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TMI Blog2019 (7) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the TP Act, it has to be considered the date of ownership from the date on which he was put in possession of the property. Accordingly, the Court held that the transaction has to be treated as a long term capital gains, as the assessee was enjoying the property for more than 36 months. We note from the circular is that the Board held that the date of allotment of the flat should be reckoned for the purposes of computing the capital gain. We would be well justified in applying the said decision of the Board to the case on hand also, though the present case does not relate to a residential accommodation. In any event, the terms and conditions of the agreement are more or less similar and both are wholly owned Government of Tamil Nadu Undertakings which have allotted the properties, that is, in the case of the assessee which has been allotted by the SIDCO and in the circular issued by the Board, it is an allotment by the Delhi Development Authority. Order passed by AO treating the industrial sheds as a short-term capital asset is incorrect and it should be treated as a long term capital asset and the gains arising therefrom should be assessed as low tax effect. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheds by the Small Industries Development Corporation (SIDCO), vide allotment order dated 11.08.1988. The tentative cost of the land and building was fixed at ₹ 8,34,600/- and the assessee was required to pay 20% of the margin money being ₹ 1,66,920/- and service charges of 5%, i.e., ₹ 41,730/-. The allotment order dated 11.08.1988 contains various conditions. The assessee was put in possession of the sheds soon after it was allotted in August, 1988 and continued to be in possession and enjoyment of the industrial sheds. After payment of the entire sale consideration of ₹ 8,34,600/-, SIDCO executed a sale deed in favour of the assessee, vide sale deed dated 11.01.1996 registered as Document No.318/1996 on the file of the Joint Sub Registrar II, Chengalput. The assessee sold the two sheds which were allotted to them, to two different purchasers in the year 1996, that is, during January and September, 1996. 4.For the assessment year under question, namely 1997-98, the assessee filed return of income on 25.01.1999, which was processed under Section 143(1) of the Act. In the returns, the Assessing Officer observed that the capital gains on sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has executed the sale deed before taking over possession of the property. It is not in dispute that the assessee has complied all those conditions and there is no breach of any of the conditions contained in the order of allotment or the lease-cum-sale deed. As pointed out earlier, tentative cost is fixed by the SIDCO while allotting the property which in the instant case is ₹ 8,34,600/-, 20% of the tentative cost of the land and building allotted to the assessee is recovered as margin money that being a sum of ₹ 1,66,920/-. The balance cost of the sheds has to be paid with interest in ten equal half yearly instalments after the expiry of two years moratorium period, as per the schedule given separately. The moratorium interest shall be paid which will be raised by the Branch Office at Chengalput. The moratorium period for the commencement of repayment is two years from the date of financial effect. Thus, the amount which is paid by the assessee as margin money and the subsequent payment effected by the assessee in ten equal half yearly instalments after the expiry of moratorium period are all to be reckoned to be part of the sale consideration payable for the industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding of a property pursuant to an absolute deed. 11.We would refer to some of the conditions in the agreement, which are relevant for the purposes of this case. The agreement between SIDCO and the assessee refers the assessee as the lessee purchaser . The agreement specifically states that the price of the sheds has been tentatively fixed by SIDCO and part of this has already been paid by the assessee and the balance amount was agreed to be paid in instalments. Further, the agreement states that SIDCO had transferred the property to the firm by way of lease for the time being with the ultimate object of selling the property to the lessee purchaser, the firm, but on the fulfilment of the terms and conditions laid down therein. 12.As pointed out earlier, there is no allegation against the assessee that they have flouted the terms and conditions laid down by SIDCO. Thus, for all practical purposes, the assessee was treated to be the owner of the property except that he was not entitled to transfer, assign or sublet the industrial sheds. The sale deed also imposes certain conditions, but those conditions can operate only for the time limit prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for more than 36 months. 15.In the case of Commissioner of Income-tax, Central Circle vs. Ved Prakash Rakhra, [2012] 26 taxmann.com 166 (Karnataka), the Court took note of the decision in the case of V.V.Mody (supra) and after noting that the said decision refers to the insertion of sub-Clause (v) to Section 2(47) of the Act, held that insertion of sub-Clause (v), which provides that any transaction involving allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the TP Act, will also come within the ambit of transfer is relevant. 16.The decision of the Hon ble Division Bench of this Court in the case of Commissioner of Income-tax, Salary Circle, Chennai, vs. S.R.Jeyashankar, [2015] 373 ITR 120 (Madras) was considered as a case pertaining to an assessee who had entered into an agreement with a builder for purchase of undivided share of land. The Court took note of the terms and conditions of the agreement and the Circular of the Board in Circular No.471, dated 15.10.1986, and held that the date of allotment of flat shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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