TMI Blog2018 (10) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... he date when he enters into an agreement for purchase and not when he acquires possession. Viewed from any angle, we are unable to find ourselves in agreement with the conclusion of Ld. first appellate authority that the capital gains earned were Short Term in nature and therefore, we reverse the same. The resultantly gain as counted from date of agreement, in our opinion, was Long Term Capital gain eligible for indexation benefit. This ground stands allowed. Deduction u/s 54 - Held that:- We find that the lower authorities have denied the same primarily by concluding that the same was not available since the nature of capital gains was Short Term Capital Gains. Therefore, on factual matrix, the matter stand remitted back to the file of Ld. AO for re-adjudication & verification of deduction u/s 54 with a direction to the assessee to substantiate the same with documentary evidences / requisite information. - I.T.A. No.1244/Mum/2017 - - - Dated:- 12-9-2018 - Shri Saktijit Dey, JM And Shri Manoj Kumar Aggarwal, AM For the Assessee : Hiro Rai, Ld.AR For the Revenue : Ram Tiwari, Ld. Sr. DR ORDER PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /07/2011 which was in continuation of its holding right in the property. Therefore, the earlier period was also to be counted for the purpose of computation of capital gains . However, not convinced, Ld. AO noted that the flat was sold 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 assessee agitated the same without any success before Ld. CIT(A) vide impugned order dated 02/01/2017 wherein the reliance was placed on certain judicial pronouncements. The Ld.CIT(A), after perusal of agreement da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the issue stood covered in assessee s favor by subsequent judicial pronouncements of this Tribunal as well as of higher judicial authorities, the copies of which have been placed in the paper-book. At the same time, the case laws being relied upon by Ld. CIT(A) were sought to be distinguished on factual matrix. Per Contra, Ld. Departmental Representative [DR], Shri Ram Tiwari, submitted that the assessee had sold a flat and not a right to acquire the flat, the holding period of which was less than 3 years and therefore, the stand of lower authorities was justified. 5.1 We have carefully heard the rival submissions and perused relevant material in record including the premises ownership agreement between assessee and the builder and judicial pronouncements cited before us. The undisputed facts are that the property in question has been sold on 08/11/2011, the right in the same was acquired by the assessee by agreement dated 06/10/2008 and the possession of the same was obtained on 04/07/2011. As per assessee s contention, the holding period should be counted from date of agreement i.e. 06/10/2008 whereas the stand of the revenue is that the period of holding should be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement 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 Short Term Capital Gains as defined in Section 2(42A) in the Income-Tax Act, 1961 reads as under:- (42A) short-term capital asset means a capital asset held by an assessee for not more than thirty- six months immediately preceding the date of its transfer': We find that the expression used is 'held' as against 'acquired' or 'purchased' as used in other Sections like section 54 / 54F which shows that legislatures were conscious while making use of this expression. The expressions like 'owned' / acquired has not been used for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case under hand. Further, post Jaimal K.Shah, we find that various higher judicial authorities, in catena of judgment, taken a view favorable to the assessee. Few of which are listed below:- 1. Madhu Kaul Vs CIT (P H HC) 363 ITR 54 2. CIT Vs Ramakrishnan (Delhi HC) 363 ITR 59 3. CIT Vs S R Jeyashankar (Madras HC) 373 ITR 120 5.7 Viewed from any angle, we are unable to find ourselves in agreement with the conclusion of Ld. first appellate authority that the capital gains earned were Short Term in nature and therefore, we reverse the same. The resultantly gain as counted from date of agreement, in our opinion, was Long Term Capital gain eligible for indexation benefit. This ground stands allowed. 5.8 So far as the deduction u/s 54 is concerned, we find that the lower authorities have denied the same primarily by concluding that the same was not available since the nature of capital gains was Short Term Capital Gains. Therefore, on factual matrix, the matter stand remitted back to the file of Ld. AO for re-adjudication verification of deduction u/s 54 with a direction to the assessee to substantiate the same with documentary evidences / requisit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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