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TMI Blog2021 (4) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... DT on this issue. Being so, assessee paid a substantial amount of ₹ 16,75,900/- before the year 1996 and as such, the year of acquisition to be 1996. Accordingly, Idirect the A.O. to consider the year of acquisition of flat as 1996 and thereafter compute the cost of acquisition from this year 1996 as long term capital gain only. This ground of appeal is allowed. Payment of commission - 2% commission on sale consideration is very high - we are inclined to grant payment of commission of 1% and the same to be deducted from the sale consideration. The assessee would get a benefit partially as claimed by the assessee. Appeal filed by the assessee is partly allowed. - ITA No. 1686/Bang/2019 - - - Dated:- 8-4-2021 - SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER Appellant by : Shri S. V. Ravi Shankar , A. R. Respondent by : Shri Ganesh R. Ghale, Standing Counsel for Dept. ORDER PER CHANDRA POOJARI , ACCOUNTANT MEMBER : This appeal by assessee is directed against order of the CIT(A) dated 17.5.2019. The assessee has raised following grounds of appeal: 1.The order of the learned Commissioner of Income Tax (Appeals) - 12, Bengaluru, passed under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r it resulted in long term capital gain or short term capital gain? Facts of the case are as follows: As regard to the addition on account of Short - term capital gains amounting to ₹ 7,21,250/- the appellant has elaborately discussed in detail in the statement of facts and the same may kindly be considered. 2.1.In addition to the facts brought out in the statement of facts the appellant wishes to submit that the appellant had entered into a contract of terms to purchase the flat from M/s. Azofen [11 Ltd., in the year 1995-96 to be precise on 29/03/1995. The appellant purchased the property for a total consideration of ₹ 22,53,255/- paid on various dates and stages. The total cost of acquisition of the property amounted to ₹ 22,53,255/- and further all the payments were made through banking channels. 2.2 It is submitted that the learned assessing officer in her order assessment has considered only a sum of ₹ 17,57,500/- being the cost of acquisition of the subject matter of the property which was allotted to the appellant and the same being Hat No. 602, 6th Floor, No. D-4, lok Upavan - Phase - II , Smt. Gladys Road, Off Pokhran Road No. 2, Loka Upa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned fact has adopted the cost of acquisition of the property at ₹ 17,57,500/- as against the actual and total cost of acquisition of the subject matter of property which was sold at ₹ 22,53,255/- the payments amounting to ₹ 3,64,106/- and ₹ 2,13,249/- were made subsequently in the year 2006-07 Et 2007-08 in addition to the advance amount made by the appellant of ₹ 16,75,900/- totalling to ₹ 22,53,255/-. The learned assessing officer ought to have considered for the purpose of arriving at the cost of acquisition for the advancement of substantial cause of justice. The details and break-up of the cost of acquisition amounting to ₹ 22,53,255/- is as under: SI.No. Particulars Date of Payment Amount Remarks a. Total amounts paid towards purchase of the flat at Lok Upavan Flat as per sale deed dated 11/08/2006 11/08 / 2006 17, 57,500/ - The said amountis mentioned in the registered sale deed dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,475/- Total cost of acquisition of flat 22,53,255/- 2.7 It is submitted further that the above mentioned payments which have been tabulated in the above chart are all allowable expenditure and which has been incurred in connection to the flat of the appellant. The learned assessing office erred in not treating the same for the purpose of arriving at the total cost of acquisition of the flat. The Act specifically allows the appellant to claim any expenditure incurred and incidental towards purchase or sale of the capital asset which the learned assessing officer failed to appreciate. 2.8. As regard to the issue whether the sale consideration received by the appellant is a long-term or short term capital asset, it is submitted that the physical possession of the property was given to the appellant by the developer only on 14/08/2006 but whereas the learned assessing officer failed to appreciate the fact that appellant had entered into agreement in the year 1995-96 itself and major portion of the payments towards the said agreement towards purchase of the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition made by the learned assessing officer of ₹ 7,21,250/- under the head short term capital gains for the advancement of substantial cause of justice. 3. The other ground is ground No.7 with regard to incurring expenditure by assessee for purchase and protection of the property should be considered as a part of the cost of acquisition. At this time Ld. A.R. has not put any serious objection on this issue. However, submitted that payment of commission by 2% of ₹ 16 lakhs worked out to ₹ 32,000/- on sale which was incurred by assessee to be reduced from the sale consideration. 4. Ld. D.R. submitted that there was only payment of advance by assessee for purchase of flat and assessee actually purchased the said property vide sale deed dated 11.8.2006 and the A.O. has considered this date as date of acquisition and for the purpose of computation of capital gain and if we consider this date, the A.O. is justified in determining the income on sale of flat as short term capital gain only. The advance payment of money towards the purchase of property under credit in interest in long term capital asset being an advance payment. 5. I have heard the rival sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge, or relinquishment or extinguishment of any right, under a transaction the assessee is put in possession of an immovable property or he retained the same in part performance of the contract under section 53-A of the Transfer of Property Act, it amounts to transfer. No registered deed of sale is required to constitute a transfer. Similarly, any transaction whether by way of becoming a member of or acquiring shares in a co- operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever, which has the effect of transferring, or enabling the enjoyment of any immovable property, also constitutes transfer and the assessee is said to hold the said property for the purpose of the definition of 'short-term capital gain'. In fact, the Circular No. 495 makes it clear that transactions of the nature referred to above are not required to be registered under the Registration Act, 1908. Such arrangements confer the privileges of ownership without transfer of title in the building and are common mode of acquiring flats particularly in multistoried constructions in big cities. The aforesaid new sub-clauses (v) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 48, the language employed is unambiguous. The intention is very clear. When a capital asset is transferred, in order to determine the capital gain from such transfer, what is to be seen is, out of full value of the consideration received or accruing, the cost of acquisition of the asset, the cost of improvement and any expenditure wholly or exclusively incurred in connection with such transfer is to be deducted. What remains thereafter is the capital gain. It is not necessary that after payment of cost of acquisition, a title deed is to be executed in favour of the assessee. Even in the absence of a title deed, the assessee holds that property and therefore, it is the point of time at which he holds the property, which is to be taken into consideration in determining the period between the date of acquisition and date of transfer of such capital gain in order to decide whether it is a short-term capital gain or a long term capital gain.' 10.1 Further, in the case of Richa Bagrodia v. Dy. CIT [2019] 103 taxmann.com 73/175 1TD 552 (Mum.), the Tribunal considered similar issue and observed as under: '4. We heard both the parties and perused the orders of the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l gains. In this regard, Ld Counsel filed various decisions to suggest that the date of allotment must be considered for the purpose of computing the long term capital gains instead of date of registration. Ld Counsel filed the order of the Tribunal in the case of ACIT v. Smt Vandana Rana Roy vide [ITA No. 6173/M/2011 (A Y 2007-2008) dated 7-11-2012], wherein one of us (AM) is a party, and stated that the date of allotment should be reckoned as relevant date for computing the holding period for the purpose of computing the capital gains. In this regard, Ld Counsel brought our attention to para 7 and 8 of the said order of the Tribunal to support his case. The said judgment was decided considering the judgment of the Gujarat High Court in the case of CIT v. Anilaben Upendra Shah [2003] 262 ITR 657 (Guj.) apart from other decisions of the Tribunal in the case of Jitendra Mohan v. ITO [2007] 11 SOT 594 (Delhi) and also another decision of the ITA T in the case of Pravin Gupta v. ACIT and the relevant propositions are extracted in para 7 of the Tribunal's order dated 7-11-2012. The said paras 7 and 8 from the order of the Tribunal in the case of Smt Vandana Rana Roy read as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) when he started making payment to the builder and not from the date of execution of conveyance deed in 2001. 