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 Deepak Sales & Properties Pvt. Ltd vs. ACIT (ITAT Mumbai) (Special Bench)
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March, 29th 2014

%                                  Date of decision: 18th March, 2014

+      ITA 114/2014 & CM Appl.4959/2014 (delay)

       COMMISSIONER OF INCOME TAX-XVI       ..... Appellant
                   Through Ms Suruchi Aggarwal, sr. standing


       K. RAMAKRISHNAN                                    ..... Respondent



       The revenue claims to be aggrieved by the order dated 17.5.2013 of

the Income Tax Appellate Tribunal (ITAT).           The revenue's appeal

questioning the deletion of Rs.55,72,612/- by the CIT(Appeals) was

dismissed.     It is urged that the findings of the Tribunal, in effect

upholding the assessee's contention that the amount sought to be taxed

was in fact a long term capital gain is not justified. The learned counsel

invited our attention to the provisions concerned i.e. section 54EC and

submitted that given the circumstance of the case especially the relevant

dates ­ set out in para 7 of the impugned order, it could not be said that

ITA 114/2014                                                 Page 1 of 4
the assessee had acquired interest of the kind that can enable him to say

that he "held" the asset for more than 36 months to entitle him to the

benefit of long term capital gain.

2.      In this case the relevant facts relating to the acquisition of the

capital asset, i.e., the HUDA plot and its ultimate disposal of the assessee

was considered by the Tribunal and discussed as follows :

       "5. The ld. counsel for the assessee, on the other hand, has
       placed strong reliance on the impugned order. Besides
       addressing the oral arguments, he has also placed before us
       a brief written synopsis. It has been contended that the
       Assessing Officer had wrongly treated the capital gain as
       short-term capital gain and while doing so, had erroneously
       taken the date of execution of the conveyance deed in favour
       of the assessee as the relevant date, rather than the date of
       allotment of the plot to the assessee by HUDA; that
       undisputedly, the assessee had booked the plot in question
       with the HUDA on 18.06.1986 and had deposited the earnest
       money; that the plot was allotted to the assessee on
       03.08.1999; that on receipt of the allotment letter, the
       assessee had deposited further amounts on various dates, as
       given in the chart contained in the written synopsis; that by
       the expiry of the period of sixty days from the date of
       allotment, i.e., by 03.10.1999, the assessee had deposited
       96% of the tentative cost of the plot; that as per the terms
       and conditions contained in the allotment letter, since the
       assessee paid the instalment as demanded by HUDA, the
       assessee was to become the beneficial owner of the
       residential plot in question; that as per clause 5 of the
       allotment letter, a letter of 'acceptance was to be filed by the
       assessee along with an amount of Rs.10,155/-, within thirty
       days, thereby having paid 25% of the total cost of the plot;
       that this amount had to be deposited by the assessee in his
       capacity as the owner of the plot, on allotment, which was
       done, as evidenced by the receipt of payment; that as per
       clause 11 of the allotment letter, the right of the assessee in
ITA 114/2014                                                   Page 2 of 4
       the allotted plot was an absolute right as owner thereof; that
       this clause prohibited the assessee from transferring the plot
       except with the permission of HUDA; that this clause stated
       that it was till the execution of the conveyance deed, that the
       assessee was not to be treated as owner of the plot; that as
       per clause 12, execution of the conveyance deed was not
       made subject to the handing over of the possession of the
       plot; that thus, right from 1999, when the plot was allotted to
       the assessee, the assessee was having absolute rights
       thereon; that in 'Jitender Mohan', 11 SOT 594 (Del), it has
       been held that it is the date of allotment which is relevant for
       the purpose of computing a holding period and not the date
       of registration of conveyance deed; that Section 47 of the
       Registration Act lays down that registration of a document
       operates retrospectively; that in 'Gurbax Singh vs. Kartar
       Singh', 254 ITR 112 (SC), it has been held that registration
       of a document would relate back to the date of its execution;
       that in 'Hamda Amla V. Avadiappa (1991), 1 SCC 715 and
       'Syamla Rao vs. CIT', 234 ITR 140 (A), it has been held
       likewise; that therefore, the Ld.CIT (A) has correctly decided
       the issue in favour of the assessee; and that as such, there
       being no merit therein, the appeal of the Department be
       ordered to be dismissed."

3.     In this case the assessee acquired possession of the plot on

12.12.2005 and sold through a registered sale deed dated 9.1.2008. This

Court is of the opinion that having regard to the findings recorded by the

Tribunal, the assessee had acquired beneficial interest to the property at

least 96% of the amount was paid i.e. by 3.10.1999. This Court is

supported in its findings by a Division Bench ruling of the Punjab and

Haryana High Court in Madhu Kaul vs. CIT, (ITA 89/1999 decided on


       In view of the reasons the Courts is satisfied that the Tribunal's
ITA 114/2014                                                   Page 3 of 4
impugned order does not disclose any error calling for interference.

       The appeal is accordingly dismissed.

                                              S. RAVINDRA BHAT

                                                R.V. EASWAR
MARCH 18, 2014

ITA 114/2014                                                 Page 4 of 4
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