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2019 (4) TMI 288

lation of the allotted property, in any manner. Therefore, the assessee has acquired right in a specific property which is clearly earmarked in the layout plan. The full payment of the same has been made by the assessee by 24/07/2008 which is evident from assessee’s letter containing payment details as placed on page no. 4 of the paper-book. Subsequently, agreement of sale has been executed by the builder in assessee’s favor on 25/03/2010 which was nothing but mere improvement in assessee’s existing rights to acquire a specific property and part & parcel of the same transaction. - Respectfully, following the decision in PR. CIT Vs. VEMBU VAIDYANATHAN [2019 (1) TMI 1361 - BOMBAY HIGH COURT], we confirm the stand of Ld. first appellate authority to the extent that the resultant gains were Long-Term Capital Gains in nature. - Eligibility to claim deduction u/s 54F - nature of certain capital gains earned by the assessee - HELD THAT:- Assessee has made the payment within stipulated time as envisaged by Section 54F and the allotment in a specific property has been obtained by the assessee on 14/04/2012 which is evident from allotment letter. Therefore, since all the conditions o .....

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ment letter was only an offer and the right or interest in property was to accrue only on signing and stamping of the agreement. Only the agreement dated 25.03.2010 conveyed the right to acquire the property which was under construction on the date of agreement." 5. "On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering that the assessee had not purchased the new property claimed u/s. 54F, but just made an advance payment to the builder. The assessee had not entered into any agreement with the buyer." 6. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in not appreciating the decision of Hon'ble Delhi High Court in the case of Gulshan Malik Vs. CIT in ITA No.55/2014, CM Appl 2383/2014 & 2384/2014 (2014) 43 Taxmann. Com 200 (Delhi)' wherein it was held that a right or an interest in an immovable property can accrue to a buyer only by way of an agreement." 7. "The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored." 2.1 Facts in brief are that the assessee being resident individual was assessed .....

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on stage on the date of agreement. Therefore, the resultant gains, in the opinion of ld. AO, were short-term in nature. 2.5 Proceeding further, as a logical consequence to above conclusion, deduction u/s 54F as claimed by the assessee was also denied. Another fact noted by Ld. AO to deny the same was that the assessee merely advanced certain sum of money towards purchase of the new property and did not actually purchased the property. Finally, the gains were treated as STCG and the indexation benefit was denied to the assessee. Also, deduction u/s 54F was denied to the assessee. 3.1 Aggrieved, the assessee agitated the same with success before Ld. first appellate authority vide impugned order dated 17/09/2017 wherein it was, inter-alia, held that right in the property was created once the title was allotted to the purchaser and the payment of instalment as well as delivery of possession was mere formality. Reliance was placed on CBDT circular No. 471 & 672 to draw the said conclusion. The ratio of the following judicial pronouncement was also considered while forming such an opinion: - No. Case Law Judicial Authority Citation 1. Vinod Kumar Jain Vs. Ld. CIT Hon ble Punjab & .....

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ssions and perused relevant material on record. Upon perusal, the undisputed facts that emerges are that the assessee has acquired the rights in a duplex flat on 12th & 13th floor front facing the road admeasuring 1961.75 Square Feets & terrace measuring 881.5 Square Feets as per the attached layout plan along with 4 car parking in building known as Tapovan vide Allotment Letter dated 26/02/2008 issued by DSD Builders & Developers Pvt. Ltd. for total consideration of ₹ 371 Lacs. The said allotment is not a conditional allotment and do not envisages cancellation of the allotted property, in any manner. Therefore, the assessee has acquired right in a specific property which is clearly earmarked in the layout plan. The full payment of the same has been made by the assessee by 24/07/2008 which is evident from assessee s letter containing payment details as placed on page no. 4 of the paper-book. Subsequently, agreement of sale has been executed by the builder in assessee s favor on 25/03/2010 which was nothing but mere improvement in assessee s existing rights to acquire a specific property and part & parcel of the same transaction. This being the case, the case l .....

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ent letter and the payment of installments was only a follow-up action and taking the delivery of possession is only a formality. 5. This aspect was further clarified by the CBDT in its later circular No.672 dated 16th December, 1993. In such circular representations were made to the board that in cases of allotment of flats or houses by co-operative societies or other institutions whose schemes of allotment and consideration are similar to those of D.D.A., similar view should be taken as was done in the board circular dated 15th October, 1986. In the circular dated 16th December, 1993 the board clarified as under: "2. The Board has considered the matter and has decided that if the terms of the schemes of allotment and construction of flats/houses by the co-operative societies or other institutions are similar to those mentioned in para 2 of Board's Circular No.471, dated 15-10-1986, such cases may also be treated as cases of construction for the purposes of sections 54 and 54F of the Income-tax Act." It can thus be seen that the entire issue was clarified by the CBDT in its above mentioned two circulars dated 15th October, 1986 and 16th December, 1993. In terms of su .....

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