IN INCOME TAX APPELLATE TRIBUNAL BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. No.472/M/2015 (Assessment Year: 2010-2011) Mrs. Anupama Agarwal, DCIT, Central Circle -2, th 7 Floor, Somerset Place, Mumbai. Vs. 61-D, Bhulabhai, Desai Road, Mumbai 400 026. .PAN : AANPA8600K (Appellant) .. (Respondent) Appellant by : Shri R.S. Goradia Respondent by : Shri A. Ramachandran Date of Hearing : 31 .08.2016 /Date of Pronouncement : 23.09.2016 ORDER PER D. KARUNAKARA RAO, AM: This appeal filed by assessee on 20.1.2015 is against order of CIT (A)-36, Mumbai dated 1.10.2014 for assessment year 2010-2011. In this appeal, assessee raised following grounds which read as under:- 1. (a) Ld CIT (A) erred in law and on facts in upholding order of AO which is illegal and bad in law. (b) Ld CIT (A) has erred in law and on facts in sustaining order of AO computing total income of appellant at Rs. 64,69,648/- as against returned income of Rs. 9,02,800/-. (c) Ld CIT (A) has erred in law and on facts in confirming order of AO assessing Long Term Capital Gain offered by appellant on sale of residential flat at Neelkant Palm, Thane as Short term Capital Gain and consequently denying benefit of exemption u/s 54 of Act. (d) Without prejudice to above and in alternative, Ld CIT (A) ought to have directed assessing officer to adopt market value of residential premises as on date of acquisition considered by him as cost of acquisition for purpose of computation of capital gain. 2. Ld CIT (A) has erred in law and on facts in sustaining order of AO denying benefit of one self-occupied property and considering all as deemed let out properties as well as not allowing deduction for municipal taxes paid by appellant and also enhancing annual value in respect of Surat Property 3. Ld CIT (A) has erred in law and on facts in confirming interest, which is not in accordance with law, charged by AO. 2 2. At outset, Ld Counsel for assessee brought our attention to above grounds and mentioned that there are three issues for adjudication viz (i) allowability of deduction u/s 54 of Act qua issue of computation of holding period with reference to date of allotment of flat; (ii) allowing benefit of one self- occupied property; (iii) charging of mandatory interest related issues. 3. Referring to third issue, Ld Counsel for assessee submitted that same requires to be remanded to file of CIT (A) as he has mistakenly held that related issues are required to be dismissed as consequential in nature. He also submitted that said decision of CIT (A) is not correct considering requirement of giving adjudication with reference to interest calculations u/s 234A, 234B and 234C of Act. fact of assessee s request for excluding of certain party from working of interest was highlighted. He also submitted that rectification application was filed long time ago and same is still pending before assessing authorities. 4. After hearing both parties on this issue, we are of opinion, order of CIT (A) is deficient on issue with reference to Ground no.3 raised before us. Considering same, we direct CIT (A) to adjudicate all aspects of this ground by passing speaking order after granting reasonable opportunity of being heard to assessee. Accordingly, ground no.3 is allowed for statistical purposes. 5. Ground no.1 has four sub-grounds and all of them relate to allowability of deduction u/s 54 of Act with reference to long term capital gains earned on transfer of old asset. Referring to facts of case, Ld Counsel for assessee submitted that assessee booked flat on 30.3.2005 and there is letter of allotment in support of same. Subsequently, flat was taken possession by assessee on 30.3.2009 (after four years) and flat was registered in name of assessee on said date. This flat was subsequently sold on 30.3.2010, which is date of sale of flat and earned capital gains. Assessee considered date of booking and letter of allotment as basis for computing holding period and claimed benefit of long term capital gains. Per contra, Assessing Officer in assessment proceedings, held that date of possession of 3 flat cum date of registration on 30.3.2009 is relevant date for calculating holding period. Accordingly, AO computed short term capital gains and denied benefit of section 54 of Act when gains are reinvested in new asset. On this factual matrix of case, Ld Counsel for assessee submitted that issue now stands covered in favour of assessee by decision of Mumbai Bench of Tribunal. Bringing our attention to decision of Tribunal in case of Richa Bagrodia vs. DCIT in ITA No.3601/M/2012 (AY 2008-2009), dated 22.4.2014 and read out relevant paras 6 to 8 and submitted that date of allotment should be relevant for reckoning holding period of asset sold. He also submitted that said decision of Tribunal was based on judgment of Hon ble Gujarat High Court in case of CIT vs. Anilaben Upendra Shah (2003) 262 ITR 657 (Guj.). Further, he also brought our attention to another decision of Tribunal in case of Surendra Mohan Khanna vs. ITO in ITA No.6505/M/2012 (AY 2007-2008), dated 19.8.2016. He relied on contents of para 2.1 of said Tribunal s order (supra) for identical proposition that date of booking should be relevant. Further, he also relied on various decisions in support of same. 6. On other hand, Ld DR for Revenue relied heavily on orders of Revenue Authorities. 7. On hearing both parties, we find there is no dispute on facts. However, dispute exists with reference to holding period qua date of booking / date of allotment. In this regard, we have perused orders of Tribunal cited above. For sake of completeness of this order, relevant paras 6 to 8 of Tribunal s order in case of Richa Bagrodia (supa) are extracted as under:- 6. We heard both parties and perused orders of Revenue Authorities as well as judgments of Hon ble High Court and decisions of Tribunal cited by learned representatives of both parties. only issue that is to be decided is whether date of allotment of flat or date of possession of flat by assessee should be considered as date for computing holding period of 36 months. On perusal of cited orders of Tribunal (supra), we find that identical issue came up for adjudication before Tribunal in case of Meena Hemnani (supra), order dated 17 th January, 2014 wherein one of us (AM) is party and issue was decided in favour of assessee by relying on various decisions of Tribunal as well as judgment of Hon ble Gujarat High Court in case of CIT vs. Anilaben Upendra Shah (2003) 262 ITR 657 (Guj). Relevant discussion is given in paras 3 & 4 of said order of Tribunal which read as under: 4 3. There are couple of issues raised in this appeal. Rest of grounds raised in appeal are either consequential or general in nature. Accordingly, they are dismissed as general or consequential. issues, which need to be adjudicated in this appeal are (i) if capital gains earned by assessee are in nature of short term as held by AO or long term capital gains as offered by assessee in return. At outset, Ld Counsel for assessee mentioned that assessee purchased flat vide allotment letter dated 9.9.2003 from builder namely Prestige Estates Projects Pvt. Ltd. There was construction agreement between parties dated 1.12.2003 and registered deed of same was dated on 22.9.2006. said flat was sold by assessee to Bennet Coleman & Company on 10.11.2006. assessee earned capital gains on this transaction and offered same as long term capital gains reckoning date of allotment i.e., 9.9.2003 for purpose of determining holding period of three years relevant for long term capital gains. However, in assessment proceedings, AO considered date of registration i.e., 22.9.2006 date of registration and determined short term capital gains. Therefore, now issue to be decided by Tribunal relates to if date of allotment should be considered for purpose of computing said long term capital gains. In this regard, Ld Counsel filed various decisions to suggest that date of allotment must be considered for purpose of computing long term capital gains instead of date of registration. Ld Counsel filed order of Tribunal in case of ACIT vs. Smt. Vandana Rana Roy vide ITA No.6173/M/2011 (AY 2007-2008) dated 7.11.2012, wherein one of us (AM) is party, and stated that date of allotment should be reckoned as relevant date for computing holding period for purpose of computing capital gains. In this regard, Ld Counsel brought our attention to para 7 and 8 of said order of Tribunal to support his case. said judgment was decided considering judgment of Gujarat High Court in case of CIT vs. Anilaben Upendra Shah (2003) 262 ITR 657 (Guj) apart from other decisions of Tribunal in case of Jitendra Mohan vs. ITO (2007) 11 SOT 594 (Del) and also another decision of ITAT in case of Pravin Gupta vs. ACIT and relevant propositions are extracted in para 7 of Tribunal s order dated 7.11.2012. said paras 7 and 8 from order of Tribunal in case of Smt. Vandana Rana