M/s. Unipran Sales Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 4469/DEL/2010

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0050 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 24-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J P CHANDREKAR
• Keywords: Depreciation
• Section: 14A

Judgement Text

1 ITA NO.4469/DEL/2010 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H: NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NO.4469/DEL/2010 (ASSESSMENT YEAR : 2006-07) M/S. UNIPRAN SALES PVT. LTD., VS. ITO, WARD 18 (1 ), 407, ROHIT HOUSE, NEW DELHI. 3, TOLSTOY MARG, NEW DELHI 110 001. (PAN : AAACU0036F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJIV SAPRA, CA REVENUE BY : SHRI J.P. CHANDREKAR, CIT DR DATE OF HEARING : 24.04.2015 DATE OF PRONOUNCEMENT : 27.05.2015 O R D E R PER SHRI GEORGE GEORGE K, JM: THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE COMPA NY, IS DIRECTED AGAINST THE ORDER OF THE CIT (A)-XXI, NEW DELHI DATED 31.08 .2010. THE RELEVANT ASSESSMENT YEAR IS 2006-07. 2. THE ASSESSEE HAS, IN ITS GROUNDS OF APPEAL, RAIS ED THREE EFFECTIVE GROUNDS AS UNDER :- 2 ITA NO.4469/DEL/2010 (1) THAT THE CIT (A) OUGHT TO HAVE DELETED THE DIS ALLOWANCE OF RS.1,07,574/- AND NOT RS.49,224/- ESPECIALLY WHEN T HE ASSESSING OFFICER HAD HIMSELF WORKED OUT THE DISALLOWANCE U/ S 14A AT RS.49,224/-. THE DELETION OF RS.49,224/- BY THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) DESERVES TO BE SUBSTITUTED BY THE DELETION OF RS.1,07,574/-; (2) THAT THE ADDITION OF RS.15,62,890/- ON ACCOUNT OF SHORT- TERM CAPITAL GAIN [STCG] AS MADE TOWARDS THE ASSESS ABLE INCOME OF THE ASSESSEE WAS ARBITRARY, UNJUST AND ILLEGAL; & (3) THAT THE LONG TERM CAPITAL LOSS [LTCL] ON ACCOU NT OF SALE OF IMMOVABLE PROPERTIES AS DECLARED AT RS.5,61 ,184/- OUGHT TO HAVE BEEN ALLOWED AND CARRIED FORWARD/SET OFF AG AINST SUCH INCOME IN THE SUBSEQUENT ASSESSMENT YEARS. 3. SINCE THE THIRD GROUND RAISED BY THE ASSESSEE I S CONSEQUENT TO THE SECOND GROUND, THE SAME HAS NOT BEEN ADJUDICATED. 4. WE SHALL NOW PROCEED TO ADJUDICATE THE ISSUES RA ISED BY THE ASSESSEE AS UNDER : 5. BRIEFLY STATED, THE FACTS OF THE ISSUES ARE AS F OLLOWS: THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS O F PORTFOLIO MANAGEMENT, DEALING IN SHARES, SECURITIES AND MUTUA L FUND. THE ASSESSEE HAD FURNISHED ITS RETURN OF INCOME FOR THE AY UNDER DIS PUTE ON 22.11.2006, ADMITTING A TOTAL INCOME OF RS.3,73,151/- WHICH WAS , INITIALLY, PROCESSED U/S 143(1) OF THE ACT AND, SUBSEQUENTLY, TAKEN UP BY TH E AO FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAD OB SERVED THAT THE ASSESSEE WAS IN