Conditional sale deed and dishonoured cheques meant no completed transfer, so capital gains were not taxable.

Where a registered sale deed was expressly made conditional on receipt of cheque payments and provided for automatic cancellation on dishonour, no effective transfer arose for capital gains purposes when the cheques were dishonoured, the transaction was later treated as void, and the property remained with the assessee. The mere execution of a registered deed did not, by itself, establish a completed transfer in substance. On these facts, the consideration could not be brought to tax as capital gains because the capital asset was never transferred absolutely and the assessee retained possession.

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Issues: Whether capital gains could be assessed where the registered sale deed was expressly conditional, the post-dated cheques for balance consideration were dishonoured, the transaction was treated as void under the contractual terms, and the property remained with the assessee.

Analysis: The sale deed itself made the transaction contingent on realization of the cheque payments and contemplated automatic cancellation on dishonour. The later court order showed that the transaction had been recalled, the sale deed was treated as null and void, and the assessee was not left with an absolute and completed transfer of the capital asset. In these circumstances, the mere execution of a registered deed did not establish an effective transfer for capital gains purposes. Since the transfer never became complete in substance and the assessee retained possession, the amount could not be brought to tax as capital gains.

Conclusion: Capital gains were not taxable in the hands of the assessee.

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