SNEHA BIMAL PAREKH, MUMBAI V. PR CIT 19, MUMBAI

ITA 5489/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2811 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 29-02-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 02-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Keywords: Capital asset; Question of law; Cost of acquisition
• Section: 143(3); 54F; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV , JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO. 5489 /MUM/ 201 5 ( / ASSESSMENT YEAR : 20 12 - 13 ) MRS.SNEHA BIMAL PAREKH, 6, AJANTA, L D RUPAREL MARG, MUMBAI - 400006 / VS. PRINCIPAL COMMISSIONER OF INCOME TAX 1 9, MATRU MANDIR, TARDEO ROAD, MUMBAI - 400007 ./ PAN : AHFPP6087L / ASSESSEE BY SHRI RA JIV KHANDELWAL / REVENUE BY SHRI MANJUNATHA SWAMY / DATE OF HEARING : 2 2 .6. 2016 / DATE OF PRONOUNCEMENT : 30. 06 . 2016 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE ASSESSEE AND CHALLENGING THE ORDER DATED 21.10.2015 OF COMMISSIONER OF INCOME TAX - 19 , MUMBAI , FOR ASSESSMENT YEAR 20 12 - 13 . 2. THE ISSUE RAISED IN THE VARIOUS GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IS AGAINST THE SETTING AS IDE THE ORDER OF INCOME TAX OFFICER - 19(3)(4) VIDE ORDER DATED 21.10.2015 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 BY THE PRINCIPAL COMMISSIONER OF INCOME TAX ON THE GROUND THAT THE ASSESSEE HAS WRONGLY CLAIMED THE BENEFIT OF INDEXATION ON CO ST OF 2 5489/ MUM/ 201 5 ACQUISITION FROM THE DATE ON WHICH THE ALLOTMENT LETTER WAS ISSUED TO THE ASSESSEE. WHEREAS THE AO OUGHT TO HAVE TREATED THE GAIN ON SALE OF FLAT AS SHORT TERM CAPITAL GAINS (STCG) BY TREATING THE DATE OF POSSESSION /REGISTRATION AS THE DA T E OF ACQUISITION OF FLAT. THE PRINCIPAL COMMISSIONER OF INCOME TAX (PCIT) ALSO NOTED THE FACT THAT THE AREA OF THE FLAT WAS 1215 SQ.FT. AS PER LETTER OF ALLOTMENT DATED 27.11.2006 (112 SQ.M) WHEREAS THE AGREEMENT FOR SALE DATED 28.6.2011, THE AREA OF THE FL AT SOLD WAS 847 SQ.FT.(78.69 SQ.MTR) WHICH WAS NOT NOTICED BY THE AO IN THE ASSESSMENT PROCEEDINGS. IT WAS ALSO MENTIONED IN THE ORDER OF PCIT THAT THE ASSESSEE HAS NOT FILED ANY DOCUMENTARY EVIDENCE IN RESPECT OF LONG TERM CAPITAL GAINS EXCEPT THE ALLOTME NT LETTER IN SUPPORT OF DATE OF ACQUISITION OF THE SAID PROPERTY SUCH AS REGISTERED AGREEMENT OF PURCHASE OF T HE FLAT BY THE ASSESSEE AND ALSO THE AO HAS NOT DISCUSSED THE INTENT LETTER FOR THE PURPOSE OF DATE OF TRANSFER OF PROPERTY TO THE ASSESSEE , T HE SAID ACT OF THE AO WAS WRONG AND CAUSE D PREJUDICE TO THE INTE REST OF REVENUE AS HE DID NOT F IND THE DATE OF ACQUISITION/OWNERSHIP OF THE FLAT WHILE ALLOWING THE INDEX ING THE COST OF ACQUISITION OF THE SAID PROPERTY. 3. BRIEF FACTS OF THE CASE A RE THAT THE ASSESSEE DURING THE YEAR SOLD HIS FLAT NO.92 IN WING B OF BUILDING NO.2 LBS MARG, IN THE COMPLEX KNOWN AS KALPATARU AURA FOR A TOTAL CONSIDERATION OF RS.1,17,60,145/ - VIDE AGREEMENT DATED 28.6.2011 . THE SAID FLAT WAS ADMEASURED 121 4 SQ.FT 3 5489/ MUM/ 201 5 I.E.112.80 SQ.MT. AS PER LETTER OF INTENT /ALLOTMENT DATED 27.11.2006, WHEREAS AS PER AGREEMENT FOR SALE OF SAID FLAT STATED THE AREA OF 847 SQ.FT. (78.69 SQ.MTR.). THIS WAS PURSUANT TO SUPREME COURT JUDGMENT THAT ONLY CARPET AREA IS TO BE M ENTIONED IN THE AGREEMENT OF SALE AND PURCHASE AND NOT SUPER BUILT UP AREA. THE TOTAL COST OF ACQUISITION O F THE SAID FLAT WAS RS.76,04,418/ - AND THE DATE OF REGISTRATION OF AGREEMENT IN THE NAME OF ASSESSEE WAS 27.6.2009. THE ASSESSEE CALCULATED THE LTC G ON THE SAID FLAT AT RS.29,938/ - BY INDEXATI NG THE COST OF ACQUISITION BY TAKING THE DATE OF PURCHASE /ACQUISITION AS 27.11.2006. 4. THE ASSESSMENT WAS FRAMED BY THE AO U/S 143(3) OF THE ACT ON 19.2.2015 AT AN INCOME OF RS.3,92,670/ - . THEREAFTER THE P CIT SET ASIDE THE ASSESSMENT MADE BY THE AO U/S 263 OF THE ACT AS BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF T HE RE VENUE ON THE GROUND THAT THE GAIN ON SALE OF FLAT NO.92 IN WING B OF BUILDING NO.2 IN THE COMPLEX KNOWN AS KALPATARU AURA ON 28.6.2011 OUGHT TO HAVE BEEN TREATED AS STCG WHEREAS THE AO ALLOWED THE CLAIM OF THE ASSESSEE BY TREATING THE SAID SURPLUS ON SALE OF FLAT AS LTCG BY TAKING THE DA T E OF ALLOTMENT OF FLAT AS DATE OF ACQUISITION AND THUS WRONGLY ALLOWED THE COST OF ACQUI SITION TO BE INDEXED FOR THE PURPOSE OF LONG TERM CAPITAL GAIN AND CONSEQUENTLY OFFERED THE LONG TERM CAPITAL GAINS AT RS.29,938/ - . THE PCIT WHILE REFEREEING TO THE PROVISIONS OF SECTION 2(47) OF THE ACT OBSERVED THAT FOR THE PURPOSE OF ACQUISITION OF 4 5489/ MUM/ 201 5 P ROPERTY THE DATE OF LETTER OF INTENT /LLOTMENT DOES NOT SATISFY THE CONDITION OF TRANSFER OF PROPERTY. THE LD. PCIT RELIED HEA VILY ON PARA 12 OF THE LETTER OF INTENT WHICH READS AS UNDER : THIS WRITING IS MERELY A LETTER OF INTENT A ND IS NOT AND DOES NOT PURPORT TO BE AN AGREEMENT FOR SALE/PURCHASE OF THE SAID FLAT! THE PREMISES BY YOU, YOUR RIGHTS AND OBLIGATIONS SHALL BECOME EFFECTIVE ONLY ON EXECUTION OF THE AGREEMENT FOR SALE. ALL THE AMOUNTS PAID BY YOU TILL THEN SHALL REMAIN AS DEPOSIT (INTEREST FREE) WITH US FINALLY, THE PCIT SET ASIDE THE ASSESSMENT AFTER CONSIDERING T HE REPLY OF THE ASSESSEE BY OBSERVING AND HOLDING THAT THE ASSESSMENT ORDER DATED 19.2.2015 WAS ERR O NEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITH THE DIRECTION T O THE AO TO DETERMINE THE INCOME AND GAIN OF THE ASSESSEE. BEING AGGRIEVED BY THE ORDER OF THE PCIT, THE ASSESSEE IS IN APPEAL BEFORE US. . 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS PLACED BEFORE US INCLUDING THE ORDE RS OF AUTHORITIES BELOW AND ALSO THE CASE LAW RELIED UPON BY THE PARTIES. THE LD.AR OF THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSEE WAS ALLOTTED FLAT NO.92 IN WING B OF BUILDING NO.2 IN THE COMPLEX KNOWN AS KALPATARU AURA ON 28.6.2011. THE LD. AR DREW OUR ATTENTION TO PAGES NO.37 AND 38 OF THE PAPER BOOK WHICH IS A LETTER OF INTENT ALLOTTING THE FLAT TO THE ASSESSEE . THE LD. AR ALSO BROUGHT TO OUR NOTICE THE PAYMENT SCHEDULE AS CONTAINED AT PAGE 39 OF THE PAPER BOOK 5 5489/ MUM/ 201 5 WHICH IS REPRODUCED B ELOW FOR THE PURPOSE OF CONVENIENCE AND BETTER UNDERSTANDING OF THE FACT. SR. NO. PARTICULARS PAYMENT INSTALLMENT PERCENTAGE AMOUNT IN RS. 1 ON BOOKING (WITHIN 07 DAYS) 27TH NOVEMBER 2006 5% RS. 3,34,919/ - 2 WITHIN 30 (THIRTY) DAYS OF BOOKING 27TH DECEMBER 2006 15% RS.10,04,756/ - 3 ON COMPLETION OF PLINTH 10% RS. 6,69,838/ - 4 ON