TMI Blog2020 (2) TMI 1626X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O y viz. (i). copies of the allotment letters; (ii). copies of the receipts issued by the builder i.e M/s Oberoi Realty Limited for the payments which were made by the assessee towards purchase consideration (in instalments) of the aforesaid property; and (iii). copy of the bank account of the assessee evidencing the making of the aforesaid payments by the assessee to the builder over the years. We find that the A.O after raising specific queries as regards the basis for treating the aforesaid property as a long term capital asset, and claiming of deduction under Sec. 54 of the Act by the assessee, had only after necessary deliberations accepted the claim of the assessee. Accordingly, we are of a strong conviction that the A.O only after making necessary verifications as regards the entitlement of the assessee towards claim of deduction under Sec. 54 of the Act, had accepted the same. As such, the observation of the Pr. CIT in the SCN‟, dated 23/03/2018 that the A.O had failed to make enquiries regarding the purchase and sale of the properties is misconceived, and is liable to be rejected. The view taken by the A.O that the period of holding of the aforesaid propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3;), dated 21.12.2016. Subsequently, the Pr. CIT issued a Show cause‟ notice (SCN) to the assessee therein calling upon him to explain as to why the assessment order passed by the A.O under Sec. 143(3), dated 21.12.2016 may not be revised under Sec. 263 of the Act. 3. As per the SCN, it was observed by the Pr. CIT that the assessee had during the year under consideration sold two flats i.e Flat Nos. 705 706, 7th Floor, Tower-B, Building No. 1, Oberoi Exquisite, Goregaon (East), Mumbai, vide two separate agreements dated 17/07/2013 (registered on 19/07/2013) and 21/05/2013 (registered on 24/05/2013), for a consideration of ₹ 3,50,00,000/- and ₹ 3,20,16,626/- for each flat, respectively. On a perusal of the records, it was observed by the Pr. CIT that a letter of allotment in respect of the aforesaid property was issued to the assessee on 20/02/2010 by the builder i.e M/s Oberoi Realty Limited. However, the assessee had executed the agreements‟ for purchase of the aforesaid flats i.e Flat Nos. 705 706, 7th Floor, Tower- B, Building No.1, Oberoi Exquisite, Goregaon (East), Mumbai, vide two separate agreements dated 05/07/2003 (registered on 08/07/2013) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll under construction and possession of the same was yet not handed over to him till the date of their sale, the Pr. CIT held a conviction that the same could not be treated as a long term capital asset under Sec.54/54F of the Act. It was further observed by the Pr. CIT, that as the assessee had neither received the possession of the aforesaid flats i.e Flat Nos. 705 706, 7th Floor, Tower-B, Building No. 1, Oberoi Exquisite, Goregaon (East), Mumbai, which were under construction, nor used the same for his residence for a period of 3 years, therefore, on the said count also he was not eligible for claim of deduction under Sec. 54 of the Act. Lastly, it was observed by the Pr. CIT that the claim of deduction under Sec. 54 for two residential properties that was raised by the assessee was contrary to the provisions of the aforesaid statutory provision. On the basis of the aforesaid facts, the Pr. CIT being of the view that the A.O had failed to make necessary verifications as regards the entitlement of the assessee for claim of deduction under Sec. 54 of the Act, therein called upon the assessee to explain as to why the assessment order passed under Sec. 143(3), dated 21.12.2016 may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee along with his return of income. The ld. A.R also drew our attention to the reply dated 28.06.2016 [Page 5 of the assesse‟s Paper book‟ (APB)] that was filed with the A.O. It was submitted by the ld. A.R that the assessee vide his said reply had filed with the A.O a copies of the allotment letters‟ for the Flat Nos.705 706, 7th Floor, Tower-B, Building No. 1, Oberoi Exquisite, Goregaon (East), Mumbai, both dated 20.02.2010. Also, the copies of the agreements for purchase‟ of the aforesaid flats dated 05.07.2013 (registered on 08.07.2013) and 04.05.2013 (registered on 08.05.2013) were furnished in the course of the assessment proceedings with the AO. On the basis of the aforesaid facts, it was submitted by the ld. A.R that the A.O while framing the assessment had raised specific queries and deliberated at length as regards the entitlement of the assessee towards claim of deduction under Sec. 54 of the Act. As such, it was submitted by the ld. A.R that now when the claim of the assessee for deduction under Sec. 54 of the Act had been vetted by the A.O, and only pursuant thereto accepted, therefore, the Pr. CIT was divested of his jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC). Also, in order to support his claim that no infirmity did arise from the allowing of the assesse‟s claim for deduction under Sec. 54 of the Act, the ld. A.R relied on the order of the ITAT, Mumbai D‟ bench in the case of Richa Bagrodia Vs. DCIT-12(3), Mumbai (2019) 175 ITD 552 (Mum) and ITAT, Mumbai F‟ Bench, Mumbai in the case of ACIT vs. Smt. Vandanarama Roi (ITA No. 6173/Mum/2011), dated 07.11.2012. It was submitted by the ld. A.R, that in the aforesaid orders the Tribunal had concluded that in case of sale of flat it is the date of allotment of flat and not the date of handing over of possession of the flat which has to be considered for computing the holding period of 36 months. Accordingly, it was the claim of the ld. A.R that not only the Pr. CIT had exceeded his jurisdiction and revised the order under Sec. 263 of the Act, but also, the aforesaid claim of deduction raised by the assessee under Sec. 54 was duly supported by the orders of the jurisdictional Tribunal in the aforesaid cases. It was submitted by the ld. A.R that the order passed by the Pr. CIT under Sec. 263 for the aforesaid reasons could not be sustained and was liable to be vacated. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23; of the aforesaid property, had therein referred to certain facts as were discernible from the letter of allotment viz. (i) that, the builder had the right to terminate the allotment at its sole discretion; (ii) that, neither the assessee was entitled to occupy nor the builder was liable to hand over the occupation of the property unless and until the assessee had made all the payments in accordance with the allotment letter; (iii) that, the assessee had agreed with the builder that he would not sell, transfer, deal with or otherwise dispose off in any manner whatsoever, the aforesaid property until 04.11.2011; (iv) that, in the event of any sale/transfer of the aforesaid premises after the scheduled date, the assessee shall register the agreement to be executed with the builder under the provisions of the Maharashtra Ownership Flats (Regulation of the promotion of Construction, Sale, Management and Transfer Act, 1963) prior to the sale/transfer of the said property; and (v) that, in the event of any sale/transfer of the aforesaid property after 04.11.2011 by the assessee, the builder would be entitled to the right of first refusal in respect of the same. Accordingly, the Pr. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be in agreement with the same. Insofar the observation of the Pr. CIT that the aforesaid property viz. Flat Nos. 705 706, 7th Floor, at Oberoi Exquisite, Goregaon (E), Mumbai, were yet not complete at the time of their sale is concerned, the same does not find favour with us. On a perusal of the records, we find that the assessee had filed a Completion certificate‟, dated 12/01/2011 issued by the Architects, wherein they had stated that the 7th Floor Slab had been completed. Apart from that, the assessee had filed with the A.O the copies of the agreements to purchase‟ i.e dated 05.07.2013 (registered on 08.07.2013) and dated 04.05.2013 (registered on 08.05.2013), AND agreements to sell‟ i.e dated 17/07/2013 (registered on 19/07/2013) and 21/05/2013 (registered on 24/05/2013) of the aforesaid property viz. Flat Nos. 705 706, 7th Floor, at Oberoi Exquisite, Goregaon (E), Mumbai, which clearly referred to purchase and sale of the residential flats. Accordingly, finding no basis to agree with the view taken by the Pr.CIT that the residential flats sold by the assessee were not in a habitable condition, therefore, the assessee was disentitled for claim of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ec. 54 of the Act. For instance, the A.O vide his letter dated 28.10.2016 [Page 17 of APB‟] had called upon the assessee to substantiate his claim for deduction under Sec. 54 of the Act, in the backdrop of the fact that both the purchase and sale of the property had taken place during the year under consideration itself i.e A.Y 2014-15. It was queried by the A.O, as under (relevant extract of the query letter) : During the year under consideration you have sold two residential flats i.e flat No. 705 and 706 in Oberoi Exquisite. You have also worked out Long term capital gain (LTCG) and claimed exemption under section 54 of the I.T Act. In this respect you are requested to please explain/file details : (i). Gain arisen is LTCG especially with reference to the fact that the purchase is 8.7.2013 for flat No. 705 and 08.05.2013 for flat No. 706 and sale date is 19.7.2013 for flat No. 705 and 8.07.2013 for flat No. 706 both falling in the previous year relevant to this assessment year. (ii). Substantiate our claim for exemption under section 54 of the I.T Act with relevant supporting fulfilling the conditions for claim of exemption. In compliance to the aforesaid qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vandana Rana Roy [ITA No. 6173/Mum/2011, dated 07/11/2012]. In the said case, the Tribunal had observed that the date of allotment was to be reckoned as the date for computing the holding period for the purpose of capital gains. Also, in the case of Richa Bagrodia Vs. Dy. CIT [2019] 175 ITD 552 (Mum), the jurisdictional Tribunal has held that in case of sale of flat it is the date of allotment of the flat and not the date of giving of possession of flat which has to be considered for computing the holding period of 36 months. We further find that the Hon‟ble High Court of Punjab Haryana in the case of Madhu Kaul Vs. CIT Anr. [2014] 363 ITR 54 (P H), has also held that the mere fact that possession of the flat was delivered later, does not detract from the fact that the allottee was conferred a right to hold property on issuance of an allotment letter. It was further observed, that payment of balance instalments, identification of a particular flat and delivery of possession are consequential acts that relate back to and arise from rights conferred by allotment letter. On the basis of our aforesaid observations, we are of a strong conviction that the view taken by the A. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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