Booking of flat is not date of acquisition for claim of capital gain exemption u/s 54F. ITAT upheld denial of exemption as asset was not held for more than 3 years
ABCAUS Case Law Citation:
ABCAUS 2490 (2018) 08 ITAT
Important Case Laws Cited/relied upon by the parties:
ITO Vs. Techspan India Pvt. Ltd., & Anr (2018) ITR 0386 (Karn.)
CIT & Anr Vs. Hewlett Packard Global Soft Pvt. Ltd., (2016) 380 ITR 0386 (Karn)
Lahar Singh Siroya Vs. ACIT (2016) 138 DTR 0331 (Kar)
Vinod Kumar Jain Vs. CIT & Ors (2012) 344 ITR 0501
Madhu Kaul Vs. CIT & Anr (2014) 363 ITR 0054 (P & H)
CIT Vs. S. R. Jeyashankar (2015) 373 ITR 0120 (Mad)
The instant appeal was filed by assessee against the order of the CIT(A) in confirming the irder of the Assessing Officer (AO) in denial of the exemption u/s 54 of the Income Tax Act, 1961 (the Act).
The assessee booked a flat with the builder on 22.02.2006 on making payment of earnest money, thereafter the assessee paid the remaining payment to the builder through amount financed by the bank.
The agreement of sale was executed and registered in favour of the assessee on 06.03.2009. The said flat was sold by the assessee to a buyer by entering into another sale agreement on 29.06.2009.
The assessee claimed long term capital gain on the sale of this flat by contending that the date of acquisition of the flat is 22.02.2006 of which the flat was allotted to him by the allotment letter.
The contention of the Assessee was disputed by the Revenue on the ground that on 22.02.2006, assessee has not acquired the property, therefore, it cannot be considered as the date of acquisition for the purpose of computation of the capital gain. The AO made out a case that construction of the said property was not rather commenced on that date as the commencement of construction was started after 17.11.2006. They have also placed reliance upon the municipal certificate through which the permission was accorded for construction of the apartment. The AO accordingly disallowed the claim of exemption under section 51 of the Act and treated it to be short term capital gain and taxed the same.
The CIT(A) confirmed the order of the AO.
The assessee contended that the impugned flat was allotted to the assessee on 22.02.2006 through the allotment letter dated 22.02.2006. Therefore, the property was acquired on 22.02.2006 which was later on sold on 29.06.2009 after holding the capital asset for more than 3 years. Therefore, the long term capital gain was rightly computed by the assessee.
The Tribunal observed that the assessee had simply booked the flat by making the payment of Rs. 1,00,000/- to the builder on 22.02.2006, thereafter the remaining payment was financed by the bank. It was also evident from the sale agreement executed between the appellant and the builder that the Development Permission/Commencement Certificate was granted by the Municipal Corporation on 17.11.2006 meaning thereby upto 17.11.2006, even the commencement of the construction of the apartment was not started.
The Tribunal found that the occupancy certificate was granted by the municipality to the builder on 18.02.2009 meaning thereby upto 18.02.2009, the Assessee had not even acquired any right to occupy the flat. After occupancy certificate, the agreement to sale was executed on 06.03.2009, meaning thereby the assessee could get the possession of the flat on execution of the agreement of sale on 06.03.2009.
The Tribunal observed that the agreement to sell was claimed by the assessee to be sale deed was in fact an agreement to sale. On the basis of this agreement to sell, the assessee further sold out the property to another buyer by executing an agreement to sell.
The Tribunal opined that in view the totality of the facts and the circumstances of the case, the capital gain of which exemption under section 54F was claimed was not held by the assessee for more than 3 years. Even the construction of the apartment was not started upto 17.11.2006 and the property was sold on 28.06.2009. From any angle, the capital asset was not held by the Assessee for more than 3 years.
The Tribunal accordingly, held that the Revenue had rightly held this gain accrued on sale of this property as short term capital gain.