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Section 45 of the Income-tax Act, 1961 - Capital gain - Chargeable as - Whether registration of sale deed is not necessary to attract capital gain tax on transfer of a property - Held, yes CASES REFERRED TO K.P. Varghese v. ITO [1981] 131 ITR 597/ 7 Taxman 13 (SC) [Para 2] and CIT v. Podar Cement (P.) Ltd. [1997] 226 ITR 625/ 92 Taxman 541 (SC) [Para 2]. J.K. Singhi for the Applicant. T.C. Jain for the Respondent. JUDGMENT 1. On an application filed under section 256(1) of the Income-tax Act 1961 ('the Act'), the Tribunal has referred the following question for the opinion of this Court : "Whether, on the facts and in the circumstances of the case the Tribunal, Jaipur was justified in holding that capital gains, in respect of sale of property, was not attracted in the assessment year under consideration as there has been no transfer?" 2. The assessee-company which derives income from the manufacture and sale of containers had sold its factory building for consideration of Rs. 45,000 to a firm Krishna Agencies, Jaipur, wherein the relatives of the company's directors were partners. The matter was referred to the valuer under section 55A of the Act, who valued the property at Rs. 1,35,000, which value was adopted as market value for the purpose of section 52 of the Act after obtaining the necessary sanction of the IAC. On the basis of the proposal the amount of Rs. 73,618 was taken as income under the head 'Capital gains'. The assessee has objected to tax this amount as a capital gain tax as the property has not been registered and in absence of the registration, there is no transfer and unless the property is transferred, there is no question of capital gain on the ground of transfer. This view has been negatived by the ITO on the ground that though the property is not registered, but it attracts the capital gain tax. In appeal before the Commissioner (Appeals), the assessee has not only argued on the ground of registration of the transfer deed, but also argued on the proposition laid down by Supreme Court in the case of K.P. Varghese v. ITO [1981] 131 ITR 5971. The Commissioner (Appeals) has allowed the appeal on both the grounds and deleted the capital gain…

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