Unregistered development agreement did not trigger deemed transfer for capital gains; transfer was treated as occurring later.

An unregistered collaboration agreement lacked legal efficacy for Section 53A of the Transfer of Property Act, so the deeming transfer provision in Section 2(47)(v) of the Income-tax Act was not triggered. On that basis, an unregistered development arrangement could not by itself constitute a transfer of a capital asset for capital gains purposes in Assessment Year 2007-08. The transfer was treated as having occurred in Assessment Year 2009-10, and capital gains were not chargeable in 2007-08.

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Issues: Whether the unregistered collaboration agreement resulted in a transfer of the capital asset in Assessment Year 2007-08, or whether the transfer took place in Assessment Year 2009-10 so as to determine the year of chargeability of capital gains.

Analysis: The agreement was found to be unregistered, and therefore it could not have legal efficacy for the purposes of Section 53A of the Transfer of Property Act, 1882. In the absence of a registered contract capable of enforcement under Section 53A, the deeming provision in Section 2(47)(v) of the Income-tax Act, 1961 was not attracted. The legal position applied was that an unregistered development arrangement does not by itself constitute a transfer of a capital asset for capital gains purposes. On the facts, the assessee's case that the transfer was reflected in Assessment Year 2009-10 was accepted.

Conclusion: The transfer did not take place in Assessment Year 2007-08, and the capital gains were not chargeable in that year; the issue was decided in favour of the assessee.

Ratio Decidendi: An unregistered collaboration or joint development agreement cannot, by itself, trigger a transfer under Section 2(47)(v) of the Income-tax Act, 1961 because it lacks enforceability under Section 53A of the Transfer of Property Act, 1882.

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