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Answer: Where there is a contract of sale of shares by agreement, it is the date of the contract which should be treated as the date of transfer for purposes of capital gains tax, subject only to the condition that there should have been a subsequent delivery of shares. The Income-tax Appellate Tribunal in Max Telecom Ventures Limited v C.I.T. held so, while pointing out that the Board Circular No. 704 dated April 28, 1995 (213 I.T.R. (St.) 7) has also set out the law accordingly.
The argument of the assessee was that the agreement was a conditional one and it was only on satisfaction of the conditions that the share certificates would be delivered to the purchaser and the sale consideration would be received. Since shares are movable property, the date of transfer should ordinarily be considered with reference to Section 5(2) of the Sale of Goods Act, 1930, that is, the date of delivery should be taken as the date of transfer. In respect of shares, it has been held that the provisions of the Transfer of Property Act, 1882 and not the Companies Act, 1956 would be relevant.
Where the share scrips are handed over along with share transfer forms duly signed, the transfer is complete and the liability to tax follows. This accepted position of law follows the decision in the case of Vasudev Ramchandra Shelat v Pranlal Jayanand Thaker where even in the case of shares given by way of gift, the transfer was held to have been complete on such delivery of scrips along with share transfer forms duly signed, though the donor had died before registration, with the result that the gift having become complete, the donee was entitled to the shares.

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