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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether execution of the development agreement cum general power of attorney, coupled with delivery of possession and rights to the developer, constituted a transfer within the meaning of section 2(47)(v) of the Income-tax Act, 1961 so as to attract capital gains tax in the year under appeal.
Analysis: The agreement showed that the developer was granted possession and substantial rights over the property for development, with consideration partly in cash and partly in kind. The deeming provision in section 2(47)(v) operates where possession is allowed to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882. The charging provision under section 45 of the Income-tax Act, 1961 taxes gains arising from transfer of a capital asset in the year in which transfer takes place. On the facts, the arrangement conferred general control and development rights on the developer, and the contract terms and surrounding material supported the conclusion that possession had been handed over for purposes of the statutory definition of transfer.
Conclusion: The transaction amounted to a transfer under section 2(47)(v) of the Income-tax Act, 1961 and the capital gains addition was sustained. The ground challenging the chargeability of capital gains failed.
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