Tribunal rules holding period for Capital Gains from property starts at allotment, not deed registration

The Tribunal allowed the appeal, directing the Assessing Officer to calculate the holding period for determining Long Term Capital Gain from the date of allotment of the property, contrary to the AO's calculation based on the registration of the conveyance deed. The Tribunal considered legal precedents and factual evidence of possession and transfer, concluding that the holding period should commence from the date of allotment.

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Issues:
1. Assessment order confirmation by CIT(A)
2. Determination of Long Term Capital Gain (LTCG) based on property sale

Issue 1: Assessment order confirmation by CIT(A)
The appeal was against the order of the Commissioner of Income Tax (Appeals) confirming the assessment order for the assessment year 2008-09. The case involved a Non-resident Indian (NRI) whose return of income was not filed initially. The case was re-opened under section 147 of the Income Tax Act based on information about the sale of a property. The Assessing Officer (AO) determined Long Term Capital Gain (LTCG) based on the Fair Market Value (FMV) and possession date of the property, leading to a disputed LTCG amount.

Issue 2: Determination of Long Term Capital Gain (LTCG) based on property sale
The AO calculated LTCG by considering the value determined by the Valuation Officer and index cost for the year 2000-01 instead of 1997-98, the year of allotment. The appellant argued that the index cost should be considered from the date of allotment as per the allotment letter. The AO disputed the holding period based on the registration of the conveyance deed in 2000-01 and the occupation certificate issued in 2000. However, the appellant contended that the holding period should be calculated from the date of allotment, supported by various legal precedents.

The Tribunal considered the dispute of whether the holding period should be calculated from the date of allotment or occupation of the property. It noted the payment made by the assessee at the time of allotment and the undisputed facts regarding possession and transfer of the property. Referring to legal precedents, including decisions by High Courts and Tribunals, the Tribunal concluded that the holding period should be determined from the date of allotment. Therefore, the grounds of appeal were allowed, directing the AO to adopt the holding period from the date of allotment of the flat.

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