TMI Blog2020 (9) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax (Appeals)-58, Mumbai [in short CIT(A) ] and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the Act ). 2. The grounds of appeal filed by the assessee read as under: 1. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in confirming the denial of exemption u/s. 54 of the Act and consequently adding Long term capital gain of ₹ 22,75,000/-- treating the same as ''Income from Other Sources . 2. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in not accepting the letter of allotment, ignoring the fact that the appellant acquired the right of ownership in the flat, which came into existence by virtue of allotment letter dated 10.01.2005 and also by the receipts of payments of ₹ 10,00,000/- and ₹ 20,00,000/- both dated 10.01.2005, issued by the builder viz., Vardhaman Estate Corporation. 3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in confirming the Income from Other Sources at ₹ 22,75,000/-, instead of ₹ 18,75,000/- by adopting the compensation received against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the fact that he had invested ₹ 75,53,469/- (total consideration to be paid ₹ 1,01,95,357/- as per agreement for sale dated 23.12.2011) in purchase of new flat 2704 at Apollo Mill, Lodha Primerro, Mumbai, the appellant claimed exemption u/s 54 of the Act, after availing indexation benefit for cost of the flat paid in installments. During the course of assessment proceedings, the Assessing Officer (AO) asked the appellant to explain why the benefit received on cancellation of deal with the builder i.e. Vardhaman Estate Corporation with respect to property at Vardhaman Heights, Byculla, Mumbai should not be treated as income from other sources, instead of long term capital gains, as no purchase as well as sale agreement has been entered into by the assessee with the builder. In response to it, the appellant vide letter dated 20.03.2015 explained to the AO that a capital asset in the form of interest in the flat came into existence by virtue of allotment letter issued by the builders, M/s Vardhaman Estate Corporation, when payment was made of ₹ 10,00,000/- on 08.01.2005. However, the AO was not convinced with the above explanation of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter for deciding ownership of capital assets. Further, it is observed by him that the above documentary evidence does not establish ownership of capital assets and hence the question of assessment of capital gains does not arise. Further, the Ld. CIT(A) held that the AO has rightly brought to tax the incremental receipt as income from other sources. 5. Before us, the Ld. counsel for the appellant submits that the assessee had booked the residential flat during the FY 2004-05 from the builder for a consideration of ₹ 30,00,000/-. The allotment letter dated 10.01.2005 was issued by the builder. Full payment was made through cheques. It is further stated that during the year under consideration, the appellant cancelled the booking of the aforesaid flat vide cancellation letter dated 12.09.2011. Against the cancellation of booking of the flat, the appellant received consideration of ₹ 48.75 lakhs from the builder and since the period of holding of the appellant s rights in the said flat exceeded 36 months, the assessee treated the gain on surrender of the rights in the said flat as long term capital gains. Further, it is stated that the appellant purchased a resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lotment cannot be treated as an allotment letter for deciding ownership of capital asset. It is stated that the Ld. CIT(A) has rightly confirmed the order passed by the AO. 7. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decision are given below. We find no infirmity in the allotment letter once it is examined along with the bank statement, ledger account and letter of cancellation. Similar issue arose before the Tribunal in Ashwin S. Bhalekar (supra). In that case, the assessee was allotted a flat on the 7th floor of the proposed building known as Shubh Residency vide allotment letter dated 20.06.2008. The assessee had paid advance amounting to ₹ 50,00,000/- on the allotment of the said flat. By virtue of the said allotment, the assessee had acquired right to the proposed flat. The construction of the building was yet to commence on the date of allotment. Due to various delay in regulatory approvals, the builder could not obtain permission to construct the building upto 17th floor. Under such circumstances, the assessee surrendered the right to receive the flats and the builder cancelled the allotment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he has paid advance for the flats and acquired right to the proposed flats, this will come under the purview of acquiring right to the property. Appellant has relied on CBDT Circular No.471 dated 15.10.1986 where it is held that property acquired by allotment letter was considered as capital asset for the purpose of exemption from capital gains. Further appellant had relied on Delhi High Court decision in the case of CIT vs Ram Gopal [2015] 55 taxmann.com 536 (Delhi) in which it is held as under Section 2(14), read with sections 2(47) and 54, of the Income tax Act, 1961 Capital gains - Capital asset (Immovable property) - Assessment year 2009-10 - Whether even booking rights or rights to obtain title of property is also capital asset - Assessee sold capital assets - Assessee claimed that he acquired another property out of sale consideration and also claimed cost of improvement u/s 54 - Assessing Officer held that in absence of an agreement to sell, rights acquired by provisional booking of property was not acquisition of new capital asset and cost of improvement was not deductible - Whether since right of acquiring of property by assessee amounted to capital asset, improvemen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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