RECEIPT OF DIVIDEND INCOME OF RS.10.7 LAKHS WHICH WAS CLAIMED AS 3 ITA NO.4469/DEL/2010 EXEMPT U/S 10(34) OF THE ACT. ACCORDINGLY, THE ASS ESSEE WAS REQUIRED TO WORK OUT THE DISALLOWANCE U/S 14A R.W. RULE 8D OF I.T. R ULES. THE ASSESSEE WORKED OUT THE DISALLOWANCE U/S 14A AT RS.49,224/-. AFTER DUE VERIFICATION OF THE DETAILS FURNISHED, THE AO HAD DISALLOWED RS.49,224/ -. FURTHER, THE AO OBSERVED THAT THE ASSESSEE HAD SOLD TWO PROPERTIES ON WHICH LTCL OF RS.5,61,184/- WAS SHOWN. SINCE THE ASSETS WERE SHOWN IN THE SCHEDULE OF FIXED ASSETS ON THE BLOCK OF ASSETS AND DEPRECIATION HAS BEEN CLAIMED, THE AS SESSEE WAS SHOW-CAUSED BY THE AO, (I) AS TO WHY THE ASSETS SOLD BY IT SHOULD NOT BE TAKEN AS DEPRECIABLE ASSETS U/S 50(1) OF THE ACT AND ALSO, (II) WHY THE GAINS SHOULD NOT BE TAKEN AS STCG AND THE INDEXATION SHOULD NOT BE DISALLOWED. THE ASSESSEES CONTENTION WAS THAT IN THE CASE OF ORIENTAL HOME PROPERTY, EVE N THOUGH THE CONVEYANCE DEED WAS REGISTERED ONLY ON 20.9.2004, THE PAYMENTS HAVE BEEN MADE FROM THE FYS 1996-97 TO 2004-05. THE AO TOOK A STAND THAT S INCE ASSESSEE HAD BECOME THE OWNER OF THE ASSET ONLY ON 20.9.2004, THE INDEX ATION BENEFIT OF RS.10,63,213/- CLAIMED BY THE ASSESSEE WAS DISALLOW ABLE AND THE RESULTANT GAIN OF RS.13,01,440/- WAS, ACCORDINGLY, TREATED AS STCG U/S 50(1) OF THE ACT. LIKEWISE IN THE SALE OF ANOTHER ASSET, NAMELY, ARAV ALI RETREAT, THE AO, AFTER DUE CONSIDERATION OF THE ASSESSEES CONTENTIONS AS MENT IONED IN THE ASSESSMENT ORDER, TOOK A VIEW THAT SINCE THE SUBJECT ASSET WAS SHOWN AS BUSINESS ASSET AND CLASSIFIED ALONG WITH THE OTHER FIXED ASSETS OF THE ASSESSEE, BUT, WHEN THE RESULTANT PROFIT COMES UNDER CONSIDERATION SO AS TO AVOID TAXATION IT WAS CLASSIFIED AS INVESTMENT AND DECLARED LTCG AS AGAIN ST STCG, THE INDEXATION 4 ITA NO.4469/DEL/2010 BENEFIT OF RS.10,60,861/- CLAIMED WAS DISALLOWED AN D THE RESULTANT GAIN OF RS.2,61,450/- WAS TREATED AS STCG. IN SUBSTANCE, A TOTAL ADDITION OF RS.15,62,890/- WAS MADE BY THE AO ON THIS COUNT. 6. AGGRIEVED, THE ASSESSEE TOOK UP THOSE ISSUES, AM ONG OTHERS, BEFORE THE CIT (A). AFTER TAKING INTO ACCOUNT THE SUBMISSIONS MADE BY THE ASSESSEE AS DETAILED IN HIS IMPUGNED ORDER UNDER DISPUTE, THE C IT (A) HAD RECORDED HIS FINDINGS, CHRONOLOGICALLY, AS UNDER: (I) ADDITION OF RS.49,224/-: 3 GROUND NO.1 : THE CONTENTION OF THE APPELLANT WAS VERIFIED FROM THE PAPER BOOK SUBMITTED DURING THE COURSE OF APPELLATE PROCEEDINGS. ON PAGE 6 OF THE PAPER BOOK WHICH IS STATEMENT OF TOTAL INCOME WHEREIN, ASSESSEE HAS ALREADY ADDED BA CK AN AMOUNT OF RS.1,07,574/- ON ACCOUNT OF EXPENSES ATTRIBUTABL E FOR EARNING TAX FREE INCOME. THUS, THERE