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2013 (12) TMI 1589 - AT - Income TaxClaim for deduction u/s 54F - Held that - Board vide circular no. 672 after referring Circular No. 471 extended the facility of exemption u/s 54 33.15 lakhs the assessee made payment of 6.23 lakhs in the month of allotment itself i.e. January 2005. Subsequent payment was also made as per the terms agreed with the builder. Only after receipt of entire amount the builder has executed agreement with the assessee on 27.2.2009. The assessee has sold the said flat on 05.03.2009. Since the assessee has acquired all the rights in the flat on 22.01.2005 the period of holding is to be computed with respect to the date of allotment i.e. 22.01.2005. Taking the date of sale as 05.03.2009 the holding period of flat with the assessee was more than 36 months therefore there is no infirmity in the order of CIT(A) for allowing assessee s claim for exemption u/s 54/54F by treating the capital assets so sold as long term capital assets.
Issues Involved:
1. Determination of whether the capital asset (Flat) sold by the assessee is a long-term or short-term capital asset. 2. Eligibility of the assessee's claim for deduction under Section 54F. 3. Alleged delay in filing the appeal by the Revenue. Issue-wise Detailed Analysis: 1. Determination of whether the capital asset (Flat) sold by the assessee is a long-term or short-term capital asset: The primary issue revolves around whether the flat sold by the assessee should be considered a long-term or short-term capital asset. The assessee was allotted Flat No.1202 at Raheja, Tipco-I, Malad, Mumbai, via an allotment letter dated 22nd January 2005. Payment was made in installments starting from 22.01.2005. The flat was sold on 05.03.2009. The Assessing Officer (AO) considered the date of acquisition as 27.02.2009, the date on which the agreement for sale was executed, and thus treated the capital gain as short-term. The AO's precise observation was that the "right to purchase" the flat was conferred on the assessee on 27.02.2009, not on the date of allotment. However, the CIT(A) allowed the assessee's claim for deduction under Section 54F by treating the date of allotment as the date of acquisition, thereby considering the flat as a long-term capital asset. The CIT(A) noted that the assessee acquired the "right to purchase" the flat on part payment of the purchase consideration on 22.01.2005. The CIT(A) relied on CBDT Circulars No. 471 and No. 672, which state that the allottee gets title to the property on the issuance of the allotment letter, and the payment of installments and taking delivery of possession are follow-up actions. The Tribunal upheld the CIT(A)'s view, stating that the assessee acquired all rights in the flat on 22.01.2005, and the period of holding should be computed from this date. Therefore, the flat was held for more than 36 months, qualifying it as a long-term capital asset. 2. Eligibility of the assessee's claim for deduction under Section 54F: The assessee claimed a deduction under Section 54F for the long-term capital gain arising from the sale of the flat. The AO rejected this claim, treating the gain as short-term. However, the CIT(A) allowed the deduction under Section 54F, considering the flat as a long-term capital asset based on the date of allotment. The Tribunal supported the CIT(A)'s decision, noting that the assessee made substantial payments towards the flat starting from the date of allotment and acquired the right to the flat on 22.01.2005. The Tribunal emphasized that the CBDT Circulars No. 471 and No. 672 support the view that the allotment letter confers title to the property, and subsequent payments and possession are formalities. Thus, the assessee's investment in the Capital Gain-CDR account with OBC, Indore, was valid for claiming the deduction under Section 54F. 3. Alleged delay in filing the appeal by the Revenue: The assessee contended that the Revenue's appeal was delayed, as the AO gave effect to the CIT(A)'s order on 26.02.2013, and the appeal was filed on 13.06.2013. The Revenue argued that the appeal was filed within the due time, as the order was received by the CIT Admin. on 17.04.2013, and the appeal was filed on 13.06.2013. The Tribunal found that the appeal was filed within the permissible time frame, as the order was received by the CIT Admin. on 17.04.2013, and the appeal was filed on 13.06.2013. Therefore, there was no delay in filing the appeal, and the cross-objection by the assessee on this ground was dismissed. Conclusion: The Tribunal dismissed both the appeal by the Revenue and the cross-objection by the assessee. The Tribunal upheld the CIT(A)'s decision to treat the flat as a long-term capital asset based on the date of allotment and allowed the deduction under Section 54F. The Tribunal also found no merit in the assessee's contention regarding the delay in filing the appeal by the Revenue.
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