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TMI Blog2019 (9) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s 54F of Income Tax Act to which the Appellant is duly eligible, ignoring the submissions made by the Appellant, facts and circumstances and also various judgments of Honourable Courts." 2. Brief facts of the case are that the assessee is an individual who filed her return of income on 25.07.2013 declaring Nil income. Assessee has claimed deduction of Rs. 6693638/- u/s 54 of the Income Tax Act, 1961. The assessee has sold plot of land on 28.03.2013 for a total consideration of Rs. 11850000/- and index cost of acquisition was Rs. 5156362/- . The ld AO noted that the assessee became owner of the property on 27.12.2011 the date on which the conveyance deed was executed. The assessee claimed that the as the above plot was allotted to the assessee on 27/12/2002 the date of acquisition should be considered from that date. Thus, the only dispute on this issue is whether the property sold by the assessee is a long term capital asset or short term capital asset. The whole controversy is discussed by the ld AO at para 3.1 to 3.1.8 is as under:- 3.1 Date of acquisition and cost of the plot sold by the assessee. 3.1.1 As per the deed of conveyance of Plot no. 72, Sector-3, Gurgaon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Officer of Estate officer and signed by the Estate Officer aforesaid and dt..............the.........day of......................Hereinafter called the said site)." 3.1.2 The sale deed of the said Plot no. 72, Sector-3, Gurgaon dated 28.03.2013 in the third para states that "whereas the above said VENDOR is owner and in possession of Plot No. 72 measuring 220 sq. Mtrs. (263.12 Sq. Yds), situated in the residential colony known as Sector-43, Urban Esate, Gurgaon, Tehsil and Distt. Gurgaon (Haryana), by way of Sale Deed/Conveyance Deed Vasika No. 27259 dated 27/12/2011, registered in the office of Joint/Sub-Registrar, Gurgaon (Haryana) (hereinafet called the PROPERTY)" and further that " whereas the VENDOR has taken permission for transfer of the above said property in favour of VENDEE vide Memo No. Z0002/E0018/UE029/ TRAN1/ 0000000105 dated 21/03/2013 from the Estate Officer- II, Haryana Urban Development Authority, Gurgaon. 3.1.3 The above paras in the two deeds clearly established that the assessee became the owner of the Property on 27.12.2011 and could not become the owner uiitil and unless the additional price if any against the tentative price was paid by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reliance on the Board Circular No. 471 [F. No. 207/27/85-IT(A-II)], dated 15-10-1986 is misplaced on the facts of the case of the assessee. As that was issued in relation to the construction of the house undertaken by fhe DDA on behalf of the assessee and assessee had no control over the completion of the construction of the house which was undertaken by the Authority. The circular was with respect to the application of the consideration on transfer of asset giving rise to capital gams and to allow the benefit of deduction u/s 54 or 54F of the Act, with respect to the construction of the house. In assessee's case HUDA had not undertaken the construction of the house on assessee's behalf and it was a case of sale of residential plot giving rise to capital gain and not application of sale proceeds of asset sold and hence is clearly distinguishable. 3.1.7 This evident from the text of the said circular No. 471, dated 15- 10-1986 which is as under: "428. Capital gains from long-term capital asset - Investment in a flat under the self-financing scheme of the Delhi Development Authority - Whether to be treated as construction for the purposes of capital gains 1. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsider the transfer of a long term capital asset and allow indexation is not acceptable. The difference between the amount spent towards payment to the original allottee and by way of instalments to HUDA aggregating to Rs. 41,77,712/ - and the sale consideration of Rs. 1,18,50,000/-is brought to tax by making an addition of Rs. 76,72,288/- to the returned income of rupees NIL" 3. Thus, the ld AO treated the transfer of the capital asset as transfer of a short term capital asset. Consequently, the deduction u/s 54 was also denied. Assessee made an alternative claim of section 54 F of the act, that was also denied. Further, reasons for denial of deduction was because the new property has been purchased in the name of the assessee and Ms. Saroj Patni, mother of the assessee. The ld AO was of the view that property sold by the assessee was owned by the assessee whereas, the investment in the new residential house was also contributed to the extent of Rs. 17 lakhs by the mother of the assessee. Thus, the assessment order u/s 143(3) of the Act was passed on 03.02.2016 determining the total income of the assessee at Rs. 7672290/-. The assessee aggrieved with the order of the ld AO prefe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had. to seek the permission for transfer of the above said. prope3rty from HUDA before it could be transferred as the ownership sttHdgy with HUDA. 3.1.4 HUDA was paid further amounts for the said plot'after the deed of conveyance and before the sale of said plot by assessee. The toted amount paid by assessee towards the acquisition of the plot was Rs. 41, 77, 715/-.. ............................................................................................. ............................................................................................ 3.1.8 Hence, the contention of the assessee to consider the transfer of a long term capital asset and allow indexation is not acceptable. The difference between the amount spend towards payment, to the original allottee and. by way of installments to HUDA aggregating to Rs. 41,77,712/- and the sale consideration of Rs. 1,18,50,000/- is brought to tax by making an addition of Rs. 76, 72,288/ - to the returned income of rupees NIL." 4.2 The AO further notes from paras 3.3.4 till para 5 as follows:- " 3.3.4 Facts of the case The property has been registered as per the conveyance deed, in the name of Ms. Bhawna Shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period, of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".] Explanation.-For the purposes of this section,- "net consideration", in relation to the transfer of a capital asset:, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) W/frere the assessee purchases, within the period of 30[two yearsJ after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged, under section 45 on the basis of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged, u/s 45 as income of the previous year in which the period of three years from the date of the transfer of the original asse~ expires; arid (ii) The assessee shall be entitled to withdraw the unutilized amount in accordance with, the scheme aforesaid ................................................................................................................. 5. Hence, the total income of the assessee is assessed u/s 143(3) at Rs. 76, 72,290/- after rounding off of Rs. 76. 