INCOME TAX ACT, 1961

Section 50C

Capital gains - Characterization of gain on sale of flat - Short term capital gain or Long term capital gain - Valuation under section 50C

Assessee along with her mother entered into a Development agreement with M/s. S. As per the agreement, developers after construction of flat/building handed over Flat which comprised entire first floor of the building. He observed that since the holding of the flat was for less than 36 months from the date of allotment, it was considered to be short-term capital asset. He also observed that the sale consideration taken as per section 50C was not objected by assessee. Based on the development agreement, AO worked out short-term capital gain and added to income of assessee. CIT(A) directed AO to recalculate the long-term capital gain by allowing some relief to assessee. Held: CIT(A) held that flat was sold on 19.11.2013 whereas the date of agreement for development is 4.2.2010 and thus, period of holding was more than 36 months. Hence, he directed AO to calculate long-term capital gain on such transaction after giving cost inflation index to the assessee. Addition made by AO was to be recalculated as long-term capital gain. Since CIT(A) had directed AO to calculate the capital gains after giving cost inflation index to assessee, accordingly, appeal of assessee was rejected.

REFERRED :

FAVOUR : Against the assessee

A.Y. :

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