1. This appeal has been filed by the department against the order dated 16-2-1981 of the Commissioner (Appeals) relating to the assessment year 1975-76 The relevant previous year was the year ending 31-3-1975. the assessee is an individual deriving incojme from house property.
2. During the previous year under consideration, on 3-7-1974, the assessee sold a flat in 'Cuffe Castle' held by him to Batliboi & Co.
for Rs. 2,25,000. This flat had been earlier acquired by the assessee by an agreement dated 7-3-1969 with the builders before the multi-storeyed building was constructed. Subsequently, when the building was ready for occupation, the assessee had occupied the same in August 1971 in accordance with the terms of the original agreement dated 7-3-1969. The assessee calculated the capital gains on the sale of the flat and showed the same in the return. The ITO did not agree with the computation of capital gains returned by the assessee on two points. According to the assessee, the asset sold by him on 3-7-1974 was held by him right from 7-3-1969, i.e., the date of agreement under which the said asset was acquired by the assessee. Accordingly, the assessee claimed that he held the asset for more than sixty months and so it became a long-term capital asset. The ITO did not agree.
According to him, the assessee acquired the flat only on the day when he took possession of the same, i.e., in August 1971 and not before. If that be so, then the period for which the assessee held the asset was less than sixty months and so, it became a short-term capital asset.
This was the first dispute between the assessee and the ITO. The second dispute related to the quantum of the sale proceeds received by the assessee. According to the assessee, he received only a sum of Rs. 2,25,000 and nothing more. However, the ITO found from a statement by B.T. Mirchandani, partner of T.M. Bhagwandas & Sons, who acted as brokers for the sale of the assessee's flat to Batliboi & Co., that another sum of Rs. 68,000 was paid in cash to the assessee as a part of the sale proceeds of the flat. The assessee, of course, denied any such receipt. Nevertheless, the ITO held that the assessee must have received the sum of Rs. 68,000 alleged by the broker to have been paid to the assessee over and above the sum of Rs. 2,25,000 mentioned in the conveyance deed and paid by cheque. This was the second dispute between the ITO and the assessee. Thus, the claim of the assessee was that the asset sold by him was a long-term capital asset and the sale proceeds thereof was only Rs. 2,25,000 ; while, according to the ITO, the asset sold was a short-term capital asset and the sale-proceeds amounted to Rs. 2,93,000. The ITO computed the capital gains at a higher figure and completed the assessment accordingly.
3. The assessee appealed to the Commissioner (Appeals) and contended that the ITO erred in his action on both the points. Regarding the first point, it was contended that the assessee acquired a right to occupy the flat under the agreement dated 7-3-1969 and it was only that right to occupy the flat that was sold by him on 3-7-1974.
Consequently, it was urged that the date of taking possession of the flat by the assessee was of no consequence at all. Reliance was placed on certain decisions of the Tribunal, namely, IT Appeal No. 1232 (Bom.) of 1968-69 and IT Appeal No. 648 (PN.) of 1979. The Commissioner (Appeals) found that the Tribunal in the above cases had considered a similar point and have also held that for all practical purposes, the date of the purchase of the flat is the date on which the agreement to purchase is signed. It may be that the payment for the flat is made subsequently or that the possession of the flat was taken much later or the co-operative society to manage the entire building was formed later and membership therein was acquired at a much later date. These facts, according to the Tribunal, would not affect the original date of purchase because the buyer rightly considered himself to be the owner of the flat the moment he signed the agreement to buy the flat.
Respectfully following the aforesaid decisions of the Tribunal, the Corrtrnissioner (Appeals) decided the first point in dispute in favour of the assessee. In other words, she held that the assessee acquired the asset, sold during the previous year, on the signing of the agreement on 7-3-1969 and so it was a long-term capital asset.
4. Coming to the second point in dispute, it was urged before her that the statement of Shri Mirchandani was not at all reliable and was absolutely untrue. Certain alleged discrepancies were pointed out in the statement dated 27-3-1978 of Shri Mirchandani before the ITO. It was pointed out that Shri Mirchandani had no evidence whatsoever in support of his claim of paying such a huge amount of Rs. 68,000 to the assessee in cash. At one stage, Shri Mirchandani had stated that the amount was paid in the presence of Shri Dhaimade, a representative of the buyer, Batliboi & Co. ; but Shri Dhaimade had not corroborated this allegation of Shri Mirchandani. It is true that there were entries in the books of Bhagwandas & Sons showing as if they paid a sum of Rs. 68,000 to the assessee, but it was urged by the assessee that mere entries in the books regarding the payments, were not sufficient, as there was no guarantee that the entries were genuine, vide decision in the case of Addl. CIT v. Lata Mangeshkar  97 ITR 696 (Bom.).
