TaxTMI 
TaxTMI 
2018 (1) TMI 1288
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.... long term capital gain computed from holding of actual possession of the property by the appellant. It be so held now. 2. Ld.CIT(A) erred in law and on facts in confirming computation of short term capital gain without appreciating documentary evidence submitted that appellant on payment of major portion of his share of purchase price earned rental income on receiving effective possession from 29.03.2007. Ld.CIT(A) ought to have treated gain on sale of property as long term capital gain since the property was held for more than 36 months. 3. Ld.CIT(A) erred in law and on facts in not appreciating that the rental income declared in AY 2008/09 pertained to property under consideration only since the appellant never possessed any other property at the relevant time. Ld.CIT(A) ought to have held that the appellant correctly computed long term capital gain on sale of property. It be so held now. 4. Ld.CIT(A) gravely erred in law and on facts in holding the possession letter from the builder filed after comments of AO on additional evidence as inadmissible not appreciating that the same was filed on direction of the appellate authority. Ld.CIT(A) ought to have....
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.... stands at Rs. 1,47,00,000/-. The AO thereafter observed that the assessee held the property for less than three years and therefore the gain emanating on sale of property is taxable as Short Term Capital Gains (STCGs). It was found by the AO that assessee has, instead, claimed indexation benefit on the said property and computed Long Term Capital Gains (LTCGs) therefrom to reap concessional tax benefits. It was inter alia noted by the AO that the purchase deed was registered in favour of the assessee along with the joint owner on 15/07/2008 only. It was also observed that corresponding sale agreement was executed on 01/04/2010. The AO accordingly observed that the assessee was in possession of the property for a period of less than 36 months. The AO also underscored the fact that as mentioned in the purchase-deed, the 'building use permission' of the said property was approved on 27/10/2008 vide application dated 16/10/2008. Therefore, as a corollary, the possession could not be availed at earlier date. The assessee in reply submitted before the AO that the possession of the property was taken 29/03/2007 prior to registration of agreement i.e. on 15/07/2008. The assessee thus soug....
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....later on accentuated into full ownership on execution of registered-deed and meeting obligations attached thereto. The assessee also relied upon 'possession letter' of the property purchased dated 05/03/2007 to prop up its claim of acquisition of rights of capital nature in the impugned property. 8. The CIT(A), however, did not see any merit in the appeal of the assessee. The CIT(A) after taking into account remand report from the AO and written submissions made on behalf of the assessee observed that the possession letter was filed after the comments of the AO without any application for admission as additional evidence and hence discarded the same. The CIT(A) also found contradiction in the version of the assessee and observed that while the assessee claims the possession date to be 05/03/2007 as per the letter from the builder, it has all along claimed that possession was given on 29/03/2007. The unexplained discrepancy also cast aspersions on the date of possession. The possession letter also does not bear any date. The original copy of the possession letter was not produced. In essence, the CIT(A) questioned the genuineness of the possession letter. 9. As regards rental ....
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.... assessee for a total consideration of Rs. 1.60 crores which was ultimately translated into purchase agreement. The Ld.Counsel thereafter referred to a possession letter dated NIL (appearing at page No.131 of the paper-book) and submitted that as per the possession letter issued by the builder/developer, the assessee was in possession of the property in question w.e.f. 05/03/2007 notwithstanding execution of formal purchase-deed in July-2008. The Ld.Counsel thus submitted that when all these facts of allotment letter, possession letter, purchase agreement and the details of payment substantially made (before possession as claimed) are seen in tandem, it is quite clear that the assessee held the property in its command from 5th March-2007 which was ultimately sold after 36 months from its possession vide saledeed dated 01/04/2010. The Ld.Counsel therefore stridently contended that clearly the assessee came to hold the asset before its sale for more than 36 months and therefore the claim of the assessee towards LTCG cannot be disproved on such facts. The Ld.Counsel thereafter adverted our attention to the computation of the income of the assessee for AY 2008-09, wherein rent income o....