COMPLETION OF 2 ND SLAB 5 % RS. 3,34,919 5 ON COMPLETION OF 4TH SLAB 5 % RS. 3,34,919 6 ON COMPLETION OF 6TH SLAB 5 % RS. 3,34,919 7 ON COMPLETION OF 8TH SLAB 5 % RS. 3,34,919 8 ON COMPLETION OF 10TH SLAB 5 % RS. 3,34,919 9 ON COMPLETION OF 12TH SLAB 5 % RS. 3,34,919 10 ON COMPLETION OF 14TH SLAB 5 % RS. 3,34,919 11 ON COMPLETIO N OF 16TH SLAB 5 % RS. 3,34,919 12 ON COMPLETION OF TOP SLAB 5 % RS. 3,34,919 14 ON COMPLETION OF BRICK WORK 5 % RS. 3,34,919 15 ON COMPLETION OF INTERNAL PLASTER 5 % RS. 3,34,919 16 ON COMPLETION OF TILTING 5 % RS. 3,34,919 17 ON COMPLETION OF POSSESSION 10 % RS. 6,69,834 100% RS.66,98,375 6 . AT SR.NO. 1 OF THE ABOVE TABLE , WE FIND THAT THE ASSESSEE PAID BOOKING AMOUNT OF RS.3,34,919/ - ON 27.11.2006 WHICH CONSTITUTES 5% OF THE TOTAL PAYME NT TO BE MADE BY THE ASSESSEE TO THE BUILDER I.E RS.66,98,375/ - DURING VARIOUS STAGES ON COMPLETION /PROGRESS OF THE BUILDING . THE LD. COUNSEL SUBMITTED BEFORE US THAT THE GROUND ON WHICH THE PCIT SET ASIDE THE ASSESSMENT WA S TOTALLY WRONG AS THE ORDER OF AO IS NEITHER ERRONEOUS AND NOR PREJUDICIAL TO THE INTEREST OF REVENUE . THE LD. COUNSEL SUBMITTED THAT THESE ARE TWIN CONDITIONS WHICH WERE TO BE SATISFIED BEFORE ANY ASSESSMENT ORDER COULD BE SET ASIDE BY HIGHER AUTHORITIES AND NOT OTHERWISE . THE LD. 6 5489/ MUM/ 201 5 COUNSEL SUBMITTED BEFORE US THAT THE ASSESSEE ACQUIRED T HE INTER EST IN THE PROPERTY THE MOVEMENT THE ASSE SSEE WAS ISSUED LETTER OF INTENT BY THE BUILDER ON 17.11.2006 AN D T HE ASSESSEE MADE THE PAYMENT OF FIRST INSTALLMENT AS STATED IN THE SCHEDULE OF PAYMENT . THE LD.COUNSEL STRONGLY SUBMITTED THAT THE ACTION OF THE PCIT IS PATENTLY WRONG IN TAKING THE DATE OF REGISTRATION OF FLAT IN THE NAME OF THE ASSESSEE AS THE DATE OF ACQUISITION/PURCHASE . IT IS THE DATE OF ALLOTMENT OF FLAT ON 27.11.2006 WHEN T HE ASSESSEE ACQUIRED INTEREST/ RIGHTS IN THE PROPERTY AND THE BALANCE PAYMENT OF OUTSTANDING SALE CONSIDERATION AND DATE OF POSSESSION OR REGISTRATION ARE ONLY CONSEQUENTIAL AND NOT RELEVANT FOR THE PURPOSE OF SECTION 2(29) READ WITH SECTION 2 ( 14 ) OF THE A CT. IN THE CASE OF THE ASSESSEE, THE REGISTRATION WAS DONE ON 31.4.2009 AND T HE SALE OF FLAT WAS MADE ON 28.06.2011 . IN VIEW OF THESE FACTS THE ORDER OF THE AO IS NOT ERRONEOUS AS THE AO ALLOWED THE BENEFIT OF INDEXATION TO THE ASSESSEE BY TAKING THE D A T E OF LE T TER OF INTENT AS THE DA T E OF OWNERSHIP AS PER THE PROVISIONS OF ACT AND IN SUPPORT OF THIS THE LD.AR RELIED ON THE FOLLOWING CASE LAWS: A) SMT.LATA G ROHRA V/S DCIT (2008) 21 SOT 541 (MUM); B) MS.MADHU KAUL V/S CIT (2014) 2 63 ITR 54 (P&H); C) VINOD KUMAR JAIN VS. CIT - 344 ITR 501 (P&H); D) CIT V/S VED PARKASH AND SONS (HUF) (1994) 207 ITR 148 P H, ; E) ACIT V/S SANJAY KUMATH (2014) 63 SOT 90 (INDORE) F) CHARANBIR SINGH JOLLY V/S ITO (2006) 5 SOT 89 (MUM) G) CIT V/S K RAMAKRISHNAN (2014) 363 I TR 59(DEL) 7 5489/ MUM/ 201 5 7 . THE LF. AR FINALLY PRAYED THAT SINCE THE ORDER PASSED BY THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE IN VIEW OF THE FACTS THAT THE AO HAS RIGHTLY ALLOWED THE BENEFIT OF INDEXATION TO THE ASSESSEE BY TAKING T HE DATE OF LETTER OF INTENT ON WHICH THE TO KEN PAYMENT WERE MADE THE AS THE DA T E OF ACQUISITION WHEN THE ASSESSEE ACQUIRED RIGHT IN THE SAID FLAT AND THUS ACCEPTED THE LTCG RETUNED BY T HE ASSESSEE AND AS SUCH THE TWIN CONDITIONS AS ENVISAGED IN THE PROVI SIONS OF SECTION 263 WERE NOT SATISFIED AND THEREFORE THE ORDER AS PASSED BY THE PCIT IS WRONG AND BE SET ASIDE BY TAKING INTO CONSIDERATIONS THE RATIO LAID DOWN IN THE ABOVE REFERRED DECISIONS. 