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TMI Blog2014 (12) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... lottee was conferred a right to hold property on issuance of an allotment letter and the payment of balance instalments, identification of a particular flat and delivery of possession are consequential acts that relate back to and arise from the rights conferred by the allotment letter - the allottee gets the title to the property on issuance of allotment letter and the payment in instalments is only a consequential act upon which delivery of possession to the property flows – thus, there is no reason as to why the same principle should not be applied to all transactions based on agreements in respect of capital asset - the breach of agreement would only give right to the beneficiary for enforcing the right over the property – thus, the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L), Chennai for constructing the built-up area of 3465 sq.ft. including common area in the above-said undivided share of land. The agreement was for purchase of land as well as for construction of home by a project promoted by VHPL. The agreement was determined for a consideration at ₹ 81,68,811/- to be paid by the assessee to the builder VHPL towards construction of the residential unit. Thereafter, the assessee sold the entire unit by a sale deed dated 10.4.2008 well after 36 months from the date of agreement dated 22.2.2005 and claimed the difference between the cost of acquisition and sale consideration as long term capital gains. 3. The Assessing Officer, however, took a view that the undivided share of land was registered on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an, learned standing counsel appearing for the Revenue and perused the materials placed before this Court. 6. The short issue that arises for consideration is whether the asset which was sold by the assessee would be subject to short term capital gains in terms of Section 2(42A) or long term capital gains in terms of Section 2(29A) of the Income Tax Act. There is no dispute with regard to the purchase of the capital asset. In order to appreciate the claim of the assessee, the Tribunal has considered the following facts in paragraph 7 of the order, which reads as follows: 7. We have heard the rival submissions and carefully perused the materials on record..... On perusing the case, the following facts emerge vividly:- (1) The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT), where an identical issue arose as to whether the date of capital gains should be reckoned from the date of allotment under a scheme framed by the DDA or it should be reckoned from the date of actual sale, which is subsequent to the date of allotment. The Punjab and Haryana High Court relied upon the circular, which was issued in relation to the allotment of flats to allottees under self-financing scheme of DDA, came to hold that a right has been conferred on the allottee to hold a flat which was later identified and possession delivered on a later date. The High Court also held that the mere fact that possession was delivered later does not detract from the fact that the allottee was conferred a right to hold property on issuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 is also on the same lines. It speaks about the right of an allottee over a property that has been allotted. The other issues like payment of balance instalments, delivery of possession, which takes place after the allotment only, relates back to the original allotment, in the present case, agreement. Therefore, the principle on which long term capital gains should be determined has been clearly indicated in the circular. For better clarity, Circular No.471 dated 15.10.1986 reads as follows: Circular No.471 Capital gains tax - Whether investment in a flat under the Self-Financing Scheme of the Delhi Development Authority would be construction for the purpose of ss.54 and 54F of the IT Act, 1961 15/10/1986 CAPITAL GAINS SECTI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy for the allottee is to file a suit for recovery of possession. 3. The Board have been advised that under the above circumstances, the inference that can be drawn is that the Delhi Development Authority takes up the construction work on behalf of the allottee and that the transaction involved is not a sale. Under the Scheme, the tentative cost of construction is already determined and the Delhi Development Authority facilitates the payment of the cost of construction in instalments subject to the conditions that the allottee has to bear the increase, if any, in the cost of the construction. Therefore, for the purpose of capital gains tax, the cost of the new asset is tentative cost of construction and the fact that the amount was allow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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