Sanjaykumar Footermal Jain Vs ITO (ITAT Mumbai)
In the instant case it is crystal clear that by virtue of agreement for sale dt. 24-04-2008, and making a part payment, the assessee has acquired irrevocable tight, title and interest including possession in the house property in the form of Godown. The registration of the property which was done subsequently on 11-07-2008 was only a formality. And therefore the period of 36 months of holding of long term capital Assets should be reckoned from 24-04-2008 and not from 11-07-2008 as wrongly adopted by the LD AO. For the purpose of Section 54 benefit, date of Agreement to purchase should be taken as the date of purchase and date of Registration of sale deed is not relevant CIT v/s. R L Sood (2000) 108 Taxman 227 ITR 245 Delhi H C.
The assessee had acquired irrevocable right, title and interest including possession in the house property in the form of godown on the date on which the purchase agreement was duly stamped. Since, the registration of the property, which was done on a later date was only a formality, therefore, the period of 36 months of holding of long term capital assets should be reckoned from the date on which the purchase agreement was duly stamped and not the date on which the purchase agreement was registered. Therefore, benefit of indexation and the deduction under section 54F was wrongly denied to the assessee.
FULL TEXT OF THE ITAT JUDGMENT
This is an appeal filed by assessee against the order of CIT(A)-32, Mumbai dated 18/05/2016 for A.Y.2012-13 in the matter of order passed u/s.143(3) of the IT Act, 1961.
2. The only grievance of assessee relates to computation of capital gain of sale of property. The AO has computed period of holding and held that assessee had earned short term capital gain whereas contention of the assessee is that property was held for more than 36 months, therefore, capital gain arose of sale of property was liable to be taxed as long term capital gains.
3. Rival contentions have been heard and record perused.
4. Facts in brief are that the assessee Shri Sanjay kumar Footarmal Jain is individual filed the return of income for AY 2012-13 declaring Total Income of Rs. 6,84,760/- on 17-06-2012, the sources of income are under Capital gain and Income from other sources. In the course of scrutiny assessment u/s.143(3), the AO has disallowed claim of long/ term capital gain on sale of godown of Rs. 5,71,282/- on the ground that tht capital gain arisen out of sale of the original assets i.e. godown has not being held for the period more than 36 months . The LD AO has treated entire capital gain on sale of long term capital assets as short term capital gain and added Rs. 86,82,000/-.
5. By the impugned order, CIT(A) confirmed the action of the AO against which assessee is in further appeal before us.
6. At the outset learned AR placed on record the order of the Co-ordinate Bench in case of Anita D Kanjani in ITA No.2291/Mum/2015 dated 13/02/2017 wherein similar issue was decided in favour of the assessee.
7. On the other hand, learned DR relied on the order of the lower authorities and also decision of Bombay High Court in case of Rasiklal M. Parikh dated 10/03/2017.
8. We have heard rival contentions and carefully gone through the orders of the authorities below. We have also deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us in the context of factual matrix of the instant case. From the record we found that the assessee has purchased the long term capital assest being godown as per agreement dt. 24-04-2008. On going through the agreement, it is evident that the assessee has made initial payment of Rs. 1,26,000/- as against purchase consideration of Rs. 12,26,000/- with the promise to make the balance of payment on or before 03-05-2008, as against the agreement for sale and part payment dt. 24-04-2008, the transferor has transferred all the right, title and interest in the favour of the transferee including five shares under share certificate no. 1/87 bearing distinctive no. 11 to 15 allotted to transferor by the society. The assessee has paid the Stamp Duty on the said agreement dt 20/04/2008 on the same date i.e. 24 April 2008. On combine reading of article 1,2,3,4,5 of the agreement dt. 24-04-2008 clearly indicates that all the rights, titles, and interest of the said premises were irrevocably transferred to the assessee by the transferor. The transferor has undertaken to do rest of formalities including the registration of the property on receipt of full and final payment. The transferor has also moved the society for the transfer of shares with issue of no objection certificate.
9. As a consequences to the agreement dt. 24-04-2008, the balance of payment was received and agreement was subsequently registered with the stamp duty authority on 11-07-2008. In the course of the assessment proceedings, the Ld AO while discussing the relevant terms of the agreement for sale on page no. 2 and page no. 3 of the assessment order dt. 23-04-2015, wrongly held that since the registration for purchase of property is made on 11-07-2008, the period for the holding long term assets benefits should be reckoned from the date of registration and not from date of transfer being 24-04-2008. Therefore AO held that the period of holding the capital assets was less than 36 month. We also observed that the assessee transfer / sold the Godown, and sale transaction was completed on 30-04-2011 with handling over of the possession on the same date.
10. As per learned AO, since the registration of original asset was completed on 11-07-2008 the long term capital assets sold subsequently on 30-04-2011 was held for a period less than 36 months and therefore the capital gain arising out of sale of capital assets was short term capital gain and not a long term capital gain. The LD AO accordingly added entire capital gain of Rs. 86,82,000/- without granting the benefit of cost of indexation of original capital assets and deduction u/s. 54F of the Act.
11. Chronological events are as under:-
