JAYATI S. CHAKRABORTY, MUMBAI V. ACIT 31(2), MUMBAI

ITA 7122/MUM/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5284 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2012-2013
• Appeal Filed On: 05-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Capital asset; Cost of acquisition; Capital Gains
• Section: 143(3); 54F; 201; 54; 10

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL J BENCH MUMB AI BEFORE SHRI G.S. PANNU, VICE-PRESIDENT AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 7122/MUM/2016 (ASSESSMENT YEAR 2012-13 ) JAYATI S CHAKRABORTY 1803/1804, B-WING, OBEROI WOODS, MOHAN GOKHALE ROAD, GOREGAON (E), MUMBAI-400063. PAN: AAOPC5980B VS. ACIT - 31(2) C-11, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051. APPELLANT RESPONDE NT APPELLANT BY : SHRI AARATI VISANJI WITH SH. SALIN R. DIVATIA- (AR) RESPONDENT BY : SHRI RAJEEV GUBGOTRA (DR) DATE OF HEARING : 10.10.2018 DATE OF PRONOUNCEMEN T : 18.10.2018 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME -TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-42, MUMBAI DATED 23.08.2016 WHICH IN TURN ARISES FROM THE ASSESSMENT ORDER PASS ED UNDER SECTION 143(3) OF THE ACT DATED 10.03.2015 FOR ASSESSMENT YEAR 201 2-13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT (APPEALS)-42 ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER TREATING THE GAINS ON SALE OF RESIDENTIAL F LAT AT 302, C WING, OBEROI SPRINGS, MUMBAI AS SHORT TERM CAPITAL GAIN INSTEAD OF LONG TERM CAPITAL GAINS AS CLAIMED BY THE ASSESSEE AND ERRED CONSEQUE NTLY IN CONFIRMING THE ADDITION OF RS. 1,97,94,060/- TO THE TOTAL INCOME R ETURNED BY THE ASSESSEE. ITA NO. 7122 MUM 2016-JAYATI S CHAKRABORTY 2 2. THE ASSESSEE FURTHER VIDE HER APPLICATION DATED 14. 06.2018 RAISED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: 2.THE LEARNED ASSESSING OFFICER VIDE ORDER DATED 10 /03/2015 U/S. 143(3) OF THE ACT DISALLOWED MY CLAIM OF LONG TERM CAPITAL GAINS AND TREATED THE SALE OF THE RESIDENTIAL FLAT AS SHORT TERM CAPITAL GAINS. CONSEQUENTLY THE ASSESSING OFFICER DID NOT ALLOW TH E EXEMPTION U/S 54 AS CLAIMED BE ME. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13 ON 31.09.2012 DECLARING TOT AL INCOME OF RS. 28,92,390/-. IN THE COMPUTATION OF INCOME, THE ASSE SSEE CLAIMED LONG TERM CAPITAL GAIN ON SALE OF RESIDENTIAL FLAT NO. 302, O BEROI SPRINGS, MUMBAI (FLAT) ON 05.10.2011. THE ASSESSEE CLAIMED ACQUISIT ION OF FLAT ON 25.04.2008. THE SAID FLAT WAS SOLD BY ASSESSEE ON 0 5.10.2011 FOR SALE CONSIDERATION OF RS. 2,90,00,000/-. THE ASSESSEE CL AIMED INDEXATION COST AND AFTER DEDUCTING THE INDEXATION COST FROM SALE P RICE, THE ASSESSEE HAS SHOWN/ CLAIMED CAPITAL GAIN OF RS. 