Date of Agreement to purchase taken as date of acquisition for grant of exemption u/s 54F. Section 2(47) not stipulates registration as mandatory condition
ABCAUS Case Law Citation:
ABCAUS 2480 (2018) 08 ITAT
Important Case Laws Cited/relied upon:
Poddar Cement 225 1TR 675 and Mysore Minerals 275ITR 775.
CIT v/s. R L Sood (2000) 108 Taxman 227 ITR 245 Delhi H C.
The instant appeal was filed by assessee against the order of CIT(A) confirming the order of the AO in holding that the property sold by the assessee was not held for more than 36 months and thereby rejecting the grant of benefit of cost of indexation and deduction u/s 54F of the Income Tax Act, 1961 (the Act).
The only grievance of assessee was with reference to computation of capital gain of sale of property. The AO had computed period of holding and held that assessee had earned short term capital gain whereas contention of the assessee was that property was held for more than 36 months.
Accordingly, the AO had disallowed claim of long/ term capital gain on the ground that the capital gain had arisen out of sale of the original assets which had not being held for the period more than 36 months .
The CIT(A) confirmed the action of the AO against which assessee was in further appeal before the Tribunal.
The Tribunal observed that the assessee had purchased the long term capital assest (godown) as per agreement from which it was evident that the assessee has made an initial payment against purchase consideration with the promise to make the balance of payment on within agreed date. As against the agreement for sale and part payment, the transferor had transferred all the right, title and interest in the favour of the transferee.
The Tribunal opined that reading of articles of the agreement clearly indicated that all the rights, titles, and interest of the said premises were irrevocably transferred to the assessee by the transferor. The transferor had undertaken to do rest of formalities including the registration of the property on receipt of full and final payment. The transferor had also moved the society for the transfer of shares with issue of no objection certificate.
It was further observed that as a consequences to the agreement, the balance of payment was received and agreement was subsequently registered with the stamp duty authority after two and half months.
The Tribunal opined that the AO while discussing the relevant terms of the agreement for sale wrongly held that since the registration for purchase of property was done later, the period for the holding long term assets benefits should be reckoned from the date of registration and not from date of transfer being being the date of agreement to purchase. Therefore AO held that the period of holding the capital assets was less than 36 month.
The Tribunal opined that as per the provision of the Act, the clause (v) and clause (vi) of the section 2 (47) envisaged a transfer with payment of part consideration and possession / enjoyment of the property. The clause (v) and clause (vi) of the section 2 (47) does not stipulates the registration of the immovable property being mandatory condition in order to constitutes transfer within the meaning of provision of Section 2(47) of the act. That is to say transfer for the purpose of Section 2 (47) of the income Tax Act means a defacto ownership and not necessarily legal ownership as laid down by the Supreme Court of India
Accordingly, the appeal of the assessee was allowed.