2001 (10) TMI 13 - HC - Income Tax

Whether in law and on facts when the assessee received possession of the flat in October 1981 and sold the same on December 4 1982 the assessee is entitled to benefit of section 80T of the Income-tax Act 1961? - In the facts of the instance case it is clear that the assessee acquired shares in the co-operative housing society and was allotted the flat on November 15 1979 and she transferred those shares on December 4 1982. Thus the assessee had held the shares and allotment of the flat in the said co-operative housing society for a period of more than 36 months. Accordingly the capital gain in question was rightly held by the Tribunal to be a long-term capital gain. Therefore the assessee was rightly entitled to the benefit of section 80T of the Income-tax Act 1961.

Summary

Issues:
1. Interpretation of section 80T of the Income-tax Act, 1961 for assessing capital gain.
2. Determination of whether possession of a flat is essential for effective ownership.
3. Examination of the relevance of the date of acquisition of shares in a co-operative housing society for computing capital gain as long-term or short-term.

Analysis:
1. The primary issue in this case revolves around the interpretation of section 80T of the Income-tax Act, 1961 concerning the assessment of capital gain. The court was tasked with determining whether the assessee, who received possession of a flat in October 1981 and sold it in December 1982, was entitled to the benefit of section 80T. The Income-tax Officer initially treated the capital gain as short term, leading to a dispute that required judicial intervention.

2. The second issue involved the significance of possession of a flat in establishing effective ownership. The Income-tax Officer argued that possession in October 1981 indicated short-term ownership, contrary to the assessee's claim of long-term ownership based on the date of acquisition of shares in the co-operative housing society. The Appellate Assistant Commissioner and the Tribunal disagreed with the Income-tax Officer's stance, emphasizing the difference between possession and effective ownership in determining capital gain.

3. Lastly, the court examined the relevance of the date of acquisition of shares in a co-operative housing society for computing capital gain as long-term or short-term. The Revenue contended that possession of the flat was crucial for ownership, asserting that the flat was not acquired until October 1981. However, the court highlighted that ownership rights stem from holding shares in the society, not possession of the property itself. The court's analysis focused on the legislative intent behind the exemption of shares in co-operative housing societies and the incidental rights related to property ownership.

In conclusion, the court ruled in favor of the assessee, affirming that the capital gain in question qualified as long-term capital gain. The judgment emphasized that the relevant date for computing capital gain in such cases is the date of acquiring shares in the co-operative housing society, not the date of possession of the property. The decision provided clarity on the interpretation of relevant provisions of the Income-tax Act, 1961 and upheld the assessee's entitlement to the benefit of section 80T.