1,65,83,053/-. THE ASSESSEE INVESTED RS. 1,40,00,000/- FOR PURCHASE OF NEW HOUSE/ FLAT AND C LAIMED EXEMPTION THEREOF AND REMAINING AMOUNT OF RS. 25,83,053/- WAS OFFERED FOR LONG TERM CAPITAL GAIN. DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE COPY OF SALE AND PURCHASE DEED OF PROPERTIES AND THE DETAILS OF INVESTMENT FOR THE CL AIM OF EXEMPTION UNDER SECTION 54 OF THE ACT. THE ASSESSEE FURNISHED NECES SARY DETAILS. ON VERIFICATION OF THE DETAILS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE ITA NO. 7122 MUM 2016-JAYATI S CHAKRABORTY 3 ENTERED IN AGREEMENT TO SALE DATED 19.07.2009 FOR P URCHASE OF THE RESIDENTIAL FLAT FROM OBEROI CONSTRUCTION PVT. LTD. FOR RS. 87, 84,050/-. THE ASSESSEE ALSO PAID STAMP DUTY OF RS. 4,21,980/- WHICH WAS CL AIMED AS A PART OF COST OF ACQUISITION. THE ASSESSEE ALSO CLAIMED EXEMPTION UNDER SECTION 54 ON INVESTMENT OF SALE CONSIDERATION ON PURCHASE OF TWO FLATS WITHIN TWO YEAR FROM THE DATE OF SALE OF OLD FLAT. THE CLAIM OF TH E ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER ON TAKING VIEW THAT ENTIRE PAY MENT WAS NOT PAID BY THE ASSESSEE, THE PURCHASE AGREEMENT WAS REGISTERED ON 19.07.2009 AND THE ASSESSEE HAS SOLD THE FLAT ON 05.10.2011. MOREOVER, THE ASSESSEE HAS NOT RECEIVED THE POSSESSION OF PROPERTY ON 25.04.2008. THEREFORE, THE CLAIM OF ASSESSEE FOR ACQUISITION OF PROPERTY ON 25.04.2008 I.E. ON WHICH THE ASSESSEE PURCHASED IT FROM PREVIOUS OWNER WAS NOT ACCEPTED. THE ASSESSING OFFICER TREATED THE ENTIRE GAIN AS SHORT TERM CAPITAL GAIN AND BROUGHT IT TO TAX ACCORDINGLY. THE CLAIM OF EXEMPTION WAS ALSO NOT AL LOWED AS THE ENTIRE GAIN WAS TREATED AS SHORT TERM CAPITAL GAIN AND FURTHER THE CAPITAL GAIN ARISEN WAS INVESTED IN TWO FLATS. ON APPEAL BEFORE THE LD. CIT (A), THE ACTION OF ASSESSING OFFICER WAS CONFIRMED. THEREFORE, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT A PPEAL BEFORE US. 4. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) F OR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ITA NO. 7122 MUM 2016-JAYATI S CHAKRABORTY 4 5. IN SUPPORT OF APPLICATION FOR ADDITIONAL GROUND OF APPEAL, THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ASSESSEE IN THE COMPUTATI ON OF INCOME THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 54 OF THE ACT. IN T HE STATEMENT OF FACT BEFORE LD CIT(A), THE ASSESSEE HAS SPECIFICALLY CON TENDED THAT THE SALE PROCEED WAS REINVESTED INTO ANOTHER RESIDENTIAL FLA T BY TEMPORARILY PLACING THE AMOUNT OF RS. 1.15 CRORE IN CAPITAL GAIN ACCOUN T SCHEME WITH NATIONALIZED BANK. THE ASSESSEE IS RAISING ADDITION AL GROUND OF APPEAL, WHICH IS EMANATING FROM THE FACTS AVAILABLE ON RECO RD. NO FURTHER FACT OR ANY DOCUMENTARY EVIDENCE IS REQUIRED TO BE BROUGHT ON RECORD. THE ASSESSEE INADVERTENTLY OMITTED TO RAISE THE GROUND RELATED W ITH THE EXEMPTION UNDER SECTION 54 OF THE ACT. THE LD. AR OF THE ASSESSEE F URTHER SUBMITS THAT ADDITIONAL GROUND RELATED WITH EXEMPTION UNDER SECT ION 54 IS PURELY A LEGAL ISSUE, WHICH DOES NOT REQUIRE ASCERTAINMENT OF NEW FACTS. 6. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE NOT S TRONGLY OPPOSED THE RAISING OF ADDITIONAL GROUND OF APPEAL. 7. WE HAVE CONSIDERED THE CONTENTION OF LD. REPRESENTA TIVES OF PARTIES AND FOUND THAT IN THE COMPUTATION OF TOTAL INCOME, THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL GAIN AND EXEMPTION UNDER SECTION 54 OF THE ACT FOR REINVESTMENT OF SALE PROCEED IN NEW RESIDENTIAL HOU SE WITHIN TWO YEAR AFTER THE DATE OF TRANSFER OF OLD ASSET (OLD HOUSE). THE CONTENTION OF THE ASSESSEE REGARDING THE INVESTMENT OF CAPITAL GAIN IS RECORDE D BY ASSESSING OFFICER IN PARA 4.1(IV) OF HIS ORDER. CONSIDERING THE NATURE O F CLAIM FOR WHICH NO NEW ITA NO. 7122 MUM 2016-JAYATI S CHAKRABORTY 5 FACTS ARE NECESSARY TO BE BROUGHT ON RECORD. WE ADM IT THE ADDITIONAL GROUND OF APPEAL RAISED BY ASSESSEE. 8. GROUND NO.1 RELATES TO TREATING THE GAIN ON SALE OF RESIDENTIAL FLAT AS SHORT TERM CAPITAL GAIN INSTEAD OF LONG TERM CAPITAL GAIN . THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ASSESSEE PURCHASED A FLAT WAS INITIALLY BOOKED BY ONE SH. SANTANU LODH. THE ALLOTMENT LETTER WAS TRA NSFERRED IN THE NAME OF THE ASSESSEE ON 25.04.2008. IN PURSUANCE OF TRANSFE R OF ALLOTMENT LETTER THE AGREEMENT WAS ENTERED BY HER WITH THE DEVELOPERS ON 19 TH JULY 2009 AND THE SAME WAS REGISTERED ONLY ON 03.08.2009. THE ASSESSE E SOLD THE SAID FLAT ON 05.11.2011. THEREFORE, THE ASSESSEE CLAIMED THAT HE R HOLDING PERIOD OF THE PROPERTY SHOULD BE COUNTED FROM 25.04.2008 WHEN SHE GOT AN OFFER OF ALLOTMENT. AS THE ASSESSEE FINALLY SOLD THE PROPERT Y ON 05.11.2011.THE ASSESSEE CLAIMS THAT HER HOLDING PERIOD WAS OVER 36 MONTH AND SHE SHOULD GET THE BENEFIT OF LTCG AS WELL AS INDEXED COST OF CONSIDERATION FROM 2008 ITSELF. THE LD. AR FOR THE ASSESSEE ALSO RELIED ON THE CBDT CIRCULAR NO. 672 DATED 16 TH DECEMBER 1993 AND THE DECISIONS OF MADHU KAUL V. CIT [2014] 363 ITR 54 (P&H), VINOD KUMAR JAIN V. CIT[2012] 344 ITR 501 (P&H), ANITA D KANJANI V. ACIT 23(1), MUMBAI (ITA NO. 2291 /MUM/2015), SNEHA BIMAL PAREKH V PR. CIT, MUMBAI (ITA NO. 5489/ MUM/2015), ACIT V. SANJAY KUMATH (ITA NO. 448/IND/2017) , SIMI KHAN NA V. ACIT (ITA NO. 2076/MUM/2017) & NITIN PRAKASH V. DCIT, THANE. ITA NO. 7122 MUM 2016-JAYATI S CHAKRABORTY 6 9. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SUPPOR TED THE ORDER OF THE AUTHORITIES BELOW. THE LD DR FOR THE REVENUE SUBMIT S THAT THE ASSESSEE HAS NOT FILED THE COPY OF THE ALLOTMENT LETTER ON RECOR D TO SHOW THAT THE ASSESSEE HAS ENFORCEABLE RIGHT AGAINST THE BUILDER. 10. IN THE REJOINDER SUBMISSIONS THE LD AR FOR THE ASSE SSEE SUBMITS THAT THEY WOULD FILE THE COPY OF ALLOTMENT LETTER DATED 17TH MAY 2006 IN THE NAME OF SANTANU LODH WITHIN THREE WORKING DAY. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE NA RROW DISPUTE BEFORE US IS WHETHER THE CAPITAL GAIN EARN BY ASSESSEE IS SHORT TERM OR THE LONG TERM CAPITAL GAIN AND / OR THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 54 OF THE ACT. THE LOWER AUTHORITIES HAVE NOT DISPUTED THE CERTAIN DATES. IT IS NOT IN DISPUTE THAT THE ASSESSEE PURCHASED THE RIGHT IN THE ASSET/ FLAT FROM THE PERSON WHO WAS INITIALLY ALLOTTED THE FLAT VIDE ALL OTMENT LETTER. THE ASSESSEE PURCHASED THE SAID FLAT VIDE AGREEMENT DATED 25.04. 2008, WHICH WAS DULY CONFIRMED BY THE BUILDER (OBEROI CONSTRUCTIONS). IN PURSUANCE OF THE PURCHASE AGREEMENT FROM THE ORIGINAL ALLOTEES THE A GREEMENT TO SALE WAS EXECUTED ON 19 TH JULY 2009 AND WAS REGISTERED ON 3 RD AUGUST 2009. THIS AGREEMENT WAS EXECUTED IN LIEU OF ALLOTMENT LETTER DATED 17/05/2006 & 25 /04/2008, WHICH IS DULY ENDORSED ON THE AGREEMENT. WE HAVE ALSO PERUSED THE CONTENTS OF THE ALLOTMENT LETTER ISSUED BY THE BUILDER. THE PERUSAL OF ALLOTMENT REVEALS THAT RS. 8,78,405/- WAS PAID ON A CCOUNT OF EARNEST MONEY, ITA NO. 7122 MUM 2016-JAYATI S CHAKRABORTY 7 RS. 13,17,608/- WAS PAID AT THE TIME OF ISSUING OF ALLOTMENT LETTER. RS. 4,39,203/- WAS PAYABLE ON COMPLETION OF PLINTH OF T HE BUILDING, RS. 47,43,387/- WAS PAYABLE IN FORTY EQUAL INSTALMENT O N COMPLETION OF 40 TH SLABS OF THE BUILDING WHERE THE SAID FLAT IS SITUAT ED. RS. 3,51,362/- WAS PAYABLE ON COMPLETION OF BRICK WORK OF THE BUILDING , RS. 3,51,362/- WAS PAYABLE AT THE TIME OF PLASTERING OF BUILDING. RS. 3,51,362/- ON COMPLETION OF FLOORING AND TILING AND REMAINING SIMILAR BALANC E OF RS. 3,51,362/- WAS PAYABLE AT THE TIME OF READY TO USE OF THE FLAT. TH US, ENTIRE AMOUNT WAS PAYABLE IN A TIME FRAME MANNER, WHICH IS LINKED TO THE PROGRESS OF THE CONSTRUCTION. 12. THE CBDT VIDE CIRCULAR NO. 471 [F. NO. 207/27/85-IT (A-II)], DATED 15- 10-1986 ISSUED FOLLOWING INSTRUCTION: 1. SECTIONS 54 AND 54F PROVIDE THAT CAPITAL GAINS ARIS ING ON TRANSFER OF A LONG- TERM CAPITAL ASSET SHALL NOT BE CHARGED TO TAX TO T HE EXTENT SPECIFIED THEREIN, WHERE THE AMOUNT OF CAPITAL GAIN IS INVESTED IN A R ESIDENTIAL HOUSE. IN THE CASE OF PURCHASE OF A HOUSE, THE BENEFIT IS AVAILABLE IF THE INVESTMENT IS MADE WITHIN A PERIOD OF ONE YEAR BEFORE OR AFTER THE DATE ON WH ICH THE TRANSFER TOOK PLACE AND IN CASE OF CONSTRUCTION OF A HOUSE, THE BENEFIT IS AVAILABLE IF THE INVESTMENT IS MADE WITHIN THREE YEARS FROM THE DATE OF THE TRA NSFER. 