When the assessee converted his immovable property into stock-in-trade and entered into development agreement, the said transaction cannot be said to be a sale of immovable property.

The assessee converted his
land from capital asset to stock-in-trade and thereafter entered into a
development agreement dated 1-9-2003 along with a supplementary development
agreement dated 23-12-2003 with a developer, whereby the assessee provided his
land measuring 44,090 sq.ft. to the developer and in return the developer was to
give the assessee a built-up area of 25,285 sq.ft.

The assessee offered capital
gains accrued on conversion of land to stock-in-trade proportionate to the
built-up area sold in different years.

The Assessing Officer was of
the view that the long-term capital gain on transfer of land was assessable in
the year in which the assessee handed over the possession of the land to the
developer itself, pursuant to the agreement.

S. 53A of the Transfer of
Property Act does not provide the conditions for transfer, but it provides
protection to the transferee of any immovable property by a written contract.

S. 53A of the Transfer of
Property Act is borrowed only with respect to the transfer of capital asset as
provided u/s.2(47) of the Income-tax Act, 1961 and the same is not applicable in
other cases which do not fall u/s.2(47).

The sale/transfer of
stock-in-trade cannot be equated with transfer of capital asset u/s.2(47). The
decisions relied upon by the learned Departmental representative as well as the
lower authorities are with respect to the transfer of capital asset u/s.2(47)
and not in respect to stock-in-trade.

The assessee handed over the
possession of the property for construction of residential apartments by the
developer. The assessee did not receive any consideration for handing over the
possession of the property to the developer, but to get the built-up area of
25,130 sq.ft.

In the absence of the
transfer of the title of the property and any consideration at the time of
development agreement, the handing over of the possession was merely a temporary
measure for carrying out the construction work by the developer and the
exclusive possession of the property in legal sense remains with the assessee.

The nature of the transaction between the
parties by way of development agreement cannot be said to be a sale of immovable
property which is stock-in-trade.