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| The Tax Publishers2020 TaxPub(DT) 2207 (Bang-Trib) INCOME TAX ACT, 1961
Section 54F
On issue, as to whether period of holding of capital asset for purposes of classification of capital gains was to be seen with reference to date of allotment of land or from date of formal execution of sale deed for registration, it was held, that assessee shall be deemed to have acquired rights in property on date of issue of allotment letter for purposes of expression 'capital asset'.
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Capital gains - Deduction under section 54F - Letter of allotment whether give effective right over capital asset pending execution of formal agreement spelling out all exact terms and conditions for acquisition -
Assessee declared long term capital gains arising on transfer of certain parcel of land. AO held income arising from sale of land to be in nature of short term capital gains. Consequently, AO denied benefit of exemption claimed under section 54F. Issue arose as to whether letter of allotment would give effective right over capital asset pending execution of formal agreement spelling out all exact terms and conditions for acquisition. Held: Bombay High Court in PCIT v. Vembu Vaidyanathan, took note of CBDT Circular no. 471 dt. 15th October 1986 as well as CBDT Circular 672 dt. 16th Dec. 1993 and concluded that assessee shall be deemed to have acquired rights in property on date of issue of allotment letter for purposes of expression 'capital asset'. Assessee in instant case was not only issued allotment letter, he also made full payment to authority concerned immediately thereafter. Thus, asset was required to be held as long term capital asset even if later date of payment was reckoned. Thus, gains arising on sale of such asset was correctly claimed as 'long term capital gains.' Consequently, all benefits flowing from such gains would be entitled to assessee.
Followed:Pr. CIT v. Vembu Vaidyanathan (2019) 101 Taxmann.com 436 (Bom.) : 2019 TaxPub(DT) 0882 (Bom-HC), Pr. CIT v. Vembu Vaidyanathan (2019) 108 Taxmann.com 339 (SC) : 2019 TaxPub(DT) 6333 (SC).Distinguished:CIT v. V.V. Mody (1996) 281 ITR 1 (Kar) : 2006 TaxPub(DT) 0275 (Del-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
IN THE ITAT, BANGALORE BENCH
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