9911796707
TMI Blog2021 (8) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Transfer of Property Act read with Section 2(47)(v) of the IT Act and the construction of the apartment was for and on behalf of the Appellant for which the cost was incurred from time to time as per the scheme of payment provided in the agreement and accordingly the Appellant had rightly computed the Cost Inflation Index while computing the capital gain and the same should have been accepted. 4) The learned CIT(A) failed to appreciate that the apartment was constructed on behalf of the Appellant and it was not a case of purchase when the property stood registered. 5) The learned CIT(A) ought to have appreciated that the apartment was deemed to have been held by the Appellant from the date of execution of Joint Development Agreement (JDA) which has been honored and the payment schedule has been made accordingly without default and consequently the apartment is deemed to have been held by the Appellant from 09.06.2006 and the Cost Inflation Index as computed by the Appellant was correct and complete and the impugned disallowance as made by the CIT(A) is opposed to law and liable to be deleted. 6) The learned CIT(A) ought to have appreciated that there are judicial prece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1,32,303 and thus the net capital gain of Rs. 41,08,845 was offered for taxation. The assessee also claimed deduction for the improvement made to the interest for expenditure of Rs. 5,72,000 was incurred. 4. The AO however did not allow the claim of cost of improvement by way of interiors on the ground that the appellant did not produce bills even though the particulars of improvement made, the person who had carried out the improvement and details of cheque payments made to him were provided. Further the AO determined the inflated cost only from the date of registration of sale deed i.e., 17.05.2010 and consequently arrived at capital gain at Rs. 83,37,613 which caused an addition of Rs. 42,28,768 to the returned income. 5. Before the CIT(Appeals), the assessee submitted that that the agreement to sell the undivided share and also the agreement for determination of value of the property were executed on 09.06.2006 and the Appellant had constructive possession of the land from that date as contemplated under Section 53A of the Transfer of Property Act read with Section 2(47)(v) of the IT Act. The construction of the apartment was for and on behalf of the Appellant for which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the scheme of payment provided in the agreement. Accordingly the Appellant had rightly computed the Cost Inflation Index while computing the capital gain. Further it is submitted it was not a case of purchase when the property stood registered. Therefore, the apartment was deemed to have been held by the Appellant from the date of JDA on 9.6.2006 according to which payments have been made. As such, Cost Inflation Index as computed by the Appellant was correct and the impugned disallowance is liable to be deleted. Further, reliance was placed on the order of the Tribunal in the case of L. Vivekananda in ITA No.1087/Bang/2018 dated 18.11.2020. 8. The ld. DR relied on the orders of lower authorities. 9. We have heard both the parties and perused the material on record. The contention of the assessee is that for the purpose of computation of capital gain, indexation of cost of acquisition is to be made from the date of incurring various payments for the purpose of acquisition of capital asset which is subject matter of charging of capital gain. However, the lower authorities considered the date of registration of the property in favour of assessee i.e., 17.5.2010 and determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract 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 subclauses (v) and (vi) have been inserted in Section 2(47) to prevent avoidance of capital gains liability by recourse to transfer of rights in the manner referred to above. A person holding the Power of At ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 shortterm capital gain or a long term capital gain." 10.1 Further, in the case of Richa Bagrodia in ITA No.3601/Mum/2012 dated 22.4.2014, the Tribunal considered similar issue and observed as under: 4. We heard both the parties and perused the orders of the Revenue Authorities as well as the judgments of the Hon'ble High Court and the decisions of the Tribunal cited by learned representatives of both the parties. The only issue that is to be decided is whether the date of allotme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of ACIT vs. 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 vs. Anilaben Upendra Shah (2003) 262 ITR 657 (Guj) apart from other decisions of the Tribunal in the case of Jitendra Mohan vs. ITO (2007) 11 SOT 594 (Del) and also another decision of the ITA T in the case of Pravin Gupta vs. 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: 7. We have heard both the parties, perused the cited decisions and we find that there is no dispute on the facts The only issue that is to be decided is whether date of allotment of the flat or the date of possession of the fiat by the assessee should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains. The date of allotment in this case being 19.11.2001 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 interference. 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 period for the purpose of capital gains. In the instant case, the date of allotment is 11.04.2003 (FY 2003-2004) and the date of sale of the property is 14.10.2007, therefore the holding period is more than 36 months. Therefore, the capital gains earned by the assessee on the sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 49 of the Act. This ground of the assessee is allowed." 10. Similar view was taken by the Hon'ble jurisdictional High Court in the case of Smt. Daisy Devaiah in ITA No.109/2014, judgment dated 22.7.2014 wherein it was held as follows:- "6. The appeal is admitted to consider the following Substantial question of law: "Whether on the facts and in the circumstances of the case, the tribunal is right in law in concluding that while computing the capital gains arising on transfer of a capital asset acquired by the assessee through succession, the indexed cost of acquisition has to be computed with reference to the year in which the previous owner first held the asset and not the year in which the assessee actually became the owner of the asset through succession?" 7. Section 45 of the Act provides that any profits or gains arising from the transfer of a capital asset effected in the previous year shall be chargeable to income tax under the head "Capital gains". Capital Gains is of two types. Short-term capital gains and long term capital gains. Depending upon the nature of capital gains the liability of the tax is determined. The mode and manner of computing the capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quisition on the day the previous owner acquired it and apply the "Indexed Cost of Acquisition" and then calculate the capital gains and the tax payable. That is precisely what has been held by the Bombay High Court in the aforesaid Judgment which in our view is the correct legal decision." 11. Accordingly we direct the AO to recompute the cost of acquisition in the light of above discussion. 12. The next ground is with regard to disallowance of cost of improvement incurred by the assessee. The lower authorities denied this claim of assessee towards improvement made to the interiors for which the assessee could not produce the requisite details of bills and vouchers. According to the ld. counsel for the assessee it was misplaced. Even before us the assessee has not produced an iota of evidence to suggest that the cost of improvement incurred on the interiors. In the absence of requisite details, we are not in a position to appreciate the argument of the assessee to allow such claim. Therefore, this ground of the assessee is dismissed. 13. In the result, the appeal of the assessee is partly allowed for statistical purposes. Pronounced in the open court on this 29th day of July, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
