ITO, New Delhi V. Sh. Ravinder Pal Singh Gill, New Delhi

ITA 1420/DEL/2011

• Counselvise Citation: 142020114 RSA 2011
• Duration Of Justice: 3 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 18-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 21-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: ASHWANI TANEJA; RAKESH GUPTA
• Keywords: Capital asset; Cost of acquisition; Fair market value; Valuation report; Assessment record
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI N.K. SAINI AND SHRI I.C. SUDHIR ITA NO. 1420/DEL/2011 ASSESSMENT YEAR: 2007 - 08 INCOME - TAX OFFICER, VS. RAVINDER PAL SINGH GILL, WARD 12(2), B - 6/6, NEW DELHI. VASANT VIHAR, NEW DELHI. (PAN: AGFPG5265Q) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VIKRAM SAHAY, SR.DR RESPONDENT BY: S/SHRI RAKESH GUPTA, ADV. & A SHWANI TANEJA, CA ORDER PER I.C. SUDHIR: JUDICIAL MEMBER THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON THE FOLLOWING GROUND S: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) HAS ERRED IN ACCEPTING THE ASSESSEE S BIFURCATION OF SALE CONSIDERATION OF THE GROUND FLOOR & THE VALUATION REPORT OF COST OF CONSTRUCTION OF THE GROUND FLOOR WITHOUT GIVING THE A.O. AN OPPORTUNITY TO EXAMINE THE EVIDENCE FILED BY THE ASSESSEE WHICH IS IN CONTRAVENTION OF RULE 46A OF THE I.T. RULES. 2. THE LEARNED CIT(APPEALS) HAS ERRED IN IGNORING THE PROVISIONS OF EXPLANATION (III) TO SEC. 48 HAS ERRED ACCEPTING THE ASSESSEE S 2 CONTENTION THAT IND EXATION IS TO BE ALLOWED W.E.F. 01.04.1981 AS THE PROPERTY WAS ACQUIRE BY THE PREVIOUS OWNER BEFORE THAT DATE. 2. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAD INHERITED THE PROPERTY AT GREATER KAILASH, NEW DELHI IN 2003 FROM HIS MOTHER WHO HAD BOUGHT THIS IN THE YEAR 1974. THE ASSESSEE THEREAFTER ENTERED INTO A COLLABORATIO N AGREEMENT WITH A BUILDER ON 10.2.2004 AS PER WHICH THE ASSESSEE WAS TO RETAIN GROUND FLOOR OUT OF THE BUILDING MADE BY THE BUILDER AND IN ADDITION TO THAT BUILDER ALSO PAID RS. 21 LACS TO THE ASSESSEE. AS PER THE SAID AGREEMENT, THE BUILDER RETAINED WITH HIM THE BASEMENT, FIRST FLOOR, SECOND FLOOR ALONG WITH TERRACE RIGHTS. THE BUILDER CONSTRUCTED ALL THE FLOORS AT HIS OWN EXPENSES. THE CONSTRUCTION OF THE GROUND FLOOR WAS COMPLETED IN THE YEAR 2006. ON 07.12.2006, THE GROUND FLOOR PROPERTY WAS SOLD BY TH E ASSESSEE FOR RS.50 LACS AS AGAINST THE DECLARED SALES CONSIDERATION OF RS. 56 LACS VIDE A SALE DEED. