Allotment date governs capital gains holding period and section 56(2)(x) valuation where enforceable rights and paid consideration exist.

Additional evidence before the appellate authority was treated as admissible where it had already been examined in remand proceedings and went to the root of the dispute; the objection to admission failed. For section 56(2)(x), the allotment date could be relevant where enforceable rights arose and substantial consideration was paid through banking channels, but the stamp duty value as on that date required limited factual verification; the addition was therefore not finally sustained. On capital gains, the holding period was counted from the allotment date, not the registration date, so the transfer was taxable as long-term capital gain and not short-term capital gain.

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Issues: (i) Whether additional evidence furnished before the appellate authority ought to be treated as admitted and considered on merits; (ii) whether addition under section 56(2)(x) could be sustained on the footing that the stamp duty value on the date of registered conveyance exceeded the declared consideration, and whether the provisos permitting adoption of the allotment date applied; (iii) whether the gain on transfer of the property was assessable as short-term capital gain or long-term capital gain.

Issue (i): Whether additional evidence furnished before the appellate authority ought to be treated as admitted and considered on merits.

Analysis: The appellate authority had examined the additional material in remand proceedings and decided the issues on merits. The evidences were relevant to the controversy and were directed to the root of the dispute. In such circumstances, a separate refusal to admit the material was inconsistent with the adjudication already undertaken.

Conclusion: The additional evidence was held to be admissible and the objection to its admission failed.

Issue (ii): Whether addition under section 56(2)(x) could be sustained on the footing that the stamp duty value on the date of registered conveyance exceeded the declared consideration, and whether the provisos permitting adoption of the allotment date applied.

Analysis: The property was allotted earlier, part consideration was shown to have moved through banking channels, and the provisos to section 56(2)(x)(b)(B) were held to require substantial compliance. The relationship between the parties was held insufficient, by itself, to discard the allotment evidence. The matter nevertheless required factual verification of the stamp duty value prevailing on the allotment date.

Conclusion: The issue was restored for limited verification of the stamp duty value as on the allotment date, and the addition under section 56(2)(x) was not finally sustained.

Issue (iii): Whether the gain on transfer of the property was assessable as short-term capital gain or long-term capital gain.

Analysis: Once the allotment was accepted as conferring enforceable rights and substantial payment had been made earlier, the period of holding had to be reckoned from the allotment date rather than the date of registration of the conveyance deed. On that basis, the transfer took place after the requisite holding period for a long-term capital asset.

Conclusion: The gain was held to be assessable as long-term capital gain and not short-term capital gain.

Final Conclusion: The assessee obtained relief on the evidentiary and capital-gains issues, while the addition under section 56(2)(x) was sent back only for limited verification of the relevant valuation date.

Ratio Decidendi: Where an allotment confers enforceable rights and consideration is substantially paid through banking channels, the holding period for capital gains is counted from the allotment date, and the valuation mechanism under section 56(2)(x) must be applied with reference to the allotment date where the statutory provisos are satisfied.

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