Law: Income Tax Act, 1961

Section: 45

INCOME TAX----Capital gains---Short-term or long-term capital gains---Agreement of sale executed by vendor on 1-5-1962, and possession of land delivered to assessee on same date---Document registered on 8-6-1979---Registration of document relates back to date on which agreement of sale was executed in favour of assessee---Assessee deemed to be owner of property with effect from 1-5-1962---Assessee held property for more than 36 months---Sale of land by assessee after converting it into plots ---Ganis from sale not to be assessed as short-term capital gains---Indian Income Tax Act, 1961, S.45. The assessee entered into an agreement of sale, dated May 1, 1962, with the vendor and paid him a certain amount for the purchase of a land. The sale-deed was executed on June 8, 1979. The assessee contended before the Income-tax Officer that the land was purchased in the year 1962 itself and he was in possession of the land and on payment of the sale consideration he was the legal owner of the land and that after he became the full-fledged owner by registering the document on June 8, 1979, he sold that land after converting it into plots. The Income-tax Officer held that the land was registered in the name of the assessee on June 8, 1979, and, therefore, the capital gains derived by the assessee on the sale of the plots should be assessed as short-term capital gains. On appeal, the Appellate Assistant Commissioner confirmed the order of the Income-tax Officer. On further appeal, the Tribunal affirmed the order of the Appellate Assistant Commissioner. On a reference: Held, that a perusal of the document made it clear that the agreement of sale was executed in 1962 and possession was delivered to the assessee on the same date and the sale consideration was also paid by the assessee to the vendor, though the document was registered on June 8, 1979. The registration of the document related back to the date on which the agreement of sale was executed in favour of the assessee by the vendor. Therefore, the assessee was deemed to be the owner of the property with effect from May 1, 1962. Therefore, the assessee had held that property for more than 36 months and the capital gains…

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