2012 (11) TMI 1101 - AT - Income Tax

Capital gains - Long Term or Short Term - Date of Acquisition to be computed from date of allotment or date of possession of flat - Held that - the date of allotment is reckoned as the date for computing the holding period for the purpose of capital gains despite of the fact that the physical possession of the flat was given to the assessee much later - Hon ble Gujarat High Court judgment in the case of CIT vs. Jindas Panchand Gandhi - Decided in the favor of assessee.

Summary

Issues:
Allowability of capital gain as Long Term Capital Gains vs. Short Term Capital Gains based on the date of acquisition.

Analysis:
The appeal centered around the allowability of capital gain as Long Term Capital Gains amounting to Rs. 44,98,847/-, claimed by the assessee, while the Revenue considered it as Short Term Capital Gains due to differing views on the date of acquisition. The assessee sold a flat on 23.8.2006, with possession taken on 14.8.2003, after allotment on 19.11.2001 and stamp duty payment on 11.8.2003. The Revenue deemed the registration date of 29.8.2003 as acquisition, resulting in a holding period of less than 36 months, classifying the gains as Short Term Capital Gains.

The CIT (A) ruled in favor of the assessee, considering the possession date as the relevant acquisition date, leading to a holding period exceeding 36 months and categorizing the gains as Long Term Capital Gains. The Revenue, aggrieved by this decision, appealed before the Tribunal.

During the proceedings, the assessee relied on judgments like CIT vs. Jindas Panchand Gandhi and CIT vs. Anilaben Upendra Shah, emphasizing the importance of the date of allotment in computing capital gains. The Tribunal noted that the cited decisions supported the assessee's position, stating that the date of allotment, 19.11.2001 in this case, should be considered for calculating the holding period, which exceeds 36 months, thereby qualifying the gains as Long Term Capital Gains.

The Tribunal referenced additional cases like Jitendra Mohan vs. ITO and Praveen Gupta vs. ACIT, reinforcing the significance of the date of allotment in determining the holding period for capital gains. The Tribunal concluded that the order of the CIT (A) was appropriate and dismissed the Revenue's appeal, affirming that the gains earned on the sale of the flat should be treated as Long Term Capital Gains, irrespective of considering the possession date. Consequently, the Revenue's appeal was dismissed, upholding the decision in favor of the assessee.