Tribunal confirms LTCG status, allows Section 54 deduction, emphasizing acquisition timing.

The Tribunal dismissed the revenue's appeal, confirming the capital gain as Long-Term Capital Gain (LTCG) and allowing the deduction under Section 54 based on the date of the sale agreement. The Tribunal upheld the CIT (A)'s decisions on both issues, emphasizing that the right to obtain the flats was acquired long before the sale and that the acquisition of the new asset fell within the permissible period.

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Issues Involved:
1. Classification of capital gain as Long-Term Capital Gain (LTCG) or Short-Term Capital Gain (STCG).
2. Allowability of deduction under Section 54 of the Income Tax Act.

Issue-Wise Detailed Analysis:

1. Classification of Capital Gain:
The primary issue was whether the capital gain from the sale of 23 flats should be classified as LTCG or STCG. The Assessing Officer (AO) considered it as STCG, while the assessee claimed it as LTCG, supported by the CIT (A). The AO argued that since the possession of the flats was taken in FY 2013-14 and sold in FY 2014-15, the asset was a short-term capital asset under Section 2(42A) of the Income Tax Act. However, the assessee contended that the right to acquire the built-up area arose on 16.12.2010 with the signing of the Joint Development Agreement (JDA), thus making it a long-term asset. The Tribunal found that the right to obtain flats was acquired on 16.12.2010, and since it was held for more than 36 months before being sold, it should be classified as LTCG. The Tribunal upheld the CIT (A)'s decision, confirming that the capital gain in question is LTCG.

2. Allowability of Deduction under Section 54:
The second issue was the allowability of deduction under Section 54 of the Income Tax Act. The AO objected to the deduction, stating that the new asset was acquired on 10.01.2014, which was prior to one year before the date of sale of the flats (16.01.2015 and 23.01.2015). The CIT (A) noted that the sale agreements were executed during FY 2013-14 and 2014-15, and the latest date of agreement and possession/transfer was 27.11.2014. The Tribunal referred to the Supreme Court's judgment in the case of Sanjeev Lal & Smt. Shail Moti Lal, which established that the date of the sale agreement should be considered for counting the period of one year before the date of sale. Following this judgment, the Tribunal concluded that the acquisition of the new asset on 10.01.2014 was within the permissible period, thus allowing the deduction under Section 54. The Tribunal upheld the CIT (A)'s decision on this issue as well.

Conclusion:
The appeal filed by the revenue was dismissed. The Tribunal confirmed that the capital gain in question is LTCG and upheld the allowability of deduction under Section 54, based on the date of the sale agreement rather than the sale deed. The order was pronounced in the open court.

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