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2021 (3) TMI 829
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....e return of income was filed on 26.07.2013 declaring total income of Rs. 46,75,460. The return was selected for scrutiny and assessment was completed u/s 143(3) of the I.T.Act on 04.03.2016. Subsequently, notice u/s 263 of the I.T.Act was issued by the CIT. According to the CIT, the assessment order completed u/s 143(3) of the I.T.Act on 04.03.2016 is erroneous and prejudicial to the interest of the revenue mainly for the reason that the assessee had claimed cost of indexation benefit for the entire purchase. According to the CIT properties sold were purchased in two instances (on 27.02.1989 and 29.10.2009) and for the portion which was purchased on 29.10.2019, the assessee was not entitled to the benefit of indexation as the said asset was held for less than 36 months. Secondly, according to the CIT, the assessee was not entitled to claim for deduction u/s 54 of the I.T.Act amounting to Rs. 48,81,963 for the investment made in new asset, since the investment in the new asset was made one year prior to the date of sale of the original asset. The assessee raised objections to the notice issued u/s 263 of the I.T.Act, both on jurisdictional aspect and on merits. The CIT rejected t....
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....ins arising out of the sale as long term capital gains. This residential unit originally consisted of ground and first floor. The first floor was purchased by the assessee and his wife on 27.02.1989 and they constructed second floor during the financial year 1992- 1993. The ground floor was retained with the original owner. Later, vide sale deed dated 29.10.2009, the assessee and his wife purchased the ground floor also for a consideration of Rs. 55,00,000. 5.1 The CIT in the order passed u/s 263 of the I.T.Act was of the view that capital gains on sale of first and second floors would give rise to long term capital gains. However, with regard to sale of ground floor, the CIT held that since it was purchased by the assessee vide sale deed dated 29.10.2009 and was sold vide sale deed dated 24.05.2012, the ground floor was held by the assessee for a period less than 36 months. Hence, according to the CIT, the income arising out of sale of ground floor would give rise to short term capital gains. The main contention of the assessee was that he had entered into an oral agreement to purchase the ground floor on 28.06.2008 and payments were made to the vendor right from 28.06.2008,....
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.... a taxpayer for more than 36 months immediately preceding the date of its transfer are treated as "long-term capital gains" and, therefore, charged to tax on a concessional basis.' 5.2.2 Similarly, the reason for introduction of clauses (v) and (vi) in the definition of the word "transfer" in Section 2(47) of the Act is contained in the circular No.495 dated 22.9.1987 by way of explanatory notes on the provisions of the Finance Act, 1997, which reads as under: '11.1 The existing definition of the word "transfer" in section 2(47) does not include transfer of certain rights accruing to a purchaser, by way of becoming a member of or acquiring shares in a co-operative society, company, or association of persons or by way of any agreement or any arrangement whereby such person acquires any right in any building which is either being constructed or which is to be constructed. Transactions of the nature referred to above are not required to be registered under the Registration Act, 1908. Such arrangement confer the privileges of ownership without transfer of title in the building and are a common mode of acquiring flats particularly in multistoreyed constructions in bi....
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....he D.D.A. amounts to purchase or is construction by the D.D.A. on behalf of the allottee. Under the SFS of D.D.A., the allotment letter is issued on payment of the first instalment of the cost of construction. The allotment is final unless it is cancelled or the allottee withdraws from the scheme. The allotment is cancelled only under exceptional circumstances. The allottee gets title to the property on the issuance of the allotment letter and the payment of instalments is only a follow-up action and taking the delivery of possession is only a formality. If there is a failure on the part of the D.D.A. to deliver the possession of the flat after completing the construction, the remedy for the allottee is to file a suit for recovery of possession. 3. The. Board have been advised that under the above circumstances, the inference that can be drawn is that the, D.D.A. takes up the construction work on behalf of the allottee and that true transaction involved is not a sale. Under the scheme the tentative cost of construction is already determined and the D.D.A. facilitates the payment of the cost of construction in instalments subject to the condition that the allottee has to be....
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....r Shopping Complex Branch, Bangalore 3,00,000:00 4. May 5, 2009 Cheque No.876525 in favour of B.S.Prabhakar on the Canara Bank, Jayanagar Shopping Complex Branch, Bangalore 2,00,000:00 5. Aug. 28, 2009 Cheque No.282992 in favour of B..S.Dwarakanath, drawn on the Karnataka Bank Ltd., Jayanagar, 4^th Block Branch, Bangalore. 13,00,000:00 6. Aug. 28, 2009 Cheque No.423295 in favour of B.S.Dwarakanath drawn on the South India Bank, Jayanagar, 4^th Block Branch, Bangalore 2,00,000:00 7. Aug. 28, 2009 Cheque No.282991 in favour of B.S.Prabhakar drawn on the Karnataka Bank Ltd., Jayanagar, 4^th Block Branch, Bangalore 10,00,000:00 8, Oct. 9, 2009 Cheque No.423296 in favour of B.S.Prabhakar drawn on the Sough Indian Bank Ltd., Jayanagar, 4^th Block Branch, Bangalore 8,00,000:00 9. Oct. 23, 2009 Cheque No.423297 in favour of B.S.Dwarakanath, drawn on the South Indian Bank Ltd., Jayanagar 4th Block Branch, Bangalore 12,00,000:00 5.2.6 From the above payment schedule, it is clear that the assessee had advanced a sum of Rs. 10 lakh on 28.06.2008 and 05.05.2009 out of total consideration of Rs. 55,00,000 (Therefore, t....
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....ct, 1908. Such arrangements confer the privileges of ownership without transfer of title in the building and are common mode of acquiring flats particularly in multistoried constructions in big cities. The aforesaid new subclauses (v) and (vi) have been inserted in Section 2(47) to prevent avoidance of capital gains liability by recourse to transfer of rights in the manner referred to above. A person holding the Power of Attorney is authorized the powers of owner, including that of making construction though the legal ownership in such cases continues to be with the transferor. The intention of legislature is to treat even such transactions as transfers and the capital gain arising out of such transactions are brought to tax. Further, the Circular No.471 goes to the extent of clarifying that for the purpose of Income-tax Act, the allottee gets title to the property on the issuance of the allotment letter and the payment of installments is only a follow up action and taking the delivery of possession is only a formality. In case of construction agreements, the tentative cost of construction is already determined and the agreement provides for payment of cost of construction in insta....
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.... the contract for sale of land is capable of specific performance and is also assignable. Therefore, it was concluded by the Hon'ble Bombay High Court that a right to obtain conveyance of immovable was liable for capital gains. The relevant finding of the Hon'ble Bombay High Court in the case of CIT v. Tata Services Limited (supra), reads as follow:- "What is a capital asset is defined in s. 2(14) of the I.T. Act, 1961. Under that provision, a capital asset means property of any kind held by an assessee, whether or not connected with his business or profession. The other sub-clauses which deal with what property is not included in the definition of capital asset are not relevant. Under s. 2(47), a transfer in relation to a capital asset is defined as including the sale, exchange or relinquishment of the asset or the extinguishment of any right therein or the compulsory acquisition thereof under any law. The word " property ", used in s. 2(14) of the I.T. Act, is a word of the widest amplitude and the definition has re-emphasised this by use of the words " of any kind ". Thus, any right which can be called property will be included in the definition of " capital....
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....her institutions whose schemes of allotment and consideration are similar to those of Delhi Development Authority, similar view should be taken as was done in the Board circular dated October 15, 1986. In the circular dated December 16, 1993 the Board clarified as under : "2. The Board has considered the matter and has decided that if the terms of the schemes of allotment and construction of flats/ houses by the co-operative societies or other institutions are similar to those mentioned in para 2 of the Board's Circular No. 471, dated October 15, 1986, such cases may also be treated as cases of construction for the purposes of sections 54 and 54F of the Income-tax Act." It can thus be seen that the entire issue was clarified by the Central Board of Direct Taxes in its abovementioned two circulars dated October 15, 1986 and December 16, 1993. In terms of such clarifications, the date of allotment would be the date on which the purchaser of a residential unit can be stated to have acquired the property. There is nothing on record to suggest that the allotment in construction scheme promised by the builder in the present case was materially different from the ter....
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.... the invitation extended on the occasion of gruhapravesham of the newly acquired house which was performed on 12.03.2012 while the apartment was completed in November, 2011. When clarity about the timing of registration of sale deed on an earlier date i.e., 6.04.2011 was sought, the assessee submitted that the registration process was completed earlier since there was an expectation at that time that the stamp duty charges were going up shortly in Karnataka State. 5.2 The submissions of the assessee in this regard are considered. From the submissions and evidences produced, it is seen that though the newly acquired flat gets completed and comes into existence in November, 2011 and gets physically handed over to the assessee in the same month, it was purchased by the assessee and his wife on 06.04.2011 itself and entire sale consideration also has been paid on or before that date to the builder. Therefore, it is to be held that the said apartment was purchased by the assessee in the month of April, 2011 and therefore this investment is not eligible for the benefit of Sec.54 of the Income Tax Act. I therefore set aside this issue to the file of the Assessing Officer for fres....