Enforceable right to obtain conveyance can start the holding period for capital gains, supporting long-term treatment and indexation.

An enforceable right to obtain conveyance under an agreement to sell was treated as a capital asset, so the holding period ran from acquisition of that right rather than from later registration or possession. Substantial payment under the earlier oral agreement, followed by pursuit of specific performance and execution pursuant to a Lok Adalat award, showed that the transfer related back to the earlier year when contractual rights were acquired and substantially performed. On that basis, the gain was treated as long-term capital gain, with indexation allowed from the earlier year of acquisition of rights, and the assessee's claim was accepted.

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Issues: Whether the gain arising from sale of property was assessable as long term capital gain or short term capital gain, and whether the date of original agreement and substantial payment governed the period of holding and indexation.

Analysis: The assessee had entered into an oral agreement for purchase of immovable property, paid substantial consideration in the earlier year, later paid the balance, and thereafter pursued specific performance when the vendors did not execute the conveyance. The dispute culminated in an award of Lok Adalat directing execution of sale-cum-GPA, pursuant to which the assessee sold a part of the property. The decisive consideration was that the assessee had acquired a right to obtain conveyance and held an enforceable interest in the property from the earlier agreement and payment, which constituted a capital asset. Physical possession or the later formal execution of sale-cum-GPA did not control the period of holding. The transfer, for capital gains purposes, related back to the earlier year when the contractual rights were acquired and substantially performed.

Conclusion: The gain was rightly treated as long term capital gain, and the assessee was entitled to indexation from the earlier year of acquisition of rights.

Final Conclusion: The appellate order accepting the assessee's claim was upheld, and the Revenue's appeal failed.

Ratio Decidendi: For capital gains purposes, a purchaser's enforceable right to obtain conveyance under an agreement to sell is a capital asset, and the period of holding runs from acquisition of that right, not from later formal registration or transfer of possession.

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