2016 (8) TMI 1135 - AT - Income Tax

Computation of capital gain - whether date of booking will be taking for the purpose of computation of capital gain or date of final payment for the flat in question? - Held that - We find that the Hon ble Gujarat High Court in the case of CIT Vs. Anilaben Upendra Shah, (2001 (10) TMI 13 - GUJARAT High Court) has held that assessee acquired shares in the co-operative housing society and was allotted the flat on November 15, 1979. Possession of the flat obtained in October, 1981 and sold the same in December, 1982, shares in capital housing society was held for more than 36 months. Accordingly, the capital gain in question was held to be Long Term Capital Gain. Thus in case of CIT Vs. Anilaben Upendra Shah (supra), the date of allotment was taken for the purpose of computation of capital gain and not possession. Nothing contrary was brought to our knowledge on behalf of Revenue. Facts being similar, so, following same reasoning, we are not inclined to concur with the finding of CIT(A) because date of acquisition of flat in question will be first booking i.e. 1986 and possession of flat will relate back to 1986 for purpose of computation of capital gain. Assessing Officer is directed accordingly.

Summary

Issues: Determination of whether the asset transferred is a Long Term Capital Gain or Short Term Capital Gain.

Analysis:
1. The appeal was filed by the assessee against the order of the Commissioner of Income-Tax (Appeals) for the assessment year 2007-08. The primary ground of appeal was that the flat sold by the assessee in Dwarka, New Delhi should be considered a Long Term Capital Asset for tax purposes, whereas the CIT(A) had treated it as a Short Term Capital Asset. The appellant argued that the asset should be taxed as Long Term Capital Gains, citing similarities with a previous case.

2. The main issue revolved around whether the date of booking or the date of final payment should be considered for the computation of capital gain on the flat in question. The Hon'ble Gujarat High Court precedent in the case of CIT Vs. Anilaben Upendra Shah established that the date of allotment, not possession, should be taken into account for determining capital gain. Since the facts were similar and no contradictory evidence was presented by the Revenue, the Tribunal ruled in favor of the assessee. The date of acquisition was considered the first booking in 1986, and possession of the flat was deemed to relate back to 1986 for the purpose of computing capital gain.

3. Consequently, the Tribunal allowed the appeal filed by the assessee, directing the Assessing Officer to consider the date of booking in 1986 as the relevant date for the computation of capital gain on the flat. The decision was pronounced in open court on August 19, 2016.