DCIT, Central Circle - XVIII, Kolkata, Kolkata V. Shri Sidh Nath Mehra, Kolkata

ITSSA 32/KOL/2012

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0827 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 11-05-2012
• Court: TRIBUNAL
• Department Lawyers: SACHCHIDANAND SRIVASTAVA
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE SHRI P.K.BANSAL, AM & SHRI MAHAVIR SINGH, JM ] IT (SS)A NO.3 2 /KOL/2012 ASSESSMENT YEAR : 2006 - 07 ( A PPELLANT ) (RESPONDENT) D.C.I.T., CENTRAL CIRCLE - XVIII, - V ERSUS - SHRI SIDH NATH MEHRA KOLKATA KOLKATA (PAN: AFAPM 5673 G) FOR THE APPELLANT: SHRI SACHCHIDANAND SRIVASTAVA, CIT(DR) FOR THE RESPONDENT: SHRI SUBASH AGARWAL, ADVOCATE DATE OF HEARING : 08.07 .2015. DATE OF PRONOUNCEMENT : 08. 07.2015. ORDER PER SHRI MAHAVIR SINGH, JM THIS APPEAL OF REVENUE IS ARISING OUT OF ORDER OF CIT(A) - CENTRAL - II, KOLKATA IN APPEAL NO . 151 / CC - XVIII/CIT(A)(CENTRAL) - II/2010 - 11/KOL DATED 17 .02.2012 . ASSESSMENT WAS FRAMED BY D.C.I.T., CENTRAL CIRCLE - XVIII, KOLKATA U/S 153A/ 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT ) FOR A.Y . 2006 - 07 VIDE ITS ORDER DATED 30.11.2010. 2. THE ONLY ISSUE IN THIS AP PEAL OF THE REVENUE IS AGAIN ST ORDER OF CIT(A) IN DIRECTING THE AO TO TREAT THE SALE OF LAND AT GHAZIABAD AS LONG TERM CAPITAL GAIN INSTEAD OF SHORT TERM CAPITAL GAIN TREATED BY THE AO. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN HIS COMPUTATION OF INCOME DECLARED LONG TERM CAPITAL GAIN ON SALE OF PLOT OF LAND AT GHAZIABAD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO REQUIRED THE ASSESSEE TO FILE THE DETAILS INCLUDING THE YEAR OF ACQUISITION. THE AO ON VERIFICATION OF DOCUMENTS FOUND THAT THE ASSESSEE HAS APPLIED COST OF INDEXATION ON THE PLOT OF LAND AT GHAZIABAD FRO M THE DATE OF APPLICATION MONEY DATED 31.07.1989 AND PAYMENTS MADE IN DIFFERENT YEARS AND IT(SS)A.NO.32/KOL/2012 SHRI SIDH NATH MEHRA A.YR.2006 - 07 2 APPLIED COST OF INFLATED INDEXATION YEAR - WISE. ACCORDING TO AO THE LAND WAS PURCHASED ONLY ON THE DATE OF REGISTRATION OF PLOT I.E. 03.12.2003 AND THE SAME WAS SOLD O N 07.02.2006 I.E. WITHIN THREE YEARS. ACCORDING TO AO THE ASSESSEE HAD HELD THE LAND FOR LESS THAN 36 MONTHS FROM THE DATE OF REGISTRATION OF THE LAND I.E. 03.12.2003 AND ACCORDINGLY THE PROFIT ARISING OUT OF THE SALE OF LAND IS TO BE TREATED AS SHORT TER M CAPITAL GAIN AND ACCORDINGLY HE DID SO. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THE SALE OF PROPERTY AS LONG TERM CAPITAL GAIN BY OBSERVING AS UNDER : - I HAVE CONSIDERED THE SUBMISSIO N OF THE APPELLANT AND PERUSED THE ASSESSMENT ORDER. ON GOING THROUGH THE ASSESSMENT ORDER AND SUBMISSION OF THE APPELLANT IT IS OBSERVED THAT THERE IS NO DISPUTE ON THE FACTS THAT THE APPELLANT HAD BOOKED A PLOT OF LAND IN THE SCHEME OF GHAZIABAD DEVELOPM ENT AU THORITY BY MAKING INITIAL PAYMENT ON 31.07.1989. THE SAID AUTHORITY RESERVED A PLOT IN THE NAME OF