R.M. Mehta, Vice President - (1.) THE following grounds are raised in this appeal directed against the order passed by the CIT(A) ; "1. That on facts and in circumstances of the case, the declared loss of Rs. 16,695 under the head long-term capital gain arising on the sale of rights in DDA flat, ought to have been accepted and allowed as deduction.
(2.) That the authorities below, on facts, in law and on the grounds taken and basis adopted, went wrong to hold that the sale of rights in the DDA flat resulted in income under the head short-term capital gain as against income under the head long-term capital gain as claimed. The adverse finding, based on the erroneous view of the factual and legal position, deserves to be quashed. That the determination of income under the head short-term capital gain at Rs. 49,235 deserves to be quashed and deleted and the declared loss of Rs. 16,695 under the head long-term capital gain deserves to be accepted and allowed as deduction." 2. We have heard both the parties and have also perused the orders passed by the tax authorities. The only issue to be decided in this appeal is whether the gain, which arose to the assessee during the assessment year under consideration on the sale of the right to acquire a flat from DDA was long-term as contended by the assessee or the view taken by the tax authorities to treat the same as a short-term capital gain was the correct one on facts and in law. 3. The brief facts are that the assessee got himself registered in 1981 under the IVth self-financing scheme by depositing a sum of Rs. 15,000 with the DDA. By virtue of a draw held on 13th Nov., 1990, the assessee was declared successful and intimation was sent to him by the DDA vide communication dt. 26th Nov., 1990--30th Nov., 1990. A copy of the allotment letter is placed at p. 15 of the assessee's paper book and this not only indicates the locality in which the flat has been allotted, the category thereof as also the estimated cost and the schedule of payments.
(3.) DURING the year under consideration, the assessee had disposed off/sold the right to acquire the said flat to one Shri R.P. Gupta for a consideration of Rs. 2,75,000 and treating the same as long-term capital gain, it worked out a net capital loss of Rs. 16,695. The AO, however, treated the capital gain to be a short-term one as according to him the registration in 1981 with the DDA by paying Rs. 15,000 did not give the assessee a right to allotment since such a right crystallized only when there was an allotment by a draw. According to the AO, the registration did not create a right but the same came into existence when the DDA confirmed that the assessee became an allottee by virtue of a draw.;