• Confusion regarding Long Term and Short Term capital gain tax

I purchased an under construction property in Gurgaon in 2010. In 2014 Aug i got the possession. Now i want to sell the property. I am in dillema as lot of people say selling the property before 2017 Aug would create problem for me as it would lead to Short term capital gain. But i have help the property for more than 6 years and received allotment letter  in 2010. 

I surfed the net and got some valuable information. In this connection, it would be worthwhile to refer to a very interesting decision of the Punjab and Haryana High Court in the case of Vinod Kumar Jain v CIT and Others 344 ITR 501.Finally while deciding the appeal the Honourable judges of the High Court laid special emphasis on the circular of the Central Board of Direct Taxes and came to the conclusion that the allotee gets title to the property on issuance of an allotment letter and that the payment of instalments is only a consequential action upon which the delivery of possession.

Kindly help me out in this regard.
Asked 7 years ago in Capital Gains Tax

Yaa u r right... Recently also some judgement came regarding ownership will be calculated from date of allotment letter. In my opinion it's long term

Vidya Jain
CA, Kolkata
1008 Answers
58 Consultations

4.8 on 5.0

Dear Sir,

You are absolutely correct. It will be long term capital gain tax.

The date of acqusition is the date of allotment letter

Please feel free to revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Yes, the period of holding will have to be reckoned from the date of allotment, provided you satisfied the conditions relating to the allotment and paid substantially the whole amount.

B Vijaya Kumar
CA, Hyderabad
1001 Answers
124 Consultations

5.0 on 5.0

Hi,

the period of holding of the above mentioned flat will be calculated from the date of receipt of the allotment letter or date of agreement to sell the said flat.

you can also visit the link below:

https://indiankanoon.org/doc/143154527/

Anindya Dutta, Kolkata vs Assessee on 21 November, 2013

Vishakha Agarwal
CA, Bangalore
448 Answers
85 Consultations

5.0 on 5.0

Sir your contention is right and also the case law as mentioned. But always this is a debatable issue. As per our view the things to be checked in Allotment letter is 1. Whether there is mention of possession 2. Whether the structure of the property which you are purchasing is ready or not.

There are many case laws which is opposite to the one you mentioned. Need to check the allotment letter for further answers.

Shyam Sunder Modani
CA, Hyderabad
1408 Answers
164 Consultations

5.0 on 5.0

Dear Sir,

If your registered purchase agreement is of 2010 than it will be long term capital gain only but if registered agreement is not on 2010 and only banakhat is signed than it will be considered as short term capital gain since date of purchase shall be date of allotment i.e. 2014.

Sir dont go on case laws since this case laws only help with the judicial fight. in case the amount involved is not big better to go with straight reading of law. As legal battle with income tax department based on case law would be an costlier effect in case the tax effect is smaller

Vishrut Rajesh Shah
CA, Ahmedabad
928 Answers
38 Consultations

5.0 on 5.0

In my opinion, the period of holding the property will be considered from the date of the allotment letter as held by the P&H HC. There are numerous decisions which have decided similarly following this P&H HC judgement. However, there are also negative judgements in this regard. Being debateable, it will depend on the specific facts, agreement to sell, sale deed and allotment letter.

To strengthen your case, you may rely on a jurisdictional decision (in this case, Delhi HC or Tribunal) in your favour, if you are able to find any.

Keerthiga Padmanabhan
CA, Greater Mumbai
784 Answers
27 Consultations

5.0 on 5.0

Hi,

There are various judgments (Including the P&H HC Judgement referred by you) which have held that the Date of Allotment Letter as the Date of Acquisition. So, in my Opinion, you can take 2010 as the date of acquisition.

However, it is better to refer the terms of agreement as to the date on which you will get ownership rights on the property. The date when you get the right to Title Deeds of the Property is the date of acquisition.

Pradeep Bhat
CA, Bengaluru
542 Answers
94 Consultations

5.0 on 5.0

Hello Sir,

Your case is a debatable case and you will have to fight it out and will obviously involve professional expertise and in turn Cost. So why take a chance when you have to wait for 5 months only.

I would suggest waiting till August 17 rather than getting into litigation.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

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