Provisional booking of a house amounts to acquisition of 'capital asset'

CIT V. RAM GOPAL - (2015) 55 taxmann.com 536 (Delhi High Court)

Assessee would be entitled to exemption under Section 54 even on acquisition of house property by way of provisional booking.

Facts:

• Assessee earned capital gain on sale of residential house property. He made provisional booking of house property out of sale consideration and claimed exemption under section 54.
• The Assessing Officer disallowed Section 54 relief as he was of the view that in the absence of an agreement to sell, the rights acquired by the provisional booking of the property would not meet the requirements of section 54, i.e., acquisition of new capital asset. 
• Appellate authorities decided in favour of assessee. The aggrieved-revenue filed the instant appeal before the High Court.

The High Court held in favour of assessee as under:

• In case of Gulshan Malik v. CIT (2014) 43 taxmann.com 200 (Delhi), it was held that 'capital asset' was defined in extremely wide terms and that a reference to section 2(47), and particularly its second Explanation to clauses (v) and (vi) made it clear that possession, enjoyment of property as well any interest in any of transferable capital asset would be included within the ambit of 'capital asset'
• Therefore, even booking rights or rights to purchase the apartment or to obtain its allotment letter was also capital asset. Hence, assessee would be entitled to Sec. 54 exemption even if property was acquired by way of provisional booking.