Taxability:

As a land owner the key issue that needs consideration is with reference to ‘transfer’ and ‘capital gains’. In a typical joint development agreement, the land owner is entitled to certain portion of the developed or constructed area as per an agreed sharing ratio. The taxability of capital gains does not depend upon the actual realization of the consideration and the liability can arise if transfer as defined in Section 2(47) of the Income Tax Act takes place in a particular financial year relevant to the assessment year. 

Section 2(47) of the Income Tax Act defines ‘transfer’. Clause (v) refers to 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.