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TMI Blog2020 (5) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... of formal agreement spelling out all the exact terms and conditions for acquisition? - HELD THAT:- Hon ble Bombay High Court in the case of PCIT vs. Vembu Vaidyanathan [ 2019 (1) TMI 1361 - BOMBAY HIGH COURT] has taken note of CBDT circular no. 471 dated 15th October 1986 as well as CBDT circular 672 dated 16th Dec. 1993 and concluded that the assessee shall be deemed to have acquired rights in the property on the date of issue of allotment letter for the purposes of expression capital asset . Assessee in the instant case has not only been issued allotment letter, he has also made full payment to the authority concerned immediately thereafter. Thus, the asset is required to be held as long term capital asset even if the later date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter alia disputed the claim of the assessee towards long term capital gains arising on transfer of certain parcel of land (site no.37) during the year. The AO held the income arising from sale of land at site no. 37 to be in the nature of Short Term Capital Gains. Consequently, The AO denied the benefit of exemption claimed under S. 54F of the Act. 4. The CIT(A) in first appeal endorsed the action of the AO. 5 Aggrieved, the assessee preferred appeal before the Tribunal. 6. When the matter was called for hearing before the Tribunal, the ld. Counsel for Assessee submitted a brief background facts relating to the transaction resulting to capital gains as follows 6.1 The Assessee was originally allotted a site bearing No.37A (situ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel submitted that the AO has disputed the claim of LTCG on transfer of the Site no. 37 having regard to the period of holding. The AO computed the period of holding of capital asset at site no.37, with reference to the date of sale deed executed in favour of the assessee on 26-11-2009 and regarded the gain arising from sale of the plot by the assessee on 21-11-2011 to be short term capital gains . 6.4 The Ld. Counsel strongly submitted that the land bearing site no.37, which was oddly shaped and connected to site no.37A, was actually held in possession of the assessee since 2003. The development authority has accepted the case of the assessee for formal transfer of the odd shaped site (site no.37A) and issued the allotment letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allotment letter should be reckoned for the purpose of determination of period holding to ascertain nature of capital gains. It was submitted that although registration deed has been executed at a later date in Nov. 2009, the right had accrued to the assessee on allotment of land in its favour and therefore mere delay in registration would not take away the rights of the assessee to claim the capital gains to be of long term nature. 6.6 The ld. AR thus submitted that the revenue authorities have committed error in ignoring the factum of definite allotment in favour of the assessee and have relied upon the date of sale deed executed at a later date and thus, wrongly denied the benefit accruing from sale of long term capital asset. The ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act, defining the expression capital asset , the revenue on the other hand, seeks to advance an argument that the allotment letter by itself does not generate any right, title, interest in the asset and the effective right on the land get vested from the date of execution of sale deed and not prior thereto. 8.1 In the context of the issue involved, We observe at the outset that the expression capital asset under S. 2(14) of the Act has a wide connotation. The issue whether letter of allotment would give effective right over the capital asset pending execution of formal agreement spelling out all the exact terms and conditions for acquisition has been comprehensively settled in favour of the assessee by the decision of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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