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Date of acquisition

Querist : Anonymous (Querist) 04 March 2010 This query is : Resolved 
Dear Sir,

I would be glad if you throw some light on the below issue,

I purchased a bunglow by paying the amount in lumsum, First payment was made on 07-02-2001 and last on 26-10-2002. Date of allotment is 21-03-2002 and date of possession is 24-11-2002.

Now the question is:

What will be the date of acquisition for calculating long term capital gain.

Awaiting for a reply.

P R Shah
Raj Kumar Makkad (Expert) 04 March 2010
The date on which final payment was made means 26.10.2002.
aman kumar (Expert) 04 March 2010
26-10-2002. Date is final as final payment for long term capital gain
A V Vishal (Expert) 04 March 2010
24-11-2002.
Guest (Expert) 04 March 2010
24-11-2002
Kumar Thadhani (Expert) 04 March 2010
THA DATE OF POSSESSION.
Vineet (Expert) 05 March 2010
I beg to differ with all the above experts.

The date of acquisition is date of allotment i.e. 21-3-2002 by which the property came under domain of the allottee unless the allotment is cancelled.

Please refer to decision of Bombay High Court in the case of Hill J B Wadia 286 ITR 113 and CBDT circular nos 672 dated 16-12-1993 and 471 dated 15-10-1986 in this regard. There are decisons of other high courts on the matter.
Querist : Anonymous (Querist) 05 March 2010
Thanks to all! specially Mr. Vineet for a very prompt reply. Thanks
A V Vishal (Expert) 05 March 2010
Mr Vineet the circulars you mentioned is for investment u/s.54 or 54F. The facts of the instant case is different.
Vineet (Expert) 05 March 2010
The ratio remains the same. There cannot be two seperate yardsticks for date of acquisition.
A V Vishal (Expert) 05 March 2010
The decision is for re investment of capital gains and not fresh investment.
Vineet (Expert) 06 March 2010

Dear Mr Vishal,

The rational remains the same whether it is fresh investment or Reinvestment as there can not be two different dates of acquisition (Money has no colour). Ownership of a property is a larger bundle of rights than mere possession. In fact by virtue of doctrine of part performance (section 53A TOPA), in certain cases possession is deemed to be ownership and not vice versa.

In any case for your reference and to conclude this healthy debate please refer to decision of Gujarat High Court in the case of Anilaben Upendra Shah (262 ITR 657) which is direct decision on the matter. I quote a relevant observation from this order:


"A perusal of clause (iii) of section 27 makes it clear that the Legislature has not made any reference to handing over possession because the possession is never considered to be a sine qua non of ownership which consists of a bundle of rights. Moreover, the amendment by the Legislature by an insertion of clause (iiia) with effect from April 1,1988, also indicates that the Legislature was conscious of the fact that prior to April 1, 1988, taking or retaining possession of any building in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act was not considered as ownership for the purpose of the Income-tax Act. Hence, the assessee not getting possession of the flat in question at the time of allotment on November 15, 1979, did not detract from the assessee's ownership of the property in question even if it was constructed after November 15, 1979."

The above decision read with earlier decision quoted earlier settles the matter I presume.
A V Vishal (Expert) 06 March 2010
I find the case law irrelevant in the present case since the case law cited by you has different question of law which has no relevance with the present facts of this case. I have my own reasons to differ on the issue.

Section 53A of the Transfer of Property Act also has been amended to the effect that for an unregistered agreement to sell, the benefit under Section 53A is not available. This amendment also was made through the Amendment Act of 2001.

After the aforesaid amendments, to get the benefit of equitable title through part performance and possession under Section 53A of the Transfer of Property Act, the following legal documentation has to be complied with:

An agreement to sell an immovable property being registered with the registration authorities under the Registration Act, 1908;

Subsequent possession being given of the immovable property to the purchaser in part performance of the aforesaid agreement to sell.

If the possession and part performance is to be recorded in writing through an agreement, it has to be stamped at the stamp duty payable on a Conveyance as per Article 5(e) of the Schedule to the Karnataka Stamp Act, 1957 (as in the case of a regular sale deed), on the sale value of the property.

However, on the stamp duty paid on this agreement, there will be a set-off in the final sale deed being executed and registered.
A V Vishal (Expert) 07 March 2010
Attached relevant notification of amendment of 53A
Vineet (Expert) 07 March 2010
We are not discussing Section 53A here. The reference was to drive home the point that possession can not be a sole pre condition for ownership.

In any case everybody has right to frame his opinion and one must agree to disagree. I hope the querist got his answer and some background material. No further comments.
A V Vishal (Expert) 07 March 2010
True we are not discussing S.53A, my post is to reply to the caselaw cited by you wherein the Gujarat HC has given judgement in Re Anilaben's Case. The date of possession is decided on basis of S.53A, which stands amended after 2001.
Querist : Anonymous (Querist) 08 March 2010
Thanks once again all experts for sharing their respective thoughts.


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