TaxTMI 
TaxTMI 
2025 (3) TMI 922
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....he part payment and possession are at a date later than the date of original agreement. d) By only on the basis of suspicion and presumption. e) By wrongly rejecting several case laws and circulars cited before the FAO f) By wrongly misinterpreting the clauses of the agreement which has nothing to do with the provisions related to the period of holding for the purpose of capital gains. 2) In the facts and circumstances of the case and in law, the learned A.O. erred in levying interest u/s 234 &initiating penalty u/s 270A." 3) In the facts and circumstances of the case and in law, the Commissioner of Income Tax[A] erred in dismissing all the grounds of appeal on merits by overlooking the fact and legal submissions made. 2. The assessee is an individual and filed the return of income for AY 2020-21 on 01.01.2021 declaring a total income of Rs. 13,80,550/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The Assessing Officer (AO) noticed that the assessee has shown a Long Term Capital Gain (LTCG) of Rs. 1,21,691/- on sale of immovable property located at 51 East, Bandra, Mumbai. The AO noti....
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....at the date of acquisition of the property is to be reckoned from the date of 03.10.2016 itself. However, the assessee's contention it is not found to be acceptable. The Circulars No.471 & 672 on which the assessee has placed reliance, are issued in relation to cases of construction for the purposes of sections 54 and 54F of the Income-tax Act. As such, the same are not applicable to the facts of the instant case. Further, as pointed out in preceding paragraphs, there is only an 'agreement to sale. No final 'sale deed' has been filed. This in itself indicates that some of the crucial terms as mentioned in the agreement dated 03.10.2016, i.e., handing over possession of the property, payment of balance sale consideration, intimation from the developer/builder etc., have not been discharged on the date of agreement dated 03.10.2016. As such, It cannot be held that the assessee has acquired the property as on 03.10.2016. The acquisition of the property is only after fulfilment of all such conditions, I.e., on 21.08.2019, on which the last payment in relation to the aforesaid property was made by the assessee. 5.5 In view of the above discussion, it is held tha....
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.... Paid in F.Y 2019-20 67,367 67,367 Service Tax Paid in F.Y 2019-20 155,771 155,771 Total (B) 7,453,917 7,810,850 Long Term Capital Gain/(Loss) (A-B) 121,691 6. The ld. AR further submitted that the agreement with the Builder towards acquisition of the property was entered into on 03.10.2016 (page no. 14 to 57 of the PB) and that the assessee has paid the stamp duty on the value of the property at the time of registration. The ld. AR also drew our attention to the fact that the assessee has paid portion of the consideration out of his share of Rs. 78,54,000/-. The ld. AR further drew our attention to agreement of sale entered into by the assessee dated 19.06.2019 (page 73 to 81 of PB) where the assessee along with other co-owners have sold the property. The ld. AR in this regard submitted that the assessee sold the property in his capacity at the owner of the property which fact has been mentioned in the agreement of sale. Accordingly, the ld. AR argued that the property has been in possession of the assessee from 03.10.2016 and therefore the gain arising on the transfer should be ....
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.... and perused the material on record. The moot point before us is in respect of treating the capital gain as long-term or short-term vis-a-vis the two dates under consideration, that is, the date of letter of allotment which would result into long-term capital gain or the date of registration of the agreement between the builder and the assessee for the booking of the flat by which Assessing Officer has computed the gain as short-term capital gain. It is an undisputed fact that letter of allotment was issued by the builder to the assessee on 15.02.2010 by which a right to own the flat as identified by the assessee and builder in the project to be undertaken for construction had accrued on the assessee. The right which accrued to the assessee is the booking right, i.e., the right to purchase the flat and obtain the title. The only question that arises for consideration is whether booking right to the flat accrues to the assessee on the date of allotment of the flat by way of issuing the letter by the builder or on the date of execution and registration of the agreement to sell, i.e., the buyer's agreement. In our considered view, only that agreement which intends to convey these ....
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....ted but identified and allotted to the assessee, some right has been extinguished at the end of the builder and some right had been created in favour of the assessee. A right in personam had been created in favour of the assessee in whose favour the letter of allotment had been issued and who has paid 20% of the total agreed consideration as advance. Further, all other payments on various milestones identified in the said letter have been duly met by the assessee on subsequent dates, duly acknowledged by the builder. Undoubtedly, such contractual right arising out of the letter of allotment can be surrendered or neutralised by the parties through subsequent contract or conduct but such is not a case in hand before us. 15. For the aforesaid understanding, we gainfully rely on the decision of Hon'ble Supreme Court in the case of Sanjeev Lal v. CIT [2014] 46 taxmann.com 300/225 Taxman 239/365 ITR 389 wherein similar observations and findings were given by the Hon'ble Apex Court, though in the context of agreement to sell. In paragraph 23 of the said decision, it is held as under: "23. Consequences of execution of the agreement to sell are also very clear and ....
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....n. 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 Delhi Development Authority 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." 15.2. Further, Hon'ble High Court dealt with the issue on the meaning to be assigned to the word "held" occurring in section 2(42A) of the Act. For this, the Hon'ble Court relied on another decision in the case of CIT v. Ved Prakash and Sons (HUF) [1993] 73 Taxman 70/207 ITR 148 (Punjab & Haryana) wherein, it was observed as under: "As is clear from a bear reading of section 2 (42A) of the Act, the word "owner" has designly not been used by the legislature. The word "hold", as per dictionary meaning, means to possess, be the owner, Holder or tenant (property, stock, land). Thus, a person can be s....