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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the transfer of the old residential flat was completed on 30-04-2004 so as to bring the purchase of the new flat within the period prescribed for exemption under section 54 of the Income-tax Act, 1961.
Analysis: The agreement dated 23-04-2004 and the deed of transfer dated 30-04-2004 showed receipt of full consideration, handing over of vacant possession, and delivery of the share certificate, society documents, NOC, original agreement, and other papers necessary to effectuate the transfer. The later registration on 26-08-2004 did not alter the substantive position. For purposes of section 2(47) of the Income-tax Act, 1961, a transaction falling within the nature of part performance and involving extinguishment of the transferor's rights constituted a transfer, and the absence of registration of the later instrument did not prevent recognition of the earlier completed transaction. The reasoning was supported by the legislative purpose of clause (v) of section 2(47) and the principle that, for income-tax purposes, ground realities and effective transfer of rights must prevail over mere formal conveyance.
Conclusion: The old flat stood transferred on 30-04-2004, the new flat had been acquired within the requisite period, and the assessee was entitled to deduction under section 54 of the Income-tax Act, 1961.
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