2022 (1) TMI 1028 - AT - Income Tax

Tribunal directs reassessment of capital gains treatment, emphasizes holding period rules

The Tribunal allowed the appeal, directing the Assessing Officer to treat the gain as long-term capital gain from the sale of a residential plot. The ... Capital gains earned on sale of residential plot of Gurgaon - Long term or short term capital gain - period of holding of asset - HELD THAT:- There is no dispute that on 31.5.2002, the said plot was allotted to the assessee. It is also not in the dispute that the certificate of possession was given on 08.05.2006. In our considered view, the date of allotment is relevant for the purpose of computing holding period and not the date of registration of conveyance deed as held by the Hon'ble Jurisdictional High Court of Delhi in the case of K. Ramakrishnan [2014 (3) TMI 812 - DELHI HIGH COURT] - we direct the AO to treat the gain as long-term capital gain. Exemption under section 54 - Since we have held that capital gain arising out of sale of the said plot of land is long-term capital gain, we now remit the matter to the file of the AO to examine the claim of exemption under section 54 of the Act. The assessee is directed to furnish necessary evidence in support of his claim. Issues:1. Confirmation of addition towards capital gains earned on the sale of a residential plot.2. Computation of income under the head 'Capital Gains' and exemption claimed under Section 54F of the Income-tax Act, 1961.Issue 1:The appeal was against the confirmation of the addition of Rs. 44,95,747 towards capital gains earned on the sale of a residential plot in Gurgaon. The Assessing Officer treated the capital gain as short-term, denying indexation benefits and exemption under Section 54 of the Income-tax Act, 1961. The assessee argued that the plot was a long-term capital asset due to the holding period exceeding 36 months from the date of allotment by HUDA. The Tribunal referred to a decision of the Hon'ble Jurisdictional High Court, emphasizing that the date of allotment, not the registration of the conveyance deed, determines the holding period for computing capital gains. Relying on this, the Tribunal directed the Assessing Officer to treat the gain as long-term capital gain.Issue 2:The assessee claimed exemption under Section 54 of the Act concerning the sale of the plot. The Tribunal, having determined the gain as long-term capital gain, remitted the matter back to the Assessing Officer to examine the claim of exemption under Section 54. The assessee was instructed to provide necessary evidence to support the claim. Consequently, the appeal of the assessee was allowed with directions for further examination of the exemption claim under Section 54 of the Act.In conclusion, the Tribunal allowed the appeal of the assessee, directing the Assessing Officer to treat the gain from the sale of the plot as long-term capital gain. The matter was remitted for the examination of the exemption claim under Section 54 of the Income-tax Act, 1961, with instructions for the assessee to provide supporting evidence. The decision was based on the determination that the date of allotment, not the registration of the conveyance deed, is crucial in computing the holding period for capital gains.