TaxTMI 
TaxTMI 
2019 (9) TMI 1078
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.... 3. The lower authorities have grossly erred in denying deduction u/s 54F of Income Tax Act to which the Appellant is duly eligible, ignoring the submissions made by the Appellant, facts and circumstances and also various judgments of Honourable Courts." 2. Brief facts of the case are that the assessee is an individual who filed her return of income on 25.07.2013 declaring Nil income. Assessee has claimed deduction of Rs. 6693638/- u/s 54 of the Income Tax Act, 1961. The assessee has sold plot of land on 28.03.2013 for a total consideration of Rs. 11850000/- and index cost of acquisition was Rs. 5156362/- . The ld AO noted that the assessee became owner of the property on 27.12.2011 the date on which the conveyance deed was executed. The assessee claimed that the as the above plot was allotted to the assessee on 27/12/2002 the date of acquisition should be considered from that date. Thus, the only dispute on this issue is whether the property sold by the assessee is a long term capital asset or short term capital asset. The whole controversy is discussed by the ld AO at para 3.1 to 3.1.8 is as under:- 3.1 Date of acquisition and cost of the plot sold by the assessee. ....
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..... 12 measuring 220 Sq. Mtr /Yard, Sector-43, Urban Estate, Gurgaon (Haryana), and more particularly described in the plan filled in the Officer of Estate officer and signed by the Estate Officer aforesaid and dt..............the.........day of......................Hereinafter called the said site)." 3.1.2 The sale deed of the said Plot no. 72, Sector-3, Gurgaon dated 28.03.2013 in the third para states that "whereas the above said VENDOR is owner and in possession of Plot No. 72 measuring 220 sq. Mtrs. (263.12 Sq. Yds), situated in the residential colony known as Sector-43, Urban Esate, Gurgaon, Tehsil and Distt. Gurgaon (Haryana), by way of Sale Deed/Conveyance Deed Vasika No. 27259 dated 27/12/2011, registered in the office of Joint/Sub-Registrar, Gurgaon (Haryana) (hereinafet called the PROPERTY)" and further that " whereas the VENDOR has taken permission for transfer of the above said property in favour of VENDEE vide Memo No. Z0002/E0018/UE029/ TRAN1/ 0000000105 dated 21/03/2013 from the Estate Officer- II, Haryana Urban Development Authority, Gurgaon. 3.1.3 The above paras in the two deeds clearly established that the assessee became the owner of the Propert....
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....ere in the conveyance deed made on 12.12.2011, it is mentioned that the conveyance deed is executed to be conveyed "free hold rights" as claimed by the assessee. Further, the reliance on the Board Circular No. 471 [F. No. 207/27/85-IT(A-II)], dated 15-10-1986 is misplaced on the facts of the case of the assessee. As that was issued in relation to the construction of the house undertaken by fhe DDA on behalf of the assessee and assessee had no control over the completion of the construction of the house which was undertaken by the Authority. The circular was with respect to the application of the consideration on transfer of asset giving rise to capital gams and to allow the benefit of deduction u/s 54 or 54F of the Act, with respect to the construction of the house. In assessee's case HUDA had not undertaken the construction of the house on assessee's behalf and it was a case of sale of residential plot giving rise to capital gain and not application of sale proceeds of asset sold and hence is clearly distinguishable. 3.1.7 This evident from the text of the said circular No. 471, dated 15- 10-1986 which is as under: "428. Capital gains from long-term capit....
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....been decided that cases of allotment of flats under the Self-Financing Scheme of the D.D.A. shall be treated as cases of construction for the purpose of capital gains." 3.1.8 Hence, the contention of the assessee to consider the transfer of a long term capital asset and allow indexation is not acceptable. The difference between the amount spent towards payment to the original allottee and by way of instalments to HUDA aggregating to Rs. 41,77,712/ - and the sale consideration of Rs. 1,18,50,000/-is brought to tax by making an addition of Rs. 76,72,288/- to the returned income of rupees NIL" 3. Thus, the ld AO treated the transfer of the capital asset as transfer of a short term capital asset. Consequently, the deduction u/s 54 was also denied. Assessee made an alternative claim of section 54 F of the act, that was also denied. Further, reasons for denial of deduction was because the new property has been purchased in the name of the assessee and Ms. Saroj Patni, mother of the assessee. The ld AO was of the view that property sold by the assessee was owned by the assessee whereas, the investment in the new residential house was also contributed to the extent of Rs. 17 la....
