Criteria for property sold to be considered as a long term capital asset under the Income Tax Act

This case concerns whether a property sold by the assessee qualifies as a long-term capital asset for tax purposes. The assessee entered into an agreement to purchase a property in Goa on 14.12.2007, paying a significant portion of the price and stamp duty on that date. The property was later sold on 15.7.2011. The key issue is the date from which the asset is considered held, impacting whether the gain or loss is long-term or short-term.

IN THE INCOME TAX APPELLATE TRIBUNAL
“B’’ BENCH “SMC” : BANGALORE

BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER

 ITA No.677/Bang/2020
 Assessment Year: 2012 – 13

Sri G. Dasaratharami Reddy
No.G-1, EDENB-AU-LAC
Old Madras Road
Indira Nagar
Bangalore 560 038.
PAN NO : ACZPR1950R
APPELLANT 

Vs.

ITO
Ward 4(3)(3)
Bangalore
RESPONDENT

Appellant by : Shri S.V. Ravi Shankar, A.R.
Respondent by : Shri Ganesh Ghale, Standing Counsel

Date of Hearing : 29.03.2021
Date of Pronouncement : 18.06.2021

O R D E R

PER B.R. BASKARAN, ACCOUNTANT MEMBER:

The assessee has filed this appeal challenging the order dated 18.8.2020 passed by Ld.CIT(A)-1, Bengaluru and it relates to the assessment year 2012-13. The solitary issue urged by the assessee is whether the property sold by the assessee is a long term capital asset or not.

2. The facts relating to the issue are stated in brief. The assessee along with another person named Shri Diwakar Asthana had entered into an agreement on 14.12.2007 for purchasing a property located at No.17 & 18, La-Oceana, Panaji, Goa for a consideration of Rs.1.65 crores. It is pertinent to note that the stamp duty payable on said Purchase was paid on the date of entering of “Agreement to sell” itself. The above said property was sold by both the persons (assessee and other purchaser) on 15.7.2011 for a sum of Rs.1.50 crores. The assessee’s share was 50% and accordingly, he computed long term capital loss pertaining to his share.

3. From the “agreement to sell”, it was noticed that the purchasers, (i.e, the assessee and Shri Diwakar Asthana) had paid a sum of Rs.1.48 crores on the date of entering into the “Agreement to sell”, i.e., on 14.12.2007 itself. The remaining amount of Rs.16.50 lakhs was agreed to be paid after obtaining occupancy certificate and giving possession. The Agreement to sell dated 14.12.2007 contained following recitals in this regard.

“13. It is specially agreed and understood that the possession of the said Bungalow is not handed over to the purchasers on execution of this agreement, it will be handed over only as per clause 2(b) above.”  Clause 2(b) – Page 13 of the agreement of sale reads as under:

“(b) Rs.8,25,000/- Rs. Eight lakhs twenty five thousand only) by Demand Draft within 7 days from the date of obtaining occupancy certificate towards the completion of the said bunglow.
 
(c) Rs.8,25,000/- Rs. Eight lakhs twenty five thousand only) by Demand Draft simultaneously on handing over possession of the said Bungalow to the purchaser which shall be done either by 31.3.2008 subject to an xtension of 60 days there from.” 

To know more in details find the attachment file