INCOME TAX APPELLATE TRIBUNAL, BANGALORE
R.N. PURI, A.V. BALASUBRAMANYAM, JJ.
Fourth Income-tax Officer -Appellant
Versus
Dr. V. V. Mody -Respondent
INCOME-TAX APPEAL NO. 42 (BANG.) OF 1987 [ASSESSMENT YEAR 1983-84]
Decided On : 24-04-1991
Advocates Appeared:
M. V. Javali,S. P. Bhat
ORDER
A. V. Balasubramanyam, Judicial Member - A question relating to capital gains is the subject matter of this appeal by the Revenue and, at the very outset, we furnish the following prefatory facts.
2. The assessee (indl.) had been allotted a site in Bangalore by the Bangalore Development Authority (BDA) on 25th may, 1972. He executed a lease-cum-sale agreement and entered possession immediately. This was in conformity with the rules of allotment. The assessee was to pay a certain amount to the BDA towards the lease-cum-sale agreement. According to the agreement, when the entire amount was paid and at the end of the tenth year the assessee was entitled to obtain a deed of conveyance from the allotting authority.
3. BDA executed a deed of sale on 29th March, 1982 and it was registered on 13th May, 1982. The assessee sold the site to a third person on 27th November, 1982 for a consideration of Rs. 69,200.
4. In the assessment proceedings, the ITO was of the view that the assessee held the property only from 29th March, 1982 onwards and that he having sold the property on 27th November, 1982, it was a case of short-term capital gain. It is needless to say that the assessee had claimed that it was a long-term capital gain on the premise that he had held the property since the day of allotment, namely, 25th May, 1972, under lease-cum-sale agreement.
5. The assessee's contention came to be accepted by the Commissioner (Appeals), in appeal, who, following the decision in the case of Des Raj Nagpal v. ITO (1985) 13 ITD 800 (Delhi)(SB), concluded that the asset had been held by the assessee since 25th May, 1972 when he got possession under lease-cum-sale agreement. The Revenue is in appeal challenging the conclusion of the commissioner (Appeals).
6. Arguing for the Revenue, Shri Javali Submitted that the nature of interest held by the assessee when he entered possession on 25th May, 1972 pursuant to the lease-cum-sale agreement was different from the interest which he transferred to his buyer on 27th November, 1982 and that the intermediate event of taking a conveyance from the BDA on 29th March, 1982 really mattered since by this event absolute ownership came to be acquired by the assessee. Shri S.P. Bhat, appearing for the assessee, argued that as the assessee had taken possession on 25th May, 1972 under lease-cum-sale agreement from the BDA he had "held" the asset from that day onwards relying upon the meaning of the word "held" as explained by the Supreme Court in Begulla Bapi Raju v. State of A.P. AIR 1983 SC 1079 and the decision of the Calcutta High Court in the case of Commissioner v. All India Tea & Trading co. Ltd. (1979) 117 ITR 525 (Cal.).
7. An asset is the right in a property which one possesses. Property is a thing that is owned. If a person is said to own an asset, he is in fact said to own certain rights vis-a-vis that property. A definition of the word "property", is very difficult, for what is property in one sense may not be so in another situation. What is stated by the Supreme Court in Guru Datta Sharma v. State of Bihar AIR 1961 SC 1684 is relevant for our present purpose. Their Lordships pointed out at page 1097:
"....Property as a legal concept is the sum of a bundle of rights and in the case of tangible property would include the right of possession, the right to enjoy the right to destroy, the right to retain, the right to alienate and so on."
What is, therefore, necessary to see is, whether the nature of property held by the assessee on 25th May, 1972 was the same as the nature of property he conveyed to the vendee on 27th November, 1982. Unless the two are exact, it cannot be said that the property conveyed on 27th November, 1982 had been held by him for more than thirty six months. For this an analysis of the lease-cum-sale agreement, by and between the assessee and the BDA, is necessary. Such agreements are as per Form III provided by the Bangalore Development Authority (allowment of Sites ) Rules 1984.
8. As
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