Indexation from purchase agreement date and limits on section 263 revision where the Assessing Officer took a plausible view.

Rights acquired under a flat purchase agreement were treated as a capital asset, and the holding period for indexation under section 48 ran from the agreement date rather than the later conveyance registration date. The assessee was therefore entitled to indexed cost from 7-8-1993 for long-term capital gains computation. Revisional action under section 263 was not sustainable where the Assessing Officer had examined the relevant material and adopted a plausible view; a revision cannot rest only on the Commissioner's different opinion or the absence of detailed discussion in the assessment order.

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Issues: (i) Whether the rights acquired under the purchase agreement dated 7-8-1993 constituted a capital asset held from that date for the purpose of computing indexed cost of acquisition and long-term capital gain. (ii) Whether the Commissioner was justified in invoking revisional jurisdiction under section 263 of the Income-tax Act, 1961 on the ground that the assessment order was erroneous and prejudicial to the interests of the revenue.

Issue (i): Whether the rights acquired under the purchase agreement dated 7-8-1993 constituted a capital asset held from that date for the purpose of computing indexed cost of acquisition and long-term capital gain.

Analysis: The right acquired by the assessee under the agreement to purchase the flat was treated as a capital asset within the meaning of section 2(14) of the Income-tax Act, 1961. For computation of indexed cost under section 48, the relevant factor was the cost of acquisition of the asset and the period from which the asset was held, not the dates on which instalments or other payments were actually made. The asset was held from the date of the agreement, and the subsequent registration of conveyance did not alter that holding period for indexation purposes.

Conclusion: The assessee was entitled to indexation from 7-8-1993, and the Assessing Officer's view on merits was correct.

Issue (ii): Whether the Commissioner was justified in invoking revisional jurisdiction under section 263 of the Income-tax Act, 1961 on the ground that the assessment order was erroneous and prejudicial to the interests of the revenue.

Analysis: The assessee had furnished the relevant details before the Assessing Officer, and the assessment was completed after considering them. A revision under section 263 could not be sustained merely because the assessment order did not contain elaborate discussion or because the Commissioner held a different view on the same material. The order could not be treated as erroneous and prejudicial to the revenue on that basis.

Conclusion: Invocation of section 263 was not justified, and the revisional order was liable to be cancelled.

Final Conclusion: The revisionary orders were quashed, and the assessee's appeals were allowed.

Ratio Decidendi: Rights in property acquired under a purchase agreement can constitute the relevant capital asset for indexation, and revisional jurisdiction under section 263 cannot be exercised merely because the Commissioner prefers another view where the Assessing Officer has adopted a plausible view on the material placed before him.

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