Date of allotment governs capital gains acquisition, interest on borrowing forms part of cost, and section 50C needs fresh verification.

For capital gains purposes, the date of allotment, when enforceable rights in the flat accrued, was treated as the date of acquisition; later registration, possession and completion steps were treated as consequential, so the gain remained long-term. On the valuation question, section 50C applied only where stamp valuation evidence was properly available, and the matter required fresh verification by the Assessing Officer. Interest paid on borrowings for acquiring the flat was held to form part of the cost of acquisition under section 48, so the addition made on that count could not stand.

---

---

Issues: (i) Whether the date of allotment of a flat, and not the date of registration, should be taken as the date of acquisition for determining whether the resultant capital gain is long-term or short-term. (ii) Whether the sale consideration for transfer of the flat could be determined under section 50C of the Income-tax Act on the basis adopted by the lower authorities. (iii) Whether interest paid on borrowings relating to the flat could be included in the cost of acquisition while computing capital gains.

Issue (i): Whether the date of allotment of a flat, and not the date of registration, should be taken as the date of acquisition for determining whether the resultant capital gain is long-term or short-term.

Analysis: The right in the property was held to have accrued on the date of allotment, when the assessee was conferred a right to hold the flat and had paid the first instalment. The later acts of identification of the flat, payment of balance instalments and delivery of possession were treated as consequential and relating back to the allotment. Support was drawn from earlier judicial precedents and Circular No. 471 dated 15.10.1986, which recognise that allotment confers the relevant proprietary right for capital gains purposes.

Conclusion: The date of allotment was correctly taken as the date of acquisition, and the capital gain was rightly treated as long-term. This issue is decided in favour of the assessee.

Issue (ii): Whether the sale consideration for transfer of the flat could be determined under section 50C of the Income-tax Act on the basis adopted by the lower authorities.

Analysis: Section 50C was treated as a deeming provision applicable only where the consideration is lower than the value adopted or assessed by the stamp valuation authority. Since the record did not contain confirmation from the stamp valuation authority and the lower authorities had proceeded on different deemed values, the valuation issue required fresh verification in accordance with law.

Conclusion: The valuation issue was restored to the Assessing Officer for fresh adjudication. This issue is allowed for statistical purposes and does not finally decide the valuation dispute in favour of either side.

Issue (iii): Whether interest paid on borrowings relating to the flat could be included in the cost of acquisition while computing capital gains.

Analysis: The interest payment was treated as expenditure incurred in acquiring the asset and, therefore, as part of the cost for computing capital gains under section 48 of the Income-tax Act. The assessee's claim was accepted and the addition made by the Assessing Officer was found unsustainable.

Conclusion: The interest amount was rightly included in the cost of acquisition. This issue is decided in favour of the assessee.

Final Conclusion: The Revenue's appeal succeeded only in relation to the valuation matter, which was remanded for fresh consideration, while the findings treating the gain as long-term and allowing interest as part of cost were sustained.

Ratio Decidendi: For capital gains purposes, the right conferred by allotment is the relevant date of acquisition where the allottee obtains enforceable rights in the property, and interest paid for acquiring the asset may form part of its cost under section 48.

---