Permissive possession under a joint development agreement is not part-performance possession, deferring capital gains liability under Section 2(47)(v).

Permissive possession granted to a developer under a joint development agreement does not, by itself, constitute possession in part performance under Section 53A of the Transfer of Property Act, 1882. Section 2(47)(v) of the Income-tax Act, 1961 requires possession to be taken or retained in circumstances contemplated by Section 53A. Where the agreement preserves the owners' actual physical possession and describes the developer's entry as permission to undertake development and construction, no legal possession is delivered in part performance. Accordingly, capital gains are not assessable in that relevant assessment year.

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Issues: Whether permissive possession granted under a joint development agreement constituted possession in part performance under Section 53A of the Transfer of Property Act, 1882, attracting Section 2(47)(v) of the Income-tax Act, 1961 and capital gains liability in the relevant assessment year.

Analysis: The joint development agreement expressly preserved the owners' actual physical possession and characterised the developer's entry as permissive possession for development and construction. Section 2(47)(v) of the Income-tax Act, 1961 applies only where possession is taken or retained in part performance of a contract of the nature contemplated by Section 53A of the Transfer of Property Act, 1882. Mere permission or licence to enter and undertake development, without delivery of legal possession in part performance, does not satisfy that requirement.

Conclusion: Permissive possession under the joint development agreement did not attract Section 53A of the Transfer of Property Act, 1882 or Section 2(47)(v) of the Income-tax Act, 1961. Capital gains could not be assessed in the relevant assessment year.

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