Registered sale deed does not create capital gains transfer where full payment was a condition precedent to passing title and possession.

For capital gains purposes, registration of a sale deed does not by itself constitute transfer of immovable property if the instrument shows that title and possession were to pass only on full payment of consideration. The controlling test is the parties' intention as gathered from the deed, and registration is only prima facie evidence of an intended transfer. Where full consideration had not been paid and the deed made payment a condition precedent, no effective conveyance arose during the relevant period and no transfer occurred under the capital gains provisions.

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Issues: Whether, for the purposes of capital gains under the Income-tax Act, registered sale deeds effected a transfer of immovable property despite an express stipulation that title and possession would pass only on payment of the full consideration.

Analysis: Transfer of immovable property by sale is not determined by registration alone. The controlling test is the intention of the parties as gathered from the instrument itself. Registration is only prima facie evidence of an intention to transfer, but it does not by itself effect an operative transfer where the deed makes payment of the full consideration and delivery of the deed or possession a condition precedent. In the facts found, the parties intended that the sale would become effective only upon payment of the entire consideration, and the amount had not been fully paid during the relevant previous year. Accordingly, no transfer took place within the meaning of the capital gains provisions.

Conclusion: The transfer under section 2(47) required an effective conveyance to the transferee, and the three sale deeds did not result in a completed transfer during the relevant period. The questions were answered in favour of the assessee and against the Revenue.

Ratio Decidendi: For capital gains purposes, a registered sale deed does not amount to transfer unless the parties intended title to pass immediately and the conveyance became effective in law.

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