Deemed transfer under capital gains law requires possession and section 53A conditions in a development agreement.

A development agreement does not trigger a deemed transfer under section 2(47)(v) of the Income-tax Act unless the arrangement satisfies the elements of part performance under section 53A of the Transfer of Property Act and enables the transferee to enjoy the immovable property. Here, possession was not handed over, full consideration was not paid, and the amount received was only an advance toward the proposed transaction. On those facts, the legal conditions for transfer were not met, so capital gains could not be computed on the basis adopted by the Assessing Officer.

---

---

Issues: Whether a development agreement, without handing over possession and without payment of the entire consideration, constituted a transfer under section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882 so as to attract capital gains.

Analysis: The agreement provided that possession would be delivered only on receipt of the full consideration, and the record did not show that possession had been handed over or that the entire agreed amount had been paid. Section 2(47)(v) covers a deemed transfer only where the transaction, in substance, answers the requirements of part performance under section 53A of the Transfer of Property Act, 1882 or otherwise enables enjoyment of the immovable property by the transferee. On the facts, the amount received was only an advance towards the proposed transaction, and the legal conditions for an effective transfer were not satisfied. The capital gain computation made by the Assessing Officer was therefore not justified.

Conclusion: The development agreement did not amount to a transfer under section 2(47)(v) of the Income-tax Act, 1961, and the addition on account of capital gains could not be sustained.

Ratio Decidendi: A development agreement does not give rise to a deemed transfer for capital gains purposes unless possession is handed over and the transaction satisfies the conditions of section 53A of the Transfer of Property Act, 1882.

---