8 . TH E LD. DR , ON THE OTHER HAND , OBJECTED TO THE ARGUMENT S OF T HE LD.AR AND SUPPORTED THE ORDER OF THE PCIT HEAVILY. THE LD. DR SUBMITTED THA T THE DA T E OF ACQUISITION OF THE PROPERTY IS THE DATE OF REGIST RAT ION IN THE NAME OF THE A SS ES S EE AS PROVIDED IN THE T RANSFER OF P ROPERTY A CT. THE LD.DR SUBMITTED THA T AS PER THE PROV ISIONS OF SECTION 2(47) OF T HE AC T THE TRANSFER IS COMPLETE WHEN THE POSSESSION OF IMMOVABLE PROPERTY IS TAKEN UNDER THE TRANSFER OF PROPERTY ACT, 1982 AND T HUS THE LD.PCIT HAS RIGHTLY EXERCISED HIS REVISIONARY POWER UNDE R SECTION 263 OF THE ACT AS THE O R DE R PASSED BY THE AO IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE RE V ENUE IN VIEW OF THE FACT THAT THE STCG HAS BEEN TREATED AS LTCG BY ALLOWING INDEXATION OF COST OF ACQUISITION FROM THE DATE OF LETTER OF INTENT INSTEAD OF DATE OF REGISTRATION OF PROPERTY IN T H E NAME OF THE ASSESSEE AND FINALLY THE LD. DR 8 5489/ MUM/ 201 5 PRAYED THAT THE O RDER OF THE PCIT BE UPHELD BY DISMISSING T HE APPEAL OF THE ASSESSEE. IN SUPPORT OF HIS CONTENTIONS, THE LD.DR RELIED ON THE FOLLOWING CASE LAWS: I) CIT V/S AMITABH BACHCHAN IN CIVIL APPEAL NO.5009 OF 2016 (ARISING OUT OF SLP C ) NO.11621 OF 2009) ORDER DATED 11.5.2016 (SUPREME COURT) II) HORIZON INVESTMENT CO.LTD V/S CIT IN ITA NO.1593/MUM/2013 (AY - 2008 - 09) DATED 27.6.2014 MUMBAI TRIBUNAL. II) ARVEE INTERNATIONAL V/S ADDL.CIT (2006) 101 ITD 495 (MUM). 9 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE ORDERS OF AUTHORITIES BELOW AND CA S E LAWS RELIED UPON BY THE RIVAL PARTIES . WE FIND FROM THE PAGE NO. 36 OF TH E PAPER BOOK WHICH IS A LETTER OF ALLOTMENT DA T ED 27.11.2006 ACCOMPANYING THE SCHEDULE OF PAYMENT AS FILED AT PAGE 39 OF THE PAPER BOOK REVEALS THAT THE ASSESSEE WAS ALLOTTED THE FLAT ON 27.11.2006 AND T HE ASSESSEE HAS ALSO MADE PAYMENT OF RS.3,3 4,919/ - AS BOOKING ADVANCE. THE FLAT WAS REGISTERED IN THE NAME OF ASSESSEE ON 31.4.2009(CORRECT DA T E IS 30.4.2009 ) VIDE REGISTER SALE - DEED PLACED AT PAGES 43 TO 56 OF THE PAPER BOOK. A COPY OF THE SALE DEED DA T ED 28.6.2011 TRANSFERRING THE FLAT IS FIL ED AT PAGES 8 TO 18. NOW, ISSUE BEFORE US TO BE ADJUDICATE D IS WHETHER THE GAIN RESULTED FROM TRANSFER OF FLAT WHICH WAS ALLOTTED ON 27.11.2006 REGISTERED IN THE NAME OF ASSESSEE ON 30.11.2009 A ND SOLD ON 28.6.2011 IS A LTCG OR STCG. IF ASSETS TRAN SFERRED IS HELD FOR MORE THAN 36 MONTHS THEN THE RESULTANT GAIN WOULD BE LTCG AND THE 9 5489/ MUM/ 201 5 ASSESSEE WOULD BE ENTITLED TO INDEXATION OF COST FOR THE PURPOSE OF CALCULATION OF CAPITAL GAIN . IN THIS CASE, THE ASSESSEE HAS CLAIMED TO HAVE BEEN ALLOTTED THE FLA T ON 27.11.06 WHEN THE ASSESSEE WAS GIVEN LETTER OF ALLOTMENT AND ASSESSEE MADE PAYMENT OF RS.3,34,919/ - OUT O F TOTAL PURCHASE PRICE OF RS.66,98,375. THE FLAT IN QUESTION WAS PURCHASED