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....n the two deeds clearly established that the assessee became the owner of the Property on 27.12.2011 and could not become the o wner until and unless the additional price if a ny against the ten tative price was paid by the assessee. This is further established by the fact that the assessee had. to seek the permission for transfer of the above said. prope3rty from HUDA before it could be transferred as the ownership sttHdgy with HUDA. 3.1.4 HUDA was paid further amounts for the said plot'after the deed of conveyance and before the sale of said plot by assessee. The toted amount paid by assessee towards the acquisition of the plot was Rs. 41, 77, 715/-.. ............................................................................................. ............................................................................................ 3.1.8 Hence, the contention of the assessee to consider the transfer of a long term capital asset and allow indexation is not acceptable. The difference between the amount spend towards payment, to the original allottee and. by way of installments to HUDA aggregating to Rs. 41,77,712/- and the sale considerati....
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....rs to the net consideration, shall not be charged under section 45: Provided that nothing contained in this sub-section shall apply where- (a) the assessee,- (i) own more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a. period, of one year after the date of transfer of the original asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".] Explanation.-For the purposes of this section,- "net consideration", in relation to the transfer of a capital asset:, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) W/frere the assessee pu....
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.... in sub-section (1], then,- (i.) the amount by which - (a) the amount of capital gain arising from the transfer of the original asset not charged u/s 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be. clause (b) of sub-section (1), exceeds. (b) The amount that would, not have been so charged had the amount actually utilized by the assessee for the purchase or constuctin of the new asset within the period specified in sub-section (1) been the cost of the new asset, shall be charged, u/s 45 as income of the previous year in which the period of three years from the date of the transfer of the original asse~ expires; arid (ii) The assessee shall be entitled to withdraw the unutilized amount in accordance with, the scheme aforesaid ................................................................................................................. 5. Hence, the total income of the assessee is assessed u/s 143(3) at Rs. 76, 72,290/- after rounding off of Rs. 76. 72.287/7"^-. - 28SA of the IT Act, 1961, Interest u/s 234A/234B/234C/234D is charged as applicable. Necessary forms are issued in the c....
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.... 31.05.2002, at paras 4,5,6 and 7 it has been elaborated as follows:- "4. In case you refuse to accept this allotment you, shall communicate your refusal by a registered letter within 30 days from the date of issue of this allotment letter, failing which this allotment shall stand cancelled and the earnest money deposited by you shall he forfeited, to authority and. you shall have no claim for damages. 5. In case you accept this allotment please send you acceptance by registered post alongwith an amount of Rs. 177606.00 within 30 days from the date of issue of this allotment letter, which together with an amount of Rs. 118404.oo by you alongwith your application form an earnest, money, will constitute 25 per cent, of the total tentative price. 6. The balance amount i.e. Rs. 888030.00 of the above tentative price of the plot can be paid in lump sum of allotment letter or in six annual installments. The first installment will fall due after the exprity of one year of the dale of issue of this letter. Each installment would be recoverable together with interest on the balance price at 15% interest of the remaining amount. The interest shall however, accrue f....
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....ndu undivided family], the capital gain arises from the transfer of a long-term capital asset, being buildings or Slands appurtenant thereto, and being a residential housed, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of 9jone year before or two years after the date on which the transfer took place purchased 10], or has within a period of three years after that date 11 [constructed, one residential house in India], lOthen], instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt, with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain 12[is greater than the cost of 13 the residential house so purchased or constructed (hereafter in this section referred to as the new asset)], the difference between the amount of the capital gain and the cost of the new asset shall be charged under .section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capit....
