Registration of Sale Deed Does Not Shift Taxability

Registration of Sale Deed Does Not Shift Taxability to a Subsequent Year When Consideration and Possession Were Completed Earlier

Issue

Whether section 43CA can be invoked in AY 2016-17 upon subsequent registration of a sale deed when full consideration was received, possession was handed over, and income was offered to tax in AY 2014-15 under an earlier conveyance deed.

Facts

The assessee-company executed an initial deed/conveyance on 28-12-2013 during FY 2013-14 for the transfer of property.
The entire sale consideration of ₹15 lakh was received in two installments on 07-04-2013 and 28-12-2013, and possession of the property was duly handed over to the buyer during FY 2013-14.
The assessee offered the resultant income from the transaction to tax in the earlier assessment year (AY 2014-15).
Subsequently, a formal sale deed was executed on 16-05-2015 and registered on 11-06-2015 (falling under AY 2016-17).
The Assessing Officer (AO) invoked Section 43CA for AY 2016-17 and made an addition based on the difference between the stamp duty value on the date of registration and the declared consideration.

Decision

The Tribunal held that the substantive transfer of the property was completed in FY 2013-14 when full consideration was received and possession was handed over.
It ruled that subsequent registration of the conveyance deed on 11-06-2015 does not by itself shift the year of taxability to AY 2016-17 or generate a fresh taxable event.
The Tribunal declared that the income pertained to AY 2014-15 and not AY 2016-17.
Consequently, the invocation of Section 43CA for AY 2016-17 was held to be misplaced, and the addition made by the AO was deleted in favor of the assessee.

Key Takeaways

De Facto Transfer Governs Timing: Where full consideration is paid and possession is transferred under Section 53A of the Transfer of Property Act, the tax liability crystallizes in the year of actual transfer, not the year of subsequent registration.
No Re-Taxation on Registration: Subsequent formal registration of a sale deed is merely a procedural completion and does not trigger a fresh taxable event if the underlying transaction was already subjected to tax.
Inapplicability of Section 43CA: Stamp duty value adjustments under Section 43CA cannot be applied retrospectively to a later year when the legal and beneficial transfer of immovable property was completed in an earlier assessment year.

IN THE ITAT MUMBAI BENCH ‘F’

Juris Matrix Advisors (P.) Ltd.

Income-tax Officer

Pawan Singh, Judicial Member
and ARUN KHODPIA, Accountant Member

IT Appeal No. 1831 (Mum) of 2026
[Assessment year 2016-17]

SEPTEMBER 11, 2026

Ms. Saile Gujarathi, CA for the Appellant. Vibhor Badoni, Sr. DR for the Respondent.

ORDER

Arun Khodpia, Accountant Member.-This appeal is preferred by the assessee, directed against the order of the Commissioner of Income Tax Appeals, National Faceless Appeal Centre (NFAC), Delhi [in short, “the Ld. CIT(A)”], dated 22.12.2025 for the Assessment Year (AY) 2016-17, arises from the assessment order under section 143(3) of the Income Tax Act, 1961 [in short, “the Act”] dated 07.12.2018, passed by Income Tax Officer Ward 12(3)(1), Mumbai [in short, “the Ld. AO”].

2. The grounds of appeal raised by the assessee are as under:

“Ground No. 1-Erroneous Determination of Year of Sale / Transfer

1.1 On the facts and in the circumstances of the Case and in Law, the Honourable Commissioner of Income Tax (Appeals) erred in passing the impugned Appellant Order, without properly appreciating and adjudicating the detailed written submissions and documentary evidences placed on record by the Appellant, thus, holding, that, the Sale/Transfer of the Property (Stock-in-Trade) took place in F.Y 2015-16, relevant to A.Y 2016-17, merely on the basis of the Registered Deed of Conveyance dated 16/05/2015 (Registered on 11/06/2015).

