Sh. Ranjana Bammi, New Delhi V. ACIT, New Delhi

ITA 3994/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3360 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 25-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 14-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: ASHISH CHADHA CAS; SSH VED JAIN ADV ASHISH GOEL
• Keywords: Capital asset; Cost of acquisition

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH F , NEW DELHI BEFORE : SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 3994/DEL./2014 ASSESSMENT YEAR: 2006 - 07 RANJANA BAMMI, C - 717, NEW FRIENDS COLONY, NEW DELHI.(PAN - AAHPB8045K) (APPELLANT) V S.. A.C.I.T., CIRCLE 42(1), NEW DELHI. (RESPONDENT) ASSESSEE BY S/SH. VED JAIN, ADV., ASHISH GOEL & ASHISH CHADHA, CAS REVENUE BY SH. F.R. MEENA, SR. DR ORDER P ER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY ASSESSEE AGAINST ORDER OF THE C IT(A) - XXVII, NEW DELHI DATED 21.05.2014 FOR T HE ASSESSMENT YEAR 2006 07 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] IS BAD, BOTH IN THE EYE OF LAW AND ON FACTS. 2(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN CONFIRMING THE DATE OF HEARING 25.04.2017 DATE OF P RONOUNCEMENT 27 .04.2017 2 ITA NO. 3994/DEL./2014 ACTION OF THE AO IN TREATING THE AMOUNT OF RS.6,30,239/ - ON SALE OF PROPERTY AS SHORT TERM CAPITAL GAIN AS AGAINST THE ASSESSEE CLAIMING THE SAME TO BE LONG TERM CAPITAL GAIN. (II) THAT THE SAID ACTION HAS BEEN CONFIRMED BY THE LEARNED CIT(A) DESPITE THE ASSESSEE B RINGING ON RECORD EXPLANATION AND EVIDENCES TO THE EFFECT THAT THE BUYER'S AGREEMENT BEING ENTERED INTO AS ON 27.12.1999 THE ASSESSEE HAS HELD THE CAPITAL ASSET FOR MORE THAN 3 YEARS AND GAIN ON SALE OF SAME WILL BE A LONG TERM CAPITAL GAIN. 3. ON THE FAC TS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN REJECTING THE CONTENTION OF THE APPELLANT THAT IN TERMS OF SECTION 2C OF THE ACT, THE PERIOD FOR COMPUTING CAPITAL GAIN BEING LONG TERM IS TO BE JUDGED FROM THE DAT E SINCE WHEN THE ASSET IS HELD BY THE ASSESSEE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN NOT FOLLOWING JUDGMENT OF THE JURISDICTIONAL ITAT, WHICH BEING DIRECTLY ON THE SAME ISSUE WAS BINDING ON HIM. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN COMPUTING THE CAPITAL GAINS AT RS.10,57,563/ - AS AGAINST ASSESSEE'S COMPUTATION OF RS.6,30,239/ - . 2. FROM THE ABOVE GROUNDS OF APPEAL, THE ONLY ISSUE WHICH EMERGES OUT FOR ADJUDICATION IS WHETHER THE LD. AUTHORITIES BELOW ARE JUSTIFIED IN COMPUTING SHORT TERM CAPITAL GAIN OF RS.10,57,563/ - ON THE SALE OF IMPUGNED PROPERTY AS AGAINST LONG 3 ITA NO. 3994/DEL./2014 TERM CAPITAL GAIN OF RS.6,30,239/ - DECLARED BY THE APPELLANT ON THE SALE OF SAID PROPERTY. 