Leasehold rights taxation: allotment date fixes acquisition, actual cost applies, and section 50C does not extend to such transfers.

For transfer of allotted leasehold rights, the date of allotment is treated as the date of acquisition where it creates an enforceable right to receive the plots, and the resulting gain is long-term if the holding period is satisfied. The actual amount paid to obtain the leasehold rights is accepted as the cost of acquisition where it is ascertainable, without substituting a notional value. Section 50C does not apply to transfer of leasehold rights in land, so stamp duty value cannot replace the stated consideration. The co-ownership allocation issue was sent back for fresh verification of the affidavit and consideration-sharing records.

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Issues: (i) whether the date of allotment of leasehold plots constituted the date of acquisition so as to determine the nature of capital gains; (ii) whether the actual amount paid for obtaining the leasehold rights constituted the cost of acquisition; (iii) whether the sale consideration could be substituted by stamp duty value under section 50C of the Income-tax Act, 1961 in respect of transfer of leasehold rights; and (iv) whether the assessee's share in the capital gains had to be confined to 25% on the basis of the number of co-owners.

Issue (i): Whether the date of allotment of leasehold plots constituted the date of acquisition so as to determine the nature of capital gains.

Analysis: The right in the allotted plots arose when the allotment letters were issued in 2003, and the transfer took place in 2007. The period between allotment and transfer exceeded the statutory holding period, and the allotment created an enforceable right to receive the plots in compensation for the acquired ancestral land. The reasoning adopted in the relied upon precedent was followed.

Conclusion: The date of allotment was rightly treated as the date of acquisition, and the gain was correctly held to be long-term capital gain.

Issue (ii): Whether the actual amount paid for obtaining the leasehold rights constituted the cost of acquisition.

Analysis: The record showed the amount actually paid by the assessee for obtaining the leasehold rights in the two plots. Where the actual cost is ascertainable, there was no need to substitute a notional market value. The same approach was supported by the cited precedent.

Conclusion: The actual amount paid was correctly accepted as the cost of acquisition.

Issue (iii): Whether the sale consideration could be substituted by stamp duty value under section 50C of the Income-tax Act, 1961 in respect of transfer of leasehold rights.

Analysis: Section 50C applies to land or building or both, and not to a transfer of leasehold rights in land. Since the transaction was only in leasehold rights, substitution of consideration by stamp duty value was not permissible.

Conclusion: Section 50C was held inapplicable to the transfer of leasehold rights.

Issue (iv): Whether the assessee's share in the capital gains had to be confined to 25% on the basis of the number of co-owners.

Analysis: The record required verification of the affidavit said to have been filed by the sisters of the assessee regarding receipt of consideration. As this aspect was not addressed in the finding below, the issue required fresh examination by the Assessing Officer after giving opportunity of hearing.

Conclusion: The issue was remanded for fresh adjudication.

Final Conclusion: The Revenue's challenge failed on the substantive issues, while the assessee succeeded on the principal tax-treatment questions, with one limited issue sent back for reconsideration.

Ratio Decidendi: For transfer of allotted leasehold rights, the date of allotment determines acquisition, the actual payment for obtaining the rights is the cost of acquisition where ascertainable, and section 50C does not apply to leasehold rights in land.

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