Joint development agreement tax: when is the landowner taxed?

This is Part 1 of a six-part study of how income tax treats joint development agreements, from the landowner’s side and the developer’s, under the Income-tax Act, 1961 and the Income-tax Act, 2025. Part 2 covers how much is taxed, cost, rate, sections 54, 54F and 54EC, and the sale of flats received; Part 3 Hindu undivided families, heirs, non-residents, dealers, firms and companies; Part 4 trusts, societies, agricultural, leasehold and town planning scheme land; Part 5 the developer; Part 6 tax deduction at source, searches, reassessment and the move to the 2025 Act. Housing society redevelopment has two separate series: for the developer, the schemes, payments to members and revenue recognition and the minimum tax; for members, transfer, cost and holding period, hardship, corpus and rent, exit and resale and tenants, slums, shops and the society.

An Ahmedabad bungalow owner who gives his plot to a builder for six flats and Rs 50 lakh signs the agreement in one year, lets the builder in the same year, sees the first tower certified four years later and moves into his own flat a year after that. Income tax has to pick one of those years. For an individual or Hindu undivided family under a registered area-sharing agreement, section 45(5A) has picked it since assessment year 2018-19: the year the plan-approving authority certifies completion of “the whole or part of the project”. For everyone else, and for every agreement that is unregistered, pays only cash, or gives a share of sale proceeds instead of flats, the answer is the year of “transfer” under section 2(47), and that is where most of the litigation lies.

On transfer, the Supreme Court’s 2017 decision in Balbir Singh Maini decided two things and left three open. An agreement made on or after 24 September 2001 that is not registered cannot be a part-performance transfer under section 2(47)(v), and nothing accrues where the project falls through. Whether a developer who enters under a licence has possession, whether the developer was willing to perform, and what a registered agreement with an irrevocable power of attorney does, the Court did not decide. Since 2022 Tribunal Benches have split on exactly those questions for registered agreements, and Ahmedabad, which must follow the Gujarat High Court but treats every other Bench as a coordinate Bench, has to choose.

Key points

• A joint development agreement is a transfer under section 2(47)(v) only where it is a section 53A contract, registered if made on or after 24 September 2001, with possession in part performance and a developer who performs or is willing to perform.
• On registered agreements the Tribunal is split: Hyderabad taxes the registration year where possession is recited; Patna, Visakhapatnam, Kolkata and Pune wait for real possession or consideration. For Ahmedabad both are coordinate Benches.
• Section 45(5A) applies only to an individual or Hindu undivided family, under a registered agreement for a share in the project, from assessment year 2018-19; it moves the charge to the completion certificate year and values the share at stamp duty value plus money.
• Whether the first part certificate or the owner’s own tower certificate triggers the charge, whether Gujarat building use permission is the certificate, and whether the section is optional are all undecided.
• Pure revenue-sharing agreements are outside section 45(5A); the landowner’s year depends on whether the agreement transferred the land at signing (Bankar, Pune) or each share accrues as sales are made (Ahmedabad practice, and Sanand Properties, Supreme Court, 2026, on who is taxed).
• Refundable deposits are not consideration on the High Court authority read, though the Revenue treats an adjustable or forfeitable deposit as price; a stalled project defers or defeats accrual on Maini, while the Revenue keeps a completed transfer in its own year (Dholu, paragraph 6.1).

The deal map: what the landowner signs and what he receives

A joint development agreement is any arrangement under which a landowner lets a developer build on his land and is paid out of the project, and the tax answer turns less on its name than on three facts: whether it is registered, what the owner receives, and what control passes when it is signed.

Area sharing. The owner keeps a fixed share of the built area (flats, shops, offices, or plots and villas in a layout) and conveys to the developer, or to the developer’s buyers, the undivided share of land that goes with the developer’s units. This is the model section 45(5A) was written for.

Area plus money. A common variant adds cash or cheque payments at signing, on plan approval or in instalments. The money may be called consideration, an advance, an interest-free refundable deposit or a “security”; which label survives scrutiny decides whether anything was paid “for” the land in the agreement year (discussed below).

Revenue sharing. The owner takes a percentage of what the developer realises from buyers, gross or net, sometimes with a minimum guarantee, often through an escrow account. No flats come to him.

Outright sale of development rights. A sale of development rights for money is outside section 45(5A), and the year is the year of transfer.

Variants that change the analysis. An irrevocable general power of attorney given with the agreement can itself be the transfer event, or can make no difference, depending on what it authorises. A clause letting the developer in “as licensee” for development, or “as representative of the owners”, is the landowner’s main defence against agreement-year taxation. A phased project with several building use permissions raises the part-certificate question under section 45(5A). And an owner who is also a partner or director of the developer, as in DCIT v. Mukesh Jamnadas Shah (ITAT Ahmedabad, IT(SS)A 201 to 203/Ahd/2019, 27 March 2023), invites the Revenue’s alternative that the land was converted into stock in trade. Land put into a developer company or SPV for shares is a transfer by exchange under section 2(47)(i), outside section 45(5A) because the owner receives shares, not “a share, being land or building”; land put into a developing firm for a partnership interest is section 45(3) (Part 3). And an owner who pays the developer for extra area or for building his own share is dealt with in Part 2.

What the owner can receive. Constructed area, plots, a share of revenue, money in instalments, a refundable deposit, parking, a share of transferable development rights, delay compensation and cancellation penalties. For the year of charge only two questions matter for each item: is it consideration for the transfer, and when does the owner acquire an enforceable right to it.

Transfer under section 2(47): which limb a development agreement engages

A development agreement is a “transfer” of land only if it falls within one of the clauses of section 2(47) of the Income-tax Act, 1961, and five of them are in play. The definition says that transfer “includes” (i) “the sale, exchange or relinquishment of the asset”, (ii) “the extinguishment of any rights therein”, (iv) conversion of the asset into stock in trade, (v) “any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882”, and (vi) any transaction, “whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever”, “which has the effect of transferring, or enabling the enjoyment of, any immovable property”. Explanation 1 imports the meaning of immovable property from section 269UA(d), whose Explanation to sub-clause (i) already treats “any rights therein” as land.

Clause (v) and section 53A. Section 53A protects a transferee who has, “in part performance of the contract, taken possession of the property”, under a written contract “to transfer for consideration any immoveable property” whose terms “can be ascertained with reasonable certainty”, where “the transferee has performed or is willing to perform his part of the contract”. The Registration and Other Related Laws (Amendment) Act, 2001 changed the position from 24 September 2001. Section 17(1A) of the Registration Act, 1908 now requires documents “containing contracts to transfer for consideration, any immovable property for the purpose of section 53A” to be registered if executed on or after that date, and says unregistered ones “shall have no effect for the purposes of the said section 53A”; the proviso to section 49 no longer lets an unregistered document be received as evidence of part performance. Clause (v) therefore has, for a post-2001 agreement, a registration condition on top of the six features of section 53A.

Clause (vi) and enjoyment as owner. Clause (vi), not tied to section 53A or registration, is the Revenue’s route for an unregistered agreement; Maini reads it as enjoyment “as a purported owner” and found none on an agreement that left the owner as owner. The Cochin Tribunal in Pulikkaparambil George Jacob v. ITO (MA 29/COCH/2023, 25 August 2026, paragraph 5) recalled its own order endorsing, though remitting, a clause (vi) transfer on an unregistered joint venture agreement because “the coordinate bench did not follow the decision of the honourable Supreme Court in case of CIT versus Balbir Singh Maini”, and directed the appeal to be heard afresh, so clause (vi) is still to be decided there. The recalled order states the Revenue’s argument at full strength: entry was a licence, but the developer held its 73.91 per cent of the land “in it’s capacity as an owner” (paragraph 4.2, reproduced in the recall order). On clause (v), a single judge of the Karnataka High Court in K. Shashikala v. ACIT (WP 22819/2021, 20 October 2022, paragraphs 7, 8 and 11) held that a sale agreement (unregistered), agency agreement and power of attorney with no recital of possession were not a transfer under clause (v), and remitted the assessment to the Assessing Officer. The Revenue’s clause (vi) case survives where the documents let the developer act as owner of the owner’s own share.

Clause (ii) and extinguishment. Extinguishment needs neither registration nor section 53A possession. The Supreme Court used it in Seshasayee Steels (2019) to fix the year in which the owner’s rights ended on the last payment under a compromise; the Pune Tribunal used it in ITO v. Anil Vitthal Bankar (2 February 2023) for a registered agreement with a sweeping irrevocable power of attorney. Against a landowner who keeps title and gets flats in his own name, the argument is weaker, because his rights in the land continue in his share.

Clause (iv) and conversion. The Revenue’s alternative where the owner looks like a trader is that the agreement converts the land into stock, section 45(2) postponing the charge to each sale; the Delhi Tribunal rejected it for an individual not in the real estate business in Amrendra Kumar v. ITO (ITA 2937/Del/2026, 16 September 2026, paragraph 7). Part 3 decides section 45(2).

Explanation 2. The 1961 Explanation 2 says transfer “includes and shall be deemed to have always included” “creating any interest in any asset in any manner whatsoever … by way of an agreement … or otherwise”. The Revenue can read it as catching the signing of any development agreement. The owner’s answer: it is expressed “For the removal of doubts” and aimed at shares of foreign companies, clause (v) would be otiose if every agreement creating an interest were a transfer, and Maini did not apply it. No decision on the point was traced.

The 2025 Act. Section 2(109) of the Income-tax Act, 2025 re-letters the definition: extinguishment is clause (b), conversion (d), enjoyment (f), part performance (g), and the former Explanation 2 is clause (h). Two changes matter for agreements signed from 1 April 2026. Clause (f) reads “or in any other manner)” without “whatsoever”, the word on which Maini (paragraph 21) rested the breadth of clause (vi); the owner will say the new limb is no wider, the Revenue that nothing turns on one word. And clause (h) is now a substantive limb, without “For the removal of doubts” or “shall be deemed to have always included”, which strengthens the Revenue’s textual argument that creating an interest by agreement is itself a transfer; the owner’s answer, that (g) would then be otiose, is unchanged.

