Capital gains on development agreements arise when possession is given under section 53A, even if consideration is received later.

Section 2(47) of the Income-tax Act treats a transfer as taking place when a development agreement is coupled with possession in part performance under section 53A of the Transfer of Property Act. Payment of consideration on the date of the agreement is not required; the critical elements are a written contract, delivery of possession, and conduct showing performance or willingness to perform. On the facts described, the agreement and possession occurred in the same previous year, so capital gains were taxable in that year and later receipt of consideration did not defer taxability.

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Issues: Whether capital gains were assessable in the assessment year in which the development agreement was executed and possession was given, even though consideration was to be received later.

Analysis: Section 2(47) of the Income-tax Act, 1961 includes within the concept of transfer transactions falling within section 53A of the Transfer of Property Act, 1882. Under section 53A, payment of consideration at the time of the agreement is not a prerequisite; what is material is a written contract, possession in part performance, and acts showing performance or willingness to perform. On the facts found by the Tribunal, the agreement and possession both occurred in the relevant previous year, so the transfer was complete for capital gains purposes in that year. The later receipt of consideration did not postpone taxability.

Conclusion: The question was answered against the assessee and in favour of the Revenue; the Tribunal's view that capital gains arose in the relevant assessment year was upheld.

Final Conclusion: The appeal failed because the transfer under the development agreement was complete upon execution of the agreement and handing over of possession, attracting capital gains tax in the assessment year under appeal.

Ratio Decidendi: For capital gains purposes, a transfer occurs when a development agreement coupled with possession satisfies section 53A, and actual payment of consideration on that date is not necessary.

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