Joint development agreements and capital gains tax: absence of section 53A possession meant no deemed transfer under the income tax law.

A joint development arrangement was examined to determine whether it constituted a transfer triggering capital gains tax under section 2(47)(v) of the Income-tax Act. The Tribunal applied the jurisdictional High Court's view that the agreement provided only for a pro rata transfer of land, that possession of the whole property was not delivered in part performance under section 53A of the Transfer of Property Act, and that an unregistered arrangement did not satisfy the conditions for section 53A. On that basis, section 2(47)(v) did not apply and the capital-gains addition based on an immediate transfer could not be sustained.

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Issues: Whether the joint development arrangement and connected documents amounted to a transfer attracting capital gains tax under section 2(47)(v) of the Income-tax Act, 1961, and related provisions, or whether the assessee could be taxed only when consideration was actually received.

Analysis: The Revenue's appeal concerned the taxability of the transaction under the deeming provisions for transfer. The Tribunal noted that the issue was covered by the jurisdictional High Court, which had held that the development agreement contemplated only a pro rata transfer of land, that possession for the entire property was not handed over in part performance so as to attract section 53A of the Transfer of Property Act, 1882, and that in the absence of a registered agreement satisfying the ingredients of section 53A, section 2(47)(v) did not apply. On that basis, the earlier addition made on the footing of an immediate transfer and accrual of capital gains could not be sustained.

Conclusion: The capital-gains addition was not sustainable, and the Revenue's challenge to the deletion failed.

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