3 . THE BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT TH E ASSESSEE FILED ITS RETURN OF INCOME ON DATED 14 TH MARCH 2007 DECLARING AN INCOME OF RS. 6 ,24,500/ - . THEREAFTER WHEN THE CASE O F ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED, THE ASSESSEE, BY WAY OF REVISED COMPUTATIONS OF INCOME, INTER ALIA, DECLARED LONG TERM CAPITAL GAIN OF RS.6,30,239/ - ON THE SALE OF PROPERTY NO. G - 023, SECOND FLOOR, PHASE IV, DLF CITY , GURGAON . THIS PROPERTY WAS ALLOTTED BY HUDA TO THE ASSESSEE BY WAY OF BUYER S AGREEMENT ON 27.12.2099, BUT TRANSFERRED IN THE NAME OF ASSESSEE BY EXECUTION OF SALE DEED ON 29.01.2004 . THE ASSESSEE SOLD THIS PROPERTY TO ONE SH. MOHIT SHARMA THROUGH REGIS TERED SALE DEED ON 09.06.2005 AND ACCORDINGLY COMPUTED THE LONG - TERM CAPITAL GAIN TAKING THE HOLDING PERIOD OF THE ASSET FOR MORE THAN 36 MONTHS. IN THE ASSESSMENT PROCEEDINGS, THE AO DISCARDED THE COMPUTATION OF LONG - TERM CAPITAL GAIN OBSERVING AS UNDER : 4 ITA NO. 3994/DEL./2014 IN RESPECT OF PROPERTY NO.G - 023, REFERRED TO ABOVE, IN RESPECT OF WHICH THE ASSESSEE HAS SHOWN CAPITAL GAIN OF RS.6,30,239, THE SAID PROPERTY HAD BEEN SOLD BY THE ASSESSEE VIDE SALE DEED EXECUTED ON 9 - 6 - 2005. IT HAS CLEARLY AND UNAMBIGUOUSLY BEEN MENTIONED AT PAGE 4 OF THIS SALE DEED THAT THE ASSESSEE HAD PURCHASED THIS PROPERTY FROM DLF UNIVERSAL BY WAY OF SALE DEED DATED 29 - 1 - 2004 REGISTERED IN THE OFFICE OF THE SUB REGISTRAR, GURGAON. IT IS TRUE THAT THE ASSESSEE HAD BEEN MAKING PAYMENT IN INSTA LLMENTS PRIOR TO PURCHASE ON 29 - 1 - 2004, BUT SHE DID NOT BECOME OWNER OF THE PROPERTY PRIOR TO THIS MERELY BY PAYING INSTALLMENTS. THUS, AS MENTIONED IN THE SALE DEED EXECUTED BY THE ASSESSEE ON 9 - 6 - 2005, THE ASSESSEE PURCHASED THIS PROPERTY ON 29 - 1 - 2004 AN D BECAME ITS OWNER ONLY ON THIS VERY DATE. SHE TRANSFERRED THIS PROPERTY ON 9 - 6 - 2005, I.E. WITHIN THREE YEARS OF ITS ACQUISITION. THUS, THE CAPITAL GAIN EARNED BY THE ASSESSEE ON THIS PROPERTY WILL BE SHORT - TERM CAPITAL GAIN AND IS SO ASSESSED. THE TOTAL SALE PRICE OF THIS PROPERTY AS SHOWN IS RS.30,00,000/ - . TOTAL COST OF ACQUISITION AS PER INFORMATION SUPPLIED BY THE ASSESSEE WORKS OUT TO RS. 19,42,437/ - . THE DIFFERENCE IS RS.10,57,563/ - WHICH IS ASSESSED AS SHORT TERM CAPITAL GAIN IN THE HANDS OF THE A SSESSEE. 4. AGGRIEVED BY THIS ORDER, THE ASSESSEE CARRIED THE MATTER TO LD. CIT(A) IN APPEAL, WHO RELYING UPON THE DECISION OF ITAT, MUMBAI IN THE CASE OF JAIMAL K. SHAH, 24 TAXMAN.COM 91 (MUM), CONFIRMED THE ACTION OF THE ASSESSING OFFICER VIDE IMPUGNED ORDER, IRKED BY WHICH, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5 ITA NO. 3994/DEL./2014 5. THE LD. AR OF THE ASSESSEE CONTENDED THAT THE PROPERTY WAS ALLOTTED ON 27.12.1999 BY BUYER S AGREEMENT AND 90% OF THE PAYMENTS WERE MADE TILL THE YEAR 2001 BEFORE THE SALE DEED REGISTERED IN THE NAME OF ASSESSEE, I.E., 29.01.2004. IT WAS SUBMITTED THAT KEEPING IN VIEW THE DATE OF ALLOTMENT OF PROPERTY AND PAYMENT OF SUBSTANTIAL AMOUNTS AGAINST THIS PROPERTY, THE APPELLANT HAD RIGHTLY COMPUTED THE LONG TERM CAPITAL GAIN ON THE SALE OF SAID PROPERT Y WHICH WAS SOLD ON 09.06.2005. HE SUBMITTED THAT IDENTICAL ISSUE HAS BEEN DECIDED BY HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. K. RAMAKRISHNAN, 48 TAXMANN.COM 55 (DELHI) IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AFTER RELYING ON THE DECISION OF PUNJAB & HARYANA HIGH COURT IN MRS. MADHU KAUL VS. CIT, 363 ITR 54 (P&H). HE ALSO RELIED ON THE FOLLOWING OTHER DECISIONS : (I). B.R. ASSOCIATES PVT. LTD. VS. ACIT, 2014(6)TMI 933 ITAT, DELHI BENCH. (II). PRAVEEN GUPTA VS. ACIT, 2010 (8) TMI 820 - ITAT DELHI (III). CIT VS. JINDAS PANCHAND GANDHI, 279 ITR 552 (GUJ) (IV). LATA G. RHRA VS. DCIT(2008) 21 SOT 541 ITAT MUMBAI 6 ITA NO. 3994/DEL./2014 (V). ACIT V. CREDIT RATING INFORMATION SERVICES OF INDIA LTD., 2008(4)TMI 743 ITAT MUMBAI. ON THE STRENGTH OF THESE DECISIONS, THE LD. AR URGED FOR DELETION OF ADDITION SUSTAINED BY THE LD. AUTHORITIES BELOW. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD AND WE FIND THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. K. RAMAKRISHNA (SUPRA), WHEREIN IT HAS BEEN THAT IN ORDE R TO DETERMINE TAXABILITY OF CAPITAL GAIN ARISING FROM SALE OF PROPERTY, IT IS DATE OF ALLOTMENT OF PROPERTY WHICH IS RELEVANT FOR PURPOSE OF COMPUTING HOLDING PERIOD AND NOT DATE OF REGISTRATION OF CONVEYANCE DEED. THE RELEVANT OBSERVATIONS OF THE HON BLE COURT READ AS UNDER : 2. IN THIS CASE, THE RELEVANT FACTS RELATING TO THE ACQUISITION OF THE CAPITAL ASSET, I.E., THE HUDA PLOT AND ITS ULTIMATE DISPOSAL OF THE ASSESSEE WAS CONSIDERED BY THE TRIBUNAL AND DISCUSSED AS FOLLOWS : 7 ITA NO. 3994/DEL./2014 5. THE LEARNED COUNSEL F OR THE ASSESSEE, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. BESIDES ADDRESSING THE ORAL ARGUMENTS, HE HAS ALSO PLACED BEFORE US A BRIEF WRITTEN SYNOPSIS. IT HAS BEEN CONTENDED THAT THE ASSESSING OFFICER HAD WRONGLY TREATED THE CAP ITAL GAIN AS SHORT - TERM CAPITAL GAIN AND WHILE DOING SO, HAD ERRONEOUSLY TAKEN THE DATE OF EXECUTION OF THE CONVEYANCE DEED IN FAVOUR OF THE ASSESSEE AS THE RELEVANT DATE, RATHER THAN THE DATE OF ALLOTMENT OF THE PLOT TO THE ASSESSEE BY THE HUDA ; THE UNDI SPUTEDLY, THE ASSESS E E HAD BOOKED THE PLOT IN QUESTION WITH THE HUDA ON JUNE 18,1986, AND HAD D E POSITED THE EARNEST MONEY; THAT THE PLOT WAS ALLOTTED TO THE ASSESSEE ON AUGUST 3,1999 ; THAT ON RECEIPT OF THE ALLOTMENT LETTER, THE ASSESSEE HAD DEPOSITED FUR THER AMOUNTS ON VARIOUS DATES, AS GIVEN IN THE CHART CONTAINED IN THE WRITTEN SYNOPSIS ; THAT BY THE EXPIRY OF THE PERIOD OF SIXTY DAYS FROM THE DATE OF ALLOTMENT, I.E., BY OCTOBER 3,1999, THE ASSESSEE HAD DEPOSITED 96 PER CENT, OF THE TENTATIVE COST OF TH E PLOT; THAT AS PER THE TERMS AND CONDITIONS CONTAINED IN THE ALLOTMENT LETTER, SINCE THE ASSESSEE PAID THE INSTA L LMENT AS DEMANDED BY THE HUDA, THE ASSESSEE WAS TO BECOME THE BENEFICIAL OWNER OF THE RESIDENTIAL PLOT IN QUESTION ; THAT AS PER CLAUSE 5 OF T HE ALLOTMENT WAS TO BECOME THE BENEFICIAL OWNER OF THE RESIDENTIAL PLOT IN QUESTION; THAT AS PER CLAUSE 5 OF THE ALLOTMENT LETTER, A LETTER OF ACCEPTANCE WAS TO BE FILED BY THE ASSESSEE ALONG WITH AN AMOUNT OF RS. 10,155, WITHIN THIRTY DAYS, THEREBY HAVING PAID 25 PER CENT, OF THE TOTAL COST OF THE PLOT ; THAT THIS AMOUNT HAD TO BE DEPOSITED BY THE ASSESSEE IN HIS CAPACITY AS THE OWNER OF THE PLOT, ON ALLOTMENT, WHICH WAS DONE, AS EVIDENCED BY THE RECEIPT OF PAYMENT; THAT AS PER CLAUSE 11 OF THE ALLOTMENT L ETTER, THE RIGHT OF THE ASSESSEE IN THE ALLOTTED PLOT WAS AN ABSOLUTE RIGHT AS OWNER THEREOF ; THAT THIS CLAUSE PROHIBITED THE ASSESSEE FROM TRANSFERRING THE PLOT EXCEPT WITH THE PERMISSION OF THE HUDA ; THAT THIS CLAUSE STATED THAT IT WAS TILL THE EXECUTI ON OF THE CONVEYANCE DEED, THAT THE ASSESSEE 8 ITA NO. 3994/DEL./2014 WAS NOT TO BE TREATED AS OWNER OF THE PLOT; THAT AS PER CLAUSE 12, EXECUTION OF THE CONVEYANCE DEED WAS NOT MADE SUBJECT TO THE HANDING OVER THE POSSESSION OF THE PLOT; THAT THUS, RIGHT FROM 1999, WHEN THE PLOT WAS ALLOTTED TO THE ASSESSEE, THE ASSESSEE WAS HAVING ABSOLUTE RIGHTS THEREON ; THAT IN JITENDERA MOHAN V. ITO [20071 11 SOT 594 (DELHI), IT HAS BEEN HELD THAT IT IS THE DATE OF ALLOTMENT WHICH IS RELEVANT FOR THE PURPOSE OF COMPUTING A HOLDING PERIOD AND NOT THE DATE OF REGISTRATION OF CONVEYANCE REGISTRATION OF CONVEYANCE DEED ; THAT SECTION 47 OF THE REGISTRATION ACT LAYS DOWN THAT REGISTRATION OF A DOCUMENT OPERATES RETROSPECTIVELY ; THAT IN GURBAX SINGH V. KARTAR SINGH [2002] 254 ITR 112 (SC), IT HAS BEEN HELD THAT REGISTRATION OF A DOCUMENT WOULD RELATE BACK TO THE DATE OF ITS EXECUTION ; THAT IN HAMDA AMMAL V. AVADIAPPA PATHAR [1991] 1 SCO 715 AND M. SYAMALA RAO V. CIT [1998] 234 ITR 140 (AP), IT HAS BEEN HELD LIKEWISE; THAT, THEREFORE, THE LEARNED C OMMISSIONER OF INCOME - TAX (APPEALS) HAS CORRECTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSES ; AND THAT AS SUCH, THERE BEING NO MERIT THEREIN, THE APPEAL OF THE DEPARTMENT BE ORDERED TO BE DISMISSED. 3. IN THIS CASE, THE ASSESSEE ACQUIRED POSSESSION OF THE PLOT ON DECEMBER 12, 2005, AND SOLD THROUGH A REGISTERED SAFE DEED DATED JANUARY 9, 2008. THIS COURT IS OF THE OPINION THAT HAVING REGARD TO THE FINDINGS RECORDED BY THE TRIBUNAL, THE ASSESSEE HAD ACQUIRED THE BENEFICIAL INTEREST TO THE PROPERTY AT LEA ST 96 PER CENT OF THE AMOUNT WAS PAID, I.E., BY OCTOBER 3, 1999. THIS COURT IS SUPPORTED IN ITS FINDINGS BY A DIVISION BENCH RULING OF THE PUNJAB AND HARYANA HIGH COURT IN MRS. MADHU KAUL V. CIT[2014] 363 ITR 54/43 TAXMANN.COM 417.' 8. RESPECTFULLY FOLLOW ING THE ABOVE DECISION OF HON BLE JURISDICTIONAL HIGH COURT, THE ISSUE UNDER CONSIDERATION IS DECIDED IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY, THE 9 ITA NO. 3994/DEL./2014 IMPUGNED ADDITION DESERVES TO BE DELETED AND THE APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.04.2017 . SD/ - SD/ - ( AMIT SHUKLA ) ( L.P. SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27.04.2017 *AKS * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR, ITAT 5. GUARD FILE ASSISTANT REGISTRAR