TaxTMI 
TaxTMI 
2005 (8) TMI 314
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....ng to all the three assessees being 50 per cent belonging to Ms. Mrinalini Thadani and 25 per cent each belonging to Shri Sharad Thadani and Shri Manav Thadani was sold during the relevant assessment year. The assessees had claimed exemption under s. 54/54F on the sale of this flat. The AO examined the assessees' claim of treating this as long-term capital gain. The AO obtained information from the builder under s. 133(6), who informed vide its letter dt. 19th Dec., 1998 that the certificate of possession of the said flat was given to the assessees on 6th Dec., 1994 after obtaining completion certificate from NDMC on 24th May, 1994. In view of this certificate, the AO was of the opinion that it was a short-term capital asset. The factual matrix of the case is that Late Shri Gullu Thadani, father of Shri Sharad Thadani, Shri Manav Thadani had applied for purchase of above-stated residential flat from M/s Kailash Nath & Associates vide agreement dt. 8th Feb., 1988. During his lifetime, Shri Gullu Thadani had requested the builder vide his letter dt. 11th May, 1990 to make his daughter Ms. Mrinalini Thadani 50 per cent shareholder of the said flat. After the demise of Shri Gullu T....
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....ssion, "capital asset" means: (a) property of any kinds (b) held by an assessee whether or not connected with the business subject to certain specific exclusions. Relying on various case laws, the assessees submitted that the term "property" is of widest import and should be given a liberal interpretation. It was pointed out that it includes of all interest which have the insignia or characteristic of proprietary right. It was submitted that the word "property" does not mean merely physical property, but also means the right, title or interest in it. Thus, it was submitted that debate about the date of actual possession of the flat was immaterial and irrelevant in this case as much earlier to that date, all the three assessees had acquired interest in the said flat which was in the form of their right to obtain the conveyance in their favour. After referring to various case laws and passages from the Commentary of Chaturvedi and Pithisaria as reproduced by the learned CIT(A) in his order, the assessees submitted that they had acquired the right in the property in terms of agreement dt. 8th Feb., 1988 or latest on 10th July, 1990 on the death of Shri Gullu Th....
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...., is of no significance. The learned CIT/senior Departmental Representative submitted that the date of Will is important when a right in existence is transferred. If the property is not in existence the date of Will is of no importance. He submitted that the Will only ensured the builder to comply with the terms and conditions of agreement in favour of his two sons. The learned CIT/senior Departmental Representative submitted that theoretical right has not been considered under s. 54/54F of the Act. The learned counsel for the assessee submitted that as per s. 2(14), the capital asset means property of any kind held by an assessee. He submitted that right to obtain conveyance itself is a capital asset which came into existence on 8th Feb., 1988 when father of the assessees entered into agreement with the builder. The learned counsel referred to the approval of appropriate authority under s. 269UL granted on 29th March, 1988 pointing out that if no property was in existence then how approval could be granted. Thus, the learned counsel for the assessee submitted that assessee held capital asset in the form of right to obtain conveyance from 8th Feb., 1988. The learned counsel further....
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.... conveyance on the date of transfer of the flat to M/s Living Media India Ltd. which was obtained by the assessees on 8th Feb., 1988 or latest by 10th July, 1990 on the date of death of Shri Gullu Thadani, therefore, the asset transferred was a long-term capital asset. Thus, the assessees' contention was that the date of possession was the date on which the assessees had acquired right of obtaining conveyance in the flat. If this contention of assessees is accepted then whether the physical possession was given to assessees on 3rd March, 1992 or 6th Dec., 1994 will not be of much significance. In order to appreciate the argument of the learned counsel, we would first refer to various case laws relied on by him. The first case law relied on by him was the Hon'ble Supreme Court decision in the case of Ahmed G.H. Ariff vs. CWT. In this case the Hon'ble Supreme Court examined the issue of the right of the sons of the Wakf to receive a share of the rents and profits of the Wakf property with reference to the term "asset" as defined in s. 2(e) of the WT Act and held that it was a property and comes within the purview of the term "asset". The Hon'ble Supreme Court, inter a....
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....ns. The Hon'ble Gujarat High Court examined the contention of Revenue regarding exemption under s. 5(1)(xxviii) of the WT Act and observed that in respect of shares in a co-operative housing society, the legislature intended to grant exemption in favour of all the rights flowing from shares in a co-operative housing society except the interest, which the legislature itself brought in within the tax net by making an express provision in sub-s. (7) of s. 4 of the Act. 9. From the above-noted case laws, it is clear that the term "property" has to be given the widest possible meaning and is itself a bundle of rights and all the comprehensive valuable rights do come within the purview of the term "property". It cannot be denied that Shri Gullu Thadani had obtained a valuable right on 8th Feb., 1988 itself and Ms. Mrinalini Thadani had also obtained a valuable right in the property. The two sons, viz., Shri Sharad Thadani and Shri Manav Thadani got the right latest on 10th July (September), 1990 on the death of Shri Gullu Thadani by virtue of Will left by Shri Gullu Thadani. They got the right to obtain conveyance from the seller by virtue of this Will. As far as the payment terms....