Transfer of allotment rights in immovable property can constitute a capital asset transfer taxable under capital gains, not other sources.

Rights arising from allotment and a buyer agreement in immovable property were treated as a capital asset within the wide meaning of section 2(14) of the Income-tax Act. The transfer of those rights by agreement to sell was held to fall within the expansive scope of section 2(47), including transactions that enable enjoyment or operate through part performance. As the assessee had held and paid for the unit over a substantial period before transferring the rights, the surplus could not be assessed under the residuary head as income from other sources. The transaction was therefore chargeable under the head "Capital Gains", and the resulting long-term capital loss was allowable.

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Issues: Whether the assessee's transfer of allotment rights in an immovable property was a transfer of a capital asset chargeable under the head "Capital Gains" or was taxable as "Income from Other Sources", and whether the resultant loss was allowable as long-term capital loss.

Analysis: The right acquired under the allotment and buyer agreement was treated as property of a kind falling within the wide meaning of "capital asset" under section 2(14) of the Income-tax Act, 1961. The expression "transfer" in section 2(47) was held to be expansive and to include transactions covered by part performance and transactions having the effect of transferring or enabling enjoyment of immovable property. The assessee had held and paid for the unit over a substantial period and then transferred those rights by agreement to sell. The character of the transaction was therefore one of transfer of a capital asset, not a mere receipt taxable under the residuary head. The authorities below were held to have erred in treating the surplus as income from other sources.

Conclusion: The transfer of allotment rights was a transfer of a capital asset assessable under the head "Capital Gains", and the assessee was entitled to claim the long-term capital loss.

Ratio Decidendi: Rights in an immovable property arising from allotment and agreement, when transferred in a manner covered by section 2(47), constitute a capital asset transfer chargeable under the capital gains scheme and cannot be assessed under the residuary head merely because legal title or possession had not been fully conveyed.

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