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TMI Blog2021 (3) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... of impugned flat is short term capital gains, they did not have an occasion to consider / examine the claim of deduction u/s 54 of the I.T.Act on reinvestment. Therefore, we restore the case to the A.O. for the limited purpose for examining whether the assessee is entitled to deduction u/s 54 of the I.T.Act. - ITA No. 32/Bang/2018 - - - Dated:- 16-3-2021 - Shri George George K, JM And Shri B.R.Baskaran, AM Appellant by : Smt.Jinita Chaterjee, Advocate Respondent by : Smt.R.Premi, JCIT-DR ORDER Per George George K, JM : This appeal at the instance of the assessee is directed against CIT(A) s order dated 06.09.2017. The relevant assessment year is 2010-2011. 2. There are eight grounds raised. Ground Nos.1, 6, 7 and 8 are general in nature and no adjudication is required, hence, the same are dismissed. Ground Nos.2 and 3 relate to the issue of reopening of assessment. However, no arguments were raised with regard to the reopening of assessment, hence, ground Nos.2 and 3 are also rejected. The surviving ground Nos. 4 and 5 read as follows:- 4. The learned CIT(A) ought to have appreciated the explanation furnished by the appellant and held that the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een transferred to the prospective buyers and no final sale deed was executed for acquiring the property by the appellant and what was transferred by him as again only right and not an absolute property acquired through a registered document of sale. The legal ownership and title of the property would be transferred to the buyer only through a registered document after payment of requisite stamp duty and registration charged to the Stamp Duty Authorities by registering the property in the name of the buyer. As per the India Evidence Act the instruments which are not duly stamped / registered are inadmissible evidence in the court of law. Thus, the date on registration of the property would be considered as date of the transfer of the property. Therefore, the Assessing Officer s action in treating the capital gains arose on transfer of the original property after acquiring the rights over that property by way of registration as STCGs is hereby upheld. The grounds of appeal therefore is hereby dismissed. 5. Aggrieved by the order of the CIT(A), the assessee has preferred this appeal to the Tribunal. The learned AR has filed four sets of paper book, enclosing therein various jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the period to 36 months. In the memorandum explaining the provisions in the Finance (No.2) Bill, 1977, the reasons for enlargement of the scope of long-term capital gains is set out as hereunder: 'Enlarging the scope of long-term capital gains . Any profits or gains arising from the transfer of any capital asset held by a taxpayer for not more than 60 months immediately preceding the date of its transfer are treated as capital gains relating to a short-term capital asset and charged to tax as ordinary income. Gains arising from the transfer of a capital asset held by the taxpayer for more than 60 months are treated as long-term capital 'gains and charged to tax on a concessional basis. As the holding period of 60 months is unduly long and adversely affects the investment climate, the Bill seeks to secure that gains arising from the transfer of any capital asset held by a taxpayer for more than 36 months immediately preceding the date of its transfer are treated as long-term capital gains and, therefore, charged to tax on a concessional basis.' 6.2 Similarly, the reason for introduction of clauses (v) and (vi) in the definition of the word transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Sections 54 and 54-F provide that capital gains arising on transfer of a long-term capital asset shall not be charged to tax to the extent specified therein, where the amount of capital gain is invested in a residential house. In the case of purchase of a house, the benefit is available if the investment is made within a period of one year before or after the date on which the transfer took place and in case of construction of a house, the benefit is available if the investment is made within three years from the date of the transfer. 2. The Board had occasion to examine as to whether the acquisition of a flat by an allottee under the Self-Financing Scheme (SFS) of the D.D.A. amounts to purchase or is construction by the D.D.A. on behalf of the allottee. Under the SFS of D.D.A., the allotment letter is issued on payment of the first instalment of the cost of construction. The allotment is final unless it is cancelled or the allottee withdraws from the scheme. The allotment is canc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on de facto basis. 