Capital gains on joint development agreement accrue when transfer conditions and possession are completed, not in an earlier year.

Capital gains from a transfer under a joint development agreement were held to arise in assessment year 2008-2009, because possession was handed over only after the relevant approvals and completion of the conditions for transfer. The appellate finding that the transaction satisfied section 53A of the Transfer of Property Act, 1882 and section 2(47)(v) of the Income-tax Act, 1961 in that year had attained finality, as the Revenue did not challenge it. On that basis, the gains could not be shifted to assessment year 2006-2007, and the binding appellate finding prevailed against the Assessing Officer.

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Issues: Whether the capital gains arising from transfer of property under a joint development agreement were assessable in assessment year 2006-2007 or in assessment year 2008-2009, and whether the Revenue could insist on assessment in the earlier year after the finding for the later year had attained finality.

Analysis: The assessee had entered into a joint development agreement, and possession was handed over only in assessment year 2008-2009 after the necessary approval and completion of the conditions relevant to transfer. The finding of the Commissioner of Income Tax (Appeals) that the transfer satisfied the requirements of section 53A of the Transfer of Property Act, 1882 and section 2(47)(v) of the Income-tax Act, 1961 in assessment year 2008-2009 had attained finality, since the Revenue had not appealed that order. On that basis, the Tribunal held that the capital gains could not be reopened or shifted to assessment year 2006-2007, and the appellate finding was binding on the Assessing Officer.

Conclusion: The capital gains were correctly assessable in assessment year 2008-2009 and not in assessment year 2006-2007; the Revenue's challenge failed.

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