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2023 (1) TMI 1002
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.... of manufacturing and trading in Cut and polished diamonds. During the assessment proceedings, Assessing Officer observed that vide Sale Deed dated 19.05.2012 assessee entered with M/s. Veer Gems and sold the office premises bearing No. BC4021 in Bharat Diamond Bourse, Bandra Kurla Complex for a consideration of Rs..1.93 crores. He observed that assessee has declared the computation of income under the head Capital gain relating to above sale transaction as under: - Transfer Price 1,93,00,000 Indexed cost of acquisition (32,91,000*852/351) [1998-99] 79,88,410 Indexed cost of improvement (1,62,000*852/447) [2002-03] 31081779 Indexed cost of improvement (2,43,000*852/463) [2003-041 447,162 Indexed cost of improvement (4,86,000*852/480) (2004-05) 862,650 Indexed cost of improvement (3,97,000*852/497) [2005-061 509,143 Indexed cost of improvement (9,64,800*852/519) 12006-07] 1,583,834 Indexed cost of improvement (1,35,000*852/389) (1999-2000] 295,681 Long Term Capital gain 73,04,341 4. Assessing Officer observed that as per the working submitted by the assessee, assessee has shown acquisition of property in Financial Year 1998-99....
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....allor Illath Raman Nambudhri, AIR 1917 Mad 358). Therefore, in our view, a right to obtain office premises, was clearly "property" as contemplated by section 2(14) of the I.T. Act, 1961. Other case law on the same issue favoring the above views of Bombay High Court are as follows 1. CIT v. Sterling Investment Corpn. Ltd. [1980) 103 ITR 441 (Bom.). 2. ITO v. Smt. Kashmiralien M. Parikh (1993) 66 Taxman 31 (Ahd.) (Mag. 3. Tribunal order in ITA No. 3923 (Mum) of 2002 for assessment year 1995-96 in the case of Mrs. Manju Agarwal v. Asstt. CIT, Mumbai C Bench order dated 16-9-2004 4. Jitendra Mohan v. ITO [2001] 11 SO 1 594 (Dell). 5. CIT vs Jindas Parchand Gandhi (2005) 279 ITR 552 (Guj) In our case as allotment letter issued by the BDB in the year 1998-99 gives us the right to obtain office premises so it become an assets under section 2 (14) of the Income Tax Act. 1% 1. Whether Gain on sale of Flat will be short Term or Long Term? An asset which is held for 36 months is a long term asset. Whether it is held for 36 months? Once the right to purchase (ie obtain office premises) proved to be an ass....
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....t she was deemed to be owner for property from 7-8-1993 and accordingly, the capital gain was to be worked out from that date as per Explanation (Hi) to section 48. and since the asset had been held for the first time in 1993 cost inflation index of that year was to be applied on the total purchase consideration pavable by the assessee as per agreement regardless of the dates of the actual amount paid by her. HELD As per section 2(14), read with section 2(14)(i), the rights in flat, acquired by the assessee on execution of agreement on 7-8-1993, came within the purview of the term capital asset. From the perusal of language used in Explanation (i) to section 48, which provides for manner of computation of indexed cost of acquisition, it is apparently clear that it refers only to date of cost of acquisition of the asset and not actual payments made by the assessee. Hence, there was no merit in the contention of the revenue that the benefit of indexation should he gen on the basis of dates of actual payments made by the assessee. Thus, on merits, the issue was covered in favour of assessee. However, regarding jurisdiction for invoking the provisions of section 263, ....
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....borne in mind that no right was created in any office space primarily because no office space was into existence at the time of contribution of funds by the assessee and secondarily because the office complex so built up by Bharat Diamond Bourse was itself taken on lease by them from MMRDA on 31st March, 2010. Thus, the rights cannot be created in a property which is to be constructed in future or which is not even owned by the original transferor. The only right which could generate in respect of payment made for such property is the right to receive back the said payment. This right is the personal right of the assessee over the money it advanced to Bharat Diamond Bourse and not the right over any property as such. The assessee's right over the property came on the date of its allotment by Bharat Diamond Bourse, or at best at the time when the complex was leased by MMRDA to Bharat Diamond Bourse. In any event, the sale of the office space and also the sale of Shares BKC were made by the assessee before the lapse of 3 years from their Allotment to the assessee. Hence, the sale consideration thereof would constitute Short Term Capital Gain as against the Long Term Capital Gains....
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.... & over the next years has carried out improvements in the property. As per sale agreement pursued the allotment of said premises on 29/07/2010. Therefore, the asset so transferred becomes short term capital asset on the date of its transfer and capital gain on sale of the same asset would constitute short term capital gain. 3) Genuineness of the Long Term Capital Gain: The entire relevant documents to prove the genuineness of long term capital gain such as sale agreement, installment ledger, bank statements, computation of Income which shows the working of LTCG were submitted during assessment proceedings. According to the Installment ledger the total payment made of Rs.62,78,800/- from which the payment of Rs. 55,78,800/- is related to the office premises & Rs 7,00,000/- is related to the parking area Your appellant takes the indexation cost of acquisition by considering the amount of Rs 55,78.800/- which is related to the office premises. Now the question arises as to what else is further required to prove the Long term capital gain in view of the Learned Assessing Officer. There is no tangible material with the income tax department in support of trea....
