Date of allotment as acquisition date can determine long-term capital gains treatment and section 54 review.

In allotment-based flat transactions, the date of allotment is treated as the date of acquisition for computing the holding period where substantial consideration has already been paid and the purchaser acquires a right in the property on allotment. Applying that principle, the flat was regarded as a long-term capital asset because the sale occurred after a holding period exceeding 36 months. The claim for exemption under section 54 was required to be examined afresh by the Assessing Officer in light of that long-term characterisation.

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Issues: Whether the date of allotment of a flat is to be treated as the date of acquisition for computing the holding period so as to determine whether the gain is long-term capital gain, and whether the claim for exemption under section 54 required fresh examination.

Analysis: The assessee was allotted the flat on 26.10.2009 and had paid a substantial part of the consideration by then. On these facts, the right in the property was acquired on the date of allotment, and the subsequent sale on 03.09.2013 resulted in a holding period exceeding 36 months. The Tribunal relied on the settled principle that, in such allotment-based transactions, the allotment date is the relevant date of acquisition for capital gains purposes. Once the asset was held to be a long-term capital asset, the question of exemption under section 54 had to be examined by the Assessing Officer afresh.

Conclusion: The asset was held to be a long-term capital asset by reckoning the allotment date as the date of acquisition, and the issue of exemption under section 54 was remitted for fresh adjudication.

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