Capital Gains Deleted as No Transfer Occurred Without Possession and Full Payment

Purav Mahendra Mehta Vs ACIT (ITAT Mumbai)

Registration Alone of Agrement to Sell Doesn’t Trigger Capital Gains — Mumbai ITAT Applies ‘Transfer’ Principles

Assessment was completed u/s 143(3) taxing capital gains of ₹80,76,511 on sale of three commercial units. CIT(A) confirmed the addition.

Before Tribunal, Assessee submitted that only part consideration (between 5% to 13%) was received during FY 2014-15 & possession was never handed over. Agreements to Sell , though registered on 07.12.2014, specifically stated in Clause 7 & 8 that title transfer & possession would occur only after full payment. Purchasers also issued written confirmations stating that full consideration was unpaid & possession not taken.

Assessee relied on the Bombay High Court decision in CIT Vs Dr Arvind S. Phake & Mumbai Tribunal’s ruling in Ashok M. Seth Vs DCIT, which held that mere registration does not result in “transfer” unless full consideration is paid & possession is delivered, emphasising that intention of the parties determines the real timing of transfer. Tribunal noted that in the present case, only execution of agreement had occurred; full consideration & possession — both mandatory conditions for transfer — were pending.

The transfer of property cannot be said to have been effected merely basis registration of the agreement to sell & not of the instrument of transfer of immoveable property through a conveyance deed . Hence, no transfer took place in AY 2015-16.