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2019 (12) TMI 911 - AT - Income TaxCapital gain computation - CIT(A) in not considering the date of agreement as the date of purchase for computation of capital gain u/s 48 - HELD THAT - For the computation of the capital gain arisen out of the aforesaid sale, the assessee has taken the date of purchase of the above property as 31.01.2009 which is the date of agreement to purchase as against the actual date of purchase i.e., 21.03.2013. As find the AO treated the date of purchase of the property as 21.03.2013 and determined the gain arising on sale of the property as short-term capital gain whereas, according to the assessee, the property is a long-term capital asset since the holding period is more than 36 months if the date of agreement to purchase the property is considered as the date of acquisition. In the case of Nilam R. Kataria 2019 (6) TMI 1052 - ITAT AHMEDABAD after considering the various decisions, came to the conclusion that the period of holding of the asset has to be considered from the date of allotment of the property and not from the date of actual registration. We direct the AO to consider the date of agreement to sell as the date of acquisition and accordingly compute the long-term capital gain. The grounds raised by the assessee are accordingly allowed.
Issues Involved:
1. Determination of the date of acquisition for computation of capital gain under section 48 of the Income Tax Act. 2. Classification of the capital gain as short-term or long-term based on the holding period. Issue-Wise Detailed Analysis: 1. Determination of the Date of Acquisition for Computation of Capital Gain Under Section 48 of the IT Act: The primary issue in this case revolves around the correct date of acquisition for the purpose of computing capital gains. The assessee claimed the date of purchase as 31.01.2009 based on an agreement, while the Assessing Officer (AO) considered the date as 21.03.2013, the date of the sale deed. The AO's stance led to the classification of the gain as short-term capital gain due to a holding period of less than 36 months, as per section 2(42A) of the IT Act. The Tribunal examined various precedents, including the case of Nilam R. Kataria vs. ACIT, where it was concluded that the holding period should be considered from the date of allotment rather than the date of actual registration. The Tribunal also referred to the Gujarat High Court decision in Kishorbhai Harjibhai Patel vs. ITO, which held that the date of the agreement to sell should be considered the date of transfer for capital gain computation. 2. Classification of the Capital Gain as Short-Term or Long-Term Based on the Holding Period: The Tribunal's analysis included the review of multiple judicial decisions supporting the view that the date of allotment or agreement is crucial for determining the holding period. The Tribunal cited the Ahmedabad Bench decision in Nilam R. Kataria, which emphasized that possession and payment towards the property, even without a registered deed, should be considered for computing the holding period. The Tribunal also referenced the Bombay Tribunal decision in Anita D Kanjani and the Karnataka High Court decision in CIT vs. A Suresh Rao, which supported the notion that the holding period starts from the date of allotment or agreement, not the registration date. The Tribunal further examined the Punjab & Haryana High Court decisions in Madhu Kaul and Vinod Kumar Jain, which reinforced that the issuance of an allotment letter and initial payment confer a right to the property, marking the start of the holding period. Considering these precedents, the Tribunal concluded that the assessee's holding period should be calculated from the date of the agreement (31.01.2009), making the asset a long-term capital asset. Consequently, the gain arising from its sale should be classified as long-term capital gain. Conclusion: The Tribunal set aside the CIT(A)'s order and directed the AO to consider the date of the agreement to sell (31.01.2009) as the date of acquisition. This resulted in the classification of the gain as long-term capital gain, allowing the assessee's appeal. The decision was pronounced in the open court on 18.12.2019.
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