2022 (7) TMI 1306 - AT - Income Tax

Computation of capital gain u/s 54F - acquisition date of plot/property sold - Assessee claimed that the date of allotment i.e. 30.12.2006 on which date plot buyers agreement dated 30.12.2006 with BPTP Ltd. (the vendor) for purchase of the plot/land under consideration was executed, is relevant for consideration as date of acquisition and for the benefit of indexation to claim capital gain or tax u/s 54 and therefore the Assessee is entitled to get benefit of long term capital gain because the Assessee acquired the property under consideration 30.12.2006 and sold the same on 14.10.2015 - HELD THAT - Considering the peculiar facts and circumstances, we deem it appropriate to set aside the order passed by the ld. Commissioner and to direct the Assessing Officer to recompute the capital gain/loss of the Assessee u/s. 54 of the Act, while considering the date of plot buyer s agreement dated 31.12.2006 as acquisition date of plot/property sold and for indexation benefit. Ordered accordingly. Assessee appeal stands allowed.

Summary

Issues:
Computation of capital gain under section 54F of the Income-tax Act, 1961 based on the date of acquisition, entitlement to long term capital gain, and applicability of relevant legal precedents.

Analysis:
1. The appeal was filed by the Assessee against the order passed by the Commissioner of Income-tax (Appeals) for the assessment year 2016-17. The Assessee claimed long term capital loss on the basis of instalments paid for purchasing property rights, which was disallowed by the Assessing Officer due to lack of supporting documents.

2. The Commissioner concluded that the Assessee became the owner of the property with the signing of the conveyance deed and taking over possession during the financial year 2015-16. The Commissioner treated the income from the sale of the property as short term capital gain, enhancing the Assessee's income accordingly.

3. The Assessee challenged the Commissioner's decision, arguing that the order was based on contrary facts and should be set aside. The Assessee claimed entitlement to long term capital gain based on the date of acquisition and sale of the property.

4. During the hearing, the Assessee relied on legal precedents, including judgments from the Hon'ble Apex Court and the Hon'ble Delhi High Court, to support their contention regarding the relevant date for computing the holding period and claiming capital gain under section 54 of the Act.

5. After careful consideration of the facts and legal precedents cited by the Assessee, the Tribunal set aside the Commissioner's order and directed the Assessing Officer to recompute the capital gain/loss of the Assessee under section 54 of the Act. The Tribunal considered the date of the plot buyer's agreement as the acquisition date for the property sold, allowing for indexation benefit.

6. Consequently, the appeal filed by the Assessee was allowed, and the order was pronounced in the open court on 28/07/2022.