Agreement for sale with irrevocable power of attorney may amount to transfer under income-tax law when control passes effectively.

An agreement for sale combined with an irrevocable power of attorney can constitute a transfer under Section 2(47) of the Income-tax Act, 1961 when it effectively divests the owner of control and rights over the property. The Court noted that the wide definition of transfer covers extinguishment of rights and transactions falling within part performance under Section 53A of the Transfer of Property Act, 1882. On the facts, the powers conferred to deal with, convey, transfer, receive consideration for, and control the property showed constructive transfer of possession and rights, so capital gains tax applied.

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Issues: Whether the execution of an agreement for sale together with an irrevocable power of attorney and the handing over of possession or rights in the property amounted to a transfer within the meaning of Section 2(47) of the Income-tax Act, 1961, so as to attract capital gains tax.

Analysis: The definition of transfer under Section 2(47) is wide and includes extinguishment of rights and transactions involving possession in part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882. On the facts, the agreement for sale and the contemporaneous irrevocable power of attorney conferred extensive powers over the property, including authority to deal with, convey, transfer, receive consideration for, and otherwise control the property. These clauses showed that the rights in the property had effectively passed and that possession had been constructively transferred. The Tribunal's view that there was no transfer was therefore unsustainable.

Conclusion: The transaction constituted a transfer within Section 2(47) of the Income-tax Act, 1961, and capital gains were exigible. The appeal succeeded.

Final Conclusion: The assessment authority's treatment of the transaction as a taxable transfer was restored, and the Tribunal's contrary view was set aside.

Ratio Decidendi: An agreement for sale coupled with an irrevocable power of attorney that effectively divests the owner of control and conveys rights over the property can amount to a transfer under Section 2(47) of the Income-tax Act, 1961, including by extinguishment of rights and part performance.

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