Capital gains tax and registered sale deeds: later registration does not create a fresh transfer where possession had already passed.

Where possession and the substantive transfer had already occurred in an earlier year, later registration of sale deeds did not create a fresh transfer for capital gains purposes. The article also notes that a finding of relinquishment must rest on verified material; an inference based only on presumption is insufficient to support long-term capital gains on retained property rights. The operative point is that completed transactions are not recharacterised for tax merely because documents are registered later, and unsupported allegations of surrender of rights do not by themselves establish taxability in the relevant year.

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Issues: Whether long-term capital gains were taxable in the assessment year concerned on the basis of the execution of registered sale deeds and the alleged relinquishment of the assessee's rights in the property.

Analysis: The undisputed position was that possession had already been given and the underlying transaction had in substance been completed in earlier years. Applying the doctrine embodied in section 53A of the Transfer of Property Act, 1882, the later execution of registered documents did not create a fresh transfer for capital gains purposes. The finding of relinquishment was also not supported by verified material, and the inference that the assessee had given up rights in the retained 500 sq. yards was based on presumption rather than proof.

Conclusion: No taxable transfer or relinquishment giving rise to long-term capital gains arose in the relevant assessment year, and the addition was not sustainable.

Final Conclusion: The assessee succeeded because the transaction was treated as having been completed in an earlier year and the later deed execution did not give rise to a fresh capital gains liability.

Ratio Decidendi: Where possession and the substantive transfer have already occurred in an earlier year, later registration of documents does not by itself constitute a fresh transfer for capital gains tax, and a presumption of relinquishment without evidence cannot sustain the charge.

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