TMI Blog2020 (3) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... e only in respect of residential house is purchased or constructed within the stipulated period. The assessee has shown agreement for purchase of land. And the assessee failed to show that there was transfer of property by execution of sale deed. The Tribunal recorded a clear finding that there was no sale of property in dispute for the reasons that no document of sale deed was placed before the revenue authority. Moreover, the assessee in the present case claimed right in the asset, which was remained in the ownership of assessee for more than 36 month when it was relinquished/ surrendered. In the result, ground no.1 of the appeal is allowed. - I.T.A. No. 6856/Mum/2018 - - - Dated:- 17-2-2020 - Shri Shamim Yahya (AM) For the Assessee : Ms. Lipsa A. Chanchlani For the Department : Shri R. Bhoopathi ORDER This appeal by the assessee is directed against the order of learned CIT(A) dated 24.9.2018 and pertains to A.Y. 2012-13. 2. Grounds of appeal read as under :- 1. The Ld CIT (Appeals) has erred in holding that the allotment letter issued by the builder for booking rights coupled with part payment made towards purchase consideration did not consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce upon catena of case laws that in these circumstances relinquishment/surrender of rights gives rise to capital gain. Learned counsel referred to several decisions including decision of another owner in the same building Shri Girish P. Rupani (ITA No. 1028/Mum/2018 for A.Y. 2012-13) decided by the ITAT on 10.4.2019. In identical circumstances referring to several case laws the ITAT had decided the identical issue in favour of the assessee. 6. Per contra, learned Departmental Representative relied upon the orders of the authorities below. 7. Upon careful consideration I note that identical issue in the case of another owner in the same building was decided by the ITAT in favour of the assessee by elaborate order as under :- 6. We have considered the rival submissions of the parties and have gone through the orders of authorities below. We have also deliberated on the case law relied by ld. AR for the assessee and the ld. DR for the revenue. We have noted that there is no dispute that the assessee booked one flat on 10.04.2007 at the total cost of ₹ 20,88,519/-. The assessee paid ₹ 2,51,000/- on 02.04.2007 and further ₹ 13,00,000/- on 05.05.2007. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing background. The respondentassessee is an individual. The assessee had filed the return of income for the assessment year 2009-10 and claimed long term capital gain arising out of capital asset in the nature of a residential unit. During the course of assessment the Assessing Officer examined this claim and came to the conclusion that the gain arising out of sale of capital asset was a short term capital gain. The controversy between the assessee and the revenue revolves around the question as to when the assessee can be stated to have acquired the capital asset. The assessee argued that the residential unit in question was acquired on the date on which the allotment letter was issued by the builder which was on 31st December, 2004. The Assessing Officer however contended that the transfer of the asset in favour of the assessee would be complete only on the date of agreement which was executed on 17th May, 2008. 3. CIT appeals and the Tribunal held the issue in favour of the assessee relying on various judgments of different High Courts including the judgment of this Court in case of Commissioner of Income-Tax, Bombay City I Vs. TATA Services Limited 1. Reliance was also pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, 2004 on which the allotment letter was issued. 9. Further, the Hon ble Bombay High Court in CIT vs. Vijay flexibl Container (186 ITR 693) while considering the question Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that the amount of ₹ 1 lakh, being the compensation received by the assessee from B.V. Dhuru, cannot be treated as 'capital gains' in the hands of the assessee passed the following order : 3. Section 45 of the Income-tax Act, 1961 ('the Act') makes any profits or gains arising from the transfer of a capital asset chargeable to income-tax under the head 'Capital gains'. A capital asset is defined by section 2(14) of the Act to mean 'property of any kind held by an assessee'. The word 'transfer' in relation to a capital asset is defined by section 2(47) to include' the sale, exchange or relinquishment of the asset or the extinguishment of any rights therein'. The Supreme Court held the word 'property', in Ahmed GM. Ariff v. CWT [1970] 76 ITR 471, to be 'a term of widest import and signifying every possible interest which a pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be obtained. The afore going discussion leads, we think, to the conclusion that the right to obtain a conveyance of immovable property falls within the expression 'property of any kind' used in section 2(14) and is, consequently, a capital asset. 