1.2 The Honourable CIT(A) failed to appreciate that the Sale/Transfer transaction of the Property (Stock-in-Trade), stood concluded in F.Y 2013-14, relevant to A.Y 201415, pursuant to the Deed of Conveyance dated 28/12/2013, which constituted the primary and operative instrument, evidencing transfer of rights between the Parties, whereby:

• Full Consideration was received from Buyer in F.Y 2013-14, relevant to A.Y 201415, and

• Vacant and peaceful Possession was handed over to the Buyer in F.Y 2013-14, relevant to A.Y 2014-15, and

• Substantial rights in the Property (Stock in Trade) stood irrevocably transferred to the Buyer in F.Y 2013-14, relevant to A.Y 2014-15, and

• Business Profits Computed and Taxed in F.Y 2013-14, relevant to A.Y 2014-15, and

• Subsequent registration of the formal Deed of Conveyance, executed on 16/05/2015 and registered on 11/06/2015, was merely the legal formalities, to prefect the title of the Buyer, as required by the law, in accordance with the Section 53A of the Transfer of Property Act, 1882 (as amended) read with the provisions of the Specific Relief Act, 1963 (as amended).

1.3 Further, the Honourable CIT(A) failed, to properly consider, the submissions and judicial precedents, available on records, duly submitted on 20/11/2025, relied upon by the Appellant, at the time of Personal Hearing through Vido Conferencing dated 18/11/2025, thus vitiating the impugned Appellate Proceedings and therefore, the said Appellant Order, to that extent, warrants appropriate relief, in accordance with Law.

1.4 Accordingly, the Appellant submits, that, the impugned finding, that, the Sale /Transfer of the Property (Stock-in-Trade), occurred in A.Y. 2016-17, is contrary to facts and Law and liable to be set aside.

Ground No. 2 – Accrual and Taxability of Business Income in A. Y. 2014-15

2.1 The Honourable CIT(A) failed to appreciate, that, the Appellant, in accordance with settled accounting principles and the doctrine of accrual, recognised revenues in F.Y 2013-14 upon transfer of significant risks and rewards of the ownership to the Buyer of the Property (Stock in Trade).

2.2 The Appellant submits, that, the Profits arising from the said Sale/Transter transaction of the Property (Stock-in-Trade), was duly computed, under Section 28 read with Section 145 of the Income-tax Act, as per the Mercantile Method of Accounting, regularly followed by the Appellant, under the Head “Profit and Gains of Business and offered to Income Tax in A.Y 2014-15, available on the records.

2.3 The Appellant submits, that, the impugned action of bringing the same transaction, to Income Tax, again in A.Y 2016-17, results in impermissible double taxation, of the same income and is contrary to the settled principles, governing accrual and taxation of business income.

Ground No. 3-Without Prejudice: Applicability of Section 43CA to be Examined with Reference to Agreement Date

3.1 Without prejudice to the above Grounds, the Honourable CIT(A) erred in failing to appreciate that even assuming Section 43CA applies, the relevant date for determination of Stamp Duty Value ought to be 28/12/2013, being the date of Agreement/First Deed of Conveyance, when Consideration was fixed and received from Buyer, through banking channels, against the possession, being handed over to the Buyer.

3.2 The Honourable CIT(A) failed to apply Section 43CA(3), which recognises the date of Agreement, where Consideration or part thereof has been received by prescribed modes, as the determinative date for adoption of Stamp Duty Value.

3,3 The Appellant submits, that, the statutory framework, itself acknowledges, that, the transaction of Sale/Transfer of the Property (Stock in Trade), stood concluded and enforceable in F.Y 2013-14, relevant to A.Y 2014-15.

3.4 Accordingly, the impugned transaction, if, at all taxable, under Section 43CA, must be examined with reference to valuation as on 28/12/2013 (F.Y 2013-14, relevant to A.Y 2014-15) and not on the date of subsequent Registration, in F.Y 2015-16 relevant to A.Y 2016-17.