Roy read as under: 7. We have heard both parties, perused cited decisions and we find that there is no dispute on facts. only issue that is to be decided is whether date of allotment of flat or date of possession of flat by assessee should be considered as date of holding for computing holding period of 36 moths. In alternative, date of registration should be relevant date. On perusal of said decisions relied upon by Ld Counsel, we find that decisions are relevant and applicable to facts of present case. conclusion of Hon ble Gujarat High Court judgment in case of CIT vs. Jindas Panchand Gandhi reads as under: Assessee having sold flat allotted to him by co-operative housing society after period of 36 months from date of allotment, capital gains arising to him were long-term capital gains despite fact that physical possession of flat was given to assessee much later and, therefore he was entitled to deduction from such gains as per law. 7.1 conclusion of Hon ble Gujarat High Court judgment in case of CIT vs. Anilaben Upendra Shah reads as under: Assessee having held shares and allotment of flat in co-operative housing society for period of more than 36 moths capital gain arising from sale of said flat was long- term capital gain and assessee was entitled to benefit of section 80T irrespective of fact that assessee did not get possession of flat in question at time of allotment and it was constructed later on. 7.2. conclusion of Hon ble ITAT, Delhi Bench in case of Jitendra Mohan vs. ITO reads as under: On facts of case, assessee held capital asset (shed) allotted to it on installment basis from 28th December, 1994, date of payment of second installment and sale thereof on 15th December, 2000, gave rise to long term capital loss even though possession of shed was handed over by DSIDC to assessee on 28th May, 1998. 7.3. conclusion of Hon ble ITAT, Delhi Bench in case of Praveen Gupta vs. ACIT reads as under: Assessee can be said to have held flat when he made payment to builder and received allotment letter, and therefore, benefit of indexation of cost of acquisition of flat has to be granted to assessee from date (1995) when he started making payment to builder and not from date of execution of conveyance deed in 2001. 5 8. All above decisions are uniform in concluding that date of allotment is reckoned as date for computing holding period for purpose of capital gains. date of allotment in this case being 19.11.2001 and date of sale is 23.8.2006, therefore, holding period is much more than 36 months. In this case, gains earned by assessee on sale of flat have to be computed as capital gains. Without prejudice, even if date of possession, being 14.8.2003, is considered; assessee is still entitled to benefits of Long Term Capital Gains. Therefore, in our opinion, order of CIT (A) does not call for any interference. Accordingly, grounds raised by Revenue are dismissed. 4. Considering above settled nature of this issue, we are of opinion that assessee must succeed on this issue. Accordingly, relevant grounds of appeal are allowed. 7. From above settled position of issue, it can be safely concluded that date of allotment should be reckoned as date for computing holding period for purpose of capital gains. In instant case, date of allotment is 11.04.2003 (FY 2003-2004) and date of sale of property is 14.10.2007, therefore holding period is more than 36 months. Therefore, capital gains earned by assessee on sale of flat have to be treated as long term capital gains . assesee paid first installment on 11.4.2003, thereby conferring right to hold flat, which was later identified and possession delivered on later date. Hon ble Punjab & Haryana High Court in case of Mrs. Madhu Kaul vs. CIT vide Income Tax Appeal No.89 of 1999, dated 17th January, 2014 held that mere fact that possession was delivered later, does not detract from fact that allottee was conferred right to hold property on issuance of allotment letter. Thus, ld DR s arguments on non-existence of flat at time of issuing of allotment letter stands answered by said judgment of Hon ble High Court of Punjab & Haryana (supra). same view was supported by various decisions of Tribunal as well as judgments of Hon ble Gujarat High Court and relevant conclusions were already extracted in above paragraphs of this order. Regarding judgments of Hon ble jurisdictional High Court relied on by Ld DR are distinguishable on facts. Therefore, considering above settled nature of issue as well as following principle of consistency, we are of considered opinion that ground no.1 raised by assessee should be allowed. Accordingly, ground no.1 is allowed. 