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TMI Blog2019 (7) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... cuted in favour of the Appellant as on 11.1.1996 by the SIDCO while ignoring totally the allotment of the said sheds on 11.8.1988 and further while wrongly interpreting the lease-cum-sale deed dated 6.2.1989, which were the basis for the claim of assessment as Long Term Capital Gains? (ii) Whether the Appellate Tribunal is correct in law in sustaining the action of the Lower Authorities in taxing the capital gains arising or accruing as a result of transfer of two industrial sheds as Short Term Capital Gains brushing aside the definition of Short Term Capital Assets in Section 2 (42A) of the Act as the definition of transfer in Section 2 (47) of the Act, which definitions justify the return of capital gains as Long Term Capital Gains by the Appellant? (iii) Whether the Tribunal is correct in law in sustaining the taxation of Short Term Capital Gains from the transfer of two industrial sheds even though the effect of the sale deed executed by SIDCO on 11.1.1996 in favour of the Appellant relates back to the date of allotment of the said sheds namely, 11.8.1988, justifying the return of income filed for the above Assessment Year?" 3.The assessee was allotted two industrial sheds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is before us by way of this appeal. 5.We have heard Mr.A.S.Sriraman, learned counsel for Mr.S.Sridhar, learned counsel for the appellant/assessee; and M/s.S.Premalatha, learned Junior Standing Counsel for Mr.M.Swaminathan, learned Senior Standing Counsel for the respondent/Revenue. 6.The short issue which falls for consideration is the date to be reckoned for the purposes of computing the capital gains, in other words, it has to be seen as to whether the capital gains arising on the transfer has to be treated as the short-term capital gains or a long term capital gain as claimed by the assessee. To arrive at a decision to this question, we need to necessarily look into the factual position, more particularly, the terms and conditions of allotment. The promoter of the industrial establishment is a wholly owned Government of Tamil Nadu Undertaking. The allotment is made to the successful applicants and an order of allotment is issued which, in fact, is the vital document, by which, the assessee acquired right to enter upon the property. 7.The order of allotment states that the assessee has executed the sale deed before taking over possession of the property. It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich has been defined under Section 2(47) of the Act. The definition stood amended and sub-Clause (v) was inserted by Finance Act, 1987 with effect from 01.04.1998. The said provision reads as follows:- "Section 2(47)(v):- any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882." 10.In terms of sub-Clause (v) of Section 2(47) of the Act, any transaction involving allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882 (hereinafter referred to as "the TP Act") will also fall within the ambit of transfer. Thus, in our considered view, on a conjoint reading of Section 2(42A) and Section 2(47)(v) of the Act, makes it evidently clear that holding of property does not essentially mean holding of a property pursuant to an absolute deed. 11.We would refer to some of the conditions in the agreement, which are relevant for the purposes of this case. The agreement between SIDCO and the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 wherein, the Court took note of the fact that the assessee was put in possession of the property in 1992 and was enjoying the property as that of an absolute owner except to fulfil the terms and conditions of the lease-cum-sale deed. In other words, the assessee was enjoying the property as an owner and that he was put in possession of the property in terms of the agreement and such possession has to be treated as if he was enjoying the property under the part performance of the contract as defined under Section 53A of the TP Act. Thus, the Court held that if the assessee was enjoying the property under the provisions of the TP Act, it has to be considered the date of ownership from the date on which he was put in possession of the property. Accordingly, the Court held that the transaction has to be treated as a long term capital gains, as the assessee was enjoying the property for more than 36 months. 15.In the case of Commissioner of Income-tax, Central Circle vs. Ved Prakash Rakhra, [2012] 26 taxmann.com 166 (Karnataka), the Court took note of the decision in the case of V.V.Mody (supra) and after noting that the said decision refers to the insertion of sub-Clause (v) to Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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