3.5 Therefore, the Appellant submits, that, the action of bringing the said transaction to Income Tax in A.Y. 2016-17, is without jurisdiction and unsustainable in Law.

Ground No. 4 – Denial of Statutory Valuation Safeguard on Hyper-Technical Ground (Substance Over Form) and Denial of deduction of correct computation of Cost of Acquisition of the Property (Stock in Trade).

4.1 On the facts and in the circumstances of the Case and in Law, the Honourable CIT(A) erred in confirming, the addition under Section 43CA, by upholding adoption of Stamp Duty Value of F.Y 2015-16, relevant A.Y 2016-17, without directing reference to the Departmental Valuation Officer (DVO), despite the Appellant, having expressly disputed the correctness of the Stamp Duty Valuation and date of Sale / Transfer of the Property (Stock in Trade) and without providing sufficient opportunity to the Appellant, to adduce / submit, relevant evidences, with regards to the Valuation of the said Property (Stock in Trade) and its Cost of Acquisition.

4.2 The Appellant submits, that, it was evident from the available records, that, the said Property (Stock in Trade), was a small piece of Land Area of about 151.75 square meters, with structure, admeasuring 283.68 square meters, fully occupied by the 17 tenants / occupants, further reserved, for garden, hosing for dis-housed and recreation ground, as per Development Plan Remarks, issued by MCGM dated 31/08/2012.

Therefore, after considering the such constrains of the Development Potential of the said Property (Stock in Trade), it was decided to Sale/Transfer said Property (Stock in Trade), at the prevailing market price, with a view, to recover its Cost of Purchase. Therefore, its Stamp Duty Valuation of Rs. 1,03,84,500/- of F.Y 2015-16, can never be compared with the Agreement Value of Rs. 15,00,000/-, of F.Y 2013-14 and accordingly, said Stamp Duty Value was disputed and reference for its Valuation, by the Departmental Valuation Officer (DVO), was sought, before the Learned ITO as well as to the Honourable CIT(A), to meet ends of the Justice.

4.3 The Honourable CIT(A), gravely erred, in rejecting the Appellant’s request for valuation by the DVO, merely on the hyper – technical ground, that, the reference was sought under Section 55A instead of Section 43CA(2) read with Section 50C(2), without appreciating, that, the substance of the Appellant’s objection, was a clear dispute of Fair Market Value and that, the statutory condition for invoking Section 43CA(2) stood satisfied.

4.4 The Honourable CIT(A), falled to apply, the settled principle, that, taxation proceedings are governed by the substance over form and that, incorrect citation of the Provision, cannot defeat, the substantive statutory right, available to the Tax Payers.

4.5 The Appellant submits, that, the impugned finding, based purely on the procedural misdescription/technical misdescription, has resulted, in the denial of the mandatory Statutory safeguard, intended to prevent, arbitrary adoption of the Stamp Duty Valuation and therefore, such impugned finding, is contrary to the settled principle and unsustainable in Law.

Ground No. 5 Initiation of Penalty u/s 271(1)(c) of the Income Tax Act

5.1 On the facts and in the circumstances of the Case and in Law, the Honourable CIT (A) erred, in not addressing, the issue of the Penalty proceedings u/s 271 (1) (c) of the Act, which was initiated by the Learned ITO – Ward 12(3) (1), Mumbai, as per his Assessment Order dated 07/12/2018, without considering the facts and submissions, available on the records.

5.2 The Appellant prays that, such initiating of Penalty proceedings u/s 271 (1) (c) of the Act, may kindly be quashed and justice be done to the Appellant.

Ground No. 6-General Ground

6.1 The Appellant craves permission to place before your honour, additional documents / papers / Case Laws, and/or any other additional evidence / fresh evidence /documents, which may be, vital for properly deciding the Income of the Appellant, during the course of this Appellate Proceedings.

