Capital gains on developer transfer accrue when possession passes under a valid agreement, not again on later unit sales.

Where an HUF handed over possession of immovable property to a developer under a valid agreement and power of attorney, the transfer was complete in the legal sense under section 2(47)(v) of the Income-tax Act read with section 53A of the Transfer of Property Act, so capital gains accrued in that earlier year. The later sale of developed units by the developer did not create a fresh taxable transfer in the assessee's hands, especially where the consideration had already been received earlier and no income accrued in the relevant year. On that basis, capital gains were not assessable again in assessment year 2016-17 and the addition was deleted.

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Issues: Whether the capital gains arising from transfer of the assessee-HUF's undivided share in immovable property were assessable in the relevant assessment year 2016-17, or had already accrued in assessment year 2011-12 when possession was handed over to the developer under the sale agreement and power of attorney arrangement.

Analysis: The assessee had sold the land under an agreement dated 06.11.2009 and handed over possession to the developer through a registered power of attorney on 30.04.2010, thereby completing a transfer in the legal sense under section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882. The consideration for the assessee's share had already been received in the earlier years, and the later sale of developed apartments in assessment year 2016-17 was carried out by the developer, with the ultimate buyers deducting tax in the developer's name. The material on record also showed that no sale consideration accrued to the assessee in the relevant year, and similar co-owners were not subjected to capital gains addition in their hands.

Conclusion: The capital gains, if any, had arisen in assessment year 2011-12 and not in assessment year 2016-17; the addition made in the assessee's hands for assessment year 2016-17 was not sustainable and was deleted.

Ratio Decidendi: Where possession of immovable property is given to the developer under a valid agreement and power of attorney so as to attract section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882, the capital gains accrue in the year of such transfer and cannot be taxed again in a later year merely because the developer subsequently sells the developed units.

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