Capital gain

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Ankur Issar (Querist)
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18 February 2012 A person has booked a flat in gurgaon and paid an initial advance to the builder thereby acquiring the right in the property. Thereafter he had paid the installments to the builder for obtaining the possesion of immovable property.But when few installments are still remaining he had assigned all his rights in a property to another person. Give ur opinion as to whether right in a property is the capital asset or not? If yes, then under what circumstances it will be a short term capital gain?
whether period during which a property was merely a right is to be considered for determinin g the nature of capital gains?
What will be the cost of acquisition of assignment of right in the immovable property?
Please give your opion on the basis of relevant sections , case laws , circulars and notifications as soon as possible
thanks in advance

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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19 February 2012 As I understand right to acquire the property, is different from the acquisition of the property. When property is acquired, it means right to acquire the property has been exercised and there after such right becomes a non-existent right.
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In case of capital assets period of holding is calculated from the date of acquisition of the same.
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When we sale a right , which is also a capital asset, the period of holding is calculated from the date of acquiring it to
the date of exercising it.
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In such a case cost of acquisition will be the initial amount paid and the subsequent payments can be considered as cost of improvement.
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In my view, right in the capital asset is generated by the agreement entered into between the prospective buyer and the vendor.
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For treating it as a LTCA, 3 years period has to be reckoned from the date of agreement.
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Hope, experts will discuss this aspect in more detail.
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