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2015 (11) TMI 1269 - AT - Income TaxGain received on the transfer of the land - Short term capital gain or long term capital gain - interpretation of the expression held by the assessee - Held that - As on 28/4/2001, all the other acts and process of acquisition of land in question were completed except registration of the conveyance deed. Since the assessee was allotted the land in question subsequent to the open auction and was issued allotment letter dated 14/2/2001 subject to the payment of consideration which the assessee paid by 28/4/2001 therefore, the date of acquisition would be when the assessee performed his part and complied with terms and conditions of allotment. The capital gain is treated as LTCG if the said asset is held by the assessee held by the assessee for more than 36 months (3 years) as per the provisions of sec.2(42A)/2(42B) of the Act. Therefore, for the purpose of sec.2(42A) and 2(42B), land in question will be regarded to be held by the assessee from the date of allotment on 14/2/2001 subject to payment of the entire consideration within the period stipulated as per allotment conditions. See A.Suresh Rao vs. ITO 2013 (4) TMI 743 - ITAT BANGALORE Thus the assessee was holding the land in question from the date of allotment on 14/2/2001 and consequently the capital gain arising from the sale of the property on 16/9/2014 would be LTCG. Accordingly, orders of the authorities below qua the issue are set aside and the claim of the assessee being LTCG is allowed. Since the AO as well as the CIT(A) have treated the capital gain arising from sale of the property in question as STCG, therefore, the issue of claim u/s 54F has not been examined by the authorities below. Accordingly, in the facts and circumstances and in view of our finding on the nature of capital gain, being LTCG, the AO is directed to examine and decide the claim of deduction u/s 54F. - Decided in favour of assessee.
Issues Involved:
1. Classification of capital gains as Long-term Capital Gain (LTCG) or Short-term Capital Gain (STCG). 2. Date of acquisition of the property for capital gains calculation. 3. Interpretation of the term "held by the assessee" under Section 2(42A) of the Income Tax Act. 4. Applicability of Section 54F exemption. Detailed Analysis: 1. Classification of Capital Gains: The primary issue in the appeal was whether the gains derived from the transfer of land should be classified as LTCG or STCG. The assessee argued that the gains should be treated as LTCG since the property was acquired on 5/2/2001 through an auction and the entire consideration was paid by 28/4/2001. The Assessing Officer (AO), however, classified the gains as STCG, asserting that the actual date of acquisition was the date of the conveyance deed registration on 23/9/2002, making the sale on 6/9/2004 within three years of acquisition. 2. Date of Acquisition: The assessee contended that the date of acquisition should be considered as the date of auction (5/2/2001), the date of allotment (14/2/2001), or the date of final payment (28/4/2001). The AO and the CIT(A) maintained that the date of acquisition was the date of registration of the conveyance deed (23/9/2002). The Tribunal noted that the assessee had complied with all payment terms by 28/4/2001 and thus, the date of acquisition should be considered as the date when the assessee fulfilled the conditions of allotment. 3. Interpretation of "Held by the Assessee": The Tribunal referred to various judicial precedents to interpret the term "held by the assessee" under Section 2(42A) of the Income Tax Act. The Tribunal emphasized that the term implies possession and control over the asset, not necessarily legal ownership. The Tribunal cited the judgment of the Hon'ble jurisdictional High Court in the case of CIT vs. A. Suresh Rao, which held that the expression "held by the assessee" includes the period from the date of allotment when the entire consideration was paid. 4. Applicability of Section 54F Exemption: Since the AO and CIT(A) treated the gains as STCG, they did not examine the assessee's claim for exemption under Section 54F. The Tribunal directed the AO to re-examine the claim for exemption under Section 54F in light of its finding that the gains should be classified as LTCG. Conclusion: The Tribunal concluded that the assessee held the property from the date of allotment (14/2/2001) and the gains from the sale of the property should be classified as LTCG. Consequently, the Tribunal set aside the orders of the AO and CIT(A) and allowed the appeal of the assessee. The AO was directed to examine and decide the claim for deduction under Section 54F based on the Tribunal's finding that the gains were LTCG. Pronouncement: The judgment was pronounced in the open court on 23rd September, 2015.
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