Conditional property transfer agreement without final approval or vested ownership rights does not trigger capital gains transfer treatment.

A conditional agreement for transfer of office premises, pending mandatory approval of the Charity Commissioner and remaining subject to possible cancellation and revised consideration, did not effect a transfer in praesenti. Section 53A of the Transfer of Property Act was inapplicable because the terms were not finally ascertainable with reasonable certainty and no enforceable ownership rights arose from the agreement alone. Section 2(47)(vi) of the Income-tax Act also did not apply because no additional ownership rights had vested before execution of the deed. The premises therefore could not be treated as a long-term capital asset on the basis of the 1992 agreement.

---

---

Issues: Whether the agreement dated 28-1-1992 conferred transfer of the office premises so as to constitute a transfer under section 2(47)(v) or section 2(47)(vi) of the Income-tax Act, 1961 and section 53A of the Transfer of Property Act, 1882, thereby making the asset a long-term capital asset.

Analysis: The agreement was held to be only a proposed scheme subject to mandatory approval of the Charity Commissioner under section 36 of the Bombay Public Trusts Act, 1950, with the consideration remaining subject to enhancement and the arrangement capable of cancellation if approval was not obtained. The assessee's continued occupation was treated as tenancy-related possession, and non-payment of rent during the interim period was linked to the refundable deposit rather than to acquisition of ownership rights. The conditions necessary for part performance under section 53A were found absent because the terms were not finally ascertainable with reasonable certainty and no enforceable transfer of ownership arose on the agreement alone. Section 2(47)(vi) was also held inapplicable because no additional rights as owner had vested in the assessee before execution of the deed of apartment.

Conclusion: The agreement did not amount to a transfer in praesenti, and the capital asset could not be treated as a long-term capital asset on the basis of the 1992 agreement.

Ratio Decidendi: A conditional agreement for transfer of immovable property, pending statutory approval and lacking final and enforceable transfer rights, does not constitute a transfer under section 2(47)(v) or section 2(47)(vi) of the Income-tax Act, 1961.

---