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TMI Blog2022 (7) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... y i.e. Flat No. A-Wing, 2nd Floor, Kaatyayai Enclave, Santacruze (East), Mumbai for a sale consideration of Rs.1,49,00,000/- on 24.02.2014 and claimed exemption u/s. 54 of the Act. The relevant chronological events date wise are given below: Sr.No. Date Events 1. 14.10.2006 Date of acquisition of a plot of land situated at village Kole-Kalyan, Andheri, Mumbai for Rs. 16,00,000/-. The assessee acquired part rights in the property. 2. 12.04.2007 Date of Tripartite Development agreement where assessee is a confirming party and transfer of above rights in favour of the developer/ builder M/s Dhawan Builders and Developers. The assessee sold his rights in the property. As per Para 6 of the agreement, in consideration of the assessee granting his undivided share in the property, the developer will allot ,a new flat having 1000 Sq.ft. area in the new building to be put up by the developer on the3 said property. 3. 23.05.2013 Date of Occupation Certificate issued by the local authority. - 4 10.07.2013 Acquition of the new property. Assessee has obtained the possession of the flat in lieu of development agreement entered earlier on 12.04.2007 being Flat No. 201- A, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Rs. 1,49,00,000/-. The deed of transfer cum allotment dated 10.07.2013 is only the agreement made in confirmation of the free of cost flat and our client has correctly taken the dates for long term capital gains i.e. 2006-07 and 2013-14. Therefore, the capital gains is long term and not short term thereby we request your honour to allow the exemption claimed u/ s. 54/54F on the ground that asset sold is land/flat and being long term capital gains. The right of the flat is therefore already created when our client has entered into the development agreement on 12.4.2007. The same is later transferred/ allotment by the Deed of Transfer cum allotment on 10.07.2013." The assessee has also relied on many case laws, few of them are enumerated as under: 1) VasaviPratap Chand vs DCIT (2004) 89 ITD 73 (Delhi Trib) 2) D.L. Nandagopal Reddy Vs ITO ward 7(2) 3) 34 JCIT(Asst) (spl. Range 6) vs. Dr. T.K. Dayaklu (ITA 610)/Bang/2001 dated 23.06.2005 4) Dnyaneshwar N. Mulikvs.ACIT (ITAT Pune_ (2005) 98 TTJ (Pune) 179 5) (2012) 6 Taxcorp(A.T) 28907 (Hydrabad) URO 6) ITA No.448/Ind/2013 A.Y. 2009-10, ACIT 2(1), Indore vs. Shri Sanjay Kamath, Indore 7) ITA No.6120/Mum/2010 A.Y.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction involved in both the cases are same, i.e. a transaction involving development agreement wherein rights in land is given up to get certain built up area of the constructed building on such land. In the present case also, the appellant entered into a development agreement in 2007, gave up its development rights in land in lieu of its right to get a flat and got the constructed flat of .1033.88 sq.ft. in FY 2013-14. The appellant has subsequently sold the flat and had not transferred the right to acquire the flat which had got extinguished on getting the possession of flat in FY2013-14. Thus, capital gain on the transfer of development rights along with the land would be taxable in AY2014-15 as long term capital gain, since the appellant acquired the land on 14.10.2006 and held it for more than 3 years. The long term capital gain would be the difference of the indexed cost of purchase of land and the cost of construction of the flat having built up area of 1033.88 sq.ft. Further, the capital gain on the sale of said flat i.e. right, title and interest in the said flat on 24.02.2014 would result in short term capital gain in AY 2014-15, as the period of holding is only about 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered opinion that the short term capital gain is to be estimated @ 25% of the sale consideration of Rs. 1,49,00,000/- at Rs.37,25,000/-, being the profit component of the cost of construction of the said fiat and the long term capital gain is to be computed on the balance sale consideration of Rs.1,11,75,000/-, by reducing the same with the indexed cost of acquisition of the land. The AO is directed to recompute the total income of the appellant accordingly, and allow benefit of deduction u/s 54 of the Act, in respect of the long term capital gain, in accordance with law. The ground no. 1 is partly allowed." 8. Aggrieved assessee is in appeal before us raising following grounds in its appeal: - "1) The "Learned CIT(A) has erred in treating short term capital gain of Rs.37,25,000/-, being 25% of the sale consideration of flat sold at Rs.1,49,00,000/-. 2) The "Learned CIT(A)" has erred in law and on the facts and in the circumstances of the case in subjecting to tax "A Long Term Capital Gain" allegedly treating as "Short Term Capital Gain" thereby also denying/rejecting claim of Exemption u/s.54/54F of the Income Tax Act 1961 in respect of "Sale of Rights to/in Flat received p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntered with the developer dated 12.04.2007. The fact remains that assessee has promised and allotted the flat in the new proposed building in lieu of the right on the land which was subject matter of the development. Assessee surrendered the right on the land based on the allotment of the flat, may not be a specific flat but having a legal promise that assessee will get a flat of 3BHK measuring 1000 Sq.ft. and accordingly, builder has allotted Flat No. 201. Therefore, as held in the case of Pr.CIT v. Vembu Vaidyanathan (supra) it was held that for computing capital gain tax the date of allotment would be the date on which purchase of residential unit can be stated to have acquired property. The relevant ratio is reproduced below: - "4. Having heard learned counsel for the parties, we notice that the CBDT in its circular No.471 dated 15th October, 1986 had clarified this position by holding that when an assessee purchases a flat to be constructed by Delhi Development Authority ("D.D.A." for short) for which allotment letter is issued, the date of such allotment would be relevant date for the purpose of capital gain tax as a date of acquisition. It was noted that such allotment is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence to suggest that the other units previously held by the assessee were discarded earlier and that at the relevant time the assessee did not hold any other residential unit. Quite apart from it being a pure question of fact, we do not find any indication in the impugned judgment of the Tribunal though the revenue had argued such a contention in its appeal before the Tribunal." 12. Similar view was expressed by Hon'ble High Court of Punjab and Haryana in the case of Ms. Madhu kaul v. CIT (supra) observing as under:- "We find no distinction between the opinion recorded in the aforesaid judgment and the controversy in the present case. Admittedly, the flat was allotted to the appellant on 07.06.1986, vide letter conveyed to the assessee on 30.06.1986. The assessee paid the first installment on 04.07.1986, thereby conferring a right upon the appellant to hold a flat, which was later identified and possession delivered on a later date. The mere fact that possession 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. The payment of balance installments, identification of a particula ..... X X X X Extracts X X X X X X X X Extracts X X X X
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