Sec. 2(29AA)/ Sec. 2(42A)/ Sec. 48 – Period of holding – immovable property – Date of acquisition – Provisional allotment versus final allotment.

During the financial year under consideration, on 19.05.2012, the Assessee sold office premises in Bharat Diamond Bourse – a trade body of diamond merchants. The Final Allotment Letter in respect thereof was issued to the Assessee on 29.07.2010, though the Assessee started making payments in respect of the same from the year 1998 onwards.

Relying on the date of the Allotment Letter, the AO held that the property was a short-term capital asset, and hence, denied the benefit of indexation. While the documents related to the provisional allotment letter stated that the area to be allotted was 900 sq. ft., the actual allotment letter stated the area to be 892 sq. ft. The Department contended that, hence, the area to be finally allotted came to be crystallised only on 29.07.2010.

It was submitted on behalf of the Assessee that the right in the property was given in the year 1998 and from that year onwards, the Assessee started making payment in instalments. The unit and its area was identified. At the time of allotment in the year 1998, the area was provisional, and hence, the figure of 892 sq. ft. was mentioned in the documents issued at that time.

The ITAT held that what is relevant is the date from which the right in the property was held by the assessee i.e. the date of provisional allotment is relevant. Hence, it was held that the year of acquisition was to be reckoned from FY 1998-99 onwards and benefit of indexation was to be allowed accordingly. (ITA No. 645/Mum/2022 dated November 10, 2022) ( AY. 2013-14)
Sumit Export v. ACIT (Mum.)(Trib.) www.itatonline .org
[Coram : Hon’ble Shri Kuldip Singh (JM) and Hon’ble Shri S. Rifaur Rahman (AM)]