Capital gains on joint development land require section 53A compliance, including possession and readiness to perform.

Capital gains under section 2(47)(v) arise only where a joint development arrangement satisfies the requirements of section 53A of the Transfer of Property Act. The Tribunal followed the binding High Court ruling on the same agreement and noted that possession of the entire land had not been handed over in part performance, and the developers were not shown to be willing or able to perform their contractual obligations. As those mandatory conditions were unmet, the remaining land was not treated as transferred for capital gains purposes and no chargeable income accrued on that footing.

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Issues: Whether capital gains tax was chargeable on the remaining land under the joint development arrangement where possession of the entire land was not given and the conditions of part performance were not satisfied.

Analysis: The appeal turned on whether the transaction fell within section 2(47)(v) of the Income-tax Act, 1961 by attracting section 53A of the Transfer of Property Act, 1882. The Tribunal followed the binding High Court decision on the same development agreement and held that the mandatory requirements of section 53A were not met because possession of the entire land had not been handed over in part performance and the developers were not shown to be willing or able to perform their contractual obligations. On that basis, the remaining land could not be treated as transferred for capital gains purposes and no chargeable income had accrued in respect of it.

Conclusion: The addition on account of capital gains on the remaining land was not sustainable and stood deleted, so the Revenue's appeals failed.

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