Development agreement as mere licence does not create deemed transfer under section 2(47)(v) for capital gains reopening.

A reopening based on alleged capital gains escapement was invalid because the development agreement gave the developer only an exclusive licence to enter and develop the land, not possession in part performance under section 53A of the Transfer of Property Act. On that footing, the agreement did not amount to a transfer within section 2(47)(v), since the possession requirement for deemed transfer was not satisfied. The jurisdictional foundation for reopening therefore failed, and the notice and the rejection order were set aside.

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Issues: Whether the notice reopening the assessment under section 148 was valid when the development agreement granted the developer only a licence to enter and develop the land, and therefore did not amount to a transfer within section 2(47)(v) read with section 53A.

Analysis: The reopening was founded on the premise that the assessee had transferred capital asset land in the relevant year and had escaped assessment on capital gains. The decisive question was whether the development agreement placed the developer in possession in part performance of a contract of the nature contemplated by section 53A of the Transfer of Property Act, 1882. The agreement described the developer as an exclusive licensee for development, and the legal effect of such licence had to be tested against the settled requirement that section 53A applies only where possession is taken or retained in part performance. On that footing, a mere licence to develop did not amount to possession for the purpose of section 2(47)(v).

Conclusion: The reopening lacked a valid jurisdictional because the development agreement did not effect a transfer within section 2(47)(v); the notice and the rejection order were liable to be set aside.

Ratio Decidendi: A development agreement conferring only a licence to enter and develop property does not by itself satisfy the possession requirement of section 53A, and therefore does not constitute a transfer under section 2(47)(v) for purposes of reopening on capital gains escapement.

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