Capital gains transfer timing turns on possession and agreement, with earlier year taxation upheld under deemed transfer rules.

Transfer of a capital asset was treated as having occurred in the earlier assessment year because the assessee had executed a sale agreement, received consideration, and handed over possession, bringing the transaction within section 2(47)(v) of the Income-tax Act read with section 53A of the Transfer of Property Act. The Court accepted the factual finding of the lower authorities and found no error of law in that conclusion, while holding that the Revenue's proposed questions did not raise any substantial question of law. Capital gains were therefore not taxable in the later assessment year after registration of the sale deed.

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Issues: Whether the transfer of the property and the consequent liability to capital gains tax arose in the assessment year 2009-10 on the basis of the unregistered sale agreement and possession, or only in the assessment year 2010-11 on registration of the sale deed.

Analysis: The finding of the first appellate authority and the Tribunal was that the assessee had entered into a sale agreement, received consideration, and put the purchaser in possession in the earlier financial year, attracting the deeming provisions relating to transfer of a capital asset under section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882 and the statutory registration requirement referred to in the controversy. The Tribunal's conclusion rested on appreciation of the recorded facts, and the Court found no error of law in that factual determination. The Court also held that the Revenue's proposed questions did not give rise to any substantial question of law.

Conclusion: The transfer was held to have taken place in the earlier assessment year, and the capital gain was not taxable in assessment year 2010-11; the Revenue's challenge failed.

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