang only from the premises ownership agreement dated 06/10/2008 and was in furtherance of the aforesaid agreement only. The possession of the property was obtained pursuant to the agreement, which was distinctly identified / earmarked before hand at the time of entering of agreement and therefore, part & parcel of the same transaction. Nothing in the agreement suggest that the assessee gave up the right to acquire the property at the time of possession and got a new capital asset in the shape of flat, in exchange rather it was the case, where the right / title of the assessee over the subject property got better and more perfect. 5.5 So far as the statutory provisions are concerned, we find that Shor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date when he enters into an agreement for purchase and not when he acquires possession. A similar phrase has been used in the Explanation (iii) to section 48 which defines the term "indexed cost of acquisition". The said phrase is reproduced hereunder:- (iii) "indexed cost of acquisition" means an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later; (emphasis added) A perusal of the above provision reveals that even for calculating indexation the base year is to be taken as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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