Case Law Details
CA Sandeep Kanoi
P&H High Court in a ruling in the case of Vinod Kumar Jain Vs. CIT held that Assessee gets title to the properly on the issuance cf an allotment letter and the payment cf instalments is only a consequential action upon which the delivery of possession flows and in calculation of holding period the period from the date of allotment and upto the date of possession will also be counted.
Brief Facts :- Facts as narrated in the appeal are that the assessee filed its return for the assessment year 1989-90 wherein a note had been given by him that capital gains on account of sale of residential flat in New Delhi were exempt from tax. The assessing officer asked for the details and reasons from the assessee for claiming exemption. It was also sought to be furnished as to when the possession of the flat that had been sold on 6.1.1989, had been handed over to him. The assessee furnished the desired information and documents, including the copy of allotment letter besides stating that he was entitled to exemption as per the provisions of Section 2(29A) of the Act. The assessee had claimed that he purchased another flat at New Delhi on 31.1.1989, for Rs.3,80,000/-, and as such the capital gains were exempted from tax. It was pointed out by the assessing officer that the assessee was allotted a flat No. 73 on 12.3.1986 in category-II under the Wazirpur Phase-III-Residential Scheme of DDA. The cost of the flat was Rs.1,49,060/- which was sold by him on 6.1.1989 for a sum of Rs.2,25,000/- and as such, there was a capital gain of Rs.75,940/-. The assessing officer observed that the assessee had claimed exemption under the provisions of Section 2(29A) of the Act which deals with the matters of long term capital gain but he could not have the benefit of the said provisions as his case fell under the category of short term capital gain and was governed by the provisions of Section 2(42A). It was on this basis the assessing officer did not exempt the long term capital gain and disallowed the deduction claimed by the appellant- assessee.
Issue Under Consideration
The sole point for consideration in this case is, whether the capital gain arising on allotment of flat under the scheme of the DDA on 27.2.1982 of which actual flat number and delivery of possession took place on 15.5.1986 and the flat having been sold on 6.1.1989, was a long term capital gain; and consequently, whether the assessee was entitled to set off the same under Section 54 of the Act.
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Author Bio
Thank you very much for this article and the following one (Mrs. Madhu Kaul Vs. CIT) on this subject. These are very useful articles. It is nice of you to bring these decided cases to the notice of your readers.