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....rs CBDT in its circular No 471 dated 15th October, 1986 had clarified this position by holding that when an assessee purchases a flat to be constructed by Delhi Development Authority ("D.D.A" for short) for which allotment letter is issued, the date of such allotment would be relevant date for the purpose of capital gain tax as a date of acquisition. It was noted that such allotment is final unless it is cancelled or the allottee withdraw from the scheme and such allotment would be cancelled only under exceptional circumstances. It was noted that the allottee gets title to the property on the issue of allotment letter and the payment of installments was only a follow up action and taking the delivery of possession is only a formality. CBDT in its later circular No 672 dated 16th December, 1993. In such circular representations were made to the board that in cases of allotment of flats or houses by cooperative societies or other institutions whose schemes of allotment and consideration are similar to those of D.D.A., similar view should be taken as was done in the board circular dated 15th October, 1986 b) The decision pronounced by ITAT, C Bench, Mumbai i....
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....bai in case of ITO 30(2)(3) vs. Smt. Meeta Bhavesh Ganatra, Mumbai ITA No: 5149/Mum/2017[419 Taxpundit261] In the given judgment, the assessee purchased 7 Nos. of Industrial Galas at Malad, Mumbai from one Builder viz. Homeland Realtors arid Developers Private Limited in the year 2007 jointly with her husband Mr. Bhavesh Natwarlal Ganatra at an agreed consideration of Rs.53,75,700/- Homeland Realtors Mid Developers Private Limited issued the Allotment Letters to the assessee in 2007 allotting the specific Galas with specific Galas with corresponding galas marked on the floor plan. The assessee sold the said 7 Nos of Galas in FY 2012-13 for an aggregate consideration of Rs. 2,12,00,000/- The Id. AO reckoned the date of possession of the said industrial Galas in the hands of the assessee and accordingly determined the holding period of the same to be less than three years and consequently held the gains arising from the sale of said industrial Galas are to be taxed as only short term capital gains. The Id. AO consequently also denied the benefit of indexation of the cost claimed by the assessee. Accordingly, the Id. AO determined the short term capital gain....
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....nt order levied penalty u/s 271(1)(c) for furnishing inaccurate particulars of income. Our client hereby request you to drop the penalty proceedings u/s 271(1)(c) based on the following judgments pronounced by the ITAT in case of ITAT, E Bench, Mumbai in case of The DCIT 8(3), Mumbai v/s. Tristar Jewellery Exports Private Limited [ITA No: 6435/Mum/2013] In the above mentioned judgment, appeal had been filed by the department against the order of CIT (A) in deleting the penalty of Rs. 11.94,545/-. The AO levied the penalty in question qua the addition made. The Learned CIT(A) deleted the penalty, holding that the penalty was not leviable on addition made on estimation basis and that it did not stand confirmed that the assessee had willfully submitted inaccurate particulars to conceal its income. The Hon'ble ITAT, in the order deleted the addition made, in toto. Therefore, the very basis of the levy of penalty in question no longer survives. Accordingly, the grievance of the department is rejected and the order of the Ld.CIT(A) deleting the penalty is upheld. In light of the aforesaid facts and all the decided judgments by Hon'ble Supreme Court, various High Courts a....
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....he learned NFAC erred in denying the Appellant the benefit of indexation on the cost by holding that the capital gains earned by the Appellant from the transfer was not long term capital gains but short term capital gains. 2. The Appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal." 9. At the time of hearing, Ld. AR brought to our notice relevant facts from the orders of the Assessing Officer and Ld.CIT(A) and he submitted that no doubt the sale agreement was made on 19.12.2012, however, it is relevant to notice that right on the property was given in the year 1998. In this regard he brought to our notice Page No. 60 of the paper book which is ledger extract of the assessee company in the books of the Bharat Diamond Bourse wherein it was clearly brought on record that assessee was given a provisional area allotment of 900 sq.ft and it is clearly given details of amount collected by them starting from 31.08.1999 onwards and also it clearly indicated office number as BC4021. 10. Further, with regard to lease deed registered with MMRDA dated 31st March, 2010, he submitted that it is only a renewal of the lease deed. what is relev....
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.... build-up area on the fourth floor in "B" Tower central wing of the complex which was constructed in the year 2009 on all that piece and parcel of land situated within the complex. 15. The dispute arose in this case is relating to date of acquisition of the right over the property by the assessee. As per the record submitted before us from the books of Bharat Diamond Bourse clearly indicates that assessee has been allotted office space and subsequently made several payments commencing from 31.08.1999 as per ledger extract. It is brought to our notice in the similar facts and grounds of appeal raised in appeal before Coordinate Bench in M/s. Suresh Brothers v. ACIT (supra). The Coordinate Bench has considered and adjudicated exactly similar facts on record and for the sake of clarity it is reproduced below: - "10. We shall now advert to the claim of the revenue that the date of acquisition of the occupancy rights in the property were to be reckoned from 02.08.2010 i.e the date on which occupation rights were vested with the assessee, vide a registered document. As is discernible from the records, the revenue in order to fortify its aforesaid claim, had observed, that as ....
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....lotted the property under consideration i.e Office No. EE6011, Bharat Diamond Bourse (built up area of 5,750 sq. ft.), therefore, it can safely be concluded that a right towards the aforesaid property got vested with the assessee from the said date. Also, as is discernible from the records, the assessee as on the date of allotment had parted with substantial portion of consideration towards the cost of acquisition of the property under consideration. Our aforesaid view is further fortified from the observation of the CIT(A), wherein he had observed, that a transfer application dated 22.11.2000 filed by a different concern for transfer of its property was allowed by Bharat Diamond Bourse from the beginning. As such, the aforesaid fact in itself evidences that the said transferor concern on 22.11.2000 was vested with a right which could be transferred in favour of a third party. On the basis of our aforesaid deliberations, we are of the considered view that as the case of the assessee is no different from the aforesaid concern, therefore, it can safely be concluded that pursuant to the final and binding allotment of the office premises i.e EE6011, Bharat Diamond Bourse (built up area....