1. This appeal has been preferred by the assessee against the order dated 1-5-1981 of the AAC.2. 1977-78 is the assessment year concerned. Financial year is the previous year. The assessee is an individual. The assessment was completed by the ITO as per order dated 5-11-1979 determining total income at Rs. 64,410, as rounded off, as against declared income of.
3. During the previous year under consideration, the assessee sold for Rs. 70,000 a plot of land, namely, plot No. 91, Block 5, Greater Kailash, New Delhi. Cost of acquisition of the said plot was Rs. 6,600.
In addition, there had been some cost of improvement also. The ITO took such cost of improvement at Rs. 3,470 for purpose of computation under Section 48 of the Income-tax Act, 1961 ('the Act'). The ITO, however, did not accept the assessee's contention to the effect that an expenditure of Rs. 2,869 had been incurred in connection with the transfer of the said plot. Under the circumstance, the ITO worked out gross capital gains at Rs. 59,930 instead of at Rs. 57,060 as claimed by the assessee. Further, the ITO denied to the assessee special deduction as admissible under Section 80T of the Act, as in the ITO's opinion said transfer related to a short-term capital asset, namely, a capital asset that had been held by the assessee for a period of less than 60 months. In this connection, the ITO based his finding on the fact that registered conveyance in respect of the plot in question has been executed in the assessee's favour only on 25-4-1973.
4. The assessee went in appeal to the AAC. The AAC reworked the computation under Section 48 and allowed the assessee a deduction from the sale proceeds of a further amount of Rs. 2,140. The AAC, however, confirmed the ITO's finding that the asset in question was not a long-term capital asset.
5. Not feeling satisfied with the relief obtained from the AAC, the assessee has come, up in second appeal. On the assessee's side, our attention was drawn to the copy of the sale deed dated 25-4-1973 at pages 5 to 7 of the assessee's compilation and it was submitted that apart from the paltry sum of Rs. 330 the balance consideration of Rs. 6,300 had been paid by the assessee to the vendor by 27-3-1961. Our attention was also drawn to property tax receipt at pages 1 and 2 of the assessee's compilation. These receipts show payment of property tax by the assessee to the Municipal Corporation of Delhi in 1968 in respect of the plot in question. Argument of the assessee was two-fold.Firstly, it was urged that in terms of the definition contained in Section 2(42A) of the Act holding of the asset as a owner was not necessary and that the word used there was merely 'held'. According to the assessee, the payment of property tax, as aforesaid, in 1968 to the Municipal Corporation clearly established that the asset in question had been held by the assessee for more than 5 years before its transfer in financial year 1976-77-CIT v. Chunilal Khushaldas  93 ITR 369 (Guj.) cited on the assessee's side. We see force in the assessee's reasoning. Though the case of Chunilal (supra) involves consideration of dispute relating to shares, their Lordships while interpreting Section 2(42A), clearly rejected the revenue's contention to the effect that the word 'held' as occurring in the said definition should be taken to mean held as a registered owner. On the revenue's side, our attention was drawn to third and fourth recitals in the sale deed, where the vendor indicated his own possession and ownership of the plot in question until the date of execution of sale deed dated 25-4-1973.
From this, it was argued that the assessee did not hold possession of the plot in question before 1968 as alleged by the assessee. We see no force in this argument. Reason is that the recitals in the sale deed pertain to give historical background, inasmuch as there had been an amalgamation of companies known as D.L.F. Housing & Construction (P.) Ltd., described as predecessor company and D.L.F. United Ltd., the successor company, in terms of the High Court's order dated 26-10-1970.
The assessee had obviously paid consideration amounting to Rs. 6,300 as aforesaid, to the predecessor company only. Under the circumstance, we are of the view that when the successor company as vendor recited its title to and possession of the plot in question, that was merely a formality indicating its taking over the rights and liabilities of the predecessor company. So far as the factum of the assessee's possession is concerned, the evidence in the form of payment of property tax, as aforesaid, leaves no scope for doubt. We, therefore, conclude that the assessee has held the capital asset in question for more than 60 months before its sale by him.
6. Second limb of the assessee's argument was that the provisions of Section 54 of the Transfer of Property Act came to be extended to the Union territory of Delhi only on 1-10-1962; that before the said date execution of registered conveyance in respect of immovable property worth more than Rs. 100 was not necessary in law to effect the transfer and that in the instant case transfer of the plot, along with its possession, had become effective in March 1961, by which time Rs. 6,270 out of Rs. 6,600 had also been paid by the assessee as consideration to the predecessor company which ultimately executed the sale deed.
According to the last recital in the sale deed, the predecessor company had agreed to sell and the vendee had agreed to purchase the said plot of land for a sum of Rs. 6,600. The assessee's argument was that the predecessor company had handed over the possession of the land and had received Rs. 6,270 as consideration and that with the said two steps, the title in the plot in question stood transferred to the assessee already even though the assessee was yet liable to pay part of the consideration, namely, Rs. 330. It was also urged that the mere fact that ultimately a registered sale deed came to be executed in March 1973 would not impinge from the fact that in the eye of law, in the absence of Section 54 of the Transfer of Property Act having been extended to the Union territory of Delhi, the title to the plot stood completely transferred in favour of the assessee. We have already given a finding about the possession of the plot having gone to the assessee before 1968. However, there is no evidentiary material to indicate that even in the absence of full payment of the consideration, the parties had verbally agreed that the title in the plot in question would stand transferred to the assessee. We, therefore, reject second contention of the assessee. In overall result, the assessee succeeds. He is found entitled to special deduction under Section 80T. The ITO is directed to work out relief accordingly.