MANJU ASHOK GOPWANI, MUMBAI V. INCOME TAX OFFICER WARD 2(3)(1), MUMBAI

ITA 5504/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0856 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 31-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: M SUBRAMAINAN
• Keywords: Capital asset; Cost of acquisition
• Section: 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.5504/M/2017 ASSESSMENT YEAR: 2013-14 MRS. MANJU ASHOK GOPWANI, C/O. SABNANI & CO., 3(A)2, COURT CHAMBERS 35, NEW MARINE LINES, MUMBAI-400 020 PAN: ATNPG4991L VS. ITO WARD 2(3)(1), AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI M. SUBRAMAINAN, A.R. REVENUE BY : MS. N. HEMALATHA, D.R. DATE OF HEARING : 01.01.2018 DATE OF PRONOUNCEMENT : 22.01.2018 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 23.05.2017 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2013-14. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER: ASSESSEE IS WORKING AT HONG KONG. SHE HAD PURCHAS ED A FLAT IN 1991. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO), WHILE CALCULATING THE INDEXED VALUE OF COST FROM TH E DATE OF REGISTRATION OF THE AGREEMENT, HAS NOT ALLOWED THE EXEMPTION UNDER SECTION 44EF. THE ASSESSEE HAS SOLD THE FLAT NO.90 1 IN THE BUILDING CALLED SKY-PAN, OFF LINK ROAD, OBEROI COMPLEX, ANDH ERI (W) ON ITA NO.5504/M/2017 MRS. MANJU ASHOK GOPWANI 2 14.02.2013 AT A CONSIDERATION OF RS.1,33,22,000/-. THE PROPERTY IS CLAIMED TO HAVE BEEN PURCHASED IN THE YEAR 1991 AT A PRICE OF RS.22,26,000/- ONLY. THE ASSESSEE CLAIMED ALL THE RIGHTS, TITLE AND INTEREST IN THE FLAT IS VESTED FROM NOVEMBER 1991. THEREFORE, HE IS ENTITLED TO INCOME TAX FROM NOVEMBER 1991 AND NOT F ROM THE DATE OF REGISTERING THE AMOUNT IN 2001. ACCORDINGLY, THE A SSESSEE WANTED TO WORK OUT LONG TERM CAPITAL GAIN AFTER INDEXATION FR OM 1991. THE LD. CIT(A) DID NOT ALLOW THE SAME. THEREFORE, ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD. A.R. SUBMITTED THAT ASSESSEE HAS ENTERED INTO AGREEMENT FOR PURCHASE OF FLAT FOR RS.22,26,000/- F OR WHICH AMOUNT OF RS.2,00,000/- HAS BEEN PAID ON 04.11.91 AND BALA NCE WAS PAID IN 1994 AND THE POSSESSION OF FLAT WAS RECEIVED ON 04. 01.95. THE PURCHASE AGREEMENT WAS REGISTERED ON 04.01.01. AS PER THE ASSESSEE, THE DATE OF ACQUISITION OF FLAT IS 04.01.91. THERE FORE, INDEXATION COST MAY BE ALLOWED. HE RELIED UPON THE DECISION OF TRI BUNAL IN THE CASE OF PRAVEEN GUPTA VS. ACIT (2011) 137 TTJ (DEL) 307. 4. THE LD. D.R. RELIED UPON THE ORDERS OF THE REVEN UE AUTHORITIES. 5. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. I FIND THAT ASSESSEE HAS PRODUCED THE ORIGINAL DEED OF AGREEMEN T BEFORE US BY WAY OF PAPER BOOK WHEREIN IT IS STATED AS UNDER: DEED OF CONFIRMATION THIS DEED OF CONFIRMATION IS MADE AT MUMBAI ON THIS 4 TH DAY OF JANUARY, IN THE CHRISTIAN YEAR TWO THOUSAND ONE BY MRS. MANJU A. GOPWANI MR. & ASHOK ITA NO.5504/M/2017 MRS. MANJU ASHOK GOPWANI 3 G. GOPWANI RESIDING AT FLAT NO.901, SKY PAN-A, OFF. NEW LINK ROAD, ANDHERI (WEST), MUMBAI 400 053, HEREINAFTER REFERRED TO AS THE PURCHASER (WHICH EXPRESSION SHALL UNLESS IT BE REPUGNANT TO THE CONT EXT OR MEANING THEREOF, BE DEEMED TO MEAN AND INCLUDE, HIS HEIRS, EXECUTORS, A DMINISTRATORS AND ASSIGNS) WHEREAS, BY AN AGREEMENT FOR SALE DATED 4TH NOVEMBE R1991, (HEREINAFTER CALLED 'THE SAID AGREEMENT') MESSRS. OBEROI PROPERTY DEVEL OPERS, AGREED TO ALLOT TO THE PURCHASER AND THE PURCHASER AGREED TO PURCHASE FLAT NO.902, ON THE 9TH FLOOR, OF THE BUILDING 'SKY PAN-A', AT OBEROI COMPLEX, OFF. N EW LINK ROAD, ANDHERI (WEST), MUMBAI 400 053 (HEREINAFTER REFERRED TO AS 'THE SAI D FLAT') AT THE PRICE AND ON THE TERMS AND CONDITIONS THEREIN CONTAINED. AND WHEREAS, THE SAID AGREEMENT THROUGH INADVERTENC E REMAINED TO BE LODGED FOR REGISTRATION WITH THE SUB-REGISTRAR OF ASSURANC ES, WITHIN THE TIME LIMIT SPECIFIED UNDER LAW FOR REGISTRATION. NOW WITH THIS DEED OF CONFIRMATION, THE PURCHASER H EREBY CONFIRMS THE SAID AGREEMENT DATED 0 NOVEMBER1991, WHICH IS ANNEXED HE RETO AND MARKED AS EXHIBIT 'A'. 6. FROM THE ABOVE IT IS APPARENT THAT BY AN AGREEME NT FOR SALE DATED 04.11.91 M/S. OBEROI PROPERTY DEVELOPERS, AGR EED TO ALLOT TO THE PURCHASER AND THE PURCHASER AGREED TO PURCHASE FLAT NO.902. IT IS ALSO BORNE OUT FROM THIS AGREEMENT THAT ASSESSEE HA S ALSO MADE PAYMENT OF RS.2 LAKHS BY CHEQUE ON 04.11.91. THERE FORE, IT IS CLEAR THAT ASSESSEE HAS ACQUIRED THE PROPERTY FROM 01.11. 91. I FIND THAT THE DECISION OF DELHI BENCH IN THE CASE OF PRAVEEN GUPT A (SUPRA) WHEREIN THE TRIBUNAL HAS HELD AS UNDER: CAPITAL GAINS COST OF ACQUISITION INDEXED COST OF ACQUISITION OF FLAT BY ENTERING INTO AN AGREEMENT TO ACQUIRE A FLAT IN 1995, ASSESSEE HAD IDENTIFIED A PARTICULAR PROPERTY WHICH HE INTENDED TO BUY AND THE BUILDER WAS ALSO BOUND TO PROVIDE THAT PROPERTY BY ACCEPTIN G CERTAIN ADVANCE PAYMENT AND MAKING AGREEMENT FOR BALANCE PAYMENTAS SESSEE HAD ACQUIRED A RIGHT TO GET A PARTICULAR FLAT FROM THE BUILDER AND THAT RIGHT ITSELF IS A CAPITAL ASSET WORD HELD USED IN S. 2(14) AS WELL AS IN CL. (III) OF EXPLANATION TO S. 48 CLEARLY DEPICTS THAT THE ASSES SEE MUST HAVE SOME RIGHT IN THE CAPITAL ASSET WHICH IS SUBJECT TO TRAN SFERASSESSEE CAN BE SAID TO HAVE HELD THE FLAT WHEN HE MADE THE PAYMENT TO THE BUILDER AND RECEIVED THE ALLOTMENT LETTER THEREFORE, BENEF IT OF INDEXATION OF COST OF ACQUISITION OF THE FLAT HAS TO BE GRANTE D TO THE ASSESSEE FROM 1995 AND NOT FROM THE DATE OF EXECUTION OF CONVEYAN CE DEED IN 2001 ITA NO.5504/M/2017 MRS. MANJU ASHOK GOPWANI 4 HELD : THE FLAT WAS ALLOTTED TO THE ASSESSEE VIDE ALLOTMEN T LETTER DT. 