The Mumbai Bench of the Income Tax Appellate Tribunal in the case of Adi D Vachha v. ITO held that period of holding the asset has to be computed not from the date when MoU was cancelled in the year 2004 but from the original date of acquisition of property.
The AO noticed that the assessee has computed Long Term Capital Gain from the sale of TDR. The assessee in response submitted that he had to right to acquire TDR in view of land acquired by Pune Municipal Authority and the same has been transferred to the third party for a consideration of Rs 50 lakh. The timelines for the transactions are: The assessee had sold his right in TDR by way of an MoU on 17/08/1996. The MoU was cancelled by the way of cancellation deed dated 14/06/2004 and the right In TDR was sold by agreement dated 14/06/2006 for a consideration of Rs 50 lakh.
It was submitted that the right in TDR in lieu of land is a capital asset and hence, the same has been rightly considered under the head capital gains after considering the necessary cost of acquisition computed Long Term Capital Gain of Rs 25 lacs.
The assessee contended that the holding period of the TDR is less than 36 months and accordingly, gain received from the transfer of TDRs is assessable under the head Short Term Capital Gain. Hence, the present appeal.
The Bench constituting of members Ram Lal Negi and G. Manjunatha held that if the date of acquisition of property originally is taken, then the period of holding the asset is more than 36 months and hence, surplus from the transfer of the asset is rightly assessable under the head long term capital gains.
Hence, the period of holding the asset has to be computed not from the date when MoU was cancelled in the year 2004 but from the original date of acquisition of property.
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