Further, it was point out that the same brokers had alleged similar cash payments, without receipt, over and above the regular cheque payments in respect of two other flats negotiated and sold on behalf of Amalgamated Construction Co. The ITO assessing the said Amalgamated Construction Co. started investigations relying on similar statements by this very broker. However, after detailed investigations, the ITO found no basis whatsoever to support the vague allegation made by this broker and so, the assessment of the said Amalgmated Construction Co.
was completed on the basis that no extra money in the form of cash, as alleged by this broker, was ever received by the seller. Besides, it was pointed out that the sale-proceeds shown by the assessee at Rs. 2,25,000 was very reasonable and in fact it is more than the market value of the flats at Cuffe Parade as accepted by the Commissioner, Bombay, City-Ill, in case of Venus and Jupiter buildings. In fact, the sale proceeds shown by the assessee at Rs. 2,25,000 is about Rs. 25,000 more than the amount accepted by the Commissioner as fair and reasonable in respect of similar buildings in the same locality. Hence, it was urged that there was no question of receiving any extra amount over and above the sale-proceeds shown in the conveyance deed. The Commissioner (Appeals) agreed with the contention of the assessee and held that there was no material to support the assumption of the ITO to the effect that the assessee must have received a sum of Rs. 68,000 over and above the declared consideration of Rs. 2,25,000. Hence, she decided the second point in dispute also in favour of the assessee.
5. Aggrieved by the above order of the Commissioner (Appeals), the department is in appeal before us. Shri D.R. Chawla, the learned representative for the department, urged before us that the Commissioner (Appeals) erred in her decision on both the points.
According to him, the flat which was sold by the assessee could not have been acquired on the date of agreement to buy it because on that day, the flat was not in existence. The assessee could have bought the flat only from the day from which he took the same in possession, i.e., in August 1971. Hence, he urged that the asset should have been regarded as short-term capital asset. He relied on the decision dated 11-2-1982 of the Tribunal in IT Appeal No. 445 (Bom.) of 1981 in support of his contention. Regarding the second point, he relied on the statement of the broker and the entries made in his books of accounts.
He stated that the broker has categorically stated that he paid a sum of Rs. 68,000 to the assessee in cash. The buyer of the flat has also stated that the amount was paid by him to the .broker as part of the sale-proceeds. Further, the commission of 2 per cent paid by buyer to the broker showed that the amount of commission was calculated on Rs. 2,25,000 plus Rs. 68,000. Hence, he urged that the decision of the Commissioner (Appeals) deserved to be vacated and that of the ITO deserved to be restored. Shri Anil Harish, the learned representative for the assessee, on the other hand, supported the order of the Commissioner (Appeals). In addition to the arguments already recorded by the Commissioner (Appeals), he drew our attention to the decision dated 16-6-1980 of the Tribunal in IT Appeal No. 1529 (Bom.) of 1977-78, wherein, an issue similar to the one now under consideration was considered and decided in favour of the assessee. More particularly, it was decided in that case that the right to occupy the flat is bought by the person on the date of agreement to buy it and not on the day on which the flat was occupied. He also referred to the decision of the Bombay High Court in the case of CIT v. Tata Services Ltd.  122 ITR 594 for the proposition that the right to occupy a flat in a multi-storeyed building is acquired on the date of agreement with the builders. Regarding the decision dated 11-2-1982 of the Tribunal in IT Appeal No. 445 (Bom.) of 1981, Shri Anil Harish stated that the issue before the Tribunal in that case was different. The Tribunal was dealing with a case under Section 54 of the Income-tax Act, 1961 ('the Act') which states that a house property used for residence must be sold and another house property must be purchased within one year before or after such sale. His point was that Section 54 of the Act refers to a tangible asset like a house property. Hence, nobody can acquire such a tangible house property before it comes into existence. Hence, the Tribunal decided that for the purpose of Section 54, the date on which the property came into existence and was occupied by the assessee was the date of acquisition. He explained that 'short-term capital asset' under Section 2(42A) of the Act means any capital asset including the possession right in a flat which is an intangible asset and which can exist and be dealt in even prior to the date on which the flat comes into existence. Consequently, he urged that for the purpose of determining whether the right to occupy a flat in a multi-storeyed building is a short-term capital asset or not, the date of agreement is relevant. He emphasised the fact that the decision dated 16-6-1980 of the Tribunal in IT Appeal No. 1529 (Bom.) of 1977-78 is a direct authority on this very issue, wherein this point has been clearly decided in favour of the assessee. He also referred to the decision in the case of Tata Services (supra), urging that the said case also supported the conclusion arrived at by the Tribunal in their order dated 16-6-1980.
