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TMI Blog2019 (5) TMI 1386X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) in holding the gain derived from sale of properties as long term capital gain. 3. Brief facts are, vide separate registered sale deeds executed on 22nd December 2005 four companies, including the assessee, purchased four commercial properties, the details of which are as under:- Sl.no. Name of Owner Company Address Carpet Area (Sq.Ft.) Date of Acquisition Purchase Consideration (Rs. ) 1. Imperial Realtors Pvt. Ltd. Unit no.1A, 1st Floor, KempShoppe Commercial Premi-ses, Cadastral, Survey Nos. 603 & 569 of Malabar &Cumballa Hill, Mumbai 400 038 633.84 23/12/2005 60,84,880 2. Columbia Realtors Pvt. Ltd. Unit no.1A, 1st Floor, KempShoppe Commercial Premi-ses, Cadastral, Survey Nos. 603 & 569 of Malabar &Cumbal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see challenged the aforesaid decision of the Assessing Officer before the first appellate authority. 5. After considering the submissions of the assessee and relying upon the decision of the Tribunal, Delhi Bench, in Pravin Gupta v/s ACIT, ITA no.2558/Del./2010, dated 13th August 2010, learned Commissioner (Appeals) held that since the assessee was holding the properties since December 2005, i.e. more than three years, the gain derived from transfer of such property has to be assessed as long term capital gain. Learned Commissioner (Appeals) observed, occupancy certificate is not relevant to construe the period of holding of the property. Accordingly, he reversed the decision of the Assessing Officer in treating the gain from sale of prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t letter by the builder the buyer acquires right, title and interest over the property and holding period of the property as the date reckoned from the date of allotment letter. Thus, he submitted that the learned Commissioner (Appeals) was correct in holding that the gain from sale of properties is to be assessed as long term capital gain. In support of such contention, he relied upon the following decisions:- i) CIT v/s Vina Indra Kumar, [2015] 370 ITR 552; and ii) PCIT v/s Vembu Vaidyanathan, ITA no.1459/2016, dated 22.01.2019. 8. We have considered rival submissions and perused the material on record. From the facts and materials on record, it is evident that vide separate registered sale deeds executed on 23rd December 2005, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was not held the property from the date of execution of the registered sale deeds. The Hon'ble Jurisdictional High Court in Vina Indra Kumar (supra) has held that even where the assessee has executed an agreement of sale, the date of holding of property has to be reckoned from the date of agreement of sale. While expressing such opinion, the Hon'ble Jurisdictional High Court did not accept the contention of the Department that the holding period of the property should be reckoned from the date of issuance of occupation certificate by the Municipal Corporation. The Hon'ble Jurisdictional High Court in Vembu Vaidyanathan (supra) has held that even on issuance of allotment letter by a builder the allottee gets title over the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering the submissions of the assessee in the context of facts and material on record, learned Commissioner (Appeals) observed that out of the deduction claimed towards cost of improvement, an amount of Rs. 44,39,845, representing expenditure incurred towards labour work, rent, rates and taxes, the purchase of building materials, professional fee are not allowable as some of them were incurred after the properties were sold by the assessee. Further, he observed that pre-operative expenditure cannot be treated as cost of improvement. Accordingly, he disallowed the amount of Rs. 44,39,845. Insofar as brokerage and professional fee are concerned, he disallowed the entire claim on the observation that the assessee could not produce any evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. to demonstrate that the work relating to such expenditure was done prior to the date of sale. In our view, the aforesaid claim of the assessee requires verification on the basis of evidences furnished by the Assessing Officer. If the assessee can demonstrate through supporting evidences that the expenditure of Rs. 35,00,045, was incurred prior to the date of sale of property, the deduction claimed can be allowed. Accordingly, we restore this issue to the Assessing Officer for fresh verification. As regards the pre-operative expenditure of Rs. 9,39,800, after verifying the details of such expenditure has submitted before us by the learned Authorised Representative, we are of the view that such expenditure is not in connection with the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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