FOR RS.76,04,418/ - INCLUDING THE STAMP DUTY, REGISTRATION VALUE ETC AN D S OLD FOR RS.1,17,17,145/ - . UPON LOOKING INTO THE FACTS OF THE CASE , WE FIND THAT THE A SSESSEE BECOME OWNER OF T HE FLAT ON 27.6.20 06 THEN THE ALLOTMENT LETTER WAS ISSUED AND ADVANCE AMOUNT/BOOKING AMOUNT WAS PAID TO THE BUILDER. THE CASE OF THE ASSE SSEE ALSO FIND STRONG SUPPORT FROM THE DECISION S CITED BEFORE US DURING THE COURSE OF HEARING. IN THE CASE OF SMT.LATA G ROHRA (SUPRA) , THE TRIBUNAL HAS HELD AS UNDER : AS PER SECTION 2(14), READ WITH SECTION 2(14)( VI ), THE RIGHTS IN FLAT, ACQUIRED B Y THE ASSESSEE ON EXECUTION OF PURCHASE AGREEMENT ON 7 - 8 - 1993, CAME WITHIN THE PURVIEW OF THE TERM CAPITAL ASSET. FROM THE PERUSAL OF LANGUAGE USED IN EXPLANATION ( III ) TO SECTION 48, WHICH PROVIDES FOR MANNER OF COMPUTATION OF INDEXED COST OF ACQUISITI ON, IT IS APPARENTLY CLEAR THAT IT REFERS ONLY TO DATE OF COST OF ACQUISITION OF THE ASSET AND NOT ACTUAL PAYMENTS MADE BY THE ASSESSEE. HENCE, THERE WAS NO MERIT IN THE CONTENTION OF THE REVENUE THAT THE BENEFIT OF INDEXATION SHOULD BE GIVEN ON THE BASIS OF DATES OF ACTUAL PAYMENTS MADE BY THE ASSESSEE. THUS, ON MERITS, THE ISSUE WAS COVERED IN FAVOUR OF ASSESSEE. HOWEVER, REGARDING JURISDICTION FOR INVOKING THE PROVISIONS OF SECTION 263, IT WAS FOUND THAT THE ASSESSEE FILED NECESSARY DETAILS BEFORE THE AS SESSING OFFICER AND THE ASSESSING OFFICER HAD PASSED ASSESSMENT ORDER AFTER TAKING INTO CONSIDERATION THE SAME. HENCE, MERELY FOR THE REASON THAT NO SPECIFIC FINDINGS HAD BEEN GIVEN IN THE ASSESSMENT ORDER, THE SAME COULD NOT BE SAID HAVE BEEN PASSED WITHO UT APPLICATION OF MIND. IN THIS VIEW OF THE MATTER, THE ORDER UNDER SECTION 263 PASSED BY THE COMMISSIONER WAS TO BE SET ASIDE. [PARA 9] 10 5489/ MUM/ 201 5 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STOOD ALLOWED. [PARA 10] IN THE CASE OF MS.MADHU KAUL (SUPRA) IT HAS BEEN HELD BY THE HONBLE PUNJAB AND HARIYANA HIGH COURT AS UNDER : ADMITTEDLY THE FLAT WAS ALLOTTED TO THE ASSESSEE ON 7 - 6 - 1986 VIDE LETTER CONVEYED ON 30 - 6 - 1986. THE ASSESSEE PAID THE FIRST INSTALMENT ON 4 - 7 - 1986. THEREBY CONFERRING A RIGHT UPON T HE ASSESSEE TO HOLD A FLAT, WHICH WAS LATER IDENTIFIED AND POSSESSION DELIVERED ON A LATER DATE. 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 ALL OTMENT LETTER. THE PAYMENT OF BALANCE INSTALMENTS, IDENTIFICATION OF A PARTICULAR FLAT AND DELIVERY OF POSSESSION ARE CONSEQUENTIAL ACTS AND RELATE BACK TO AND ARISE FROM THE RIGHTS CONFERRED BY THE ALLOTMENT LETTER. [PARA 7] THEREFORE, THE TRIBUNAL HAD ERRED IN HOLDING THAT THE TRANSACTION DOES NOT ENVISAGE A LONG - TERM CAPITAL GAIN. [PARA 8 IN THE CASE OF VINOD KUMAR JAIN (SUPRA) IT HAS BEEN HELD BY THE HONBLE PUNJAB AND HARIYANA HIGH COURT AS UNDER : THE ASSESSEE WAS ALLOTTED A FLAT ON 27 - 2 - 1 982 ON INSTALMENTS UNDER RESIDENTIAL SCHEME OF THE DDA. THE POSSESSION OF THE SAID FLAT WAS, HOWEVER, GIVEN TO THE ASSESSEE ON 15 - 5 - 1986 AND THE LETTER ISSUED IN THAT BEHALF INDICATED THE FLAT NUMBER AND CALLED UPON THE ASSESSEE - ALLOTTEE TO DEPOSIT THE BAL ANCE AMOUNT. THE ASSESSEE SOLD THE SAID FLAT ON 6 - 1 - 1989 AND CLAIMED THAT CAPITAL GAIN ARISING ON SALE OF SAID