COMMISSIONER OF INCOME TAX Vs. S.R. JEYASHANKAR

JUDGEMENT

(1.) This Tax Case (Appeal) filed by the Revenue as against the order of the Income Tax Appellate Tribunal comes up for admission and the Revenue has raised the following substantial questions of law:

(2.) The assessment in this case relates to the assessment year 2009-10. The assessee had purchased the undivided share of land of 2150 sq.ft. out of a large extent of 4 grounds and 400 sq.ft. situated in S.Nos. 2766 and 67, RS No. 1570/4 at No. 1, Binny Road, Chennai. Prior to the purchase of this undivided share in land, the assessee had entered into an agreement with M/s.Vishranthi Homes Pvt. Ltd. (in short VHPL), Chennai for constructing the built-up area of 3465 sq.ft. including common area in the above-said undivided share of land. The agreement was for purchase of land as well as for construction of home by a project promoted by VHPL. The agreement was determined for a consideration at Rs.81,68,811/- to be paid by the assessee to the builder VHPL towards construction of the residential unit. Thereafter, the assessee sold the entire unit by a sale deed dated 10.4.2008 well after 36 months from the date of agreement dated 22. 2.2005 and claimed the difference between the cost of acquisition and sale consideration as long term capital gains.

(3.) The Assessing Officer, however, took a view that the undivided share of land was registered on 4.8.2005 and since the property was purchased in the month of August, 2005 and sold in April, 2008, the capital gains arising from sale will be assessed as short terms capital gains only and accordingly, the Assessing Officer denied benefit of Section 2(29A) of the Income Tax Act and made addition. As against the said order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who placing reliance on Circular No. 471 : /1986 dated 15.10.1986 allowed the appeal filed by the assessee. Aggrieved by the said order, the Revenue has filed an appeal before the Income Tax Appellate Tribunal.