SHRI MURALI M. NATARAJAN, CHENNAI V. DCIT, NCC-21, CHENNAI

ITA 2811/CHNY/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7959 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-07-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 03-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G JOHNSON
• Keywords: Capital asset; Capital Gains
• Section: 143(3)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A. NO.2811/CHNY/2019 / ASSESSMENT YEAR: 2013-14 SHRI MURALI M. NATRAJAN, 7, RAMS APARTMENTS, 78A, TTK ROAD, OPP. ALWARPET POST OFFICE, CHENNAI 600 018. [ PAN: AANPM2599P] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 21 CHENNAI 600 034. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI SATISH R. MODY, ADVOCATE /RESPONDENT BY : SHRI G. JOHNSON, ADDL. CIT / DATE OF HEARING : 04.08.2021 /DATE OF PRONOUNCEMENT : 09.08.2021 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 9, CHENNAI, DATED 25.07.2019 RELEVANT TO THE ASSESSMENT YEAR 2013-14. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE DATE OF ALLOTMENT OF FLAT OR DATE OF ACQUISITION OF THE PROPERTY HAS TO BE TAKEN INTO CONSIDERATION FOR COMPUTING CAPITAL GAIN TAX. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 ADMITTING A TOTAL INCOME OF .3,25,54,514/- ON 24.07.2013. THE ASSESSING OFFICER COMPLETED THE I.T.A. NO. 2811/CHNY/2019 2 ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 [ACT IN SHORT]. ACCORDING TO THE ASSESSING OFFICER, FOR THE PURPOSE OF ACQUISITION OF THE PROPERTY, THE DATE OF POSSESSION OF THE PROPERTY HAS TO BE CONSIDERED AND NOT THE DATE OF ALLOTMENT LETTER. ACCORDINGLY, THE ASSESSING OFFICER HAS CALCULATED ALLOWABLE SHORT TERM CAPITAL GAIN. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 3. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT FOR THE PURPOSE OF DATE OF ACQUISITION OF THE PROPERTY, HE HAS SUBMITTED THAT THE ALLOTMENT LETTER HAS TO BE TAKEN INTO CONSIDERATION AND NOT THE DATE OF SALE. HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PCIT V. VEMBU VAIDYANATHAN [2019] 108 TAXMANN.COM 339 (SC). HE ALSO RELIED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. S.R. JEYASHANKAR [2015] 53 TAXMANN.COM 107 (MADRAS/373 ITR 120. 4. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT ALL THE JUDGEMENT RELIED ON BY THE LD. AR ARE DECIDED BY APPLYING THE CIRCULAR NO. 471 DATED 15.10.1986, WHICH IS ISSUED BY THE CBDT ON THE TRANSACTIONS RELATING TO DDA ONLY. 5. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, THE I.T.A. NO. 2811/CHNY/2019 3 ASSESSEE HAS AGREED TO PURCHASE PROPERTY FROM M/S. NEELKAMAL REALTORS & BUILDERS PVT. LTD. AND ALLOTMENT LETTER WAS ISSUED BY THE ABOVE BUILDER ON 31.01.2007 AND THE ASSESSEE HAS ALSO ENTERED INTO REGISTERED AGREEMENT ON 07.03.2007. SUBSEQUENTLY, THE ASSESSEE PURCHASED THE PROPERTY. ACCORDING TO THE ASSESSING OFFICER, THE FLAT WAS HANDED OVER TO THE ASSESSEE ON 04.07.2012 AND THE SAME WAS SOLD BY THE ASSESSEE ON 27.02.2013. ACCORDING TO THE ASSESSING OFFICER, SINCE THE ASSESSEE HAS SOLD THE PROPERTY IN 2013, THE DATE ON WHICH THE PROPERTY WAS SOLD REQUIRED TO BE CONSIDERED ONLY AS SHORT TERM CAPITAL GAIN AND THE ASSESSEE IS NOT ENTITLED TO CLAIM INDEXATION BENEFITS INTENDED FOR LONG TERM CAPITAL ASSETS. THIS ISSUE HAS ALREADY BEEN CONSIDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. S.R. JEYASHANKAR (SUPRA), WHEREIN, THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER: 7. ON THE BASIS OF THE ABOVE ADMITTED FACTS, THE TRIBUNAL PLACED RELIANCE ON THE DECISION OF THE PUNJAB AND HARYANA HIGH COURT (MRS.MADHU KAULS CASE (SUPRA)), WHERE AN IDENTICAL ISSUE AROSE AS TO WHETHER THE DATE OF CAPITAL GAINS SHOULD BE RECKONED FROM THE DATE OF ALLOTMENT UNDER A SCHEME FRAMED BY THE DDA OR IT SHOULD BE RECKONED FROM THE DATE OF ACTUAL SALE, WHICH IS SUBSEQUENT TO THE DATE OF ALLOTMENT. THE PUNJAB AND HARYANA HIGH COURT RELIED UPON THE CIRCULAR, WHICH WAS ISSUED IN RELATION TO THE ALLOTMENT OF FLATS TO ALLOTTEES UNDER SELF-FINANCING SCHEME OF DDA, CAME TO HOLD THAT A RIGHT HAS BEEN CONFERRED ON THE ALLOTTEE TO HOLD A FLAT WHICH WAS LATER IDENTIFIED AND POSSESSION DELIVERED ON A LATER DATE. THE HIGH COURT ALSO HELD THAT THE MERE FACT THAT POSSESSION WAS DELIVERED LATER DOES NOT DETRACT FROM THE FACT THAT THE ALLOTTEE WAS CONFERRED A RIGHT TO HOLD PROPERTY ON ISSUANCE OF AN ALLOTMENT LETTER AND THE PAYMENT OF BALANCE INSTALMENTS, IDENTIFICATION OF A PARTICULAR FLAT AND DELIVERY OF POSSESSION ARE CONSEQUENTIAL ACTS THAT RELATE BACK TO AND ARISE FROM THE RIGHTS CONFERRED BY THE ALLOTMENT LETTER. IN EFFECT, THE HIGH COURT HELD THAT THE ALLOTTEE GETS THE TITLE TO THE PROPERTY ON ISSUANCE OF ALLOTMENT LETTER AND THE PAYMENT IN INSTALMENTS IS ONLY A CONSEQUENTIAL ACT UPON WHICH DELIVERY OF POSSESSION TO THE PROPERTY FLOWS. SIMILAR VIEW HAS I.T.A. NO. 2811/CHNY/2019 4 BEEN TAKEN IN THE DECISION (VINOD KUMAR JAINS CASE (SUPRA)) BY THE PUNJAB AND HARYANA HIGH COURT. 6. MOREOVER, IN THE CASE OF PCIT V. VEMBU VAIDYANATHN (SUPRA), WHEREIN, THE HONBLE SUPREME COURT HAS HELD THAT FOR THE PURPOSE OF COMPUTING CAPITAL GAIN TAX, THE DATE OF ALLOTMENT OF FLAT BY THE DDA WOULD BE THE DATE ON WHICH THE PURCHASER OF FLAT CAN BE STATED TO HAVE BEEN ACQUIRED THE PROPERTY. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PCIT V. VEMBU VAIDYANATHAN (SUPRA) AS WELL AS THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. S.R. JEYASHANKAR (SUPRA), THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 09 TH AUGUST, 2021 AT CHENNAI. SD/ - SD/ - (G. MANJUNATHA) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 09.08.2021 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.