Section 2(47)(v) transfer in a joint development deal arose only when possession and conveyance rights were actually created.

Capital gains from a joint development arrangement were held not to arise in assessment year 2012-13 because the agreement did not hand over possession or create enforceable rights meeting section 53A of the Transfer of Property Act. A power of attorney restricted the attorney from selling or conveying the property, so the arrangement did not amount to a transfer under section 2(47)(v) of the Income-tax Act. The supplementary agreement and later power of attorney, which fixed consideration and authorised conveyance, indicated that the effective transfer occurred only in assessment year 2013-14, making the addition for 2012-13 unsustainable.

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Issues: Whether capital gains arising from the joint development arrangement were taxable in assessment year 2012-13 or only in assessment year 2013-14.

Analysis: The Development Agreement did not show that possession of the scheduled property had been handed over to the developer; it only permitted entry for demolition and reconstruction. The power of attorney dated 08.11.2011 also prohibited the attorney from selling or conveying any portion of the property. Those documents did not satisfy the conditions of section 53A of the Transfer of Property Act, 1882, so the arrangement could not be treated as a transfer under section 2(47)(v) of the Income-tax Act, 1961. The Supplementary Agreement dated 18.07.2012 fixed the consideration and the later power of attorney dated 17.08.2012 conferred authority to convey and sell the property, showing that the effective transfer took place only then, falling in assessment year 2013-14.

Conclusion: The capital gains were not assessable in assessment year 2012-13 and the addition for that year was unsustainable.

Ratio Decidendi: For the purposes of section 2(47)(v) of the Income-tax Act, 1961, a transfer under the doctrine of part performance arises only when the statutory conditions of section 53A of the Transfer of Property Act, 1882 are satisfied, including effective possession and enforceable rights in favour of the transferee.

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