72.287/7"^-. - 28SA of the IT Act, 1961, Interest u/s 234A/234B/234C/234D is charged as applicable. Necessary forms are issued in the context. Penalty proceedings u/s 271(l)(c) are being initiated separately for concealment and filing of inaccurate particulars of income 4.3 The appellant had sold an asset being residential plot of 220 sq. mts. Bearing plot no 72 at sector 43, Gurgaon for a consideration of Rs. 1,18,50,000/- vide sale deed dated 28.03.2013. Thus, the date of sale of asset is established as 28.03.2013.] 4.4 The computation of total income by the appellant as in the return of income is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter, which together with an amount of Rs. 118404.oo by you alongwith your application form an earnest, money, will constitute 25 per cent, of the total tentative price. 6. The balance amount i.e. Rs. 888030.00 of the above tentative price of the plot can be paid in lump sum of allotment letter or in six annual installments. The first installment will fall due after the exprity of one year of the dale of issue of this letter. Each installment would be recoverable together with interest on the balance price at 15% interest of the remaining amount. The interest shall however, accrue from the date of offer of possession. 7. The possession of the site will be offered to you on completion of the development works in the era, where the site is situated." Thus, possession was not synonymous with allotment or reallotment. Date of possession is vital for working out the namre of asset whether long-term or short-term. In case of the appellant, the asset, came In possession only on 27.12.2011. This asset was sold on 28,03.2013. Thus, the asset in question remained with the appellant for less than 3 years and qualifies to be termed as Short-Term Capital Asset. 4,7 It is relevant to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok place, it shall be dealt, with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain 12[is greater than the cost of 13 the residential house so purchased or constructed (hereafter in this section referred to as the new asset)], the difference between the amount of the capital gain and the cost of the new asset shall be charged under .section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case, may be, the cost, shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged, under section 45; and for the propose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be 4.9 Provisions of Section 54F(1) read as .follows:- " 54F. (l)[Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not a short-term capital asset. Section 2(2 9B) "long term capital gain" means capital gain arising from the transfer of a long term capital asset Section 2(42A) Short-term capital asset means a. capital, asset held, by an assessee for not more than thirty-six months immediately preceding the date of its transfer. Section 2S42B} "short term capital gain" means capital gain arising from the transfer of a short term capital asset" 4.11 Since it is noted that the asset in question is a short-term capital asset, the gam arising there from was Short-Term Capital Gam. As such, 1 uphold the action of the Assessing Officer. Since the asset, in question is a Short-Term Capital Asset, benefit of provisions of Section 54 and Section 54F (which prescribe benefit only for a Long-Term Capital Asset) is not available to the assessee appellant. 4.12 In light of the above, the appellant fails in appeal." 5. Contesting the findings of lower authorities and defending the ground of appeals the ld AR submitted a written note as under:- DETAIL OF ASSET IN QUESTION:- PLOT NO. 72, Sector-43, Gurgaon Date of Allotment to original Owner by HUDA :- 31.05.2002 Date of Re- Allotmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "the allottee gets title to the property on the issuance of allotment letter and the payment of installments is only a follow up action and taking the delivery of possession is only a formality." As per Principal Commissioner of Income Tax v Vembu Vaidyanathan (ITA No. 1459 of 2016) dated 22/1/2019 Bombay High Court's stated that in reference to CBDT Circular No. 471 it is observed that such allotment is final unless it is cancelled or the allottee withdraws from the scheme and such allotment would be cancelled only under exceptional circumstances. It further noted that payment of instalment was only a follow-up action and taking delivery is only a formality. The issue involved in the present appeal has also been examined recently by Hon'ble Punjab & Haryana High Court in the case of Vi nod Kumar Jain v CIT Ludhiana having identical facts and relying on circular 471 held that "The allottee received title to the property on the issuance of an allotment letter and payment of installments were only consequential action upon which the delivery of possession followed" Admissibility of Section 54 F 1- Article 265 of the Constitution of India reads that "No tax shall be levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r other particulars before them indicatethat some refund or relief is due to him. This attitude would, in the long run, benefit the department, for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assesses on whom it is imposed by law, officers should - (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs". 7. A reading of the circular shows that a duty is cast upon the assessing officer to assist and aid the assessee in the matter of taxation. They are obliged to advise the assessee and guide them and not to take advantage of any error or mistake committed by the assessee or of their ignorance. The function of the Assessing Officer is to administer the statute with solicitude for public exchequer with an inbuilt idea of fairness to taxpayers." 6. The ld DR vehemently supported the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the payment towards the installments have been made to HUDA from the accounts of the parents of the assessee. The ld AO noted that the total consideration paid to HUDA of Rs. 4177715/- out of which only Rs. 2478500/- has been paid by the assessee therefore, the assessee has not invested the full net sale consideration for acquisition of the new asset. The second reason the ld AO noted that the new property has been purchased in the name of the assessee and mother of the assessee whereas, the property sold was only in the name of the assessee. Thus, the mother of the assessee has also contributed to the capital asset. Hence, the ld AO held that claim of deduction u/s 54F is not allowable. The ld CIT(A) has clearly held that as the impugned asset sold is a short term capital asset there is no benefit of provision of section 54 and 54F is available to the assessee. However, as we have already held that impugned asset is a long term capital asset and the capital gain earned by the assessee is a long term capital gain and therefore, now the assessee after all other conditions are satisfied is eligible for claim of deduction u/s 54/54F of the Act. Therefore, we set aside ground No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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