Deemed transfer under development agreements arises only when readiness and willingness under property law are proved by conduct.

A development agreement and delivery of possession do not amount to a deemed transfer under section 2(47)(v) unless the section 53A conditions are cumulatively met, including the transferee's readiness and willingness to perform the contract as shown by conduct. On the facts, the developer had not secured approvals, begun construction, or otherwise demonstrated readiness, and the breakdown of the arrangement supported the conclusion that no transfer had occurred; capital gains were therefore not taxable in the relevant year. The unexplained cash credit issue was not finally sustained because the supporting material and banking trail had not been examined in depth, so the matter was remitted for fresh adjudication.

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Issues: (i) Whether the development agreement and handing over of possession resulted in a transfer within the meaning of section 2(47)(i) or section 2(47)(v) read with section 53A of the Transfer of Property Act, 1882 so as to attract capital gains tax. (ii) Whether the addition of unexplained cash credit of Rs. 19,86,664 required confirmation or fresh examination.

Issue (i): Whether the development agreement and handing over of possession resulted in a transfer within the meaning of section 2(47)(i) or section 2(47)(v) read with section 53A of the Transfer of Property Act, 1882 so as to attract capital gains tax.

Analysis: For a transaction to fall within section 2(47)(v), the requirements of section 53A of the Transfer of Property Act must be cumulatively satisfied. Mere execution of a development agreement or delivery of possession is not enough. The transferee must also be ready and willing to perform its part of the contract, and such willingness must be reflected in conduct and not in a bare assertion. On the facts, the developer had not undertaken development, had not secured approvals, had not commenced construction, and had not shown readiness to complete the arrangement. The landowners had also instituted proceedings indicating the agreement had broken down. The land was additionally treated as agricultural land, and that finding remained uncontroverted.

Conclusion: No transfer within the meaning of section 2(47)(v) was established and capital gains could not be brought to tax in the year under appeal.

Issue (ii): Whether the addition of unexplained cash credit of Rs. 19,86,664 required confirmation or fresh examination.

Analysis: The record indicated that the assessee had produced evidence concerning the creditor and the banking trail, while the lower authorities had not examined the supporting material in sufficient depth. Since similar credits from the same source in earlier years had reportedly been accepted on verification, the proper course was to re-examine the matter afresh after giving the assessee an opportunity to substantiate the claim.

Conclusion: The addition was not finally sustained and the issue was remitted for fresh adjudication.

Final Conclusion: The revenue's appeals failed on the capital gains issue, while the assessee's appeal succeeded only to the extent of a remand on the cash credit addition; the common order was otherwise upheld.

Ratio Decidendi: A development agreement attracts deemed transfer under section 2(47)(v) only when the transferee's readiness and willingness to perform the contract under section 53A of the Transfer of Property Act is established by conduct and supporting circumstances.

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