Capital gains transfer date and indexed acquisition cost turned on possession, full payment, and documentary proof of registration charges.

For capital gains purposes, an agreement to sell, full payment of consideration and delivery of possession can fix the effective transfer date even before formal registration, so the holding period is counted from that earlier date; on those facts, the property was treated as a long-term capital asset and the Revenue's challenge to short-term capital gains treatment failed. Registration charges supported by contemporaneous evidence were held to form part of the cost of acquisition and were eligible for indexation from the year of payment, so the Revenue's objection to the indexed cost claim was rejected.

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Issues: (i) Whether the property sold by the assessee was a short-term capital asset or a long-term capital asset for capital gains purposes. (ii) Whether the registration charges of Rs. 20,68,000 formed part of the cost of acquisition and were eligible for indexation.

Issue (i): Whether the property sold by the assessee was a short-term capital asset or a long-term capital asset for capital gains purposes.

Analysis: The decisive facts were that the assessee had entered into an agreement to sell, paid the full agreed consideration during FY 2013-14, and obtained possession in that year. On those facts, the transfer was treated as complete in substance in FY 2013-14 for capital gains purposes, even though formal conveyance was registered later. The Tribunal accepted the finding that the assessee became entitled to enjoy the property as owner from the date of full payment and possession, making the holding period exceed 36 months.

Conclusion: The property was a long-term capital asset and the Revenue's challenge to deletion of the short-term capital gain addition failed.

Issue (ii): Whether the registration charges of Rs. 20,68,000 formed part of the cost of acquisition and were eligible for indexation.

Analysis: The assessee supported the claim with the demand draft, receipt, and related contemporaneous documents showing that the amount had been paid in FY 2013-14 in connection with acquisition of the property. The Tribunal found no contrary material from the Revenue to dislodge the factual finding that the payment was part of acquisition cost. On that basis, the amount was held to be includible in the cost of acquisition and eligible for indexation from the relevant year of payment.

Conclusion: The registration charges rightly formed part of the indexed cost of acquisition and the Revenue's objection was rejected.

Final Conclusion: The Revenue failed to dislodge the appellate findings on both the nature of the asset and the acquisition cost, so the assessee's capital gains treatment as sustained by the first appellate authority remained undisturbed.

Ratio Decidendi: For capital gains purposes, an agreement to sell coupled with full payment and delivery of possession can fix the effective transfer/acquisition date, and contemporaneously evidenced acquisition-related payments form part of the cost of acquisition for indexation.

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