2014 (3) TMI 812 - HC - Income Tax

Justification for taxability of LTCG Date of acquisition of interest Held that - The assessee acquired possession of the plot on 12.12.2005 and sold through a registered sale deed dated 9.1.2008 - having regard to the findings recorded by the Tribunal, the assessee had acquired beneficial interest to the property at least 96% of the amount was paid i.e. by 3.10.1999 Relying upon Madhu Kaul vs. CIT 2014 (2) TMI 1117 - PUNJAB & HARYANA HIGH COURT there is no need for interference in the order of the Tribunal Decided against Revenue.

Summary

Issues:
1. Interpretation of provisions under section 54EC for long term capital gain eligibility.
2. Determination of holding period for capital asset acquisition.
3. Relevance of date of allotment versus date of registration in computing holding period.

Analysis:
1. The primary issue in this case revolves around the interpretation of provisions under section 54EC concerning the eligibility for long term capital gain. The Revenue contested the order of the Income Tax Appellate Tribunal (ITAT) dated 17.5.2013, which dismissed their appeal questioning the deletion of Rs.55,72,612/- by the CIT(Appeals). The Tribunal's findings, upholding the assessee's claim of long term capital gain, were challenged by the Revenue. The learned counsel highlighted the circumstances of the case, emphasizing the relevant dates and provisions under section 54EC. It was argued that the assessee did not hold the asset for more than 36 months, thus questioning the long term capital gain benefit.

2. The second issue pertains to the determination of the holding period for the acquisition of the capital asset, specifically a HUDA plot, and its subsequent disposal by the assessee. The Tribunal considered the facts related to the acquisition and disposal of the plot. The assessee's counsel argued that the Assessing Officer incorrectly treated the capital gain as short-term and emphasized the importance of the date of allotment versus the date of execution of the conveyance deed. The counsel provided a detailed timeline of events, demonstrating the assessee's payments and ownership rights over the plot since its allotment in 1999. Reference was made to legal precedents supporting the significance of the date of allotment in computing the holding period for capital gains.

3. The third issue addresses the relevance of the date of allotment versus the date of registration in determining the holding period for the capital asset. The assessee acquired possession of the plot in 2005 and sold it through a registered sale deed in 2008. The Court noted that the assessee had acquired beneficial interest in the property by paying 96% of the amount by 3.10.1999, based on the terms of the allotment letter. The Court relied on a Division Bench ruling of the Punjab and Haryana High Court to support its findings. Ultimately, the Court found no error in the Tribunal's order and dismissed the appeal, concluding that the Tribunal's decision did not warrant interference based on the presented facts and legal interpretations.