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO RECONCILE THE DIFFERENCE IN THE SALES CONSIDERATION AND ALSO S H O W - CAUSED AS TO WHY THE ENTIRE CONSIDERATIO N OF RS.50 LACS TOGETHER WITH RS.21 LACS IF NOT YET OFFERED FOR 3 TAXATION, MAY NOT BE TAKEN AS THE VALUE OF THE TOTAL CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. IN RESPONSE, THE ASSESSEE REVISED COMPUTATION OF INCOME IN WHICH HE DECLARED TOTAL CONSIDERATION FROM THE SALE OF PROPERTY AT RS.71 LACS (RS.50,00,000 + RS.21,00,000 ) AND WORKED OUT FRESH TAXABLE LONG TERM CAPITAL GAIN AT RS.7,60,511. THE ASSESSING OFFICER DID NOT ACCEPT THE REVISED COMPUTATION OF THE ASSESSEE AND HELD THAT THE C APITAL GAIN/LOANS SHOULD HAVE BEEN ARISEN IN THE ASSESSMENT YEAR RELEVANT TO FINANCIAL YEAR 2003 - 04 ITSELF. HE HELD THAT THE ASSESSEE HAD RELINQUISHED HIS RIGHTS OVER THE VACANT PLOT FOR CONSIDERATION OF RS.21 LACS AND THE ENTIRE GROUND FLOOR WAS TO BE CON STRUCTED IN THE FINANCIAL YEAR 2003 - 04. HE OBSERVED THAT THE ASSESSEE HAD ACQUIRED THE GROUND FLOOR OF THE PROPERTY VIDE COLLABORATION AGREEMENT DATED 10.2.2004 AND SOLD THE SAME FOR RS.50 LACS ON 07.12.2006 I.E. WITHIN A PERIOD OF 36 MONTHS FROM THE DATE OF ACQUISITION OF THE PROPERTY. HE, THEREFORE, HELD THAT THE CAPITAL GAIN ARISING FROM THE SALE OF GROUND FLOOR OF PROPERTY SHOULD BE SHORT TERM INSTEAD OF LONG TERM AND NO EXEMPTION UNDER SEC. 54EC IS TO BE ALLOWED AGAINST THE SAME. HE HELD THAT COST OF A CQUISITION OF PROPERTY IS TO BE TAKEN AT NIL AS THE BENEFIT OF FAIR MARKET VALUE OF THE PLOT OF LAND AS ON 01.04.1981 HAS ALREADY BEEN PROVIDED TO THE ASSESSEE WHILE COMPUTING THE LONG TERM CAPITAL GAIN FOR THE FINANCIAL YEAR 2003 - 04. THE LEARNED CIT(APPEA LS) HAS, HOWEVER, 4 ACCEPTED THE CLAIM OF THE ASSESSEE, HENCE, REVENUE IS IN APPEAL ON THE ABOVE GROUNDS. 4. IN SUPPORT OF THE GROUNDS, THE LEARNED DR HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDERS. HE SUBMITTED THAT THE LEARNED CIT(APPEALS) HAS IGNORED THE MATERIAL ASPECT OF THE CASE NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD RELINQUISHED HIS RIGHTS OVER THE VACANT PLOT FOR THE CONSIDERATION OF RS.21 LACS TO THE BUILDER IN THE FINANCIAL YEAR 2002 - 03 AND SOLD THE GROUND FLOOR FOR RS.50 L ACS ON 07.12.2006 I.E. WITHIN 36 MONTHS FROM THE DATE OF ACQUISITION OF THE PROPERTY. HE SUBMITTED THAT THERE WERE TWO TRANSACTIONS ON TWO DIFFERENT DATES. HE SUBMITTED FURTHER THAT THE DECISION RELIED UPON BY THE LEARNED CIT(APPEALS) HAVING DISTINGUISHABL E FACTS ARE NOT HELPFUL TO THE ASSESSEE. 