Capital gains transfer date and section 50C valuation variance were examined, with marginal difference insufficient to enhance consideration.

For capital gains computation, transfer may arise on handing over possession in part performance of an agreement under section 2(47)(v) read with section 53A, rather than only on execution of the registered sale deed. The document also notes that section 50C should not be applied mechanically where the difference between declared consideration and the Valuation Officer's estimate is marginal and within normal valuation variance. On the facts, inconsistent recitals on the date of possession created doubt as to the precise transfer date, and the addition made by the Assessing Officer was found unsustainable; the CIT(A)'s deletion was upheld.

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Issues: Whether capital gains on the transfer of immovable property were to be computed by adopting the stamp duty guideline value on the date of the sale deed, and whether section 50C of the Income-tax Act, 1961 could be invoked when the difference between the sale consideration and the valuation determined by the Valuation Officer was less than 10%.

Analysis: Transfer for income-tax purposes may occur not only on execution of the registered conveyance, but also when possession is handed over in part performance of an agreement within the meaning of section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882. On the facts, the agreement and sale deed contained inconsistent recitals on the date of delivery of possession, creating doubt as to the precise date of transfer. Independently, section 50C operates where the declared consideration is lower than the stamp duty value, but the valuation exercise showed only a marginal difference of less than 10% between the declared consideration and the value estimated by the Valuation Officer. Such a small variation was treated as a normal valuation difference and not a basis for enhancing the consideration.

Conclusion: The addition made by the Assessing Officer was not sustainable, and the deletion made by the CIT(A) was upheld in favour of the assessee.

Final Conclusion: The revenue's challenge to the computation of capital gains failed, and the assessed addition was not restored.

Ratio Decidendi: For capital gains computation, a transfer may arise on handing over possession in part performance of an agreement, but section 50C should not be mechanically applied where the valuation difference is only marginal and within normal estimation variance.

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