Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (4) TMI 455 - AT - Income TaxGain on Sale of house property - whether it resulted in long term capital gain or short term capital gain? - period of holding - A.O. was of the opinion that assessee acquired the said property w.e.f. 11.8.2006 and not from June, 1997 since the assessee has not got transferred, the property in favour of him in terms of section 2(47)(v) r.w.s. 53A of the T.P. Act - contention of the assessee is that for the purpose of computation of capital gain indexation cost of acquisition to be made from the date of making substantial payment and not from the actual date of sale deed - whether date of substantial payment towards acquisition of flat to be considered as a date of acquisition or the date of sale agreement to be considered as a date of acquisition of the said property? - HELD THAT - This controversy was settled in the case of A. Suresh Rao 2014 (1) TMI 1585 - KARNATAKA HIGH COURT in which Hon ble High Court analysed various provisions of the Act pertaining to computation of capital gain under various situations and also circulars issued by the CBDT on this issue. Being so, assessee paid a substantial amount of ₹ 16,75,900/- before the year 1996 and as such, the year of acquisition to be 1996. Accordingly, Idirect the A.O. to consider the year of acquisition of flat as 1996 and thereafter compute the cost of acquisition from this year 1996 as long term capital gain only. This ground of appeal is allowed. Payment of commission - 2% commission on sale consideration is very high - we are inclined to grant payment of commission of 1% and the same to be deducted from the sale consideration. The assessee would get a benefit partially as claimed by the assessee. Appeal filed by the assessee is partly allowed.
Issues Involved:
1. Classification of the asset as a short-term or long-term capital asset. 2. Determination of the cost of acquisition. 3. Consideration of additional expenses as part of the cost of acquisition. 4. Interest charges under sections 234B and 234C of the Income Tax Act. Issue-wise Detailed Analysis: 1. Classification of the Asset as Short-term or Long-term Capital Asset: The primary issue was whether the property sold by the appellant should be classified as a short-term or long-term capital asset. The appellant argued that the original asset sold should be considered a long-term capital asset, given that an oral contract and substantial payments were made in 1995-96, thereby creating substantial rights in the asset. The authorities below, however, considered the property as a short-term capital asset, based on the possession date of 14/08/2006. The Tribunal referred to the case of A. Suresh Rao, where it was held that for the purpose of holding an asset, it is not necessary to have a registered deed of conveyance. The Tribunal concluded that the date of substantial payment towards the acquisition of the flat should be considered as the date of acquisition. Accordingly, the property was classified as a long-term capital asset. 2. Determination of the Cost of Acquisition: The appellant contended that the total cost of acquisition should be ?22,53,255/-, which included various payments made over the years. The Assessing Officer (AO) had only considered ?17,57,500/- as the cost of acquisition. The Tribunal examined the detailed payment breakdown provided by the appellant and concluded that the total cost of acquisition should indeed be ?22,53,255/-. The Tribunal directed the AO to adopt this amount for the computation of capital gains. 3. Consideration of Additional Expenses as Part of the Cost of Acquisition: The appellant claimed additional expenses of ?4,95,755/- incurred for the purchase and protection of the property should be considered as part of the cost of acquisition. The Tribunal agreed that certain expenses, such as registration charges, administrative charges, and payments towards parking space and society dues, were allowable expenditures. However, the Tribunal found the claimed commission of 2% on the sale consideration to be excessive and allowed a commission of 1%, amounting to ?16,000/-, to be deducted from the sale consideration. 4. Interest Charges Under Sections 234B and 234C of the Income Tax Act: The appellant denied liability for interest charges under sections 234B and 234C. The Tribunal did not provide a specific ruling on this issue within the judgment text provided, focusing primarily on the classification of the asset and the determination of the cost of acquisition. Conclusion: The Tribunal concluded that the property should be classified as a long-term capital asset, and the total cost of acquisition should be ?22,53,255/-. The Tribunal allowed certain additional expenses as part of the cost of acquisition, including a reduced commission of 1%. The appeal was partly allowed, and the AO was directed to recompute the capital gains accordingly.
|