Joint development arrangement and capital gains tax: unregistered agreement and licencee possession did not trigger deemed transfer.

A joint development arrangement was stated to create only a pro rata transfer of land, so the transaction did not attract capital gains tax under section 2(47)(ii), section 2(47)(v) or section 2(47)(vi) of the Income-tax Act, 1961. The note further states that no possession of the entire land was given in part performance under section 53A of the Transfer of Property Act, 1882; any possession was only as a licencee for development, not as a transferee. Because the post-24.09.2001 agreement was unregistered, section 53A requirements were not met and section 2(47)(v) did not apply. The capital gains addition was therefore deleted.

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Issues: Whether the transfer of land under the joint development arrangement attracted capital gains tax under section 2(47)(ii), section 2(47)(v) and section 2(47)(vi) of the Income-tax Act, 1961, and whether the Revenue's appeal against deletion of the addition could be sustained.

Analysis: The dispute was covered by the earlier decision holding that the joint development agreement, read with the related sale deeds, reflected only a pro rata transfer of land. It was further held that no possession of the entire land had been given in part performance so as to attract section 53A of the Transfer of Property Act, 1882. The possession, if any, was only as a licencee for development and not as a transferee. Since the agreement executed after 24.09.2001 was not registered, the requirements of section 53A were not satisfied and, by incorporation, section 2(47)(v) did not apply. On that basis, the addition made on the footing of taxable capital gains was not sustainable.

Conclusion: The appeal failed and the deletion of the capital gains addition was upheld in favour of the assessee.

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