Part performance and capital gains: possession and existing property are required before an agreement date can fix transfer under section 2(47).

For section 2(47) read with section 53A of the Transfer of Property Act, transfer by part performance requires possession and satisfaction of the contractual conditions; where the subject property is not yet in existence and possession is not delivered on the agreement date, the later conveyance date governs capital gains treatment. On the facts noted, the agreement dated 26.05.2011 did not constitute the date of transfer or acquisition because the first floor came into existence only after the occupation certificate, possession had not been given, and the conveyance deed was executed on 12.12.2012. The asset was therefore treated as acquired on 12.12.2012, with short-term capital asset treatment sustained and exemption under section 54 denied.

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Issues: Whether the date of agreement dated 26.05.2011 constituted the date of transfer/acquisition for purposes of section 2(47) and section 53A, and whether the assessee was entitled to claim exemption under section 54 by treating the asset as a long-term capital asset.

Analysis: The agreement contemplated reconstruction of the existing property and transfer of the first floor only after completion of construction. The first floor came into existence only after the occupation certificate was issued, and the conveyance deed was executed on 12.12.2012. The assessee had not obtained possession of the first floor on 26.05.2011, nor had the conditions necessary for part performance under section 53A of the Transfer of Property Act, 1882, been satisfied. On the facts found, section 2(47) did not operate from the date of agreement, and the assessee failed to rebut the factual findings that the asset was acquired on 12.12.2012.

Conclusion: The assessee was not entitled to treat the transaction as giving rise to a long-term capital asset from 26.05.2011, and the denial of exemption under section 54 was upheld.

Final Conclusion: The addition and the treatment of the asset as short-term capital asset were sustained, and the appeal failed.

Ratio Decidendi: For section 2(47) read with section 53A, transfer by part performance requires possession and satisfaction of the contractual conditions; where the subject property is not yet in existence and possession is not delivered on the agreement date, the later conveyance date governs for capital gains purposes.

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