Registered sale deed governed capital gains treatment; later MOU and reconveyance deed could not displace the completed transfer.

A registered sale deed was treated as the operative transfer of a capital asset under section 2(47)(v) of the Income-tax Act, 1961, because the assessee had represented before the registration authority that vacant possession had been handed over and full consideration received. The later MOU and unregistered reconveyance agreement could not override the registered conveyance, and pending civil and criminal pleadings were insufficient to displace the completed transfer. The Tribunal therefore rejected the claim that the arrangement was only a loan transaction and sustained the capital gains addition.

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Issues: Whether the registered sale deed dated 20.04.2009 constituted a transfer of a capital asset giving rise to capital gains notwithstanding the assessee's claim that the transaction was only a loan-arrangement supported by an MOU and reconveyance deed, and whether the additional evidence could dislodge the effect of the registered document.

Analysis: The registered sale deed was treated as the operative document evidencing transfer for purposes of section 2(47)(v) of the Income-tax Act, 1961. The assessee had appeared before the registration authority on the footing that vacant and peaceful possession had been transferred and the full consideration had been received. The later MOU and unregistered reconveyance agreement were held to be incapable of overriding the registered conveyance, and the subsequent civil and criminal pleadings, being pending and not final, were not accepted as the basis to negate the completed transfer. The Tribunal therefore declined to treat the transaction as a mere sham arrangement for obtaining a loan.

Conclusion: The transaction was held to be a valid transfer attracting capital gains tax, and the addition was sustained against the assessee.

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