5. THE LEARNED AR ON THE OTHER HAND TRIED TO JUSTIFY THE FIRST APPELLATE ORDER WITH THE SUBMISSIONS THAT THE DECISIONS RELIED UPON BY HIM SQUARELY COVERED THE CASE OF THE ASSESSEE. HE SUBMITTED THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, SALES PRICE OF GROUND FLOOR FOR RS.50 LACS SHOULD BE APPORTIONED BETWEEN LAND AND SUPER STRUCTURE. SALE OF PROPORTIONATE LAND OF GROUND FLOOR SHOULD BE TREATED AS LONG TERM CAPITAL GAIN SINCE THE ASSESSEE HAD INHERITED THIS L AND FROM HIS MOTHER WHO HAD PURCHASED THIS LAND ON 5 28.1.1974. HE SUBMITTED THAT THE COST INCURRED BY THE BUILDER FOR CONSTRUCTION OF THE GROUND FLOOR IS THE REVENUE OF THE ASSESSEE IN THE ASSESSMENT YEAR 2004 - 05 FOR THE PURPOSE OF CALCULATION OF CAPITAL GA IN ON PROPORTIONATE SHARE OF LAND. SIMILARLY THIS COST OF CONSTRUCTION SHOULD BE TREATED AS COST FOR THE PURPOSE OF CALCULATION OF CAPITAL GAIN ON THE SALE OF SUPER STRUCTURE OF GROUND FLOOR IN THE ASSESSMENT YEAR 2007 - 08. HE SUBMITTED THAT AS PER THE LAW, THE INDEX COST OF PROPORTION LAND FOR GROUND FLOOR SHOULD BE ALLOWED AS COST FOR THE PURPOSE OF CALCULATION OF THE CAPITAL GAIN ON PROPORTIONATE LAND FOR ASSESSMENT YEAR 2007 - 08. HE THUS CLAIMED THAT THE LEARNED CIT(APPEALS) HAS RIGHTLY GIVEN BENEFIT OF D EDUCTION UNDER SEC. 54EC OF THE ACT TO THE ASSESSEE. HE SUBMITTED FURTHER THAT THERE IS NO VIOLATION OF RULE 46A OF THE I.T. RULES BY THE LEARNED CIT(APPEALS) AS ALLEGED BY THE REVENUE. BESIDES , REITERATING THE CITATIONS REFERRED BY THE LEARNED CIT(APPEALS ) , THE LEARNED AR ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) CIT VS. JHANVI S. DESAI (2012) 252 CTR (MUM.) 518; II) ARUN SHUNGLOO TRUST VS. CIT (2012) 249 CTR (DEL.) 294; III) CIT VS. HINDUSTAN HOTELS PTD. & ANR. - 335 ITR 60; IV) CIT VS. SHAPOORJI PALLONJI & CO. LTD. - 318 ITR 417 (AT) ; & V ) CIT VS. MANJULA J. SHAH - 355 ITR 474 (BOM.); 6 6. THE ONLY ISSUE INVOLVED IS AS TO WHETHER THE GAIN EARNED BY THE ASSESSEE SHOULD BE ASSESSED AS LONG TERM CAPITAL GAIN AND CORRESPONDING AMOUNT OF EXEMPTION AVAILABLE TO THE ASSESSEE UNDER SEC. 54EC SHOULD BE GRANTED TO THE ASSESSEE. 7. CONSIDERING THE ABOVE SUBMISSIONS, THE MATERIAL FACTS ARE THAT THE ASSESSEE HAD INHERITED THE PROPERTY FROM HIS MOTHER WHO HAD PURCHASED THE LAND ON 28.1.1974. ON 1 0.2.2004, THE ASSESSEE ENTERED INTO A COLLABORATION AGREEMENT WITH THE BUILDER AS PER WHICH THE BUILDER HAD TO PROVIDE CONSTRUCTED GROUND FLOOR TO THE ASSESSEE AT HIS OWN COST AND ALSO HAD TO PAY RS.21 LACS WHICH WAS PAID IN THE YEAR 2004 WITH THIS FURTHER UNDERSTANDING THAT THE BASEMENT, GROUND FLOOR, SECOND FLOOR ALONG WITH TERRACE RIGHTS WILL REMAIN WITH THE BUILDER. VIDE SALE DEED DATED 7.12.2006, THE ASSESSEE SOLD THE GROUND FLOOR FOR RS.50 LACS. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD REL INQUISHED HIS RIGHTS OVER THE VACANT PLOT FOR THE CONSIDERATION OF RS.21 L.ACS AND THE ENTIRE GROUND FLOOR WAS TO BE CONSTRUCTED IN THE FINANCIAL YEAR 2003 - 04, HENCE, THE RESULTANT CAPITAL GAIN/LOSS SHOULD HAVE BEEN ARISEN IN THE ASSESSMENT YEAR RELEVANT T O THE FINANCIAL YEAR 2003 - 04 ITSELF. HE OBSERVED FURTHER THAT THE ASSESSEE HAD ACQUIRED THE GROUND FLOOR OF THE PROPERTY VIDE COLLABORATION AGREEMENT DATED 10.2.2004 AND SOLD THE SAME 7 FOR RS.50 LACS ON 07.02.2006 I.E. WITHIN A PERIOD OF 36 MONTHS FROM THE DATE OF ACQUISITION OF THE PROPERTY. THEREFORE, THE CAPITAL GAIN ARISING FROM THE SALE OF GROUND FLOOR OF PROPERTY SHOULD BE SHORT TERM INSTEAD OF LONG TERM AND NO EXEMPTION UNDER SEC. 54EC WAS TO BE ALLOWED AGAINST THE SAME. THE ASSESSING OFFICER HELD FUR THER THAT COST OF ACQUISITION OF PROPERTY WAS TO BE TAKEN AT NIL AS THE BENEFIT OF FAIR MARKET VALUE OF THE PLOT OF LAND AS ON 01.04.1981 HAD ALREADY BEEN PROVIDED TO THE ASSESSEE WHILE COMPUTING THE LONG TERM CAPITAL GAIN FOR THE FINANCIAL YEAR 2003 - 04. 8. IT APPEARS FROM THE RECORD THAT THE CONSTRUCTION OF THE GROUND FLOOR WAS COMPLETED IN THE YEAR 2006 AND IT WAS SOLD BY THE ASSESSEE ON 7.12.2006, THE RESULTANT GAIN ARISING ON THIS SALE WAS SHOWN BY THE ASSESSEE AS LONG TERM CAPITAL GAIN AND THE ASSESS EE CLAIMED SECTION 54EC BENEFIT BY MAKING INVESTMENT OF RS.20 LACS. THE SUBMISSIONS OF THE ASSESSEE REMAINED THAT THE IMPUGNED ASSET SOLD BY THE ASSESSEE IN THIS YEAR WAS CONSISTING OF LAND AS WELL AS BUILDING. IT WAS SUBMITTED THAT EVEN IF THE ASSERTION O F THE ASSESSING OFFICER THAT BUILDING WAS SHORT TERM CAPITAL ASSET IS TAKEN AS CORRECT FOR THE SAKE OF ARGUMENT, TH OUGH DENIED VEHEMENTLY, THE PROPORTIONATE LAND ON WHICH THE GROUND FLOOR WAS CONSTRUCTED WAS UNDISPUTEDLY HELD BY THE ASSESSEE FOR MORE THAN 36 MONTHS AND, THEREFORE, IN 8 ANY CASE, THE IMPUGNED LAND WAS A LONG TERM CAPITAL ASSETS AND ANY AMOUNT OF GAIN ARISING THEREUPON WOULD BE LONG TERM CAPITAL GAIN. AS PER SEC. 2(42A) EXPLANATION I(I)(B) FOR DETERMINING THE PERIOD FOR WHICH THE ASSET IS HEL D BY THE ASSESSEE WHERE THE CAPITAL ASSETS BECOMES THE PROPERTY OF THE ASSESSEE BY WAY OF INHERITANCE/SUCCESSION, THERE SHALL BE INCLUDED THE PERIOD FOR WHICH THE ASSET WAS HELD BY THE PREVIOUS OWNER. 9. CONSIDERING THE ABOVE MATERIAL FACTS AND THE PROV ISIONS OF LAW, THE LEARNED CIT(APPEALS) FOLLOWING THE RATIOS LAID DOWN IN THE CITED DECISIONS BEFORE HIM HAS COME TO THE FOLLOWING CONCLUSIONS: 5. I HAVE CAREFULLY EXAMINED THE FACTS RELEVANT TO THE ISSUE AND CASE LAWS WITH REFERENCE TO SUBMISSIONS MADE BY THE. APPELLANT AND PERUSED THE ASSESSMENT RECORDS. I HAVE STUDIED & EXAMINED THE COLLABORATION AGREEMENT DT 10 - 02 - 2004 ENTERED BY THE ASSESSEE. THE AO HAS RULED THAT THE ENTIRE PLOT OF LAND WAS TRANSFERRED IN 2004 WHEREAS THE ASSESSEE'S SUBMISSIONS ARE THAT SHARE OF LAND OF GROUND FLOOR WAS NOT TRANSFERRED IN 2004 AND IT WAS SOLD IN 2006. TO KNOW WHAT