Capital gain tax long term or short term?
I booked a flat in mumbai in 2009 for total consideration of 33,70,000/-. I gave 5 lac to builder and recieved allotment letter on 20th jun 2009. Then I paid slab wise- 7,80,000/- in year 2011, 10,62,150/- in year 2012, 6,90,850/- in year 2013, and final payment of 3,37,000/- on 16th may 2014. I entered into agreement on 12th feb 2014. I took physical occupancy on 20th oct 2014. I delayed the agreement due to lack of money. Now I want to sell my flat. Am I eligible for long term capital gain advantage? Many CA says date of acquisition is date of agreement so I can not take advantage of long term capital gain. But many references are available online even some court verdicts says that the date of acquisition is the date of allotment. Please guide....
Asked 2 years ago in Capital Gains Tax from Mumbai, Maharashtra
Date of allotment date will be taken as date of acquisition in this case.
You are eligible for long term capital gain.
Please feel free to contact me in case of any doubts.
Thanks and Regards
CA Abhishek Dugar
Sir we need to check the allotment letter for clause relating to possession for determining LTCG.
Yes many courts have given verdict that Date will be the date when allotment letter is issued but many also have given that that will be the date when physical possession is delivered.
As per the information provided by you, it appears that you have booked a flat long back which makes you illegible for a Long Term Capital Gain whereas if you go as per the Sale Deed it shows a Short Term Capital Gain.
Now this is a litigative area where many courts have provided there verdict that the date shall be determined from the date of allotment letter whereas in a few cases it is from the date of agreement.
It totally depends on how is your allotment letter drafted and how you present your case and take it forward in front of the authorities.
But if you have the allotment letter, paid all the respective dues, taken possession and then are now selling the flat then it has to be a favorable order and should be considered as a Long Term Capital Asset.
Trust this clarifies your query.
Please feel free to call/ get back in case of any further clarifications.
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP