Capital gain computation: Holding period to be reckoned from the date of allotment of flat or from the date of application for flat?
The Mumbai Bench of ITAT in the case of DCIT v. Narendra Gehlaut, [ITA No. 1101/MUM/2022]has held that the computation of the holding period for capital gains should start from the date of allotment of a flat, not from the date of the application for the flat.
In this case the assessee declared a long-term capital gain (LTCG) upon transferring and assigning provisional reservation rights in a flat. The Assessing Officer disagreed with the taxpayer’s contention of LTCG and treated it as a short-term capital gain (STCG).
The dispute centered on the date of allotment of the flat, which was mentioned in a Memorandum of Understanding (MOU) dated December 14, 2016. The MOU stated that the flat had been allotted to the taxpayer on October 31, 2015. The ITAT upheld this date of allotment, ruling that since the holding period from October 31, 2015, to December 14, 2016, was less than 36 months, the gain from transferring the rights in the flat should be categorized as a STCG.
This decision overturned the assessee’s claim of LTCG and supported the Assessing Officer’s order.
The case detail is as under: