No completed transfer for capital gains where possession and full consideration were not proved, so taxation failed.

Long-term capital gains were not taxable where a registered sale deed existed but possession was not effectively transferred and the agreed consideration was not fully received. The surrounding facts showed an ongoing dispute, post-dated cheques that were not honoured, and pending litigation, so the conditions associated with transfer by part performance were not satisfied. On those facts, the transaction did not amount to a completed transfer for capital gains purposes, and no real income arose on a merely notional basis.

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Issues: Whether long-term capital gains were chargeable on the disputed sale of immovable property when possession was not proved to have been handed over and the agreed consideration had not been fully received.

Analysis: The parties had executed a registered sale deed, but the surrounding facts showed continuing dispute over possession and consideration. The purchasers had issued post-dated cheques, payment was stopped, and litigation remained pending. In these circumstances, the conditions associated with transfer by part performance were not satisfied. On the facts, the transaction had not culminated in a completed transfer for the purpose of capital gains. The principle applied was that where the transaction does not materialize and no real income arises, capital gains cannot be taxed on a merely notional basis.

Conclusion: Long-term capital gains were not taxable in the assessee's hands for the year in question.

Ratio Decidendi: Where possession is not effectively transferred and the agreed consideration is not fully received, a disputed transaction does not amount to a completed transfer giving rise to taxable capital gains under the Income-tax Act.

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