Transfer of allotment rights, not ownership, did not create short-term capital gain in the assessee's hands.

Transfer of an allottee's right to obtain allotment and conveyance of a plot was treated as transfer of a contractual/accrued right, not transfer of ownership, because the plot had never been conveyed or registered in the assessee's name and the conveyance deed was executed directly in favour of the purchaser. Under the allotment rules, allotment conferred only a right in the applicant, while title passed only on execution and registration of the conveyance. On those facts, the transaction did not generate short-term capital gain in the assessee's hands, and the related addition was unsustainable.

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Issues: Whether the transfer of the assessee's right to obtain allotment and conveyance of the plot gave rise to short-term capital gain.

Analysis: The assessee had applied for allotment and paid earnest money in 1971, but the plot was never conveyed or registered in his favour. Under the applicable allotment rules, allotment created a right in the applicant and the eventual conveyance was to be executed by the Governor in favour of the transferee. The record showed that the conveyance deed was executed directly in favour of the purchaser, not in favour of the assessee. On these facts, what was transferred was only the assessee's right to acquire the plot, not ownership of the plot itself. The principle that title does not pass until the conveyance is executed and registered supported this position.

Conclusion: The transaction did not result in short-term capital gain in the assessee's hands, and the addition was not sustainable.

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