IS NO CASE FOR AO FOR ADDITION OF RS.49,224/- U/S 14A OF THE IT ACT AS IT WILL AMOUNT TO DOUBLE ADDITION. THEREFORE, ADDITION OF RS.49,224/- IS DE LETED. (II) ADDITION OF RS.15,62,890/-: 4.1 IN THIS REGARD, THERE ARE TWO PROPERTIES TO BE CONSIDERED WHILE DETERMINING THE ISSUE OF SHORT TERM CAPITAL G AIN OR LONG TERM CAPITAL GAIN. THE PROPERTY KNOWN AS ARAVALI R ETREAT WAS BOOKED ON 18.7.96 VIDE ALLOTMENT LETTER ISSUED BY M /S. ANSAL PROPERTIES & INDUSTRIES LTD FOR WHICH PAYMENT WAS M ADE IN INSTALMENTS DURING THE PERIOD 18.7.96 TO 9.2.2002. THE SAME PROPERTY WAS SOLD FOR THE CONSIDERATION OF RS.21 LA CS TO SHRI RAJESH KUMAR VIDE AN AGREEMENT TO SALE DATED 6.7.20 05. 4.2 THERE IS ANOTHER PROPERTY KNOWN AS ORIENTAL HOM E WHICH WAS BOOK (SIC) BOOKED THROUGH AGREEMENT DATED 1.10 .96 AND PAYMENTS OF RS.25,98,560/- HAD BEEN MADE IN INSTALM ENTS DURING THE PERIOD 1996-97 TO 2004-05. THIS PROPERTY WAS S OLD VIDE SALE AGREEMENT DATED 27.7.2005. ASSESSEE HAS CLAIMED BO TH THE ASSETS 5 ITA NO.4469/DEL/2010 AS INVESTMENT. HOWEVER, AO HAS TREATED THESE ASSET S AS DEPRECIABLE ASSETS. THE AO HAS OBSERVED THAT ASSET S WERE SHOWN IN SCHEDULE OF FIXED ASSETS AND VIDE ORDER SHEET EN TRY DATED 18.11.2008, AO HAS RAISED QUERY AS TO WHY ASSETS SH OULD NOT BE TREATED AS DEPRECIABLE ASSETS U/S 50(1) OF THE IT A CT AND THE GAIN SHOULD NOT BE TAKEN AS SHORT TERM CAPITAL GAIN AND WHY INDEXATION SHOULD NOT BE DISALLOWED. FROM THE REPLY OF THE AS SESSEE, IT IS VERY APPARENT THAT PROPERTIES WERE PURCHASED IN INSTALME NTS OF ALMOST 6 OR 7 YEARS AS IN THE PROPERTY NO.1 (ARAVALI RETRE AT) FOR THE PERIOD 18.7.96 TO 9.2.2002, FOR THE PROPERTY NO.2 ( ORIENTAL HOME) FOR THE PERIOD 1996-97 TO 2004-05 AND PROPERTY NO.2 WAS SOLD ON 27.7.2005. SO AS PER CONVEYANCE DEED DATED 20.9.20 04, THE POSSESSION OF PROPERTY NO.2 WAS TAKEN AS ON 20.9.20 04 AND THE SAME WAS SOLD AS ON 27.7.2005. THUS, IT IS AS CASE WHEREIN ACTUAL POSSESSION WAS TAKEN ONLY ON 20.9.2004. IT IS NOT THE CASE THAT POSSESSION WAS TAKEN FROM THE DATE OF BEGINNING OF INSTALMENT PAYMENT. AS PER THE PROVISION OF THE TRANSFER OF P ROPERTY ACT, 1882, THE TRANSFER OF PROPERTY HAS BEEN DEFINED IN SECTION 5 IN WHICH SALE HAS BEEN DEFINED IN SEC. 54, AS PER WHIC H, SALE IS A TRANSFER OF OWNERSHIPS IN EXCHANGE FOR A PRICED PAI D. IN THE INSTANT CASE, OWNERSHIP WAS TRANSFERRED ONLY ON 20. 9.2004 IN THE CASE OF ORIENTAL HOME NOT IN THE PERIOD OF INSTALME NT PAYMENTS. THUS, THIS CASE IS HIT BY PROVISION OF TRANSFER OF PROPERTY ACT AND ASSESSEES CLAIM OF TRANSFER OF PROPERTY HAS NOT BE EN MATERIALIZED IN THE PERIOD OF THE INSTALMENT PAYMENTS. 4.3 SIMILAR TREATMENT IS APPLICABLE IN THE CASE OF PROPERTY NO.1 (ARAVALI RETREAT) WHICH WAS ALSO ACQUIRED THRO UGH INSTALMENT PAYMENT. SO, DURING THE PERIOD OF INSTA LMENT PAYMENT, OWNERSHIP WAS NOT TRANSFERRED. THEREFORE, ASSESSEE S CONTENTION WITH REGARD TO TREATING THE PROPERTIES AS LONG TERM CAPITAL GAIN GETS DEFEATED AND AOS ADDITION , AMOUNTING TO RS.1 5,62,890/- SUSTAINS. IN THIS REGARD, RELIANCE IS PLACED ON TH E DECISION OF ASSAM VEGETABLE & OIL PRODUCTS LTD V. CIT & OTHERS, GAUHATI HIGH COURT REPORTED AT 264 ITR PAGE 47, WHEREIN, HO NBLE HIGH COURT HAS HELD AS UNDER: ASSESSEE ENTERS INTO PURCHASE AGREEMENT, PAYS ENTI RE SUM AND TAKES POSSESSION OF PROPERTY AND GETS POWER OF ATTORNEY FROM VENDOR, TRANSFER THE PROPERTY WITHIN ONE YEAR, THIS WAS HELD AS SHORT TERM CAPITAL GAIN. 6 ITA NO.4469/DEL/2010 THE RATIO OF THIS JUDGMENT CLEARLY FITS THE PRESENT CASE. 7. BEING AGGRIEVED, THE ASSESSEE HAS UP BEFORE US W ITH THE PRESENT APPEAL. DURING THE COURSE OF HEARING, THE SUBMISSIONS MADE BY THE LEARNED AR ARE SUMMARIZED AS UNDER : > THAT AS THE AO HAD HIMSELF CONCEDED AND, ACCORDI NGLY, WORKED OUT THE DISALLOWANCE U/S 14A WORKS OUT TO ON LY RS.49,224/- HE OUGHT TO HAVE DELETED RS.1.07 LAKHS ADDED BACK B Y THE ASSESSEE U/S 14A OF THE ACT IN ITS COMPUTATION OF INCOME. AT ANY RATE, RS.1.07 LAKHS DESERVED TO BE DELETED BY THE CIT (A) AS AGAINST THE RELIEF OF RS.49,224/-. IT WAS, THEREFORE, PLEADED FOR FURTHER RELIEF OF RS.57,350 [RS.1,07,574 49,224]; ARAVALI RETREAT FARM: > THAT THE ASSESSEE HAD VIDE ALLOTMENT LETTER DT.18 .7.1996 ISSUED BY M/S.ANSAL PROPERTIES & INDUSTRIES LTD [AP IL] PURCHASED THE SAME FOR THE PURPOSES OF INVESTMENT, FOR WHICH, PAYMENTS WERE MADE IN INSTALMENTS DURING THE PERIOD 18.7.1996 TO 9.2.2002; AND THAT THE SAME WAS SOLD FOR RS.21 LAKH S VIDE AN AGREEMENT TO SELL DATED 6.7.2005 THEREBY EARNED LTC G OF RS.2.61 LAKHS, BUT, BY TAKING INDEXATION BENEFIT OF RS.10,6 0,861/-, THERE WAS A LTCL OF RS.7,99,411/-; > THAT THE ASSESSEE DERIVED THE RIGHT IN THE PROPE RTY FROM THE DATE OF ALLOTMENT LETTER DT.18.7.96 AND THAT THE EN TIRE PAYMENT OF RS.18.38,550/- FOR THE ACQUISITION OF SUBJECT PROPE RTY WAS MADE IN INSTALMENTS DURING THE PERIOD FROM 18.7.96 TO 9.2.2 002 AND, THUS, THE CIT (A) WAS NOT JUSTIFIED IN CONFIRMING THE DIS ALLOWANCE OF THE INDEXATION BENEFIT OF RS.10,60,861/- AND TO TRE AT RS.2,61,450/- AS STCG WHEN THE SALE TOOK PLACE AFTER MORE THAN 3 YEARS ON 6.7.2005; ORIENTAL HOME: > THAT ORIENTAL HOME WAS PURCHASED AS AN INVESTMENT VIDE PLOT BUYERS AGREEMENT DT.10.1996 FROM M/S. ADHARSHI LA TOWERS PVT LTD FOR RS.1.66 LAKHS AND CONSTRUCTION AGREEMEN T DT.1.10.1996 ON SUCH PLOT WAS