Flat sold 10 days after registration: How an allotment letter helped an NRI claim long-term capital gains tax benefits

A flat sold just 10 days after registration may appear to qualify as a short-term capital asset for income tax purposes. However, the date of registration is not necessarily the date on which a buyer acquired the property for calculating capital gains tax. An allotment letter issued years earlier can establish an earlier holding period, provided it conferred enforceable rights over the property.

The Income Tax Appellate Tribunal (ITAT), Surat, addressed this issue in Jagdishkumar Chhotubhai Gandhi v. ITO (International Taxation), Surat, ITA No. 245/SRT/2024, in an order dated 29 September 2026. The tribunal held that the holding period should be counted from the date of the allotment letter rather than the subsequent registration of the flat.

The ruling offers an important lesson for homebuyers who purchase under-construction properties and register them much later. The date on the sale deed may not, by itself, settle whether gains from a subsequent sale qualify as long-term capital gains (LTCG).

Why the tax department treated the gain as short-term

According to the tribunal order, the taxpayer, a non-resident Indian (NRI), had purchased an under-construction flat in Annora, Rodas Enclave, Hiranandani Estate, Thane, from Roma Builders Pvt. Ltd.

The allotment letter was issued on 8 January 2011 for a consideration of ₹1.43 crore, excluding service tax, value-added tax and other expenses. The taxpayer's total cost, including these expenses, was ₹1.57 crore.

The conveyance deed was executed and registered on 30 September 2016. The taxpayer then sold the property on 10 October 2016 for ₹2.78 crore, just 10 days after registration.