Part performance and possession can trigger transfer under tax law, while later nominee conveyance does not postpone it.

Part performance under section 53A, coupled with an agreement for sale, receipt of substantial consideration, handing over of possession, and execution of a power of attorney, brought the immovable property transaction within section 2(47)(v) of the Income-tax Act. The transfer was therefore treated as having occurred in the earlier assessment year, and a later conveyance to the purchaser's nominee did not defer that date. Because section 50C was introduced only from 01.04.2003, its deeming valuation rule did not apply to this earlier transfer. The assessee also qualified for exemption under section 54F because the sale proceeds were invested in a residential flat within the prescribed period and no disqualifying additional residential house was shown.

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Issues: (i) whether the transfer of the immovable property took place in assessment year 2001-02 under section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882; (ii) whether section 50C of the Income-tax Act, 1961 applied to the transfer; (iii) whether the assessee was entitled to exemption under section 54F of the Income-tax Act, 1961.

Issue (i): whether the transfer of the immovable property took place in assessment year 2001-02 under section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882.

Analysis: The agreement for sale was executed, substantial consideration was received, possession was handed over, and a power of attorney was executed in favour of the purchaser during the earlier year. These facts satisfied the conditions of part performance under section 53A of the Transfer of Property Act, 1882 and brought the transaction within the inclusive definition of transfer under section 2(47)(v) of the Income-tax Act, 1961. The later conveyance in favour of the purchaser's nominee did not alter the date of transfer, as the assessee had already parted with possession and rights in the property earlier.

Conclusion: The transfer took place in assessment year 2001-02 and not in assessment year 2005-06.

Issue (ii): whether section 50C of the Income-tax Act, 1961 applied to the transfer.

Analysis: Section 50C was introduced with effect from 01.04.2003. Since the transfer was held to have occurred on 28.12.2000, the deeming provision for adoption of stamp valuation as full value of consideration could not govern the computation of capital gains in this case.

Conclusion: Section 50C did not apply to the transaction.

Issue (iii): whether the assessee was entitled to exemption under section 54F of the Income-tax Act, 1961.

Analysis: The assessee invested the sale consideration in a residential flat within the statutory period and the record did not show ownership of any disqualifying additional residential house on the relevant date. The conditions for exemption under section 54F were therefore satisfied.

Conclusion: The assessee was entitled to exemption under section 54F.

Final Conclusion: The capital gain was held taxable, if at all, in the earlier assessment year corresponding to the date of part performance, the valuation under section 50C was excluded, and the investment in the residential flat qualified for exemption.

Ratio Decidendi: Where an assessee, under a written agreement for consideration, hands over possession of immovable property in part performance of the contract, the transaction constitutes transfer under section 2(47)(v) of the Income-tax Act, 1961; a later conveyance to a nominee does not postpone that transfer, and a subsequently introduced deeming provision cannot be applied retrospectively to such earlier transfer.

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