6.5 In the instant case, the letter of allotment was issued to the assessee on 22.03.2006. The letter of allotment makes a mention of the identity of the flat in Mumbai, namely, Flat No.304, Buttercup, Hiranandani Meadows, situated at Thane (West Mumbai). It also makes a mention that total consideration of the said property is a sum of ₹ 29,08,950 out of which a sum of ₹ 1 lakh was paid by the assessee on the date of allotment and balance is to be paid as per the terms mentioned in the allotment letter. The Hon'ble Karnataka High Court in the case of CIT vs A Suresh Rao 223 Taxmann 228 (Kar) dealt with similar issue wherein the significance of the expression 'held' used by the legislature has been analysed and explained at length. Hon'ble High Court analysed various provisions of the Act pertaining to computation of capital gain under various situations and also circulars issued by the CBDT on this issue. The relevant portion of the observation of the Hon ble Karnataka High Court (supra), is reproduced hereunder:- 12. The definition as contained in Section 2 (42A) of the Act, though uses the words, a capital asset held an as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f construction is already determined and the agreement provides for payment of cost of construction in installments subject to the condition that the allottee has to bear the increase, if any, in the cost of construction. Therefore, for the purpose of capital gains tax the cost of the new asset is the tentative cost of construction and the fact that the amount was allowed to be paid in installments does not affect the legal position 6.6 Thus, from the aforesaid judgment, it is clear that for the purpose of holding an asset, it is not necessary that the assessee should be the owner of the asset based upon a registration of conveyance conferring title on him. 6.7 Similarly, in the case of Mrs.Madhu Kaul v. CIT Anr. [(2014) 363 ITR 54 (P H)], the Hon'ble Punjab Haryana High Court analysed various circulars and provisions of the Act that on allotment of flat and making first installment the assessee was conferred with a right to hold a flat which was later identified and possession delivered on later date. The mere fact that possession was delivered later, would not detract from the fact that assessee (allottee) was conferred a right to hold the property on issuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the terms, conditions and consideration as mentioned in the said Allotment Letter dated 22nd February 2006 and proper compliance thereof by the said Mahendrasinh Ramsinh Jadhav Anita Mahendrasinh Jadhav. 6.10 The Hon ble Bombay High Court in the case of CIT v. Tata Services Limited [(1980) 122 ITR 594 (Bom).] had stated that the word property used in section 2(14) of the I.T. Act is a word of widest amplitude and this was reemphasized this by use of the words of any kind . It was held by the Hon ble Bombay High Court that the contract for sale of land is capable of specific performance and is also assignable. Therefore, it was concluded by the Hon ble Bombay High Court that a right to obtain conveyance of immovable was liable for capital gains. The relevant finding of the Hon ble Bombay High Court in the case of CIT v. Tata Services Limited (supra), reads as follow:- What is a capital asset is defined in s. 2(14) of the I.T. Act, 1961. Under that provision, a capital asset means property of any kind held by an assessee, whether or not connected with his business or profession. The other sub-clauses which deal with what property is not included in the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces. It was noted that the allottee gets title to the property on the issue of allotment letter and the payment of instalments was only a follow-up action and taking the delivery of possession is only a formality. 5. This aspect was further clarified by the Central Board of Direct Taxes in its later Circular No. 672, dated December 16, 1993 ([1994] 205 ITR (St.) 47 ). In such circular representations were made to the Board that in cases of allotment of flats or houses by co-operative societies or other institutions whose schemes of allotment and consideration are similar to those of Delhi Development Authority, similar view should be taken as was done in the Board circular dated October 15, 1986. In the circular dated December 16, 1993 the Board clarified as under : 2. The Board has considered the matter and has decided that if the terms of the schemes of allotment and construction of flats/ houses by the co-operative societies or other institutions are similar to those mentioned in para 2 of the Board's Circular No. 471, dated October 15, 1986, such cases may also be treated as cases of construction for the purposes of sections 54 and 54F of the Income-tax Act. ..... 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