6.2 The Appellant craves permission to grant personal hearing in the above matter.”

3. The assessee company had filed its return for assessment year 2016-17 on 15-10-2016 declaring total income at NIL. Later, the case of an assessee company was selected for limited scrutiny under CASS. Accordingly, the statutory notices under Section 143(2) and 142(1), along with questionnaires, were issued through ITBA portal. The assessee company responded to such notices.

4. It is observed by the Ld. AO that, during the year under consideration a conveyance deed dated 16-05-2015 was registered with the registrar of properties on 11-06-2015. The assessee, therefore was requested to explain as to why the profit arising out of sale of the above plots during the year was not offered to tax. In response the assessee stated that the sale of property was carried out during the financial year 2013-14 and not during the financial year 2015-16. As the deed of conveyance to sell the plot was originally entered into on 28-12-2013, which is a part of the subsequent deed of conveyance dated 16-05-2013, registered on 1106-2015. Hence, as per assessee, no profit arose in assessment year 2016-17.

5. The AO was not convinced with the submissions and contentions raised by the assessee. He referred to provisions of Section 43CA, according to which the consideration received or accruing as a result of transfer of an asset being land or building is less than the value adopted or assessed or assessable by an authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall for the purpose of computing profit and gains from such transfer of such asset, be deemed to be the full value of the consideration received or accruing as a result of such transfer.

6. The AO accordingly made the addition of Rs.93,34,500/- as business profit from sale of land, being the difference between the stamp-duty valuation of the property at Rs.10,38,500/-, reduced by assessee’s share in the cost of acquisition of land as on 23-12-2010 for Rs.10,50,000/-.

7. The Assessee carried the matter before Ld. CIT(A), who decided the issues against the assessee, affirming the finding of AO, with following observations:

“CONCLUSION AND ORDER

7. Having carefully considered the assessment order, the grounds of appeal, the detailed written submissions, the oral submissions made during the video conference hearing, and the applicable legal provisions and judicial precedents, I am satisfied that the action of the Assessing Officer in making an addition of Rs. 93,34,500/- to the appellant’s income under Section 43CA is legally correct, factually justified, and based on sound reasoning.

7.2 The appellant’s reliance on Section 47 of the Registration Act is misplaced. The Supreme Court has categorically held in Ram Saran Lall (Constitution Bench) and reiterated in Kanwar Raj Singh (2024) that Section 47 does not determine when a sale is complete; it only determines priority of registered documents. A sale of immovable property is complete only upon registration of the sale deed, not before.

7.3 The fact that two distinct deeds were executed one in 2013 (which remained unregistered) and another in 2015 (which was registered) is determinative. The 2015 deed is not a mere registration of the 2013 deed; it is a fresh, independent, and operative deed of conveyance.

7.4 The appellant’s arguments regarding possession, payment of consideration, and Section 53A of the Transfer of Property Act do not assist them. These provisions provide limited rights and protections to the buyer but do not complete the transfer of title in the absence of a registered deed.

7.5 There is no double taxation in this case. The appellant voluntarily declared some income in AY 2014-15, but as a matter of law, no income accrued in that year. The income legally accrued in AY 2016-17 when the deed was registered, and it is correctly taxable in that year.

7.6 The challenge to the Stamp Duty valuation is without merit. The appellant did not make a proper claim for reference to Valuation Officer under the applicable provision (Section 50C(2) read with Section 43CA(2)). The erroneous request for reference under Section 55A (which applies only to capital gains) cannot be acceded to. The Stamp Duty valuation is prima facie correct and has been rightly adopted by the AO.

7.7 In result, the action of the Assessing Officer in computing business profits at Rs. 93,34,500/- and adding the same to the total income of the appellant for Assessment Year 2016-17 is upheld in its entirety.”

