# ITAT: NRI's Thane Flat Held From Allotment, Not Registry By Saurabh Garg, founder·7 min read·Published 2026-10-04 **Short answer:** On 29 September 2026 the Income Tax Appellate Tribunal at Surat held that an NRI who sold a Thane flat ten days after its conveyance was registered had held it from the builder's allotment letter of 8 January 2011, not from the registration of 30 September 2016. The gain was long-term, so indexation and the Section 54 deduction were restored. The tribunal also held that the allotment letter counts as the agreement for the stamp-value rule in Section 56(2)(vii)(b) and sent that issue back to the tax officer. # An NRI Sold His Thane Flat Ten Days After Registration. The Tax Tribunal Said He Had Held It Since 2011. **An NRI booked an under-construction flat in Hiranandani Estate, Thane, and got his allotment letter on 8 January 2011. The conveyance was registered on 30 September 2016, and he sold the flat on 10 October 2016. The tax officer counted ten days of holding and taxed Rs 68.12 lakh as a short-term gain. On 29 September 2026 the Income Tax Appellate Tribunal at Surat counted from the allotment letter instead. The gain was long-term.** ## The case The order is in ITA No. 245/SRT/2024, *Jagdishkumar Chhotubhai Gandhi v. ITO (International Taxation), Surat*, for assessment year 2017-18. The bench was B.M. Biyani, Accountant Member, who wrote the order, and Paresh M. Joshi, Judicial Member. The hearing was on 23 July 2026 and the order was pronounced on 29 September 2026. It runs to 24 pages. The order records that "the assessee-individual was a NRI" when he filed his return for 2017-18 (paragraph 2(i)). His address in the cause title is care of a business advisory firm in Andheri East, Mumbai. The order does not say which country he lived in. ## The facts As the order records them (paragraphs 2 and 6 to 8): - He returned a total income of Rs 14,26,950 for 2017-18. The tax officer accepted it in a scrutiny assessment of 20 December 2019. - On 7 March 2022 the CIT (IT and TP), Ahmedabad set that assessment aside under Section 263 and ordered a fresh one. The Dispute Resolution Panel, Mumbai rejected his objections on 20 December 2023. The final assessment of 12 January 2024 put his income at Rs 1,28,18,087. - The flat was No. 2004 in Annora, Building No. 3, Rodas Enclave, Hiranandani Estate, Ghodbunder Road, Thane. M/s Roma Builders Pvt. Ltd. allotted it to him by a letter of 8 January 2011 for Rs 1,43,20,000. - He paid Rs 27,95,298 and Rs 1,00,000 through banks on 28 September 2010 and 4 May 2010, before the allotment letter. Further payments ran from 10 January 2012 to 1 July 2013. The last payments, Rs 3,00,000 and Rs 3,88,942 plus charges, came between 14 September and 4 October 2016. - The conveyance was executed and registered on 30 September 2016. He sold the flat to a buyer on 10 October 2016 for Rs 2,78,00,000. - He counted his holding from the allotment letter, claimed indexed cost of Rs 2,20,71,117 and a Section 54 deduction of Rs 57,28,883, and offered a long-term gain of nil. The tax officer counted from registration, ten days in all. That made the gain short-term, removed indexation and the Section 54 deduction, and produced a short-term gain of Rs 68,12,137 (paragraph 6). He added a second sum of Rs 45,79,000 under Section 56(2)(vii)(b), because the stamp value of the purchase, Rs 1,88,99,000, was above the Rs 1,43,20,000 price (paragraph 21). ## What each side argued The NRI's counsel relied on CBDT Circulars No. 471 of 15 October 1986 and No. 672 of 16 December 1993, which treat an allottee as getting title on the allotment letter, and on rulings including the Bombay High Court in *PCIT v. Vembu Vaidyanathan* (2019) 413 ITR 248, where the Supreme Court dismissed the Revenue's special leave petition (paragraph 10). The Revenue said the allotment letter was not a registered document and conveyed no right, and that the circulars cover flats allotted by the Delhi Development Authority, not a private builder (paragraphs 12 and 14). The NRI's reply was that every precedent cited involved private builders, and that Circular No. 672 extends Circular No. 471 to co-operative societies and other institutions (paragraphs 13 and 15). ## What the tribunal held - **The test is "held", not "owned".** Section 2(42A), as quoted in the order, made an asset short-term if "held by an assessee for not more than thirty-six months immediately preceding the date of its transfer". The courts have held, for flats under builders' allotment schemes, that the date of allotment fixes the holding period even where conveyance or registration comes later (paragraphs 17 and 18). - **Long-term, with the deductions.** The holding period runs from 8 January 2011, "being the date of allotment, and not from 30.09.2016, being the date of registration of the conveyance-deed". The flat was a long-term capital asset, and the tax officer was directed to allow indexation and the Section 54 deduction "in accordance with law" (paragraph 19). - **The allotment letter is the agreement.