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TMI Blog2024 (8) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee under gift is subsequently transferred by him by adopting the date and cost of acquisition of the capital asset of the previous owner as the date and cost of acquisition of the assessee. This precisely is the scheme of the Act as laid out in the relevant provision. Under similar circumstances in the case of Manjula J. Shah [ 2009 (10) TMI 646 - ITAT MUMBAI] has held that for the purpose of calculation of indexed cost, the index cost will be taken from the previous year in which the previous owner had become the owner of the property Delhi Flat - order of the CIT(A) is that the swapping of two units for one unit - As we take into consideration the agreement dated 29.10.2018 by which the builder Pureearth Infurastructure Ltd. along with promoter Basant Projects Ltd., had entered into agreement to sell, it comes up that consequent to a settlement agreement executed between DCM, Pureearth and Flat owner association on 10th May, 2003 before the Hon ble Delhi High Court, Pureearth had acquired development rights and Pureearth had further entered into a join development agreement with Basant Projects Ltd. and DCM for development and construction of the said land. The agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under consideration, the assessee earned rental income, interest income and capital gain/loss from sale of property in India and filed his return of income declaring income of Rs. 52,45,610/- and claiming the refund of Rs. 58,57,820/-. The Ld. AR has filed a synopsis, on conclusion of the hearing and Ld. DR has primarily relied the findings of Ld. Tax Authorities below. 2.1 During the year under consideration, the assessee had sold two properties, i.e., one, Flat No. 301, Jasmine at Project Omaxe, Forest Spa, Sector-43, Faridabad, ( Faridabad Flat ) for sale consideration of Rs. 1,95,00,0000/- and second an Apartment No. T-10/412, Project Park Square, Rohtak Road, New Delhi ( Delhi Flat ) for sale consideration of Rs. 72,36,552/- 2.2 The case of assessee was selected for scrutiny under CASS and the e-assessment was completed whereby the Long term capital loss (LTCL) declared by the Assessee amounting to Rs. 70,19,601 was recomputed as short term capital gain of Rs. 1,22,72,900, thereby assessing the income at Rs. l,75,18,505. In computing the same, the AO further did not allow credit of certain payment towards cost of acquisition and considered the sale value as Fair Market Value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Copy of the certificate of acknowledgement of Possession is enclosed at Paper Book Page 121-122. On 27.07.2018, Mrs. Shakuntala Gupta got deleted her name from the property and gifted it to Assessee (Ashish Gupta). Copy of the name deletion form is attached at Paper Book page 123-124. Accordingly, Ashish Gupta (Assessee) became the 100% owner of the property since his family members gifted the same to him. The Assessee sold the property to third party on 22 July 2019 for a consideration of Rs. 1.95 Cr. 4.1 The Assessee claimed long term capital loss on the said property on the basis that same was held by him and his mother/grandmother from FY 2010-11 who subsequently assigned their rights in favour of the Assessee. The entire assignment of property from his mother/grandmother were from his blood relationship out of natural love and affection, hence the period of holding as well as cost of the previous owner ought to be considered. Ld. AR has submitted that in case of gift the price paid by the donor as well as the holding period of the previous owner is considered for the purpose of computing the capital gain. Reliance is placed on Explanation 1(b) to section 2(42A) of the Act, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and thus, is a short-term asset not entitled for indexation of cost of acquisition while computing capital gain. 5. We are of considered view that the transaction of gift is not regarded as transfer and accordingly capital gain arising from such transfer is not made chargeable to tax u/s 45. However, this capital gain by implication is brought to tax at second stage when capital asset becoming the property of the assessee under gift is subsequently transferred by him by adopting the date and cost of acquisition of the capital asset of the previous owner as the date and cost of acquisition of the assessee. This precisely is the scheme of the Act as laid out in the relevant provision. Under similar circumstances, Special Bench of Mumbai in the case of Manjula J. Shah (supra) has held that for the purpose of calculation of indexed cost, the index cost will be taken from the previous year in which the previous owner had become the owner of the property. The AO has placed only on the document disclosing the possession and ignoring the gift altogether. 6. As with regard to Delhi Flat, Ld. AR has submitted that the Assessee made booking of a flat in his name with Ansal DCM Properties i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2018 when the two small units were swapped for the bigger unit. 9. It is submitted by Ld. AR that the capital asset came into existence only after the unit T10-412 was 'held' by the Assessee i.e. the allotment was done in favour of the Assessee in 2018. Accordingly, the Assessee reflected the transaction of sale in its return of income only in 2019 when it sold the allotment in unit T10-412 which was actually allotted to him. In this context it was submitted that the provisional allotment of the two smaller units were cancelled and as such that should not be considered as allotment finalized but only the allotment of the unit T10-412 which was actually executed be considered as the date of allotment and the capital asset actually held by the Assessee. The assessee did not affect the transfer in 2018 since the provisional allotments two smaller units were cancelled and the allotment in one bigger unit T10-412 identified by the Assessee was finalised and the agreement was executed to this effect vesting the right with him. That is the time when the capital asset was actually held by him. Thus, the Assessee held the property only after allotment of unit T10-412 when his ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2 (14) as well as Explanation to Section 48 clearly depicts that assessee must have some right in the capital asset which is subject to transfer. By making the payment to the builder and having received allotment letter in lieu thereof, the assessee will be holding capital asset and, therefore, the benefit of indexation has to be granted to the assessee on the basis of payments made by him for acquiring the said asset and the assessee has rightly claimed the indexation benefit from the dates when he has made the payments to the builder. Therefore, we see force in the claim of the assessee. The Assessing Officer is directed to provide the be the benefit of indexation to the assessee in the manner in which the assessee has claimed 11. We have taken into consideration the above facts and what we observe from the order of the CIT(A) is that the swapping of two units T3-002 and T3-003 for one unit of T10-412 is considered as an exchange and, accordingly, in paras 10.1 to 10.6, the CIT(A) has observed as follows:- 10.1 The appellant has contended that the previous owner Mrs. Sushma Gupta (mother) had booked the property at Faridabad on 21.02.2011. The same was transferred to the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent to a settlement agreement executed between DCM, Pureearth and Flat owner association on 10th May, 2003 before the Hon ble Delhi High Court, Pureearth had acquired development rights and Pureearth had further entered into a join development agreement with Basant Projects Ltd. and DCM for development and construction of the said land. The agreement has reference to earlier allotted apartments which meant the booking of space or area or unit or apartment already made to old flat buyers through erstwhile builders, DCM and Pureearth in the project . It further comes up that the amount of Rs. 40,36,702/- already paid were adjusted as a consideration. 13. Thus, we are of the considered view that Pureearth, was a successor in interest of Ansal-DCM properties and the builder-buyer agreement dated 29.10.2018 as executed was not a fresh agreement of allotment or an exchange deed, but, the assessee as a vendee and the Pureearth and Basant as promoters had only redefined and fortified their respective rights and corresponding liablites, arising from the booking of a flat initiated with Ansal-DCM properties in the year 1989. 14. The CIT(A) had fallen in error in considering the acquisitio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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