Effective possession under section 2(47)(v) may arise in development agreements even without exclusive possession where control passes in part performance.

Section 2(47)(v) of the Income-tax Act, read with section 53A of the Transfer of Property Act, is explained as covering development arrangements where the transferee is placed in effective possession and control in part performance of the contract. The article notes that exclusive possession is not essential; concurrent possession may still satisfy the statutory requirement if the developer can enter the property, obtain permissions, carry out development, and exercise general control. It further points to the agreement terms, consideration structure, continuing conduct of the developer, and encumbrance details as indicators that possession had effectively been handed over, with capital gains treated as attracted in the year concerned.

---

---

Issues: Whether the development agreement and power of attorney amounted to a transfer within the meaning of section 2(47)(v) of the Income-tax Act, 1961 so as to attract capital gains tax in the year under appeal.

Analysis: The transaction was examined with reference to section 2(47)(v) of the Income-tax Act, 1961 and section 53A of the Transfer of Property Act, 1882. The agreement gave the developer extensive rights, including the ability to enter the property, obtain permissions, undertake development, and deal with the project. The Court held that for clause (v), exclusive possession is not necessary and that even concurrent possession may satisfy the statutory requirement if the transferee is enabled to exercise general control over the property in part performance of the contract. The Court also relied on the terms of the agreement, the nature of the consideration, the developer's continuing conduct, and the encumbrance particulars to conclude that possession had been effectively handed over and that the transferee was willing to perform its part of the contract.

Conclusion: The transaction constituted a transfer under section 2(47)(v) and the capital gains addition was upheld.

Ratio Decidendi: For purposes of section 2(47)(v), a transfer occurs when the transferee is put in effective possession and control in part performance of a contract under section 53A of the Transfer of Property Act, 1882, and exclusive possession is not a necessary condition.

---