Capital gains and section 54F relief depend on Form 26AS valuation, transfer s, possession, and foreign residential investment.

Capital gains were analysed by reference to Form 26AS, and development charges and brokerage were treated as deductible transfer s where actually incurred. Section 54F relief was held available for investment in a residential house in the USA, as the provision does not confine the new house to India and the claim could be raised in appeal. For a joint development agreement, taxability depended on effective transfer and delivery of possession, so capital gains arose only when possession was later handed over rather than on execution of the agreement. Correct credit for prepaid taxes required verification of the record.

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Issues: (i) Whether the sale consideration for the Poojanahalli lands had to be computed on the basis of the amount reflected in Form 26AS and whether the assessee was entitled to deduction of development charges and brokerage as cost of transfer. (ii) Whether deduction under section 54F was allowable in respect of investment made in a residential house situated in the USA. (iii) Whether capital gains arising from the joint development agreement dated 31.1.2014 were chargeable in assessment year 2014-15 or in assessment year 2015-16. (iv) Whether the Assessing Officer was to be directed to grant correct tax credit for prepaid taxes.

Issue (i): Whether the sale consideration for the Poojanahalli lands had to be computed on the basis of the amount reflected in Form 26AS and whether the assessee was entitled to deduction of development charges and brokerage as cost of transfer.

Analysis: The dispute on sale consideration was resolved by preferring the amount reflected in Form 26AS for the relevant assessment year for computation of capital gains. The Tribunal also accepted that the development charges paid to the development authority and the brokerage paid for sale were actually incurred, and the mere fact that these claims were not made in the original return did not bar their consideration before the appellate forum.

Conclusion: The issue was decided in favour of the assessee. The sale consideration was to be taken as reflected in Form 26AS, and deduction of development charges and brokerage was to be allowed.

Issue (ii): Whether deduction under section 54F was allowable in respect of investment made in a residential house situated in the USA.

Analysis: The Tribunal followed the view that section 54F does not contain a condition that the new residential house must be situated in India. It also held that the absence of a claim in the original return did not prevent the appellate authority from entertaining the claim. The investment in the foreign residential property therefore satisfied the statutory requirement for exemption.

Conclusion: The issue was decided in favour of the assessee. Deduction under section 54F was allowable for the USA residential property.

Issue (iii): Whether capital gains arising from the joint development agreement dated 31.1.2014 were chargeable in assessment year 2014-15 or in assessment year 2015-16.

Analysis: The Tribunal held that mere execution of the joint development agreement did not by itself amount to a taxable transfer when legal possession had not effectively passed and when the developer had not performed acts in furtherance of the contract during the relevant year. It relied on the statutory framework governing transfer of capital assets, part performance, and the effect of registration requirements, and concluded that the transfer materialised only when possession was actually delivered later. The capital gain therefore could not be taxed in the earlier year.

Conclusion: The issue was decided in favour of the assessee. The capital gain from the joint development agreement was taxable only in assessment year 2015-16.

Issue (iv): Whether the Assessing Officer was to be directed to grant correct tax credit for prepaid taxes.

Analysis: The Tribunal found that the matter required verification from the record and therefore restored it for proper credit adjustment.

Conclusion: The issue was decided in favour of the assessee to the extent of remand for verification and grant of correct credit.

Final Conclusion: The appeal succeeded on the principal substantive grounds concerning capital gains computation, transfer expenses, section 54F exemption, and the timing of taxability under the joint development agreement, while the tax credit matter required verification by the Assessing Officer.

Ratio Decidendi: For capital gains purposes, a transfer under section 2(47)(v) requires an enforceable transaction coupled with effective passing of possession or its legal equivalent, and section 54F does not confine the new residential house to India.

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