Capital gains on immovable property accrue on execution of a compulsory registered sale deed, not later registration.

Capital gains on immovable property are chargeable under section 45 in the previous year in which a valid transfer takes place. Where registration is compulsory, the transfer is not completed by mere later registration; the operative date is the execution of the sale deed when the deed becomes effective in law. The Registration Act provisions, including sections 17(1), 49 and 47, do not displace the requirement of completed registration for compulsory transfers, and the post-2001 amendments reinforce registration in part-performance situations. On the stated facts, the sale deed executed on 15.12.2007 was relevant to assessment year 2008-09, so taxability did not arise in assessment year 2009-10.

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Issues: Whether the capital gains arising from the sale of immovable property were taxable in the assessment year corresponding to the date of execution of the sale deed or in the assessment year corresponding to the date of its registration.

Analysis: Section 45 of the Income-tax Act, 1961 charges capital gains in the previous year in which the transfer takes place. For immovable property, sections 17(1) and 49 of the Registration Act, 1908 require compulsory registration for a transfer to take effect. Section 47 of the Registration Act, 1908 only governs the time from which a registered document operates, and does not displace the requirement that registration be completed where the law mandates it. The post-2001 amendments to section 17(1A) and section 49 of the Registration Act, 1908, along with the amendment to section 53A of the Transfer of Property Act, 1882, make registration essential even in part-performance situations. On the facts, the sale deed was executed on 15.12.2007 and registered on 17.04.2008. The execution date fell in the previous year relevant to assessment year 2008-09.

Conclusion: The transfer was held to have taken place on the date of execution of the sale deed, so the capital gain was not taxable in assessment year 2009-10 and was attributable, if at all, to assessment year 2008-09.

Ratio Decidendi: Where registration is compulsory for transfer of immovable property, capital gains are chargeable in the year in which the deed is executed and the transfer becomes operational, not in the year of later registration.

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