ENTERED INTO BY THE ASSESSEE WITH M/S.ANSAL PROPERTIES & INDUSTRIES LTD FOR RS.23,33,344/-, THA T THE AGGREGATE 7 ITA NO.4469/DEL/2010 PAYMENTS OF RS.25,98,560/- WAS MADE BY THE ASSESSEE IN INSTALMENTS DURING THE FYS 1996-97 TO 2004-05; AND THAT THIS PROPERTY WAS SOLD VIDE AGREEMENT TO SELL DT 27.7.20 05 TO SRI NIKHIL KUMAR VASUDEVA FOR RS.39 LAKHS, THEREBY THE LTCG WO RKED OUT TO RS.2,38,227/-; > THAT THE CIT (A) WAS NOT JUSTIFIED TO CONFIRM TH E DISALLOWANCE OF THE INDEXATION BENEFIT OF RS.10,63, 213/- AND TO TREAT THE RESULTANT GAIN OF RS.13,01,440/- AS STCG BY IGNORING THE FACT THAT SUBSTANTIAL PAYMENTS WERE MADE FROM FYS 1 996-97 TO 1998-99; > THAT BOTH THE ABOVE ASSETS WERE SHOWN IN THE BAL ANCE SHEETS AND THEY DID NOT FORM PART OF DEPRECIABLE AS SETS UNDER THE SCHEDULE OF FIXED ASSETS AND THAT NEITHER THE ASSES SEE HAD CLAIMED ANY DEPRECIATION NOR ALLOWED BY THE REVENUE; > THAT THE ASSESSEE DERIVED THE RIGHT IN THE SAID ASSETS THE DAY THE AGREEMENTS WERE SIGNED IN THE FY 1996-97 AND RE TAINED SUCH RIGHTS ON ACCOUNT OF TIMELY PAYMENTS OF INSTALMENTS AND THAT THE DEVELOPERS LOST THE RIGHTS OVER THE ASSETS THE DAY ON WHICH THEY ENTERED INTO AGREEMENTS WITH THE ASSESSEE; > THAT THE CIT(A)S OBSERVATION AT PARA 4.2 IS NOT TENABLE SPECIFICALLY REGARDING THAT THE PROVISIONS OF THE T RANSFER OF PROPERTY ACT ARE TAKEN TO OVERRIDE THE EXPLANATIONS OF THE INCOME-TAX ACT; > THAT THE RELIANCE PLACED BY THE CIT (A) IN THE CA SE OF ASSAM VEGETABLE AND OIL PRODUCTS LTD V. CIT (SUPRA) HAS RELEVANCE TO THE INSTANCE CASE AS THE FACTS WERE DI FFERENT; > THAT THE ADDITION OF RS.15,62,890/- MADE BY THE AO AND SUSTAINED BY THE CIT (A) DESERVES TO BE DELETED AND THE NET LTCL OF RS.5,61,184/- AS CLAIMED FROM THE SALE OF SUBJEC TS ASSETS REQUIRES TO BE CARRIED FORWARD FOR SET OFF IN THE S UBSEQUENT YEARS; & > RELIANCE HAS BEEN PLACED ON THE FOLLOWING JUDGME NTS, NAMELY: (I) MRS.MADHUKAUL V. CIT &ANOTHER (2014) 363 ITR 54 (P&H); (II) CIT V. K RAMAKRISHNAN (2014) 363 ITR 59 (DEL) 8 ITA NO.4469/DEL/2010 7.1 ON THE OTHER HAND, THE LEARNED D R SUPPORTED TH E STAND OF THE CIT (A) ON BOTH THE ISSUES. IT WAS, THEREFORE, PLEADED THAT T HE ASSESSEES APPEAL REQUIRES TO BE REJECTED. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS, DULY PERUSED THE RELEVANT MATERIALS ON RECORD AND ALSO THE DOCUMENTA RY EVIDENCES PRODUCED BY THE LEARNED AR IN THE FORM OF PAPER BOOK. THE ISSU ES RAISED BY THE ASSESSEE ARE DEALT WITH CHRONOLOGICALLY AS UNDER : AS FAR AS THE FIRST ISSUE IS CONCERNED, WE WOULD L IKE TO POINT OUT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE HAD FURNISHED THE DETAILS OF DISALLOWANCE U/S 