2ND AUG., 1995 AND AGREEMENT WAS EXECUTED ON 27TH SEPT. , 1995. THE ASSESSEE STARTED MAKING PAYMENT FROM 2ND AUG., 1995 AND WAS MAKING PAYMENT TILL 28TH SEPT., 2001. THE AO WAS THEREFORE WRONG IN HOL DING THAT THE BENEFIT OF INDEXATION WILL BE AVAILABLE TO THE ASSESSEE FROM 2 7TH DEC., 2001 I.E., FROM THE CATE OF EXECUTION OF THE CONVEYANCE DEED AND NOT FR OM 27TH SEPT., 1995. BY ENTERING INTO AN AGREEMENT TO ALLOT A FLAT , THE ASSESSEE HAS IDENTIFIED A PARTICULAR PROPERTY WHICH HE INTENDED TO BUY FROM THE BUILDER AND THE BUILDER IS ALSO BOUND TO PROVIDE THE APPLIC ANT WITH THAT PROPERTY BY ACCEPTING CERTAIN ADVANCE AMOUNT AND MAKING AGREEME NT FOR BALANCE PAYMENT AS SCHEDULED IN THE AGREEMENT. THUS, GOING INTO THE PROVISIONS, IT/S NOT NECESSARY THAT TO CONSTITUTE A CAPITAL ASSET TH E ASSESSEE MUST BE THE OWNER BY WAY OF A CONVEYANCE DEED IN RESPECT OF THA T ASSET FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. THE ASSESSEE HAD ACQUIRE D A RIGHT TO GET A PARTICULAR FLAT FROM THE BUILDER AND THAT RIGHT OF THE ASSESSEE ITSELF IS A CAPITAL ASSET. THE WORD HELD' USED IN S. 2(14) AS W ELL AS EXPLANATION TO S. 48 CLEARLY DEPICTS THAT ASSESSEE MUST HAVE SOME RIGHT IN THE CAPITAL ASSET WHICH IS SUBJECT TO TRANSFER. BY MAKING THE PAYMENT TO TH E BUILDER AND HAVING RECEIVED ALLOTMENT LETTER IN LIEU THEREOF, THE ASSE SSEE WILL BE HOLDING CAPITAL ASSET AND, THEREFORE, THE BENEFIT OF INDEXATION HAS TO BE GRANTED TO THE ASSESSEE ON THE BASIS OF PAYMENTS MADE BY HIM FOR A CQUIRING THE SAID ASSET AND THE ASSESSEE HAS RIGHTLY CLAIMED THE INDEXATION BENEFIT FROM THE DATES WHEN HE HAS MADE THE PAYMENTS TO THE BUILDER. THE A O IS DIRECTED TO PROVIDE THE BENEFIT OF INDEXATION TO THE ASSESSEE I N THE MANNER IN WHICH THE ASSESSEE HAS CLAIMED. (PARAS 17, 18 & 29) CONCLUSION: ASSESSEE CAN BE SAID TO HAVE HELD THE FLAT WHEN HE MADE THE PAYMENT TO THE BUILDER AND RECEIVED THE ALLOTME NT LETTER AND, THEREFORE, BENEFIT OF IN DEXATION OF COST OF ACQUISITION OF THE FLAT HAS TO BE GRANTED TO THE ASSESSEE FROM THE DATE (1995) WHEN HE STARTED MAKIN G PAYMENTS TO THE BUILDER AND NOT FROM THE DATE OF EXECUTION OF CONVE YANCE DEED IN 2001. 7. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBU NAL, I HOLD THAT ASSESSEE HAS MADE PAYMENT OF RS.2 LAKHS BY CHEQUE O N 04.11.91. THEREFORE, ASSESSEE HAS ACQUIRED THE PROPERTY AND H E MADE THE PAYMENT. THEREFORE, INDEXATION BENEFIT STARTS FROM THE DATE WHEN HE MADE THE PAYMENT TO THE BUILDER. I THEREFORE, DIRE CT THE AO TO PROVIDE THE BENEFIT OF INDEXATION TO THE ASSESSEE F ROM 04.11.91. ITA NO.5504/M/2017 MRS. MANJU ASHOK GOPWANI 5 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 22.01.2018. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 22.01.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.