APPELLANT AS PER ALLOTMENT LETTER DATED 05.11.1989. THERE IS NO DISPUTE ON THIS FACT ALSO THAT THE SUBSEQUENT PAYMENTS WERE MADE IN VARIOUS YEARS AND T HE REGISTRATION WAS DONE IN THE NAME OF APPELLANT ON 03.12.2003. THE SAID PLOT OF LAND WAS SOLD BY THE APPELLANT FOR CONSIDERATION OF RS.42,00,000/ - ON 17.02.2006. SINCE, THE APPELLANT HAD BOOKED THE PLOT IN THE YEAR 1989 AND SOLD THE SAME IN THE YEAR 20 06, THE APPELLANT COMPUTED LONG TERM CAPITAL GAIN AFTER CLAIMING INDEXED COST OF ACQUISITION OF THE YEARS IN WHICH PAYMENTS WERE MADE BY HIM I.E. FROM THE YEAR 1989 - 90 ONWARDS. THE APPELLANT ALSO CLAIMED DEDUCTION ON ACCOUNT OF PAYMENT OF COMMISSION ON SAL E OF PLOT. HOWEVER, ON EXAMINATION OF DETAILS OF CAPITAL GAINS THE AO WAS OF THE OPINION THAT THOUGH THE APPELLANT HAD BOOKED THE PLOT BY MAKING INITIAL PAYMENT ON 31.07.1989 AND MADE BALANCE PAYMENT IN INSTALMENTS IN THE SUBSEQUENT YEARS BUT SINCE THE PLO T WAS TRANSFERRED AND REGISTERED IN HIS NAME ON 03.12.2003, THE BENEFIT OF THE INDEXATION WOULD BE ALLOWED FROM THE DATE OF REGISTRATION AND THE SAID DATE WOULD BE CONSIDERED TO CALCULATE THE PERIOD OF HOLDING OF THE CAPITAL ASSET TO DETERMINE AS TO WHETH ER THE GAIN ON TRANSFER OF CAPITAL ASSET IS LONG TERM GAIN OR THE SHORT TERM GAIN. ACCORDING TO THE AO SINCE THE DATE OF REGISTRATION OF THE CAPITAL ASSET WAS 03.12.2003 AND THE DATE OF TRANSFER OF THE CAPITAL ASSET IS 17.02.2006, THE HOLDING PERIOD OF THE CAPITAL ASSET BY THE APPELLANT WAS LESS THAN 36 MONTHS, THEREFORE, THE GAIN ON SALE OF CAPITAL ASSET IS TAXABLE AS SHORT TERM CAPITAL GAIN. HENCE, THE AO ASSESSED SHORT TERM CAPITAL GAIN AT RS.30,23,449/ - . ON CAREFUL CONSIDERATION OF FACTS, I AM OF THE OP INION THAT THE VIEW TAKEN BY THE AO IS NOT A CORRECT VIEW BECAUSE THE APPELLANT HAD GOT THE RIGHT OF CONVEYANCE OF THE PLOT OF LAND ON 31.07.1989 BY VIRTUE OF RESERVATION LETTER AND BY MAKING INITIAL PAYMENT ON THE SAID DATE. THAT RIGHT ITSELF IS A CAPITAL ASSET AND HENCE ON TRANSFER OF SAID RIGHT THE APPELLANT WAS LIABLE TO PAY CAPITAL GAIN TAX. HE WAS ENTITLED TO CLAIM THE INDEXATION FROM THE YEAR IN WHICH THE SAID RIGHT WAS OBTAINED BY HIM IRRESPECTIVE THE DATE OF ACTUAL REGISTRATION. THE GAIN WOULD BE T HE LONG TERM GAIN OR THE SHORT TERM GAIN HAS TO BE CALCULATED FROM THE DATE OF BOOKING AND NOT FROM THE DATE OF REGISTRATION. AGGRIEVED REVENUE IS IN APPEAL BEFORE US. IT(SS)A.NO.32/KOL/2012 SHRI SIDH NATH MEHRA A.YR.2006 - 07 3 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES O F THE CASE. WE FIND THAT THE ASSESSEE HAS BOOKED A PLOT OF LAND IN THE SCHEME OF GHAZIABAD DEVELOPMENT AUTHORITY ON 31.07.1989 AND AN ALLOTMENT LETTER IS ALSO ISSUED ON 05.11.1989. THE REGISTRATION WAS DONE IN THE NAME OF ASSESSEE ON 03.12.2003 AND THE PLO T WAS SOLD ON 17.02.2006. THESE FACTS ARE NOT DISPUTED. THE ONLY DISPUTE IS THAT THE DATE OF ALLOTMENT LETTER I.E. 05.11.2989 CANNOT BE CONSIDERED AS THE