Transfer of property purchase rights after a long holding period may be treated as long-term capital gains.

Rights acquired under agreements to purchase immovable property, when transferred after being held for more than 36 months, are treated as a long-term capital asset. The capital gains character follows the holding period of the contractual rights actually transferred, not merely the later conveyance of the flat. On the stated facts, the transfer of the entire right, title and interest in the flat after that holding period was regarded as giving rise to long-term capital gains.

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Issues: Whether the assessee's rights acquired under agreements to purchase a flat and transferred after more than 36 months constituted a long-term capital asset so that the resulting capital gains were long-term capital gains.

Analysis: The assessee acquired rights under the agreements dated 8 November 1977 and 4 December 1978, obtained possession in June 1981, and transferred the entire right, title and interest in the flat by agreement dated 28 April 1983. The transfer was of the rights arising from the earlier agreements, and those rights had been held for more than 36 months before being transferred. On these facts, the character of the gain depended on the holding period of the contractual rights transferred.

Conclusion: The gains were rightly treated as long-term capital gains, and the question of law did not survive.

Ratio Decidendi: Rights under an agreement to purchase immovable property, when transferred after being held for more than 36 months, constitute a long-term capital asset and yield long-term capital gains.

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