FLAT WAS LONG - TERM CAPITAL GAIN UNDER SECTION 2(29A) AND AS HE HAD PURCHASED ANOTHER FLAT ON 31 - 1 - 1989, SUCH CAPITAL GAIN WAS TO BE SET OFF UNDER SECTION 54. THE ASSESSING OFFICER DISALLOWED THE ASSESSEE S CLAIM HOLDING THAT THE POSSESSION OF THE FLAT WAS GIVEN TO THE ASSESSEE ON 15 - 5 - 1986 AND, THEREFORE, THE CAPITAL GAIN ON SALE OF THE FLAT IN QUESTION WAS SHORT - TERM CAPITAL GAIN GOVERNED BY SECTI ON 2(42A). ON APPEAL, THE COMMISSIONER (APPEALS) UPHELD THE VIEW TAKEN BY THE ASSESSING OFFICER. THE TRIBUNAL ALSO DISMISSED THE ASSESSEE S APPEAL. ON APPEAL TO THE HIGH COURT : 11 5489/ MUM/ 201 5 IN THE CASE OF VED PRAKASH AND SONS (SUPRA) IT HAS BEEN HELD BY THE HONBLE PUNJAB AND HARYANA HIGH COURT AS UNDER : 14. WE FIND NO MERIT IN THIS CONTENTION OF LEARNED COUNSEL. AS IS CLEAR FROM A BARE READING OF SECTION 2(42A) OF THE ACT, THE WORD 'OWNER' HAS DESIGNEDLY NOT B EEN USED BY THE LEGISLATURE. THE WORD 'HOLD', AS PER DICTIONARY MEANING, MEANS TO POSSESS, BE THE OWNER, HOLDER OR TENANT OF (PROPERTY, STOCK, LAND ....). THUS, A PERSON CAN BE SAID TO BE HOLDING THE PROPERTY AS AN OWNER, AS A LESSEE, AS A MORTGAGEE OR ON ACCOUNT OF PART PERFORMANCE OF AN, AGREEMENT, ETC. CONVERSELY, ALL SUCH OTHER PERSONS WHO MAY BE TERMED AS LESSEES, MORTGAGEES WITH POSSESSION OR PERSONS IN POSSESSION AS PART PERFORMANCE OF THE CONTRACT WOULD NOT IN STRICT PARLANCE COME WITHIN THE PURVIEW OF 'OWNER'. AS PER THE SHORTER OXFORD DICTIONARY, EDITION 1985, 'OWNER' MEANS ONE WHO OWNS OR HOLDS SOMETHING; ONE WHO HAS THE RIGHT TO CLAIM TITLE TO A THING. 15. THE APEX COURT IN THE CASE JAGDISH CHA ND RADHEY SHYAM V. STATE OF PUNJAB , AIR 1972 SC 2587 ; [1972] PLJ 566, WHILE EXAMINING THE PROVISIONS OF THE CAPITAL OF PUNJAB (DEVELOPMENT AND REGULATION) ACT (27 OF 1952) HELD THAT THE EVENT OF SOME D EFAULT WITH REGARD TO PAYMENT OF INSTALMENTS WHICH MIGHT HAVE BEEN COMMITTED BY AN ALLOTTEE DOES NOT GIVE A RIGHT TO THE GOVERNMENT TO RESUME THE LAND OR BUILDING AND AT BEST IT IS ENTITLED TO RECOVER THE AMOUNT DUE ON ACCOUNT OF NON - PAYMENT OF SOME OF THE INSTALMENTS. THE COURT HELD THAT THE STIPULATION IN THE AGREEMENT THAT IN THE EVENT OF DEFAULT IN MAKING THE PAYMENT THE GOVERNMENT SHALL HAVE THE RIGHT TO RESUME THE PROPERTY WAS AN UNREASONABLE RESTRICTION ON THE ENJOYMENT OF THE PROPERTY AND DECLARED T HE SAME ULTRA VIRES. IN THE INSTANT CASE, THE SALE THOUGH MADE BY A PRIVATE ENTREPRENEUR APPEARS TO BE IN IDENTICAL TERMS AS NORMALLY STIPULATED IN VARIOUS AUCTION SALE/SALES BY GOVERNMENT AGENCIES WHERE THERE IS STIPULATION IN THE AGREEMENT TO THE EFFECT THAT IN THE EVENT OF DEFAULT IN PAYMENT MONIES ALREADY PAID SHALL STAND FORFEITED. THUS, EVEN IF IT BE TAKEN THAT SOME AMOUNT WAS YET TO BE PAID BY THE ASSESSEE IN TERMS OF THE AGREEMENT, ALL THE SAME IT CANNOT BE CONSTRUED THAT HE HAD NO RIGHT OR INTEREST IN THE PROPERTY BUT WAS A LICENSEE AS SOUGHT TO BE PROJECTED BY COUNSEL FOR THE APPLICANT. THE ASSESSEE IN TERMS OF THE AGREEMENT HAVING BEEN PUT IN POSSESSION IN MAY, 1970, REMAINED IN OCCUPATION AS OF RIGHT AND THUS FOR ALL INTENTS AND PURPOSES WAS ITS BENEFICIAL OWNER FROM THE START. THE JUDGMENT OF 12 5489/ MUM/ 201 5 THE INCOME - TAX TRIBUNAL, CHANDIGARH