2. THE BOARD HAD OCCASION TO EXAMINE AS TO WHETHER THE ACQUISITION OF A FLAT BY AN ALLOTTEE UNDER THE SELF-FINANCING SCHEME (SFS ) OF THE D.D.A. AMOUNTS TO PURCHASE OR IS CONSTRUCTION BY THE D.D.A. ON BEH ALF OF THE ALLOTTEE. UNDER THE SFS OF THE D.D.A., THE ALLOTMENT LETTER IS ISSU ED ON PAYMENT OF THE FIRST INSTALMENT OF THE COST OF CONSTRUCTION. THE ALLOTME NT IS FINAL UNLESS IT IS CANCELLED OR THE ALLOTTEE WITHDRAWS FROM THE SCHEME . THE ALLOTMENT IS CANCELLED ONLY UNDER EXCEPTIONAL CIRCUMSTANCES. THE ALLOTTEE GETS TITLE TO THE PROPERTY ON THE ISSUANCE OF THE ALLOTMENT LETTER AN D THE PAYMENT OF INSTALMENTS IS ONLY A FOLLOW-UP ACTION AND TAKING THE DELIVERY OF POSSESSION IS ONLY A FORMALITY. IF THERE IS A FAILURE ON THE PART OF THE D.D.A. TO DELIVER THE POSSESSION OF THE FLAT AFTER COMPLETING THE CONSTRU CTION, THE REMEDY FOR THE ALLOTTEE IS TO FILE A SUIT FOR RECOVERY OF POSSESSI ON. 3. THE BOARD HAVE BEEN ADVISED THAT UNDER THE ABOVE CI RCUMSTANCES, THE INFERENCE THAT CAN BE DRAWN IS THAT THE, D.D.A. TAK ES UP THE CONSTRUCTION WORK ON BEHALF OF THE ALLOTTEE AND THAT THE TRANSACTION INVOLVED IS NOT A SALE. UNDER ITA NO. 7122 MUM 2016-JAYATI S CHAKRABORTY 8 THE SCHEME THE TENTATIVE COST OF CONSTRUCTION IS AL READY DETERMINED AND THE D.D.A. FACILITATES THE PAYMENT OF THE COST OF CONST RUCTION IN INSTALMENTS SUBJECT TO THE CONDITION THAT THE ALLOTTEE HAS TO B EAR THE INCREASE, IF ANY, IN THE COST OF CONSTRUCTION. THEREFORE, FOR THE PURPOSE OF CAPITAL GAINS TAX THE COST OF THE NEW ASSET IS THE TENTATIVE COST OF CONSTRUCTION AND THE FACT THAT THE AMOUNT WAS ALLOWED TO BE PAID IN INSTALMENTS DOES NOT AFFE CT THE LEGAL POSITION STATED ABOVE. IN VIEW OF THESE FACTS, IT HAS BEEN DECIDED THAT CASES OF ALLOTMENT OF FLATS UNDER THE SELF-FINANCING SCHEME OF THE D.D.A. SHALL BE TREATED AS CASES OF CONSTRUCTION FOR THE PURPOSE OF CAPITAL GAINS. 13. THE CBDT IN CIRCULAR NO. 672 DATED 16-12-1993 ISSUE D FOLLOWING INSTRUCTIONS: 1. ATTENTION IS INVITED TO BOARD'S CIRCULAR NO. 471, DATED 15-10-1986 . IT WAS CLARIFIED THEREIN THAT CASES OF ALLOTMENT OF FLATS UNDER THE SELF-FINANCING SCHEME OF THE DELHI DEVELOPMENT AUTHORITY (DDA) SHO ULD BE TREATED AS CASES OF CONSTRUCTION FOR THE PURPOSES OF SECTIONS 54 AND 54F OF THE INCOME-TAX ACT. THE BOARD HAS SINCE RECEIVED REPRESENTATIONS THAT E VEN IN RESPECT OF ALLOTMENT OF FLATS/HOUSES BY CO-OPERATIVE SOCIETIES AND OTHER INSTITUTIONS, WHOSE SCHEMES OF ALLOTMENT AND CONSTRUCTION ARE SIMILAR TO THOSE OF DELHI DEVELOPMENT AUTHORITY, A SIMILAR VIEW SHOULD BE TAKEN. 2. THE BOARD HAS CONSIDERED THE MATTER AND HAS DECIDED THAT IF THE TERMS OF THE SCHEMES OF ALLOTMENT AND CONSTRUCTION OF FLATS/HOUS ES BY THE CO-OPERATIVE SOCIETIES OR OTHER INSTITUTIONS ARE SIMILAR TO THOS E MENTIONED IN PARA 2 OF BOARD'S CIRCULAR NO. 471, DATED 15-10-1986 , SUCH CASES MAY ALSO BE TREATED AS CASES OF CONSTRUCTION FOR THE PURPOSES OF SECTIONS 54 AND 54F OF THE INCOME-TAX ACT. 14. THE HONBLE DELHI HIGH COURT IN CIT VS. RAMAKRISHNA N [2014] 363 ITR 59 (DEL.) HELD THAT IN ORDER TO DETERMINE TAXABILITY O F CAPITAL GAIN ARISING FROM SALE OF PROPERTY, IT IS DATE OF ALLOTMENT OF PROPER TY WHICH IS RELEVANT FOR PURPOSE OF COMPUTING HOLDING PERIOD AND NOT DATE OF REGISTRATION OF CONVEYANCE DEED. THE HONBLE PUNJAB & HARYANA HIGH COURT IN MADHU KAUL VS. CIT(SUPRA) HELD THAT WHERE A FLAT WAS ALLO TTED TO ASSESSEE ON 7-6- 1986 AND SHE PAID FIRST INSTALMENT ON 4-7-1986 AND POSSESSION OF FLAT WAS DELIVERED ON A LATER DATE AND THEREAFTER SHE SOLD F LAT ON 5-7-1989, CAPITAL GAIN ARISING FROM SALE OF FLAT WAS A LONG-TERM CAPI TAL GAIN. ITA NO. 7122 MUM 2016-JAYATI S CHAKRABORTY 9 15. FURTHER, THE HONBLE PUNJAB & HARYANA HIGH COURT IN VINOD KUMAR JAIN VS. CIT (SUPRA) ON THE FACTS THAT ASSESSEE WAS ALLO TTED A FLAT BY DELHI DEVELOPMENT AUTHORITY (DDA) ON 27.02.1982 ON INSTAL MENTS UNDER RESIDENTIAL SCHEME. HOWEVER, THE POSSESSION OF FLAT WAS GIVEN TO THE ASSESSEE ON 15.05.1986. THE ALLOTMENT LETTER ISSUED INDICATES THE FLAT NUMBER AND THE BALANCE AMOUNT PAYABLE. THE ASSESSEE SOLD T HE FLAT ON 06.01.1989 AND CLAIMED LONG TERM CAPITAL GAIN AND FURTHER CLAI MED THE SET OFF OF CAPITAL ON PURCHASE OF ANOTHER FLAT. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF ASSESSEE THAT POSSESSION OF FLAT WAS GIVEN ONLY ON 15.05.1986 AND, THEREFORE, THE CAPITAL GAIN ON SALE OF FLAT WERE SH ORT TERM CAPITAL GAIN. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSESSI NG OFFICER WAS UPHELD. TRIBUNAL ALSO DISMISSED THE APPEAL OF THE ASSESSEE. ON FURTHER APPEAL BEFORE THE HONBLE DELHI HIGH COURT, THE ASSESSEE WAS ALLO WED LONG TERM CAPITAL GAIN. WHILE ALLOWING APPEAL OF THE ASSESSEE, THE HO NBLE COURT REFERRED THE CBDT CIRCULAR NO. 471 DATED 15.10.1996 WHICH DESCRI BED NATURE OF RIGHT THAT AN ALLOTTEE ACQUIRES ON ALLOTMENT OF A FLAT UN DER SELF-FINANCING SCHEME. IT WAS HELD THAT ASSESSEE WAS A FLAT ON 27.02.1982 ON PAYMENT OF INSTALMENT BY ISSUING OF AN ALLOTMENT LETTER AND HE HAD BEEN M AKING PAYMENT IN TERM THEREOF, SPECIFIC NUMBER OF FLAT WAS ALLOTTED TO TH E ASSESSEE AND POSSESSION WAS DELIVERED ON 15.05.1986. THE RIGHT OF ASSESSEE PRIOR TO 15.05.1986 WAS THE RIGHT IN THE PROPERTY. IN SUCH SITUATION, IT CA NNOT BE HELD THAT PRIOR TO THAT SAID DATE, THE ASSESSEE WAS