2019 (9) TMI 1078 - AT - Income Tax

Property classified as long-term capital asset for tax benefits under Sections 54 & 54F.

Smt Bhawna Sharma Versus DCIT (Intl. Taxation), Circle-3 (1) (2), New Delhi

Smt Bhawna Sharma Versus DCIT (Intl. Taxation), Circle-3 (1) (2), New Delhi - TMI Issues Involved:1. Whether the property was a short-term capital asset or a long-term capital asset.2. Whether the appellant was eligible for benefit under Section 54F of the Income Tax Act.3. Whether the appellant was eligible for benefit under Section 54 of the Income Tax Act.Issue-wise Detailed Analysis:1. Determination of Asset Type (Short-term vs. Long-term):The primary dispute was whether the property sold by the assessee was a short-term or long-term capital asset. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] considered the date of the conveyance deed (27.12.2011) as the date of acquisition, making the asset a short-term capital asset since it was sold on 28.03.2013, held for less than 36 months.The assessee contended that the date of allotment (27.12.2002) should be considered the date of acquisition, making it a long-term capital asset. The assessee supported this with various judicial precedents and CBDT Circulars No. 471 and 672, which state that the title to the property is acquired on the issuance of the allotment letter, and subsequent payments are merely follow-up actions.The Tribunal agreed with the assessee, citing the Bombay High Court's decision in ITA No. 1459/2016, which held that the date of allotment should be considered the date of acquisition. Consequently, the Tribunal directed the AO to treat the date of allotment as the date of acquisition, making the property a long-term capital asset. Thus, the profit from the sale was to be considered long-term capital gain.2. Eligibility for Benefit under Section 54F:The AO denied the benefit under Section 54F on the grounds that:- The new property was purchased in the names of the assessee and her mother, while the sold property was solely in the assessee's name.- The mother contributed Rs. 17 lakhs towards the new property, indicating that the full net sale consideration was not reinvested by the assessee alone.The CIT(A) upheld this view, stating that since the asset was considered a short-term capital asset, the benefits under Sections 54 and 54F were not applicable.However, with the Tribunal's determination that the asset was a long-term capital asset, the assessee became eligible for benefits under Section 54F, subject to other conditions being met. The Tribunal remanded the issue back to the CIT(A) to decide on the eligibility for the Section 54F benefit, ensuring that the assessee's contentions were considered, and an opportunity for a hearing was provided.3. Eligibility for Benefit under Section 54:The AO and CIT(A) denied the benefit under Section 54, primarily because they considered the asset a short-term capital asset. The Tribunal's decision that the asset was a long-term capital asset reversed this finding, making the assessee eligible for the benefit under Section 54, provided all other conditions were satisfied.Conclusion:The Tribunal allowed the appeal, determining that the property was a long-term capital asset based on the date of allotment. It remanded the issue of eligibility for benefits under Sections 54 and 54F back to the CIT(A) for reconsideration, ensuring that the assessee's arguments were fully heard and evaluated. The appeal was allowed for statistical purposes, with directions for further proceedings.