HAS BEEN TRANSFERRED WE WILL HAVE TO EXAMINE THE RELEVANT CLAUSES IN COLLABORATION AGREEMENT. RELEVANT CLAUSES OF THE COLLABORATION AGREEMENT ARE AT PAGE 6 WHICH ARE REPRODUCED BELOW 9 THAT IN LIEU OF THE PORTION MADE AVAILABLE BY THE OWNER TO THE BUILDER FOR DEVELOPMENT OF THE SAID PROPERTY, THE OWNER SHALL BE ENTITLED TO : OWNER'S ALLOCATION ENTIRE GROUND FLOOR PORTION WITH ONE SERVANT QUARTER & COMMON TOILET ON THE TERRACE OF THE BUILDING ALONGWITH ONE CAR PARKING IN THE DRIVE WAY, IN /OF THE SAID PROPERTY .ALONGWITH PROPORTIONATE UNDIVIDED, INDIVISIBLE AND IMPARTIBLE LAND RIGHTS/ SHARE UNDERNEATH THE BUILDING MEASURING 400 SQ.YDS., TOGETHER WITH RIGHT TO USE/AVAIL COMMON AREAS AND FACILITIES AND EASEMENTS ATTACHED THERETO. THAT IN LIEU OF THE BUILDER DEVELOPING THE PORTIONS/PROPERTY, USING HIS INFRA - STRUCTURAL FACILITIES AND AT HIS OWN COST PAYING THE AFORESAID AMOUNT TO THE OWNER, THE BUILDER SHALL BE ENTITLED TO THE REMAINING PORTIONS: BUILDER'S ALLOCATION ENTIRE BASEMENT FLOOR, ENTIRE FIRST FLOOR, ENTIRE SECOND FLOOR AND ENTIRE TERRACE FLOOR OVER & ABOVE THE SECOND FLOOR AND THEREUPON, IN/OF THE SAID PROPERTY, ALONG WITH PROPORTIONATE UNDIVIDED, INDIVISIBLE, AND IMPARTIBLE LAND RIGHTS/ SHARE UNDERNAETH THE BUILDING MEASURING 400SQ. YDS., TOGETHER WITH THE RIGHT TO USE/AVAIL COMMON AREAS AND FACILITIES AND EASEMENTS ATTACHED THERETO. FROM THE PERUSAL OF ABOVE TWO CLAUSES, I HAVE OBSERVED THAT T HE BUILDER WAS TO CONSTRUCT THE ENTIRE BUILDING CONSISTING OF BASEMENT, GROUND FLOOR, FIRST FLOOR, SECOND FLOOR AND TERRACE FLOOR AT HIS OWN COST. OWNER'S (ASSESSEE'S) SHARE WAS BUILT - UP GROUND FLOOR AND THE 10 PROPORTIONATE UNDIVIDED, INDIVISIBLE AND IMPART IBLE LAND SHARE UNDERNEATH THE BUILDING MEASURING 400 SQ YARD. THEREFORE I HOLD THAT THE ASSESSEE DID NOT TRANSFER THE PROPORTIONATE SHARE OF LAND OF GROUND FLOOR IN 2004 TO THE BUILDER. THE ASSESSEE HAS SOLD THE GROUND FLOOR IN 2006 FOR RS 50,00,000 VIDE SALE DEED DT 7 - 12 - 06. THIS WAS DULY CONSTRUCTED GROUND FLOOR ALONG WITH PROPORTIONATE SHARE OF LAND. RELYING ON THE FOLLOWING JUDGEMENTS I HOLD THAT THE SALE PRICE OF RS 50,00,000 SHOULD BE DIVIDED BETWEEN SALE PRICE OF LAND AND SALE PRICE OF SUPERSTRUCTU RE. . . . . . . . . . - - - - - - - - - - FOR DIVISION OF SALE PRICE OF RS 50,00,000 BETWEEN SALE OF PROPORTIONATE LAND AND SALE OF SUPERSTRUCTURE I ACCEPT THE ASSESSEE'S CONTENTION WHICH ARE PART OF THIS ORDER AND HOLD THAT SALE PRICE FOR PROPORTIONATE SH ARE OF LAND SHOULD BE TAKEN AT RS.29,83,079 AND SALE PRICE OF BUILDING SHOULD BE TAKEN AS 20,16,921. THE ASSESSEE HAS INHERITED THIS PLOT OF LAND IN 2003 FROM HIS MOTHER, WHO HAD B OUGHT THIS IN THE YEAR 