** Following its own earlier ruling in *ACIT v. M/s Dianco*, the tribunal held that the allotment letter "constitutes an 'Agreement'" for the provisos to Section 56(2)(vii)(b). The pre-allotment payments went through banks, so the stamp value as on 8 January 2011 applies, not the value on registration. The Rs 45,79,000 addition could not stand, and the tax officer must work out the 2011 stamp value and recompute (paragraph 27). The NRI did not press his challenges to the validity and timing of the assessment (paragraph 4). The appeal was allowed in part (paragraph 28). ## What it means for an NRI owner An NRI who books an off-plan flat can wait years for the conveyance. In this case the gap was more than five years. This order says that, for the tax charge, the clock started at the allotment letter. The facts that carried the case are on the record. The builder's allotment letter fixed the price, payments went through banks, and the builder confirmed the payments in a letter of 24 October 2016 (paragraphs 6 and 8). A buyer who cannot show those documents is in a weaker position. Three limits. This is a tribunal order on one assessment, and it is open to appeal. It applies the law as it stood for a sale in October 2016, assessment year 2017-18, when the line was 36 months. The holding period and indexation rules have changed since, so a sale today is taxed under different rules; our [capital gains guide](/guides/capital-gains-tax-nri-property) sets out the current position. And the Section 56 point went back to the tax officer, so the final figure is not yet known. The buyer's TDS on an NRI sale runs on the price, not the gain; our guide on [TDS on sale of property by an NRI](/guides/tds-on-sale-of-property-by-nri) covers it, and our [sale guide for owners in the USA](/guides/sell-property-in-india-from-usa) covers the steps. The [cost inflation index for 2026-27](/guides/nri-cost-inflation-index-384-fy-2026-27-jul-2026) is in our news archive. ## FAQ **What did ITAT Surat decide on 29 September 2026?** It held that an NRI held a Thane flat from the builder's allotment letter of 8 January 2011, not from registration on 30 September 2016, so his gain on the sale of 10 October 2016 was long-term. **Was the taxpayer an NRI?** Yes. The order records that "the assessee-individual was a NRI" when he filed his return for 2017-18, and he was assessed by the International Taxation wing at Surat. It does not name his country of residence. **Does an allotment letter count as the agreement for the stamp-value rule?** In this order, yes. The tribunal held that the allotment letter is an "Agreement" under the provisos to Section 56(2)(vii)(b), because part of the price was paid through banks before it, and sent the stamp value as on 8 January 2011 back to the tax officer. **Why did the tax officer treat the gain as short-term?** He counted the holding from registration of the conveyance on 30 September 2016 to the sale on 10 October 2016, which came to ten days. That removed indexation and the Section 54 deduction and gave a short-term gain of Rs 68,12,137. **Do the CBDT circulars on allotment apply only to DDA flats?** The Revenue argued so. The NRI's counsel replied that Circular No. 672 of 1993 extends Circular No. 471 to co-operative societies and other institutions, and the tribunal followed court rulings on flats allotted by builders. *66 MG Road newsdesk* ## Sources - *Jagdishkumar Chhotubhai Gandhi v. ITO (International Taxation), Surat*, ITA No. 245/SRT/2024, AY 2017-18, Income Tax Appellate Tribunal, Surat Bench, B.M. Biyani (AM) and Paresh M. Joshi (JM), heard 23 July 2026, pronounced 29 September 2026, 24 pages. Full text, carrying the ITAT page header and "Page x of 24" footer on every page, read on 4 October 2026: [https://indiankanoon.org/doc/58926589/](https://indiankanoon.org/doc/58926589/) - Paragraph 9 of the order says "the Ld. AR has wrongly interpreted" the holding as ten days; in context the reference is to the tax officer's view, which is how paragraph 11 puts it. Paragraph 10 quotes the Mumbai tribunal's ruling in *Anita D. Kanjani*, whose internal paragraph numbers are not the order's own. About the author: [Saurabh Garg](/about) Saurabh Garg has run the venture studio C4E for twenty years. He founded 66 MG Road in 2026, reads every proposal request, and replies within one business day. [saurabhgarg.com](https://saurabhgarg.com) · [@saurabh](https://x.com/saurabh) · [LinkedIn](https://www.linkedin.com/in/saurabhgarg) Information on this page is as on 2026-10-04. Rules, rates, deadlines and government portals change without notice, so verify against the official source before you act. This page is for information only. It is not tax or legal advice, and it is not a substitute for a qualified adviser who knows your position. ## Related guides - [Capital Gains Tax for NRIs on Property: The Post-2024 Regime](/guides/capital-gains-tax-nri-property) - [TDS on Sale of Property by an NRI: How Much the Buyer Deducts, and the Form 128 Fix](/guides/tds-on-sale-of-property-by-nri) - [Sell Property in India from the USA: The Complete Process](/guides/sell-property-in-india-from-usa) - [The Cost Inflation Index for 2026-27 Is 384. For an NRI Selling Property, It Changes Nothing](/guides/nri-cost-inflation-index-384-fy-2026-27-jul-2026) ## Compare and cost - [The NRI Property Management Companies in India: A Comparison You Can Check](/guides/best-nri-property-management-companies-india) - [What NRI Property Management Costs in India: The Four Models and What Hides in Each](/guides/nri-property-management-cost-india) - [NoBroker NRI Services Review: What the Pages Promise and What They Leave Out](/guides/nobroker-nri-services-review) --- Source: [https://66mgroad.com/guides/nri-flat-holding-period-allotment-date-capital-gains-itat-surat-sep-2026](https://66mgroad.com/guides/nri-flat-holding-period-allotment-date-capital-gains-itat-surat-sep-2026) · 66 MG Road. Full LLM brief: https://66mgroad.com/llms.txt