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Issues Involved:
The judgment involves the following issues: 1. Inclusion of sum in gross receipts for computation of capital gains. 2. Legal correctness of finding regarding completion of transfer upon registration of sale deed. 3. Possibility of transfer of property without effective conveyance through execution and registration of sale deed. 4. Interpretation of 'transfer' as per section 2(47) of the Income-tax Act, 1961. Issue 1: Inclusion of Sum in Gross Receipts: The assessee sold land through registered sale deeds with a stipulation for full payment before transfer of title. The Income-tax Officer included the sum of Rs. 42,000 in gross receipts for capital gains computation based on the registration of sale deeds, implying transfer. The Tribunal deemed it a transfer regardless of payment stipulations or intention of parties. However, the High Court held that registration alone does not signify transfer if conditions like payment are pending, as the true test is the intention of the parties. Issue 2: Completion of Transfer upon Registration: The High Court referred to precedents emphasizing that title does not pass merely upon execution and registration of a sale deed. The intention of the parties, as reflected in the deed, determines the passing of title. The court highlighted that registration indicates an intention to transfer but does not prove an operative transfer if conditions like payment are pending. Issue 3: Transfer without Effective Conveyance: The court analyzed the Transfer of Property Act and noted that transfer of immovable property by sale requires effective conveyance, as defined under section 2(47) of the Income-tax Act. In this case, the parties intended transfer only upon full payment, indicating no transfer during the relevant period. Thus, the assessee was not liable for capital gains tax. Issue 4: Interpretation of 'Transfer' u/s 2(47) of the Act: The court concluded that 'transfer' under section 2(47) necessitates an effective conveyance of capital assets to the transferee. Therefore, in this case, where transfer was contingent upon full payment, there was no transfer during the relevant period. The court ruled in favor of the assessee on issues 1, 2, and 3, and answered issue 4 in the affirmative. Separate Judgment: Justice S. K. Chattopadhyaya concurred with the decision. The judgment was transmitted to the Income-tax Appellate Tribunal, Patna Bench, in accordance with section 260 of the Act.
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