1974. THEREFORE BY APPLYING THE PROVISIONS OF SECTIO N 49(1)(III)(A) THE COST OF ACQUISITION OF THE ASSET SHALL BE DEEMED TO BE COST FOR WHICH PREVIOUS OWNER OF THE P ROPERTY ACQUIRED IT, AS INCREASED BY THE COST OF ANY IMPROVEMENT OF THE ASSET INCURRED/BORNE BY THE PREVIOUS OWNER OR THE ASSESSEE, AS THE CASE MAY BE. THE ASSESSEE HAS PROVIDED VALUER'S CERTIFICATE FOR VALUE AS ON 1 - 4 - 81 WHICH COMES TO RS 8,36,125. SINCE THE PLINTH AREA OF THE ENTIRE BUILDING AS PER THE MAP APPROVED BY MUNICIPAL CORPORATION OF DELHI WAS 649.60 MTRS AND THE PLINTH AREA OF THE GRO UND FLOOR WAS 167.22 MTRS , THEREFORE I HOLD THAT PROPORTIONATE COST OF LAND OF GROUND FLOOR WOULD BE 8,36,125 X 167.22/649.60 WHICH COMES TO RS 2,15,235 AS ON 1 - 4 - 81. 11 THE AO'S VIEW WAS THAT THERE IS TRANSFER OF LAND IN 2004 TO BUILDER BY ASSESSEE, AND H ENCE L TCG SHOULD BE COMPUTED AT THAT TIME. HOWEVER DUE TO COMPOSITE CONTRACT OF TRANSFER OF LAND WITH RESPECT OF RS.21 LAKHS AND GROUND FLOOR, THERE IS NO TRANSFER IN 2004 AS PER APPELLANT'S ARGUMENT. THE APPELLANT TREATS THE TRANSFER ONLY ONCE I.E. IN 20 06, WHEN THE BUILDING WAS COMPLETE AND READY FOR SALE. THE AO TREATS THAT THERE ARE TWO TRANSFERS WITH RESPECT TO TIME I.E. ONE ON THE DATE OF BUILDING COLLABORATION AGREEMENT WITH BUILDER AND THE OTHER TRANSFER ON THE DATE OF SALE OF GROUND FLOOR WITH POR TION OF LAND APURTENANT THERE TO WITH GROUND FLOOR. IN A CIVILIZED URBAN POPULATION, SUCH TYPE OF TRANSFER OF LAND AND BUILDING IN MULTI - STOREYED STRUCTURES WILL COME NOW AND THEM IN ALL CITIES. SINCE THE CASE OF ASSESSEE IS COVERED BY MAY ITATS, H.C.S, I HOLD THE APPELLANT'S VIEW AS CORRECT. FOR COST OF SUPERSTRUCTURE SOLD IN 2006 BY THE ASSESSEE, THE ASSESSEE'S HAS SUBMITTED VALUER'S CERTIFICATE. THIS VALUE OF RS 19,20,000 SHOULD BE TAKEN AS THE COST OF SUPERSTRUCTURE OF GROUND FLOOR FOR THE COMPUTATIO N OF CAPITAL GAIN FOR THE AY 07 - 08 AND THIS IS ALSO SSESSEE'S RECEIPT OF SALE OF LAND IN THE AY 2004 - 05. SINCE THE SUPERSTRUCTURE WAS SOLD WITHIN 36 MONTHS OF ACQUIRING THE CAPITAL GAIN ON SUPERSTRUCTURE SHOULD BE TAXED AS SHORT TERM CAPITAL GAIN HOWEVER FOR REASONS STATED ABOVE IN THIS ORDER CAPITAL GAIN ON PROPORTIONATE SHARE OF LAND SHOULD BE TAXED AS LONG TERM CAPITAL GAIN. DEDUCTION U/S 54EC FOR INVESTMENT IN BONDS SHOULD BE ALLOWED. 