B.M. Kothari, A.M. - Revenue has raised the following grounds in its appeal :

"1. The learned CIT(A) has erred in law and on facts in holding that an amount of Rs. 16,675 is long-term capital gain arising on account of sale of property.

2. The CIT(A) ought to have held that as the assessee never claimed the amount of Rs. 16,675 as long-term capital as also in the statement of income the assessee has offered the amount of Rs. 16,175 as "Profit on sale of Flat" the assessee has no right to file appeal.

2. The learned Departmental Representative contended that the assessee did not raise any claim before the Assessing Authority that the capital gain derived by the assessee on the sale of flat is long-term capital gain. In view of the judgment of Hon’ble Supreme Court in Addl. CIT v. Gurjargravures P. Ltd. [1978] CTR (SC) 1 : [1978] 111 ITR 1 (SC), he submitted that no such claim can be raised for the first time before the CIT(A). The CIT(A) has, therefore, erred in entertaining the said ground. As regards merits, he submitted that the assessee had booked the flat in November, 1978 by paying a deposit of Rs. 1,000 only. When all the flats were completely booked by the builders, the prospective buyers formed a housing cooperative society and got their society registered in March, 1979 and took up the administration of the society by entrusting the work of construction to M/s Karuna Associates, the builders. Thereafter the construction of flats was commenced which was completed in the month of January, 1981. Possession of the flat was handed over in February, 1981. The assessee transferred his rights in the said flat on 1st Nov., 1983. What was sold by the assessee was the flat and not the right which was acquired in November, 1978. The provisions of s. 2(42A) defines short-term capital assets as "a capital asset held by an assessee for not more than 36 months immediately preceding the date of its transfer". In the present case, the possession of the flat was taken in February, 1981 and the same was transferred in November, 1983, i.e., within the period of three years. Hence it was a short-term capital gain. The CIT(A) has wrongly held that it should be treated as a long-term capital gain. He further submitted that such a view was taken by the CIT(A) without providing any opportunity to the ITO. He, therefore, urged that the order of the CIT(A) may be set aside and that of the ITO restored.

3. The learned counsel for the assessee contended that the assessee entered into an agreement for purchase of the said flat vide agreement dt. 23rd March, 1979. Copy of the agreement was submitted in the paper book. He submitted that the assessee had transferred the entire rights in the said flat which originally was acquired in the month of November, 1978. Since the right to acquire the said flat was acquired in the month of November, 1978 which was followed by an agreement executed in March, 1979, the gain derived from the sale of such flat is a long-term capital gain. As regards the submission of the Departmental Representative that no such claim was made before the ITO, the learned counsel invited our attention towards the cross-objection submitted by the assessee. In the return, the assessee disclosed the said income as under :

"Profit on transfer of flat (details will be submitted at the time of hearing)

Rs. 16,675"

The ITO asked for necessary details vide letter dt. 3rd March, 1987. The assessee submitted reply vide letter dt. 9th March, 1987 in which all necessary details were furnished indicating that the profit was a long-term capital gain. He also relied on the decision of Hon’ble Supreme Court in the case of Jute Corpn. of India Ltd. v. CIT & Ors. [1990] 88 CTR (SC) 66 in which, according to the learned counsel, the earlier judgment reported in 1978 CTR (SC) 1 : (1978) 111 ITR 1 (SC) was impliedly overruled. The learned counsel also relied on the decision in the case of Surjeet Singh v. ITO (1979) 3 TLR (vi) 225 (Chd.)(Trib.). He supp