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Issues: Whether the holding period of the capital asset was to be computed from the date of allotment or from the date of possession for determining whether the asset was a short-term or long-term capital asset and for eligibility to exemption under section 54F.
Analysis: The allotment letter and payment records showed that the assessee acquired the substantive right in the property on allotment and payment, while registration of the conveyance deed was only a later formal step. For the purpose of section 2(42A) of the Income-tax Act, 1961, the relevant date for computing the period of holding is the date on which the assessee acquired the asset by allotment, not the later date of possession or registration. Since the asset was held from the date of allotment for more than 36 months before transfer, it qualified as a long-term capital asset. The reasoning follows the settled view that ownership by registered conveyance is not essential for computing the holding period where the assessee has already acquired rights in the asset.
Conclusion: The holding period had to be reckoned from the date of allotment, not the date of possession or registration. The asset was a long-term capital asset and the assessee was entitled to exemption under section 54F.
Ratio Decidendi: For computing the period of holding under section 2(42A) of the Income-tax Act, 1961, the decisive date is the date on which the assessee acquires the right in the asset by allotment, and not the later date of possession or registered conveyance.
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