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TMI Blog2024 (7) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... rty, computed at Rs. 35,33,059/- applying indexation, as short term capital gains of Rs. 64,89,545/-. 2. The CIT (A) has erred in confirming the order of the assessing officer, denying the exemption u/s. 54F of the Act against the long term capital gains on transfer of right to acquire the property for the reason of the failure on the part of the appellant to file a revised return of income to claim the said exemption. 3. The CIT (A) has erred in confirming the addition of Rs. 16,00,100/- made u/s. 69A of the Act in respect of cash deposited by the appellant in her bank account during the financial year 2015-16." 3. Before us, Ld. Counsel for the assessee did not press ground no. 3. Accordingly, ground no. 3 taken by the assessee is dismissed as not pressed. 4. Ground no. 1 and 2 relates to the issues, as to whether the capital gain reported by the assessee on transfer of right to acquire the property is a long-term capital gain (LTCG) or short-term capital gain (STCG) and as to denial of claim of deduction u/s. 54F for the reason of failure by the assessee to file revised return of income for claiming the said deduction. 5. Brief facts of the case as culled out from records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o allotted. Time for the payment of each instalment is the essence of the agreement as stated therein. From the recitals as contained in this agreement, they all relate to the execution of the project in which the assessee has been allotted the identified said flat. All these recitals are indeed in future tense, in other words, to be executed in the times to come, based on various milestones agreed between the two parties. Registration of this agreement took place on 15.05.2014 which is pursuant to the letter of allotment issued by the builder to the assessee dated 15.02.2010. There is a time gap between the two events of issue of letter of allotment and registration of the agreement containing the recitals for terms and conditions relating to the allotment of the said flat. For this time gap, it is stated that there had been certain disputes and delays relating to approvals for the execution of the project at the end of the builder, beyond the control of the assessee. 6. Subsequently, while the said flat was still under construction, assessee entered into an agreement for sale with assessee being the vendor and the other parties being the purchasers for transfer of right held by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under section 54 is not allowable. Also, since capital gain is the short-term capital gain, he disallowed the deduction under section 54 of Rs.45,81,300 as claimed by the assessee. For the purpose of not entertaining the claim of assessee made during the course of assessment for deduction under section 54F, Ld. Assessing Officer noted that assessee has not filed any revised return of income and therefore such a claim is not permissible. Assessment was completed, against which assessee went in appeal before the Ld. CIT(A). 9. Ld. CIT(A) noted that despite giving sufficient opportunities to represent the case, assessee did not file any submission or explanation in respect of its claim to treat the capital gain as long-term capital gain. Since nothing was brought on record to controvert the findings noted by the Ld. Assessing Officer in the assessment order, the addition so made was upheld. Similar view was taken by the Ld. CIT(A) in respect of denial of claim of deduction under section 54F since no revised return was filed by the assessee. Aggrieved, assessee is in appeal before the Tribunal. 10. Before us, Ld. Counsel for the assessee reiterated the facts and submissions made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same was denied since assessee did not file the revised return of income for claiming deduction under the correct section of 54F. To this effect, Ld. counsel placed strong reliance on the decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT in 284 ITR 323 and CIT vs. Pruthvi Brokers and Shareholders in 349 ITR 336 (Bom) to submit that nothing impinges on the power of the appellate authorities to entertain such a claim of the assessee. 11. Per contra, Ld. Sr. DR referred to para 4.4 of the assessment order to submit that the registered agreement dated 13.05.2014 has created the right or interest in an immovable property which accrued to the assessee and therefore has rightfully computed the capital gain as short-term capital gain as against treatment given by the assessee of long-term capital gain considering the date of letter of allotment that is 15.02.2010. It was also submitted that since no revised return has been filed by the assessee, the deduction claimed u/s 54F has been rightfully not entertained by the Ld. Assessing Officer. 12. We have heard the rival contentions and perused the material on record. The moot point before us is in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by which a right in personam is created in favour of the assessee. When such a right is created in favour of the assessee, the builder is restrained from selling the said identified flat to someone else because the assessee in whose favour the right in personam is created, has a legitimate right to enforce specific performance in terms of the said letter of allotment, if the builder, for some reason is not executing and complying with the terms stated therein. Thus, by virtue of the letter of allotment, some right to own a property is given by the builder to the assessee. In real life, there are events when a person, even after holding such a letter of allotment issued by the builder, tries to sell same property to another person which would not be in accordance with law because once such a contractual arrangement has been agreed upon, the said person gets the right to get the property transferred in his favour by filing a suit for specific performance. Therefore, it can be said that in respect of the said property, though yet to be constructed but identified and allotted to the assessee, some right has been extinguished at the end of the builder and some right had been created in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was long-term capital gain u/s. 2(29A) and as he had purchased another flat on 31.01.1989, such capital gain is set off u/s. 54. However, the assessing officer disallowed the claim of the assessee by taking the date of possession as 15.05.1986 by treating the capital gain as short-term capital gain. On these set of facts, Hon'ble Court referred to CBDT circular No. 471 dated 15.10.1996 whereby instructions were issued regarding treatment of capital gains tax, in case of a flat purchased under self financing scheme. In para 3 of the said circular, it was stated that "it has been decided that cases of allotment of flats under the self financing scheme of the Delhi Development Authority shall be treated as cases of construction for the purpose of capital gains." In para 2, facts of the case were described according to which "under the self financing scheme of the Delhi Development Authority the allotment letter is issued on payment of the 1st instalment of the cost of construction. The allotment is final unless it is cancelled or the allottee withdraws from the scheme. The allotment is cancelled only under exceptional circumstances. The allottee gets title to the property on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Transfer of Property Act which needs to be read with provisions of section 2(47) of the Act for the purpose of computing tax liability arising on account of sale or purchase of immovable properties under the Act. However, the issue before us is different. The issue of transfer of ownership is not the issue to be decided here for computing the holding period. Under the present set of facts which have been discussed in detail in above paragraphs and taking into consideration the judicial precedents referred above, we find that holding period should be computed from the date issue of allotment letter. Once this is considered, the holding period becomes more than 36 months and consequently the right to own the property transferred by the assessee would be a long-term capital asset in the hands of the assessee and the gain on transfer of the same would be taxable in the hands of the assessee as long-term capital gain. We direct accordingly. Ground no. 1 taken by the assessee is allowed. 18. Having so held in terms of above discussion and finding, the assessee is eligible to claim deduction u/s. 54F for the investment made by her in another house property being a flat in ..... 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