Section 50C is only a computation provision; capital gains remain taxable in the year of transfer, not later registration.

Capital gains from the sale of immovable property were held taxable in the year of transfer, not in the later year in which registration was completed. The sale deed was treated as operative from the date of execution, and section 47 of the Registration Act was applied to show that registration does not defer conveyance. Section 45(1) of the Income-tax Act governed the year of taxability, while section 50C was confined to computation by substituting the deemed full value of consideration. On that basis, section 50C could not shift the transaction into Assessment Year 2011-12, and the addition made on that footing was deleted.

---

---

Issues: Whether capital gains arising from sale of immovable property could be brought to tax in Assessment Year 2011-12 by applying section 50C of the Income-tax Act, 1961, when the sale deed was executed in the previous year relevant to Assessment Year 2010-11 but registration was completed later.

Analysis: The sale deed operated from the date of execution, and section 47 of the Indian Registration Act, 1908 provided that registration did not postpone the operative date of the conveyance. The transfer by way of sale therefore took place on 10.08.2009, falling in the previous year relevant to Assessment Year 2010-11. Section 45(1) of the Income-tax Act, 1961 fastens capital gains tax in the year of transfer, while section 48 is only a computation provision. Section 50C of the Income-tax Act, 1961 only substitutes the full value of consideration for computation purposes and does not alter the year in which the transfer is taxable. The reliance placed on the Calcutta High Court decision was distinguished on facts, as that case involved a different factual matrix and an amendment issue concerning the expression "assessable".

Conclusion: Capital gains could not be taxed in Assessment Year 2011-12, and the addition made by invoking section 50C was liable to be deleted.

Ratio Decidendi: Section 50C of the Income-tax Act, 1961 is a deeming computation provision and cannot shift the year of taxability of capital gains, which remains governed by the year of transfer under section 45(1).

---