9911796707
TMI Blog2017 (9) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Rs. 33,08,740/- in relation to STCG on sale of two residential flats without properly appreciating the factual and legal matrix as clearly brought out by the AO in the assessment order. (ii) The Learned CIT (A) has erred on facts and in law in deleting the addition of Rs. 33,08,740/- in relation to STCG without appreciating the fact that the assessee acquires complete or substantial rights in these two flats only when agreement was executed as has been held in ITAT's decision in the case of Mrs. Lata vs Addl. CIT, in (2011) 10 taxmann.com96 (Mum) in IT Appeal No.2864 and 2968 of 2009, where facts were similar. 2. The Ld. CIT(A)'s order is contrary to law and on facts and deserves to be set aside and A.O's order may be restored." 3. The brief facts of the case are that the assessee company is engaged in the business of investment and finance. During the course of assessment proceedings is] s 143(3) r.w.s. 143(2) of the 1961 Act, the A.O. observed that the assessee had sold two flats No. 504 and 604 situated at Cygna Buildibng, Zircon Venture CHS Ltd, Vinman Nagar, Pune for a consideration of Rs. 32,50,000/- each. The assessee had offered long term capital of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n.com 96(Mum.). Thus, the AO observed that it is clear that the character of capital assets transferred is flat and not allotment letter or right to acquire the property and hence the A.O. computed the short term capital gain as under:- Flat No. 504 Flat No. 604 Total Sales consideration 32,00,000 32,50,000 64,50,000 Stamp duty valuation (A) 39,75,451 39,04,824 78,80,275 Cost of acquisition 20,58,925 20,98,750 Stamp duty and registration charges 2,05,580 2,09,080 Total cost of acquisition (B) 22,63,705/- 23,07,830/- 45,71,535/- Short term capital gain (A+B) 17,11,746/- 15,96,994 33,08,740/- Thus, the A.O. brought to tax an income to the tune of Rs. 33,08,740/- to tax as short term capital gain(STCG), vide assessment order dated 28th December, 2012 passed by the AO u/s 143(3) of the Act. 4. Aggrieved by the assessment order dated 28-12-2012 passed by the A.O., the assessee carried the matter in appeal before the Id. CIT(A) vide appellate order dated 29-05-2015, who allowed the appeal of the assessee by holding as under:- "3.2. I have gone through the same. The AO has observed that by obtaining the allotment letter in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting that contracts in the nature of section 53A should also be covered by definition of "transfer". Therefore, in our humble view, the amendment to sec. 53A of the Transfer of Property Act whereby the requirement of the documents not being registered has been omitted will alter the situation for holding the transaction to be a transfer u / s 2 (4 7)(v) if all other ingredients have been satisfied." 3.3. In a case like this, where the asset which came to possession as per terms and conditions mentioned in the allotment letter, it is clear that the contract for purchase of flat was in existence, which was in writing and same was followed by willing parties of the contract on these two specified both the sides by making payment of instalments from time to time by one and registration of the documents alongwith bringing into existence of flats and handing over of possession of the flat itself. On these given facts i.e. having done part performance in terms of section 53A of Transfer of Property Act, the contract having come into existence on the date of allotment letter for the said flats and thus period of holding in the case being more than 3 years before sale of same in October, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the assessee company is engaged in the business of investment and finance. The assessee had sold two flats bearing No. 504 and 604 situated at Cygna Buildibng, Zircon Venture CHS Ltd, Vinman Nagar, Pune for a consideration of Rs. 32,50,000/- and Rs. 32,50,000/- respectively, vide agreements to sale entered into on 15th October, 2009 and 30th December 2009 respectively which is not in dispute. The dispute has arisen between the rival parties mainly with respect to the date of acquisition of these two aforesaid flats and whether the resultant gains/loss on the sale of these two flats is long term capital gain or short term capital gain. We have observed that the assessee booked two flats in September, 2005 with the Builder, booking documents w.r.t. both the flats are placed in paper book page 22/29, whereby advance were given of Rs. 1 lac each by the assessee to the Builder vide cheque No. 52 and 53, HDFC Bank respectively for the' aforesaid two flats. This booking advance was followed by assessee making payments to the Builder in installments from time to time w.r. t. these two flats. The communications with the builder w.r. t. both the flats are placed in paper bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the date of allotment shall be the date of construction for the purpose of Section 54/ 54F of the Act. Thus, we hold that the assessee has sold two flats wherein the p~riod of holding was more than three years (date of allotment September, 2005 and date of sale October/December, 2009) and hence gains arising from sale of two flats shall be brought to tax as long term capital gains. Thus, we do not find any infirmity in the order of the Id. CIT (A) which we are inclined to uphold/ affirm. However, The assessee is entitled for the benefit of cost inflation index based on actual payments made to the Builder vis-a-vis date of payment for computing indexation of cost of acquisition for computing long term capital gains. The decision in the case of Mr Gulshan Malik(supra) is clearly distinguishable as in that case the builder has specifically stated that allotment letter will not create any title, interest in the flat. The relevant portion of the decision is reproduced hereunder: "The confirmation letter dated 6.8.2004 (Annexure 3) specifically states first, that no right to provisional! final allotment accrues until the Buyer's Agreement is signed and returned to the builders a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction for the purposes of capital gains 1. Sections 54 and 54F provide that capital gains arising on transfer of a long-term capital asset shall not be charged to tax to the extent specified therein, where the amount of capital gain is invested in a residential house. In the case of purchase of a house, the benefit is available if the investment is made within a period of one year before .or after the date on which the transfer took place and in case of construction of a house. the benefit is available if the investment is made within three years from the date of the transfer. 2. The Board had occasion to examine as to whether the acquisition of a flat by an allottee under the Self-Financing Scheme (SFS) of the D.D.A. amounts to purchase or is construction by the D.D.A. on behalf of the allottee. Under the SFS of the D.D.A., the allotment letter is issued on payment of the first instalment of the cost of construction. The allotment is final unless it is cancelled or the allottee withdraws from the scheme. The allotment is cancelled only under exceptional circumstances. The allottee gets title to the property on the issuance of the allotment letter and the payment of instal ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