Kapadia and the agreement-year rule: what the Bombay High Court actually decided

The agreement-year rule comes from Chaturbhuj Dwarkadas Kapadia v. CIT (Bombay High Court, 13 February 2003, (2003) 260 ITR 491), and it is usually quoted without its result: the Court laid down the rule for the future and allowed the assessee’s appeal. The assessee held a 44/192 undivided share in property at Gamdevi and agreed on 18 August 1994 to sell it to Floreat Investments for Rs 1,85,63,220 “with a right to the said Floreat to develop the property” (paragraph 2). The agreement contemplated a limited power of attorney (clause 8) and an irrevocable licence after approvals. By 31 March 1996 almost the whole price was paid. The power of attorney was executed in March 1999, and the assessee paid capital gains tax for assessment year 1999-2000. The Assessing Officer and the Tribunal held the transfer took place in assessment year 1996-97, the year of substantial payment and permissions.

The Court, S.H. Kapadia J writing, said at paragraph 8 that development agreements “do not constitute transfer in general law” and that “the year of chargeability is the year in which the contract is executed. This is in view of Section 2(47)(v) of the Act.” At paragraph 9: “If the contract, read as a whole, indicates passing of or transferring of complete control over the property in favour of the developer, then the date of the contract would be relevant to decide the year of chargeability.” Its reason was administrative certainty: “what is substantial compliance would differ from officer to officer”. And on the facts, “once under Clause 8 of the agreement a limited power of attorney is intended to be given to the developer to deal with the property, then … the date of the contract, viz., August 18, 1994, would be the relevant date”.

Three things follow. First, the Department lost: the question whether the Tribunal was right to place the transfer in assessment year 1996-97 was answered “in the negative, i.e., in favour of the assessee” (paragraph 12), and “the appeal stands allowed” (paragraph 13). Second, the Court did not tax the contract year either; it described its view as “guidelines, which may be followed by the Department in all future cases” and left the assessee’s payment for 1999-2000 undisturbed (paragraph 10). Third, the rule is expressed through section 2(47)(v), so after the 2001 amendment it can operate only on a registered agreement, and only where the contract “read as a whole” passes “complete control”.

The Bombay High Court has since left a possession-year finding undisturbed without mentioning Kapadia. In PCIT v. Late Miss Ranjana P. Doshi (Income Tax Appeal 1124 of 2016, 9 January 2019) co-owners signed a development agreement on 1 April 2008 for Rs 34.35 crore; the Revenue said general control passed by that agreement and a general power of attorney, but the Tribunal found that possession was not parted with until full payment much later. The Court dismissed the Revenue’s appeal at admission as raising no question of law (paragraph 5), recording at paragraph 4 that in Arvind S. Phake (20 November 2017) it had found “that the transfer of capital asset can be stated to have taken place only when the possession of the property was handed over upon receipt of full consideration”. Phake itself was not read for this article and is cited only as Ranjana Doshi describes it.

Balbir Singh Maini: what the Supreme Court decided and what it left open

CIT v. Balbir Singh Maini (Supreme Court, Civil Appeal 15619 of 2017 and batch, 4 October 2017, R.F. Nariman and Sanjay Kishan Kaul JJ) decided two things for the landowner and expressly declined to decide three more.

The facts. The Punjabi Cooperative Housing Building Society Ltd., of 95 members, owned 21.2 acres at village Kansal near Chandigarh. A tripartite agreement of 25 February 2007 with Hash Builders and Tata Housing Development Company was never registered (paragraph 5). Clause 2.1 recited that the owner “irrevocably and unequivocally grants and assigns in perpetuity all its rights” of development (paragraph 13). Consideration was payable in four instalments; 7.7 acres were conveyed by sale deeds and the gains on them offered (paragraph 6). The third instalment was never paid, public interest litigation stopped the project, and no approvals came. For a member holding a 1,000 square yard plot, the Assessing Officer computed a long-term capital gain of Rs 3,54,68,276 under section 2(47)(ii), (v) and (vi), holding that physical and vacant possession had passed under the agreement (paragraph 7).

Registration (paragraph 20). In the Court’s own words, “if an agreement, like the JDA in the present case, is not registered, then it shall have no effect in law for the purposes of Section 53A”, and “there is no contract in the eye of law in force under Section 53A after 2001 unless the said contract is registered”. It approved the High Court’s formulation that “in order to qualify as a ‘transfer’ of a capital asset under Section 2(47)(v) of the Act, there must be a ‘contract’ which can be enforced in law under Section 53A”. The Court rejected the Tribunal’s reliance on the words “of the nature referred to in Section 53A”.

Clause (vi) (paragraphs 21 to 23). The Court first corrected the High Court: clause (vi) is not confined to changes in membership of a society, given “the expression ‘or in any other manner whatsoever’” (paragraph 21). Then: “any transaction which enables the enjoyment of immovable property must be enjoyment as a purported owner thereof. The idea is to bring within the tax net, transactions, where, though title may not be transferred in law, there is, in substance, a transfer of title in fact” (paragraph 22). On this agreement, “the owner continues to be the owner throughout the agreement, and has at no stage purported to transfer rights akin to ownership to the developer. At the highest, possession alone is given under the agreement, and that too for a specific purpose - the purpose being to develop the property” (paragraph 23).

No accrual (paragraphs 24 to 28). Independently of transfer, the Court held that “the income from capital gain on a transaction which never materialized is, at best, a hypothetical income” (paragraph 27), and that the owners “did not acquire any right to receive income, inasmuch as such alleged right was dependent upon the necessary permissions being obtained” (paragraph 28).

What it left open. Paragraph 20 says: “Since we are deciding this case on this legal ground, it is unnecessary for us to go into the other questions decided by the High Court, namely, whether under the JDA possession was or was not taken; whether only a licence was granted to develop the property; and whether the developers were or were not ready and willing to carry out their part of the bargain.” Those were the Punjab and Haryana High Court’s findings in C.S. Atwal v. CIT (ITA 200 of 2013, 22 July 2015), on the same agreement: possession, “if at all”, was “as a licencee only” (paragraph 40), and “willingness to perform their part of the contract was absent on the part of the developers” (paragraph 42). Two Gujarat-relevant orders attribute those findings to the Supreme Court. The Gujarat High Court in Chhaganlal Mulji Dholu v. JCIT (25 November 2022, paragraph 5.5.1) says Maini held that a licensee “cannot be said to be in possession of the property within the meaning of section 53A”; the Ahmedabad Tribunal in ITO v. Nasrin Mohamadfarooq Memon (21 July 2026, paragraph 8.2) says the same of Maini and Seshasayee together.

The limit of paragraph 23. Paragraph 23 is a finding on that agreement read as a whole, including a termination clause and approval-conditional instalments; it sits uneasily with clause 2.1’s grant “in perpetuity”, and the Revenue reads it as fact-bound. An agreement that gives an irrevocable power to sell the owner’s land share, lets the developer book units and receive the price in its own name, and puts the price risk on the developer is the Revenue’s case for “rights akin to ownership”.

Possession against licence, willingness to perform and the power of attorney

Possession under a licence to develop is not possession in part performance under section 53A, and on that point the Supreme Court has spoken, though not in Maini. In Seshasayee Steels P. Ltd. v. ACIT (Civil Appeal 9209 of 2019, 4 December 2019, R.F. Nariman, Aniruddha Bose and V. Ramasubramanian JJ) an agreement to sell of 15 May 1998 for about 100 grounds at Perungudi gave the builder, by clause 16, “permission … to start advertising, selling, construction on the land”, and a power of attorney of 27 November 1998 let the builder’s director sell flats after development. The Court held: “Clause 16 would, therefore, lead to the position that a license was given to another upon the land for the purpose of developing the land into flats and selling the same. Such license cannot be said to be ‘possession’ within the meaning of Section 53A, which is a legal concept, and which denotes control over the land and not actual physical occupation of the land.” Clause (vi) failed too, the owner’s rights being “completely intact both as to ownership and to possession even de facto”.

The case is double-edged. The assessee there wanted the earlier year (1998) in order to escape tax in assessment year 2004-05, when the last cheque under the compromise was paid; the Court placed the transfer in the year the owner’s rights were extinguished on that cheque, under a compromise of 19 July 2003, under section 2(47)(ii) and (vi), and dismissed the appeal. A landowner who argues “licence only” to defeat an agreement-year charge accepts that the transfer comes later, often in a year closer to search material or at a higher stamp duty value.

The High Courts on licence. The Calcutta High Court in PCIT v. Infinity Infotech Parks Ltd (ITAT 225 of 2015, 18 July 2018) gave the clearest reasoning for area-sharing agreements: “where the owner retains any right in the constructed area that may come up in future, it would scarcely be a case of a transfer taking place at the time of the execution of the agreement”; the developer’s possession is like that of a mason or civil engineer, under “the de jure possession of the owner”; and the developer’s right to protect possession under section 53A “could never have arisen prior to the construction being completed and the apportionment effected”. The landowner there was a company. The Telangana High Court in Smt. Shantha Vidyasagar Annam v. ITO (ITTA 527 of 2006, 7 January 2025, paragraph 17) held that possession “for the limited purpose of carrying out the development work” was not section 53A possession. The Mumbai Tribunal restated Seshasayee in one line for a housing society’s redevelopment agreement in ITO v. The Borivali Ashwini Co-op Housing Society (ITA 9287/Mum/2025, 11 May 2026, paragraph 12): “granting licence to developer to enter upon land for development does not amount to possession contemplated under section 53A of the Transfer of Property Act”.

Willingness to perform. Section 53A requires that the transferee “has performed or is willing to perform”. In Ahmedabad the test comes from ITO v. Yogendra Ambalal Sarkar (ITA 977/Ahd/2011, 17 October 2014), known here only as quoted in Ashwin M. Patel HUF (paragraphs 6 and 16), where no material showed that the transferees “were willing to perform their part of obligation under the agreement during the year under consideration”. The Revenue’s answer is that willingness is judged in the agreement year by the developer’s conduct then: a developer who pays, applies for approvals and builds is willing, and a later default does not unwind an earlier transfer. That answer is undecided at High Court level where the developer performed for years and then defaulted.

