Capital gains transfer timing and 1981 fair market value valuation are determined by effective completion and reliable evidence.

For capital gains purposes, the note explains that transfer is treated as complete when the sale deed is executed, possession is delivered, and consideration is substantially received; later registration does not by itself defer taxability to a later year. It also notes that a mere agreement to sell does not create title, while the income-tax position depends on the transaction having been effectively carried out. On valuation, the note states that where the assessee's 01.04.1981 fair market value claim is unsupported by a reliable report, the authority may reject it and adopt a reasonable estimate from the record.

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Issues: (i) Whether the long-term capital gain arose in Assessment Year 2009-10 or in the earlier year when the sale deed was executed, possession was delivered, and consideration was substantially received. (ii) Whether the fair market value of the property as on 01.04.1981 was to be adopted at the amount claimed by the assessee or at the restricted value determined by the appellate authority.

Issue (i): Whether the long-term capital gain arose in Assessment Year 2009-10 or in the earlier year when the sale deed was executed, possession was delivered, and consideration was substantially received.

Analysis: The timing of transfer for capital gains purposes was examined with reference to the statutory concept of transfer under the Income-tax Act, the requirement of conveyance under the Transfer of Property Act, and the effect of registration under the Registration Act. The reasoning accepted that a mere agreement to sell does not by itself create title, but where the transaction had already been acted upon by execution of the sale deed, delivery of possession, and receipt of consideration, the transfer had occurred on that date for income-tax purposes. The later presentation for registration did not postpone taxability to the subsequent assessment year. The earlier precedent on similar facts was treated as applicable, and the reliance on Suraj Lamp was held not to displace the income-tax position on these facts.

Conclusion: The long-term capital gain was held not taxable in Assessment Year 2009-10 on this transaction, and the assessee succeeded on this issue.

Issue (ii): Whether the fair market value of the property as on 01.04.1981 was to be adopted at the amount claimed by the assessee or at the restricted value determined by the appellate authority.

Analysis: The valuation dispute was considered under the provision permitting the assessee to adopt the cost of acquisition or fair market value as on 01.04.1981 where the asset had come to the assessee through a qualifying mode. The appellate authority found deficiencies in the valuer's report, including the short span of inspection and the remoteness of comparable instances, and therefore rejected the claimed valuation as excessive. At the same time, the authority also found that the Assessing Officer's figure was not the proper basis and adopted an intermediate fair market value estimate supported by the surrounding facts.

Conclusion: The restricted fair market value of Rs. 8,00,000 as on 01.04.1981 was upheld, and this issue was decided partly against the assessee and partly in his favour.

Final Conclusion: The capital gain was held not assessable in the year under appeal, while the valuation aspect was sustained only to the limited extent fixed by the appellate authority, resulting in partial relief to the assessee and dismissal of the Revenue's challenge.

Ratio Decidendi: For capital gains purposes, transfer occurs when the transaction is effectively completed by execution of the conveyancing document and delivery of possession, and where a valuation report is found unreliable the fair market value under the relevant provision may be determined on a reasonable estimate from the record.

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