AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 646
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....r of booking rights in immovable property in AY 2008-09 as Short Term Capital Gain (STCG) (Rs. 52,80,000/-) as against the same being correctly assessable in AY 2009-10 as Long Term Capital Gain (LTCG) (Rs. 36,29,880/-) as returned by the assessee . In AY 2009-10, the LTCG has been assessed on protective basis and this issue is in appeal before the Hon'ble ITAT for AY 2009-10. 2. That the Ld. CIT(A) has erred in considering the date of agreement to sell 08.03.2008 as the date of transfer on mere receipt of 10% advance, whereas the transfer took place in the next year only pursuant to completion of full and final payment, on handing over of original documents and on transfer of booking by builder in the name of the buyer i.e. in AY 2009-10. There is no transfer of the capital asset involved in AY 2008-09. 3. The core issue to be decided in this appeal is with regard to the year of transfer of capital asset pursuant to the agreement to sale and consequentially decide whether it is short-term or long-term capital gain. 4. We have heard the rival submissions and perused the material available on record. The return for assessment year 2008-09 was filed by the assessee....
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....of the house in his favour is completed except with prior written consent of the Builder. For the sake of convenience, the said clause 16 of allotment letter dated 9.4.2005 is reproduced below:- "16. The buyer is not entitled to transfer/encumber his rights under this allotment till the sale of the house in his favour is completed except with prior written consent of the builder on payment of outstandings and such administrative charges as may be specified by the builder in this behalf. The subsequent transferees shall be bound by the terms of this allotment in all respects" 6. As seen from the terms of the said agreement to sell, it was only an agreement to sell wherein transfer of booking rights were to be completed subsequently on fulfillment of certain conditions, more particularly - (i) the receipt of entire consideration, and (ii) receipt of NOC from builder. As on the date of Agreement to Sell, the assessee (seller herein) had only received 10% advance deposit as earnest money subject to conditions and compliances to be done. Time limit for final payment and transfer was agreed upto 30.04.2008 which fell in the next year i.e. AY 2009-10. Assessee had no power to ....
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....rty, therefore provisions of section 2(47)(v) were not applicable requiring condition of handing over possession, but section 2(47)(ii) shall be applicable which require condition of relinquishment of asset. As per the Ld. AO there was relinquishment of rights and, therefore transfer took place in AY 2008- 09. 10. On appeal by assessee against order u/s 147/143(3) in AY 2008- 09, Ld. CIT(A) confirmed the assessment of the capital gain in AY 2008- 09 as STCG applying section 2(47)(vi) on the following grounds:- a. When there is intention to convey rights in the agreement to sell, it is safe to say that the rights to obtain title/ booking rights emanated from the agreement. When such rights can be located in the buyer's agreement the date of acquisition of capital asset must be considered the date of signing of the said agreement; B. By virtue of this agreement to sell, there is transfer of actionable rights; C. Although transfer of immovable property may be conditional, nevertheless there is parting of an interest in the property i.e. Booking Rights as admitted by the assessee. The Ld. AR before us submitted that no such admission was made by the as....
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....nce of conditions by the buyer and by the Builder. The transfer was only to take place after compliance by buyer of buyer's obligations and after permission to transfer by Ansal Buildwell Limited. As borne out from clause-2 and 3 of the agreement to sell read with clause-16 of the allotment letter - a. The Agreement to sell specifically mentions that balance payment and transfer is to be done up to 30.4.2008 i.e. in FY 2008-09 relevant to AY 2009-10; b. On refusal of the transfer by the builder or delay beyond 30.04.2008, the seller (assessee herein) had the right to cancel the agreement to sell and to refund the advance of Rs. 15,75,000/- to the buyer; and c. even if permission is granted by the Builder, the seller has the right to refuse transfer of the booking right on payment of double the advance received. This shows that the agreement was cancellable. 13. Thus, in totality of facts and circumstances of the assessee's case as stated above, there was no transfer. The assessee was vested with entire rights in the property until consideration was received and NOC was issued by the Builder. Thus there was no extinguishment/ relinquishment of right....
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....agreement to sell. The final payment of agreed consideration for booking rights was received by the assessee only on 25.04.2008; e. The assessee had no power to transfer the booking rights without prior written consent of by the builder M/s Ansal Buildwell Limited. Hence, it is very clear that the transfer of booking rights is subject to consent of the builder; f. ⁠The consent was given by the builder on 02.05.2008, wherein, the builder had transferred the booking rights in the name of Shri Ardaman Singh on 02.05.2008. The evidence to this effect is enclosed at page 25 of the Paper Book. 17. Hence, apparently, the transfer of capital asset (i.e. booking rights in the property) happened only on 02.05.2008, which fall in AY 2009-10 and the assessee would be justified to disclose long-term capital gain for AY 2009-10 as transfer becomes complete in AY 2009- 10. 18. We find that the ld CIT(A) had applied the provisions of section 2(47)(vi), which reads as under:- "Section 2(47) "transfer", in relation to a capital asset, includes,- (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society....
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....the aforesaid decision of the Hon'ble Supreme Court would be squarely applicable to the facts of the instant case inasmuch as the transfer of booking rights contemplated in the agreement to sell dated 08.03.2008 was dependent upon the permission to be granted by the builder, which happened only on 02.05.2008 and thereby the transfer of booking rights would be completed only in AY 2009- 10. 22. Further the Hon'ble Gujarat High Court in the case of Ushaben Jayantilal Sodhan reported in 407 ITR 276 (Guj) had an occasion to deal with the similar issue under consideration. The relevant observations made thereon are reproduced herein below:- 16. We must, however, view these transactions in the context of the provisions contained in the Act instead of confining its effect to the Transfer of Property Act and the Registration Act. As noted, Section 2(14) of the Act defines "capital asset" inter alia as a property of any kind held by an assessee. Section 2(47) of the Act defines "transfer" in relation to a capital asset to include sale, exchange or relinquishment of the asset or extinguishment of any rights therein. The term "transfer" defined u/s.2(47) of the Act, thus, has ....