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2018 (8) TMI 1309 - AT - Income TaxReopening of the assessment u/s 147 - deduction u/s. 54(1) - investment made in the apartment at Sapphire Heights - AO observed that capital gain was short term capital gain and not long term, hence not eligible for exemption u/s 54 - Held that - occupancy certificate was granted to the builder on 18.02.2009 meaning thereby upto 18.02.2009, the Assessee had not even acquired any right to occupy the flat. After occupancy certificate, the agreement to sale was executed on 06.03.2009, meaning thereby the assessee could get the possession of the flat on execution of the agreement of sale on 06.03.2009. This agreement to sell was claimed by the assessee to be sale deed was in fact an agreement to sale. Even the construction of the apartment was not started upto 17.11.2006 and the property was sold on 28.06.2009. From any angle, the capital asset was not held by the Assessee for more than 3 years. We are of the considered opinion the Revenue has rightly held this gain accrued on sale of this property as short term capital gain. Accordingly, we find no infirmity in the order of the CIT(A) and we confirm the same. - Decided against the assessee.
Issues Involved:
1. Validity of the reopening of the assessment under Section 147 of the Income Tax Act. 2. Eligibility for deduction under Section 54 of the Income Tax Act. 3. Classification of the capital gains as long-term or short-term. 4. Levying of interest under Sections 234A and 234B of the Income Tax Act. Issue-Wise Detailed Analysis: 1. Validity of the Reopening of the Assessment under Section 147: The Assessee contended that the original assessment under Section 143(3) had already considered and allowed the deductions under Section 54, and reopening the assessment was therefore a "change of opinion" and invalid. The Revenue argued that the original assessment did not examine the date of acquisition of the flat, which was critical in determining the eligibility for the deduction under Section 54. The Tribunal found that the Assessing Officer (AO) had not examined the actual date of acquisition during the original assessment, and thus, the reopening was valid and did not constitute a change of opinion. The reopening of the assessment was upheld. 2. Eligibility for Deduction under Section 54: The Assessee claimed that the capital gains from the sale of Flat No. 302, Buttercup, Hiranandani Meadows should be considered long-term, as the flat was acquired on 22.02.2006 through an allotment letter. The Revenue disputed this, stating that the flat was actually acquired on 06.03.2009 when the sale deed was registered, and thus, the gains should be classified as short-term. The Tribunal agreed with the Revenue, noting that the Development Permission/Commencement Certificate was granted on 17.11.2006, and the occupancy certificate was issued on 18.02.2009. Therefore, the flat was not held for more than three years, and the gains were rightfully classified as short-term. The Tribunal upheld the disallowance of the deduction under Section 54. 3. Classification of Capital Gains as Long-Term or Short-Term: The main issue was whether the capital gains from the sale of the flat should be treated as long-term or short-term. The Assessee argued that the date of acquisition should be 22.02.2006, the date of the allotment letter. The Revenue contended that the date of acquisition should be 06.03.2009, the date of the registered sale deed. The Tribunal found that the flat was not ready for possession on 22.02.2006 and that the construction had not even started by then. The Tribunal concluded that the flat was acquired on 06.03.2009 and sold on 29.06.2009, thus classifying the gains as short-term. The Tribunal noted that the Assessee's intention was speculative, given the quick resale of the property. 4. Levying of Interest under Sections 234A and 234B: The Assessee contested the levying of interest under Sections 234A and 234B. The Tribunal found these to be consequential in nature and did not require independent adjudication. The interest levied was upheld. Conclusion: The Tribunal dismissed the appeal, upholding the reopening of the assessment, the classification of the capital gains as short-term, and the disallowance of the deduction under Section 54. The levying of interest under Sections 234A and 234B was also upheld. The decision was pronounced in the open court on 21st August 2018.
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