BENCH IN THE CASE OF SURJEET SINGH V. ITO [1979] TAX 53(6) - 28, THOUGH NOT BINDING UPON THIS COURT, HAS ALL THE SAME A PERSUASIVE VALUE. THE POINT IN DISPUTE IS SQUARELY COVERED BY THIS JUDGMENT. THUS, WE ARE OF THE VIEW THAT THE APPELLATE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT THE CAPITAL GAIN WAS A LONG - TERM CAPITAL GAIN. THUS THE QUESTION OF LAW REFERRED IS ANSWERED IN THE AFFIRMATIVE. IN THE CASE OF SANJAY KUMATH (SUPRA) (INDORE), THE TRIBUNAL HAS HELD AS UNDER : THE ASSESSEE WAS ALLOTTED A FLAT IN A MULTI - STORIED BUILDING. VIDE THE ALLOTMENT LETTER, THE BUILDER AGREED TO SELL THE FLAT TO THE ASSESSEE. AFTER SIGN ING THE SAID LETTER OF ALLOTMENT AND PAYING THE BOOKING AMOUNT, THE ASSESSEE ACQUIRED THE RIGHT IN THE SAID FLAT. [PARA 8] AFTER THE ENTIRE PAYMENT WAS MADE BY THE ASSESSEE, AGREEMENT WAS EXECUTED ON 27 - 2 - 2009. THEREAFTER, THE ASSESSEE SOLD THE FLAT ON 5 - 3 - 2009. THUS, ALL THE RIGHTS IN THE FLAT WERE DULY ACQUIRED BY THE ASSESSEE ON 22 - 1 - 2005, WHEN HE WAS GIVEN LETTER OF ALLOTMENT WHICH CLEARLY DESCRIBED THE PRECISE NUMBER OF FLAT SO ALLOTTED TO HIM. AS PER THE PROVISIONS OF SECTION 2(47)(II), 'TRANSFER' IN RELATION TO CAPITAL ASSETS INCLUDES THE EXTINGUISHMENT OF ANY RIGHT THEREIN. THIS LETTER OF ALLOTMENT EXTINGUISHES THE RIGHTS OF BUILDER IN THE SAID FLAT IN FAVOUR OF THE ASSESSEE IN RESPECT OF THIS FLAT AND BY SIGNING THE LETTER OF ALLOTMENT, THE ASSESSE E AGREED TO BUY THE SAME AND FOR WHICH PAYMENT WAS ALSO MADE ACCORDING TO THE LETTER OF ALLOTMENT. [PARA 9] BOARD VIDE CIRCULAR NO. 672 AFTER REFERRING CIRCULAR NO. 471 EXTENDED THE FACILITY OF EXEMPTION UNDER SECTIONS 54 & 54F IN RESPECT OF ALLOTMENT OF FLAT/HOUSE. THUS, AS PER THE CBDT CIRCULAR ALSO, THE ASSESSEE ACQUIRED THE RIGHTS/TITLE IN THE FLAT BY WAY OF ALLOTMENT LETTER ON 22.1.2005. THIS ALLOTMENT LETTER WAS DULY CONFIRMED BY THE ASSESSEE BY MAKING VARIOUS PAYMENTS. OUT OF TOTAL PAYMENT OF RS. 33 .15 LAKHS, THE ASSESSEE MADE PAYMENT OF RS. 6.23 LAKHS IN THE MONTH OF ALLOTMENT ITSELF I.E. JANUARY, 2005. SUBSEQUENT PAYMENT WAS ALSO MADE AS PER THE TERMS AGREED WITH THE BUILDER. ONLY AFTER RECEIPT OF ENTIRE AMOUNT, THE BUILDER HAS EXECUTED AGREEMENT W ITH THE ASSESSEE ON 27 - 2 - 2009. THE ASSESSEE HAS SOLD THE SAID FLAT ON 5 - 3 - 2009. SINCE THE ASSESSEE HAS ACQUIRED ALL THE RIGHTS IN THE FLAT ON 22 - 1 - 2005, THE PERIOD OF HOLDING IS TO BE COMPUTED WITH RESPECT TO THE DATE OF 13 5489/ MUM/ 201 5 ALLOTMENT I.E. 22 - 1 - 2005. TAKING TH E DATE OF SALE AS 5 - 3 - 2009, THE HOLDING PERIOD OF FLAT WITH THE ASSESSEE WAS MORE THAN 36 MONTHS, THEREFORE, THERE IS NO INFIRMITY IN THE ORDER OF COMMISSIONER (APPEALS) FOR ALLOWING ASSESSEE'S CLAIM FOR EXEMPTION UNDER SECTION 54/54F, BY TREATING THE CAPI TAL ASSETS SO SOLD AS LONG - TERM CAPITAL ASSETS. [PARA 10] IN THE CASE OF CHARANBIR SINGH JOLLY (SUPRA) MUMBAI B E NCH OF THE TRIBUNAL HAS HELD AS UNDER : THE ASSESSING OFFICER HAD ADOPTED THE ORIGINAL COST OF ACQUISITION AT THE FIRST INSTALMENT VALUE, WH EREAS THE ASSESSEE HAD CLAIMED THE ORIGINAL COST OF ACQUISITION AT THE TOTAL PAYMENTS MADE BY HIM. THEREFORE, THE REAL QUESTION WAS WHAT WAS THE COST OF ACQUISITION FOR THE