14A R.W. RULE 8D OF I.T . RULES OF RS.49,224/-. ON THE BASIS OF THE DETAILS FURNISHED BY THE ASSESSEE, THE AO HAD DISALLOWED A SUM OF RS.49,224/-. THE ASSESSEE IN ITS RETURN OF INCOME HAD DISALLOWED RS.1.07 LAKHS. THE CONCERNED ASSESSMENT YEAR BEING ASSESSMENT YEAR 2006-07, RULE 8D DOES NOT HAVE APPLICATION. DURING THE COURSE OF FIRST A PPELLATE PROCEEDINGS AND EVEN BEFORE US ALSO, THE ASSESSEE HAD NOT PLACED ANY MAT ERIAL TO JUSTIFY ITS CLAIM FOR THE DISALLOWANCE OF RS.1.07 LAKHS AS AGAINST RS.49, 224/- MADE BY THE AO. IN HIS FINDING, THE CIT (A) HAD CLEARLY MENTIONED THAT 3. ON PAGE 6 OF THE PAPER BOOK WHICH IS STATEMENT OF TOTAL INCOME WHEREIN, AS SESSEE HAS ALREADY ADDED BACK AN AMOUNT OF RS.1,07,574/- ON ACCOUNT OF EXPEN SES ATTRIBUTABLE FOR EARNING TAX FREE INCOME. THUS, THERE IS NO CASE FO R AO FOR ADDITION OF RS.49,224/- U/S 14A OF THE IT ACT AS IT WILL AMOUNT TO DOUBLE ADDITION. 9 ITA NO.4469/DEL/2010 (PARA 3) . IN VIEW OF THE ABOVE, WE ARE DECLINED TO INTERF ERE WITH THE CIT (A)S STAND. 9. WITH REGARD TO THE ADDITION OF RS.15,62,890/- ON ACCOUNT OF STCG MADE BY THE AO AND, SUBSEQUENTLY, SUSTAINED BY THE CIT ( A), WE FIND THAT THE ASSESSEE WAS IN RECEIPT OF ALLOTMENT LETTER DT.18.7 .1996 [SOURCE: P 32 TO 40 OF PB] FROM APIL FOR THE PURCHASE OF AN ASSET ARAVAL I RETREAT FARM FOR RS.18,38,550/-, FOR WHICH THE ASSESSEE HAD MADE PAY MENTS IN INSTALMENTS, RIGHT FROM 18.7.1996 TO 9.2.2002, AGGREGATING TO RS.18,38 ,550/- [REFER: PAGE 31 OF PB]. MOREOVER, THE ASSESSEE, WHILE ACCEPTING THE A LLOTMENT LETTER, HAD ENDORSED THAT I/WE HEREBY ACCEPT THE ALLOTMENT ON THE TERMS , CONDITIONS/STIPULATIONS MENTIONED HEREIN ABOVE. ON A PERUSAL OF THE DETAI LS OF INSTALMENT SCHEDULE, WE FIND THAT THE ASSESSEE HAD MADE PAYMENTS TO THE TUN E OF RS.18 LAKHS OUT OF THE TOTAL AMOUNT OF RS.18,38,550/- THROUGH CHEQUES WITH IN A SPAN OF ONE YEAR FROM THE DATE OF RECEIPT OF ALLOTMENT LETTER DT.18.7.199 6. LIKEWISE, ORIENTAL HOME PROPERTY WAS CONCERNED, THE ASSESSEE HAD ENTERED IN TO AN AGREEMENT WITH ADHARSHILA TOWERS (P) LTD ON 1.10.1996 FOR THE PURC HASE OF THE SUBJECT PROPERTY FOR RS.1,66,656/- [SOURCE: PAGES 75 TO 85 OF PB] AN D SIMULTANEOUSLY ENTERED INTO A CONSTRUCTION AGREEMENT ON 1.10.1996 WITH M/S . ANSAL PROPERTIES & INDUSTRIES LTD FOR AN AMOUNT OF RS.23,33,344/- [REF ER: PAGES 22 TO 30 OF PB] AND THE PAYMENTS IN INSTALMENTS WERE MADE THROUGH C HEQUES FROM 24.6.1996 TO 6.1.1999 TO THE TUNE OF RS.23,56,344/- [RS.25,89,92 0 RS.2,33,576] [SOURCE: PAGE 13 OF PB]. SUBSTANTIAL PAYMENTS IN INSTALMENTS HAVE SINCE BEEN MADE MORE 10 ITA NO.4469/DEL/2010 THAN THREE YEARS BEFORE THE DATE OF CONVEYANCE DEED . IN RESPECT OF THE AOS ALLEGATION THAT .SINCE THE ASSETS WERE SHOWN IN THE SCHEDULE OF F IXED ASSETS AND ON THE BLOCK OF ASSETS DEPRECIATION HAS BEEN CL AIMED BY THE ASSESSEE.