TaxTMI 
TaxTMI 
2024 (11) TMI 684
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....as Short-Term Capital Gains by considering the date of allotment when the property was ready and ignored the date of provisional allotment of the property, date of booking, payment made over the years to the builder towards acquisition of immovable property and the period of construction of the property. 3. On the facts and under the circumstances of the case and in law, the Ld. CIT(A) erred in not allowing exemption of Rs. 56,14,425/- u/s 54F as claimed by the Appellant on the Long-Term Capital Gains incurred by him on the sale of his office premises even though all the conditions of Section 54F were satisfied. 3. Brief facts of the case are that in the course of assessment proceedings, it was noticed by the Ld. Assessing Officer (AO) that assessee had shown Long Term Capital Gains in the computation of income amounting to Rs. 56,14,425/- and deduction u/s 54 of the Act had been claimed in respect of the same. He observed that the asset transferred by the appellant was office property and short term capital asset and therefore, the appellant was not eligible for claimed deduction u/s 54 of the Act. Further, since the property transferred was commercial property the AO also aske....
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....him on provisional basis and confirmed in year 2005. In this regard, it is important to mention letter received by the appellant from BDB on 10.02.2010, in which BDB asked the appellant to confirm in writing the acceptance for office premises to be finally allotted having actual area of (287 sqft) as against provisional allotment area proposed to him earlier (300 sqft), which meant that till 10.02.2010, the appellant had not got even the allotment of the office premise in BDB and in the above letter, nowhere, the BDB has specified office no., wing etc proposed to be allotted to the appellant. Hence, it was clear that the appellant was not having any right in any property till that time. Further, vide letter dt. 23.6.10 addressed to BDB, the appellant undertook to sign the allotment letter and other relevant documents including taking possession of the stipulated premises and execute the documents before sub registrar. From the above letter also, it was clear that till 23.6.10 also, allotment letter was not signed and possession was not given. Even in this letter, office no. and wing etc were not mentioned which was proposed to be allotted after 23.6.10 which made it further clear t....
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....utes between the BDB committee, its architects and contractors and payment defaults by members during the 1995-99 property slump put the project on hold in 1998. It was restarted in 2001. The construction cost of an estimated INR 11 billion (US$170 million) was collected from members. 6.1 The appellant also invested in the said BDB by purchasing an office premise in Bharat Diamond Bourse, BKC, Mumbai for which he had made payments over years from 1992. He was provisionally allotted space in the proposed Diamond bourse to be constructed in Bandra Kurla Complex. As regards departmental stand that the asset sold was a short term capital asset as the occupancy rights were provided within the period of 36 months, it is contented that the payment for purchase of property has been made by the assessee for the period more than 10 years and specific identification of the unit allotment in the property under construction was also provided to the assessee beyond 7 years. The assessee has made payment for installments for the office space in the proposed complex from the year 1992 as below: Financial Year when payment made Amount Paid (Rs.) FY 1991-92 1,87,500 FY 1192-93 3,54,500 FY 1....
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....s not having any right in any property till that time. (Page 4 of AO) In the same letter referred by the AO, it is mentioned (also forming part of order). The managing committee seeks your confirmation for office premises to be finally allotted to you. Thus, there was provisional allotment already done before the project commencement and the right of assessee was created in the proposed structure from the first payment of installment itself. 2 AO further relied on letter of the assessee to BDB dated 23.06.2010, where assessee has accepted the possession and admitted to execution of registration of documents in respect of stipulated premises. AO was of the opinion that the letter did not mention the office number or wing etc which was proposed to be allotted and hence he concluded that the assessee was not having any right in the property till that time. The contention of the AO that the assessee was not having any right in the property till that time is incorrect. The AO himself has provided on Page 4 of his order extract of correspondence wherein provisional allotment of 300 Sqft of space is mentioned. Thus there was always allotment of space agreed between the parties. T....
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....tely ignoring the truth that the assessee had made all the payments much before the stated the possession letter. Moreover, they have completely glossed over the fact that provisional allotment was given much earlier and as evident from subsequent development the designated premises remained the same as well. These facts fortify the grounds that all the essential ingredients of a constructive possession were already met long before. 7.1 The letter of allotment is a crucial document as it outlines the terms and conditions of a sale. It serves as proof of the payment made to the seller or developer and the remaining balance that must be cleared. It assures buyers that the property in question will be completed by the promised date. Since the allotment letter of a property is a contract between the buyer and the seller, it is considered a legally binding agreement under Section 10 of the Indian Contract Act. Therefore, if the seller is not able to hold on to their part of the deal, buyers can hold them legally responsible for not delivering the house on time. effective from the date of agreement to sale. 7.2 In the case of Richa Bagrodia v. DCIT (2019) 175 ITD 552 (Mum.)(Trib.),on a....
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.... In the case of Smt. Jennifer Chakraborty ITA No.400/Kol/2016 & ITA No.514/Kol/2016 it was observed that the letter of provisional allotment issued by the builder on 11.04.2007,is to be considered as date of acquisition of right in the property. The tribunal relied further on the judgment of the Coordinate Bench in the case of M/s. Anindya Dutta in ITA No.473/Kol/2012, for Assessment Year 2008-09, order dated 29.11.2013 wherein similar facts were discussed and it was held as under: "9. Further, Board's Circular No. 471 dated 15-10-1986, has also been considered by Hon'ble Bombay High Court in the case of CIT v. Hilla J.B. Wadia 216 ITR 376 (Bom), it was held that Section 54 of the Act has to be construed in the context of the manner in which residential properties are now being constructed in a city like Bombay where, looking to the cost of the land, cooperative housing societies are being formed for constructing a building in which flats are allotted to members. This must also be viewed as a method of constructing residential tenements. What we have to see is whether the assessee has acquired a right to a specific flat in such a builder which is being constructed by the so....