KAUSHIK VIJAY JOSHI,MUMBAI V. ASST. COMMISSIONER OF INCOME TAX 32(2), MUMBAI

ITA 2629/MUM/2025

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Mr. Kaushik Vijay Joshi, the appellant, contested the decision of the National Faceless Appeal Center/Commissioner of Income Tax (Appeals), which had upheld the AO's determination of STCG on the sale of a property. The property was part of a housing scheme developed by HCL Perot Systems Pvt. Ltd., where Mr. Joshi was an employee and had made contributions towards the property from 1998. The AO had treated the property as held for less than 36 months, thus liable for STCG, based on the deed date of 2011. However, Mr. Joshi argued that the property rights accrued from the earlier contributions, making it eligible for LTCL. The Tribunal, referencing a Bombay High Court decision, agreed with Mr. Joshi's position, emphasizing the significance of the allotment date over the deed execution date.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398328 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Other Referred Cases: Hon'ble Bombay High Court judgment on property acquisition date
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P D CHOUGULE; LD.
• Assessee Lawyers: RUPA GAMI; LD
• Keywords: Set aside; Additional evidence
• Section: 54; 54F

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA No.2629/M/2025 Assessment Year: 2014-15 Mr. Kaushik Vijay Joshi 906/A, Dheeraj Hills View Tower,Siddharth Nagar, Thakur Village, Borivali East, Mumbai- 400066 PAN: AAIPJ4175B Vs. Asst. Commissioner Of Income Tax 32(2) BKC, Mumbai, Mumbai- 400051 (Appellant) (Respondent) Present for: Assessee by : Ms. Rupa Gami, Ld. A.R. Revenue by : Mr. P D Chougule, Ld. Sr. D.R. Date of Hearing : 04.06.2025 Date of Pronouncement : 04.06.2025 O R D E R Per : Narender Kumar Choudhry, Judicial Member: This appeal has been preferred by the Assessee against the order dated 06.03.2025, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2014-15. ITA No. 2629/M/2025 Mr. Kaushik Vijay Joshi 2 2. In this case, New Okhla Industrial Development Authority (in short “NOIDA”) vide lease deed dated 03.06.1999 allotted certain land measuring 5010 sq. mtr. to HCL Perot Systems Pvt. Ltd. for 90 years’ lease starting from 03.06.1999, for developing the housing scheme for its employees. The Assessee being an employee of the said company and a member of the housing scheme, was allotted a residential flat under the scheme plotted on dated 24.09.1998 and therefore has paid his contribution/earnest money from 24.09.1998 onwards totaling to Rs. 6,30,000/- as detailed below, and obtained receipt No.000017 dated 30.06.1999 from the developer {kindly refer to page no 3 of Assessment Order. “A. Rs.75,000/- Dtd. 24.09.1998 B. Rs.75,000/- Dtd. 17.09.1998 C. Rs.1,68,000/- Dtd. 10.02.1999 D. Rs.1,25,000/- Dtd. 01.02.1999 B. RS.1,90,000/- Dtd. 01.05.1999 (Refer Exhibit 02 alongwith the copy of cheques)” 3. Thereafter vide possession letter dated 02.08.2001, possession of flat was handed over to the Assessee by the developer and occupation/possession and maintenance collection was also collected from 2001 onwards, as it appears from page no.5. of assessment order. The Assessee thus, has claimed to be in possession of such property since 1998. Thereafter, a tripartite agreement was also executed on 21.09.2011. 4. Subsequently, the Assessee sold the said property on 16.04.2013 on a total consideration of Rs.56,45,469/- and after deducting the indexed cost to the tune of Rs.92,35,512/-, ultimately suffered the long term capital loss (STCL) of Rs.35,90,043/- and claimed the same being exempt u/s 54 of the Act. ITA No. 2629/M/2025 Mr. Kaushik Vijay Joshi 3 5. The Assessing Officer (AO) though considered such claim of the Assessee, however, disallowed the said exemption claimed and determined the short term capital gain of Rs.24,18,000/- by mainly holding as under: “That the Assessee had acquired the said flat by way of deed dated 21.09.2011 and transferred the same vide transfer deed cum sale deed dated 02.07.2013, therefore, the Assessee has held the property for a period of less than 36 months and accordingly the Assessee is liable for short term capital gain (STCG) of Rs.24,18,000/- on the sale of said property”. 6. The Assessee, being aggrieved, challenged the said addition/disallowance/determination of STCG of Rs.24,18,000/- before the Ld. Commissioner, who, vide impugned order and by specifically mentioning in the para No.7 of the order “to the effect that 5 notices were issued to the Assessee, however, the Assessee did not respond and made no compliance” ultimately dismissed the appeal of the Assessee for non-prosecution as well as by giving finding that “as per the details available on record, there is nothing to controvert the findings of the AO and therefore all the grounds raised in appeal are hereby dismissed. In the event I have no reason to interfere with the findings of the AO. Hence, the order of the AO is confirmed and appeal is dismissed”. 7. The Assessee, being aggrieved, is in appeal before this Court. At the outset, the Ld. Counsel Ms. Rupa Gami drew the attention of this Court to the submissions 18.04.2018, 22.04.2019, 07.10.2019 as enclosed in paper book filed, wherein the stamping of the Commissioner of Income Tax (Appeal)-44 is available, however the there is no initial, signature, date etc. and therefore, on being asked, the Ld. Counsel for the Assessee has contended that such ITA No. 2629/M/2025 Mr. Kaushik Vijay Joshi 4 documents have duly been filed by herself, during the course of appeal in physical form. But after 2020, faceless appeal system has been introduced and started, therefore, the Assessee never received any such notices, as mentioned by the Ld. Commissioner. Even otherwise, the Ld. Commissioner in the impugned order neither mentioned anything about the remand report dated 25.09.2019 bearing no. Pr. CIT(A)-44/remand report/2017-18 in response to the letter dated 30.04.2019 submitted by the ITO 32(2)(1) nor decided the appeal of the Assessee on merit. Therefore, the order of the Ld. Commissioner is liable to be set aside. 