NOT HOLDING THE FLAT AN D THE ASSESSEE WAS ALLOWED ITA NO. 7122 MUM 2016-JAYATI S CHAKRABORTY 10 A LONG TERM CAPITAL GAIN AND WAS ALSO ENTITLED FOR SET OFF UNDER SECTION 54 OF THE ACT. 16. CONSIDERING THE DECISION OF VARIOUS HIGH COURTS A S REFERRED ABOVE AND THE CBDT CIRCULARS NO. 471 & 672, WE FIND THAT THE HOLD ING PERIOD SHOULD BE COMPUTED FROM THE DATE OF ISSUE OF ALLOTMENT LETTER . IN CASE, THE HOLDING PERIOD IS MORE THAN 36 MONTH FROM THE DATE OF ALLOT MENT TILL THE DATE OF TRANSFER, THE ASSET IS TO BE TREATED AS LONG TERM C APITAL ASSET IN THE HAND OF ASSESSEE AND ON TRANSFER OF SUCH ASSET; THE ASSESSE E WOULD BE ENTITLED FOR LONG TERM CAPITAL GAIN. NOW COMING THE FACTS OF THE PRESENT CASE, THE ASSESSEE ACQUIRED THE RIGHT IN FLAT NO. 302, 3 RD FLOOR, TOWER-C WITH CAR PARKING IN OBEROI SPRING, OSHIWARA, ANDHERI VIDE AL LOTMENT LETTER DATED 25.04.2008, WHICH IS DULY CONFIRMED AND ACKNOWLEDGE BY M/S OBEROI CONSTRUCTION. THE ASSESSEE SOLD THE SAID FLAT ON 05 .10.2011. THEREFORE, THE GAIN EARNED BY ASSESSEE IS TAXABLE AS LONG TERM CAP ITAL GAIN. HENCE, THE GROUND NO.1 OF THE APPEAL RAISED BY ASSESSEE IS ALL OWED. 17. GROUND NO.2 RELATES TO CLAIM OF EXEMPTION UNDER SEC TION 54 OF THE ACT. IN VIEW OF OUR FINDING ON GROUND NO.1 WHEREIN THE ASSE SSEE IS DECLARED ENTITLED FOR LONG TERM CAPITAL GAIN. WE HAVE NOTED THAT THE ASSESSING OFFICER DISALLOWED THE EXEMPTION ON HIS OBSERVATION THAT AS SESSEE HAD INVESTED CAPITAL GAIN FOR PURCHASE OF TWO FLATS. 18. THE HONBLE KARNATAKA HIGH COURT IN CIT VS. JYOTHI K. MEHTA (201 TAXMAN 79) HELD THAT IN NEWLY ASSET ACQUIRED AFTER THE SALE OF ORIGINAL ASSET ITA NO. 7122 MUM 2016-JAYATI S CHAKRABORTY 11 CAN ALSO BE A BUILDING OR LANDS APPURTENANT THERETO , WHICH ALSO SHOULD BE A RESIDENTIAL HOUSE. THEREFORE, THE LETTER 'A' IN TH E CONTEXT IT WAS USED SHOULD NOT BE CONSTRUED AS MEANING 'SINGULAR'. BUT BEING A N INDEFINITE ARTICLE, THE SAID EXPRESSION SHOULD BE READ IN CONSONANCE WITH T HE OTHER WORDS 'BUILDINGS' AND 'LANDS' AND, THEREFORE, THE SINGULA R 'A RESIDENTIAL HOUSE' ALSO PERMITS USE OF PLURAL BY VIRTUE OF SECTION 13(2) OF THE GENERAL CLAUSES ACT. THEREFORE, MERELY BECAUSE THE ASSESSEE PURCHASED TW O UNITS, IT COULD NOT BE SAID THAT SHE WAS NOT ENTITLED TO THE BENEFIT OF SE CTION 54. 19. CONSIDERING THE DECISION OF KARNATAKA HIGH COURT AS REFERRED ABOVE. THE ASSESSING OFFICER IS DIRECTED TO ALLOW EXEMPTION TO THE ASSESSEE UNDER SECTION 54 OF THE ACT. 20. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/10/2018. SD/- SD/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 18.10.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR J BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI