Section 2(47)(v) & Capital Gains: Determining the Year of Transfer in Property Transactions

Vivek Jalan | Last updated: 27 April 2026

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When calculating capital gains or losses on property sales where payments are made in installments, the key factor for determining the assessment year is the date possession is transferred to the buyer. According to Section 2(47)(v) of the Income Tax Act and Section 53A of the Transfer of Property Act, a transaction is considered a 'transfer' only when the buyer takes or retains possession. This means capital gains are assessed in the financial year the possession was transferred, regardless of when the agreement was signed or payments were made. This also applies to determining the base year for indexation purposes.

There is a question while computation of Capital Gain or Capital loss on transfer of immovable property that incase payments were made in parts over a period, in which FY will the capital gain or loss be assessable. Further, it is important for the purpose of indexation also for the buyer. For eg. Agreement for sale of a property was made on 30.3.2013 and advances were exchanged. However, the conveyance was executed on 30.6.2014 and possession was transferred then. The question is, whether Ca

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1 Year PLAN

1999

(Excl. of GST ₹359)

BEST VALUE

2 Years PLAN

3499

(Excl. of GST ₹629)

3 Months PLAN

999

(Excl. of GST ₹179)

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About the Author

Vivek Jalan

DESIGNATED PARTNER

Mr. Vivek Jalan is a FCA, Qualified LL.M (Constitutional Law) and LL.B. He is the Chairman of The Fiscal Affairs and Taxation Committee of The Bengal Chamber of Commerce and Industry. He is the Convenor on Indirect Taxes of the CII- Economic Affairs and Taxation Committee (ER); He is also a visiting faculty for Indirec ... Read more

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