Part performance and substantial consideration completed the transfer earlier; later receipts were not taxable under section 45(5)(b).

Possession retained under a sale agreement, together with substantial part-payment of consideration, completed the transfer under section 2(47)(v) read with section 53A of the Transfer of Property Act; the capital gains therefore arose in the earlier year relevant to assessment year 1993-94. The later assessment years 2000-01 and 2002-03 could not be used to shift the tax incidence merely because further amounts were received later. Section 45(5)(b) did not apply, as it is confined to enhanced consideration awarded by a court, tribunal or other authority in compulsory acquisition or a similar statutory context.

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Issues: Whether capital gains arising from the property transaction were taxable in the assessment years 2000-01 and 2002-03, and whether the transfer was complete earlier on the basis of possession and part consideration so as to attract section 2(47)(v) of the Income-tax Act, 1961 and section 53A of the Transfer of Property Act, 1882, while section 45(5)(b) of the Income-tax Act, 1961 was applicable to the later receipt.

Analysis: The property had been put in the possession of the buyer under the earlier lease arrangement, and on the sale agreement dated 27-08-1992 a substantial part of the agreed consideration had already been received. The arrangement fell within the principle of part performance, so the transfer stood completed when possession continued with the buyer in pursuance of the sale agreement and the consideration had substantially passed. On that basis, the transfer could not be shifted to the later assessment years merely because further amounts were received thereafter. The later receipt of Rs. 4.3 crores could not be taxed under section 45(5)(b) because that provision applies only where consideration is enhanced by a court, tribunal or other authority in a compulsory acquisition or similar case, which was not the situation here.

Conclusion: The transfer was held to have occurred in the earlier year relevant to assessment year 1993-94, not in assessment years 2000-01 or 2002-03, and the additions towards capital gains for those later years were unsustainable.

Ratio Decidendi: Where possession is retained in part performance of a sale agreement and substantial consideration has passed, the transfer is complete under section 2(47)(v) read with section 53A; section 45(5)(b) applies only to enhanced consideration awarded by a court, tribunal or other authority in the specified statutory context.

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