The Income Tax Appellate Tribunal (Mumbai) has held that, Income from Capital Asset is ‘Capital Gain’and not business Income even if Assesse was regularly booking Flats and Selling the same. Any kind of Income from Capital Assets held by the Assesse whether or not connected with his business of profession earned must be treated as capital gain.
The Assesse has hold an immovable property for 74 lakhs and after reducing the cost of acquisition of `57 lakhs the assesse has shown a sum of `17 lakhs as long term capital gains.It was further noted that the assesse received an allotment letter for flat of payment of 1 lakh. But he thought that the allotment letter was a fake one till he exchange the property to the builder M/s. Amrut Dhara Enterprises. There is no agreement in between them at the time of sale and the agreement has been executed within six months from the date of the allotment letter.
The Tribunal bench observed that, “when the assesse became the owner of the flat he has acquired his rights in a capital asset. The right by view of an allotment letter is a valuable right and that rights has been created in favour of the assesse when the builder has issued an allotment letter and received the consideration towards booking of the flat. It is not disputed that the allotment letter is duly registered with the Sub-Registrar and was signed by the assesse as well as M/s. Amrut Dhara Enterprises. The AO, it appears was wanted to just disallow the claim of the assesse. Therefore, without ascertaining and brining any evidence just assumed as if the allotment letter is a fabricated one. In their opinion the AO cannot give such a finding in the absence of any evidence being brought on record.And the Respondent failed to appreciate that the assessee was holding the right to property for a period of 4 years 9 months(exceeding 36 months)”.
While allowing the appeal the Tribunal bench comprising of Pawan Singh (Judicial Member) and P.K.Bansal (Vice President) also observed that, the capital derived by the assesse is long term capital gain as the assesse held the right on the asset for more than 36 months. Therefore the order of the CIT(A) and direct the AO to treat the said profit as long term capital gains a returned by the assesse.
Read the full text of the Order below.
