Capital gains on joint development agreements arise on handing over possession under section 2(47)(v), not on later registration.

Where possession is handed over under a joint development agreement and the arrangement is acted upon, transfer is complete for capital gains purposes under section 2(47)(v) read with part-performance principles in the year of handing over, even if formal conveyance or registration occurs later. Applying that principle, the capital gains from the development agreement accrued in assessment year 2007-08, not assessment year 2014-15. The reasoning on hypothetical income was inapplicable because the transaction had materialised and the developer had proceeded under the agreement. The Revenue's challenge therefore failed.

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Issues: Whether capital gains arising from the joint development agreement were taxable in assessment year 2007-08 or assessment year 2014-15, and whether transfer had occurred within the meaning of section 2(47)(v) when possession was handed over to the developer.

Analysis: The agreement was entered into in 2006 and possession of the property was handed over to the developer in compliance with the development arrangement. The facts showed that the developer had acted upon the agreement and the transaction had gone through, unlike a case where the arrangement never materialised. Once possession was delivered and the conditions akin to part performance were satisfied, the transfer fell within section 2(47)(v) of the Income-tax Act, 1961. Capital gains therefore accrued in the year in which the transfer took place, and not merely on the later completion or registration of constructed units. The reasoning in the decision concerning hypothetical income did not apply on these facts.

Conclusion: The capital gains were taxable in assessment year 2007-08 and not in assessment year 2014-15. The Revenue's challenge failed.

Ratio Decidendi: Where possession is handed over under a development agreement and the transaction satisfies section 2(47)(v) read with part performance principles, transfer is complete for capital gains purposes in the year of such handing over, even if formal conveyance or registration occurs later.

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