The irrevocable power of attorney. A power of attorney can be the transfer, or no help to the Revenue, depending on what it authorises. For the Revenue: the Authority for Advance Rulings in Jasbir Singh Sarkaria, In re (30 August 2007) treated the irrevocable power of 8 May 2006, which in the Authority’s words explicitly mentioned “acts of management, control and supervision of property”, not the 2005 collaboration agreement, as “a transaction in the eye of law which allows the possession to be taken in part-performance” (paragraph 15.2), and held that possession under clause (v) “need not necessarily be sole and exclusive” (paragraph 13.2); an advance ruling binds only the parties to it, and it predates Maini. The Pune Tribunal in Anil Vitthal Bankar (paragraphs 7, 11, 13 and 16) held a registered joint venture agreement of 28 April 2008, with a registered irrevocable power to mortgage, sell and receive compensation, a transfer on signing. The Bangalore Tribunal in Narayan Vedavathi v. DCIT (ITA 2084/Bang/2025 and batch, 27 August 2026, paragraphs 33 and 34) held a registered agreement and registered power of attorney of 25 March 2005, giving “effective possession, dominion and complete control”, a transfer in assessment year 2005-06, distinguishing Seshasayee. For the landowner: Maini (clause 2.2 contemplated powers of attorney), Atwal (a registered special power recorded that possession stayed with the members, paragraph 40), Nasrin Memon (an irrevocable power, yet no transfer, paragraphs 3 and 8.1) and Seshasayee. Whether a registered power of attorney can supply the registration that an unregistered agreement lacks has not been decided; the owner’s answer is that section 17(1A) asks for registration of “the documents containing contracts to transfer”, and a power of attorney is agency, not a contract to transfer. Whether a power of attorney “sale” passes title at all after Suraj Lamp is decided in Part 4.

The same agreement, two answers. Two Bangalore Benches decided one 2004 agreement with SJR Builders in opposite ways, N.G. Chandra Reddy (HUF) (2016) holding it a transfer in the agreement year and N.G. Balu Reddy (HUF) (2021) not; Part 3 sets out both, and neither should be cited alone.

Registered agreements since 2022: the split between Benches

Registration is a necessary condition for a transfer under section 2(47)(v), not a sufficient one, and on registered agreements with possession recited the Tribunal Benches now give opposite answers.

The Hyderabad line: the registration year. In Bandi Sudheer Reddy, Pramod Reddy Tekula and Venkata Rajasekhar Koneru v. ACIT (ITAT Hyderabad, ITA 610, 611 and 627/Hyd/2022, 22 October 2024), five owners had registered a development agreement cum power of attorney on 27 June 2015 with Giridhari’s Vue; clause 8 recited delivery of vacant possession on execution. A search found the document, and the Assessing Officer added Rs 32,14,995 under section 153C. The owners said trespassers blocked possession and municipal permission came only on 5 January 2021. The Tribunal, bound by the Andhra Pradesh High Court in Potla Nageswara Rao v. DCIT (ITTA 245 of 2014, 9 April 2014), took the year of the registered agreement cum power of attorney, held the registered recital prevailed over the developer’s “self-serving affidavit” (the first paragraph 8.2) and that later permission “is nothing to do with transfer of the property” (the second paragraph 8.2). The order also says that Maini held “the year of registration of the development agreement cum GPA would be the year of transfer”; Maini held no such thing, its registration holding being only that an unregistered agreement cannot be a section 53A contract. The Bangalore Tribunal took the same side in DCIT v. R. Muniraju (HUF) (ITA 54/Bang/2020, 13 October 2022, paragraph 25): “it is not the permissible possession but the absolute possession that is being given to the Developer”, and the developer’s plan application “is an act in furtherance of the contract”, so the gain was taxed in assessment year 2010-11, the agreement year. Narayan Vedavathi (2026) followed Muniraju (paragraph 37).

Potla Nageswara Rao is the Revenue’s best High Court text on deferred consideration: section 53A “does not contemplate any payment of consideration”, and “payment of consideration on the date of agreement of sale is not required, it may be deferred for future date”. It was an admission-stage dismissal that did not consider registration, and it predates Maini.

The other line: real possession and consideration. In Pancham Singh v. ITO (ITAT Patna, ITA 462/Pat/2025, 16 March 2026) a registered land development agreement of 27 August 2013, 48:52, with possession handed over for the project, was not a transfer: “The possession that was made over by the assessee to the developer was not of the developer’s share”, and income “on a transaction which had not decided in the year of agreement is a hypothetical income” (paragraph 6). Much of paragraph 6 adopts the assessee’s submission nearly word for word. In DCIT v. Maganti Subrahmanyam Choudary and others (ITAT Visakhapatnam, ITA 252 to 254/VIZ/2025, 9 September 2026), a registered development agreement cum power of attorney of 24 September 2015 with Manjeera Constructions failed section 53A because “the developer has not performed the conditions specified in the agreement” and the agreement “does not allowed actual possession” (paragraph 14), and pending litigation meant “neither developer nor the land owner has right to transfer the property” (paragraph 15); Potla was distinguished (paragraph 19). In NKA Commercial Pvt Ltd v. ITO (ITAT Kolkata, ITA 1106/KOL/2023, 26 December 2023), a company’s registered agreement of 30 July 2014 was “just an agreement for carrying out construction on the plot” where nothing was built (paragraphs 5 and 7). In Rajesh D. Gaikawad v. ITO (ITAT Pune, ITA 230/PUN/2026, 8 July 2026, paragraph 6.4), a registered agreement of 5 February 2016 deferring possession until the owner removed electricity and drainage lines effected no transfer in assessment year 2016-17. In Malti Devi v. ITO (ITAT Patna, ITA 230/PAT/2026, 19 August 2026) a registered agreement of 3 September 2015 was not a transfer when signed, though Rs 30,11,500 had been paid, a point the order does not analyse, and the Tribunal directed under section 150 that the handover year, assessment year 2025-26, be assessed (paragraphs 9 and 10).

What the Ahmedabad Bench should do. The Hyderabad and Patna orders partly reflect their jurisdictional High Courts (Potla binds Hyderabad), but for Ahmedabad both lines are coordinate Bench decisions, never “merely persuasive”. Before either line is reached, the Bench is bound by the Gujarat High Court: Jayantilal C. Desai for the agreement year where the owner surrendered control, and Chhaganlal Mulji Dholu against it where the owner remained owner (both below). On like facts the Ahmedabad Bench should follow one line, and where it disagrees with a coordinate Bench the course is to recommend that the President constitute a Special Bench under section 255(3) of the 1961 Act (section 364(4) of the 2025 Act).

Deposits, advances and money paid at signing: what is consideration

Money paid when the agreement is signed is consideration only if it is paid for the transfer, and a deposit refundable on completion is not, on every High Court authority read. The question matters twice: section 53A requires a contract “to transfer for consideration”, so an agreement under which nothing but a returnable deposit passes may not be a section 53A contract at all; and if the transfer did take place, the money may be part of what accrued in that year.

Refundable security deposits. In Shantha Vidyasagar Annam (Telangana High Court, 2025) a 1996 agreement gave the developer 60 per cent and the owner 40 per cent; the developer deposited Rs 2,00,000 “as a performance guarantee”, “returnable … without any interest after the execution of the work” (clause 6). The Court held: “A sum of Rs.2,00,000/- mentioned in paragraph 6 of the development agreement is only the performance guarantee which is refundable. The aforesaid amount of Rs.2,00,000/- has not been paid by way of consideration of the transaction” (paragraph 17), so the contract had “not been executed for consideration”, and the orders of all three authorities taxing assessment year 1997-98 were quashed (paragraphs 19 and 21). The Calcutta High Court in PCIT-2 v. Emporis Properties Pvt Ltd (ITAT/59/2023, 30 March 2023) found no transfer under an agreement with an interest-free refundable deposit of Rs 10 crore where “the assessee continued to be the owner of the property throughout the development”. The Tribunal has followed the same line in Narsi Reddy Komatireddy v. DCIT (ITAT Hyderabad, 13 February 2025), on a “deposit performance security” of Rs 5,00,000 an acre refundable on completion (paragraph 12); in Late Ragi Rajesham v. ITO (ITAT Hyderabad, 10 April 2026, paragraph 9.2); in Maganti (Rs 7 crore refundable deposit, Rs 4 crore received); and, for withholding under section 194-IA, in Prestige Estates Projects Ltd v. ACIT (ITAT Bangalore, ITA 813/Bang/2019, 2 March 2021, paragraphs 5.4, 5.7 and 5.8), on Rs 21.85 crore paid to 54 owners under a licence-type agreement in a year with no sanction or construction.

The Revenue’s answer at full strength. A deposit that is adjustable against the price, recoverable only out of the owner’s share of sales, or forfeitable on the developer’s default is part payment in substance. In Prestige the Departmental Representative argued exactly that: the deposit was “actually not refundable” and was adjusted against sale proceeds. In Bankar the Rs 1 crore “security deposit” accompanied an agreement held to be a transfer on signing. Maini’s own agreement provided that on termination “the Owner shall forfeit the Adjustable Advance/ Earnest Money” (clause 14(iv)), language that reads like price. And a deposit that is never refunded once the flats are handed over has, by then, been earned. No Gujarat decision on a refundable deposit under a development agreement was traced.

Labels do not decide. In CIT-II v. Swastik Engg. Mfg. Co. Pvt. Ltd. (Gujarat High Court, Tax Appeal 1151 of 2014, 1 December 2014) receipts both parties booked as “advance” did not stop the transfer falling in the 1994 agreement year, at the landowner’s instance.

A price fixed by formula. Ashwin M. Patel, HUF v. ITO (ITAT Ahmedabad, ITA 1876/Ahd/2013, 19 February 2015) is the Gujarat authority on agreements that fix no price. The development agreement of 1 April 2009 for 2,837 square metres of Final Plot 195 at Vasna pegged the owner’s consideration, on his account, to the jantri value on the date of the first sale deed of constructed property; the first deed came on 28 September 2010. The Assessing Officer taxed Rs 1,07,03,362 in assessment year 2010-11 because about 95 per cent, shown as an “unsecured loan” of Rs 2.12 crore, had been received in that year. The Tribunal deleted it: “DR could not point out any clause in the agreement dated 1.4.2009 wherein the assessee agreed to transfer its land to developer for consideration” (paragraph 13), and “the development agreement dated 1.4.2009 does not fall under section 53A of the TP Act” (paragraph 18). The Revenue’s reply is that section 53A asks only for terms “ascertained with reasonable certainty”, and a formula is ascertainable. The order does not say whether the 2009 agreement was registered, an argument that was not taken, and whether the Revenue’s appeal to the High Court was decided on merits was not traced.

Forfeited deposits. A deposit the owner keeps when the agreement is terminated raises section 56(2)(ix) (section 92(2)(h) of the 2025 Act) and section 51 (section 81), and both sides of that question are decided with cancellation in Part 5.

Stalled projects, cancellation and developer insolvency: does anything accrue?

Where the project never gets its approvals or the agreement is cancelled, the landowner’s main authority is the third ground in Maini: no gain accrues on a transaction that never materialised. That ground is independent of registration, so it is the defence for a registered agreement on which nothing was built. Its limit is the Court’s reasoning: the owners’ right “was dependent upon the necessary permissions being obtained” and “the entire transaction of development envisaged in the JDA fell through” (paragraphs 27 and 28).

The decided cases on cancellation and failure follow Maini. In PCIT-4 v. Shelter Project Ltd (Calcutta High Court, ITAT 60 of 2020, 4 February 2022) a company’s unregistered agreement with a State-owned housing developer, cancelled in 2011 with the money returned, produced no transfer, and Rs 49,92,73,606 taxed as having accrued in assessment year 2009-10 went. In CIT-IV v. Vijaya Productions P Ltd (Madras High Court, TCA 229 of 2012, 27 April 2026), where an unregistered agreement with Prestige Estates was coupled with a share transfer agreement and both “remained only on paper”, the Court held that “the provisions of Section 45 do not come into play” (paragraph 13) and that the authorities “ought to have waited till the Joint Venture Agreement and the Share Transfer Agreement were actually implemented” (paragraph 14). In Bileshivale Muddanna Govardhana Murthy v. DCIT (ITAT Bangalore, 5 March 2026, paragraphs 12.1 to 12.7) a family partition decree and a later agreement signed by another member showed the earlier agreement “did not materialise”; the Karnataka High Court dismissed the Revenue’s appeal on 8 September 2026 (ITA 141 of 2026, paragraphs 10 and 11).

The Revenue’s position. Where the transfer was complete and the developer defaults later, the Revenue says the gain stays in the transfer year. The Gujarat High Court’s own words in Dholu (paragraph 6.1): capital gain “is chargeable in the year of capital assessment even though the consideration may be realised earlier or later or or there may not be realisation at all”. No provision was found that reopens a completed assessment when a development agreement is later cancelled; the owner’s remedies are a later capital loss on re-entry or an argument that the income never accrued. Whether a partly built and then abandoned project produces a gain on the land actually developed (the question proposed and not answered in Potla) is open.

Developer insolvency. Only one income-tax order read links a developer’s insolvency litigation to the landowner’s year: Maganti (Visakhapatnam, 2026), where proceedings before the High Court, the National Company Law Tribunal and the Supreme Court meant neither party could transfer the land, so there was no section 2(47)(v) transfer (paragraph 15). Under section 45(5A) the owner’s position is clearer on the text: the charge waits for “the certificate of completion for the whole or part of the project”; if the developer enters insolvency and no certificate issues, nothing is chargeable, and if a resolution applicant completes the project the certificate year is the year of charge, at the stamp duty value of whatever share the owner then receives. The Revenue’s argument is that a registered specified agreement with possession was a transfer, and if section 45(5A) can never operate because no certificate will issue, section 45(1) applies to the year of transfer; the owner’s claim against the corporate debtor for undelivered area is a right that replaced the land.

Section 45(5A): the text, its purpose and who qualifies

Section 45(5A) moves an individual’s or Hindu undivided family’s gain under a registered area-sharing agreement out of the year of transfer and into the year of the completion certificate. It opens “Notwithstanding anything contained in sub-section (1)” and provides that “where the capital gain arises to an assessee, being an individual or a Hindu undivided family, from the transfer of a capital asset, being land or building or both, under a specified agreement, the capital gains shall be chargeable to income-tax as income of the previous year in which the certificate of completion for the whole or part of the project is issued by the competent authority”. Explanation (ii) defines a “specified agreement” as “a registered agreement in which a person owning land or building or both, agrees to allow another person to develop a real estate project on such land or building or both, in consideration of a share, being land or building or both in such project, whether with or without payment of part of the consideration in cash”. The sub-section was inserted by the Finance Act, 2017 with effect from 1 April 2018, so it applies from assessment year 2018-19.

Why Parliament enacted it. The Memorandum explaining the Finance Bill, 2017, read as reproduced by the Mumbai Tribunal in Sugee Seven Developers LLP v. ITO (TDS) (ITA 2313 to 2316/Mum/2025, 10 October 2025, paragraph 7), and Circular 2 of 2018 of 15 February 2018 (paragraphs 25.1 to 25.8) say the same thing. Under the existing law, “execution of Joint Development Agreement between the owner of immovable property and the developer triggers the capital gains tax liability in the hands of the owner in the year in which the possession of immovable property is handed over to the developer for development of a project” (paragraph 25.1); the new sub-section was inserted “With a view to minimise the genuine hardship which the owner of land may face in paying capital gains tax in the year of transfer” (paragraph 25.2). Paragraph 25.1 is the Board’s own summary of the pre-2017 law, written before Maini; the Revenue cites it for a possession-year rule, and the owner answers that Maini has since required a registered section 53A contract.

The conditions, one by one. First, the assessee must be “an individual or a Hindu undivided family”. Residence is not a condition, so a non-resident individual owner is within it; the developer’s withholding then moves from section 194-IC, which applies to payments to a resident, to section 195 (Part 6). Secondly, the asset must be a capital asset, “being land or building or both”. Land held as stock in trade is not, so a dealer-landowner is outside: the Pune Tribunal, remanding Rakesh Motilal Sharma v. ACIT (ITA 1256/PUN/2025, 18 June 2026), observed as much, at paragraph 10, of a 2018 agreement over land admittedly held as stock, and the Bangalore Tribunal held a private trust holding stock outside in L.K. Trust v. DCIT (ITA 1147 and 1375/Bang/2025, 9 June 2026, paragraph 8.7). Thirdly, the agreement must be registered. Fourthly, the consideration must include “a share, being land or building or both in such project”, whether or not cash is also paid.

Who signs and who is taxed. The definition speaks of “a person owning land or building”, not of an individual, while the charging words require the gain to arise to an individual or Hindu undivided family. So one agreement can be a specified agreement for several co-owners, of whom only the individuals and families get the deferral; a company co-owner of the same plot is taxed in the year of transfer.

Leaseholders. Whether a perpetual leaseholder is “a person owning land” (Sugee Seven Developers, Mumbai, 2025, rejected the argument that he is outside the definition and applied section 194-IC), and whether a GIDC or AUDA lessee can claim the deferral, is taken up in Part 4.

What it does not do. Section 45(5A) does not reach a company, firm, LLP, association of persons, trust or cooperative society; the Bangalore Tribunal said so of a firm in Nalapad Properties v. DCIT (ITA 1297/Bang/2024, 16 August 2024, paragraph 7.1), where the Assessing Officer had used the sub-section to tax a 2008 agreement in the year of a 2016 occupancy certificate. And it governs the landowner’s gain only, not the developer’s income (Part 5).

Which certificate, issued by whom: the year of charge under section 45(5A)

The charge falls in the previous year in which “the certificate of completion for the whole or part of the project is issued by the competent authority”, and the competent authority is “the authority empowered to approve the building plan by or under any law for the time being in force” (Explanation (i)). On the words, the certificate must be issued by the plan-approving authority, so an architect’s completion certificate or a developer’s declaration does not fix the year.

Gujarat building use permission. No decision and no Board statement says whether building use permission is the “certificate of completion” for section 45(5A), and the Gujarat development regulations’ own terms were not verified for this article. The nearest authority is Ushaben Jayantilal Sodhan v. ITO (Gujarat High Court, Tax Appeal 393 of 2014, 1 May 2018), a section 54F case on an owner who demolished her bungalow and built eight flats. The Court recorded that “the development permission was granted by the competent authority on 29.07.2006 and Building Use Permission was granted on 23.10.2008” (paragraph 3), quoted the Tribunal’s finding that “the BU permission was granted by AMC on 23.10.2008 meaning thereby that no construction activity took place after 23.10.2008” (paragraph 5), and allowed section 54F only for the one flat sold “before the completion of construction” (paragraph 29). That treats the permission date as completion. The owner whose permission issued early, or the Revenue where it issued late, may argue that some other document (the completion report filed before the permission, or physical occupation) marks completion; neither has textual support, because the sub-section fixes the year by the authority’s certificate.

Part certificates and phased projects. The Revenue’s reading is strong on the words: the first certificate “for the whole or part of the project” is the trigger, even if the owner’s flats are in a tower not yet certified, and the stamp duty value is then of “his share … in the project” on that date. The owner’s reading is that until his own tower is certified his share is not yet a completed unit with a stamp duty value as such, that the purpose of the provision (relief until the owner has his asset) points to the certificate covering his share, and that where the agreement allots specific units tower by tower, the “project” for him is his tower. A middle reading would tax, at each part certificate, the gain on the units it covers; the text’s single charge in a single year tells against it. No decision resolves any of the three. Neither reading belongs to one side: where jantri rates rise between certificates, the owner may prefer the first certificate and the Revenue the later one (worked example, Table 2).

