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TMI Blog2025 (3) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal agreement. d) By only on the basis of suspicion and presumption. e) By wrongly rejecting several case laws and circulars cited before the FAO f) By wrongly misinterpreting the clauses of the agreement which has nothing to do with the provisions related to the period of holding for the purpose of capital gains. 2) In the facts and circumstances of the case and in law, the learned A.O. erred in levying interest u/s 234 &initiating penalty u/s 270A." 3) In the facts and circumstances of the case and in law, the Commissioner of Income Tax[A] erred in dismissing all the grounds of appeal on merits by overlooking the fact and legal submissions made. 2. The assessee is an individual and filed the return of income for AY 2020-21 on 01.01.2021 declaring a total income of Rs. 13,80,550/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The Assessing Officer (AO) noticed that the assessee has shown a Long Term Capital Gain (LTCG) of Rs. 1,21,691/- on sale of immovable property located at 51 East, Bandra, Mumbai. The AO noticed that the assessee has claimed indexed cost of acquisition and improvement while computing the LTCG. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contention it is not found to be acceptable. The Circulars No.471 & 672 on which the assessee has placed reliance, are issued in relation to cases of construction for the purposes of sections 54 and 54F of the Income-tax Act. As such, the same are not applicable to the facts of the instant case. Further, as pointed out in preceding paragraphs, there is only an 'agreement to sale. No final 'sale deed' has been filed. This in itself indicates that some of the crucial terms as mentioned in the agreement dated 03.10.2016, i.e., handing over possession of the property, payment of balance sale consideration, intimation from the developer/builder etc., have not been discharged on the date of agreement dated 03.10.2016. As such, It cannot be held that the assessee has acquired the property as on 03.10.2016. The acquisition of the property is only after fulfilment of all such conditions, I.e., on 21.08.2019, on which the last payment in relation to the aforesaid property was made by the assessee. 5.5 In view of the above discussion, it is held that the period of holding of the property is less than 'one year' and hence the profit earned on sale of such property is ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreement with the Builder towards acquisition of the property was entered into on 03.10.2016 (page no. 14 to 57 of the PB) and that the assessee has paid the stamp duty on the value of the property at the time of registration. The ld. AR also drew our attention to the fact that the assessee has paid portion of the consideration out of his share of Rs. 78,54,000/-. The ld. AR further drew our attention to agreement of sale entered into by the assessee dated 19.06.2019 (page 73 to 81 of PB) where the assessee along with other co-owners have sold the property. The ld. AR in this regard submitted that the assessee sold the property in his capacity at the owner of the property which fact has been mentioned in the agreement of sale. Accordingly, the ld. AR argued that the property has been in possession of the assessee from 03.10.2016 and therefore the gain arising on the transfer should be treated as LTCG. 7. The ld. DR on the other hand relied on the orders of the lower authorities. 8. We heard the parties and perused the material on record. We notice that the assessee along with three other members have entered into agreement with M/s Dhudhwala Property Developers for the purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the builder and the assessee for the booking of the flat by which Assessing Officer has computed the gain as short-term capital gain. It is an undisputed fact that letter of allotment was issued by the builder to the assessee on 15.02.2010 by which a right to own the flat as identified by the assessee and builder in the project to be undertaken for construction had accrued on the assessee. The right which accrued to the assessee is the booking right, i.e., the right to purchase the flat and obtain the title. The only question that arises for consideration is whether booking right to the flat accrues to the assessee on the date of allotment of the flat by way of issuing the letter by the builder or on the date of execution and registration of the agreement to sell, i.e., the buyer's agreement. In our considered view, only that agreement which intends to convey these rights accruing to parties can be considered as the source of accrual of rights to the assessee. 13. We have already taken note of various terms and conditions from the letter of allotment dated 15.02.2010 which have been subsequently recorded elaborately in the agreement to sell registered on 13.05.2014. It is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious milestones identified in the said letter have been duly met by the assessee on subsequent dates, duly acknowledged by the builder. Undoubtedly, such contractual right arising out of the letter of allotment can be surrendered or neutralised by the parties through subsequent contract or conduct but such is not a case in hand before us. 15. For the aforesaid understanding, we gainfully rely on the decision of Hon'ble Supreme Court in the case of Sanjeev Lal v. CIT [2014] 46 taxmann.com 300/225 Taxman 239/365 ITR 389 wherein similar observations and findings were given by the Hon'ble Apex Court, though in the context of agreement to sell. In paragraph 23 of the said decision, it is held as under: "23. Consequences of execution of the agreement to sell are also very clear and they are to the effect that the appellants could not have sold the property to someone else. In practical life, there are events when a person, even after executing an agreement to sell an immovable property in favour of one person, tries to sell the property to another. In our opinion, such an act would not be in accordance with law because once an agreement to sell is executed in favour of one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment Authority to deliver the possession of the flat after completing the construction, the remedy for the allottee is to file a suit for recovery of possession." 15.2. Further, Hon'ble High Court dealt with the issue on the meaning to be assigned to the word "held" occurring in section 2(42A) of the Act. For this, the Hon'ble Court relied on another decision in the case of CIT v. Ved Prakash and Sons (HUF) [1993] 73 Taxman 70/207 ITR 148 (Punjab & Haryana) wherein, it was observed as under: "As is clear from a bear reading of section 2 (42A) of the Act, the word "owner" has designly not been used by the legislature. The word "hold", as per dictionary meaning, means to possess, be the owner, Holder or tenant (property, stock, land). Thus, a person can be said to be holding the property as an owner, as a lessee, as a mortgagee or on account of part performance of an agreement, etc. Conversely, all such other persons who may be termed as lessees, mortgagees with possession or persons in possession as part performance of the contract would not in strict parlance come within the purview of "owner". As per the shorter Oxford dictionary, edition 1985, "owner" means one who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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