Capital gains on allotted property are computed from the allotment date, supporting long-term capital gain treatment.

Capital gains on sale of an allotted property are to be characterised by reference to the date of allotment, not the later registration of the conveyance deed, where the allottee has acquired enforceable rights and substantially complied with payment obligations. Applying the jurisdictional High Court's principle on beneficial ownership and the relation-back effect of registration, the period of holding was computed from allotment. The gain was therefore treated as long-term capital gain, and the addition made by assessing it as short-term capital gain was deleted.

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Issues: Whether the capital gain arising from sale of the allotted property was to be assessed as long-term capital gain or short-term capital gain by reckoning the holding period from the date of allotment or from the date of registration of the conveyance deed.

Analysis: The assessee had acquired rights in the property upon allotment and had substantially complied with the payment obligations long before the sale deed was executed. The governing principle applied was that, for computing the period of holding in such allotment cases, the relevant date is the date of allotment and not the later date of registration of the conveyance deed. The decision of the jurisdictional High Court, following earlier authorities on beneficial ownership and relation-back effect of registration, was held to squarely cover the issue.

Conclusion: The gain was assessable as long-term capital gain. The addition treating it as short-term capital gain was not sustainable and was directed to be deleted, in favour of the assessee.

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