8. Being aggrieved with the aforesaid decision by the Ld. CIT(A), the assessee is in appeal before us.

We have considered the rival submissions, perused the material available on record and the case laws relied upon by the assessee. Admittedly, the assessee executed a registered sale deed on 11.06.2015. It is the contention of the assessee that such registration was undertaken as a matter of completion of the requisite legal formalities, whereas the substantive transaction of transfer of the property had already taken place during the year 2013, pursuant to the sale deed/agreement executed on 28.12.2013. The assessee has submitted that although the said document was not registered at that point of time, the same was subsequently incorporated as part of the registered conveyance deed dated 11.06.2015. In support of its contention, the assessee has furnished, inter alia, the ledger account of the purchaser, M/s. Moss Realtors Pvt. Ltd., evidencing payment of the entire sale consideration of Rs.15,00,000/- in two instalments, namely, Rs.7,50,000/- on 07.04.2013 and the balance amount of Rs.7,50,000/- on 28.12.2013. Thus, according to the assessee, the entire consideration stood paid and the transaction had been acted upon much prior to the subsequent registration of the conveyance deed on 11.06.2015.

9. In order to corroborate the aforesaid transaction, assessee also furnished bank statement of account maintained with Union Bank of India, having recorded therein the entries of aforesaid two payments. The assessee also got a certificate from the bank dated 29^th June, 2026 establishing that such transactions of payments were actually taken place. The Ld. AO and Ld. CIT(A) both did not agree with the contentions of the assessee that the transaction had taken place in AY 2014-15. It is submitted by the assessee that the income from the said transaction being a business transaction was offered for tax in the AY 2014-15 following the consistent accounting principles and taxation practices and, therefore, the same income cannot be taxed again otherwise it would constitute double taxation of the same income.

10. Ld. AO was of the opinion that provisions of section 43CA would apply in the present case as the valuation done by Stamp Duty Authority was higher than the actual consideration received by the assessee.

11. The core issue before us is, whether the income arising from the underlying transaction of sale of the subject property pertains to and is taxable in AY 2014-15, when the sale consideration was received and the transaction was acted upon, or in AY 2016-17, merely on account of the fact that the sale deed was subsequently registered in the latter assessment year. The assessee relied upon various judicial precedents in support of its contention that the subsequent registration of the sale deed, by itself, would not postpone the year of taxability where the substantive transaction had already been completed and the consideration had been received and offered to tax in the earlier assessment year. Amongst the decisions relied upon, the decision of the Co-ordinate Bench of the Tribunal, Mumbai, in the case of Navketan Premises (P.) Ltd. v. Dy. CIT 214 ITD 243 (Mum – Trib.) is relevant, wherein, on the facts of that case, it was held that where the property had been sold, the entire consideration had been received through banking channels and the resultant income had already been offered to tax in the relevant assessment year, the subsequent formal registration of the agreement at a later date could not, by itself, defer the taxability of the transaction to the year of registration. The invocation of section 43CA in the year of subsequent registration was accordingly held to be misplaced.

12. Further, in the case of Amitkumar Ambalal Shah v. ITO 68 SOT 251 (Ahd – Trib.), the Co-ordinate Bench considered the circumstances attending the transfer of the property, including execution of the sale deed, payment of sale consideration and handing over of possession, and held that the transaction of transfer was relatable to the date on which the aforesaid substantive acts had taken place, rather than merely to the date on which the document was subsequently presented before the Registrar for registration. The said decision thus supports the proposition that the date of subsequent registration cannot be viewed in isolation for determining the point of transfer where the substantive ingredients of the transaction had already been completed.

13. We also find that in the case of ACIT v. Vidhi Enterprises [IT Appeal No. 4164 (Mum) of 2025, dated 16-2-2026]/[2026] 3 TMI 627 (ITAT Mumbai), the Co-ordinate Bench, while dealing with a transaction concerning property constituting stock-in-trade of the assessee and the resultant income assessable under the head “Profits and Gains of Business or Profession”, considered the principles applicable to real-estate transactions and held that the year in which the consideration was received and possession was handed over was relevant for determining the year of taxation, and that the subsequent registration of the property would not, in the facts of that case, result in shifting the year of taxation to the year of registration.

