Registered sale deed transfer relates back to execution date, so capital gains belong in the earlier assessment year.

Where a registered sale deed is executed and presented for registration, consideration is received, and possession is delivered on that date, the transfer is treated as complete from the date of execution because later registration relates back to that date. On those facts, the agricultural land transfer fell in the earlier previous year, so capital gains could not be taxed in the later assessment year and the addition was deleted.

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Issues: Whether the transfer of the agricultural land took place on the date of execution and presentation of the registered sale deed, so that the capital gain was taxable in the earlier assessment year and the addition made in the later assessment year was unsustainable.

Analysis: The sale deed was executed and presented for registration on 22.03.2011, consideration had been received, and possession had been handed over on the same date. Registration was completed later on 19.05.2011 after clearance of duty or fee. For a registered instrument of sale, the legal effect of registration relates back to the date of execution. Once the instrument is registered, the transfer operates from the time it would have operated if registration had not been required. On these facts, the transaction was complete in the previous year 2010-11 relevant to assessment year 2011-12, and not in the previous year relevant to assessment year 2012-13.

Conclusion: The addition of capital gain in assessment year 2012-13 was not sustainable and was deleted.

Ratio Decidendi: Where a registered sale deed is executed, presented for registration, consideration is received, and possession is delivered, later completion of registration relates back to the date of execution for determining the year of transfer.

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