[REFER: PARA 3 OF THE ASST. ORDER], IT IS OBSERVED THAT NO DEPRECIATION HAS BEEN CLAIMED BY THE ASSESSEE AS ALLEGED BY THE AO [PAGE 51 OF PB]. ON A FURTHER VERIFICATION OF THE STATEMENT OF ALLOWABLE DEPRECIATION FOR THE AY UNDER DISPUTE [PAGE 68A OF PB], IT IS OBSERVED THAT NO DE PRECIATION IN RESPECT OF BOTH SUBJECT ASSETS WERE CLAIMED BY THE ASSESSEE. THOUG H THE CIT (A) WAS IN AGREEMENT WITH THE CONTENTION OF THE ASSESSEE THAT THE SUBJECT ASSETS WERE NOT DEPRECIABLE AS ALLEGED BY THE AO, THE CIT (A) TOOK A STAND THAT 4.2..SO AS PER CONVEYANCE DEED DATED 20.9.2004 , THE POSSESSION OF PROPERTY NO.2 WAS TAKEN AS ON 20.9.2004 AND THE SAM E WAS SOLD AS ON 27.7.2005. THUS, IT IS AS CASE WHEREIN ACTUAL POSS ESSION WAS TAKEN ONLY ON 20.9.2004. IT IS NOT THE CASE THAT POSSESSION WAS TAKEN FROM THE DATE OF BEGINNING OF INSTALMENT PAYMENT. AS PER THE PROVIS ION OF THE TRANSFER OF PROPERTY ACT, 1882, THE TRANSFER OF PROPERTY HAS BE EN DEFINED IN SECTION 5 IN WHICH SALE HAS BEEN DEFINED IN SEC. 54, AS PER WHIC H, SALE IS A TRANSFER OF OWNERSHIPS IN EXCHANGE FOR A PRICED PAID. IN THE I NSTANT CASE, OWNERSHIP WAS TRANSFERRED ONLY ON 20.9.2004 IN THE CASE OF ORIENT AL HOME NOT IN THE PERIOD OF INSTALMENT PAYMENTS. THUS, THIS CASE IS HIT BY PRO VISION OF TRANSFER OF PROPERTY ACT AND ASSESSEES CLAIM OF TRANSFER OF PROPERTY HA S NOT BEEN MATERIALIZED IN THE 11 ITA NO.4469/DEL/2010 PERIOD OF THE INSTALMENT PAYMENTS. THUS, THE ISSUE IS: WHETHER THE AO AS WELL AS THE CIT (A) WERE JUSTIFIED IN TREATING THE SUBJE CT PROPERTIES AS STCG? 10. AT THIS JUNCTURE, WE WOULD LIKE TO REFER TO THE JUDICIAL PRONOUNCEMENTS ON SUCH AN ISSUE, AS UNDER : (I) THE HONBLE PUNJAB & HARYANA HIGH COURT HAS, IN THE CASE OF MRS.MADHUKAUL V. CIT & ANOTHER REPORTED IN [2014] 3 63 ITR 54 (P&H), HELD AS UNDER : THAT THE FLAT WAS ALLOTTED TO THE ASSESSEE ON JU NE 7, 1986, BY A LETTER CONVEYED TO THE ASSESSEE ON JUNE 30, 1986. THE ASSESSEE PAID THE FIRST INSTALMENT ON JU LY 4, 1986, THEREBY CONFERRING A RIGHT UPON THE ASSESSEE TO HOLD A FLAT, WHICH WAS LATER IDENTIFIED AND POSSESS ION WAS DELIVERED ON A LATER DATE. THE MERE FACT THAT POSS ESSION WAS DELIVERED LATER DID NOT DETRACT FROM THE FACT T HAT THE ALLOTTEE WAS CONFERRED A RIGHT TO HOLD THE PROPERTY ON ISSUANCE OF AN ALLOTMENT LETTER. THE PAYMENT OF TH E BALANCE INSTALMENTS, IDENTIFICATION OF A PARTICULAR FLAT AND DELIVERY OF POSSESSION WERE CONSEQUENTIAL ACTS, THAT RELATED BACK TO AND AROSE FROM