Effective transfer of immovable property may trigger capital gains in the recipient's hands, even without registered conveyance.

Capital gains on immovable property were to be assessed in the hands of the person who had effectively received the property and sale consideration, not merely the person shown in the sale deed. The documents, book entries, prior assessment history and the retiring partner's actual enjoyment of the properties showed that the properties had already been settled in his favour and the sale proceeds had been received by him. A registered conveyance was not essential where the arrangement enabled enjoyment of immovable property within section 2(47)(vi). Accordingly, the section 50C addition in the firm's hands was not sustainable.

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Issues: Whether the addition made under section 50C in the hands of the firm was sustainable, or whether the impugned immovable properties had already stood transferred to the retiring partner so that the capital gains were assessable in his hands.

Analysis: The relevant retirement and settlement documents, book entries, prior assessment history, and the use of the properties by the retiring partner were examined together. The record showed that the properties had been settled in favour of the retiring partner in an earlier year, that he had been enjoying the properties for his own business, and that the entire sale proceeds had been received by him. In such circumstances, the absence of registered conveyance did not prevent recognition of a transfer where the arrangement had the effect of enabling enjoyment of immovable property within the meaning of section 2(47)(vi) of the Income-tax Act, 1961. The fact that the deed of sale continued in the firm's name, or that the partner had not filed a return, did not justify taxing the gain in the hands of the wrong person.

Conclusion: The addition under section 50C in the hands of the firm was not sustainable, and the capital gains were held assessable in the hands of the retiring partner, not the assessee firm.

Final Conclusion: The revenue failed to establish any infirmity in the deletion of the addition, and the assessment was not restored against the firm.

Ratio Decidendi: For capital gains purposes, income must be assessed in the hands of the person who has effectively received the property and sale consideration, and a transfer may be recognised under section 2(47)(vi) even without registered conveyance if the arrangement enables enjoyment of immovable property.

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