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2019 (4) TMI 288 - AT - Income TaxDate of acquisition for computation of LTCG - allotment date or date for Registered Agreement for Sale - HELD THAT - The said allotment is not a conditional allotment and do not envisages cancellation of the allotted property, in any manner. Therefore, the assessee has acquired right in a specific property which is clearly earmarked in the layout plan. The full payment of the same has been made by the assessee by 24/07/2008 which is evident from assessee s letter containing payment details as placed on page no. 4 of the paper-book. Subsequently, agreement of sale has been executed by the builder in assessee s favor on 25/03/2010 which was nothing but mere improvement in assessee s existing rights to acquire a specific property and part parcel of the same transaction. Respectfully, following the decision in PR. CIT Vs. VEMBU VAIDYANATHAN 2019 (1) TMI 1361 - BOMBAY HIGH COURT , we confirm the stand of Ld. first appellate authority to the extent that the resultant gains were Long-Term Capital Gains in nature. Eligibility to claim deduction u/s 54F - nature of certain capital gains earned by the assessee - HELD THAT - Assessee has made the payment within stipulated time as envisaged by Section 54F and the allotment in a specific property has been obtained by the assessee on 14/04/2012 which is evident from allotment letter. Therefore, since all the conditions of Section 54F was fulfilled by the assessee, there could be no occasion to deny the benefit of deduction to the assessee. Therefore, no infirmity could be found in the impugned order. - Decided against revenue.
Issues Involved:
1. Deletion of addition on account of Short-Term Capital Gain. 2. Allowance of deduction claimed under Section 54F. 3. Consideration of the period of holding of rights from the date of allotment letter versus agreement date. 4. Validity of the allotment letter without specific flat number and unconditional rights. 5. Actual purchase versus advance payment for the new property under Section 54F. 6. Applicability of the decision in Gulshan Malik Vs. CIT. 7. Request to set aside the CIT(A) order and restore the Assessing Officer's decision. Issue-wise Detailed Analysis: 1. Deletion of Addition on Account of Short-Term Capital Gain: The revenue contested the CIT(A)'s decision to delete the addition on account of Short-Term Capital Gain, arguing that the right in the property was created when the allotment letter was issued, and full consideration was paid. The assessee received an allotment letter dated 26.02.2008 and paid the full consideration by 24.07.2008. The CIT(A) held that the right in the property was created once the title was allotted to the purchaser, and subsequent payment and delivery were mere formalities. 2. Allowance of Deduction Claimed under Section 54F: The CIT(A) allowed the deduction claimed under Section 54F, stating that the house was purchased within two years of the sale, as required under Section 54F. The revenue argued that the assessee had not purchased the new property but merely made an advance payment to the builder. The CIT(A) found that the investment in the new flat was made within the stipulated time period, making the assessee eligible for the deduction. 3. Consideration of the Period of Holding of Rights: The revenue argued that the period of holding should be counted from the date of the agreement (25.03.2010) rather than the allotment letter (26.02.2008), making the gain a Short-Term Capital Gain. The CIT(A) held that the right in the property was created with the allotment letter, and the holding period should be counted from that date, making the gains Long-Term Capital Gains. 4. Validity of the Allotment Letter: The revenue contended that the allotment letter did not contain the flat number or unconditional rights to dispose of the property, making it only an offer. The CIT(A) found that the allotment letter created a right in a specific property earmarked in the layout plan, and the agreement of sale was merely an improvement in the existing rights. 5. Actual Purchase versus Advance Payment: The revenue argued that the assessee had not purchased the new property but only made an advance payment. The CIT(A) found that the assessee had made the payment within the stipulated time and obtained an allotment in a specific property, fulfilling the conditions of Section 54F. 6. Applicability of the Decision in Gulshan Malik Vs. CIT: The revenue relied on the decision in Gulshan Malik Vs. CIT, where it was held that a right or interest in an immovable property accrues only by way of an agreement. The CIT(A) distinguished this case, noting that the allotment in the present case was not conditional, and the right in the property was created with the allotment letter. 7. Request to Set Aside the CIT(A) Order: The revenue prayed that the CIT(A) order be set aside, and the Assessing Officer's decision be restored. The tribunal, however, upheld the CIT(A)'s decision, confirming that the resultant gains were Long-Term Capital Gains and the assessee was eligible for the deduction under Section 54F. Conclusion: The tribunal dismissed the appeal, confirming the CIT(A)'s decision that the gains were Long-Term Capital Gains and the assessee was entitled to the deduction under Section 54F. The tribunal relied on CBDT circulars and judicial pronouncements, including the recent decision of the Bombay High Court in PCIT Vs. Vembu Vaidyanathan, to conclude that the date of allotment should be considered for determining the holding period and eligibility for deduction.
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