Real estate stock-in-trade taxability turns on receipt of consideration and possession, not later assignment deed registration.

For a real estate developer, stock-in-trade is taxed when the transaction is effectively completed through receipt of consideration and handing over of possession, not merely when an assignment deed is later registered. The discussion notes that the agreement for sale was executed in 2013, substantial consideration was received before execution and the balance before 31.03.2014, and possession was delivered in financial year 2013-14. On those facts, registration in assessment year 2018-19 did not by itself trigger business income, and section 43CA could not sustain an addition where no fresh transfer of stock-in-trade occurred in that year.

---

---

Issues: Whether the registration of the assignment deed in the assessment year 2018-19 could trigger taxation of business income where consideration had been received and possession had been handed over in an earlier year, and whether the addition under section 43CA of the Income-tax Act, 1961 was sustainable.

Analysis: The assessee's units were held to be stock-in-trade of a real estate developer. The record showed that the agreement for sale was executed in 2013, substantial consideration had been received before execution and the balance before 31.03.2014, and possession had also been handed over in financial year 2013-14. The only event in the impugned year was registration of the assignment deed. The Tribunal held that taxation depends on accrual and receipt of income and on the real transfer event, not on later registration alone. It further held that, for stock-in-trade, subsequent registration does not postpone taxability where the transaction was already completed by receipt of consideration and handing over of possession. The reliance on capital gains precedents was found distinguishable, and section 43CA could not sustain the addition in a year when no transfer of stock-in-trade had occurred.

Conclusion: The addition made in assessment year 2018-19 was unsustainable and the deletion by the first appellate authority was upheld in favour of the assessee.

Final Conclusion: The business income addition based solely on later registration failed because the taxable event had already occurred in the earlier year when consideration was received and possession was delivered.

Ratio Decidendi: Where a real estate developer has received consideration and handed over possession of stock-in-trade in an earlier year, later registration of an assignment deed does not by itself create taxable income in a subsequent year.

---