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....he one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".] Explanation.-For the purposes of this section.- "net consideration"29. in relation to the transfer of a capital asset, means the full value of the consideration received, or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. " 4.10 To know what is a Short-Term Capital Asset and what is a longterm capital asset, recourse is held to provisions of Section 2(29A), Section 2(29B), Section 2{42A), and Section 2(4233). These read as follows:- " Section 2(29A) "long term capital asset" means a capital asset which is not a short-term capital asset. Section 2(2 9B) "long term capital gain" means capital gain arising from the transfer of a long term capital asset Section 2(42A) Short-term capital asset means a. capital, asset held, by an assessee for not more than thirty-six months immediately preceding the date of its transfer. Section 2S42B} "short....
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....44 ITR 501 (P&H_HC) o.CIT v. Jitendra Mohan (2007) 165 Taxman 524 (Del HC) p. CIT v. Panchand Gandhi (2005) 279 ITR52 (Guj HC) q. CIT v. Anila ben Upendra Shah (2003) 262 ITR 657 (Guj) r. Lahar Singh Siroya v. ACIT (2016) 138 DTR 331 (Kar-HC) s.Vijay Hamilapurkar v. DCIT ITA No.6048/M/2013 t. ACIT v. Vandana Rana Roy ITA No.6173/M12011 u. Meena Hemnani vs ITO ITA No.5998/M/2010 v. Sneha Bimal Parekh v. CIT ITA No.5489/M/2015 w. Sumatichand Tolamal Gouti v.DCIT ITA No.2009/M/2013 15. x. Sanjeev Lall vs CIT Hon. SC 365ITR 389 y. CIT vs Ram Gopal Hon. Delhi High Court ITA 70/2015 09/02/2015 z. Snehabimal vs PCIT Mumbai ITA 5489/M/2015 aa. Seeta Prabhu vs ITO Mumbai ITA 1020/M/2015 bb. ACIT vs Shri Keyar Hemant Shah TA No. 671 Mumbai/ 2017 dated 02.04.2019 cc. Circular: No. 471, dated 15-10-1986 162 ITR(St)41 dd.Circular : No. 672, dated 16-12-1993 205 ITR(St) 47 CBDT Circular No.672 and 471 dated 16/12/1993 and 15/10/1986 respectively clarifying that "the allottee gets title to the property on the issuance of allotment letter and the payment of installments is only a follow up action and taking the delivery of possession i....
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....not being properly instructed is over assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. 5. The Bombay High Court in Nirmala L. Mehta v. A. Balasubramaniam, C.I.T. (2004) 269 ITR 1 held that there cannot be any estoppel against the statute. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. 6. Circular No. 14(XL-35) of 1955, dated 11.4.1955, issued by the Central Board of Direct Taxes and relied upon by the Petitioner reads as under: "Officers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a tax payer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a tax payer where proceedings or other particulars before them indicatethat some refund or relief is due to him. This atti....
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....impugned asset in that decision was a residential asset whereas, in the present case it is plot of land. However, merely because there is a change in the nature of immovable property, the principles of determining date of acquisition cannot change. In view of this we direct the ld AO to consider the date of allotment on 31.05.2002 as the date of acquisition of the impugned asset. Thus what is transferred by the assessee is a long term capital assets and not a short term capital assets. In view of this, the impugned profit or gain on sale of the above asset shall be considered as long-term capital gain. Thus, findings of lower authorities are reversed. Accordingly, ground No. 1 and 2 of the appeal are allowed. 8. Ground No. 3 of the appeal is against the denial of deduction u/s 54F of the Act. The ld AO was requested vide letter dated 29.01.2016 during the course of assessment proceedings to allow the alternative claim u/s 54F of the Act. The alternative claim of the assessee was also rejected on the merits. The only reason for rejection was that the property has been registered in the name of the assessee only, however, the payment towards the installments have been made to H....