Beneficial ownership on allotment can start the holding period for long-term capital gains, not later registration.

For capital gains purposes, the holding period of an allotted property may begin when beneficial ownership accrues on allotment and substantial payment is completed, rather than on later conveyance or registration. The Tribunal accepted that the assessee acquired beneficial interest in the plot on the date of allotment and therefore could treat the asset as held from that date for long-term capital gain computation. The High Court found no reason to interfere with that view and the assessee's claim succeeded on the basis that allotment and substantial compliance with the allotment terms determined the relevant holding period.

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Issues: Whether the assessee could be treated as having held the allotted plot for the requisite period so as to claim long-term capital gain treatment.

Analysis: The Tribunal had found that the assessee obtained beneficial interest in the plot when allotment was made and substantial payment was completed, and that the relevant date for computing the holding period was the date of allotment rather than the later execution of the conveyance deed. The Court accepted that the assessee acquired beneficial interest by 03.10.1999, notwithstanding later possession and registration, and held that the Tribunal's view accorded with the governing principle that ownership for capital gains purposes may arise from allotment and substantial compliance with allotment terms.

Conclusion: The assessee was entitled to treat the asset as held from the date of allotment for the purpose of long-term capital gain computation.

Final Conclusion: No interference was warranted with the Tribunal's view, and the appeal failed.

Ratio Decidendi: For capital gains purposes, the holding period of an allotted property may run from the date on which beneficial ownership accrues on allotment and substantial payment, not from the later date of conveyance or registration.

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