Taxable transfer of immovable property requires a registered or legally effective conveyance, not mere possession or construction activity.

A taxable transfer of immovable property was not established merely because possession was handed over for construction. The land continued to be owned by the assessee and was reflected as stock in trade, while no registered sale deed or other registered transfer instrument was executed in favour of the partnership firm. Section 43CA could not, by itself, create a transfer where none legally existed, and the principles under section 53A of the Transfer of Property Act, read with the amended Registration Act, required a legally effective transfer arrangement. On that basis, the proposed additions towards long-term capital gain and business income were deleted.

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Issues: Whether the land was transferred to the partnership firm so as to justify addition under capital gains and business income.

Analysis: The assessee continued to own the land and showed it as stock in trade; no registered sale deed or other registered transfer instrument was executed in favour of the firm. Mere handing over of possession for construction did not amount to a legal transfer of ownership. The deeming provision in section 43CA operated only where there was an actual transfer of an asset other than a capital asset, and could not by itself create a transfer. The principles governing section 53A of the Transfer of Property Act, read with the amended Registration Act, supported the view that an unregistered arrangement did not confer transfer rights in immovable property.

Conclusion: The addition on the footing of transfer of land was unsustainable, and the disallowance of the assessee's challenge was incorrect.

Final Conclusion: The impugned additions towards long-term capital gain and business income were deleted because no taxable transfer of the land to the firm was established.

Ratio Decidendi: A taxable transfer of immovable property is not established merely by possession or construction activity where ownership remains with the assessee and no registered conveyance or legally effective transfer arrangement exists.

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