Capital gains transfer date turns on possession and beneficial rights, not later registration, affecting the assessment year.

For capital gains, transfer arises when the vendor parts with possession and transfers beneficial rights under the agreement, not when the conveyance is later registered. On the facts, consideration was received by account payee cheques, possession passed on the date of the banakhat, and the document was duly stamped on that date, so the earlier date governed the assessment year. The later registration did not change the effective date of transfer, and the exemption under section 54F could not be denied on the basis adopted by the Assessing Officer. The addition founded on the registration date was therefore unsustainable.

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Issues: Whether the transfer of the capital asset for the purpose of capital gains took place on the date of the agreement and delivery of possession or on the later date of registration, and whether the consequent assessment year and denial of exemption under section 54F were justified.

Analysis: The sale consideration had been received through account payee cheques, the deed reflected delivery of possession to the purchaser on the date of the banakhat, and the document was duly stamped on that date. The later registration of the document did not alter the effective date of transfer for income-tax purposes. The reasoning adopted by the Jurisdictional High Court was followed to hold that transfer is attracted when the right, title and interest in the property are passed and possession is handed over, not merely when the conveyance is eventually registered. On that basis, the capital gain arose in the earlier year and the exemption claim was not to be denied on the footing adopted by the Assessing Officer.

Conclusion: The transfer was held to have taken place on the date of the agreement and handing over of possession, in favour of the assessee.

Final Conclusion: The addition based on adoption of the later registration date was unsustainable, and the Revenue's challenge failed.

Ratio Decidendi: For capital gains, the effective date of transfer is the date on which the vendor parts with possession and transfers beneficial rights in the property pursuant to the agreement, not the later date of registration of the conveyance.

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