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TMI Blog2018 (11) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... ed therein. Hence, the date of acquisition of the right in the property should be taken when the option was exercised for purchase of flat i.e. 15.07.2005. CBDT Circular No.471 dated 15/10/1996 has clarified the position in regard to flat booked by an assessee under self finance scheme of DDA. It has been clarified by the CBDT that the period of holding of the property will be counted from the date of issuance of allotment letter by the DDA pursuant to which the installments have been paid by the assessee and construction has been made by DDA. Irrespective of the fact whether the agreement with the builder may have certain clauses which may not make the buyer owner of the flat as such, the intention of the builder as well as of the buyer in all these cases is that the buyer will make payment to the builder and builder will construct the flat and hand over the same to the buyer. Accordingly, the clarification given by the CBDT is equally applicable to the booking of the flats with the builders and period of holding will be counted from the booking of the flats. Thus we direct the AO to compute period of holding from 15/07/2005, which works out to be more than 36 months, acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and M/s. P. R. Investments, and the builder had not commenced the construction at the time when advances were made by the parties and even after getting the plan approved, no agreement was entered into between P.R. Investments and D.M. Ramesh (Director of Grey Investments Pvt. Ltd.) and the assessee. The A.O. has further recorded that initial payment of ₹ 2.5 lac only had been made and other payments had been staggered over a period of 3 years, whereas, the sale agreement dtd. 23.04.09 is a Tripartite Sale Agreement between M/s. P.R. Investments of one part, Shri D.M. Ramesh (Director of Grey Investments Pvt. Ltd.) and the assessee of the second part and Mr. Dilip S. Coulagi Mrs. Nayana D. Coulagi being of the third part and on going through the Development Agreement it was also seen that it had been registered on 26.04.2006 and the occupation certificate was obtained by the developer on 15,10.08 and possession was handed over in December 2008. The A.O., therefore, observed that by no stretch of imagination, the date of purchase can be taken as 01.06.2005 under the head 'Long Term Capital Gain'. On the contrary, A.O. has held that the sale consideration received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of possession of the flat by owner, i.e. December 2008 and, alternately, held that even if the date of development agreement, i.e. 26.4.06 is taken as the date of acquisition of right in the property, capital asset has been held for less than 36 months and falls in the category of short term as it was sold on 23.04.09. The assessee s 25% share being ₹ 71.25 lac out of total consideration of ₹ 2,85,00,000 has, therefore, been held by the A.O. as taxable under the head Short Term Capital Gain . 5. Against the above order of AO, assessee approached to the CIT(A) and challenged reopening as well as merit of the addition so made by the AO. 6. By the impugned order, CIT(A) upheld the reopening and also addition so made by the AO after observing as under:- 6.1 The first ground of appeal taken by the appellant is against reopening of the case by issue of notice u/s.148 of the Act. The appellant in his written submissions has relied upon the decision dtd. 17.01.2013 of the Delhi High Court in the case of Simka Hotels Resorts in support of his argument that he has in his case made proper disclosure of income and not suppressed any material facts and under asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons for re-opening were also duly provided to the appellant. 6.3 The first ground of appeal is therefore dismissed. 7. The second ground of appeal is against the treatment given by the A.O. to the Long Term Capital Gain declared by the appellant, as Short Term Capital Gain. 7.1 The basic facts, as given in the reasons for reopening of the assessment is as follows: 1. The date of acquisition of the impugned property is 01.06,05. 2. The date of sale of the impugned property is 22.04.09. 3. There is no registered document for purchase of the property. 4. There is no development agreement between the owners and M/s. P.R. Investments. 5. Builders had not commenced the project when advances were made by the parties. Even after the plan was approved, no agreement was entered into between P.R, Investments and Shri D.M. Ramesh (Director of Grey Investments Pvt. Ltd.) and Bhagwan J. Tahiliani HUF (the appellant). 6. The sale agreement dtd. 23.04.09 is a triparte agreement between M/s. P.R. Investments ofn one part, D.M. Ramesh, Director of Grey Investments Pvt. Ltd. and Bhagwan J. Tahiliani HUF of the second part and Shri Dilip S. Coulagi and Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R. Investments, for purchase of a residential flat on the 3rd floor of the proposed building and requested P.R. Investments to allow them first option to purchase for them such residential flat on the 3rd upper floor of the proposed building and the proposed consideration payable by the appellant and D. M. Ramesh was recorded as ₹ 1,49,20,000 starting from payment of earnest money of ₹ 10 lacs by 02.04.05 and the balance, ₹ 1,39,20,000 in installments of ₹ 15 lac, 25 lac, 30 lac and 30 lac on 28.5.2005, 9.6.2005, on completion of 4th slab, on completion of last slab and the balance amount of ₹ 39,20,000 at the time of handing over possession of the residential flat on the third floor. 