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TMI Blog2017 (2) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the Assessing Officer on account of wrong consideration of Long Term Capital Gain as Short Term Capital Gain for ₹ 4,76,6331/- is unjustified, unwarranted and bad in law. That the Learned CIT(A) has erred in confirming and upholding the Period of Holding of the Capital Asset as and from the date of Registration of Agreement [24-04-2008] instead of and in place of the date of the Agreement [28-12-2007], and as such in fact and in law the Long Term Capital Asset held by the Appellant was wrongly considered as Short Term Capital Asset and the same is unjustified, unwarranted and bad in law. That the Learned CIT (A) has erred in not considering the fact that the rights, title and interest in the property was itself acquired and held from the date of Allotment letter dated 11-04-2005 by the Appellant and as such the Period of Holding and indexation cost were not properly considered. 2. The solitary issue required to be addressed by us in this appeal is that whether the office unit (flat) sold by the assessee during the year on which long term capital gain was shown in the return was a long term capital asset or short term capital asset as per section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be computed from the date of allotment of the property as per section 2(42A). In support of his claim, reliance was placed on the following judgments:- 1. Madhu Kaul v. CIT (2014) 363 ITR 54 (P H HC) 2. CIT v. K Ramakrishnan (2014) 363 ITR 59 (Del HC) 3. CIT v. S R Jeyashankar (2015) 373 ITR120 9Mad HC) 4. CIT v. A Suresh Rao (2014) 223 Taxmann 228 (Kar HC) 5. Vinod Kumar Jain v. CIT (2012) 344 ITR 501 (P H_HC) 6. CIT v. Jitendra Mohan (2007) 165 Taxman 524 (Del HC) 7. CIT v. Panchand Gandhi (2005) 279 ITR52 (Guj HC) 8. CIT v. Anilaben Upendra Shah (2003) 262 ITR 657 (Guj) 9. Lahar Singh Siroya v. ACIT (2016) 138 DTR 331 (Kar-HC) 10. Vijay Harnilapurkar v. DCIT ITA No.6048/M/2013 11. ACIT v. Vandana Rana Roy ITA No.6173/M12011 12. Meena Hernnani vs ITO ITA No.5998/M/2010 13. Sneha Bimal Parekh v. CIT ITA No.5489/M/2015 14. Surnatichand Tolamal Gouti v.DCIT ITA No.2009/M/2013 15. Circular: No. 471, dated 15-10-1986 162 ITR(St)41 16. Circular : No. 672, dated 16-12-1993 205 ITR(St) 47 6. It was alternatively argued by the Ld. Counsel that in case holding period is to be computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period, then the date of signing of the agreement i.e. 28-12-2007 should be taken into account and not the date of registration of the agreement in terms of section 47 of Registration Act, 1908 as has also been clarified by the Hon ble Supreme Court in the above mentioned two judgements. 9. With a view to resolve this dispute, we have firstly analysed the provisions of section 2(42A) which defines short term capital asset as under:- Section 2(42A) in the Income- Tax Act, 1961 (42A) short- term capital asset means a capital asset held by an assessee for not more than thirty- six months immediately preceding the date of its transfer : Perusal of aforesaid definition shows that the legislature has used the expression held . It is further noted by us that in various other allied or similar sections, the legislature has preferred to use the expression acquired or purchased e.g. in section 54 / 54F. Thus, it shows that the legislature was conscious while making use of this expression. The expressions like owned has not been used for the purpose of determining the nature of asset as short term capital asset or long term capital asset. Thus, the intention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a cooperative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever, which has the effect of transferring, or enabling the enjoyment of any immovable property, also constitutes transfer and the assessee is said to hold the said property for the purpose of the definition of 'short-term capital gain . In fact, the Circular No.495 makes it clear that transactions of the nature referred to above are not required to be registered under the Registration Act, 1908. Such arrangements confer the privileges of ownership without transfer of title in the building and are common mode of acquiring flats particularly in multistoried constructions in big cities. The aforesaid new sub-clauses (v) and (vi) have been inserted in Section 2(47) to prevent avoidance of capital gains liability by recourse to transfer of rights in the manner referred to above. A person holding the Power of Attorney is authorized the powers of owner, including that of making construction though the legal ownership in such cases continues to be with the transferor. The intention of legislature is to treat even such transactions as transfers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted. What remains thereafter is the capital gain. It is not necessary that after payment of cost of acquisition, a title deed is to be executed in favour of the assessee. Even in the absence of a title deed, the assessee holds that property and therefore, it is the point of time at which he holds the property, which is to be taken into consideration in determining the period between the date of acquisition and date of transfer of such capital gain in order to decide whether it is a short-term capital gain or a long-term capital gain. Thus, from the aforesaid judgment, it is clear that for the purpose of holding an asset, it is not necessary that the assessee should be the owner of the asset based upon a registration of conveyance conferring title on him. 11. Similarly, in the case of Madhu Kaul (supra), the Hon ble Punjab Haryana High Court analysed various circulars and provisions of the Act that on allotment of flat and making first installment the assessee was conferred with a right to hold a flat which was later identified and possession delivered on later date. The mere fact that possession was delivered later, would not detract from the fact that assessee (allott ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue here before us is different. As discussed earlier, the holding period is to be determined in terms of section 2(42A) of the Act which has been reproduced and discussed above. The issue of transfer of ownership is not the issue to be decided here for computing the holding period. Therefore, we find that application of the ratio of aforesaid judgment would not be appropriate here. 16. Thus, respectfully following the judgements of various High Courts wherein this very issue has been analysed in detail as discussed above at length, we find that holding period should be computed from the date of issue of allotment letter. If we do so, the holding period becomes more than 36 months and consequently, the property sold by the assessee would be long term capital asset in the hands of the assessee and the gain on sale of the same would be taxable in the hands of the assessee as Long Term Capital Gain. We direct accordingly. 17. As a result, grounds raised by the assessee are allowed in terms of our directions as given above. However, the alternative issue raised by the assessee is not being adjudicated at this stage. 18. In the result, the appeal of the assessee is allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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