Development agreement without part performance or possession transfer is not a taxable transfer for capital gains purposes.

A development agreement does not amount to a transfer for capital gains purposes under section 2(47)(v) where the assessee retains physical possession, the developer receives possession only on fulfilment of contractual conditions and final payment, and the balance consideration remains unpaid. The arrangement also fails to trigger section 53A of the Transfer of Property Act, 1882 when the transferee has not obtained rights of part performance and the essential terms have not been complied with. On these facts, the agreement does not mature into a taxable transfer, and the addition towards long-term capital gains is not sustainable.

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Issues: Whether the development agreement amounted to a transfer within the meaning of section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882, so as to attract capital gains tax.

Analysis: The assessee retained physical possession of the property, the developer was entitled to possession only upon fulfilment of the contractual conditions and last payment, and the balance consideration remained unpaid. The agreement was terminated after the developer failed to comply with the essential terms, and the facts did not establish that the transferee had obtained rights of part performance under section 53A of the Transfer of Property Act, 1882. On these facts, the arrangement did not mature into a transfer for capital gains purposes under section 2(47)(v) of the Income-tax Act, 1961.

Conclusion: No transfer arose under section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882, and the addition towards long term capital gains was not sustainable.

Ratio Decidendi: Where possession is not handed over in a manner attracting part performance and the transferee has not fulfilled the essential contractual conditions, a development agreement does not constitute a transfer for capital gains purposes under section 2(47)(v).

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