THE RIGHTS CONFERRED BY THE ALLOTMENT LETTER. (II) THE HONBLE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT V. K. RAMAKRISHNAN REPORTED IN [2014] 363 ITR 59 (DEL) HA S HELD THAT:- 12 ITA NO.4469/DEL/2010 THE ASSESSEE ACQUIRED POSSESSION OF THE PLOT ON DE CEMBER 12, 2005, AND SOLD IT THROUGH A REGISTERED SALE DEE D DATED JANUARY 9, 2008. HAVING REGARD TO THE FINDINGS REC ORDED BY THE TRIBUNAL, THE ASSESSEE HAD ACQUIRED THE BENE FICIAL INTEREST IN THE PROPERTY AND AT LEAST 96 PER CENT O F THE AMOUNT WAS PAID BY OCTOBER 3, 1999. THUS, THE SALE PROCEEDS WERE TO BE CONSIDERED AS LONG TERM CAPITAL GAINS. 11. IN THE INSTANT CASE, AS MENTIONED EARLIER, IN C ASE OF ARAVALI RETREAT, THE ENTIRE PAYMENT OF RS.18,38,550/- WAS MADE IN INSTAL MENTS DURING THE PERIOD 18.07.1996 TO 09.02.2002. THE IMPUGNED PROPERTY WA S SOLD ONLY ON 06.07.2005. THEREFORE, FROM THE LAST DATE OF PAYME NT OF INSTALMENT, NAMELY, 09.02.2002 TO DATE OF SALE OF IMPUGNED PROPERTY, MO RE THAN 36 MONTHS HAVE EXPIRED. SIMILARLY, FOR THE ORIENT PROPERTY, THE S UBSTANTIAL PAYMENT (90.76%) OF TOTAL CONSIDERATION WAS PAID BEFORE 06.01.1999 AND ASSESSEE ACQUIRED THE BENEFICIAL INTEREST TO THE PROPERTY. THE HONBLE J URISDICTION HIGH COURT AND HONBLE PUNJAB & HARYANA HIGH COURT HAD CATEGORICAL LY HELD THAT DATE OF ALLOTMENT OF PLOT TO ASSESSEE IS TO BE CONSIDERED A ND NOT THE DATE OF EXECUTION OF CONVEYANCE DEED. FURTHER, THE JUDGMENT RELIED ON B Y THE CIT (A) IN THE CASE OF ASSAM VEGETABLE AND OIL PRODUCTS LTD. REPORTED IN 2 64 ITR 47 IS DISTINGUISHABLE ON FACTS. IN THAT CASE, THE ASSESS EE ITSELF ON SALE OF PROPERTY HAD DISCLOSED THE PROFITS AS SHORT TERM CAPITAL GAINS. THE REVENUE IN THAT CASE WAS OF THE VIEW THAT THE PROFIT IS TO BE ASSESSED UNDER TH E HEAD INCOME FROM OTHER SOURCES. THE HONBLE HIGH COURT UPHELD THE STAND OF THE ASSESSEE. THE ISSUE 13 ITA NO.4469/DEL/2010 RAISED IN THE INSTANT CASE IS DIFFERENT AND THE FAC TS ARE DISTINGUISHABLE. TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTANCES OF THE ISS UE AS DELIBERATED UPON IN THE FORE-GOING PARAGRAPHS AND IN CONSONANCE WITH THE JU DGMENTS OF THE HONBLE JURISDICTIONAL HIGH COURT AND THE HONBLE PUNJAB & HARYANA HIGH COURT (SUPRA), WE ARE OF THE VIEW THAT THE CIT (A) WAS NO T JUSTIFIED IN CONFIRMING THE STAND OF THE AO. IT IS ORDERED ACCORDINGLY. 12. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 27 TH DAY OF MAY, 2015. SD/- SD/- (S.V. MEHROTRA) (GEORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 27 TH DAY OF MAY, 2015 TS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXI, NEW DELHI. 5. CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.