If corporation of a city doesn't make it mandatory to register relinquish deed for giving up share in favour of brother, will income tax department accept deed of understanding with amount of monetary compensation mentioned as valid proof of selling /giving up share of PROPERTY to invest the LTCG in capital gain bonds?
You must register a formal Relinquishment Deed because the Registration Act requires it for any transfer of interest in immovable property. A "Deed of Understanding" is generally not legally sufficient to satisfy the Income Tax Department's requirements for claiming capital gain exemptions. You should prioritize registering the deed to ensure your transaction is legally sound and your tax claims remain valid.
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