Capital gains on land turn on the registered sale deed date where possession was not handed over under the agreement to sell.

For capital gains purposes, the relevant transfer date depends on whether possession was handed over under an agreement to sell. Where possession is not delivered, the deeming transfer under section 2(47)(v) read with section 53A of the Transfer of Property Act does not apply, and mere execution of the agreement does not complete transfer of immovable property. The registered sale deed is treated as the operative conveyance under section 2(47)(i) of the Income-tax Act and section 47 of the Registration Act. The land's character must be tested on that date; if it has ceased to be agricultural by then, it is treated as a capital asset. The proviso to section 50C(1) was noted but did not change this position.

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Issues: Whether, for the purpose of capital gains, the relevant date for determining the character of the land and the transfer of rights was the date of the agreement to sell or the date of the registered sale deed, and whether the land retained agricultural character so as to fall outside the definition of capital asset.

Analysis: The agreement to sell did not result in handing over of possession, so the deeming provision of transfer by part performance under section 2(47)(v) read with section 53A of the Transfer of Property Act, 1882 did not apply. Mere execution of the agreement to sell did not by itself transfer title or complete transfer of the immovable property. The Court treated the registered sale deed as the operative conveyance because, under the legal scheme of section 2(47)(i) of the Income-tax Act, 1961 and section 47 of the Registration Act, 1908, the transfer became effective on execution of the registered deed. By that date, the land had already changed user and was no longer agricultural. The proviso to section 50C(1) of the Income-tax Act, 1961 was also noticed as an exception to the general rule, but it did not alter the conclusion on the relevant transfer date or the character of the asset.

Conclusion: The relevant date was the date of the registered sale deed, not the date of the agreement to sell, and the land was rightly treated as a capital asset. The addition towards long term capital gain was upheld against the assessee.

Final Conclusion: The appeal failed because the transfer was held to occur on execution of the sale deed, when the land had ceased to be agricultural, leaving no basis to exclude the gain from taxation.

Ratio Decidendi: For capital gains purposes, where possession is not handed over under an agreement to sell, transfer of immovable property is complete only on execution of the registered sale deed, and the asset's character must be judged as on that date.

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