Transfer of flat rights under sale agreement treated as capital asset transfer, making the gain taxable.

An agreement for sale transferring an assessee's rights in a flat constituted a transfer of a capital asset for capital gains purposes. The definition of "transfer" under section 2(47) is wide and includes extinguishment of rights; here, the assessee's hire-purchase rights, including possession, enjoyment and the right to obtain conveyance, were passed in full to the purchaser for consideration, and possession was delivered. The right to obtain conveyance was treated as property and therefore a capital asset under section 2(14). The transaction was thus taxable, and capital gains were correctly assessed in the assessee's hands.

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Issues: Whether the assessee's transfer of his rights in the flat under an agreement for sale constituted a "transfer" of a capital asset so as to attract capital gains tax.

Analysis: The relevant statutory definition of "transfer" under section 2(47) of the Income-tax Act, 1961 is wide and includes extinguishment of rights in a capital asset. The right held by the assessee in the flat was not merely physical possession but the bundle of rights arising from the hire-purchase arrangement, including possession, enjoyment, and the right to obtain conveyance. By the agreement for sale, those rights were passed in entirety to the purchaser for consideration and possession was delivered. The right to obtain conveyance itself is property and forms a capital asset within section 2(14). The transaction therefore resulted in transfer of the assessee's capital asset and not merely an executory promise without tax consequence.

Conclusion: The agreement for sale amounted to a taxable transfer of the assessee's capital asset, and capital gains were correctly brought to tax in the assessee's hands.

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