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TMI Blog2015 (11) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) did not appreciate the fact that the agreement for purchase was entered in 2006 and the date of sale was in 2008. 2.2. On the other hand, the ld. counsel for the assessee, Shri Vijay C. Kothari, defended the conclusion arrived at in the impugned order by contending that the assessee received allotment letters on 31/12/2004 and the agreement for purchase of the flats was entered into vide agreement dated 02/11/2006 and the MOU for sale of these flats was entered into on 24/04/2008 by explaining that the agreement of sale was executed on 17/05/2008 for flat no.1901 and 1902 and for flat no.1907 & 1908 on 18/07/2008. 2.3. We have considered the rival submissions and perused the material available on record. On the basis of material available on record, we note that the ld. Assessing Officer has discussed the issue in para 5.1.2 of the assessment order. The Assessing Officer treated the long term capital gain at Rs. 6,31,36,750/- as short term capital gain which arose on transfer of capital asset, duly disclosed by the assessee in his return. The stand of the Revenue is that it was wrongly disclosed as long term capital gains. The Assessing Officer computed the short term ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsequent action of registration of sale agreement is merely an assignment of rights in the property of the assessee with Act of registration under the Stamp Duty Act. Our view is fortified by the decisions of the Tribunal/Hon'ble High Courts in following cases:- a. Praveen Gupta vs ACIT (137 TTJ 307)(ITAT Delhi) b. CIT vs Laxmi devi Ratani (2005) 198 CTR (MP) 336 c. CIT vs Tata Services ltd. 122 ITR 594 d. CIT vs Vijay Flexible Containers 186 ITR 693 (Bom.) e. CIT vs Mormasji Man Charji Vaid 168 CTR (Guj.)(FB) 565 f. Arundhati Balkrishna vs CIT (1982) 29 CTR (Guj.) 85. 2.6. In view of the above, we are usefully quoting the relevant portion from the decision from Hon'ble jurisdictional High Court (122 ITR 594) (supra):- Quote:- "What is a capital asset is defined in section 2(14) of the I.T. Act, 1961. Under that provision, a capital asset means property of any kind held by an assessee, whether or not connected with his business or profession. The other subclauses which deal with what property is not included in the definition of capital asset are not relevant. Under section 2(47), a transfer in relation' to a capital asset is defined as including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Brothers vs DCIT (2008) 301 ITR 345 (Madr.) c. CIT vs Tata Services ltd. 122 ITR 594 (Bom.) d. Bafna Charitable Trust vs CIT 230 ITR 864 (Bom.) e. V. Rangaswamy Naidu vs CIT 31 ITR 711 (Mad.) f. Addl. CIT vs Ganpati Raju 119 ITR 715 (AP) g. S. Vaidyanathna Swamy vs CIT 119 ITR 369 (Mad.) h. P. J. Mathew vs ITO 323 ITR 592 (Ker.) In the light of the above, it can be said that the interest of the assessee accrued right from the date of allotment itself. The claim of the assessee is further supported by CBDT Circular No.672 and 471 dated 16/12/1993 and 15/10/1986 respectively clarifying that "the allotee gets title to the property on the issuance of allotment letter and the payment of installments is only a follow of action and taking the delivery of possession is only a formality." The case of the assessee is further fortified by the ratio laid down in ACIT vs Smt. Sundar Kaur Sujan Singh Gad (3 SOT 206), ACIT vs Smt. Vandana Rana Roy (ITA No.6173/mum/2011) order dated 07/11/2012, holding date of allotment is the relevant date for computing capital gains, Jeetendra Mohan vs ITO (2007) 11 SOT 594 (Del.), Jagmohan Singh Rawat vs ITO (ITA No.3297/Del./2011) order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that to qualify for deduction the expenditure must necessarily have been incurred prior to the passing of title. The Hon'ble Karnataka High Court in 152 ITR 247 (supra) held that interest on borrows is deductible only if is not allowed u/s 57 of the Act, thus, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals) on this issue also, therefore, dismissed. 4. The next ground pertains to deleting the additions made by the Assessing Officer invoking the provisions of section 50C of the Act. The crux of argument on behalf of the Revenue is that while coming to a particular conclusion, the ld. Commissioner of Income Tax (Appeals) did not appreciate the fact that the provisions of section 50C of the Act, the Assessing Officer is bound to take the value adopted by Stamp Valuation Authority. On the other hand, the ld. counsel for the assessee defended the conclusion arrived at in the impugned order. 4.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee transferred the impugned flats and the stamp duty authorities determined the market value of flat number 1907 and 190 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material available on record. Uncontrovertedly, the impugned payments were made through account payee cheque and the assessee furnished the complete list of vendors to whom the payments were made (through cheque), Cheque No., copy of invoices for the impugned amount were produced before the authorities. Admittedly, without interior work, largely kitchen, carpentry, ceiling and flooring the apartment cannot be come usable, thus, such investment was rightly held to be investment in the residential property, thus, we find no infirmity in the conclusion of the ld. Commissioner of Income Tax (Appeals), therefore, we find no merit in the impugned ground, raised by the Revenue, consequently, dismissed. 6. The last ground pertains to allowing deduction u/s 54 of the Act by treating the gain so arrived on transfer of capital asset as long term capital gains instead of short term capital gain. The crux of argument on behalf of the ld. DR is in support to the assessment order, whereas, the ld. counsel for the assessee defended the conclusion arrived at in the impugned order. 6.1. We have considered the rival submissions and perused the material available on record. While disposing of grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nicipal conditional letter of NOC for occupation. 24-11-79 Date of offer for possession. 9-4-80 Letter from Builder for readiness for completion certificate. 13-5-80 Date of possession. 3. Before the ITO, the assessee contended that though agreement for purchase of a flat was entered on 22-10-77 and payment was also made earlier, only the date when the new flat is ready for occupation should be taken as date of purchase by the assessee. The ITO rejected the above contention with the following observation in para 5 of his order: I have considered the assessee';s contention the agreement for purchase of a new flat was entered into in 1977, payments were made in 1977, and even the last instalment was made on 3-4-79 while the old flat was sold on 15-5-80 i.e. more than one year after that. The assessee has already acquired a right in the new flat more than 12 months before the date of sale of the old flat though he might have taken possession of the same much late on and this amounts to purchase of a flat, since this was done more than 12 months before the sale of the old flat section 54 exemption is not available to the assessee. His claim is therefore re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he builder earlier, it could be taken as ready for occupation and that was the date material for the purpose of counting period of one year within the meaning of section 54 of the IT Act, 1961. He finally submitted that 9-4-1980, on which date the builder agreed to give possession of the flat would be taken as the date on which the assessee has purchased the property for the purpose of residence within the meaning of section 54 of the IT Act, 1961. Till such time, he had only the right to purchase house property, he added. He relied on the following decisions: (1) CWT v. K.B. Pradhan (1981) 130 ITR 393(Ori.) (2) K.P. Varghese v. ITO (1981) 131 ITR 597(SC) (3) CIT v. Mrs. Shahzada Begum (1988)173 ITR 397/38 Taxman 31 (AP) (4) Purushottam Govind Bhat v. First ITO (1985) 13 ITD 939(Bom.) (5) Damodar Raheja v. Eighth ITO (1984) 10 ITD 75(Mad.). 6. We have carefully gone through the facts of the case and the rival contentions. The question before us, though it is simple, raises problems of importance in metropolitan cities where there exists lot of problems for meeting basis human needs ';house';. Just to encourage assessee, section 54 is enacted to give relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is flat as much as that of a full owner cannot be denied. The purpose of the assessee getting the flat allotted was to have the benefit of residential accommodation entirely in his control as if he was the full owner. Except, therefore, for a few technical requirements, the assessee can be said to be the full owner of the property. As a matter of fact, if not in law, therefore, it would be correct to say that the assessee has purchased a residential property. If the meaning of the word ';purchase'; is pushed to its technical sense, perhaps, the owner of a flat as above would not get the benefit of section 54. Even so, it would be against the very object and purpose of section 54 if such a flat owner is denied the benefit. Practically in every big town in this country, the ownership flats are in fashion. In applying the provisions of section 54 to such a contingency, it would not be, as claimed by the learned counsel for the department, proper to deny the assessee the benefit of section 54. With the increase in the cost of buildings if the technical policy of denying the benefits of section 54 claimed by the learned departmental counsel is accepted, section 54 would almos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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