Joint development agreement and deemed transfer: permissive entry without part-performance possession does not trigger capital gains.

A joint development agreement did not constitute a transfer under section 2(47)(v) of the Income-tax Act, 1961 because the owners retained possession and granted only permission to enter the property for development. The arrangement was treated as permissive possession, not possession taken or retained in part performance of a contract within section 53A of the Transfer of Property Act, 1882. As the statutory condition for deemed transfer was not met, capital gains were not assessable in the year under consideration.

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Issues: Whether capital gains were chargeable on execution of the joint development agreement on the footing that there was a transfer within the meaning of section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882, when the owners had retained possession and granted only permission to enter the property.

Analysis: The agreement recorded that the developer was given permission to enter upon the property for development purposes, while possession was stated to remain with the owners. On that basis, the arrangement was treated as one of permissive possession rather than possession in part performance of a contract for transfer. Since section 2(47)(v) applies only where possession is taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882, the statutory condition for transfer was not satisfied.

Conclusion: The joint development agreement did not result in a transfer under section 2(47)(v) of the Income-tax Act, 1961, and capital gains were not assessable in the year under consideration.

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