6. The very issue arose before this Court in CIT v. Tata Services Ltd. [1980] 122 ITR 594. The assessee there had entered into an agreement with A to purchase land and had paid earnest money. A was reluctant to complete the conveyance. Ultimately, a tripartite agreement was entered into between the assessee, A and X where under the assessee transferred and assigned in favour of X its right, title and interest under the agreement and received the sum of ₹ 5 lakhs as consideration and a further sum of ₹ 90,000 being the refund of earnest money. The question before the Court in reference was whether the transaction which brought the assessee the sum of ₹ 5 lakhs involved the transfer of a capital asset and gave rise to a capital gain. The Court noted the definitions of 'capital asset' and 'transfer' under the Act. It noted that a contract for the sale of land was capable of specific per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss. 8. The decisions in the cases of Tata Services Ltd. (supra) and Sterling Investment Corpn. Ltd. (supra) negative all the three submissions that have been made before us by Mr. Zaveri, the learned counsel for the assessee, namely, that no capital asset was acquired by the assessee as a result of the said agreement for sale; that, in the alternative, there was no transfer of a capital asset; and that, in the further alternative there had been no capital gain because there had been no cost of acquisition of the capital asset. Mr. Zaveri, therefore, attempted to persuade us to take a view different from that taken by this Court in the afore mentioned cases. While we are not persuaded to do so, we must record that it is his industry which has brought to our attention the decisions that we refer to in this judgment. 9. The Delhi High Court in the case of CIT v. R. Dalmia [1987] 163 ITR 517, considered the question as to whether the right acquired by the assessee under agreements to sell immovable property was not a proprietary right. Following the earlier judgment of the Delhi High Court in CIT v. J. Dalmia [1984] 149 ITR 215, it was held that the right acquired by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement. A settlement was arrived at when the suit reached hearing, at which point of time the assessee gave up his right to claim specific performance and took only damages. His giving up of the right to claim specific performance by conveyance to him of the immovable property was relinquishment of the capital asset. There was, therefore, a transfer of a capital asset within the meaning of the Act. We may at this stage also deal with the further argument that there was no consideration for the acquisition of the capital asset. In our view, this Court was right in the view that it took that the payment of earnest money under the agreement for sale was the cost of the acquisition of the capital asset. 11. Our attention was invited by Mr. Zaveri to the judgment of the Andhra Pradesh High Court in CIT v . Barium Chemicals Ltd. [1987] 168 ITR 164/31 Taxman 471. The facts there were that the assessee had entered into an agreement with an English company for the erection of a plant. Trial runs of the plant showed that the plant was defective. In the meanwhile the English company had left the erection site. Negotiations resulted in a settlement whereby the English company paid to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct legal tests in arriving at its conclusion that the assessee had not been proved to be a dealer in immovable property and, accordingly, it held that the amount which he had received by way of damages was not a revenue receipt. Having regard to the nature of the controversy before the Court, this case does not render us any assistance. 14. We see, with respect, no convincing reason to take a view other than that which has been taken by this Court in the cases of Tata Services Ltd. (supra) and Sterling Investment Corpn. Ltd. (supra) . We must, hold, therefore, that the assessee acquired a capital asset by reason of the said agreement for sale, that there was a transfer of that capital asset when the assessee entered into consent terms and relinquished it, and that the capital asset had been acquired for the cost of ₹ 17,500 paid as and by way of earnest money under the said agreement for sale. 15. The question that is posed asks whether the amount of ₹ 1 lakh can be treated as a capital gain in the hands of the assessee. We find that the ITO had deducted from out of the total sum of ₹ 1,17,500 received by the assessee under the consent terms the amount of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X
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