Period of holding for booked flats runs from allotment, making the gains long-term and allowing indexation from actual payments.

The period of holding for flats acquired through booking and instalment payments was computed from the date of allotment, because the right in the specific flats arose at allotment and later registration merely completed formalities. Applying the factual transaction structure and the principle underlying part performance, the flats were treated as long-term capital assets rather than short-term capital assets. The gains on sale were therefore taxable as long-term capital gains, and indexation was to be determined with reference to the dates of actual instalment payments.

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Issues: Whether the flats sold by the assessee were long-term capital assets or short-term capital assets for the purpose of capital gains, and whether the period of holding had to be counted from the date of allotment/booking or from the date of registration of the sale agreement.

Analysis: The flats were booked in September 2005, booking advances were paid, and instalments were subsequently remitted to the builder. The right in the specific flats was therefore created at the time of allotment, and the later registration of the agreement only completed the formalities. The holding period could not be computed merely from the registration date, because the allotment and subsequent payment structure showed acquisition of the capital asset much earlier. The principle underlying part performance and the factual reality of the transaction supported treating the date of allotment as the relevant date for holding-period computation. On that basis, the circulars dealing with allotment of flats under self-financing schemes also supported the assessee's claim to long-term capital gain treatment. For indexation, the actual dates of payment of instalments were relevant.

Conclusion: The flats were held as long-term capital assets, the gains on sale were taxable as long-term capital gains, and the assessee was entitled to indexation with reference to the dates of actual payments.

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