9911796707
TMI Blog2018 (10) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act r.w.s. 53A of the Transfer of Property Act 1882. The assessee was having legal right over the property and for this we have to note the definition of capital asset where the word used is "held" in the Section 2(14) read with explanation to Section 48 of the Act clearly depicts rights of the assessee over a capital asset and also specifies the benefit of indexation to be granted to the assessee on the basis of payments made by her for acquiring the said capital asset. In the instant case of the assessee, the right over the property was held by the assessee for the period of 36 months, therefore, on transfer of these properties the ‘long term capital gain’ has been offered by the assessee. The property is acquired is long term capital assets, therefore, the right over the property in question enjoyed by the assessee, the sale of the said property, the consideration was necessarily in the nature of Long Term Capital Gain. At the best, the date of provisional allotment letter dated 30.05.2007 for Upohar Apartment, Kolkata and in respect of two flats jointly held by her with four other persons at Diamond City South, Kolkata, the letter of provisional allotment issued by the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the assessee neither occupied those flats, as her own residence, nor has shown to have earned any income under the head house property from those allotted flats. The ld AO noted that assessee even had not disclosed any notional income from those flats, therefore, it was presumed by AO that electrification, water connection, plumbing were not completed, so these flats can not be called habitable. The date of relinquishment of Upohar Apartment UPL 021401 was stated as 28.10.2010 and the provisional allotment of said flat was given to the assessee on 23.05.2007. The date of investmentin Flat No.2D 2E, in Diamond City South Kolkata, which were provisionally allotted to the assessee on 11.04.2007 and assessee relinquished the said Flats on 16.04.2010. The Assessing Officer observed that in fact these flats were provisionally allotted to the assessee, by letter of allotment, even the assessee had not paid full considerations for those flats.The ld AO pointed out that there was no doubt about assessee s provisional allotment and thereafter subsequent relinquishment of flats (three flats) by taking full consideration from the transferee after a period of three years and investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the properties. It is amply clear that the transactions were so designed to evade tax on gains generated from booking and surrendering rights of flats. In view of such, the ld CIT(A) noted that the gains of ₹ 22,87,429/- generated from transfer/relinquishment of provisional allotment right, cannot be considered as long-term capital gains so as to be qualified for deduction u/s 54 of the Act, hence the addition to the tune of ₹ 22,87,429/- made by AO was confirmed 6 Aggrieved by the order of the ld. CIT(A), the assessee is in further appeal before us. 7. Learned counsel for the assessee begins by pointing out that the contention of the Ld. Assessing officer that the date of agreement cannot be regarded as date of acquisition is not correct. Section 45 of the Income Tax Act, 1962 states that any profit or gains arising from transfer of a capital asset shall be chargeable to income-tax under the head 'capital gains'. The term 'capital asset' has been defined in section 2(14) of the Act, to mean property of any kind held by an assessee. But, when it comes to transfer for the purpose of levy of income-tax u/s2(47)(v), of the Act, the handing over of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in five installments including payment for final installment of ₹ 3,66,778/-on 08/10/2010. The assessee, just after 20 days from the final payment, transferred the flat to another person on 28/01/2010, for a consideration of ₹ 61,45,960/-, thereby making a profit of ₹ 18,91,882/-. Similarly, assessee made a profit of ₹ 3,94,592/- from transactions of two flats, jointly held by her with four other persons at Diamond City, Kolkata, where letter of provisional allotment' was issued by the builder on 11/04/2007, on payment of the booking amount and the final installment was paid on 12/04/2010, and the flats were transferred through letter of relinquishment of allotment on 16/04/2010, i.e. just after four days of the final payment. In this process, assessee made total capital gains of ₹ 22,87,429/-,which assessee claimed as Long Term Capital Gains from sales of three residential properties and claimed full exemption U/s. 54 of the Act against payment of allotment money for booking of another residential flat. 10. We note that the AO in his assessment order mentioned that the flats were not in habitable condition in any manner and the assessee had n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad vested upon him title, domain and control over the flats identified by assessee. The assessee was having legal right over the property and for this we have to note the definition of capital asset where the word used is held in the Section 2(14) read with explanation to Section 48 of the Act clearly depicts rights of the assessee over a capital asset and also specifies the benefit of indexation to be granted to the assessee on the basis of payments made by her for acquiring the said capital asset. 11.We note that any capital asset held by the assessee for more than a period of thirty-six months is in the nature of Long Term Capital Asset. Further, the word held used in Section 2(14) of the Act implies right over a capital asset. In the instant case of the assessee, the right over the property was held by the assessee for the period of 36 months, therefore, on transfer of these properties the long term capital gain has been offered by the assessee. We note that the assessee under consideration identified the flat at Upohar Project, Kolkata on 23.05.2007 by paying first installment of ₹ 6,00,000/- and builder issued a provisional letter of allotment on 30.05.2007, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at and investment in it. Central Board of Direct Taxes Circular No. 471, dated October 15, 1986, deals with investment in flats under the self-financing scheme of the Delhi Development Authority. The Board has stated in the circular that when an allotment letter is issued to an allottee under this scheme on payment of the first instalment of the cost of construction, the allotment is final unless it is cancelled. The allottee, thereupon, gets title to the property on the issuance of the allotment letter and the payment of instalments is only a follow-up action and taking delivery of possession is only a formality. The Board has directed that such an allotment of a flat under this scheme should be treated as a case of construction for the purpose of capital gains. 10. In view of the above, we are of the view that the identified flats No. 1103 1104 was allotted to the assessee by way of allotment on 12-05-2004 by paying a booking money of ₹ 4,64,705/- and from that period the assessee was enjoying legal right over the said property. Since the period of payment of purchase consideration of ₹ 1,12,11,892/- was followed-up by the assessee till 10-09-2007 i.e., for a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to go through the provisions of Section 54 of the Act, which reads as under:- Profit on sale of property used for residence. 54.[(1)][Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of a long term capital asset , being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head Income form house property (hereinafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house, then, instead of the capital gain being charged to income tax as income of the previous year in which transfer took place, it shall be dealt with in accordance with the following provisions of his section, that is to say,- ... .. From the above provisions of Section 54, it is clear that when an assessee, individual or Hindu undivided family, sales a residential building or land appurtenant thereto, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sale proceed out of its sale consideration were in the nature of LTCG and were invested for purchasing the new house property for residential purpose within a period of one year from the date of sale of property. Hence, the assessee is eligible for deduction Sec.54 of the Act. But in the present case, whether the assessee has invested the LTCG arising out of sale of these apartments in the new residential house or not, has not been examined by the AO, these need examination, factually. Hence, for factual examination, we set aside this issue to the file of AO. 12. In the result, Revenue's appeal is dismissed and that of assessee is partly allowed for statistical purposes. Based on the facts and circumstances mentioned above, we are of the view that the assessee is eligible for deduction Section 54 of the Act. The assessee has invested the long term capital gain arising out of sale of these apartments in the new residential house, therefore, the assessee is entitled to claim exemption under section 54 of the Act.Hence, the addition made by the Assessing Officer and confirmed by the ld. CIT(A) needs to be deleted. Accordingly, we delete the addition of ₹ 22,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