Phased projects outside section 45(5A). For a company, firm, trust or association of persons the question is when each part of the land is transferred, and the authorities point both ways. For the owner: in C.S. Atwal (paragraphs 40 and 46(1)) the parties had agreed to a pro-rata transfer, and land passed, and was taxed, tranche by tranche as sale deeds conveyed it; in Mukesh Jamnadas Shah (Ahmedabad, 2023) the gain was returned and accepted deed by deed; and on Infinity Infotech’s reasoning possession in part performance passes only when the owner’s share in a completed phase is made over. For the Revenue: Kapadia and Jayantilal C. Desai fix one date for one agreement, and an irrevocable power of attorney over the whole land (Sarkaria) passes control of all of it at once. No decision on a phased agreement outside section 45(5A) was traced; an agreement that allots land, approvals and the owner’s units phase by phase gives the owner the firmer footing for a phase-by-phase charge.

No certificate at all. Because the sub-section displaces section 45(1), nothing is chargeable until a certificate issues. The Hyderabad Tribunal applied that in Ramesh Babu Nimmatoori v. ACIT (ITA 591 and others/Hyd/2022, 14 August 2024, paragraph 41) to an agreement of 30 June 2017: “the Developer has not completed the project in all respects and has not obtained a completion certificate”, and unless the Assessing Officer “proves that the conditions prescribed for u/s 45(5A) of the Act is satisfied, the question of computation of capital gain for the impugned A.Y does not arise”.

Plotted developments. Plots in a layout, and which certificate completes a layout, are taken up in Part 4.

The full value: stamp duty value of the share plus money, and the 2023 amendment

Section 45(5A) deems the full value of consideration to be “the stamp duty value, on the date of issue of the said certificate, of his share, being land or building or both in the project, as increased by any consideration received in cash or by a cheque or draft or by any other mode”. Explanation (iii) defines stamp duty value as “the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of an immovable property being land or building or both”. In Gujarat that is the jantri value of the owner’s units on the certificate date. Part 2 computes the gain; this Part needs only the three disputes the formula creates about time.

The 2023 words and the gap for assessment years 2018-19 to 2023-24. Until 31 March 2024 the closing words were “as increased by the consideration received in cash, if any”. The Finance Act, 2023 (Act 8 of 2023) substituted “any consideration received in cash or by a cheque or draft or by any other mode” with effect from 1 April 2024, the Department’s footnote recording a substitution, not a clarification. For certificates issued in previous years 2017-18 to 2022-23, the owner can argue that a cheque is not “cash”, that a deeming provision is read strictly, and that Parliament chose a prospective substitution. The Revenue’s answer at full strength: the Memorandum to the Finance Bill, 2017 and Circular 2 of 2018 (paragraph 25.3) both described the add-on as “any monetary consideration received, if any”; the definition of specified agreement contrasts a share in the project with “payment of part of the consideration in cash”, meaning money as opposed to kind; and section 194-IC reaches any consideration “not being consideration in kind”, paid “in cash or by issue of a cheque or draft or by any other mode”. The Revenue has a fallback too: if bank payments fall outside the deemed value, they are still consideration for the same transfer, chargeable under section 45(1) in the transfer year, which may be worse for the owner. No decision either way was traced. The definition of specified agreement itself still says “in cash”, so an agreement whose money part is paid by cheque is a specified agreement only on the reading that “cash” there means money. And because section 49(7) gives the owner’s flats a cost equal to the deemed full value, whatever is added to the gain is added to the cost (Part 2).

Received by when. From assessment year 2024-25 the words catch “any consideration received” by any mode, but they say “received”, and a schedule of payments often runs past the certificate. The Revenue will say the deeming fixes the whole consideration in one year; the owner, that only what was received by the certificate date is added, later receipts being taxed when received or, on the Revenue’s alternative line, as part of the same transfer. Undecided. Whether hardship compensation, rent and corpus are “consideration” is discussed for society members in the redevelopment members’ series and, for the developer who pays them, in the redevelopment developer series.

No tolerance, no Valuation Officer. The 110 per cent tolerance in the third proviso to section 50C and the reference to the Valuation Officer in section 50C(2) are not in section 45(5A). An owner whose jantri value exceeds the market value of his flats has no textual route to a valuation reference; whether section 50C(2) can be borrowed is undecided.

Tax deducted in earlier years. The developer deducts 10 per cent under section 194-IC when the money is paid or credited, often years before the certificate. Rule 37BA(3)(i) of the Income-tax Rules, 1962 gives credit “for the assessment year for which such income is assessable”, so the credit belongs to the certificate year, though Form 26AS reports it in the payment year.

The 2025 Act. Section 67(14), (15) and (16) of the Income-tax Act, 2025 re-enact the sub-section, its definitions and its proviso: the gain is chargeable “for the tax year in which the certificate of completion for the whole or part of the project is issued by the competent authority”, and the full value carries the post-2023 words. Section 67(15)(b) does not ask under which Act the agreement was registered, the textual footing for charging under section 67(14) a 1961 agreement certified after 1 April 2026; Part 6 argues the transition, including section 536(2)(h) as substituted by Act 4 of 2026, clause by clause.

The proviso: selling the share before the certificate

The deferral is lost if the owner sells his share before the project is certified. The proviso to section 45(5A) says that the sub-section “shall not apply where the assessee transfers his share in the project on or before the date of issue of the said certificate of completion, and the capital gains shall be deemed to be the income of the previous year in which such transfer takes place and the provisions of this Act, other than the provisions of this sub-section, shall apply for the purpose of determination of full value of consideration received or accruing as a result of such transfer”.

Four points follow, none of them decided in any order traced. First, “on or before”: a sale on the day of the certificate is caught. Secondly, the gain on the original transfer of land becomes income of the year in which the share is sold, computed under the general provisions (section 48, section 50C, section 50D), not at the stamp duty value of the share on the certificate date. Thirdly, two transfers are then in play, the land to the developer and the share to the buyer, and section 49(7) expressly withholds its cost rule from a share within the proviso (“not being the capital asset referred to in the proviso”). The Revenue’s best line is to measure the land gain by the share’s sale price, as the realised consideration for the land, and give the share a cost equal to that figure, so that the two computations produce one gain; its more aggressive line taxes the land on an agreement-year value and the share sale on its own. Fourthly, “his share in the project”: the owner will say a sale of one flat out of ten is not a transfer of “his share”, and at most takes that flat out of the sub-section; the Revenue, that a part transfer of the share is a transfer of it pro tanto, or of all of it.

The Gujarat fact pattern makes the fourth point urgent. Developers commonly book the owner’s allotted flats before completion and owners join the sale deeds. In Mukesh Jamnadas Shah (Ahmedabad, 2023), on a pre-2017 agreement, the owners executed each buyer’s sale deed “along with the Developer” (paragraph 6) and returned the gain deed by deed. On a post-2017 specified agreement the same practice would, on the Revenue’s reading, take each flat sold before the certificate out of section 45(5A) as it is sold, with no section 49(7) cost. Death is not a transfer by “the assessee” of “his share”, and a distribution on a family partition, though a transfer, is outside the charge by section 47(i), so the owner will say neither produces a charge under the proviso; the Revenue will answer that section 47(i) exempts only the gain on the distribution, not the earlier transfer of the land on which the proviso operates. Heirs who then sell before the certificate make their own transfer (Part 3).

Commencement and prospectivity: agreements signed before 1 April 2017

Section 45(5A) does not reach an agreement under which the transfer took place before the previous year 2017-18, and most of the authority says so; the Orissa High Court’s order in Kanak Bhanj Deo is the exception the Revenue relies on.

Pankaj Kumar. The Patna High Court in Pankaj Kumar v. CIT (Civil Writ Jurisdiction Case 20926 of 2019 and batch, 12 May 2023, K. Vinod Chandran CJ and Madhuresh Prasad J) dismissed owners’ writs asking that the sub-section be applied to earlier agreements. Confining it to individuals and families “especially works against the contention of the amendment being clarificatory” (paragraph 20); section 2(47)(v) read with sections 45 and 48 remains applicable to all except “those individuals and Hindu undivided families, who by virtue of a JDA transferred the capital assets after 01.04.2018” (paragraph 21); and the sub-section, “expressly stated to be effective from 01.04.2018 cannot be treated as retrospective” (paragraph 24). Its dividing line is 1 April 2018, the first day of assessment year 2018-19, the first year the section covers. Read with the Memorandum and Circular 2 of 2018 (paragraph 25.6), which apply the sub-section “from assessment year 2018-19”, an agreement registered and acted on between 1 April 2017 and 31 March 2018 falls within it, since its gain belongs to previous year 2017-18; Pankaj Kumar’s wording was not addressed to such a case.

The Bangalore line. In ACIT v. Lakkanna Durgappa (ITAT Bangalore, ITA 2858-2859, 3032 and 3125/Bang/2025, 11 May 2026), a search case, the owner and his wife had a 2012 agreement with SJR Prime Corporation and an occupancy certificate of 30 May 2019. The Revenue sought to tax the gain in assessment year 2020-21. The Tribunal held (paragraph 26) that, the agreement having been executed and possession given in 2012-13, “the gains must be taxed in the year of transfer (AY 2013-14 here) and cannot be shifted to AY 2020-21 merely because the completion certificate was received in that year”, adding that “Section 45(5A) applies only when the specified agreement is entered into on or after 01.04.2017 and the completion certificate is issued on or after that date”. The Bench noted it had “not been shown whether the handing over of possession in FY 2012-13 was absolute possession within the meaning of section 53A or merely a limited license for construction” (paragraph 33), and still dismissed the Revenue’s appeals (paragraphs 35 and 36). It left the Revenue to reopen 2013-14 if it could (paragraphs 27 and 28), and declined to follow the Cuttack Tribunal in Kanak Bhanj Deo because it had not considered Kapadia or the Karnataka High Court’s 2011 judgment in Dr. T.K. Dayalu: “The decision of the Hon’ble jurisdictional High Courts binds us” (paragraphs 30 and 31). In Narayan Vedavathi (2026), relying on Pankaj Kumar, the Tribunal held that the amendment “would not apply to the transactions effected prior to 01/04/2018” (paragraph 38), but only after holding that the registered 2005 agreement and power of attorney had transferred the land in assessment year 2005-06 (paragraphs 33 and 34).

Kanak Bhanj Deo. The Cuttack Tribunal (Kanak Bhanj Deo v. ITO, ITA 21/CTK/2024, 10 July 2024) dealt with a 2012 agreement under which the owner received four flats in assessment year 2017-18 and herself returned capital gain on the land in that year, the dispute being mainly her section 54F claim on four flats. The Tribunal refused her plea that 2012-13 was the year of transfer: “no capital gain was declared by the assessee herself in the assessment year 2012-2013”, and the conditions of section 53A were not met until she received her 26 per cent share, so that the gain “has to be taxed in the hands of the assessee when the transfer as per Section 53A of the Transfer of Property Act is completed” (paragraph 10). It added that “Since the assessee herself has declared capital gains from the transfer of land in the impugned year, the capital gains is charged to tax in AY 2017-18 only” (paragraph 11). It never mentions section 45(5A). The Orissa High Court (ITA 26 of 2024, 29 August 2024) dismissed her appeal at admission on a different footing: “Relevant provision is sub-section (5-A) under section 45” (paragraph 4), and the omission “in obtaining completion certificate, does not give rise to any question of law” (paragraph 5). That applies the sub-section to assessment year 2017-18, a year before it commenced, without considering commencement, Pankaj Kumar (decided a year earlier) or Kapadia. The Supreme Court dismissed the special leave petition on 18 July 2025 without reasons.

Both sides. For the owner: Pankaj Kumar is the only High Court judgment squarely on prospectivity; the Memorandum and Circular fix assessment year 2018-19; an admission-stage order that applies a provision to a year before it existed lays down no law, and a refusal of special leave without reasons declares none. For the Revenue: the only High Court order on a pre-2017 agreement taxed in a later year went its way and survived in the Supreme Court; and the Tribunal’s reasoning in Kanak, that transfer under section 53A is incomplete until the owner’s share is delivered, is an independent general-law basis that does not need section 45(5A) at all. In Mita Aich v. ITO (ITAT Kolkata, ITA 3008/KOL/2025, 21 April 2026, paragraphs 7 and 8) an owner who had shown the gain in no year lost her timing argument on a 2014 registered agreement. The converse case went the owner’s way in Chennakesavan Savithri v. ITO (ITAT Chennai, ITA 301/Chny/2023, 3 September 2026): a non-resident who had offered the gain in assessment year 2018-19, when four flats were received under an unregistered agreement of 9 April 2012, was reassessed for 2013-14 on the same gain; the reopening was quashed because “there is no agreement in the eyes of law which can be enforced under Section 53A” (paragraph 29), and the power of attorney given the same day was no transfer (paragraphs 31 and 32), the merits being left open (paragraph 34). And in Sri Alagappa Muthiah (HUF) v. DCIT (ITAT Bangalore, ITA 775, 776, 954 and 955/Bang/2024, 12 August 2024) the general law moved the year forward at the owners’ instance: two Hindu undivided families’ agreements of 10 February 2011, taxed by the Assessing Officer in assessment year 2017-18 on the occupancy certificate, were held taxable in assessment year 2018-19, the year of the possession letter of 8 May 2017 and the year to which the Bench assigned the certificate (the order prints two different dates for it), the developer not having been willing to perform earlier; the Bench also said section 45(5A) could not be applied to assessment year 2017-18 retrospectively (paragraphs 7 and 7.1).

Is section 45(5A) optional?

On the text, no; on authority, nobody has decided. The sub-section opens “Notwithstanding anything contained in sub-section (1)” and says the gain “shall be chargeable” in the certificate year and the stamp duty value “shall be deemed” the full value. The Act uses express words where it gives an election, and there are none here.

The owner’s argument starts from the Board’s own vocabulary. The Memorandum speaks of “benefit of this proposed regime” and Circular 2 of 2018 of “benefit of this regime” (paragraph 25.4), and the Mumbai Tribunal in Sugee Seven called it a “beneficial provision”; a person may waive a provision enacted for his benefit. The Revenue’s answer: the words are mandatory; “benefit” describes the effect of the rule, not a choice; and an election would let owners pick the cheaper year, which after 23 July 2024 means picking between rates and indexation regimes (Part 2). An owner who returned the gain in the agreement year under a specified agreement should expect the certificate year to be assessed too, and must then resist one charge by appeal, rectification or a claim that the earlier tax be adjusted. No decision on such an owner was traced.

Revenue-sharing and hybrid agreements: the landowner’s year of charge

A pure revenue-sharing agreement is outside section 45(5A), and the landowner’s year then depends on whether the agreement itself transferred the land or each share of sale proceeds is taxed as it accrues. The definition of specified agreement requires consideration “of a share, being land or building or both in such project”. In ACIT v. Emami Realty Ltd (ITAT Kolkata, ITA 1457/Kol/2024, 12 January 2026) the Tribunal found no infirmity (paragraph 7.1) in the Commissioner (Appeals)’ statement that “what is commonly referred to as area sharing is a prerequisite for the agreement to qualify as a ‘specified agreement’”; the case was an unregistered cash sale of a project undertaking between two companies, so the remark goes beyond the facts, but it is the only reasoned statement traced and it follows the words.

The agreement year. In Anil Vitthal Bankar (ITAT Pune, ITA 67 and 1579/PUN/2018, 2 February 2023) sixteen owners registered a “Joint Venture Agreement” of 28 April 2008 giving them 30 per cent of gross sale proceeds, with a registered irrevocable power of attorney that could not be cancelled and let the developer mortgage, sell and receive compensation for the land. The Tribunal held a transfer under section 2(47)(ii), the owners having “extinguished” their “Bundle of Rights in the land” (paragraph 11), and under clause (v) (paragraph 13), on the date of the agreement (paragraph 16). It noted the land value of Rs 7 crore recited in the agreement and a stamp duty value of Rs 8,00,27,640, upheld the Assessing Officer’s year and sent the computation back only for indexed cost (paragraph 16). It did not analyse Maini (mentioned only inside a passage it reproduces from another order), Seshasayee or Infinity Infotech. In DCIT v. Raja Rao Parachuri (ITAT Visakhapatnam, ITA 374/Viz/2024, 8 October 2025) the same question went the other way for an unregistered revenue-sharing agreement of 25 April 2012: no section 53A effect without registration (paragraph 11), “permissive access” not juridical possession (paragraph 12), and taxing the agreement year after the owner had offered the gain in a later year “would undeniably lead to double taxation” (paragraph 13).

Each share as it accrues. In Gujarat the practice has been to tax a revenue share deed by deed or receipt by receipt, and the Tribunal has accepted it without ruling that it is the law. In Mukesh Jamnadas Shah (2023) the owners returned the gain year by year from assessment year 2017-18 to 2022-23 as sale deeds were executed on 28,609.89 of 32,987 square metres, and the Revenue’s attempt to tax Rs 42,05,18,483 in the agreement year failed. In Rameshlal Bullchand Ambwani v. PCIT (ITAT Ahmedabad, ITA 196/Ahd/2022 and 234/Ahd/2023, 24 January 2024), brothers whose 2014 agreement with their own company gave them a percentage of each flat’s price, reduced from 15 to 11 per cent by a rectification deed, were assessed on what they received in the year, and a revision attacking the reduction failed. The owner’s legal argument is the Supreme Court’s accrual reasoning in Maini: a share of sales not yet made is not a debt owed to him, and what is hypothetical does not accrue.

Sanand Properties. The Supreme Court in Sanand Properties P. Ltd. v. Jt. CIT (Civil Appeal 9107 of 2012 and connected appeals, 12 May 2026, 2026 INSC 472, J.B. Pardiwala J writing for himself and K.V. Viswanathan J) decided who is taxed on a share of gross revenue, not when. A company and a firm had formed an association of persons in 2003 to develop the company’s land at Yerawada, Pune; clause 7 entitled the company to 35 per cent of gross sale receipts “inclusive of the value of land”, withdrawable at once, the expenses to come out of the other 65 per cent. The Court held that the company “was entitled to withdraw a share of 35% of the gross sale proceeds rightaway, even before the expenses were deducted”, which was “a diversion for the AOP due to overriding title” (paragraph 97); that its accrual “was not contingent on the AOP’s profit” and the receipts were “intercepted and diverted towards the SPPL before it could have even assumed the character of income in the hands of the AOP” (paragraph 99); and that the amount was “in pith and substance, a business receipt arising from the surrender of development rights or a share of gross revenue” (paragraph 103), taxable in the company’s hands for the years assessed (paragraph 105). For a revenue-sharing landowner the case helps on who: his share is his income, not the developer’s. On when, it cuts both ways. The Revenue will say paragraph 99 places accrual at the point each gross receipt comes in, so each year’s collections are taxed in that year, which matches Gujarat practice and defeats both deferral to completion and agreement-year taxation of unknown sums. The owner whose land is a capital asset will say the Court decided a business case between members of an association of persons and did not decide the head of income, or the year of transfer, for a capital-asset owner. Part 3 decides a business landowner’s recognition (Anushka Estates, Bangalore, 2025, decided before Sanand) and Part 5 the developer’s side.

Hybrid agreements. Area plus cash is squarely within section 45(5A). Area plus a revenue share, or area with a minimum guarantee, is arguable. The owner will say the revenue element is “part of the consideration” paid in money, added in the certificate year under the post-2023 words. The Revenue, where deferral suits the owner, may say it is a contingent share of turnover taxed under the general provisions as it accrues. The text does not split one agreement into two; amounts received after the certificate year are the hard case. Undecided.

Society members and section 45(5A)

Whether a housing society member’s agreement can be a specified agreement is undecided; the member-side redevelopment series argues it both ways. The definition speaks of “a person owning land or building”, so the society’s own registered agreement can be a specified agreement for section 194-IC purposes even though only an individual or family can claim the deferral; a member can then argue that his transfer is “under” the society’s specified agreement even if his own alternate accommodation agreement is not one. The Revenue’s reply is that the member transfers nothing under the society’s agreement and is not a person who “agrees to allow another person to develop”. For a Gujarat bungalow society whose members hold their plots, the member is closer to “a person owning land”, and Gaurang S. Desai (below) shows the Department itself assessing members as transferors.

The year of charge for every kind of landowner

The year of charge turns first on who the landowner is and only then on the agreement. The table summarises; Parts 3 and 4 decide each type.

Landowner	Section 45(5A)?	Year of charge	Authority or note
Resident individual or Hindu undivided family, registered area-sharing agreement	Yes	Completion certificate year	s.45(5A); s.67(14) of the 2025 Act
Non-resident individual, same agreement	Yes; residence is not a condition	Completion certificate year	Withholding under s.195, not s.194-IC (Part 6)
Individual, unregistered, cash-only or revenue-sharing agreement	No	Year of transfer under s.2(47)	Maini; Bankar; Emami Realty
Individual holding the land as stock in trade	No	Business income when the share is received or sold	Rakesh Motilal Sharma (Pune, 2026); on stock in trade generally, Shreyas Builders (firm, Mumbai, 2024)
Perpetual leaseholder	Arguable; Sugee Seven applied the definition for s.194-IC	Completion certificate year on that reading	Sugee Seven (Mumbai, 2025, para 8); Part 4
Co-owners of mixed status	Individuals yes; others no	Split: certificate year for individuals, transfer year for the rest	Text of Explanation (ii)
Owner who dies between agreement and certificate	Undecided	Certificate year, in the deceased’s name (Revenue) or as the heirs’ own gain (heirs)	s.159 (s.302 of the 2025 Act); Part 3
Family partitioned during the agreement	Undecided	Gain is the family’s until a total partition is recorded under s.171 (s.171(1), (9)), on the Revenue’s reading; after a recorded total partition s.171(4) and (5) reach only income up to the partition	No decision; Part 3
Minor	Yes, clubbed under s.64(1A)	Certificate year; majority before then is argued	No decision
Company, firm, LLP	No	Year of transfer under s.2(47)	Nalapad (Bangalore, 2024, para 7.1); Infinity Infotech (Calcutta HC, 2018)
Owners pooling plots as one group	No, if assessed as an association of persons	Year of transfer	Decided in Part 4
Private trust	No on L.K. Trust (land held as stock); a specific trust’s section 161 argument is in Part 4	Year of transfer, or s.45(2) year of sale for stock	L.K. Trust (Bangalore, 2026, para 8.7)
Charitable trust, deity, waqf, cooperative society	No	Year of transfer	Ishwar Chinta Haran Shiv Thakur (Kolkata, 2017: agreement-year finding by the CIT(A); Tribunal decided reopening only); Part 4
Owner of rural agricultural land	Not a capital asset if still agricultural land on the date of transfer; the Revenue tests character at that date	If so, no gain on the land; flats taxed when sold	Section 2(14)(iii); Popatrao Dashrathrao (Pune, 2026) heard the argument and remanded the computation; Part 4

Worked example: one plot under four deal forms

One plot can be charged in any of four years depending on the deal form. The facts are illustrative. A resident individual owns a plot in Ahmedabad. On 15 June 2022 she signs an agreement with a developer for six flats (40 per cent of the built area, the developer taking a 60 per cent undivided share of the land) and Rs 50,00,000, paid by cheque in two instalments. The developer enters on 1 July 2022. The jantri value of the whole plot on the agreement date is Rs 2,40,00,000. Tower A, which has none of her flats, gets building use permission on 20 March 2026; Tower B, with her six flats, on 5 September 2026; the flats are handed over on 30 September 2026. The stamp duty value of her six flats is taken as Rs 3,60,00,000 on 20 March 2026 and Rs 3,78,00,000 on 5 September 2026 (and, for the variant in Table 3, Rs 3,30,00,000 on 20 March 2023). The example computes only the year of charge and the deemed or candidate full value; cost, indexation, rate and exemptions are computed in Part 2.

Table 1: the events common to all four forms

Date	Event	Previous year or tax year
15 June 2022	Agreement signed; Rs 20,00,000 paid by cheque	2022-23 (AY 2023-24)
1 July 2022	Developer enters the plot	2022-23 (AY 2023-24)
10 August 2024	Rs 30,00,000 paid by cheque	2024-25 (AY 2025-26)
20 March 2026	Building use permission for Tower A (none of the owner’s flats)	2025-26 (AY 2026-27)
5 September 2026	Building use permission for Tower B (the owner’s six flats)	Tax year 2026-27 (2025 Act)
30 September 2026	Owner’s six flats handed over	Tax year 2026-27 (2025 Act)

Table 2: Form A, a registered area-sharing agreement signed by a resident individual (section 45(5A))

Reading	Year of charge	Stamp duty value of the share	Money consideration added	Deemed full value
First certificate for any part (Tower A)	AY 2026-27, section 45(5A) of the 1961 Act	Rs 3,60,00,000	Rs 50,00,000	Rs 4,10,00,000
Certificate covering the owner’s tower (Tower B)	Tax year 2026-27, section 67(14) of the 2025 Act (transition argued in Part 6)	Rs 3,78,00,000	Rs 50,00,000	Rs 4,28,00,000

Tax deducted at 10 per cent under section 194-IC: Rs 2,00,000 on 15 June 2022 (previous year 2022-23); Rs 3,00,000 on 10 August 2024 (previous year 2024-25); total Rs 5,00,000, to be claimed in the year the gain is assessable (for a 2025 Act tax year, under the rules made under section 390(6)).

Table 3: Form A variant, Tower A certified on 20 March 2023 (AY 2023-24, before the Finance Act 2023 words took effect from AY 2024-25)

Reading	Money consideration added	Deemed full value
Owner: “the consideration received in cash, if any” excludes cheques	Rs 0	Rs 3,30,00,000
Revenue: cash means money; cheque received by the certificate date counts	Rs 20,00,000	Rs 3,50,00,000
Revenue, wider: the whole agreed money consideration fixed in that year	Rs 50,00,000	Rs 3,80,00,000

Table 4: Form B, the same agreement signed by a company (outside section 45(5A))

Reading	Year of transfer	Candidate full value (measure decided in Part 2)
Revenue: registered agreement plus possession on 1 July 2022 is a section 2(47)(v) transfer	AY 2023-24	At least Rs 1,94,00,000 (section 50C floor, where it applies: stamp duty value of the 60 per cent land share, Rs 1,44,00,000, plus Rs 50,00,000); the Revenue’s own measure is the value of the six flats receivable, or the developer’s cost of building them (Part 2), plus Rs 50,00,000
Company: entry was a licence; possession in part performance passes when its share is made over (Infinity Infotech)	Tax year 2026-27	Rs 3,78,00,000 (value of the flats received, taken as unchanged from 5 to 30 September 2026) plus Rs 50,00,000 = Rs 4,28,00,000

Table 5: Form C, an unregistered agreement signed by an individual, developer entering under a licence

Reading	Year of transfer	Basis
Owner	Tax year 2026-27	No section 2(47)(v) transfer without registration (Balbir Singh Maini, paragraph 20); transfer when the flats are made over
Revenue, only if the power of attorney lets the developer act as owner	AY 2023-24	Section 2(47)(vi) or (ii): enjoyment as a purported owner, or extinguishment of rights
Section 45(5A)	Not available	Not a registered agreement, so not a specified agreement

Table 6: Form D, a registered revenue-sharing agreement: 35 per cent of gross sale receipts to the individual owner

Year of receipt	Owner’s 35 per cent	Year charged if each share is taxed as it accrues
2023-24	Rs 40,00,000	AY 2024-25
2024-25	Rs 1,20,00,000	AY 2025-26
2025-26	Rs 1,60,00,000	AY 2026-27
2026-27	Rs 90,00,000	Tax year 2026-27
Total	Rs 4,10,00,000

On the Revenue’s agreement-year reading (Anil Vitthal Bankar) the whole transfer is charged in AY 2023-24 at a value fixed then, for example the plot’s stamp duty value of Rs 2,40,00,000; section 45(5A) is not available on either reading.

What the example shows. In Form A the part-certificate dispute moves the charge across the boundary between the two Acts and changes the deemed value by Rs 18,00,000. In Form B the Revenue’s early year is not necessarily the cheaper one: the land’s stamp duty value is only a floor, and the Revenue will measure the consideration by the flats receivable or the developer’s cost (Part 2). And the Rs 5,00,000 deducted in Form A sits in Form 26AS for 2022-23 and 2024-25 and must be claimed in the certificate year.

Gujarat: what the record shows

The Gujarat High Court has placed the transfer in the agreement year where the owner surrendered control and refused to do so where the owner remained owner, and no Gujarat court or Bench has yet applied section 45(5A) to a post-2017 agreement. Ahmedabad, Surat and Rajkot Benches are bound by the High Court; three of the four High Court decisions usually cited (Jayantilal C. Desai, Swastik Engg. and Gaurang S. Desai) are admission-stage dismissals affirming the Tribunal on the documents, which bind on what they necessarily decided but are thinner precedent than a reasoned judgment.

The High Court. In Jayantilal C. Desai v. ACIT (Tax Appeal 2294 of 2009, order of 11 April 2011), where the owner had claimed a capital loss in a later year, the Court upheld the agreement year (1994) because the owner “had not only transferred the possession of the land … but surrendered all the rights in the land such as right to develop, right to accept members, to decide the price, to give advertisement, to engage agencies for development” (paragraph 11). In CIT-II v. Swastik Engg. (2014) the Court agreed with the Tribunal’s application of Kapadia, placing the 1994 transfer outside a block period. In Chhaganlal Mulji Dholu v. JCIT (Special Civil Application 3406 of 2022, 25 November 2022), a reasoned judgment on a reopening that arose from the Akshar Group search, the Court accepted that “It was only when all the obligations of the parties were fulfilled under the development agreement, the transfer in eye of law would take place” (paragraph 5.2), placed the transfer on the sale deed (paragraphs 5.4 and 6), and quashed the notice; its paragraph 5.5.1 attributes the licence point to Maini, which Maini did not decide, and paragraph 6.1 gives the Revenue its best Gujarat sentence on accrual. In CIT-III v. Gaurang S. Desai (Tax Appeal 1174 of 2007, 14 July 2008) members of a plot-holders’ society who received one flat each under a 1995 agreement were assessed as transferors, in the year the flats were delivered rather than the agreement year, and allowed section 54F; it supports no year-of-transfer rule. PCIT v. Navinchandra N. Patel (Tax Appeal 631 of 2025, 6 August 2026) failed on reopening alone, leaving the Revenue’s section 45(2) theory for a per-unit agreement undecided.

The Ahmedabad Bench. Besides Ashwin M. Patel HUF (above): Mukesh Jamnadas Shah (2023): a Rs 127 crore agreement for 32,987 square metres at Gotri, Vadodara, found in the Akshar Group search, unsigned by the owners and unregistered; the Revenue relied on the seized agreements reciting “vacant possession” and objected that the owners’ later version had substituted “without possession”, but the owners’ execution of every buyer’s deed showed possession “rest with the assessees till the completion of sale” (paragraph 6.1), and Rs 42,05,18,483 was deleted; the Revenue’s section 45(2) alternative was not answered. Nasrin Mohamadfarooq Memon (2026): the agreement “merely permitted the developer to enter the land for the purpose of development and construction”, the developer holding possession “only as a representative of the owners” (paragraph 8.1), though an irrevocable power of attorney had been given (paragraph 3); the order does not say the 2013 agreement was registered, and its remark that gains are taxable in the completion certificate year (paragraph 8.2) is obiter; for a 2013 agreement it could hold only if the agreement was registered and the transfer itself fell on or after 1 April 2017, the prospectivity question argued above. On the other side, ITO v. Jigneshbhai Shivabhai Patel (ITA 1757/Ahd/2015, 24 June 2022) accepted a 2008 transfer of agricultural land to a buyer-developer who took possession and paid for NA conversion, and Sapnaben Dipakbhai Patel v. ITO (ITA 2414/Ahd/2013, 13 January 2016) held an agreement to sell agricultural land, with a possession agreement of the same date, a transfer under section 2(47)(v) and (vi) in that year (paragraph 21), and deleted Rs 6,83,09,792 taxed in the year of the sale deed (paragraph 32).

Surat and Rajkot. The Surat Tribunal’s order in Bhanuben Ramanbhai Surati v. ITO (ITA 769/SRT/2023, 28 May 2025), placing the transfer of agricultural land on the sale deed because of the tenancy law bar, is discussed in Part 4. Hiteshkumar Mohanlal Desai v. Assessment Unit (ITAT Surat, ITA 962/SRT/2025, 29 September 2026) concerned four co-owning brothers’ registered agreement, which the order describes only by its money consideration of Rs 24 crore, with tax deducted at 1 per cent; the addition was deleted on the record and on parity with co-owners whose identical returns were accepted (paragraphs 8 to 11), and the argument that section 45(5A) applied was not decided. It is not authority that a cash agreement is taxed as received. No Rajkot order on a development agreement was found.

What is missing. No Gujarat decision applies section 45(5A) to a post-2017 specified agreement, decides whether building use permission is the certificate, or applies the proviso. On cancellation, the Ahmedabad Tribunal left undisturbed a landowner’s deduction of Rs 3,81,58,013 paid to a terminated developer under an arbitral award in Dhara Jagdishchandra Patel, on the section 263 enquiry point (3 May 2017) and then, following that order, on the Revenue’s quantum appeal (ITA 3406/Ahd/2016, 11 January 2019), never on deductibility; the Gujarat High Court admitted the Revenue’s appeal on whether the agreement, its cancellation and the award were genuine (Tax Appeal 642 of 2019, 25 February 2020), and no decision on it was traced; the Revenue’s appeal on the revision itself was dismissed for non-prosecution, with liberty to revive, on 23 July 2026 (Tax Appeal 53 of 2020).

Open questions in Part 1, argued both ways

Eight questions in this Part remain open, each with authority on both sides.

1. Is a registered agreement with possession recited a transfer when signed? For the Revenue: Tekula and Muniraju, Potla, Narayan Vedavathi, Bankar, and Jayantilal where control passes. For the owner: Pancham Singh, Maganti, NKA Commercial, Gaikawad, Malti Devi, Infinity Infotech and Shantha Vidyasagar Annam. A coordinate-Bench split for Ahmedabad; a Special Bench constituted by the President is the textbook answer.

2. Does an irrevocable power of attorney make the developer a purported owner? For the Revenue: Sarkaria, Bankar, Vedavathi. For the owner: Maini, Atwal, Seshasayee, Nasrin Memon. Turns on the powers granted.

3. When is a revenue-sharing owner taxed? For the Revenue: on signing (Bankar), or at each gross receipt (its reading of Sanand paragraph 99). For the owner: as each share accrues on sale (Gujarat practice), never on unknown future sums (Maini paragraphs 27 and 28).

4. Which certificate triggers section 45(5A), and is building use permission one? On the words: the first part certificate. On purpose: the certificate covering the owner’s share. Which side prefers which turns on the jantri trend (in the worked example the first certificate gives the lower value). Building use permission is the natural candidate in Gujarat (Ushaben, for section 54F); untested.

5. Did “cash” before 1 April 2024 include cheques, and is money received after the certificate added? For the owner: the 2023 substitution was prospective. For the Revenue: the Memorandum and Circular 2 of 2018 spoke of monetary consideration. Undecided.

6. Does the proviso bite flat by flat? For the Revenue: any part sale of the share. For the owner: “his share” means the whole share. Undecided.

7. Does section 45(5A) reach pre-2017 agreements, and is it optional? Pankaj Kumar, Lakkanna Durgappa and Vedavathi against Kanak Bhanj Deo in the Orissa High Court; the Board’s “benefit” against “shall be chargeable”. Whether the Supreme Court appeals in the Karnataka High Court’s Dayalu line (Civil Appeals 5104-5105 of 2012, listed on 16 July 2026, though a 2021 record appears to show them withdrawn) remain pending could not be confirmed, and that judgment could not be read in a legible copy.

8. What happens if the developer becomes insolvent before the certificate? For the owner: no certificate, no charge (Nimmatoori; Maini on accrual; Maganti). For the Revenue: the general rule revives for the transfer year. No decision.

A landowner’s checklist

Each step below states the risk it guards against.

1. Register the agreement only if you mean it to be a transfer or a specified agreement. Risk: an unregistered post-2001 agreement loses section 45(5A) yet escapes clause (v); a registered one may be taxed in the signing year on the Hyderabad line.
2. Draft possession as a licence for development, deliverable in stages, and say so. Risk: a recital of “vacant possession” on signing is the Revenue’s best evidence (Tekula; Mukesh Jamnadas Shah’s “without possession” substitution); outside section 45(5A), a licence that defers the transfer also moves it to a later year at a usually higher value (Seshasayee).
3. Limit the power of attorney to approvals and the developer’s own units. Risk: powers to sell the owner’s land share, mortgage and receive compensation support clauses (ii) and (vi) (Bankar, Vedavathi).
4. Make deposits refundable on completion, interest-free, not adjustable against price. Risk: an adjustable or forfeitable deposit is argued to be price.
5. Fix in the agreement which tower holds the owner’s units and keep every building use permission file. Risk: the first part certificate may fix the year before your flats exist.
6. Do not sell or agree to sell allotted flats before the certificate without advice. Risk: the proviso withdraws the deferral and the section 49(7) cost.
7. Record every receipt by mode and date. Risk: the pre-2024 cheque dispute and the “received by the certificate date” dispute both turn on it.
8. Carry forward section 194-IC credit to the certificate year and explain it in a note to the return. Risk: credit lost or a reopening on Form 26AS data.
9. For a pre-2017 agreement, decide the year once and file consistently. Risk: being taxed in both the agreement year and the delivery year (Kanak Bhanj Deo; Mita Aich).
10. For a revenue share, return each year’s share as it accrues and keep the escrow statements. Risk: an agreement-year assessment on a value fixed by the Assessing Officer.

Concordance: the Income-tax Act, 1961 and the Income-tax Act, 2025

The table pairs the 1961 provisions this Part turns on with their 2025 Act counterparts; only pairs read at the Department’s pages are shown.

Subject	Income-tax Act, 1961	Income-tax Act, 2025
Definition of transfer	section 2(47): extinguishment (ii), conversion (iv), part performance (v), enjoyment (vi), Explanation 2	section 2(109): (b), (d), (g), (f), (h); immovable property defined in the clause
Stamp duty value	section 45(5A), Explanation (iii)	section 2(105)
Charge on capital gains	section 45(1)	section 67(1)
Conversion into stock in trade	section 45(2)	section 67(6)
Specified agreement: charge, definitions, proviso	section 45(5A), Explanation, proviso	section 67(14), (15), (16)
Computation	section 48	section 72
Cost of a share under a specified agreement	section 49(7)	section 73(1), Table serial 20
Stamp duty value as full value; tolerance; Valuation Officer	section 50C (third proviso; sub-section (2))	section 78(1)(b); section 78(2)
Advance money retained	section 51	section 81
Investment in a residential house	section 54F	section 86
Forfeited advance as income	section 56(2)(ix)	section 92(2)(h)
Income of a minor child clubbed	section 64(1A)	section 99(1)(c)
Legal representative	section 159	section 302
Deduction at source on transfer of immovable property	section 194-IA	section 393(1), Table serial 3(i)
Deduction at source under a specified agreement	section 194-IC	section 393(1), Table serial 3(ii)
Deduction at source on payments to a non-resident	section 195	section 393(2), Table serial 17
Credit for tax deducted	section 199	section 390(5), (6)
Special Bench constituted by the President	section 255(3), Special Bench limb	section 364(4)
Repeal and savings	(not applicable)	section 536

The 2025 Act references were checked against that Act’s text on the Income Tax Department’s website, reading the Act field on each page.

This note is general commentary on the law as at 24 October 2026 and is not advice on any matter. The position in a particular case depends on its own facts.