Joint development agreements can trigger capital gains when possession and control pass, with tax on full accruing consideration.

A joint development agreement coupled with an irrevocable power of attorney was treated as a transfer for income-tax purposes because effective possession and control passed to the developer, bringing section 2(47)(v) and section 2(47)(vi) into play. Capital gains were therefore computed in the year the arrangement was entered into, and section 45 read with section 48 required the full consideration received or accruing on transfer to be taxed, including the value of flats to be received later. The cancellation plea and the argument that only completed receipts could be taxed were rejected; the section 54F point was not adjudicated.

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Issues: Whether capital gains arising from the joint development agreement were chargeable in the relevant assessment year on the footing that the transaction amounted to a transfer under section 2(47)(v) and section 2(47)(vi) of the Income-tax Act, 1961, and whether the full consideration received or accrued under the agreement, including the value of flats to be received later, was liable to be brought to tax in the hands of the individual member.

Analysis: The appeal was decided on identical facts and the reasoning followed the earlier detailed view that the society had, through the joint development arrangement and the irrevocable power of attorney, conferred effective possession and control over the property to the developer. The transfer was therefore treated as having taken place when the arrangement was entered into, even though title conveyance was to occur in stages. The computation of capital gains was held to be governed by section 45 read with section 48, under which the full value of consideration received or accruing on transfer is relevant, not merely the amount actually received during the year. The later cancellation plea and the contention that only completed receipts could be taxed were rejected. The plea for deduction under section 54F was not adjudicated because no such ground survived for consideration.

Conclusion: The capital gains were rightly assessed in the year of the joint development agreement on the basis of the entire consideration accruing under the arrangement, and the addition was upheld against the assessee.

Final Conclusion: The assessment of capital gains on the basis of the joint development agreement was sustained, and the assessee's appeal failed.

Ratio Decidendi: For a development arrangement accompanied by irrevocable possession-related rights and an irrevocable power of attorney, transfer occurs for income-tax purposes when the arrangement is entered into, and capital gains are computable on the full consideration received or accruing on such transfer.

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