Joint development agreement possession did not constitute transfer, so capital gains could not arise in the relevant year.

A joint development agreement did not amount to a transfer of the capital asset in the relevant assessment year because the agreement excluded part performance under Section 53A of the Transfer of Property Act, 1882, and deferred the developer's power to alienate until completion of construction and receipt of the necessary clearances and occupation certificate. The clauses on permissive possession, power of attorney and tax payment showed that possession was granted only for development and construction, not as a completed transfer of rights. On that reading, the condition for transfer under Section 2(47)(v) of the Income-tax Act, 1961 was not satisfied, and the capital gains addition was unsustainable.

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Issues: Whether execution of the joint development agreement resulted in transfer of the capital asset in the relevant assessment year so as to attract capital gains tax.

Analysis: The agreement expressly provided that delivery of possession would not amount to part performance under Section 53A of the Transfer of Property Act, 1882, and that the developer's power to alienate would arise only after completion of construction and issuance of the required clearances and occupation certificate. The clauses dealing with permissive possession, power of attorney, and payment of taxes showed that the developer received possession only for the purpose of development and construction, not as a completed transfer of rights in the property. On a combined reading of the agreement, the condition necessary to treat the transaction as a transfer under Section 2(47)(v) of the Income-tax Act, 1961 was not satisfied in the relevant year.

Conclusion: The transfer did not take place in the relevant assessment year, and the capital gains addition was unsustainable.

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