Capital gains transfer test: possession and substantial consideration fixed the tax year, not later registration.

For capital gains purposes, transfer was treated as occurring when the agreement to sell was executed on 31.03.2008, consideration was substantially received, and possession was handed over, even though registration followed later. The Income-tax Act concept of transfer under section 2(47), read with section 45, was applied separately from the strict conveyancing rule under the Transfer of Property Act. The earlier capital gains authorities were followed, and the later GPA line of decisions was held inapplicable on these facts because the transaction had already been acted upon and completed between the parties. Accordingly, the gain was not taxable in assessment year 2009-10.

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Issues: Whether the long-term capital gain arising from the land transaction was taxable in assessment year 2009-10 or assessment year 2008-09, having regard to the date of execution, possession and registration of the sale deed.

Analysis: The dispute turned on the meaning of transfer for capital gains purposes under section 2(47) of the Income-tax Act, 1961 read with section 45. The documentary record showed that the agreement to sell was executed on 31.03.2008, consideration was substantially received and possession was handed over on that date, while registration followed later. The transfer concept in the Income-tax Act was treated as distinct from the strict conveyancing rule under the Transfer of Property Act, and the earlier binding authorities on capital gains were applied. The later decision concerning GPA and similar transactions was held not to govern the facts where the transaction had already been acted upon and completed between the parties before the later pronouncement.

Conclusion: The transfer was held to have taken place on 31.03.2008, so the capital gain did not fall for taxation in assessment year 2009-10; the assessee succeeded on the core issue and the Revenue's appeal failed.

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