Development agreement and possession transfer can trigger capital gains when section 53A conditions are satisfied.

Registered development agreements coupled with delivery of possession can constitute a transfer of a capital asset under section 2(47)(v) where the section 53A requirements are met. The record showed a written agreement, possession handed over, and a non-refundable deposit, while the developer had applied for approvals and no repudiation or unwillingness to perform was proved. On those facts, the conditions of part performance were satisfied, and the transfer was treated as occurring in the year of the agreement and possession. Capital gains were therefore chargeable in the relevant assessment year.

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Issues: Whether execution of the registered development agreement and handing over of possession to the developer resulted in a transfer of capital asset under section 2(47)(v) read with section 53A of the Transfer of Property Act, 1882, so as to attract capital gains in the assessment year concerned.

Analysis: The assessee had entered into a registered development agreement, delivered possession, and received a non-refundable security deposit. The dispute turned on whether the developer was willing to perform its part of the contract, because section 53A requires a written contract, possession in part performance, and willingness to perform. The material on record showed that the developer had applied for approvals and the delay in commencement of development was due to extraneous circumstances and pending permissions, not proved unwillingness. The absence of evidence showing repudiation or default by the developer meant the conditions of section 53A were satisfied. The jurisdictional High Court principle was applied that transfer for capital gains purposes occurs in the year of agreement and delivery of possession.

Conclusion: The transaction amounted to a transfer under section 2(47)(v), and capital gains were chargeable in the relevant assessment year; the assessee's challenge failed and the Revenue's stand was accepted.

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