Registered transfer overrides unproven sale agreement for capital gains; section 50C applies once deeds are executed after commencement.

An unperformed or unproven agreement to sell, even with asserted possession, does not displace a registered transfer for capital gains purposes where the sale deeds are later executed and the transfer is brought on record; on those facts, the transfer is treated as taking effect on registration, not in the earlier years claimed. Where section 50C is already in force by the time of registration, stamp valuation becomes relevant for computing full value of consideration. The assessed status must also follow the registered documents and surrounding material: the gains were treated as belonging to the individual owners rather than the HUF, and the HUF character was not accepted for the disputed properties.

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Issues: (i) whether the transfer of the properties was completed in the earlier years on the basis of agreements to sell and delivery of possession, so as to attract capital gains tax in the later assessment year; (ii) whether section 50C of the Income-tax Act, 1961 applied to the registered transfers made in the financial year relevant to assessment year 2004-05; and (iii) whether the capital gains in respect of the disputed properties were assessable in the hands of the individual assessees or the HUF.

Issue (i): whether the transfer of the properties was completed in the earlier years on the basis of agreements to sell and delivery of possession, so as to attract capital gains tax in the later assessment year.

Analysis: The agreements relied upon by the assessees were examined against the registered sale deeds and the surrounding facts. The record showed that the agreements were not consistently acted upon within the stipulated time, the consideration remained unpaid in part until registration, and the assessees did not establish that the transactions had been treated as transfers in the earlier years for income-tax purposes. The Court also noted that, for capital gains, the transfer became operative when the sale deeds were registered and the transfer was brought to the notice of the Department. On these facts, the plea that the transfers had already been completed in the earlier years under section 2(47)(v) and section 53A was not accepted.

Conclusion: The transfers were held to have taken effect on registration in the relevant assessment year, and not in the earlier years claimed by the assessees.

Issue (ii): whether section 50C of the Income-tax Act, 1961 applied to the registered transfers made in the financial year relevant to assessment year 2004-05.

Analysis: The registered deeds were executed in the financial year 2003-04, after section 50C had come into force. Once the transfer was held to have occurred on registration, the valuation adopted by the stamp authority became relevant for computing the full value of consideration under section 50C. The argument that the earlier agreements took the transactions outside section 50C was rejected because the earlier agreements were not accepted as completed transfers for tax purposes.

Conclusion: Section 50C was held applicable to the transfers and the stamp valuation was taken into account for capital gains computation.

Issue (iii): whether the capital gains in respect of the disputed properties were assessable in the hands of the individual assessees or the HUF.

Analysis: The registered documents and the surrounding material showed the properties as having been dealt with by the individual owners, and there was no satisfactory basis to sustain the HUF status for the disputed gains. The appellate finding that some gains belonged to the HUF was not accepted in the revenue's appeal. The individual capacity of the assessees was treated as the correct status for the relevant properties.

Conclusion: The capital gains were held assessable in the hands of the individual assessees and not in the HUF, to the extent the revenue's appeal succeeded.

Final Conclusion: The reopening challenges were not pursued, the assessee-side challenges on transfer timing and section 50C failed, the charitable trust's separate claim under section 11(1A) also failed, and the revenue succeeded only in part on the status of assessability.

Ratio Decidendi: For capital gains purposes, an unperformed or unproven agreement to sell does not override the effect of a registered transfer, and where the transfer is held to occur on registration after the coming into force of section 50C, the stamp valuation is the relevant consideration for computation.

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