8. Further, we have also perused para 2.1 of order of Tribunal in case of Surendra Mohan Khanna (supra) and relevant lines are extracted as under:- 2.1. Nothing contrary was brought to our knowledge on behalf of Revenue. Facts being similar, so, following same reasoning, we are not inclined to concur with finding of CIT (A) because date of acquisition of flat in question will be first booking ie 1986 and possession of flat will relate back to 1986 for purchase of computation of capital gain. Assessing Officer is directed accordingly. 9. Thus, from above, it is evident that date of booking being date where rights on flat arose to assessee and same constitutes starting date for calculating holding period of asset for purpose of section 54 of Act. Accordingly, in this case, date 30.3.2005 should be relevant date. AO is directed to compute holding period accordingly. In effect, grounds no.1 (a); 1(b) and 1(c) of appeal are allowed. Considering relief granted to 6 assessee in this regard, adjudication of ground no. 1(d) becomes academic. Accordingly, said ground no.1 (d) is dismissed. Ground no.1 is partly allowed. 10. Ground no.2 relates to allowing of benefit of self occupied property. Relevant facts connected to ground are that assessee owns three residential houses in Thane, Surat and Navi Mumbai. There is no dispute about property at Navi Mumbai as per Ld Counsel for assessee. Bringing our attention to property at Surat, Ld Counsel for assessee submitted that issue of computation of ALV has to be re-examined by AO in view of binding jurisdictional High Court judgment in case of CIT vs Tip Top Typography [2012] 368 ITR 330 (Bom). 11. After hearing both parties, we direct AO to apply said binding judgment of Hon ble jurisdictional High Court judgment in case of Tip Top Typography (supra) to facts of instant case after affording reasonable opportunity of being heard to assessee. We order accordingly. 12. With reference to property at Thane, Ld Counsel for assessee submitted that property is generated out of merger of flats no.901 and 902 into one functional unit. This resultant property was never let out by assessee during year under consideration. Therefore, same was vacant and was being used sporadically by assessee and when she visits Thane. Otherwise, it is claim of that assessee lives in Mumbai with her husband. limited request of assessee with reference to this property is that Assessing Officer denied any property as self occupied property. Referring to other two properties at Navi Mumbai and Surat, Ld Counsel for assessee submitted that Thane property should constitute self occupied property as same was not let out. 13. On other hand, Ld DR for Revenue submitted that this issue may also be sent back to file of AO considering fact that property at Thane is merger of two independent flats ie flats no.901 and 902 and there is dispute about allowability of one property as self occupied property. On facts, property at Thane consists of two properties and there is requirement of adjudication and finding of fact on this issue also. 14. On hearing both parties on this issue, we are of opinion that assessee is, in principle, entitled for one self occupied property. aspects relating 7 to merger of two flats into one requires detailed examination by Assessing Officer. If AO comes to conclusion that flats no.901 and 902 constitutes one functional residential unit, AO should decide accordingly and allow entire property as self occupied property. Alternatively, if merger of flats is not borne out of flats, assessee, in any case, is entitled to one of two merger flats as self occupied flats. AO shall pass speaking order on this issue after granting reasonable opportunity of being heard to assessee as per set principles of natural justice. Thus, ground no.2 is allowed for statistical purposes. 15. In result, appeal of assessee is partly allowed for statistical purposes. Order pronounced in open court on 23rd September, 2016. Sd/- Sd/- (SAKTIJIT DEY) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; 23.09.2016 .OKK , Sr. PS /Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A)- 4. CIT 5. , ,DR, ITAT, Mumbai 6. Guard file. //True Copy// / BY ORDER, (Dy./Asstt. Registrar) , ITAT, Mumbai Anupama Agarwal v. DCIT, Central Circle-2, Mumbai