DATE OF ALLOTMENT OF PLOT FROM WHERE THE ASSESEE IS THE OWNER OF THIS PLOT . IN OUR VIEW THE CIT(A) HAS RIGHTLY CONSIDERED THIS OWNERSHIP FROM THE DATE OF ALLOTMENT LETTER I.E. 05.11.1989 AND TREATED THE SALE PROCEEDS OF THE ASSESSEE AS LONG TERM CAPITAL GAIN AND ALLOWED THE BENEFIT OF COST OF INFLATED INDEXATION. WE FIND THAT SIMILAR ISSUE CROPPED UP IN TH E DECISION OF HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF MS.MADHU KAUL VS CIT 363 ITR 54 (P&H) WHEREIN THE HONB BLE PUNJAB AND HARYANA HIGH COURT HELD THAT CONFERRING A RIGHT UPON THE ASSESSEE TO HOLD A FLAT, WHICH WAS LATER IDENTIFIED AND POSSE SSION DELIVERED ON A LATER DATE, THE MERE FACT WAS THAT IT DOES NOT DETRACT FROM THE FACT THAT THE ALLOTTEE WAS CONFERRED A RIGHT TO HOLD PROPERTY ON ISSUANCE OF AN ALLOTMENT LETTER. THE PAYMENT OF BALANCE INSTAL L MENTS, IDENTIFICATION OF A PARTICULAR FLAT AND DELIVERY OF POSSESSION ARE CONSEQUENTIAL ACTS AND RELATES BACK TO AND ARISE FROM THE RIGHTS CONFERRED BY THE ALLOTMENT LETTER. IN THE PRESENT CASE ALSO THE RIGHT TO HOLD PROPERTY OR OWNERSHIP RELATES BACK ON 05.11.1989 AND THE ASSESSEE HAS SOLD THE SA ME ON 03.12.2003. IT MEANS THAT IT IS MORE THAN 36 MONTHS HOLDING PERIOD AND ASSESSEE IS ALLOWABLE FOR ASSESSMENT OF THIS PROFIT AS LONG TERM CAPITAL GAIN. WE HOLD SO. THIS ISSUE OF THE REVENUE IS DISMISSED. 5. THE NEXT ISSUE IS AS REGARDS TO ASSESSMENT D ONE AS SHORT TERM CAPITAL GAIN ON GURGAON PLOT. FOR THIS THE REVENUE HAS RAISED THE FOLLOWING GROUND NO.2 : 2. THAT IN RESPECT OF LAND AT GURGAON, THE LD. CIT(A) HAS ERRED IN TAKING THE DATE FOR THE PURPOSE OF INDEXATION AS 04.02.1985, THE DATE OF FIRST P AYMENT, INSTEAD OF AS 29.03.1990, THE DATE OF REGISTRATION. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND T HAT THE ASSESSEE HAS CLAIMED BENEFIT OF INDEXATION OF CLAIM ON 04.02.1985 I.E. THE INIT IAL PAYMENT OF ALLOTMENT AND THE BALANCE PAYMENT IT(SS)A.NO.32/KOL/2012 SHRI SIDH NATH MEHRA A.YR.2006 - 07 4 WAS MADE IN THE SUBSEQUENT YEARS AND THE CONVEYANCE DEED WAS REGISTERED IN THE NAME OF THE ASSESSEE ON 29.03.1990. AS A MATTER OF PRINCIPLE , WE HOLD THAT THE OWNERSHIP RELATES BACK TO THE DATE OF ALLOTMENT O F THE PLOT IN THE ABOVE ISSUE. S IMILARLY IN THIS ISSUE ALSO THE PLOT WAS ACQUIRED BY THE ASSESSEE ON 04.02.1985 AND INDEXATION BENEFIT WILL BE ALLOTTED ACCORDINGLY. THIS IS ALSO TO BE ASSESSED AS LONG TERM CAPITAL GAIN. WE HOLD SO. THIS ISSUE OF THE REVENU E S APPEAL IS DISMISSED. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNC ED IN TH E COURT . SD/ - SD/ - [P.K.BANSAL] [MAHAVIR SINGH] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 8 TH JULY, 2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO : 1 . SHRI SIDH NATH MEHRA, 10/1, PARK LANE, KOLKATA - 700016. 2 THE D.C.I.T., CENTRAL CIRCLE - XVIII, KOLKATA. 3 . THE CIT, 4. THE CIT(A) - CENTRAL - II, KOLKATA. 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES