Development agreement and capital gains arise only when possession is actually given in part performance under section 53A.

A sale-cum-development agreement does not amount to a transfer under section 2(47)(v) unless the transferee is put in possession in part performance within section 53A of the Transfer of Property Act. Here, the agreement contemplated delivery of vacant and peaceful possession only after the developer obtained the Intimation of Disapproval, and the record showed that this approval came later with no proof of prior possession. The statutory conditions for transfer in the relevant assessment year were therefore not met, so the long-term capital gains addition could not be sustained.

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Issues: Whether the sale-cum-development agreement resulted in a transfer of immovable property in the assessment year under section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882, so as to attract long-term capital gains in that year.

Analysis: The agreement provided that vacant and peaceful possession would be handed over only after the developer obtained the Intimation of Disapproval from the municipal authority. The material on record showed that the Intimation of Disapproval was issued only later, and there was no evidence that possession had been delivered before that event. On these facts, the statutory conditions for treating the transaction as a transfer under section 2(47)(v), grounded in part performance under section 53A, were not satisfied in the relevant assessment year.

Conclusion: No transfer of immovable property took place in the relevant assessment year, and the long-term capital gains addition could not be sustained. The assessee succeeds.

Ratio Decidendi: A development agreement does not trigger transfer for capital gains purposes under section 2(47)(v) unless the transferee has, in part performance, actually been allowed possession in terms of section 53A of the Transfer of Property Act, 1882.

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