Int paid during construction period is treated as cost

[Asked by Guest]

Dear Sir

Mr X has booked a flat in Jaipur ( Raj. )  with a private builder in June 2007  and  to pay the cost of flat  he has taken a housing loan . The possession of the 

said flat was taken in Dec 2009. Now Mr X sold the flat in August 2010 and has purhcases  another flat in Sept 2010  .

1. Whether he can take benefit of  long term capital gain as the period of  date of booking and date of sale is more 36 months or only date of possession will count for the purpose of Long term capital gain. Please give your opinion looking to the recent judgement of Pun and Har court and also of  Bombay HC.

2. In case it is treated as short term capital gain,   whether Mr X can treat the interest paid as cost of acquisition of the assets. Please give  the opinion on the basis of some  case laws. 

AI Summary

Date of agreement determines long term capital gains treatment; gain measured from agreement date, not possession date.
The date of the agreement under which the assessee is put in possession is the relevant date for computing long term capital gain; Madras High Court authority (Madathil Brothers) and several High Court decisions support computing capital gain from the agreement date rather than from physical possession; the reply does not provide a separate determination on inclusion of interest paid during construction in cost of acquisition.