Transferable flat rights arise on booking date, so holding period and long-term capital gains run from that point.

Where a booking letter created transferable rights in an identified flat, the date of acquisition was taken as the booking date rather than the later agreement date. The later allotment and ownership documents merely recognised the same pre-existing right, so the holding period ran from 14.10.2006. On that basis, the transfer produced long-term capital gains, not short-term gains, making indexation available from financial year 2006-07. The alternative claim for deduction under section 54F was also restored for verification. The addition treating the gain as short-term was set aside and recomputation directed in favour of the assessee.

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Issues: Whether the assessee's rights in the flat were acquired on the date of booking/allotment or only on the date of registration of the agreement, and whether the transfer of such rights generated long-term capital gains with consequent eligibility to indexation and deduction under section 54F.

Analysis: The documents showed that the booking letter dated 14.10.2006 created transferable rights in a specific flat in favour of the assessee. The subsequent allotment/reservation letter and the later premises ownership agreement did not create a fresh right but only recognised and improved the already existing right. What was ultimately transferred under the agreement dated 18.09.2010 was the same right that had come into existence on 14.10.2006. Since the holding period exceeded 36 months, the gain could not be treated as short-term. The assessee was therefore entitled to indexation from financial year 2006-07, and the alternative claim for deduction under section 54F was also allowable, subject to verification.

Conclusion: The right in the flat was held from 14.10.2006 and its transfer resulted in long-term capital gains. The assessee succeeded on the classification issue and the consequential claim under section 54F was restored for verification.

Final Conclusion: The addition treating the gain as short-term was set aside, and the matter was allowed in favour of the assessee with directions for recomputation.

Ratio Decidendi: Where a booking letter creates transferable rights in an identified flat, later allotment or registration documents do not necessarily reset the date of acquisition if they merely recognise the same pre-existing right; the holding period must be computed from the date on which the enforceable right first arose.

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