Capital gains on agreement to sell flats were not taxable where possession was never delivered and no transfer occurred.

Capital gains from an agreement to sell flats were not taxable in the relevant assessment year because no transfer under section 2(47) had occurred. The flats were still under construction and possession had not been delivered, so the statutory ingredients of section 2(47)(i) and section 2(47)(v) were not satisfied. Section 53A of the Transfer of Property Act was also inapplicable because the transferee had not obtained possession or complete control over the property. The HC treated the Tribunal's conclusions as factual and found no perversity or substantial question of law.

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Issues: Whether capital gains arising from the agreement to sell 18 flats were taxable in the assessment year in question, and whether a transfer had occurred within the meaning of section 2(47) of the Income-tax Act, 1961 when possession had not been delivered.

Analysis: The agreement was executed, but the flats were yet to be constructed and possession had not been handed over to the transferee. On these facts, the ingredients of transfer under section 2(47)(i) and clause (v) were not satisfied. In particular, section 53A of the Transfer of Property Act, 1882 was inapplicable because possession was absent, and the assessee had not parted with complete control over the property. The Tribunal's findings were factual, based on the documents and surrounding circumstances, and no perversity or misreading of evidence was shown so as to give rise to a substantial question of law under section 260A of the Income-tax Act, 1961.

Conclusion: The capital gains could not be brought to tax in the relevant assessment year, and the appeals failed.

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