Capital gains transfer follows possession and beneficial rights, not mere registration, where full consideration is a condition precedent.

For capital gains purposes, registration of a conveyance deed does not by itself complete transfer where the sale contract makes vacant possession and enjoyment conditional on receipt of full consideration. The controlling test is when possession and beneficial rights actually pass, not merely when the deed is executed and registered. Here, the land was actually handed over only on 4 February 2009, and the purchaser then became entitled to enjoy and mutate the property, so the transfer was treated as occurring in assessment year 2009-10. The addition in assessment year 2008-09 was therefore unsustainable.

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Issues: Whether the transfer of agricultural land for the purpose of capital gains took place in assessment year 2008-09 on execution of the registered conveyance deed, or in assessment year 2009-10 when vacant and peaceful possession was actually handed over and the final consideration was received.

Analysis: The consideration was agreed to be paid in instalments through post-dated cheques, and the sale documents contemplated delivery of vacant and peaceful possession only after receipt of the final payment. The record showed that possession was actually handed over on 4 February 2009, and the purchaser became entitled to enjoy and mutate the land from that date. In these circumstances, the execution and registration of the conveyance deed on 19 March 2008 did not by itself complete the transfer for capital gains purposes. The reasoning was supported by the principle that registration is only prima facie evidence of transfer and that the true test is the intention of the parties and the passing of possession and rights.

Conclusion: The transfer of the land was not taxable in assessment year 2008-09; the capital gain was rightly offered in assessment year 2009-10, and the addition made in the earlier year was unsustainable.

Ratio Decidendi: For capital gains, where the sale deed is registered but the contract makes delivery of possession and enjoyment conditional upon receipt of the full consideration, the transfer is taken to occur only when possession and beneficial rights actually pass.

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