A sale of immoveable property is effected only when a registered instrument of transfer is executed and registered, and not when possession is given.

G.K.MITTER, J.

1. THE main question for determination in this reference is whether there was a sale by the assessee of its immoveable properties to Hall and Anderson Ltd., a public company, on 1st Dec., 1946, within the meaning of s. 12B(1) of the Indian IT Act, 1922.

2. THE assessee bearing the name, Hall and Anderson Limited, is a private company incorporated under the Indian Companies Act, 1913. It used to carry on business as general drapers, outfitters, furnishers and warehouse owners in Calcutta. On 29th Nov., 1946, it entered into an agreement for sale of all its properties and assets in Calcutta and Darjeeling to a new public company also bearing that name. The document executed in this connection shows that the vendors agreed to sell and the new company agreed to purchase w.e.f. 1st Dec., 1946, all the freehold land lying at 31, Chowringhee Road, and 1, Russell Street, Calcutta, together with all buildings, fixtures, furniture and other moveable property and the monthly tenancy of the premises at Commercial Road, Darjeeling, and all cash, bank and other balances, stock-in-trade, books debts, etc., belonging to the vendors including the benefit of any EPT refund and the advantages of all contracts with assistants and other and generally the whole of the undertaking and assets of the vendors including its goodwill and the right to use the name "Hall and Anderson". The price was fixed at Rs. 80,00,000 apportioned in the manner following, namely, Rs. 20,00,000 for the freehold land, Rs. 30,00,000 for the buildings and other immoveable properties and Rs. 30,00,000 for the moveable properties. Possession was to be given to the new company on the execution of the agreement for sale or at any rate within two weeks thereof. The vendors undertook to execute a conveyance and any other documents which might thereafter be considered necessary in respect of the portions of the premises agreed to be sold but which did not pass by delivery of possession. The new company agreed to accept such title as the vendors had, as also all existing liabilities and debts of the vendors. The new company further agreed to retain the services of any member of the vendors' staff who wished to remain on the same terms as before.

It will be noticed from the above that the intention of the parties was that the public company would step into the shoes of the assessee as soon as possible and within a fortnight from 29th Nov., 1946. As a matter of fact possession of the entire properties was delivered to the new company on 1st Dec., 1946. There can be no doubt again that the parties intended that whatever properties or assets the assessee had would be put into possession of the new company immediately and the assessee would execute a sale deed or any other document which might be required by the new company to perfect its title. For some reason or other, there being no suggestion that it was with the intention of avoiding payment of any tax, the sale deed in respect of the immoveable properties was not executed until 26th Feb., 1949. The deed of sale recites that the vendors, on being called upon to execute a conveyance "for the purpose of formally transferring the lands, hereditaments and premises" mentioned in the agreement for sale, were granting, selling and conveying unto the new company free from incumbrances all the immoveable properties mentioned in the agreement for sale. The question is whether the sale for the purpose of s. 12B(1) of the Indian IT Act was effected on 1st Dec., 1946, as claimed by the Revenue or on 26th Feb., 1949, as claimed by the assessee. If the sale be held to have been effected in December, 1946, the assessee will have to pay tax on the capital gains but will be exempt therefrom, if the date of sale be in February, 1949.

3. THIS reference turns on the interpretation of s. 12B(1) and s. 12B(2) of the Indian IT Act as they stood until repealed by the Indian Finance Act, 1949. The portions of the sections with which we