2018 (2) TMI 2032 - AT - Income Tax

Exemption u/s 54 - Capital gain on sale of residential house property treated as short term capital gain - HELD THAT - Since, the exemption claimed by the co-owner in respect of the same property has been allowed by the Ld. CIT (A), the Ld. CIT (A) in the present case has no reason to deviate from the decision taken by the CIT (A) in the case of the assessee who is also a co-owner of the said property. The order of the Ld. CIT (A) passed in the case of Gulshan Mallik 2014 (3) TMI 474 - DELHI HIGH COURT and also in accordance with the CBDT Circular No. 672 dated 16.12.1993 and also in accordance with the decision of the co-ordinate Bench rendered in Anita K Kalyani vs. ACIT 2017 (2) TMI 788 - ITAT MUMBAI Hence, we allow the sole ground of appeal of the assessee and set aside the impugned order passed by the Ld. CIT(A). Accordingly, we direct the AO to allow the exemption u/s 54 of the Act claimed by the assessee. - Decided in favour of assessee.

Summary

Issues:
1. Capital gain treatment on sale of residential property as short term capital gain.
2. Disallowance of exemption u/s 54 of the Income Tax Act.
3. Divergent views in identical cases.
4. Computation of holding period for exemption u/s 54/54F.
5. Application of various judgments and circulars.
6. Decision consistency among co-owners.
7. Setting aside the impugned order and allowing exemption u/s 54.

Issue 1: Capital gain treatment on sale of residential property as short term capital gain:
The appeal was filed against the order treating capital gain on the sale of a residential property as short term capital gain. The assessee contended that the holding period should be determined from the date of possession, not the date of agreement. The AO disallowed exemption u/s 54 as the property was under construction and not held for three years. The CIT (A) affirmed this decision. However, the Tribunal allowed the exemption considering the date of allotment as the date of acquisition, following various judgments and circulars.

Issue 2: Disallowance of exemption u/s 54 of the Income Tax Act:
The AO disallowed the exemption u/s 54 claimed by the assessee, stating the property was not held for three years. The CIT (A) reversed this decision based on the date of allotment being considered as the date of acquisition, in line with relevant judgments and circulars. The Tribunal upheld this view, allowing the exemption and setting aside the impugned order.

Issue 3: Divergent views in identical cases:
The assessee argued against divergent views taken in identical cases concerning the computation of the holding period for exemption u/s 54/54F. The Tribunal emphasized consistency in decisions based on various High Court judgments and Tribunal decisions, ensuring uniform application of the law.

Issue 4: Computation of holding period for exemption u/s 54/54F:
The Tribunal considered the date of allotment as crucial for determining the holding period for exemption u/s 54/54F. It relied on judgments and circulars to support this interpretation, emphasizing that the date of allotment should be deemed as the date of acquisition for computing capital gains and claiming exemptions.

Issue 5: Application of various judgments and circulars:
The Tribunal extensively referred to judgments of High Courts, decisions of the ITAT, and CBDT Circulars to support its interpretation of the law regarding the computation of capital gains and exemptions u/s 54/54F. These references played a pivotal role in allowing the exemption claimed by the assessee.

Issue 6: Decision consistency among co-owners:
The Tribunal highlighted the importance of maintaining decision consistency among co-owners of the same property. It noted that the exemption allowed to a co-owner in a similar case should apply uniformly to all co-owners, ensuring fairness and adherence to legal principles.

Issue 7: Setting aside the impugned order and allowing exemption u/s 54:
Ultimately, the Tribunal set aside the impugned order and directed the AO to allow the exemption u/s 54 claimed by the assessee. By aligning with previous decisions and legal interpretations, the Tribunal upheld the assessee's entitlement to the exemption, emphasizing the correct computation of the holding period and adherence to relevant legal provisions.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's rationale in deciding the case.