Joint development agreement may trigger capital gains transfer under section 2(47)(vi); computation requires fresh reassessment.

A joint development agreement coupled with an irrevocable general power of attorney can amount to a transfer under section 2(47)(vi) where it confers enforceable rights to enter the property, construct the project, and enjoy the developer's share; unregistered documents and delay in completion do not prevent capital gains from arising. For computation, land acquired before 1 April 2001 requires adoption of fair market value on that date as cost of acquisition with indexation under section 48, and the consideration may also need examination under section 50C. The capital-gain quantification was remitted for fresh determination in accordance with law.

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Issues: (i) Whether execution of the joint development agreement and irrevocable general power of attorney constituted a transfer giving rise to capital gains under section 2(47)(vi) of the Income-tax Act, 1961. (ii) How the capital gain was to be quantified for the year under appeal.

Issue (i): Whether execution of the joint development agreement and irrevocable general power of attorney constituted a transfer giving rise to capital gains under section 2(47)(vi) of the Income-tax Act, 1961.

Analysis: The arrangement conferred on the developer rights to enter the property, construct the project, enjoy the developer's share, and complete the transaction through construction-linked consideration in kind. The inclusive definition of transfer covers any arrangement that has the effect of transferring or enabling enjoyment of immovable property, and this operates independently of the requirements of section 53A of the Transfer of Property Act, 1882. The unregistered nature of the documents therefore did not prevent attraction of section 2(47)(vi), and the delay in completion did not alter the character of the transaction.

Conclusion: The transaction amounted to a transfer under section 2(47)(vi), and capital gains were chargeable in the year under appeal.

Issue (ii): How the capital gain was to be quantified for the year under appeal.

Analysis: The land was stated to have been acquired before 1 April 2001, so the fair market value as on that date was required to be adopted as the cost of acquisition with indexation under section 48 of the Income-tax Act, 1961. The consideration also had to be examined with reference to the stamp value under section 50C of the Income-tax Act, 1961, and the assessee was to be given an opportunity to substantiate the claim with supporting material.

Conclusion: The quantification issue was left to be decided afresh by the Assessing Officer in accordance with law.

Final Conclusion: The appeal succeeded only to the limited extent of requiring fresh determination of the capital-gain computation, while the finding that the development arrangement constituted a taxable transfer was sustained.

Ratio Decidendi: A development arrangement that confers enforceable rights to enter, construct, and enjoy immovable property, and has the effect of transferring or enabling enjoyment of such property, falls within section 2(47)(vi) and triggers capital-gains liability even if the transaction is not completed by a registered conveyance.

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