2021 (6) TMI 944 - AT - Income Tax

Tribunal rules holding period for Capital Gains from property starts at allotment, not deed registration

Shri Jethanand T. Datwani Versus The ITO (International Taxation), Anavil Business Center, Surat

The Tribunal allowed the appeal, directing the Assessing Officer to calculate the holding period for determining Long Term Capital Gain from the date of ... LTCG on sale of property - working of LTCG - AO determined the LTCG on the basis of value determined by DVO and further on the basis of index cost for AY 2000-01 instead of 1997- 98 - whether the holding period is treated from the date of allotment or from the date of occupation of the property - whether the acquisition of property should be taken from the date of allotment order from the date of occupation of the property - assessee booked the flat in Joint names and the name of his wife name is mentioned at first holder. Whereas all payments were made by assessee from his bank account - HELD THAT:- There is no dispute about the date of allotment letter dated 25.09.1997. We find that AO has recorded that at the time of allotment, the assessee paid ₹ 6,52,000/-. The assessee vehemently contended that substantial part of the sale consideration was paid from the date of possession. This fact is not disputed by lower authorities. The date of transfer of asset/flat is also not in dispute. We find that in case MadhuKaul v/s. CIT [2014 (2) TMI 1117 - PUNJAB & HARYANA HIGH COURT] and CIT v/s. S.R. Jayshankar [2014 (12) TMI 264 - MADRAS HIGH COURT] held that the date of allotment letter is to be considered to determine the holding period to ascertain the entitlement of section 54 of the Act. We find that the decision of MadhuKaul v/s. CIT and CIT v/s. S.R. Jayshankar (supra) were followed by co-ordinate bench of Tribunal in NanditaPatodia v/s. ITO [2017 (4) TMI 397 - ITAT MUMBAI] and allow the holding period from the date of allotment letter to determine the LTCG. - Decided in favour of assessee. Issues:1. Assessment order confirmation by CIT(A)2. Determination of Long Term Capital Gain (LTCG) based on property saleIssue 1: Assessment order confirmation by CIT(A)The appeal was against the order of the Commissioner of Income Tax (Appeals) confirming the assessment order for the assessment year 2008-09. The case involved a Non-resident Indian (NRI) whose return of income was not filed initially. The case was re-opened under section 147 of the Income Tax Act based on information about the sale of a property. The Assessing Officer (AO) determined Long Term Capital Gain (LTCG) based on the Fair Market Value (FMV) and possession date of the property, leading to a disputed LTCG amount.Issue 2: Determination of Long Term Capital Gain (LTCG) based on property saleThe AO calculated LTCG by considering the value determined by the Valuation Officer and index cost for the year 2000-01 instead of 1997-98, the year of allotment. The appellant argued that the index cost should be considered from the date of allotment as per the allotment letter. The AO disputed the holding period based on the registration of the conveyance deed in 2000-01 and the occupation certificate issued in 2000. However, the appellant contended that the holding period should be calculated from the date of allotment, supported by various legal precedents.The Tribunal considered the dispute of whether the holding period should be calculated from the date of allotment or occupation of the property. It noted the payment made by the assessee at the time of allotment and the undisputed facts regarding possession and transfer of the property. Referring to legal precedents, including decisions by High Courts and Tribunals, the Tribunal concluded that the holding period should be determined from the date of allotment. Therefore, the grounds of appeal were allowed, directing the AO to adopt the holding period from the date of allotment of the flat.