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TMI Blog2024 (11) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... as furnished details of payments made in each of the years. The consequence of the issuance of a letter of allotment for the flat signifies a contractual arrangement between the assessee and the builder by which a right in persona is created in favor of the assessee. When such a right is created in favor of the assessee, the builder is restrained from selling the said identified flat to someone else because the assessee in whose favor the right in persona 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. A right in personam had been created in favor of the assessee in whose favor the letter of allotment had been issued and who has paid 20% of the total agreed consideration as advance. Based on the facts and circumstances mentioned above, we are of the view that the sale of the above stated premises is in the nature of long term asset resulting in long term capital gains on which the assessee is also eligible to deduction in terms of section 54F. The addition made is accordingly deleted and claim of the assessee is LTCG is restored. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was commercial property the AO also asked appellant to explain how exemption u/s 54 was applicable on the same. In response, the appellant submitted that the there was typing error in computation of income and the deduction claimed may be considered u/s 54F.The AO further noted that transferred office property was allotted to assessee on 30.07.2010 and was transferred by him on 12.05.2013 as per Sale deed cum transfer . Since he held the asset for a period of less than 36 months, the asset transferred was held to be short term capital asset and exemption u/s 54 54F were denied being not applicable for short term capital asset. Accordingly, he disallowed the deduction claimed of appellant of Rs. 56,14,425/- and added the same to the income of the appellant. 4. In subsequent appeal filed by the assessee, the learned CIT(A) observed that the moot point in the ground was the treatment of capital gain on sale of Office Premises in Bharat Diamond Bourse (BDB),Mumbai as STCG while appellant contended that the gain was LTCG. During the year under consideration, the appellant had sold his immovable office property located in BDB on 12.03.2013. The AO treated the capital gain arising on tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.10 which made it further clear that till that time, appellate was not having any type of right in any property. It was further observed that on perusal of point no.6 of the letter dated 30.07.2010 issued by BDB to the appellant, it was clear that BDB has executed the lease deed with MMRDA only on 31.03.2010 in respect of the land on which the stipulated premises is situated and in the said lease deed, appellant had been shown as one of the proposed allottee that meant the BDB has received the rights to transfer the stipulated premises only on 31.03.2010 itself. Also in point No.8 of the aforesaid letter, it was stated that we hereby deliver and hand over to you vacant, quiet and peaceful possession of the stipulated premises which now onwards you are entitled to peacefully possess, occupy, use and enjoy as rightful allotee thereof, but subject however, to the provisions of the articles of association of the company and as per the terms and conditions of the lease deed dated 31 March, 2010.Conseuqntly,the ld.CIT(A) dismissed the appeal and upheld the action of the AO. 5. Further, w.r.t. the ground no.2 which pertained to the issue of not allowing deduction u/s 54F of Rs. 56,14,425 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 1192-93 3,54,500 FY 1993-94 1,23,000 FY 1994-95 1,08,000 FY 1995-96 1,62,000 FY 1996-97 1,08,000 FY 1997-98 90,000 FY 1998-99 75,000 FY 1999-00 36,000 FY 2000-01 37,500 FY 2002-03 54,000 FY 2003-04 2,23,500 FY 2004-05 3,90,000 FY 2005-06 1,84,500 FY 2006-07 22,390 Total 21,55,890 The above mentioned office was sold by the assessee on 12.03.2013 at Rs. 1,14,80,000/-, after holding for period of 15 years. 6.2 It was further submitted that the assessee is already a senior citizen of 69 years of age and with no lineal decedent into diamond business. Further assessee felt no need to travel and operate from BKC and hence he decided to sell the said premises. The assessee offered the gain on sale of the office as Long Term Capital Gain while filing his return of income for AY 2013-14. As per allotment letter dated 30.07.2010, it was mentioned that BDB has entered into lease agreements with MMRDA in year 1993. It was only in year 2010, the certain documents were registered. The OC (Occupancy Certificate) was received vide dated 6.09.2009. 6.3 With regard to Office number, it is stated that it is clearly mentioned in 2005 statement of BDB that appellant was allotted Office no. DE8032, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re made towards the same. Infact the statement from BDB dated 04.6.2005 did mentioned office no DE8032 in its schedule of payments which was issued much prior to 2010. 3 AO has further referred to letter dated | 30.07.2010 whereby it was informed to the appellant that BDB has executed and registered Lease deed with MMRDA in respect of said plot. BKC was formed by MHADA all plots are leased by MHADA. Infact the recent Reliance Convention Centre Godrej plots are also leased by MHADA. AO concluded that lease deed was executed only on 31.3.2010 with MMRDA for the land where BDB received rights to transfer stipulated premised. Thus appellant acquired rights in the office premises on or after 30.07.2010; which means asset transferred is Short term and not long term. The letter referred by AO was towards provisioning of information with regard to lease rights finally acquired by BDB from MMRDA. The AO ignored the fact that in allotment letter dated 30.07.2010, it was clearly mentioned about two original leases with MMRDA in 1993. The appellant was already having rights in the proposed structure to be developed by BDB. The payment were made for the office from 1992, the asset which was fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that date of allotment of flat and not date of giving possession of flat which has to be considered as date for computing holding period of 36 months. Further, the Indore Tribunal in the case of Sanjay Kumath V ACIT (2014) in ITA NO.448/Ind/2013 that the period of holding of a flat reckoned from the date of allotment letter as it extinguished the right of the builder in the flat. Mr. Sanjay had acquired all rights in said flat on the date of allotment thus, the holding period being more than 36 months, exemption under section 54F was admissible to him. 7.3 It was held by the Hon ble Supreme Court of India in the case of Sanjeev Lal v CIT (2014) that the agreement to purchase is to be considered as a date on which the property i.e., the residential house had been acquired (transferred). It is stated that by looking at the provisions of Section 2(47) of the Act, which defines the word transfer in relation to a capital asset, one can say that if a right in the property is extinguished by execution of an agreement to sell, the capital asset can be deemed to have been transferred. 7.4 Even seen in the light of consideration paid, as per details narrated in para 6.1 above, it is evident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prescribed period which will entitle him to obtain possession of the flat so constructed and in which he intends to reside. The material test in this connection is domain over the flat and investment in it. 7.5 The Central Board of Direct Taxes Circular No. 471, dated October 15, 1986, deals with investment in flats under the self-financing scheme of the Delhi Development Authority. The Board has stated in the circular that when an allotment letter is issued to an allottee under this scheme on payment of the first instalment of the cost of construction, the allotment is final unless it is cancelled. The allottee, thereupon, gets title to the property on the issuance of the allotment letter and the payment of instalments is only a follow-up action and taking delivery of possession is only a formality. 7.6 Similar issue came up for consideration before the coordinate Bench of ITAT, Mumbai in the case of Minaxi Mahesh Pawani (Deceased) through Legal Heir Pratik Mahesh Pawani (ITAT Mumbai) Appeal Number : ITA No. 4380/MUM/2023 Date of Order : 28/06/2024 wherein it was held that the holding period shall be computed from the date of the allotment letter and not the date of registration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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