7.4 A Memorandum of Agreed Terms (MOAT) between Mr. Ajay D. Goel, Jyotin D. Goel and Mr. Sunil D. Goel (Owners) of the one part and M/s. P.R. Investments (Developers) consisting of three partners, of the other part agreed that owners of the plot of land belonging to Nutan Laxmi Co.op. Housing Society Ltd. together with the Bungalow named 'Garwa' shall shortly make declaration setting out the devolution of the title to the said immovable property confirming th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the developer in respect of the said immovable property was agreedat a lumsum of ₹ 1,52,00,000 (to be shared by the three owners in equal shares) to be paid by the developer to the owners, ₹ 15 lac on the date of MOAT, as earnest deposit and ₹ 70,00,000 and the balance ₹ 67 lac on the appointed dates. 7.5 In the letter dtd. 15.07.05, the appellant and D.M. Ramesh wrote to M/s. P.R. Investments that as per point 3 of the letter dtd. 1.4.05, they have expressed their interest in booking for purchase of the residential flat on the 3rd floor of the proposed new building and that they should be given the first option to purchase the said flat and in accordance with the above letter they have already paid earnest money in installments aggregating to ₹ 50,000 and the balance outstanding amount of ₹ 99.20 lac is payable by them. The appellant also requested to confirm this letter as token of acceptance. 7.6 The Development Agreement dtd. 26.04.06 between Ajay D. Goel, Jyotin D. Goel and Shri Sunil D. Goel being the owners, of plot no.48 and referred to as of one part and M/s. P. R. Investments, referred to as the developer and of the secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2.4.2005 [Para (h)(vi) on page 4 of the Sale Agreement dtd. 21.4.2009], whereas, from the copy of receipt of ₹ 10 lac issued by the M/s P.R. Investments to the appellant, it is seen that it is dtd. 7.7.2005. In the ground of appeal filed by the appellant also it is stated by the appellant that earnest money deposit had been paid on 9/7/2005. Thus, if ₹ 10 lac was received on 2.4.2005 by M/s. P.R. Investments, why receipt was issued on 7.7.2005 and if the receipt was issued on 7.7.2005 then it should mention that amount of ₹ 10 lac was received on 2.4.2005, which is not the case. Therefore, there being no evidence of receipt of ₹ 10 lac paid on 2.4.2005, being the initial booking amount, it cannot be considered that the appellant had any Capital asset in the form of right of booking of an immovable property. It is also seen that in the letter dtd.1.4.2005, the appellant himself on his own accord, when nothing has been finalized between owners of the plot of land and the developer shown his interest in booking with the developer for purchase of a residential plot on the 3rd floor. This letter is, thus, nothing but evincing an interest for the purchase o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive Housing Society situated at N.S. Road No.9, JVPD Scheme, Vile Parle (W), Mumbai-400 049 for a total consideration of ₹ 1,49,20,000/-. The assessee's share in this property is 25% and the other 75% share in the property belongs to Grey Investments Pvt. Ltd. through its director Mr. D.M. Ramesh. For the purpose of booking and allotment of flat the assessee and other co-owner has written a letter on 01.04.2005 to the Builder/Developer P.R. Investments stating that they are interested in booking a flat on 3rd Floor in the proposed building for a consideration of ₹ 1,49,20,000/- plus charges for car parking. With this letter, earnest money cheque of ₹ 10,00,000 was also given to the developer/builder. The balance amount totaling ₹ 1,39,20,000 was payable by assessee to builder/developer by installment as under: (i) ₹ 15,00,000 on or before 28.05.2005 (ii) ₹ 25,00,000 on or before 09.06.2005 (iii) ₹ 30,00,000 on completion of 4th slab (iv) The balance amount namely ₹ 39,20,000 would be payable by assessee to you against and simultaneously with your handing over to us possession of such residential flat on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Terms with the Owner of bungalow and land for the purpose of development of new building on 24th June 2005. When the Memorandum of Agreed Terms was signed between the land owner and Developer, assessee immediately exercised his option and gave a letter of confirmation of purchase of flat on 3ra floor in the proposed new building on 15.07.2005 which was confirmed by the Developer/Builders P.R. Investments. The builder/developer has also deposited the earnest money cheque into their bank account on 07.07.2005. Assessee has made further payments as under: Sr.No Date Amount 1. 07.07.2005 10,00,000 2. 07.07.2005 2,50,000 3 14.08.2007 7,50,000 4 11.12.2007 7,50,000 5 20.10.2008 10,00,000 6. 11.11.2008 3,00,000 Total 40,50,000 11. Thus, the payments have b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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