Part performance treated as transfer under capital gains law; registration lapse did not defer taxation, while routine expense disallowances were deleted.

An agreement for sale was treated as a transfer under section 2(47)(v) because the purchaser exercised the contractual option, paid substantial consideration, and was allowed possession in part performance; lack of registration and pending DDA consent did not defer the capital gains charge, so the long-term capital gains addition was sustained. The disallowance of telephone expenses was deleted for a company, the fee to the registered valuer was held revenue in nature, and the miscellaneous expenses were found reasonable on the record and past trend, so those disallowances were deleted.

---

---

Issues: (i) Whether the amount received under the agreement for sale of the immovable property constituted transfer giving rise to long-term capital gains under section 2(47)(v); (ii) whether the disallowance of telephone expenses, fee paid to the registered valuer, and miscellaneous expenses was sustainable.

Issue (i): Whether the amount received under the agreement for sale of the immovable property constituted transfer giving rise to long-term capital gains under section 2(47)(v).

Analysis: The agreement conferred an enforceable option to purchase and the purchaser exercised that option, paid the substantial consideration, and ceased to pay rent. The absence of registration and pending DDA consent did not defer the tax consequence where possession and contractual rights had been effectively allowed in terms attracting the doctrine of part performance. Section 2(47)(v) treats such transactions as transfer for capital gains purposes.

Conclusion: The capital gains addition was upheld and this issue was decided against the assessee.

Issue (ii): Whether the disallowance of telephone expenses, fee paid to the registered valuer, and miscellaneous expenses was sustainable.

Analysis: The telephone disallowance was not justified in the case of a company. The fee paid to the registered valuer for revaluation of fixed assets was revenue in nature. The miscellaneous expenses were found reasonable on the material available and in the light of the preceding and subsequent years.

Conclusion: The disallowances were deleted and this issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded only in relation to the three disallowances, while the addition on account of long-term capital gains was sustained.

Ratio Decidendi: A transaction falls within transfer under section 2(47)(v) when possession is allowed in part performance of a contract, and the absence of registration does not by itself postpone the charge to capital gains.

---