14. The aforesaid judicial pronouncements, though rendered in the respective factual settings of those cases, are relevant to the controversy before us insofar as they recognise that the determination of the year of taxability cannot necessarily be made solely with reference to the subsequent date of registration, but has to be examined having regard to the substance of the transaction, the receipt of consideration, the handing over of possession and the manner in which the transaction was acted upon by the parties. In the present case also, the assessee has placed on record material demonstrating receipt of the entire consideration during FY 2013-14 and has contended that the transaction had already been completed and the resultant income had been offered to tax in AY 2014-15. The subsequent registration of the conveyance deed, therefore, requires to be examined in the aforesaid factual and legal backdrop.

15. Regarding transfer of property, section 2(47)(v) of the Act r.w.s 53A of the Transfer of Property Act is also clear that once the possession is handed over in part performance of a written agreement for consideration and the transferee is willing to perform his obligations, the transaction qualifies as a transfer for the purpose of taxation. Formal registration of the agreement at a subsequent date would constitute mere procedural formality which cannot defer the taxability of the transaction.

16. In terms of the aforesaid deliberations, facts and circumstances as well as the legal principles emerging from the judicial precedents discussed hereinabove, we find that, in the present case, the substantive aspects of the transaction stand duly supported by the material available on record. The payment of the entire sale consideration and handing over of possession are not in dispute. The entire consideration had been received during FY 2013-14 relevant to AY 2014-15, and the assessee had duly recognised and offered the resultant income to tax in the said assessment year. The only subsequent event relied upon by the Revenue for determining the year of taxability is the registration of the conveyance deed on 11.06.2015.

17. It is also pertinent to note that the document executed on 28.12.2013, pursuant to which the transaction had been acted upon by the parties, was subsequently incorporated as part of the registered conveyance deed. Therefore, on the facts available before us, the subsequent registered document cannot be viewed as evidencing an altogether fresh and independent transaction giving rise to a separate taxable event in AY 2016-17. Rather, the subsequent registration has to be considered in continuity with the transaction which had already been entered into, acted upon and subjected to taxation in AY 2014-15.

18. In these circumstances, merely because the conveyance deed came to be registered subsequently on 11.06.2015, the same, by itself, cannot result in shifting the year of taxability of the income arising from the underlying transaction to AY 2016-17. Once the transaction had already been completed in substance, the entire consideration had been received, possession had been handed over and the resultant income had been offered to tax in the earlier assessment year, the same income could not again be brought to tax in the subsequent assessment year merely on account of the subsequent registration of the document.

19. Viewed from this perspective, the invocation of section 43CA by the Ld. AO in AY 2016-17 proceeds on the premise that the taxable transfer took place only in the year in which the conveyance deed was registered. Such premise, in the peculiar facts and circumstances of the present case, cannot be sustained. The deeming fiction contained in section 43CA pre-supposes a transfer of the asset in the relevant previous year and, therefore, its applicability has necessarily to be examined with reference to the year in which the underlying transfer is taxable. It cannot be invoked in a subsequent year merely because the instrument evidencing a transaction already completed and taxed in an earlier year was registered subsequently.

20. We, therefore, find that the income arising from the impugned transaction pertains to AY 2014-15 and not AY 2016-17. The subsequent registration of the conveyance deed does not give rise to a fresh taxable event in AY 2016-17. Consequently, the invocation of section 43CA in the year under consideration is misplaced and the resultant addition cannot be sustained. Accordingly, the order of the Ld. CIT(A) is set aside and the Ld. AO is directed to delete the addition of Rs.93,34,500/-.

21. In result, the appeal of assessee stands allowed in above terms.