Date of Full Payment, not Date in Registered Document can be treated as Date of Acquisition for determining Capital Gain: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the date of full payment of money must be treated as the date of acquisition for determination of capital gain under the provisions of the Income Tax Act.

While dismissing an appeal by the Revenue, the bench clarified that for determining the capital gains, it is the date of full payment of money and not the date mentioned in the registered document is material.

The assessee, a resident individual earned income from salary, capital gain, and other sources during the relevant year. While filing the returns, the assessee reflected the gain as Long Term Capital Gain since the duration of the period as counted from the date of allotment / final payment was more than three years. However, the Assessing Officer observed that the said gain was in the nature of Short Term Capital Gain since holding period as counted from the registered purchase document to sale document was less than three years.

On appeal, the Commissioner of Income Tax (Appeals) allowed the claim of the assessee.

Concurring with the findings of the first appellate authority, the bench held that “it is undisputed fact that the assessee had acquired the right in the property pursuant to allotment letter dated 10/03/2008, a copy of which has been placed on page number-111 of the paper-book. The assessee has made the full payment of Rs.83.30 Lacs by 25/06/2008. The said fact is duly supported by the bank statements as placed on record from where the payments were made by the assessee. The above-stated fact demonstrates that the assessee had acquired an identifiable right in a specific property and also made the full payment thereof by 25/06/2008. The registration of purchase documents, in such a case, was to convey the ownership rights to the assessee which already existed in assessee’s favor by way of allotment letter dated 10/03/2008. It is also the undisputed fact that the same property has been sold by the assessee during impugned AY.”