6. Coming to the second point, Shri Anil Harish reiterated the arguments given before the Commissioner (Appeals). He urged that the broker made a statement which was untrue merely to save his own skin.
Similar statements made by him have been found to be untrue after exhaustive investigations made by the ITO vide the assessment order of Amalgamated Construction Co. He stated that the broker might have misrepresented to the buyers that some extra amount was to be paid in cash to the seller and the buyers might have paid the same to the broker. But, that fact did not lead to the conclusion that the assessee actually got the money. If the buyers have actually paid the money to the broker, then Shri Anil Harish contended that the said money never reached the hands of the assessee at all. He stated that there was no evidence to support such a conclusion. The only evidence on which the ITO has jumped to this conclusion was that the broker had said that the amount he admittedly got from the buyers was handed over to the assessee and that certain entries were made in the books of the brokers to that effect. He stated that these evidences are not enough to hold the assessee responsible for the receipt of the [money, when in fact the assessee had received none. He also pointed to the fact that certain other flats in the same buildings were sold to other parties and the sale proceeds shown by the assessee appears very favourable when compared with those sales and so, there was no scope for assuming that the assessee must have received something over and above the very fair sale-proceeds declared by him. He pointed out such other sales to be of Rs. 1,86,000 on 27-12-1975, Rs. 2,02,000 on 21-8-1976 and Rs. 2,01,251 on 23-6-1977-all for identical flats in the same building 'Cuffe Castle'. Hence, he urged that the conclusion arrived at by the Commissioner (Appeals) deserved to be sustained.
7. We have considered the contentions of both the parties as well as the facts on record. We find force in the contentions raised for the assessee. Regarding the first point, we find that the decision dated 16-6-1980 of the Tribunal in IT Appeal No. 1529 (Bom.) of 1977-78 is a direct authority. In this case, the Tribunal considered the whole question and arrived at the conclusion that the date of entering into agreement to buy the flat was the date of acquisition of the asset sold for the purpose of determining whether the capital gains arose from a short-term or long-term capital asset. This conclusion of the Tribunal is also supported by the decision in the case of Tata Services (supra) wherein it has been held that the right to occupy a flat is a capital asset which is acquired by the assessee on the date on which he enters into the agreement with the builders. It is not necessary that the flat should exist before the assessee can hold the intangible possession right relating to that flat. Respectfully following the aforesaid authorities, we hold that the Commissioner (Appeals) was quite right in her decision that the asset sold by the assessee, namely, the right to occupy the flat, was acquired by the assessee from the date of the agreement to buy the same and so it was a long-term capital asset. We find force in the contention that the date of occupation of the flat by the assessee has no bearing on the issue under consideration. We also find that the facts before the Tribunal in their order dated 11-2-1982 in IT Appeal No. 445 (Bom.) of 1981 were different. In that case, the Tribunal was concerned with Section 54, which refers to a tangible asset namely house property and a house property as such cannot be bought or sold before it comes into existence. In the case before us, we are not concerned with the house property but the intangible right to occupy the flat as and when it comes into existence. We, therefore, uphold the order of the Commissioner (Appeals) on this point.
Similarly, we find force in the contentions raised for the assessee on the second point in dispute. It is well settled that self-serving statements or recitals in a deed or books of accounts do not prove anything vide the decision of the Supreme Court in the case of CIT v.Durga Prasad More  82 ITR 540. The ITO has assumed that the assessee has received Rs. 68,000 over and above the declared consideration of Rs. 2,25,000 on the basis of the bare statement of the broker and the entries made in his books of accounts. Both these pieces of evidence are self-serving ones as they serve the interests of the broker only. There is no other evidence to corroborate the same. We find no evidence on record to substantiate the theory that the assessee in fact received the sum of Rs. 68,000 under consideration. There is enough force on the other circumstantial evidence pointing to the contrary as explained on behalf of the assessee. Similar statements of this very broker have been found to be untrue in other cases. The sale proceeds declared by the assessee are more than the amounts considered fair by the income-tax department. Again, the broker, having falsely stated that the sum of Rs. 68,000 formed a part of the sale-proceeds had to charge the commission of 2 per cent on that sum also as, otherwise, his action would obviously arouse suspicion. However, that fact in itself does not show that the said sum of Rs. 68,000 was passed on by the broker to the assessee. Under the circumstances, we agree with the Commissioner (Appeals) that the assessee received nothing more than the sum of Rs. 2,25,000. Hence, we uphold her finding on the second point in dispute also.