Registered sale deed of an immovable property is not necessary to give rise to a transfer U/S 2(47):


Registered sale deed of an immovable property is not necessary to give rise to a transfer U/S 2(47):

Smt.Sapnaben Dipakbhai Patel (ITA No.2414/Ahd/2013)


  1. The assessee has purchased a piece of land from Shri Bhikhubhai N. Padshala and Shri Sandipbhai B. Padshala for total sum of Rs.67,96,432/- vide purchase deeds dated 18.12.2007, 28.02.2008 and 4.3.2008. The assessee, thereafter, entered into an agreement to sell (Banakhat) with Shri Sanjeev D. Shah, proprietor of Capital Consultancy (SDS) and agreed to sell the said agriculture land for a consideration of Rs.76,75,413/-.
  1. The possession of the land was not transferred by the assessee. She had received a sum of Rs.3,00,000/- as advance against the proposed agreed consideration of Rs.76,75,413/-.
  1. Subsequently, by a sale deed dated 2.3.2009, the said land was agreed to be sold to one Gatil Properties P.Ltd. (GPPL) for a sum of Rs.10,64,08,660/-. In this agreement, the assessee was the selling party, GPPL was the purchasing party.
  1. The issue before the ITAT was whether the agreement to sell could be ignored and whether the land would be deemed to have been transferred by the assessee directly to the GPPL only when alleged sale deed dated 27.1.2010 was executed and short term capital gain is to be construed at that point?

ITAT Ahmedabad held as below:

  1. The rights assigned by the assessee by virtue of the agreement to sell are of capital nature and this agreement was enforceable in law under the Specific Relief Act. Her right in the property after the execution of this agreement has been curtailed or encumbrance has been created.
  1. The whole scheme for introduction of clauses (v) and (v) in section 2(47) of the Income Tax Act was that the capital gain is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law.
  1. The alleged gains on sale of property calculated in the hands of the assessee are not sustainable. We allow the appeal of the assessee and delete the addition of Rs.6,83,09,792/- from the hands of the assessee.

The  copy of the order is as under: