Unregistered sale agreement without possession does not trigger deemed transfer or capital gains under section 2(47)(v).

An unregistered agreement for sale did not amount to a transfer under section 2(47)(v) because possession was never handed over, full consideration was not paid, and the agreement was later cancelled with refund of the advance. The requirements of section 53A of the Transfer of Property Act were therefore not satisfied. Applying the principle in Balbir Singh Maini, the unregistered contract had no legal effect for invoking section 53A and could not trigger capital gains. No transfer arose and the capital gains addition was held unsustainable.

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Issues: Whether an unregistered agreement for sale, where possession was not handed over and the agreement was later cancelled with refund of advance, constituted a transfer giving rise to capital gains under section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act.

Analysis: The agreement for sale was not registered. The terms of the agreement showed that possession was to be handed over only on payment of the full sale consideration, which was never paid. The agreement was cancelled before completion and substantial advance already received was refunded. In these circumstances, the requirements of section 53A were not satisfied. The principle laid down by the Supreme Court in Balbir Singh Maini was applied to hold that an unregistered contract has no effect in law for invoking section 53A, and therefore cannot support a transfer under section 2(47)(v).

Conclusion: No transfer took place and no capital gains arose. The addition made by the Assessing Officer was not sustainable.

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