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2019 (4) TMI 358

to builder only 08.04.2009 and the purchase agreement was registered in December 2009 - part performance u/s 53A of the property Act - HELD THAT:- Whatever rights were obtained by the assessee vide reservation of allotment letter dated 16/03/2005, the same rights have been transferred during the impugned AY as against the argument of revenue that the rights first got converted into new asset upon execution of agreement between the assessee and the builder which has been sold subsequently. In our opinion, the execution of stated agreement in assessee’s favor was nothing but mere improvements in the assessee’s existing rights in the property. - Undisputedly, the right to own / obtain conveyance of immoveable property was a capital asset in terms of judgment of CIT Vs Tata Services Ltd. [1979 (1) TMI 26 - BOMBAY HIGH COURT] and CIT Vs Sterling Investment Corporation Ltd. [1979 (2) TMI 19 - BOMBAY HIGH COURT]. Therefore, the conclusion drawn by first appellate authority that the gains were Long-Term Capital Gains in nature as counted from 16/03/2005 would require no interference on our part. The appeal stands dismissed to that extent. - Manner of computation of the gains - inde .....

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taken on record as ground no.5. Finally, the grounds of appeal read as under: - 1. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A| erred in holding that capital gain earned by assessee on sale of flat in July, 2010 was a long term capital gain, when the commencement certificate itself for construction of flat sold was issued by MCGM to builder only 08.04.2009 and the purchase agreement was registered in December 2009? The CIT(A) failed to appreciate that in absence of CC and OC for the impugned flat, the same could not be said to be held or in possession of assessee and has thus erred in treating acquisition of property by assessee from 2005 i.e. the date of first advance made?. 2. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in not applying the ratio of the decision of the Hon'ble Bombay High court in case of Chaturbhuj Dwarkadas Kapadia 26O ITR 491(Bom) wherein the date of transfer is the date when part performance u/s 53A of the property Act is made and possession is given. 3. "Whether on the facts and circumstances of the case and in law, the Id. CIT(A) erred in holding the date of making .....

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0 Lacs which was payable during the year 2005 to 2010 based on construction schedule starting from 16/03/2005. It was also submitted that additional garage was purchased in November, 2009 for a sum of ₹ 8 Lacs. The purchase agreement for the stated property and garage was executed during December, 2009 upon payment of stamp duty / registration charges of ₹ 11.48 Lacs. After indexing the cost of acquisition and transfer charges, the resultant capital gains were worked out at ₹ 85.41 Lacs. The assessee pleaded that since the first installment of ₹ 3.94 Lacs towards acquisition of the property was paid on 16/03/2005 and the property was sold during July, 2010, the resultant gains were Long-Term Capital Gains [LTCG] in nature. However, Ld. AO opined that the period of holding was to be reckoned from December. 2009 i.e. when the purchase documents were registered in assessee s favor and therefore, the gains were to be treated as Short-Term Capital Gains [STCG] only. The perusal of quantum assessment order reveal that the Ld. AR is stated to have conceded to the opinion formed by Ld. AO. Accordingly, the gains were treated as STCG and the indexation benefit was de .....

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03.2005 as claimed by the appellant instead of Short Term Capital Gain. With this observation, the appellant s this ground of appeal is allowed subject to aforesaid action on the part of AO and the appellant is directed to provide all necessary documents as required by the AO. Aggrieved, the revenue is in further appeal before us. 4. The Ld. Departmental Representative [DR], drawing our attention to the factual matrix submitted that the assessee acquired the stated property only upon execution of purchase documents in its favor when the right to acquire the property was converted into a capital asset i.e. the property under question and said capital asset came into existence only upon execution of purchase documents in assessee s favor. Our attention is drawn to the fact that the assessee acquiesced to this fact even during assessment proceedings. In the alternative, it has been submitted that the benefit of indexation was to be granted when the payments were actually made by the assessee. Per Contra, Ld. Authorized Representative for Assessee [AR], Shri Sanjay Parikh, submitted that the possession was never given to the assessee and the assessee has only sold the right to acquire .....

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cution of agreement between the assessee and the builder which has been sold subsequently. In our opinion, the execution of stated agreement in assessee s favor was nothing but mere improvements in the assessee s existing rights in the property. Undisputedly, the right to own / obtain conveyance of immoveable property was a capital asset in terms of judgment of Hon ble Bombay High Court rendered in CIT Vs Tata Services Ltd. [122 ITR 594] an also in CIT Vs Sterling Investment Corporation Ltd. [123 ITR 441]. Therefore, the conclusion drawn by first appellate authority that the gains were Long-Term Capital Gains in nature as counted from 16/03/2005 would require no interference on our part. The appeal stands dismissed to that extent. 5.3 The revenue has relied upon the decision of this Tribunal rendered in S.Narendrakumar & Co. Vs DCIT [62 Taxman.com 184] which is factually distinguishable since in that case the nature of the transactions, itself was under doubt and surplus received by the assessee was held to be assessable under the head Income from other sources . Similarly, the decision of Hon ble Kerala High Court in Lachmandas & Sons Vs DCIT [49 Taxmann.com 387] deal the .....

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indexing the actual payments made in the respective AYs by applying the indexes for those years and therefore, is not directly on the issue under hand since the Tribunal, in both the case laws, has confirmed the workings / computations adopted by the assessee. 6. So far as the statutory provisions as contained in Section 48, Explanation (iii) as extracted in the impugned order is concerned, we find that indexed cost of acquisition has been defined to mean 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. 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 allowing the indexation benefit to the assessee. However, the important question that arises for consideration, at this juncture, is that whether the indexation benefit of even the future installmen .....

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blished legal position as well as the CBDT Circular, which have already been mentioned in the impugned order passed by the Tribunal. 11. During the course of argument, we were told that the long term capital gain has already been deposited as per the computation made by the A.O. in the manner claimed by the assessee. When it is so then nothing survives in the appeal. 12. Hence, we decline to interfere with the impugned order passed by the Tribunal, which is hereby sustained along with the reasons mentioned therein. 13. The answer to the substantial questions of law is in favour of the revenue and against the assessee. Respectfully following the wisdom of higher judicial forum, we hold that the indexation benefit against the cost of acquisition shall be available to the assessee on the basis of index of the year in which the payments were actually made by the assessee. The payment made up-to the date of agreement i.e. 18/10/2007 shall be indexed by applying the index for Financial Year 2007-08. Accordingly, subsequent payments made in different financial years shall be indexed by applying the respective indexes of those years. Ground Number-1 stand dismissed. Therefore, taking the s .....

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