10. ALMOST SIMILAR WERE THE FACTS IN THE CASE OF CIT VS. JAHNVI S. DESAI(SUPRA) BEFORE THE HON'BLE BOMBAY HIGH COURT. THE ASSESSEE S FATHER 12 ACQUIRED THE ENTIRE IMMOVEABLE PROPERTY FROM HIS FATHER. THE ASSESSEE S FATHER EXPIRED IN THE YEAR 1988, LIVING BEHIND A WILL BEQUEATHING THE PROPERTY TO HIS WIFE AND THE ASSESSEE S SON IN EQUAL SHARES. THE ASSESSEE S MOTHER EXPIRED ON 21.2.2000 LEAVING BEHIND A WILL BEQUEATHING HER 50% SHARE IN THE PROPERTY TO THE ASSESSEE. THE ASSESSEE SOLD THE PROPERTY DURING THE ASSESSMENT YEAR 2005 - 06 AND DECLARED LONG TERM CAPITAL GAIN AFTER CON SIDERING THE DATE OF ACQUISITION OF THE PROPERTY FOR THE PURPOSE OF CALCULATING THE CAPITAL GAINS TO BE PRIOR TO 01.04.1981. THE ASSESSING OFFICER, HOWEVER, HELD THAT THE ACTUAL DATE OF ACQUISITION MUST BE CONSIDERED FOR CALCULATING THE CAPITAL GAIN. FURTH ER HE HELD THAT THE DATE ON WHICH THE ASSESSEE INHERITED THE PROPERTY TO BE THE RELEVANT DATE AND ACCORDINGLY RECOMPUTED THE CAPITAL GAIN. THE QUESTION RAISED IN THE APPEAL PREFERRED BY THE REVENUE IN THE HON'BLE HIGH COURT WAS AS TO WHETHER ON THE FACTS A ND CIRCUMSTANCES OF THE CASE TH E ITAT WAS RIGHT IN DIRECTING THE ASSESSING OFFICER TO CALCULATE THE LONG TERM CAPITAL GAIN WITHOUT APPRECIATING THAT SEC. 2(42A) OF THE ACT EXPLANATION I ONLY DETERMINE S THE HOLDING PERIOD OF AN ASSET FOR THE PURPOSE OF SH ORT TERM CAPITAL GAINS AND HAS NO APPLICATION TO LONG TERM CAPITAL GAIN FOR THE ASSESSEE TO GET THE BENEFIT OF INDEXATION? THE QUESTION RAISED BEFORE THE HON'BLE HIGH COURT IN THE CROSS - OBJECTION WAS AS TO WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ITAT ERRED 13 IN HOLDING THAT IN RESPECT OF THE 50% OF THE PROPERTIES INHERITED BY THE RESPONDENT FROM HIS MOTHER THE PERIOD OF HOLDING WILL START FROM 21.8.1988 AND NOT FROM 01.4.1981. BOTH THE ABOVE QUESTIONS HAVE BEEN ANSWERED BY THE HON'BLE H IGH COURT IN FAVOUR OF THE ASSESSEE, WITH THIS FINDING THAT THE PERIOD OF HOLDING SHALL BE FROM 01.04.1981 IN RESPECT OF THE ENTIRE PROPERTY. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HON'BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF ARUN SHUNGLOO TRUST VS. CIT (SUPRA) HOLDING THAT THE ASSESSEE TRUST HAVING ACQUIRED THE PROPERTY IN TRUST ON 05.01.1996, WHICH PROPERTY WAS ACQUIRED BY THE PREVIOUS OWNER SOMETIME BEFORE 01.04.1981 ON SALE OF PROPERTY BY THE ASSESSEE IN 2001 - 02, IT WAS ENTITLED TO THE BENEFI T OF INDEXED COST OF ACQUISITION FROM 01.04.1981 AND NOT FOR THE PERIOD ON OR AFTER 05.01.1996. THE RATIOS LAID DOWN IN THESE DECISIONS ALSO SUPPORT THE FINDING GIVEN BY THE LEARNED CIT(APPEALS) ON THE ISSUE. WE THUS DO NOT FIND ANY REASON TO INTERFERE WIT H THE FIRST APPELLATE ORDER IN THIS REGARD. THE SAME IS UPHELD. THE GROUNDS ARE ACCORDINGLY REJECTED. 11. IN RESULT, THE APPEAL IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 17 .02.2015 SD/ - SD/ - ( N.K. SAINI ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 /02/2015 MOHAN LAL 14 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:IT AT ASSISTANT REGISTRAR