The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the date of allotment is relevant for the purpose of computing holding period for the purpose of determining capital gain under the provisions of the Income Tax Act, 1961.
In the instant case, the assessee was asked to explain the computation of income under the head ‘Capital Gains’ and also explain the exemption claimed under section 54F of the Act after claiming exemption under sections 54D/54EC/54ED at Rs. 32,28,632/– and cost of acquisition at Rs. 32,87,578/- as against sale consideration of Rs. 62,16,210/
The assessee explained that it has purchased a plot and the said plot was allotted by HUDA on 31.05.2002. The possession letter was issued by HUDA on 08.02.2006 and the possession certificate was issued by HUDA on 08.05.2006.
However, the Assessing Officer found that the date of registered sale deed between HUDA and the assessee pertaining to the said plot of land was 15.10.2009. Since the said plot was sold on 4.11.2009, capital gain arising out of the said sale of plot was taken as short term capital gains by the Assessing Officer, thereby denying benefit of indexation and subsequent claim of exemption under section 54 of the Income-tax Act, 1961. The two Member bench comprising Judicial Member Mr. Amit Shukla and Accountant Member Mr. N K Billaiya held that there is no dispute that on 31.5.2002, the said plot was allotted to the assessee.
“It is also not in the dispute that the certificate of possession was given on 08.05.2006. In our considered view, the date of allotment is relevant for the purpose of computing holding period and not the date of registration of conveyance deed as held by the Hon’ble Jurisdictional High Court of Delhi in the case of K. Ramakrishnan 48 taxmann.com 55,” the bench observed.
“Since we have held that capital gain arising out of sale of the said plot of land is long-term capital gain, we now remit the matter to the file of the AO to examine the claim of exemption under section 54 of the Act,” the bench added.