Hi,
I entered into an agreement to sale for an under construction property in June 2008. The builder has completed all the work in May 2010 and handed over the property to me. However a formal possession letter is not issued since the 'occupancy certificate' from the local authorities is pending yet. Hence though utility bills (phone, electricity,..) are paid by me, the corporation taxes are not.
If I wish to do a sale now with immediate handover, will the same be treated as long term capital gain OR short term?
Well, the "capital asset" that you are seeking to transfer are the rights under the agreement to purchase. As the agreement was entered into more than 3 years ago, the capital asset is held for more than 3 years and the gains will be a LTCG. The earnest money and the other payments paid by you is the cost of the asset. This is settled by the judgements in Sterling Investment Corporation Ltd. (1980) 123 ITR 441 (Bom) & several others.