8. On contrary, the Ld. D.R. specifically refuted the claim of the Assessee qua submission of the aforesaid documents before the Ld. Commissioner and supported the orders passed by the Authorities below. 9. Heard the parties and perused the material available on record. Though authenticity of the documents as claimed by the Assessee seems to be doubtful, however, it is an admitted fact that the Ld. Commissioner vide letter dated 30.04.2019 (supra) has specifically sought for the remand report from the AO, who vide remand report dated 25.09.2019 submitted the same, however, in the impugned order, nothing mentioned about the remand report. Thus whatsoever it may be, at this particular stage, this Court is inclined not to go into the controversy, whether the Assessee has ever filed any document or not. As the Assessee on dated 24.09.1998 was allotted flat in the residential scheme of HCL Perot Systems Pvt. Ltd. and paid certain amounts {Rs.6,30,000 in total as earnest money} as acknowledged vide receipt No.000017 as mentioned in the assessment order (page no. 3) and therefore, the rights of the Assessee in the flat, have been accrued from that ITA No. 2629/M/2025 Mr. Kaushik Vijay Joshi 5 particular day i.e. 24.09.1998 onwards. However, the AO construed the date of purchase through deed dated 21.09.2011 and consequently treated the LTCL to STCG, which is un-sustainable specifically in view of the judgment by the Hon’ble Bombay High Court wherein the Hon’ble High Court has held “that the date of allotment would be the date on which the purchaser of a residential unit can be stated to have acquired the property”, by observing as under: “4. Having heard learned counsel for the parties, we notice that the CBDT in its circular No.471 dated 15th October, 1986 had clarified this position by holding that when an assessee purchases a flat to be constructed by Delhi Development Authority (“D.D.A.” for short) for which allotment letter is issued, the date of such allotment would be relevant date for the purpose of capital gain tax as a date of acquisition. It was noted that such allotment is final unless it is cancelled or the allottee withdraw from the scheme and such allotment would be cancelled only under exceptional circumstances. It was noted that the allottee gets title to the property on the issue of allotment letter and the payment of installments was only a followup action and taking the delivery of possession is only a formality. 5. This aspect was further clarified by the CBDT in its later circular No.672 dated 16th December, 1993. In such circular representations were made to the board that in cases of allotment of flats or houses by cooperative societies or other institutions whose schemes of allotment and consideration are similar to those of D.D.A., similar view should be taken as was done in the board circular dated 15th October, 1986. In the circular dated 16th December, 1993 the board clarified as under: “2. The Board has considered the matter and has decided that if the terms of the schemes of allotment and construction of flats/houses by the cooperative societies or other institutions are similar to those mentioned in para 2 of Board’s Circular No.471, dated 15-10-1986, such cases may also be treated as cases of construction ITA No. 2629/M/2025 Mr. Kaushik Vijay Joshi 6 for the purposes of sections 54 and 54F of the Incometax Act.” It can thus be seen that the entire issue was clarified by the CBDT in its above mentioned two circulars dated 15th October, 1986 and 16th December, 1993. In terms of such clarifications, the date of allotment would be the date on which the purchaser of a residential unit can be stated to have acquired the property. There is nothing on record to suggest that the allotment in construction scheme promised by the builder in the present case was materially different from the terms of allotment and construction by D.D.A. In that view of the matter, CIT appeals of the Tribunal correctly held that the assessee had acquired the property in question on 31st December, 2004 on which the allotment letter was issued. 6. Learned counsel for the revenue has also argued that in any case the assessee was not entitled to exemption under Section 54F of the Income Tax Act, 1961 (“the Act” for short). Since the assessee had held multiple residential units which would disqualify the assessee from claiming the exemption on it as was held by the Assessing Officer. From the record we notice that before the CIT appeals the assessee had produced additional evidence to suggest that the other units previously held by the assessee were discarded earlier and that at the relevant time the assessee did not hold any other residential unit. Quite apart from it being a pure question of fact, we do not find any indication in the impugned judgment of the Tribunal though the revenue had argued such a contention in its appeal before the Tribunal”. 10. Respectfully following the dictum of Hon’ble Bombay High Court and considering the allotment letter/date or payment of fist installment of earnest money on 24.09.1998 by virtue of which rights of the Assessee in flat/property have been accrued, this Court is inclined to set aside the STCG determined by the AO and consequently direct the AO to consider the LTCL, as claimed by the Assessee and determine the tax liability accordingly. ITA No. 2629/M/2025 Mr. Kaushik Vijay Joshi 7 11. In the result, the appeal of the Assessee stands allowed in the aforesaid terms. Order pronounced in the open court on 04.06.2025. Sd/- (NARENDER KUMAR CHOUDHRY) JUDICIAL MEMBER * Kishore, Sr. PS Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy./Asstt. Registrar, ITAT, Mumbai. ITA No. 2629/M/2025 Mr. Kaushik Vijay Joshi 8 "