Joint development agreement without possession may not trigger capital gains transfer until completion of the property transaction.

A joint development agreement and power of attorney did not amount to a transfer of the capital asset in assessment year 2011-12 because the developer received only limited access for survey and planning, physical possession was not handed over, and the conditions for part performance under section 53A of the Transfer of Property Act were not satisfied. As no transaction falling within section 2(47) of the Income-tax Act was established in that year, capital gains arose only in the later year when the transfer was completed. On that basis, exemption under section 54 was available for the later assessment year, and the Tribunal's factual findings were upheld.

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Issues: Whether the joint development agreement and power of attorney amounted to a transfer of the capital asset in the assessment year 2011-12 for the purpose of capital gains tax; and whether the assessee was entitled to exemption under Section 54 of the Income-tax Act, 1961.

Analysis: The arrangement permitted the developer only to enter the property for survey, planning and other formalities, and did not amount to handing over physical possession. The approval for construction was obtained only later, and until then the assessee remained in possession. The facts did not attract section 53A of the Transfer of Property Act, 1882, as no consideration had passed and no transaction of the kind contemplated by section 2(47) of the Income-tax Act, 1961 was established in the relevant assessment year. The Tribunal's factual findings were not shown to be perverse, and no substantial question of law arose under section 260-A of the Income-tax Act, 1961.

Conclusion: The transfer did not occur in assessment year 2011-12, and the assessee was entitled to claim exemption under Section 54 of the Income-tax Act, 1961 for the later assessment year when the transfer was completed.

Final Conclusion: The revenue's challenge failed, and the Tribunal's view that capital gains arose only in the later assessment year was sustained.

Ratio Decidendi: Mere execution of a joint development agreement and power of attorney, without transfer of physical possession or the conditions necessary for part performance, does not constitute a transfer under section 2(47) of the Income-tax Act, 1961.

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