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TMI Blog2022 (7) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... e on which purchase of residential unit can be stated to have acquired property. We are of considered view that assessee has transferred the property with the promise of allotment of flat. Therefore, the date of acquisition should be the date of allotment of flat, in this case the date of entering into the joint development agreement. Therefore, the claim made by the assessee is proper and justified and accordingly, we direct the Assessing Officer to allow claim made by the assessee u/s. 54F of the Act and accordingly, ground raised by the assessee is allowed. - ITA NO. 3133/MUM/2019 - - - Dated:- 20-5-2022 - SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, HON'BLE JUDICIAL MEMBER Assessee by: Shri Prakash Jhunjhunwal Shri Hemant Bahedia Department by: Shri R.A. Dhyani ORDER PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the assessee against order of the Learned Commissioner of Income Tax (Appeals)-32, Mumbai [hereinafter in short Ld.CIT(A) ] dated 05.03.2019 for the A.Y. 2014-15. 2. Brief facts of the case are, assessee filed return of income declaring total income of Rs.1,56,640/- filed on 30.09.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residential flat after seven months from its acquisition, therefore, it is a short term capital gain. Accordingly, assessee was asked to explain why the above sale should not be treated as short term capital gain and exemption claimed u/s. 54F of the Act should not be denied. 5. In response assessee filed relevant explanation vide letter dated 11.11.2016 and 24.11.2016 and further vide letter dated 05.12.2016, the relevant portion of the same are reproduced below: - 5.2. During the course of assessment proceedings and in response to the show cause notice, the AR of the assessee has furnished his explanation vide letter dated 11.11.2016 and 24.11.2016 and further vide letter dated 05.12.2016. The relevant portion of the same is reproduced as under:- Our client had purchased land on 14.10.2006 for Rs. 16,00,000/-. The same land was given to M/s. Dhawan Builders for development. The developer has not given any consideration for the land but promises our client to provide three bedroom flat having a carpet area of 1000 sq.ft. in the newly constructed building. Thus instead of consideration the flat has been given by the developer to our client in 2013 which was sold on 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by execution and registration agreement dated 10.07.2013. He observed that from 14.10.2006 (date of acquisition) to 10.07.2013 the assessee was merely having specia of right by way of intangible property which ceased on execution and registration of agreement for flat dated 10.07.2013 that is to say, right to acquire the property is lapsed and then new asset, a residential flat being the capital asset has been purchased. The assessee had only the right of acquisition of the said flat and the said right was ceased on getting the possession of the flat. Since assessee has sold the property on 24.02.2014 after taking possession on 10.07.2013, the flat was the new asset which was sold. Therefore, the period of holding in respect of the flat has to be reckoned from the date of acquiring of the possession of the flat. Accordingly, he treated the above transaction as short term capital gain and denied the exemption claimed by the assessee u/s. 54 of the Act. 7. Aggrieved assessee preferred an appeal before the Ld.CIT(A). After considering detailed submissions of the assessee, Ld.CIT(A) partly allowed the appeal filed by the assessee with the following observations:- 4.3.2 I find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d short term capital gain in respect of transfer of super-structure of the flats, by making following observations:- 5.5 The situation is identical in the present case. In this case, the assessee along with flats had also sold right of the assessee in the land which was an independent asset and which was being held by the assessee since 1962 as an owner. Therefore, following the judgment in Hindustan Hotels Ltd. (supra), the capital gain in respect of transfer of right of assessee in the land has to be computed separately as long term capital gains and gain in respect of sale of super structure has to be treated as short term capital gain. The id. AR has argued that in case of Hindustan Hotels Ltd. (supra), the gain in respect of super structure had been taken at about 17% and therefore in this case also while attributing the sale consideration towards price of super structure, a margin of 17% on the cost of construction should be adopted. However, we note that in case of Hindustan Hotels Ltd. (supra), the period of construction* was 1990-95 and it had been sold soon thereafter in June 1995 whereas in the present case the period of construction was 2002-05 and flats had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant facts and chart mentioned in Page No. 2 of the Assessment Order and submitted that assessee gave the land for development of the flats and in return assessee was allotted 3BHK flat measuring 1000 Sq.ft. in exchange of the above said right. He submitted that assessee was promised the flat and what is relevant is the date of allotment of flat in view of the transfer of the above said rights. Therefore, for the purpose of calculating the capital gain the relevant date should be the date of allotment of flat and not the possession of the flat. In this regard he relied on the following cases: - (i). Pr.CIT v. Vembu Vaidyanathan [101 taxmann.com 436 (HC-BOM) (ii). Madhu Kaul Vs. CIT [43 taxmann.com 417 (HC P H)] 10. On the other hand, Ld. DR submitted that in the joint development agreement there was no specific flat allotment to the assessee and it is only a right for the above said flat, since the assessee has relinquished the right once the flat was occupied by the assessee. Further he submitted that Ld.CIT(A) has considered the facts in detail and gave a proper relief to the assessee. He relied on the finding of the Ld.CIT(A). 11. Considered the rival submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a follow-up action and taking the delivery of possession is only a formality. 5. This aspect was further clarified by the CBDT in its later circular No.672 dated 16th December, 1993. 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 D.D.A., similar view should be taken as was done in the board circular dated 15th October, 1986. In the circular dated 16th December, 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 cooperative societies or other institutions are similar to those mentioned in para 2 of Board's Circular No.471, dated 15101986, such cases may also be treated as cases of construction for the purposes of sections 54 and 54F of the Income-tax Act. It can thus be seen that the entire issue was clarified by the CBDT in its above mentioned two circulars dated 15th October, 1986 and 16th December, 1993. In terms of such clarifications, the date of allotment would be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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