Part performance under sale agreement bars later capital gains tax on the original owner when possession and consideration were already transferred.

Where an owner has received full consideration and delivered vacant possession under an agreement of sale cum GPA, the transaction is treated as a transfer under section 2(47) of the Income-tax Act read with section 53A of the Transfer of Property Act. A later sale deed executed by the transferee cum GPA-holder does not create a fresh transfer by the original owner, especially where the owner was not a signatory to that deed and received no further consideration. On that basis, no capital gains arose in the original owner's hands from the later document, and the capital gains addition was unsustainable.

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Issues: Whether capital gains were taxable in the assessee's hands in the assessment year 2012-13 on the basis of the later sale deed, or whether the transfer had already been completed in 2006 under the agreement of sale cum GPA.

Analysis: The assessee had received the full agreed consideration under the agreement of sale cum GPA and had handed over vacant possession to the vendee. On those facts, the vendee obtained the benefit of part performance and the transaction amounted to a transfer within the meaning of section 2(47) of the Income-tax Act, 1961, read with section 53A of the Transfer of Property Act, 1882. The later sale deed was executed by the vendee cum GPA-holder, and the assessee was neither a signatory to that deed nor the recipient of any sale consideration under it.

Conclusion: The later sale of the property could not be treated as a transfer by the assessee, and no capital gains arose in the assessee's hands from the 2012 document.

Final Conclusion: The addition made on account of capital gains was unsustainable, and the assessee was held not liable to tax on the impugned transfer.

Ratio Decidendi: Where the owner has received the full consideration and delivered possession under an agreement protected by part performance, the subsequent conveyance by the transferee does not create a taxable transfer in the original owner's hands.

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