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TMI Blog2020 (4) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... . Y. 2013 - 14 and sold the same in F. Y. 2014 - 15 and hence, as per the provisions of section 2 (42A) of I. T. Act, the asset in question i.e. 23 flats is short term capital asset and income on its sale is assessable as STCG. As against this, learned AR of the assessee supported the order of CIT (A). He also submitted that the JDA is dated 16.12.2010 and its copy is available on pages 17 to 42 of the paper book. He also submitted that occupancy certificate issued by BBMP is dated 30.03.2016 and it is available on pages 43 & 44 of the paper Book. Thereafter, he submitted that the copy of the Assessment Order for A. Y. 2011 - 12 passed u/s 143 (3) r.w.s. 147 of I. T. Act is dated 28.03.2016 and its copy is available on pages 13 to 16 of the paper Book. Reliance was placed on a judgment of Hon'ble Karnataka High Court rendered in the case of CIT vs. A. Suresh Rao, 223 taxman 228. He also placed reliance on a judgment of Hon'ble Karnataka High Court rendered in the case of CIT vs. H. Anil Kumar, 242 CTR 537. 4. We have considered rival submissions. We find that it is noted by the AO on page 2 of the assessment order that the JDA was entered on 16.12.2010 and in consideration of tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t complete and therefore, what is sold cannot be flat but only right in the flat. Hence, it is seen that in the facts of the present case, capital Asset in question is not the flats but right to obtain flats from the builder. This right has accrued to the assessee on 16.12.2010 itself on signing of JDA itself and the assessee is holding it since then because nothing more was required to be done in this regard. In our considered opinion, this right was held by the assessee for more than 36 months because it was acquired on 16.12.2010 and sold in F. Y. 2014 - 15. Hence, the capital gain in question is LTCG and not STCG. On this issue, we find no infirmity in the order of CIT (A). 5. Now we discuss and decide the second issue i.e. about allowability of deduction u/s 54. On this issue, the objections of the AO are summarized by learned CIT (A) in Para 5.0 of his order and it is stated that the new asset was acquired by the assessee on 10.01.2014 but the assets were transferred by way of sale deed executed on or after 16.01.2015 and therefore, as per the AO, the new asset was acquired prior to one year before the date of sale of flats. In Para 5.5 of his order, it is noted by the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on 27th December, 2002 and out of the total consideration of Rs. 1.32 crores, Rs. 15 lakhs had been received by the appellants by way of earnest money when the agreement to sell had been executed and a new residential house/new asset had been purchased by the appellants on 30th April, 2003. It is also not in dispute that there was a litigation wherein the Will of late Shri Amrit Lal had been challenged by his son and the appellants had been restrained from dealing with the house in question by a judicial order and the said judicial order had been vacated only in the month of May, 2004 and therefore, the sale deed could not be executed before the said order was vacated though the agreement to sell had been executed on 27th September, 2002. 19. If one considers the date on which it was decided to sell the property, i.e. 27th December, 2002 as the date of transfer or sale, it cannot be disputed that the appellants would be entitled to the benefit under the provisions of Section 54 of the Act because long term capital gain earned by the appellants had been used for purchase of a new asset/residential house on 30th April, 2003 i.e. well within one year from the date of transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et Lal had challenged the validity of the Will under which the property had devolved upon the appellants. By virtue of an order passed in the suit filed by Shri Ranjeet Lal, the appellants were restrained from dealing with the said residential house and a law-abiding citizen cannot be expected to violate the direction of a court by executing a sale deed in favour of a third party while being restrained from doing so. In the circumstances, for a justifiable reason, which was not within the control of the appellants, they could not execute the sale deed and the sale deed had been registered only on 24th September, 2004, after the suit filed by Shri Ranjeet Lal, challenging the validity of the Will, had been dismissed. In the light of the aforestated facts and in view of the definition of the term "transfer", one can come to a conclusion that some right in respect of the capital asset in question had been transferred in favour of the vendee and therefore, some right which the appellants had, in respect of the capital asset in question, had been extinguished because after execution of the agreement to sell it was not open to the appellants to sell the property to someone else in accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll interpret the provisions of Section 54 read with Section 2(47) of the Act, i.e. definition of "transfer", which would enable the appellants to get the benefit under Section 54 of the Act. 23. Consequences of execution of the agreement to sell are also very clear and they are to the effect that the appellants could not have sold the property to someone else. In practical life, there are events when a person, even after executing an agreement to sell an immoveable property in favour of one person, tries to sell the property to another. In our opinion, such an act would not be in accordance with law because once an agreement to sell is executed in favour of one person, the said person gets a right to get the property transferred in his favour by filing a suit for specific performance and therefore, without hesitation we can say that some right, in respect of the said property, belonging to the appellants had been extinguished and some right had been created in favour of the vendee/transferee, when the agreement to sell had been executed. 24. Thus, a right in respect of the capital asset, viz. the property in question had been transferred by the appellants in favour of the vende ..... X X X X Extracts X X X X X X X X Extracts X X X X
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