Registered sale agreement alone does not complete transfer where possession and contractual conditions remain pending for capital gains purposes.

A registered agreement for sale did not by itself establish a completed transfer for short-term capital gains purposes where possession was not handed over, the balance consideration remained unpaid, and contractual conditions such as full payment and the required no-objection from the Port Trust were still outstanding. On those facts, the transaction was treated as a conditional sale rather than an absolute transfer, so the capital gains addition was deleted. Because the depreciation disallowance was consequential to the same assumed transfer, it also failed once the transfer was held incomplete, and depreciation on the flat was allowed.

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Issues: (i) Whether the sale of the flat was complete during the relevant year so as to attract short-term capital gains tax, and (ii) whether depreciation on the flat was allowable when the transfer itself was held to be incomplete.

Issue (i): Whether the sale of the flat was complete during the relevant year so as to attract short-term capital gains tax.

Analysis: The agreement for sale stood registered during the year, but possession had not been handed over. The balance sale consideration remained unpaid, and handing over of possession was conditional upon full payment and receipt of the required no-objection from the Port Trust. In the absence of fulfilment of these conditions, the transaction was not an absolute transfer but only a conditional sale. On these facts, the ingredients of a completed transfer were not established for the relevant year.

Conclusion: The addition towards short-term capital gains was not sustainable and was deleted; the issue was decided in favour of the assessee.

Issue (ii): Whether depreciation on the flat was allowable when the transfer itself was held to be incomplete.

Analysis: The disallowance of depreciation was consequential to the addition made on the footing that the transfer had been completed. Once it was held that the sale was not complete during the year, the basis for denying depreciation no longer survived.

Conclusion: Depreciation on the flat was directed to be allowed and the issue was decided in favour of the assessee.

Final Conclusion: The assessment additions founded on a completed transfer were set aside, and the assessee obtained relief on both the capital gains addition and the depreciation claim.

Ratio Decidendi: Where possession and completion of contractual conditions remain outstanding, a registered agreement by itself does not establish a completed transfer for capital gains purposes; a consequential disallowance cannot survive once the primary transfer addition fails.

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