Registered conveyance and ownership determine Section 54 relief and house-property taxation, not mere possession under an agreement to sell.

Section 54 relief was considered unavailable where the assessee had paid consideration and taken possession of a flat, but no registered sale deed or conveyance had been executed. The commentary states that an agreement to sell and possession, even with the protection of part performance under section 53A of the Transfer of Property Act, do not by themselves confer title; the later deeming rule in section 27(iiia) was not applicable for the relevant assessment year. On the house-property issue, the text explains that without legal ownership the flat could not be treated as owned by the assessee, so the notional income was not assessable as income from house property.

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Issues: (i) Whether exemption under section 54 of the Income-tax Act, 1961 was available when the assessee had only paid consideration and taken possession of the flat without a registered sale deed. (ii) Whether the notional income from the flat was assessable as income from house property or as income from other sources.

Issue (i): Whether exemption under section 54 of the Income-tax Act, 1961 was available when the assessee had only paid consideration and taken possession of the flat without a registered sale deed.

Analysis: Section 54 required the assessee to have purchased a residential house within the prescribed period. The transaction for the new flat was only an agreement to sell, and no registered conveyance had been executed in favour of the assessee. The doctrine of part performance under section 53A of the Transfer of Property Act, 1882 protected possession but did not confer title. The deeming provision later introduced by section 27(iiia) of the Income-tax Act, 1961 was not applicable to the assessment year in question.

Conclusion: The assessee was not entitled to exemption under section 54.

Issue (ii): Whether the notional income from the flat was assessable as income from house property or as income from other sources.

Analysis: In the absence of legal ownership through a registered sale deed, the assessee could not be treated as the owner of the flat for the relevant assessment year. The view that such income could be taxed as house property income could not be sustained, and the earlier special bench view was held inapplicable on the facts after the later judicial authorities.

Conclusion: The notional income was not assessable as income from house property and the Revenue's view was accepted.

Final Conclusion: The assessee failed on both issues, and the departmental appeal succeeded with the order of the appellate authority reversed.

Ratio Decidendi: For the purposes of section 54, a mere agreement to sell coupled with possession does not amount to a purchase unless supported by a registered conveyance, and part performance does not by itself create ownership for income-tax purposes in the relevant period.

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