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2014 (6) TMI 933 - AT - Income TaxSale of flat - short-term capital gains or long- term capital loss - Held that - In order the calculate three years for the purpose of computing the capital gain one has to take into account the date of allotment of the flat from the builder to the assessee and it is pertinent to take note that from that date onwards the right to the said property is acquired by the assessee. In this case we find that the assessee had made the 1st payment for the flats (702 and 703) on 15.04.2006 and the said fact is corroborated by the letter written by the builder to the assessee dated 21.05.2006 which clearly refers to the progress in the construction of flat No. 702; and it is also reminder to the assessee to remit the rest of the part payment which clearly goes on to substantiate the contention of the assessee that Flat No. 702 was in fact allotted to it and also to the fact that the construction of the said flat began soon after the first installment was paid by the assessee on 15.04.2006. Thus we find that the appellant had acquired the valuable right title and interest in property on 15.04.2006 for flat No. 702. Therefore we direct the AO to allow the claim of long term capital loss on sale of right in Flat No. 702. However in respect to Flat No. 703 the same may be verified by the AO. Having said so we set aside the order impugned and direct the AO to decide the date of allotment of flat No. 703 in the light of evidence placed on record and any other enquiries deemed fit by the AO in this matter. Needless to say that adequate opportunity be granted to the assessee before passing any order in this aspect.
Issues Involved:
1. Validity of the assessment order under sections 153A/143(3) of the Income Tax Act, 1961. 2. Alleged violation of the principles of natural justice. 3. Treatment of capital gains on the sale of flats as short-term versus long-term. 4. Charging of interest under sections 234A and 234B of the Income Tax Act, 1961. Detailed Analysis: 1. Validity of the Assessment Order: The appellant challenged the validity of the assessment order passed under sections 153A/143(3) of the Income Tax Act, 1961, arguing that it was bad both on facts and in law. However, this ground was not pressed by the appellant's representative during the hearing. Consequently, this issue was dismissed by the Tribunal. 2. Alleged Violation of the Principles of Natural Justice: The appellant contended that the assessment order was passed in violation of the principles of natural justice, without giving adequate time and opportunity to represent its case and file replies and clarifications. This ground was also not pressed by the appellant's representative during the hearing and was therefore dismissed by the Tribunal. 3. Treatment of Capital Gains: The primary issue revolved around the addition of Rs. 16,78,276/- as short-term capital gains against the long-term capital loss of Rs. 8,06,488/- claimed by the appellant on the sale of Flat No. 702 and 703 at Kandivali (East), Mumbai. - Facts and Arguments: - The appellant purchased the flats on 05.06.2007, and possession was given after 27.06.2008. The flats were sold on 16.07.2009. - The Assessing Officer (AO) treated the gain as short-term capital gains since the flats were held for less than 36 months before the sale. - The appellant argued that the date of purchase should be considered as 15.04.2006, the date of allotment and first payment, thereby qualifying the asset as a long-term capital asset. - The appellant relied on various judicial precedents and a letter from the builder dated 21.05.2006 to substantiate the claim that the flats were allotted on 15.04.2006. - Tribunal's Findings: - The Tribunal examined the case laws and concluded that the date of allotment should be considered for computing the holding period. - For Flat No. 702, the Tribunal accepted the appellant's contention that the flat was allotted on 15.04.2006 and directed the AO to allow the claim of long-term capital loss. - For Flat No. 703, the Tribunal directed the AO to verify the date of allotment based on the evidence provided and any further inquiries deemed necessary. 4. Charging of Interest: The appellant challenged the charging of interest under sections 234A and 234B of the Income Tax Act, 1961. However, this ground was not elaborated upon in the judgment, and no specific findings were provided. Conclusion: The appeal was allowed for statistical purposes. The Tribunal directed the AO to reconsider the treatment of capital gains for Flat No. 703 after verification and to allow the claim of long-term capital loss for Flat No. 702. The issues regarding the validity of the assessment order and the alleged violation of natural justice were dismissed as they were not pressed by the appellant's representative. The matter of charging interest under sections 234A and 234B was not specifically addressed in the final order.
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