| QUERY: | A flat booked in 2013 and paid the amount in installments since then. First payment and registration done in 2017. Possession given in 2017 on registration though almost full payment was given on allotment in 2013 and subsequent installments paid between 2013 & 2016. What will be the date of acquisition for taxation of capital gains & indexation of payment? |
| ANSWER: | The Bombay High Court in CIT v. Mrs. Hill J. B. Wadia [216 ITR 376] has observed that “what we have to see is whether the assessee has acquired a right to a specific flat in such a building which is being constructed by the builders / society and whether he has made substantial investment within the prescribed period which will entitle him to obtain possession of the flat so constructed and in which he intends to reside. The material test in this connection is domain over the flat and investment in it”. So, on the basis of the fact that querist has invested substantial amount in 2013, though possession and registration was in 2017, the date of acquisition would be 2013 for taxation of capital gains. Similarly the Punjab and Haryana High Court in Mrs. Madhu Kaul v. CIT [363 ITR 54] held that the flat was allotted to the assessee on June 7, 1986 by a letter conveyed to the assessee on June 30, 1986. The assessee paid the first installment on July 14, 1986 thereby confirming a right upon the assessee to hold a flat which was later identified and possession was delivered later did not detract from the fact that the allottee was conferred a right to hold on issuance of an allotment letter. The payment of the balance installments, identification of a particular flat and delivery of possession were consequential acts that related back to and arose from the right conferred by allotment letter. So indexation of payment would be from the year in which the querist was holding flat i.e. the date of allotment. |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 45 |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | Capital gains- Date of acquisition – Amount paid in installments |
Opinion Of Eminent Legal Luminaries On Controversial Issues
Capital gains- Date of acquisition – Amount paid in installments
Posted in Income-tax
|
Credit: Several of the queries and answers are reproduced with permission from the AIFTP Journal. We thank AIFTP for generously allowing us to host their research material. Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. Neither the author nor itatonline.org and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied (except for personal, non-commercial use) without express written permission of itatonline.org |
Leave a Reply