9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (10) TMI 1544 - AT - Income TaxGain on sale of property - STCG OR LTCG - occupancy rights of the property - reckoning of date of acquisition of the property - AO treated the occupancy rights of the assessee in the Office premises as a Short Term Capital Asset and worked out STCG on the transfer of the same - HELD THAT - As pursuant to the final and binding allotment of the office premises assessee got vested with the ownership of the rights in respect of the property under consideration. Our aforesaid view is supported by the judgment of the Hon ble High Court of Bombay in the case of PCIT-3 Vs. Vembo Vaidyanathan 2019 (1) TMI 1361 - BOMBAY HIGH COURT wherein as referring to the clarification issued by the CBDT vide its Circular No. 672 dated 16.12.1993 it was observed by the Hon ble High Court that the Board had clarified that if the terms of the schemes of allotment and construction of flats/houses by the co-operative societies or other institutions were similar to the terms of allotment and construction by D.D.A then on the same basis the acquisition of the property was to be related to the date on which the allotment letter was issued. On the basis of its aforesaid observations the Hon ble High Court had dismissed the appeal of the revenue. In the backdrop of our aforesaid deliberations we are of the considered view that as no infirmity emerges from the order of the CIT(A) who we find had rightly concluded that the date of acquisition of the property under consideration was to be reckoned from the date of the allotment letter i.e 03.12.1999 therefore we uphold his order.
Issues Involved:
1. Determination of the date of acquisition of occupancy rights in the property for capital gains tax purposes. 2. Classification of the capital gains as Long Term Capital Gain (LTCG) or Short Term Capital Gain (STCG). Detailed Analysis: Issue 1: Determination of the Date of Acquisition of Occupancy Rights in the Property The primary issue revolves around determining the correct date of acquisition of the occupancy rights in the property at Bharat Diamond Bourse. The assessee claimed the acquisition date should be 1991, the year they applied for the allotment and made an initial payment. The Assessing Officer (A.O) argued that the acquisition date should be 02.08.2010, when a registered document was executed. The CIT(A) concluded that the acquisition date should be 03.12.1999, the date of the final and binding allotment. The Tribunal examined the facts and found that the assessee’s claim of acquisition in 1991 was untenable as no specific premises were identified or allotted at that time. The Tribunal also rejected the A.O’s view, stating that the valid title conferred by the registered document in 2010 was not conclusive for determining the holding period. Instead, the Tribunal upheld the CIT(A)’s decision that the acquisition date should be 03.12.1999, when the final and binding allotment of the specific office premises was made. Issue 2: Classification of the Capital Gains The second issue was whether the capital gains should be classified as Long Term Capital Gain (LTCG) or Short Term Capital Gain (STCG). The A.O classified the gains as STCG, arguing that the occupancy rights were acquired only in 2010. The CIT(A) and subsequently the Tribunal disagreed, concluding that the rights were acquired in 1999, thus qualifying the gains as LTCG. The Tribunal referred to the CBDT Circular No. 471, dated 15.10.1996, and Circular No. 672, dated 16.12.1993, which clarified that the date of allotment should be considered the date of acquisition for capital gains purposes. This view was supported by the Bombay High Court’s decision in PCIT-3, Mumbai Vs. Vembo Vaidyanathan (2019) 261 taxman 376 (Bom), which upheld that the date of allotment is relevant for determining the holding period for capital gains tax. Conclusion: The Tribunal upheld the CIT(A)’s decision that the date of acquisition of the occupancy rights in the property should be 03.12.1999. Consequently, the capital gains were correctly classified as Long Term Capital Gain (LTCG). The appeals of both the assessee and the revenue were dismissed. Order Pronounced: The order was pronounced in the open court on 18.10.2019.
|