8. All the above decisions are uniform in concluding that the date of allotment is reckoned as the date for computing the holding period for the purpose of capital gains. The date of allotment in this case being 19- 112001 and the date of sale is 23-8-2006, therefore, the holding period is much more than 36 months. In this case, the gains earned by the assessee on the sale of flat have to be computed as capital gains. Without prejudice, even if the date of possession, being 14-8-2003, is considered; the assessee is still entitled to the benefits of the Long Term Capital Gains. Therefore, in our opinion, order of the CIT (A) does not call for any interfere. Accordingly, the grounds raised by the Revenue are dismissed. 4. Considering the above settled nature of this issue, we are of the opinion that the assessee must succeed on this issue. Accordingly, the relevant grounds of appeal are allowed. 7. From the above settled position of the issue, it can be safely concluded that the date of allotment should be reckoned as the date for computing the holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Being so, we have no hesitation in reversing the finding of the Ld. CIT(A) on this issue and direct the A.O. to consider the date of allotment of property i.e. 20-5-1986 for the purpose of determining the cost of inflation of the assets, while computing the cost of acquisition of property in terms of section 49 of the Act. This ground of the assessee is allowed. 6. Further, in the case of Sri Bhatkal Rama Rao Prakash in ITA No.2692/Bang/2018, the Tribunal vide order dated 04.01.2019 held as under: 8.We have heard the rival submissions. The dispute between the Assessee and the Revenue is as to whether the gain on sale of the RR Property which was obtained originally on 22.03.2001 on lease from the society which was subsequently conveyed absolutely by the society to the Assessee by a registered sale deed dated 31.08.2014 can be said to be a LTCG. 9.Sec.2(29B) of the Act defines Long term capital gain as follows:- long-term capital gain means capital gain arising from the transfer of a long-term capital asset; Sec.2(29A) of the Act defines Long term Capital asset as follows:- long-term capital asset means a capital asset which is not a short-term c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt dated 19.9.2007 had to deal with a case where the Assessee got a site allotted in her favour by the Bangalore Development Authority (BDA) under a lease-cum-sale agreement dated 28.2.1981 and was put in possession of the site allotted. She got absolute sale deed from BDA only on 19.9.1996. She sold the property on 25.3.1997. The question before the Hon ble Karnataka High Court was as to whether the capital gain can be regarded as LTCG or STCG. The case of the revenue was that the period of holding had to be reckoned from 19.9.1996 and the capital gain had to be regarded as STCG. The plea of the Assessee was that the holding period had to be reckoned from 18.2.1981 the date on which the Assessee got possession of the property under lease-cum-sale agreement was accepted by the Hon ble Karnataka High Court. Similar decisions were rendered by the Hon ble Allahabad High Court in the case of Smt.Rama Rani Kalia 358 ITR 499 (All) Amar Nath Agarwal 371 ITR 183 (All). 12. We also find support for the aforesaid conclusions from another decision of the Hon ble Karnataka High Court in the case of CIT vs A Suresh Rao 223 Taxmann 228 (Kar) wherein similar issue was considered and wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferor. The intention of legislature is to treat even such transactions as transfers and the capital gain arising out of such transactions are brought to tax. Further, the Circular No.4 71 goes to the extent of clarifying that for the purpose of Income-tax Act, the allottee gets title to the property on the issuance of the allotment letter and the payment of installments is only a follow up action and taking the delivery of possession is only a formality. In case of construction agreements, the tentative cost of construction is already determined and the agreement provides for payment of cost of construction in installments subject to the ITA No. 2692/Bang/2018 Page 7 of 17 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. Therefore, in construing such taxation provisions, what should be the approach of the courts and the interpretation to be placed is clearly set out by the Apex Court in the case of Smt. Saroj Aggarwal vs CIT 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16,75,900/- 281 32,86,195/- 2006 - 07 3,64,106/- 519 3,86,556/- 2007 - 08 2,13,249/- 551 2,13,249/- Total Cost of Acquisition 22,53,255/- 38,86,000/- 19,43,000/- Consideration received from sale of property 32,00,000/- 32,00,000/- 6,00,000/- Net Gain / Loss 9,46,745/- (6,86,000) (3,43,000) 8. Being so, assessee paid a substantial amount of ₹ 16,75,900/- before the year 1996 and as such, the year of acquisition to be 1996. Accordingly, I direct the A.O. to consider the year of acquisition of flat as 1996 and thereafter compute the cost of acquisition from this year 1996 as long term capital gai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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