Capital Gain Indexation Begins From Date of Agreement, Not Possession
Recently, in a significant ruling, the court has held that Agreement to Sale = Right to Hold: Capital Gains Indexation admissible.
It has held that capital Gain Indexation Begins From Date of Agreement, Not Possession. It offered a relief for Property Sellers.
Let us have a Short Overview of the case:
Mumbai Tribunal in Braj Kishore Singh v. ITO ITA No. 1011/MUM/2025 | AY: 2015–16 | Decided: 23 June 2025
Key Facts:
The assessee, a non-resident individual, purchased a flat through an agreement dated 16.11.2007, with possession granted only on 16.12.2010.
Property sold in 2015; indexation claimed from FY 2007–08.
AO denied this, granting indexation only from FY 2010–11 (possession year)
Legal Issue:
Does indexation under Explanation (iii) to Section 48 begin from the date of possession or from the date of acquisition/payment as per the agreement to sale?
Tribunal’s Reasoning:
Precedents held that: “Right to hold a capital asset is conferred from the date of agreement and substantial payment – not merely from physical possession.”
Recognized that 64.85% of total cost was paid by FY 2007–08, establishing the holding period effectively from that date.
Agreement clearly identified the flat (Flat No. B-707), thus confirming an actionable right from 2007.
Holding:
Indexation benefit allowed from FY 2007–08, the year of agreement and first payment.
The copy of the order is as under:
