My joint development agreement was signed in 2012 and the completion certificate came in the year under assessment. The Assessing Officer has taxed the whole capital gain in this later year by invoking section 45(5A). Can he?
No. The Tribunal held that where the JDA was executed and possession handed over in FY 2012-13, the transfer within the meaning of section 2(47)(v) occurred in that year and the gain was chargeable in AY 2013-14 under the law then in force. Section 45(5A), inserted with effect from 1 April 2018, is prospective, so the gain cannot be shifted to AY 2020-21 merely because the completion certificate was received in that year. All four of the Revenue's appeals were dismissed.
Decided by the ITAT (Shri Prashant Maharishi, Vice-President and Shri Keshav Dubey, Judicial Member) on 2026-05-11, reported as ITA Nos. 2858-2859, 3032 & 3125/Bang/2025; Assessment Years 2017-18, 2018-19, 2019-20 and 2020-21 (ITAT Bangalore 'A' Bench). It bears on section 45(5A), section 2(47)(v), section 2(47), section 45, section 48, section 53A Transfer of Property Act, 1882, section 147, section 148, section 149 of the Income Tax Act 1961, in Capital Gains, How Tax Law Is Read and Assessment & Scrutiny matters.
The prospectivity of section 45(5A) cuts both ways, and this is the side of it that helps the taxpayer. Where the Revenue has missed the year of transfer it cannot recover the position by taxing the same gain in the completion-certificate year under a provision that was not on the statute book when the transfer took place; the Tribunal said the appropriate course, if any, is to reopen the earlier year subject to the limitation in section 149. The order also does something a practitioner should use: it flags that where possession was handed over only for the limited purpose of carrying out development work, there may be no transfer under section 2(47)(v) at all, which renders the retrospectivity question academic. The order is a Tribunal decision on a point on which the ITAT itself is not uniform — the Bench declined to follow a coordinate-bench decision (Kanak Bhanj Deo) on the ground that it had not considered the Bombay and Karnataka High Court decisions.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee and his wife owned land which was the subject of joint development agreements — one with M/s SJR Prime Corporation Pvt Ltd dated 17 December 2012 for the SJR Plaza City project and another with M/s Sunil Mantri Realty Ltd dated 20 March 2009 for the Mantri Premero project. The assessee's share in the SJR project was 27.8 per cent and his wife's 72.2 per cent. Following a search, the Assessing Officer brought to tax in AY 2020-21 a capital gain on the joint development, estimated on the cost of construction of flats, and separately added sale proceeds of flats and a non-refundable deposit. A coordinate Bench had already decided the wife's appeal for the same assessment year and the same development agreements, deleting the additions. The CIT(A) followed that decision and deleted the addition in the assessee's hands. The Revenue appealed for four years. Before the Tribunal the Departmental Representative relied on a coordinate-bench decision in Kanak Bhanj Deo said to have been confirmed by the Orissa High Court with an SLP dismissed.
All four appeals of the Assessing Officer were dismissed (paragraph 36). Where the JDA was executed and possession handed over in FY 2012-13, the transfer within the meaning of section 2(47)(v) occurred in that year and the gain was chargeable in AY 2013-14 under the law then in force; section 45(5A) is prospective and the gain cannot be shifted to AY 2020-21 merely because the completion certificate was received in that year (paragraph 26). If the gain was not taxed in the earlier year the appropriate course is for the Revenue to consider reopening that year under sections 147 and 148, subject to the limitation in section 149; the Tribunal would not permit the same gain to be taxed in the later year by disregarding the provisions then in force (paragraphs 27 and 28). There is no application of section 45(5A) to the assessee for this year, the JDA not having been entered into in this year and possession having been granted on the date of the JDA (paragraph 33).
The Bench first held itself bound by the coordinate Bench's decision in the wife's case on the same agreements and the same year, nothing having been shown to be infirm in the CIT(A)'s reliance on it (paragraphs 24, 25 and 29). It then reasoned independently that section 45(5A), inserted with effect from 1 April 2018, is prospective and contains no express or implied retrospective operation, the Explanatory Memorandum indicating that it applies only to agreements entered into after commencement, so any hardship in taxing the gain before the constructed area is received is a consequence of the pre-amendment regime (paragraph 26). It declined to follow the coordinate-bench decision in Kanak Bhanj Deo relied on by the Departmental Representative because that decision had considered neither Chaturbhuj Dwarkadas Kapadia (Bombay) nor Dr T.K. Dayalu (Karnataka), the latter being the jurisdictional High Court, and held that the jurisdictional High Court decisions bound it (paragraphs 30 and 31). It drew support from the Patna High Court in Pankaj Kumar on prospectivity (paragraph 32) and from the Telangana High Court in Smt. Shantha Vidyasagar Annam for the proposition that possession handed over for the limited purpose of carrying out development work is not possession contemplated by section 53A and so no transfer under section 2(47) occurs, noting that no specific terms of the JDA had been pointed out by the Revenue on that question (paragraphs 33 and 34).
Section 45(5A), inserted with effect from 01.04.2018, is prospective and contains no express or implied retrospective operation; the Explanatory Memorandum also indicates that it applies only to agreements entered into after its commencement.
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Handle my notice → Ask a CA on WhatsAppNo. The Tribunal held that where the JDA was executed and possession handed over in FY 2012-13, the transfer within the meaning of section 2(47)(v) occurred in that year and the gain was chargeable in AY 2013-14 under the law then in force. Section 45(5A), inserted with effect from 1 April 2018, is prospective, so the gain cannot be shifted to AY 2020-21 merely because the completion certificate was received in that year. All four of the Revenue's appeals were dismissed. This was decided by the ITAT (Shri Prashant Maharishi, Vice-President and Shri Keshav Dubey, Judicial Member) and bears on section 45(5A), section 2(47)(v), section 2(47), section 45, section 48, section 53A Transfer of Property Act, 1882, section 147, section 148, section 149 of the Income Tax Act 1961. It is reported as ITA Nos. 2858-2859, 3032 & 3125/Bang/2025; Assessment Years 2017-18, 2018-19, 2019-20 and 2020-21 (ITAT Bangalore 'A' Bench). The prospectivity of section 45(5A) cuts both ways, and this is the side of it that helps the taxpayer. Where the Revenue has missed the year of transfer it cannot recover the position by taxing the same gain in the completion-certificate year under a provision that was not on the statute book when the transfer took place; the Tribunal said the appropriate course, if any, is to reopen the earlier year subject to the limitation in section 149. The order also does something a practitioner should use: it flags that where possession was handed over only for the limited purpose of carrying out development work, there may be no transfer under section 2(47)(v) at all, which renders the retrospectivity question academic. The order is a Tribunal decision on a point on which the ITAT itself is not uniform — the Bench declined to follow a coordinate-bench decision (Kanak Bhanj Deo) on the ground that it had not considered the Bombay and Karnataka High Court decisions. If it applies to you, the first step is this: Fix the year of transfer on the documents: the date of the registered JDA, the date and nature of possession, and whether the developer got possession as part performance under section 53A or only a licence to enter and build.
The assessee and his wife owned land which was the subject of joint development agreements — one with M/s SJR Prime Corporation Pvt Ltd dated 17 December 2012 for the SJR Plaza City project and another with M/s Sunil Mantri Realty Ltd dated 20 March 2009 for the Mantri Premero project. The assessee's share in the SJR project was 27.8 per cent and his wife's 72.2 per cent. Following a search, the Assessing Officer brought to tax in AY 2020-21 a capital gain on the joint development, estimated on the cost of construction of flats, and separately added sale proceeds of flats and a non-refundable deposit. A coordinate Bench had already decided the wife's appeal for the same assessment year and the same development agreements, deleting the additions. The CIT(A) followed that decision and deleted the addition in the assessee's hands. The Revenue appealed for four years. Before the Tribunal the Departmental Representative relied on a coordinate-bench decision in Kanak Bhanj Deo said to have been confirmed by the Orissa High Court with an SLP dismissed. The matter was decided on 2026-05-11 by the ITAT (Shri Prashant Maharishi, Vice-President and Shri Keshav Dubey, Judicial Member). On those facts the ITAT held as follows. All four appeals of the Assessing Officer were dismissed (paragraph 36). Where the JDA was executed and possession handed over in FY 2012-13, the transfer within the meaning of section 2(47)(v) occurred in that year and the gain was chargeable in AY 2013-14 under the law then in force; section 45(5A) is prospective and the gain cannot be shifted to AY 2020-21 merely because the completion certificate was received in that year (paragraph 26). If the gain was not taxed in the earlier year the appropriate course is for the Revenue to consider reopening that year under sections 147 and 148, subject to the limitation in section 149; the Tribunal would not permit the same gain to be taxed in the later year by disregarding the provisions then in force (paragraphs 27 and 28). There is no application of section 45(5A) to the assessee for this year, the JDA not having been entered into in this year and possession having been granted on the date of the JDA (paragraph 33).
The Bench first held itself bound by the coordinate Bench's decision in the wife's case on the same agreements and the same year, nothing having been shown to be infirm in the CIT(A)'s reliance on it (paragraphs 24, 25 and 29). It then reasoned independently that section 45(5A), inserted with effect from 1 April 2018, is prospective and contains no express or implied retrospective operation, the Explanatory Memorandum indicating that it applies only to agreements entered into after commencement, so any hardship in taxing the gain before the constructed area is received is a consequence of the pre-amendment regime (paragraph 26). It declined to follow the coordinate-bench decision in Kanak Bhanj Deo relied on by the Departmental Representative because that decision had considered neither Chaturbhuj Dwarkadas Kapadia (Bombay) nor Dr T.K. Dayalu (Karnataka), the latter being the jurisdictional High Court, and held that the jurisdictional High Court decisions bound it (paragraphs 30 and 31). It drew support from the Patna High Court in Pankaj Kumar on prospectivity (paragraph 32) and from the Telangana High Court in Smt. Shantha Vidyasagar Annam for the proposition that possession handed over for the limited purpose of carrying out development work is not possession contemplated by section 53A and so no transfer under section 2(47) occurs, noting that no specific terms of the JDA had been pointed out by the Revenue on that question (paragraphs 33 and 34). In the words reproduced by the source cited on this page: "Section 45(5A), inserted with effect from 01.04.2018, is prospective and contains no express or implied retrospective operation; the Explanatory Memorandum also indicates that it applies only to agreements entered into after its commencement." The decision followed or applied Pankaj Kumar v. CIT (Patna High Court, CWJC No. 20926 of 2019, 12 May 2023) — followed on prospectivity; Chaturbhuj Dwarkadas Kapadia v. CIT (2003) 260 ITR 491 (Bombay) — relied on; CIT v. Dr. T.K. Dayalu (2011) 202 Taxman 531 (Karnataka) — jurisdictional High Court, relied on; Smt. Shantha Vidyasagar Annam (Telangana High Court, ITTA No. 527 of 2006) — relied on; Kanak Bhanj Deo (ITA No. 21/CTK/2024, ITAT Cuttack, 10 July 2024; affirmed by the Orissa High Court in ITA No. 26 of 2024 on 29 August 2024; SLP dismissed in limine on 18 July 2025) — expressly not followed.
It was decided by the ITAT on 2026-05-11 and is reported as ITA Nos. 2858-2859, 3032 & 3125/Bang/2025; Assessment Years 2017-18, 2018-19, 2019-20 and 2020-21 (ITAT Bangalore 'A' Bench). Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 45(5A), section 2(47)(v), section 2(47), section 45, section 48, section 53A Transfer of Property Act, 1882, section 147, section 148, section 149, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. All four appeals of the Assessing Officer were dismissed (paragraph 36). Where the JDA was executed and possession handed over in FY 2012-13, the transfer within the meaning of section 2(47)(v) occurred in that year and the gain was chargeable in AY 2013-14 under the law then in force; section 45(5A) is prospective and the gain cannot be shifted to AY 2020-21 merely because the completion certificate was received in that year (paragraph 26). If the gain was not taxed in the earlier year the appropriate course is for the Revenue to consider reopening that year under sections 147 and 148, subject to the limitation in section 149; the Tribunal would not permit the same gain to be taxed in the later year by disregarding the provisions then in force (paragraphs 27 and 28). There is no application of section 45(5A) to the assessee for this year, the JDA not having been entered into in this year and possession having been granted on the date of the JDA (paragraph 33). It arises in Capital Gains, How Tax Law Is Read and Assessment & Scrutiny matters, on section 45(5A), section 2(47)(v), section 2(47), section 45, section 48, section 53A Transfer of Property Act, 1882, section 147, section 148, section 149 of the Income Tax Act 1961, and was decided by Shri Prashant Maharishi, Vice-President and Shri Keshav Dubey, Judicial Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If the department is taxing the completion-certificate year for a pre-2018 agreement, take the prospectivity point squarely — section 45(5A) does not reach the transaction at all — and put the department to its election on which year it says the gain falls in. If the department then turns to the earlier year, test section 149 limitation immediately. Where the terms of the JDA give the developer possession only for carrying out the development work, plead the Telangana High Court line (Smt. Shantha Vidyasagar Annam) that no transfer under section 2(47)(v) took place at all — and put the actual clauses of the agreement on record, because the Tribunal recorded that no specific terms had been shown to it. Check whether the gain was in fact offered in another year, and on which basis; the Bench relied on the fact that the Revenue had not rebutted the assessee's assertion that it had been offered in the correct year.
Validity check could not be completed. Validity check could not be completed; the order is dated 11 May 2026 and no later treatment of it was searched for. The Bench records a contested position within the Tribunal and the contest is more serious than the order lets on. It declined to follow the coordinate-bench decision in Kanak Bhanj Deo (ITAT Cuttack, ITA No. 21/CTK/2024, 10 July 2024) on the ground that that decision had considered neither Chaturbhuj Dwarkadas Kapadia nor the jurisdictional High Court in Dr T.K. Dayalu. On verification, that Cuttack order — which taxed the gain on a 2012 joint development agreement in AY 2017-18, the year the assessee received her constructed share, and which does not mention section 45(5A) at all — was affirmed by the Orissa High Court on 29 August 2024 (ITA No. 26 of 2024, Arindam Sinha and M.S. Sahoo JJ), and the assessee's special leave petition was dismissed in limine by the Supreme Court on 18 July 2025 (SLP (C) Diary No. 28605/2025, Manoj Misra and Ujjal Bhuyan JJ). This Bench was therefore declining to follow a line that had been affirmed on appeal, which is a real vulnerability if the Revenue takes the point further. Two qualifications cut the other way: the Orissa order is a six-paragraph refusal at the admission stage which framed no substantial question of law and did not address prospectivity at all, and a special leave petition dismissed in limine declares no law and effects no merger. The status is kept at unverified rather than 'high courts differ' for those reasons. The same case is carried on indiankanoon under four separate document ids (102420618, 92145065, 26721225 and 106167487); only 102420618 was read. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order runs to 36 numbered paragraphs across four appeals for AYs 2017-18, 2018-19, 2019-20 and 2020-21, but the reasoning reproduced concerns AY 2020-21; paragraph 36 then dismisses all four appeals without separate reasons for the other three years. Paragraph 24 reproduces the coordinate Bench's order in the case of the assessee's wife, Smt. Shanthamma, at that order's internal paragraph numbering 34.9 to 34.21, and paragraph 25 reproduces the CIT(A)'s findings at 12.3 and 12.4 — neither set of numbers is this Tribunal's own. Paragraph 27 begins 'The Ld. AO further observed that', which does not sit with the analytical content that follows; paragraphs 26 to 28 read as the Bench's own reasoning and paragraph 26 was confirmed verbatim through a separate fragment view. Paragraph 26 also contains a formulation that should be treated with care: it says 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', whereas the sub-section was inserted with effect from 1 April 2018, that is from AY 2018-19. Paragraph 32 records that the Patna High Court passage it quotes came from indiankanoon and taxsutra and numbers it 'para 9'; in the Patna judgment itself that passage is paragraph 19. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
All four appeals of the Assessing Officer were dismissed (paragraph 36). Where the JDA was executed and possession handed over in FY 2012-13, the transfer within the meaning of section 2(47)(v) occurred in that year and the gain was chargeable in AY 2013-14 under the law then in force; section 45(5A) is prospective and the gain cannot be shifted to AY 2020-21 merely because the completion certificate was received in that year (paragraph 26). If the gain was not taxed in the earlier year the appropriate course is for the Revenue to consider reopening that year under sections 147 and 148, subject to the limitation in section 149; the Tribunal would not permit the same gain to be taxed in the later year by disregarding the provisions then in force (paragraphs 27 and 28). There is no application of section 45(5A) to the assessee for this year, the JDA not having been entered into in this year and possession having been granted on the date of the JDA (paragraph 33).
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