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TMI Blog2017 (9) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... ve payments. We order accordingly. - I.T.A. No. 4608/Mum/2015 - - - Dated:- 23-8-2017 - SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Revenue : Shri V. Vidhyadhar For The Assessee : Ms. Usha Gopalan ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the Revenue, being ITA No. 4608/Mum/2015, is directed against the appellate order dated 29.05.2015 passed by learned Commissioner of Income Tax (Appeals)- 14, Mumbai (hereinafter called the CIT(A) ), for assessment year 2010-11, appellate proceedings before learned CIT(A) had arisen from the assessment order dated 28th December, 2012 passed by learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income-tax Act, 1961 (hereinafter called the Act ) . 2. The grounds of appeal raised by the Revenue in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) read as under:- ( i) The Learned CIT(A) has erred on facts and in law in deleting the addition of ₹ 33,08,740/- in relation to STCG on sale of two residential flats without properly appreciating the factual and leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clauses of the registered purchase agreement dated 14-03-2008 to come to above conclusion. In-fact it is undisputed that what is transferred by the assessee in October/December 2009 were the flats while the Iassessee was allotted flats in 2005. The AO observed that the immovable property has bundle of rights and when one acquires rhe right to buy property and later take the possession of property, inferior right in the form of right to acquire gets merged with the superior right in the form of possession of property. The AO observed that the assessee had entered into an registered purchase agreement on 14-03-2008 and sold the same capital assets in October 2009, therefore the asset was held for less than thirty six months and it shall be construed as short term capital asset within the meaning of Section,2(42A) of the 1961 Act. Thus, in this appeal, the issue is in the very narrow compass. It was also observed by the AO that in the instant case, even the allotment letter is not issued by the Builder. The AO relied upon decision of Mrs. Lata v. Addl. eIT reported in (2011) 10 taxmann.com 96(Mum.). Thus, the AO observed that it is clear that the character of capital assets transferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on i.e. allottee. In such a case holding period is considered for calculation of capital gains of holding of allotment letter itself. However, coming to the instant case where the allotment letter given by the builder was subsequently followed by payments in instalments as per terms and conditions in the same and the registration was done also for handing over the possession finally; on these given facts, where thus the allotment created right to acquire the property finally culminated into acquiring of flat itself, the right to possess capital asset i.e. flat cannot be segregated . now for the reason that as per section 53A of Transfer of Property Act also, the transfer has taken place and the same is not to be determined from the date of registration only as has been concluded by A.O. In the case of Shirish Agarwal while considering this issue i.e. date of transfer with reference to Section 53A of Transfer of Property Act, the Hon'ble ITAT, Delhi has discussed this issue as under:- Thus from the above two decisions, it becomes absolutely clear that for the purpose of the Income Tax Act the ground reality has to be recognized and if all the ingredients of transfer hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were purchased by the assessee. Prior to that the assessee had made payment in installments from time to time and no right or title was created in the flats, till the flats were registered in the name of the assessee on 14-03- 2008. It was submitted that the; said flats were sold in October/December 2009 and hence the AO rightly brought to tax gains arising from sale of flats as short term capital gains. 7. The Id. Counsel for the assessee submitted that the assessee had purchased two flats bearing No. 504 and 604 in project Cygna Building, Zircon Venture CHS Ltd. It is submitted that these flats were allotted by the builder in the year 2005 and our attention was invited to communication with the builder which are placed in the paper book /page 22 to 35. Our attention was also drawn to page l/paper book wherein details of payments made to the builder in installments are in place. Thus, it is submitted that the flats were booked on September, 2005, wherein the advances were given of ₹ 1 lac for each flat. It was submitted that thereafter payments were made from time to time by installments by the assessee to the Builder. Thus, it is submitted that the period of holding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 and that is the relevant date for computing capital gains chargeable to tax, by relying on decision of Gulshan Maliktsupra). In our considered view, the assessee had made booking on 10th September, 2005 whereby cheque' of ₹ 1 lac each was given w.r.t. booking of both the flats to the Builder and thereafter the payments were made from time to time by the assessee to the Builder which is not in dispute by the Revenue. The assessee had made the following payments:- Sr No. Date of payment Flat No. 504 Date of payment Flat No. 604 1 10.09.2005 1,00,000 10.09.2005 1,00,000 2 01.12.2005 6,20,345 06.12.2005 6,34,560 3 03.05.2006 6,17,440 10.05.2006 4,19,750 4 31.07.2006 2,09,880 18.07.2006 2,09,880 In our considered view, it is clear that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the right to obtain title/ booking rights emanated from the confirmation letter. These rights may only be located in the Buyer's agreement, and thus, the date of acquisition of the capital asset must be considered the date of signing of said agreement i.e. 4.11.2004. We may also mention here that the co-ordinate Bench of this tribunal in the case of Ashutosh Gurunath Haldipur v. ITO in ITA No. 5134/Mum/2014 for A.Y. 2007-08 vide orders dated 8th November, 2016 had dealt with similar issue wherein the tribunal allowed the claim of the assessee. The relevant part of the tribunal decision if reproduced below:- 8. We have heard the ld. D.R. and also perused the material available on record. We have observed that the assessee along with his wife Mrs. Malini Rao had purchased the fiat for which payments have been made by the assessee and his wife. The assessee and his wife had also jointly raised bank loan for the acquisition of the said fiat. The assessee is claiming that he acquired the fiat from the date of letter of allotment by the builder i.e. 27-01-2003 while the A.a. has considered the date of agreement to sell which is 30th December, 2003 as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances, the inference that can be drawn is that the, D. D.A. 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 D.D.A. facilitates the payment of the cost of construction in instalments subject to the condition that the allottee has to bear the increase, if any, in the cost of construction. Therefore, for the purpose of capital gains tax the cost of the new asset is the tentative cost of construction and the fact that the amount was allowed to be paid in instalments does not affect the legal position stated above. In view of these facts, it has been decided that cases of allotment of flats under the Self-Financing Scheme of the D.D.A. shall be treated as cases of construction for the purpose of capital gains. Circular: No. 471 [F. No. 207127/85-IT(A-II)], dated 15-10-1986. We would like to also make it clear that the assessee will be entitled for cost inflation index(CII) based on the actual payments made and date of payment, accordingly CII will be worked out with reference to amount of payment and date of payment, on progressive payme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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