Contractual right to obtain conveyance is a capital asset, and surrender for consideration triggers taxable capital gains.

An enforceable contractual right to obtain conveyance of immovable property is "property of any kind" and therefore a capital asset for capital gains purposes. Although a contract for sale does not create an interest in the property itself, the right to seek specific performance is assignable and protected against persons with notice, so its surrender for consideration amounts to a transfer within the statutory definition. The earnest money paid to acquire that right is the cost of acquisition for computing capital gains. On that basis, the capital gain was correctly computed after deducting the earnest money, and the computation was upheld in favour of the Revenue.

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Issues: Whether the contractual right acquired under an agreement to purchase immovable property is "property of any kind" and thus a capital asset; whether surrender of the right to obtain conveyance amounts to transfer of a capital asset; and whether the earnest money paid is the cost of acquisition for computing capital gains.

Analysis: A contract for sale of immovable property does not create an interest in the property, but it does confer an enforceable right to obtain conveyance, including against persons with notice and, where applicable, gratuitous transferees. That right is assignable and falls within the wide meaning of "property" adopted for capital gains purposes. When the assessee settled the suit and gave up the right to specific performance in exchange for money, the right was relinquished, which amounted to a transfer within the statutory definition. The earnest money paid under the agreement represented the price paid for acquiring that right and was the cost of acquisition.

Conclusion: The contractual right was a capital asset, its surrender amounted to transfer, and the earnest money was the cost of acquisition. The amount assessable as capital gain was rightly computed at Rs. 82,086, in favour of the Revenue.

Final Conclusion: The judgment affirms that an assignable contractual right to obtain conveyance of immovable property is a capital asset and that its surrender on settlement gives rise to taxable capital gains after deducting the cost of acquisition.

Ratio Decidendi: An enforceable and assignable contractual right to obtain conveyance of immovable property is "property" and therefore a capital asset, and relinquishment of that right for consideration constitutes a transfer giving rise to capital gains.

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