Transfer of immovable property completed on handing over possession, so section 54 exemption could not be denied later.

For section 2(47) of the Income-tax Act, transfer of immovable property was treated as complete when possession was handed over in part performance of a contract falling within section 53-A of the Transfer of Property Act, even if registration occurred later. On the facts, receipt of sale consideration through banking channels, the agreement to sell, and supporting buyer financial statements showed that the transaction had effectively progressed to completion. Accordingly, exemption under section 54 could not be denied merely because the registered sale deed was executed later, and the assessee was held entitled to the exemption.

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Issues: Whether the sale transaction constituted a transfer for capital gains purposes and whether exemption under section 54 was allowable.

Analysis: The assessee had received the sale consideration through banking channels, the agreement to sell contemplated delivery of vacant physical possession on receipt of the balance amount, and the buyer's financial statements supported the advance and pending registration of the property. The Tribunal held that for section 2(47) of the Income-tax Act, 1961, transfer of immovable property is complete when possession is handed over in part performance of a contract of the nature referred to in section 53-A of the Transfer of Property Act. On those facts, the denial of exemption under section 54 on the ground that possession had not been delivered and that the sale was incomplete was not justified.

Conclusion: The assessee was held entitled to exemption under section 54, and the transaction was treated as a completed transfer for capital gains purposes.

Final Conclusion: The addition made by the Assessing Officer was deleted and the appeal was allowed.

Ratio Decidendi: For section 2(47) of the Income-tax Act, 1961, transfer of immovable property is complete when possession is handed over in performance of a contract falling within section 53-A of the Transfer of Property Act, and exemption under section 54 cannot be denied merely because the registered sale deed is executed later.

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