Composite sale of movables and immovables: title passes only on intended transfer, affecting when sale profits accrue for tax.

Title to movables in a composite sale does not pass merely on contract formation where the parties intended a single transfer with immovable property and no earlier delivery occurred. On the facts, the purchaser's temporary participation in management did not amount to transfer of the movables, and title passed only when the sale deeds were executed on 30 August 1957. Because the sale was completed only on that date, the resulting surplus could not be treated as having accrued earlier and was not assessable in the 1958-59 assessment year. The agreement and surrounding conduct showed no intention to split the transfer of movables from the immovable assets.

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Issues: (i) Whether the title to the movable properties passed to the purchaser only on 30 August 1957 and not earlier; (ii) Whether the profits arising from the sale of the movable properties were assessable in the assessment year 1958-59.

Issue (i): Whether the title to the movable properties passed to the purchaser only on 30 August 1957 and not earlier.

Analysis: A contract for sale does not by itself amount to a completed sale. In the case of movable property, title may ordinarily pass on the making of the contract if the goods are in a deliverable state and there is no contrary intention, but that rule yields where the transaction shows that the parties intended a combined transfer of movable and immovable properties as one composite sale. Here, the arrangement only permitted the purchaser to participate in management from an earlier date as a temporary working arrangement, while no actual delivery of the properties was made until the execution of the sale deeds. The agreement and the later conduct showed that the parties did not intend the movables to pass separately before the immovables.

Conclusion: The title to the movable properties passed only on 30 August 1957 and not earlier.

Issue (ii): Whether the profits arising from the sale of the movable properties were assessable in the assessment year 1958-59.

Analysis: The assessability of the surplus depended on the date on which the sale of the movables took effect. Since the sale was completed only on 30 August 1957, the profit could not be treated as having accrued earlier in the relevant accounting period so as to be brought to tax in the manner contended for by the revenue.

Conclusion: The profits from the sale of the movable properties were not assessable in the assessment year 1958-59.

Final Conclusion: On the true construction of the agreement and the surrounding conduct, the movable properties were transferred only when the sale deeds were executed, with the result that both questions were answered in favour of the assessee.

Ratio Decidendi: Where a transaction is a composite sale of movable and immovable properties, the movables do not pass separately before the immovables unless the parties clearly intended such an earlier transfer.

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