Registered development agreement with possession transfer triggers capital gains tax in the year of execution and handover.

A registered development agreement cum general power of attorney, where the document records delivery of vacant physical possession to the developer, constitutes a transfer of a capital asset for capital gains purposes in the year of execution and possession transfer. The tribunal gave primacy to the registered recitals over a later affidavit denying possession, and held that subsequent local authority permissions did not alter the taxability of the transaction. Reliance on Supreme Court rulings dealing with unregistered or inchoate development arrangements was rejected because the present arrangement was registered and coupled with contractual possession for development. The capital gains addition was therefore sustained.

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Issues: Whether capital gains arising from a registered development agreement cum general power of attorney were taxable in the assessment year in which the agreement was executed and possession was stated to have been handed over, despite the assessee's claim that actual possession was not delivered and the project was delayed.

Analysis: The registered development agreement cum GPA recorded that vacant physical possession of the property had been delivered to the developer. The tribunal treated the registered recitals as prevailing over the subsequent affidavit relied upon by the assessee and held that the grant of later permissions by local authorities did not affect the taxability of the transfer. It applied the settled principle that where a registered development agreement is coupled with transfer of possession for development purposes, the transaction amounts to a transfer of a capital asset for the purposes of capital gains taxation. The tribunal also declined to apply the assessee's reliance on the Supreme Court decisions concerning unregistered or inchoate development arrangements.

Conclusion: The capital gains addition was upheld and the assessee's challenge failed.

Ratio Decidendi: A registered development agreement cum GPA, where possession is contractually handed over for development, constitutes a transfer attracting capital gains tax in the year of execution and possession transfer.

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