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2016 (5) TMI 1033 - AT - Income TaxGain arising from transfer of flat in National Co-operative Group Housing Society as Short term or long term in nature - Held that - Since the assessee has acquired the right in the flat from the date of allotment of share certificate in his favour the capital gain accrued to the assessee is in the nature of long term capital gain whereas computation of the same varies on account of payments made by the assessee on different dates towards acquisition of the flat. Accordingly we set aside the order of the CIT(Appeals) and restore the matter to the Assessing Officer with a direction to recompute the long term capital gain as per law. - Decided in favour of assessee for statistical purposes.
Issues Involved:
1. Nature of capital gain on the sale of a flat acquired from a Co-operative Group Housing Society. 2. Eligibility for indexation benefits. 3. Deduction under Section 54 EC of the Income Tax Act. 4. Liability for interest under Section 234D of the Income Tax Act. Issue-wise Detailed Analysis: 1. Nature of Capital Gain on Sale of Flat: The primary issue is whether the gain from the sale of a flat acquired from a Co-operative Group Housing Society should be treated as a short-term or long-term capital gain. The assessee contended that the flat was booked on 5.8.1993, with possession given on 22.2.2003, and sold on 19.1.2006. The Assessing Officer (AO) treated the gain as short-term capital gain, arguing that the property was held for less than 36 months from the date of possession. The Tribunal, however, noted that the assessee acquired certain rights in the flat upon allocation of shares on 5.8.1993. By examining the judgments in CIT v. H. Anil Kumar and CIT v. Jindas Panchand Gandhi, the Tribunal concluded that the right to the flat constitutes a capital asset from the date of share allotment. Thus, the capital gain should be treated as long-term, and the matter was remanded to the AO to recompute the long-term capital gain as per law. 2. Eligibility for Indexation Benefits: The assessee argued that indexation benefits should be allowed from the date of allotment of shares. The Tribunal supported this view, citing that the right to the flat was acquired on the date of share allotment. Thus, indexation benefits should be computed from the date of share allotment, not from the date of possession. 3. Deduction under Section 54 EC of the Income Tax Act: The assessee claimed a deduction under Section 54 EC, which was initially refused by the AO and CIT(A). The Tribunal did not provide a specific ruling on this issue but implied that the deduction should be reconsidered in light of the reclassification of the gain as long-term. 4. Liability for Interest under Section 234D of the Income Tax Act: The assessee contested the liability for interest under Section 234D, arguing that no opportunity was provided before levying the interest. The Tribunal did not specifically address this issue in the judgment but focused on the main issue of capital gain classification. Conclusion: The Tribunal ruled that the capital gain from the sale of the flat should be treated as a long-term capital gain from the date of share allotment and remanded the matter to the AO for recomputation. The order emphasized the importance of recognizing the right to the flat as a capital asset from the date of share allotment, allowing for indexation benefits accordingly. The appeal was allowed for statistical purposes, with the AO directed to recompute the long-term capital gain as per law.
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