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..... The Ld.DR contended that the assessee has not adduced the impugned allotment letter to claim rights in property at the assessment stage. The Ld.DR thereafter submitted that allotment letter does not confer any valuable right in favour of assessee. It merely acknowledges the receipt of part payment towards allotment of the property in question. The Ld.DR next contended that the photocopy of the possession letter without producing the original letter was rightly found defective by the CIT(A) in more than one aspect. It was contended that the chain of events as narrated in the order of the CIT(A) clearly show that the property sold was held as capital asset for less than 36 months and therefore rightly denied benefits associated to LTCG towards indexation of costs and concessional tax treatment. 15. In a sharp rebuttal with regard to second issue, the Ld.DR once again relied upon the order of the CIT(A) and submitted that it is beyond anybody's understanding as to why such huge amount would be given to the assessee in form of cash. The theory of oral WILL is created only to support unexplained investments. The source of cash in the hands of the deceased brother is also not verifi....
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....n on behalf of the assessee that the Revenue Authorities have wrongly concluded that the immovable property was held for less than 36 months in the given facts of the case and have committed grave error in treating the gains as STCG instead of LTCG. 16.3. The Revenue, on the other hand, contends that the immovable property in question was held for less than 36 months when reckoned from the date of purchase agreement. It is the case of the Revenue that the allotment letter did not grant any rights in favour of the assessee. It is the further case of the Revenue that it is not possible for the seller to give possession in the given set of facts. It is the contention of the revenue that the possession letter was not produced either at the assessment stage or at the appellate stage. A photocopy of possession letter was annexed to certain replies before the CIT(A) at a later stage merely as an after thought. It is further emphasized on behalf of the Revenue that the joint owners have combinedly given only Rs. 58 lakhs to the corresponding seller before the aforesaid date of possession towards acquisition against agreed consideration of Rs. 1,60,00,000/-. Under these circumstances, wh....
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....ffect from the date of possession in favour of the assessee. The possession letter is thus pivotal for such assertions. In this regard, it is noticed that this possession letter was strangely neither given at the assessment stage nor filed by way of additional evidence before the CIT(A). The possession letter was annexed at the first appellate stage along with certain replies at a belated stage. The propriety of such letter is stated to be a suspect by revenue. It is seen on a bare perusal of the aforesaid undated possession letter that a 'vacant and peaceful' possession of the property in question is purportedly given to assessee wef 05/03/2007. Significantly, as on that date, the assessee jointly with his wife had paid barely Rs. 58 lakhs as against committed amount of Rs. 160 lakhs. It is highly unpalatable that a builder would relinquish its control and prematurely give 'vacant' and 'peaceful' possession of a property to joint-buyers on receipt of such a comparatively small amount vis-a-vis the total obligation, more so in the absence of any formal agreement entered into with the buyers (assessee) at that stage. Besides, we also take note of the vital fact that the aforesaid po....
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....iz. truncated payment of one third of total agreed consideration; thirdly, property under construction without any completion certificate; fourthly, no formal agreement in place at the time of purported possession; fifthly, no right with builder to seek retrieval of the so-called possession in the event of any default from the assessee. These circumstances unequivocally establishes without any traces of doubt that a symbolic possession letter was introduced as a pretense with a motive to justify longer period of holding of the asset with the object of lessening the tax burden and to avoid appropriate incidence of taxation. The claim of assessee has no semblance of bonafides. The socalled possession letter, in our view, is only cosmetic and inconsequential for determination of period of holding of impugned property sold. 16.7. We therefore hold that the CIT(A) was right in disregarding the effect of such discredited possession letter. Thus, the period of holding, in our view, cannot be reckoned either from the date of allotment letter or the date of purported possession as claimed In the similar vain, we do not find any merit in the plea of the assessee for affirmation of possess....
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....late brother, if any, was brought on record. The amount was claimed to be transferred owing to oral wishes as deposed by surviving legal heirs. Such explanation on behalf of the assessee are grossly opposed to human probabilities and does not inspire any confidence. It is only elementary that a WILL has to be formally reduced in writing in the presence of witnesses to give effect to purported dictates of deceased which is not done in the present case. Secondly, an odd amount of such magnitude vis-a-vis total estate only mystifies an ordinary human conduct. Thirdly, the cash introduced does not match with the bifurcation of the amount devolved. Fourthly, the alternative to WILL in the form of affidavit of purported legal heir is not sufficient in such circumstances to replace the effect of a written WILL. The reasons are not far to seek. A living person has an absolute power of disposal of his properties and estate and may bequeath his selfgenerated property/assets in favour of any person of his choice. The legal heirs namely wife and son herein can only be reckoned to be frontrunners and strong contenders in the estate of the property. The asset will however not automatically devol....