Development agreement and possession can trigger transfer for capital gains, but later sale deeds may not shift the tax year.

Development agreement documents, together with a registered power of attorney and handing over of possession, were treated as a transfer under section 2(47)(v) of the Income-tax Act read with section 53A of the Transfer of Property Act. The Tribunal further noted that the later sale deeds were only the culmination of that earlier transfer, so capital gains did not arise in the assessment year under appeal. It also found no basis to disturb the valuation relied upon by the assessee, and the deletion of the addition was upheld.

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Issues: Whether capital gains arising from the development agreement and consequent transfer of possession were taxable in the assessment year under appeal, or whether the transfer had already occurred in an earlier year.

Analysis: The assessee had entered into a development agreement and executed a registered power of attorney in favour of the developer, under which possession and effective rights in the property were given for development and construction. The Tribunal held that these documents, read with the handing over of possession and the completion of construction, brought the transaction within the ambit of transfer under section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882. It further held that the subsequent sale deeds executed in the year under appeal were only the culmination of the earlier transfer and that the Revenue had not shown any basis to disturb the valuation relied upon by the assessee.

Conclusion: Capital gains were not taxable in the assessment year under appeal, and the deletion of the addition was upheld in favour of the assessee.

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