PURPOSE OF SECTION 48, WHETHER THE AMOUNT OF FIRST INSTALMENT PAID BY THE ASSESSEE OR THE TOTAL AMOUNT PAID BY THE ASSESSEE FOR ACQUIRING THE HOUSE. [PARA 7 A HOUSE PROPERTY HAS GOT ITS OWN INTRINSIC/MARKET VALUE. THE COST OR THE VALUE OF THE PROPERTY REMAINS THE SAME SUBJECT TO MINOR VARIATIONS OF INTEREST OF DISCOUNT FACTOR, IRRESPECT IVE OF THE MODE OF PAYMENTS. THE COST OR VALUE OF THE PROPERTY DOES NOT GET DILUTED FOR THE REASON THAT THE COST OF ACQUISITION WAS PAID BY INSTALMENTS. THE BASIC IDEA OF BRINGING THE PRINCIPLE OF INDEXATION IS TO GIVE SOME SORT OF PROTECTION TO THE ASSESS EE FROM THE ONSLAUGHT OF INFLATION. THE EFFECT OF INFLATION COULD BE MEASURED ONLY WITH REFERENCE TO THE TOTAL COST OF ACQUISITION OF A PROPERTY. IF THE EFFECT OF INFLATION IS MEASURED WITH THE PAYMENT OF THE FIRST INSTALMENT, THE WHOLE SCHEME BECOMES RIDI CULOUS. IT IS TO BE SEEN THAT THE FACTOR OF INFLATION IS NOT WITH REFERENCE TO THE PAYMENTS MADE BY THE ASSESSEE BUT WITH REFERENCE TO THE VALUE OF THE ASSET VIS - A - VIS THE COST OF ACQUISITION OF THE SALE CONSIDERATION OF THE PROPERTY. [PARA 8] THEREFORE, IN THE INSTANT CASE THE COST OF ACQUISITION OF THE HOUSE FOR THE PURPOSE OF LONG - TERM CAPITAL GAINS COMPUTATION WAS THE TOTAL COST INCURRED BY THE ASSESSEE AND NOT THE FIRST INSTALMENT VALUE AS DETERMINED BY THE LOWER AUTHORITIES. HENCE, THE ASSESSING AUTH ORITY WAS DIRECTED TO ADOPT THE COST OF ACQUISITION AS AFORESAID AND RECOMPUTE THE LONG - TERM CAPITAL GAINS TAXABLE IN THE HANDS OF THE ASSESSEE ACCORDINGLY. [PARA 9] 14 5489/ MUM/ 201 5 IN THE CASE OF CIT V/S K RAMAKRISHNAN (2014) 363 ITR 59(DEL), THE HONBLE DELHI HIGH CO URT HAS HELD AS UNDER : 3. IN THIS CASE, THE ASSESSEE ACQUIRED POSSESSION OF THE PLOT ON DECEMBER 12, 2005, AND SOLD THROUGH A REGISTERED SALE DEED DATED JANUARY 9, 2008. THIS COURT IS OF THE OPINION THAT HAVING REGARD TO THE FINDINGS RECORDED BY THE TRI BUNAL, THE ASSESSEE HAD ACQUIRED THE BENEFICIAL INTEREST TO THE PROPERTY AT LEAST 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 . THE CASE LAW RELIED UPON BY THE LD.DR IN TH IS CASE ARE DISTINGUISHABLE ON FACTS AND ARE NOT APPLICABLE TO THE PRESENT CASE, WE THEREFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE ABOVE DECISIONS RELIED ON BY THE LD.AR HOLD THAT THE ASSESSEE ACQUIRED THE OWNERSHIP RIGHT IN THE FLAT ON THE DATE OF LETTER OF INTENT WHEN T HE ASSESSEE BOOKED THE FLAT AND PAID BOOKING AMOUNT AND NOT ON THE DATE OF REGISTRATION AND THUS HELD THE PROPERTY FOR MORE THAN 36 MONTHS AND IS ENTITLED FOR INDEXATION WHILE CALCULATING THE GAIN. IN VIEW OF THE ABOVE OBSERVATIONS, WE ARE OF THE CONSIDERED VIEW THAT REVISIONARY P OWERS EXERCISED BY THE PCIT FOR SETTING ASIDE THE ORDER FRAMED BY THE AO U/S 143(3) THAT THE DA T E OF OWNERSHIP IS THE DATE OF REGISTRATION OF FLAT OF IN THE NAME OF ASSESSEE AND NOT THE DA T E OF ALLOTMENT IS WRONG AND THEREFORE, WE SET ASIDE THE ORDER OF PCIT . THE APPEALS OF THE ASSE SSEE IS ALLOWED. 15 5489/ MUM/ 201 5 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 30 .6. 2016. SD SD ( SHAILENDRA KUMAR YADAV ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : .6.2016 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI