Satnam Singh Kainth, SBS Nagar v. Income-tax Officer, Nawanshahr

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5. 439(Asr)/2013 -do- Bhai Harnirpal Bathinda 19.03.2013 Singh

6. 440(Asr)/2013 2008-09 -do- -do- -do-

7. 447(Asr)/2013 2007-08 Dr.Ram -do- 28.03.2013 Kumar Goyal

8. 453(Asr)/2013 -do- Sh.Surjit -do- 07.03.2013 Kumar Jayani

9. 454(Asr)/2013 -do- Sh.Nirmal -do- -do- Singh Kahlon

10. 460(Asr)/2013 -do- Smt. Gurmail -do- 28.03.2013 Kaur

11. 461(Asr)/2013 -do- S.Jora Singh -do- 07.03.2013 Mann

12. 462(Asr)/2013 -do Sh.Sher Singh -do- -do-

13. 463(Asr)/2013 -do- Sh.Inderjit -do- -do- Singh

14. 402(Asr)/2013 2008-09 Sh.Charanjit -do- -do- Singh

15. 334(Asr)/2013 2007-08 Sh.Shinga Jalandhar 21.03.2013 Ram Sanghura

2. In ITA No.188(Asr)/2013, Sh.Manoranjan Kalia, the assessee has raised following grounds of appeal:

"1. That the Ld. CIT(A), in the given facts of the case, when all material facts relating to the impugned capital gain were disclosed in the returned filed, has erred in upholding the validity of assumption of jurisdiction u/s 147/148.

2. That the Ld. CIT(A) has grossly erred in upholding the validity of proceedings initiated by the AO u/s 147/148 without proper appreciation of the facts and the position of law qua such facts.

3. That the Ld. CIT(A) misdirected himself in law and on facts in confirming the taxation of notional capital gain of Rs.2,91,12,574/- by wrongly upholding the transfer of land on the date of execution of Joint Development Agreement with the developers.

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4. That the ld. CIT(A) ought to have read the Joint Development agreement in totality, so as not to infer the accrual of capital gain on the very date of execution of the said agreement.

5. That when CIT(A) himself admitted that two flats, made part of sale consideration, were non-existent his upholding the taxation of capital gain, computed on a sale value, comprised mainly of the cost of said two flats, was self contradictory.

6. That the ld. CIT(A) was not justified overlooking various judicial authorities relied upon by assessee, on a facial distinction drawn by him.

7. That the assesse's alternate claim of deduction u/s 54F ought to have been allowed by the ld. CIT(A).

8. That the ld. CIT(A) wrongly rejected the assessee's claim that the impugned capital gain, if any, could be assessed only in the hands of Society and not the assessee member.

9. That the assessee's claim not to tax the impugned gain on the principles of mutuality involved in the transactions, as been wrongly rejected by ld. CIT(A).

10. That charging of interest u/s 234A & 234B has been confirmed.

11. That initiation of penalty u/s 271(1)(c) has been wrongly confirmed.

12. That the order under appeal is wholly against law and facts of the case."

3. In ITA No.225(Asr)/2013, the assessee, Sh.Jatinder Singh Kariha has raised following grounds of appeal:

"1. That the ld. CIT(A) has erred in law and facts of the case in confirming the assessment of Rs.1,70,39,276/- as long term capital gain.

2. That the ld. CIT(A) further also has erred in law and facts of the case in denying the deduction u/s 54 of the Act.

3. That the ld. CIT(A) also misdirected himself while applying the provisions of section 45, 48 of the Act, as well as section 53A of the Transfer of Property Act.

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4. That the Ld. CIT(A) further also erred in law while confirming the additions of capital gains on notional basis, being against the principles of real income.

5. That the impugned order under appeal is arbitrary and contrary of law & facts of the case, hence deserves to be cancelled.

6. That the appellant craves leave to amend/alter or add any of the grounds of appeal before or at the time of hearing of appeal."=

4. In ITA No.301(Asr)/2013, the assessee, Sh.Manjit Pal Singh has raised following grounds of appeal:

"1. That Ld. CIT(A) was not justified in upholding initiation of proceedings u/s 148, in general and against the assessee as legal heir, in particular, contrary to facts on record and the relevant provisions of law.

2. That the ld. CIT(A) has grossly erred in upholding the impugned order against the assessee, as legal heir of the deceased, by taking wholly erroneous notice of the bare facts on record.

3. That even otherwise, there was no material to assume jurisdiction u/s 147 against the appellant, in his individual capacity or even as legal heir of the deceased.

4. That in the given facts of the case, the impugned order ought to have been passed in the hands of AOP by virtue of provisions of section 168 of the Act.

5. That the ld. CIT(A)misdirected himself in law and on facts in confirming the taxation of notional capital gain of Rs.1,76,13,556/- (with 1/4^ththereof taxed in this case) by wrongly upholding the transfer of land on the date of execution of Joint Development Agreement with the developers.

6. That the Ld. CIT(A) ought to have read the Joint Development Agreement in totality, so as not to infer the accrual of capital gain on the very date of execution of the said agreement.

7. That the cost of acquisition of the land, as wrongly computed by the AO should not have been upheld by the ld. CIT(A). The resultant computation of capital gain is thus incorrect.

8. That the Society being the owner of the land, the capital gain ought to have been assessed in the hands of the Society.

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9. That the acquisition of flats, when assessed as part of sale consideration, ought to have been allowed the benefit of section

54F.

10. That the order under appeal is wholly against law and facts of the case."

5. In ITA No.384(Asr)/2013, the assessee, Smt.Jagdish Kaur Dhillon has raised following grounds of appeal:

"1. That on the facts and in the circumstances of the case, the AO erred in reopening the case of the assessee as no LTCG escaped in the hands of the assessee. So, the re-assessment is liable to be quashed.

2. That the re-assessmetn made by the AO Circle III at Ferozepur is without jurisdiction as the case was reopened by the AO Ward 3(3) at Faridkot by recording the reasons u/s 148 on 04.01.2010 and the case was not transferred from the file of the AO at Faridkot to the AO Circle III at Ferozpur by the competent officer by passing the necessary order to that effect and by giving the necessary notice to the assessee before the transfer order. So, reassessment is liable to be quashed. This is supported by the fact that the case for the next assessment year 2008-09 was assessed by the AO at Faridkot on 28.12.2010.

3. That the AO has not confronted the adverse material collected to reopen the case to the assessee during the course of assessment proceedings. Even the adverse material was not in the possession of the AO not only at the time of recording of reasons to reopen the case but till date and were based on hear say. It is against natural law and justice. Accordingly, the assessee could not meet the case. So, the re-assessment is liable to be quashed.

4. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in giving the finding that the members of the society are owners of the 21.2 acres of agricultural land in V. Kansal whereas in the reasons recorded to reopen the case the AO himself has admitted by mentioning that the society is the owner. Accordingly, the LTCG of the agricultural land can not

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be assessed in the hands of assessee particularly when the same was assessed in the hands of the society by the department.

5. That no LTCG can be charged in the hands of the assessee or the society for the alleged transfer of 21.2 acres of agricultural land in V.Kansal as it is out of Municipal Limit of Chandigarh, so not a capital asset and Chandigarh is not notified for LTCG under notification dated 06.01.1994.

6. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in holding that there is a transfer of capital asset particular in view of the fact that the agreement later on cancelled on 13.06.2011. The Ld. CIT(A) should have taken the notice of this later development as the same goes to the root of the case.

7. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in not following the decision of CIT(A), Ludhiana, in the case of Sat Pal Gosain in view of the principle of consistency. In view of Article 14/16 of the Constitution of India, 1950, there can not be any discrimination when all the members of the society are similarly placed.

8. That on the facts and in the circumstances of the case, the assessee has not fulfilled all the four conditions of section 45.. So, the LTCG can not be assessed in the hands of the assessee if the provisions of section 45 are strictly construed as section 45 creates an item of 'artificial income'.

9. That on the facts and in the circumstances of the case, the ld. CIT(A) should have taken the value of the flat at Nil as the same has not been construed till date as it is beyond the control of the assessee. In any case, the valuation of flat is on higher side.

10. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in not giving the benefit of section 54/54F on account of flat allotted to the assessee. It is a barter system vides which flat was allotted along with the cash of Rs.825000/- on different dates.

11. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in not considering the additional objection to the reassessment in the written arguments filed before him during the course of appellate proceedings. So his order is liable to be set aside."

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6. In ITA Nos.439 & 440(Asr)/2013, Bhai Harnirpal Singh, the assessee, has raised following common grounds in both the appeals:

"1. That order passed u/s 250(6) of the Act by the Ld. CIT(A) Bathinda is against law and facts on the file in as much as he was not justified to uphold the AO had assumed valid jurisdiction by recourse to provisions of section 148.

2. That the ld. CIT(A) was not justified in not passing a speaking order in the case of the appellant.

3. That the ld. CIT(A) was not justified in upholding the action of the AO to tax the entire capital gain on hypothetical basis in the year of execution of tripartite agreement.

4. That he gravely erred in upholding the action of the AO in denying the appellant the benefit of exemption u/s 54F of the Act."

7. In ITA No. 447(Asr)/2013, Dr.Ram Kumar Goyal, the assessee, has raised following grounds of appeal:

"1. That the ld. CIT(A) has erred on facts & law in not quashing the notice u/s 148 dated 06/01/2010 issued & served in the name of the appellant when the plot in question was acquired out of agri. Income derived from ancestral agri. Land of village Bazidpur and agi. Income is being accepted as that of HUF and never considered for aggregation since long in the hands of the appellant.

2. That the ld. CIT(A) has erred on facts & law in upholding the assessment of alleged capital gain on plot of 400 s/yd on the strength tripartite of joint development agreement which remains unexecuted for various disputes and finally terminated by the society being the owner.

3. That the ld. CIT(A) has erred on facts & law in upholding the action of the AO to treat the tripartite agreement to sell land a transaction falling within the definition of transfer as defined u/s 2(47) of the Act.

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4. That the ld. CIT(A) erred in overlooking the facts that the property in question is agr. Land and is exempt from capital gain tax as not being capital asset with in the meaning of section 2(14)(v) of the Act r.w. notification No.9447 dated

06.01.1994.

5. That the ld. CIT(A) has erred on facts & law in upholding the action of the AO computing the long term capital gain against the provision of law as capital gain can be computed only in accordance with the provision of section 48 of the Act, after deducting the cost of acquisition from the full value of consideration received or accruing as a result of transfer of capital asset & full value of consideration will be determined only at the time of taking possession of flat, to be constructed by the developers, by the appellant (the alleged flat in non existent till today). The AO has observed in the assessment order that in the absence of specific information the value of flat to the assessee can be taken at Rs.4500/- per s/ft subject to rectification if the rate offered to the general public is higher than Rs.4500 /-sq. ft which shows that the rate consideration has been taken on notional basis. Thus notional market value of the flat has been adopted by A.O. for determining full value of consideration u/s 48 of the Act.

6. That without prejudice to grounds of appeal, the Ld. CIT(A) erred in not allowing exemption u/s 54F of the Act on notional cost of residential flat to be constructed by the developers & delivered to the appellant.

7. That the ld. CIT(A) has erred on facts & law in upholding the assessment of alleged long term capital gain on plot of 500 sq. yd because of concept of mutuality being involved in the formation of the society. The impugned transaction per se was not liable to tax.

8. That without prejudice to grounds of appeal, in terms of amended provisions of section 53A of the Transfer of Property Act with section 2(47) of the Act no capital gain beyond the part of land actually transferred by waya of registered sale deed was liable to tax.

9. That without prejudice to grounds of appeals the appellant being only a member of the society and the joint development agreement having been executed by the society with the

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developers, in the capacity as owner the alleged capital gain, in any, ought to have been assessed in the hands of the society.

10. That on the facts and circumstances of the case the ld. CIT(A) erred in not adjudicating the issue of charging of interest u/s 234A & 234B

11. That the humble appellant prays for permission to add or amend any ground of appeal before the disposal of appeal."

8. In ITA No. 453(Asr)/2013, Sh.Surjit Kumar Jayani, the assessee, has raised following grounds of appeal:

"1. That the CIT(A) erred on facts and in law in sustaining the addition of long terms capital gain of Rs.3,23,88,210 under section 45 of the Act on account of alleged transfer of property.

1.1 That the CIT(A) erred on facts and in law in confirming the finding of the AO that there was deemed transfer of property on the date of signing of tripartite Joint Development Agreement itself, in terms of sub section (ii), (v) and (vi) section 2(47) of the Act.

1.2 That the CIT(A) erred on facts and in law in observing that the receipt of consideration and registration of property are not relevant factors while determining the transfer of the property.

1.3 That the CIT(A) failed to appreciate that under the provisions of the Act what could be brought to tax is only the real income and not an amount, which was neither received nor likely to be received by the assessee. Besides the assessee has been deprived for claiming exemption u/s 54EC and other provisions of section 54, due to non-receipt of entire sale consideration.

1.4 That the CIT(A) failed to appreciate that the Agreement entered into by the appellant was subject to various

regulartory/statutory/other approvals/permissions etc. required to be obtained by the other party which were not received and hence there could be no 'transfer' under the aid Agreement.

1.5 That the CIT(A) further erred on facts and in law in holding that certain terms and conditions of the Agreement which provided that the transfer of land was subject to further condition/encumbrances, were not relevant.

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1.6 That the CIT(A) erred on facts and in law in not appreciating that actual physical possession of the property was not handed over by the assessee in part performance of the contract, in terms of section 53A of the Transfer of property Act and hence there was no transfer in law. That the relevant provisions of section 2(47) as also the provisions of section 53A of the Transfer of Property Act, 1822 qua the facts of this case have been misconstrued by the CIT(A) to confirm the ITO's order. That the CIT(A) failed to appreciate that registration of terms of agreement was a pre-condition to the handing over the possession of the property.

1.7 That the CIT(A) erred on facts and in law in affirming the value of the flats receivable towards part consideration of the proposed transfer of property @ Rs.4500 per sq. ft ignoring the evidence of lower value given during the course of assessment. That computation of capital gain, by assuming notional consideration of two non existent flats, not being consistent with the basis of scheme of Income Tax Act, deserves not to be upheld.

1.8 Without prejudice, the CIT(A) erred on facts and in law in not directing the AO to compute capital gains with respect to the actual amount received during the relevant assessment year.

2. Without prejudice, the CIT(A) failed to appreciate that the income if at all, could have been assessed in the hands of the Society and not the appellant.

3. That the CIT(A) erred on facts and in law in rejecting applicant facts about JDA is rescinded and the contract become impossible and illegal due to environment hazard declared by the Hon'ble Punjab & Haryana High Court holding the same to be frivolous and irrelevant.

4. That the assessed income having far exceeding Rs. 5 lacs of which the ITO was well aware before invoking his jurisdiction, he ought to have transferred the case to AO to competent jurisdiction. This legal infirmity renders the order impugned as null and void."

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9. In ITA No. 454(Asr)/2013, Sh. Nirmal Singh Kahlon, the assessee, has raised following grounds of appeal:

"1. That the CIT(A) erred on facts and in law in sustaining the addition of long terms capital gain of Rs.3,54,20,685/-under section 45 of the Act on account of alleged transfer of property.

1.1. That the CIT(A) erred on facts and in law in confirming the finding of the AO that there was deemed transfer of property on the date of signing of tripartite Joint Development Agreement itself, in terms of sub section (ii), (v) and (vi) section 2(47) of the Act.

1.2 That the CIT(A) erred on facts and in law in observing that the receipt of consideration and registration of property are not relevant factors while determining the transfer of the property.

1.3 That the CIT(A) failed to appreciate that under the provisions of the Act what could be brought to tax is only the real income and not an amount, which was neither received nor likely to be received by the assessee. Besides the assessee has been deprived for claiming exemption u/s 54EC and other provisions of section 54, due to non-receipt of entire sale consideration.

1.4 That the CIT(A) failed to appreciate that the Agreement entered into by the appellant was subject to various

regulartory/statutory/other approvals/permissions etc. required to be obtained by the other party which were not received and hence there could be no 'transfer' under the aid Agreement.

1.5 That the CIT(A) further erred on facts and in law in holding that certain terms and conditions of the Agreement which provided that the transfer of land was subject to further condition/encumbrances, were not relevant.

1.6 That the CIT(A) erred on facts and in law in not appreciating that actual physical possession of the property was not handed over by the assessee in part performance of the contract, in terms of section 53A of the Transfer of property Act and hence there was no transfer in law. That the relevant provisions of section 2(47) as also the provisions of section 53A of the Transfer of Property Act, 1822 qua the facts of this case have been misconstrued by the CIT(A) to confirm the ITO's order. That the CIT(A) failed to appreciate that registration of terms of

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agreement was a pre-condition to the handing over the possession of the property.

1.7 That the CIT(A) erred on facts and in law in affirming the value of the flats receivable towards part consideration of the proposed transfer of property @ Rs.4500 per sq. ft ignoring the evidence of lower value given during the course of assessment. That computation of capital gain, by assuming notional consideration of two non existent flats, not being consistent with the basis of scheme of Income Tax Act, deserves not to be upheld.

1.8 Without prejudice, the CIT(A) erred on facts and in law in not directing the AO to compute capital gains with respect to the actual amount received during the relevant assessment year.

2. Without prejudice, the CIT(A) failed to appreciate that the income if at all, could have been assessed in the hands of the Society and not the appellant.

3. That the CIT(A) erred on facts and in law in rejecting applicant facts about JDA is rescinded and the contract become impossible and illegal due to environment hazard declared by the Hon'ble Punjab & Haryana High Court holding the same to be frivolous and irrelevant."

10. In ITA No. 460(Asr)/2013, Smt. Gurmail Kaur, the assessee, has raised following grounds of appeal:

"1. That the ld. CIT(A) Bathinda has erred in law and on facts in confirming the addition of long terms capital gain of Rs.17875000 under section 45 of the Act on account of alleged transfer of property.

2 That the ld. CIT(A) Bathinda has erred in law and on facts in blindly following his order in the case of Nirmal Singh Kahlon in appeal No.214-IT/10-11 dated 7.3.2013 while deciding the appeal in this case

3. That the ld. CIT(A) Bathinda as well as the AO have grossly erred in law and on facts in not appreciating the fact that the assessee has received a paltry sum of Rs.3200000 only as per

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joint development agreement dated 25.2.2007 out of which Rs.1800000 was received in financial year 2007-08.

4. That the ld. CIT(A) Bathinda has grossly erred in law and on facts in confirming the addition made by AO without appreciating the fact that the society have already terminated the JDA due to non performance of its part by the Developer hence there is no question of transfer of any property by the appellant.

5. That the ld. CIT(A) Bathinda has grossly erred in law and on facts in not allowing deduction u/s 54F of the Act, in case the long term capital gain was assessable in the hands of assessee.

6. That the proceedings u/s 148 was wrongly initiated in this case and assessment framed u/s 144 was absolutely illegal. Hence, the order is bad in law and on facts.

7. That the appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off."

11. In ITA No. 461(Asr)/2013, Sh.Zora Singh Mann L/H S.Vardev Singh Mann, the assessee, has raised following grounds of appeal:

"1. That the ld. CIT(A) has erred in dismissing the appeal and confirming order of A.O. assessing income at Rs.1,79,32,120/-, including long terms capital gains of Rs.1,77,65,845/-

2. That the ld. CIT(A) Bathinda has erred in law and on facts in upholding the action of the AO of bringing to tax the notional capital gain of Rs.1,77,,65,845/- on the strength of Joint Development Agreement which remained unexecuted for various disputes and finally terminated by the society being the owner.

3. That the ld. CIT(A) Bathinda has erred in law and on facts in upholding the action of the AO of determining the long term capital gain of Rs.1,77,65,845/-. The impugned transaction on the basis of which the short term capital gain has been determined by the AO is not covered under the definition of transfer as defined u/s 2(47) of the Act.

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4. That the ld. CIT(A) Bathinda has erred in law and on facts in upholding the action of AO of determining the long term capital gains of Rs.1,77,65,845/- on account of the following reasons:

i) The capital gain can only be computed in accordance with the provisions of section 48 of the Act after deducting the cost of acquisition from the full value of consideration, received or accruing as a result of transfer of capital asset.

ii) But in the present case, the full value of consideration shall stand determined only at the time of taking of possession of the flat by the assessee. The AO has given the finding in the assessment order that "in the absence of specific information the value of the flat to the assessee can be taken at Rs.4500 per sq. ft. subject to rectification if the rate offered to the general public is higher then Rs.4500 sq. ft. which shows that the sale consideration has been taken on notional basis. Thus, the notional market value of the flat has been adopted by the AO for determining the full value of consideration for the purpose of computation of capital gain u/s 148 of the Act. The action of the AO is against the provisions of law.

5. That the Ld. CIT(A) erred on facts and law in upholding the action of the AO of determining the long term capital gain of Rs.1,77,65,845/- because of the concept of mutuality being involved in the formation of the society, the impugned transaction per se was not liable to tax.

6. That the Ld. CIT(A) erred on facts and law in disallowing deduction u/s 54F and confirming the order of Assessing Authority.

7. That without prejudice to grounds of appeal, in terms of the amended provisions of section 53A of the transfer of property Act read with section 2(47) of the Act no capital gain beyond the part of land actually transferred by way of registered sale deed, was liable to tax.

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8. That without prejudice to grounds of appeal, in terms of the amended provisions of section 53A of the transfer of the property Act, read with section 2(47) of the Act, no capital gain, beyond the part of land actually transferred by way of registered sale deed, was liable to tax.

9. That the appellant craves to add or amend the grounds of appeal before the appeal is finally heard or disposed off."

12. In ITA No. 462(Asr)/2013, Sh.Sher Singh, the assessee, has raised following grounds of appeal:

"1. That the ld. CIT(A) has erred in dismissing the appeal and confirming order of A.O. assessing income at Rs.1,77,48,188/-, including long terms capital gains of Rs.1,77,35,838/-

2. That the ld. CIT(A) Bathinda has erred in law and on facts in upholding the action of the AO of bringing to tax the notional capital gain of Rs.1,77,35,838/- on the strength of Joint Development Agreement which remained unexecuted for various disputes and finally terminated by the society being the owner.

3. That the ld. CIT(A) Bathinda has erred in law and on facts in upholding the action of the AO of determining the long term capital gain of Rs.1,77,35,838/-. The impugned transaction on the basis of which the short term capital gain has been determined by the AO is not covered under the definition of transfer as defined u/s 2(47) of the Act.

4. That the ld. CIT(A) Bathinda has erred in law and on facts in upholding the action of AO of determining the long term capital gains of Rs.1,77,35,838/- on account of the following reasons:

iii) The capital gain can only be computed in accordance with the provisions of section 48 of the Act after deducting the cost of acquisition from the full value of consideration, received or accruing as a result of transfer of capital asset.

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iv) But in the present case, the full value of consideration shall stand determined only at the time of taking of possession of the flat by the assessee. The AO has given the finding in the assessment order that "in the absence of specific information the value of the flat to the assessee can be taken at Rs.4500 per sq. ft. subject to rectification if the rate offered to the general public is higher then Rs.4500 sq. ft. which shows that the sale consideration has been taken on notional basis. Thus, the notional market value of the flat has been adopted by the AO for determining the full value of consideration for the purpose of computation of capital gain u/s 148 of the Act. The action of the AO is against the provisions of law.

5. That the Ld. CIT(A) erred on facts and law in upholding the action of the AO of determining the long term capital gain of Rs.1,77,35,838/- because of the concept of mutuality being involved in the formation of the society, the impugned transaction per se was not liable to tax.

6. That the Ld. CIT(A) erred on facts and law in disallowing deduction u/s 54F and confirming the order of Assessing Authority.

7. That without prejudice to grounds of appeal, in terms of the amended provisions of section 53A of the transfer of property Act read with section 2(47) of the Act no capital gain beyond the part of land actually transferred by way of registered sale deed, was liable to tax.

8 That without prejudice to grounds of appeal, in terms of the amended provisions of section 53A of the transfer of the property Act, read with section 2(47) of the Act, no capital gain, beyond the part of land actually transferred by way of registered sale deed, was liable to tax.

9 That the appellant craves to add or amend the grounds of appeal before the appeal is finally heard or disposed off."

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13. In ITA No. 463(Asr)/2013, Sh. Inderjit Singh, the assessee, has raised following grounds of appeal:

"1. The assessee filed Income tax return for the A.Y. 2007-08 vide receipt No.9708 dated 31.03.2008.

2. The assessee is a member of M/s. Punjabi Co-operative House Building Society having 21.1 acres of land in village Kansal, Distt. SAS Nagar, Punjab having its registered office at MLA Flat No.1, Sector 3, Chandigarh.

3. The assessee was allotted a plot measuring 500 sq. yd through allotment letter dated 09.01.2004.

4. The said society entered into an agreement with M/s. Tata Housing Development Company Ltd. on 25.02.2007 in accordance with the agreement.

5. The assessee has received partial consideration of Rs.15,00,000/- in F.Y.2006-07.

6. The assessee was issued notice u/s 148 on -04.01.2010

7. The assessee filed return in response to notice issued u/s 148

8. The AO then issued notice u/s 143(2) and 142(1) alongwith a copy of the reasons recorded for issuance of notice u/s 148.

9. The AO has made additions of Rs.1,78,75,000 on account of long term capital gains and has raised a demand of Rs.61,36,455/-.

10. The assessee filed an appeal with Ld. CIT(A), Bathinda.

11. The Ld. CIT(A) Bathinda passed an order dated 07.03.2013 and dismiss the appeal filed.

12. Aggrieved with the above order, the assessee here files an appeal on the following grounds."

14. In ITA No. 402(Asr)/2013, the assessee, Sh. Charanjit Singh Sandhu, has raised following grounds of appeal:

"1. That the Ld. CIT(A) erred on facts and law in upholding the issuance of notice u/s 148 of the Act without complying the requirements of the said section which is arbitrary and unjustified and as such the assessment merits annulment.

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2. That there being no escapement of income leading to formation of reason to believe, more so when the assessment has been framed at the amount much higher than the one mentioned in the reasons recorded, the resort to the provisions of section 148 of the Act is illegal, arbitrary & unjustified.

3. That the Ld. CIT(A) erred on facts and law in not determining explicitly as to who is the actual owner liable to pay capital gain tax if any as the notice u/s 148 of the Act has been issued both the assessee as well as the Society namely M/s. Punjabi Cooperative House Building Society Ltd. for the same reason which in itself shows that there is no reason to believe as envisaged in section 147 of the Act and as such the assessment framed is illegal which merits annulment.

4. Without prejudice to the above, the Ld. CIT(A) has further erred in upholding the addition of Rs.80,00,000/- as the alleged consideration received in cash which in fact has not been received till date except Rs.32,00,000 and as such the addition upheld is illegal, arbitrary and unjustified.

5. That the entire hypothetical addition is based on an agreement relied upon in parts by the AO which in fact has not been implemented till date and as such the addition made and upheld by the CIT(A) Bathinda on suspicion, surmises and conjectures merits deletion.

6. That the Ld. CIT(A) erred on facts and law in upholding the addition of Rs.1,12,50,000/- to be the alleged value of one flat measuring 2250 sq. ft. @ Rs.5000/- per sq. ft relying upon an agreement entered into between third parties which is illegal, arbitrary and unjustified.

7. That the entire addition of Rs.1,77,48,072/- is based purely on suspicion, surmises and conjectures in as much as neither any amount has been received in cash except Rs.32,00,000/- during the year nor any flat has been given to the assessee and as such the hypothetical additions made and upheld by the CIT(A) are illegal, arbitrary and unjustified.

8. That the agreements relied upon by the AO have to be read as a whole and not in parts which has so been done by the AO as

23

clauses relating to transfer of ownership, rights, termination, possession have been brushed aside while only the consideration clause has been referred to which cannot under any circumstance be read in isolation and as such the entire addition made and upheld by the CIT(A) merits deletion.

9. That the capital gains shall arise only in the year when the balance payment is received and the possession of the built up furnished flat is handed over to the assessee and as such to tax the income which is sill to be received especially when the implementation of the agreement itself is doubtful, the addition of Rs.1,77,48,072/- so made and upheld by the CIT(A) merits deletion.

10. That the Ld. CIT(A) erred on facts and law in holding that the transaction was squarely covered by the provisions of section 2(47) read with section 45 and 48 which is arbitrary and unjustified.

11. That in any case, section 53A of the Transfer of Property Act is not applicable to unregistered documents as in the instant case and as such the order is illegal, arbitrary and unjustified.

12. That the Ld. CIT(A) erred on facts and law in charging interest under section 234B of the Act which is not chargeable in the facts of the case.

13. That order of the ld. CIT(A) is erroneous, arbitrary, opposed to law and facts of the case and is thus,untenable."

15. In ITA No. 334(Asr)/2013, the assessee, Sh. Shingara Ram Ex-MLA, has raised following grounds of appeal:

"1. That exemption u/s 54F should have been allowed on the notional investment in flats which was counted as major part of sale consideration for computation of capital.

2. That on facts and circumstances of the case ld. CIT(A) has grossly erred in concluding that assumption of jurisdiction u/s 147/148 of Act is legal and as per law.

3. That on facts and circumstances of the case ld. CIT(A) has grossly erred in concluding that notice issued u/s 148 of the Act has been served as per law.

24

4. That on facts and circumstances of the case ld. CIT(A) has grossly erred in concluding that the assessment framed u/s 144 of the Act is correct.

5. That on facts and circumstances of the case ld. CIT(A) has grossly erred in concluding that land in question is not a agriculture land and is a asset as per section 2(14) of the Act as such capital gain was attracted.

6. That on facts and circumstances of the case ld. CIT(A) has grossly erred in dismissing ground of appeal no.5 where in assessee has challenged that alleged notional capital gain of Rs.1,77,65,846/- was calculated on the basis of Jt. Development Agreement which was remained unexecuted for various disputes and finally terminated by the society, being the owner.

7. That on facts and circumstances of the case ld. CIT(A) has grossly erred in dismissing ground of appeal no.6 where in assessee has challenged that I am only a member of the society and the Jt. Development agreement having been executed by the society with the developers, in its capacity as owner, the alleged capital gain, if any, ought to have assessed in the hands of the society.

8. That on facts and circumstances of the case ld. CIT(A) has grossly erred in dismissing ground of appeal no.7 where in assessee has challenged that the concept of mutuality being involved in formation of the society as such the impugned transaction was not liable to tax at all.

9. That on facts and circumstances of the case ld. CIT(A) has grossly erred in dismissing ground of appeal no.8 where in assessee has challenged that capital gain is attracted only if land actually transferred by way of registered sale deed, was liable to tax.

10. That the appellant requests for leave to add or amend the grounds of appeal before the appeal is heard or disposed off."

16. The Ld. JCIT(DR), Mr. Mahavir Singh invited our attention that the issues in all the 15 appeals mentioned hereinabove are identical to

25

the issues in the bunch of 30 appeals decided by the ITAT, Chandigarh Bench vide a consolidated order dated 29.07.2013 in the case of Charanjit Singh Atwal, Ludhiana vs. ITO Ward VI(1), Ludhiana in ITA No.448(Asr)/2011 and others for the assessment year 2007-08 and 24 appeals decided by this Bench in the case of Sh. Satnam Singh Kaith vs. ITO Nawanshahar and others ITA No.180(Asr)/2013 and others, dated

19.08.2013.

17. He further invited our attention that in the present appeals, the assessees are either present or Ex-MLAs of Punjab Legislative Assembly who are members of housing society. The said society consists of in total 95 present or Ex-MLAs of Punjab Legislative Assembly. The matter with respect to some MLAs and the matter with respect to the Society itself fall under the jursidction of Chandigarh ITAT and the rest under the Amritsar ITAT jurisdiction. All the 15 matters fixed today for hearing as mentioned hereinabove are part of 95 present or Ex-MLAs hereinabove. The issues in the present appeals are common and identical as in the bunch of 30 appeals decided by the ITAT, Chandigarh Bench in the case of Charanjit Singh Atwal, Ludhiana vs. ITO Ward VI(1), Ludhiana in ITA No.448(Asr)/2011 and others dated 29.07.2013 and 24 appeals decided by the ITAT, Amritsar Bench, in the case of Sh. Satnam Singh Kaith vs. ITO

26

Nawanshhar and others in ITA No.180(Asr)/2013 and others, dated

19.08.2013.

18. On the other hand, all the Ld. counsels appearing on behalf of different assessees before us in all the 15 present appeals, agreed to the argument made by the Ld. DR. Mr. Mahavir Singh. All the counsels prayed before the Bench to consider their written submissions and decide the issues in all the 15 appeals accordingly.

19. On perusing the facts in the present 15 appeals before us and the facts in the bunch of 30 appeals decided by a consolidated order dated 29.07.2013 by the ITAT Chandigarh Bench (supra) and 24 appeals decided by this Bench (supra) and on perusal of written submissions placed on record by different ARs, we are of the view that the issues decided by the ITAT Chandigarh Bench vide order dated 29.07.2013 (supra) and by this Bench vide order dated 19.08.2013 are identical to the issues in the present 15 appeals before us. Therefore, we are proceeding to decide the present appeals by this consolidated order. It is pertinent to reproduce our decision in the case of Sh. Satnam Singh Kainth in ITA No.180(Asr)/2013 and others (supra) (in para 30 to 38 i.e. page 40 to 147) as under:

"30. We have heard both the parties and perused the written submissions placed on record by the representatives of the assessees. The main issue in the present appeals is whether the assessee is liable to capital gains tax in the impugned year or not. The said legal issue

27

has been dealt with by the Chandigarh Bench of ITAT in its order dated 29.07.2013 (supra) in the case of Charanjit Singh Atwal, Ludhiana vs. ITO Ward VI(1), Ludhiana and in ITA No.448/CHD/2011 and others vide order dated 29.07.2013 (supra) vide para 27 to 44. The facts in the case of Charanjit Singh Atwal (supra) in the light of legal position in para 27 to 44 are discussed vide para 45 to 51. The Ld. counsel appearing for the assessee in the case of Charanjit Singh Atwal (supra) has raised mainly following contentions which have been dealt by Chandigarh Bench of ITAT in its order dated 29.07.2013 (supra) as under:

i) Vide para 52 to 58 of the order, first contention was that possession was not given by the Society because according to him as per clause 2.1 of the JDA, the possession of the property was to be handed over simultaneously to the execution and registration of JDA and since the JDA was not registered, therefore, the possession was not given. It was held by considering various contentions of Ld. Counsels and Ld. DR and cases of various Courts of law relied upon that by considering the purpose of insertion of clause (v) and clause

(vi) of section 2(47) and various clauses of Power of Attorney and JDA, it becomes absolutely clear that the Society has handed over the possession of the Society to THDC/HASH and accordingly first contention of the ld. DR was rejected.

ii) Vide para 59 to 61 of the order, second contention was that JDA was executed on 25.02.2007 and if possession was given then how the assessee was having possession in terms of later sale deeds executed on 2.3.2007 and 25.4.2007. It was held after considering and arguments of rival parties and facts on record that mere recitation in the sale deed to the effect that the Society was owner of land in possession measuring 21.2 acres, does not show that the society was having actual possession. What the Society was having is only ownership right and the possession was only concurrent as the possessory right. Accordingly the second contention was also rejected.

iii) Vide para 62 to 63 the third contention was that possession if at was given should be held to be only a license as defined in section 52 of Indian Easement Act. This third contention was also rejected for the reasons that rights given by the society are much larger than what is covered in the term 'License'.

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iv) Vide paras 64 to 68, the fourth contention was that the money received at the time of execution of JDA can be termed, as advance and whatever money has been received has already been shown as capital gain. It was held that it is not only the money, which is required to be taxed but the consideration which has accrued to the assessee is also required to be taxed. Accordingly, the fourth contention was also rejected.

v) Vide para 69 to 74, fifth contention was that since section 53A of the Transfer of Property Act itself has undergone amendment w.e.f. 24.9.2001 by which agreement referred to in that section is required to be registered and therefore, now in section 2(47)(v) only the amended provisions can be read. It was held that non-registration of agreement cannot lead to the conclusion that provision of section 2(47)(v) is not applicable. Accordingly, fifth contention was rejected.

vi) Vide paras 75 and 76, the sixth contention was with respect to decision of Hon'ble Bombay High Court in the case of Chaturbhuj dwarkadas Kapadia vs. CIT 260 ITR 491 is not applicable. It was held that the Bench has already discussed the implication of the decision in the case of Chaturbhuj dwarkadas Kapadia (supra) in para 33 to 38 of its order and accordingly this contention was also rejected.

via) Vide para 77 to 86, being the contention that it is necessary for invoking of section 2(47)(v) of the Act to comply with the provision of section 53A of the Transfer of Property Act to the extent that there should be willingness on the part of the transferee to perform his part of the contract. It was held that it cannot be said that the builders were not willing to perform their part of the contract in view of clauses 4.1(iv) read with clause 26(v)

vii. Vide para 87 and 88, being the seventh contention that revenue wrongly held that even clause (vi) of section 2(47) is applicable. It was held that the developer i.e. THDC/HASH has purchased the membership of the members in the society which now lead to the enjoyment of the property and in that technical sense, clause (v) of the section 2(47) is applicable.

viii. Vide paras 89 to 96, being the eightth contention that since the society has transferred the land through JDA on a pro-rata basis, therefore, only whatever money is received against which sale deeds have also been executed can be taxed and

29

notional income i.e. the money to be received later, cannot be taxed. It was held that there is no dispute that no notional income can be taxed, but in the case of Capital Gain section 45 read with section 48 clearly provides that it is the profit arising from the transfer of capital asset, which would be subjected to change capital gain tax and section 48 clearly provides for taking the total consideration into account while computing the capital gains, which has already been discussed in paras 64 to 68 of the order. Therefore, the whole consideration whether received or accrued which has to be taxed under the capital gain, once the transfer of capital asset takes place. Accordingly, the contention was rejected.

Further, the Chandigarh ITAT Bench in the order dated 29.7.2013 (supra) vide paras 97 to 99 has dealt with issue of taxability of flat on the basis of above principles considering clause 4 of JDA, it was held that once this vested right arises out of the above contract, it can be easily said that this right has also accrued to the assessee. Therefore, capital gain tax has to be paid on the total consideration arising on the transfer which would include the consideration which has been received as well as the consideration which has arisen and become due and may be received later on. Accordingly, this contention of the assessee was also rejected.

ix Vide para 100 to 107, being the ninth contention that assessee has already terminated the agreement and has revoked the Power of Attorney. It was held in view of provision of section 45 read with section 48 of the Act that subsequent events, if at all any will not make any difference because total consideration received or accrued has to be assessed in the year of transfer. The word 'irrevocable' itself shows that in the eyes of law Special Power of Attorney could not have been revoked. In view of this analysis, either the JDA has not been cancelled or in any case the same cannot be considered for determining the taxation of Capital Gain. Accordingly this contention was also rejected.

x. Vide para 108 & 109, being the tenth contention that even if the whole consideration has to be taxed then value of the flats cannot be taken at Rs.4500/- per sq.feet. In view of agreement between HASH and THDC consideration has been shown at

30

Rs.2000/- per sq. feet for 126 flats whereas it is Rs.4500/- per sq. feet for three flats. It was held that AO has estimated the value of flats on most reasonable basis.

Also vide para 110 there was contention with respect to deduction u/s 54F of the Act. It was held that no ground was raised in the appeal. Though reference was made in ground No.2.3 with reference to section 54F\ and 54EC which are on different facts and therefore deduction u/s 54F and 54 are not the same. Accordingly, the contention was rejected. Also the said issue has been dismissed in the case of Sh.Surinder Singh vs. DCIT in ITA No.1071/CHD/2011 vide para 166 to 169 for the reasons mentioned therein.

31. Vide para 111 to 113, it was contended that capital gain should have been taxed in the hands of Society which is legal owner of the land. It was held that the fact stands admitted by the assessee because assessee has filed a return declaring capital gain against part money received against the plot. Thus, it becomes clear that it is the individual member who are liable to tax in respect of transfer of plots and the Society being only a facilitator or post office. Accordingly, this contention was also rejected.

32 Vide paras 5 to 9 also the assessee has raised the additional evidence, which after considering the facts on record and arguments of Ld. Counsels allowed the admission of additional evidence.

33 Vide para 10 to 14, the revised return was treated as non-est and it was held that no disadvantage has occurred to the assessee because in the revised return, the assessee has included a sum of Rs.27,58,436/- on account of Capital Gain and the whole dispute in the assessment relates to Capital Gain arising out of sale of plot in the assessment relating to Capital Gain arising out of sale of plot in Punjabi Co-operative Housing Building Society Ltd. Mohali. In fact, the AO has ultimately assessed much higher amount of Capital Gain, which the assessee is disputing. Accordingly, this ground of the assessee was rejected. Accordingly all the issues, as discussed above in the case of Sh.Charanjit Singh Atwal (supra) were dismissed by the ITAT Chandigarh Bench in its order dated 29.07.2013.

34. As regards issue of notice u/s 148, the same was dealt with in ITA No.986/CHD/2011 in the case of Avtar Singh Brar vs. ITO. It

31

was held that Ld. CIT(A) has done no wrong in rejecting the issue on reopening of assessment. Accordingly, the ground was rejected.

35. In the case of Smt. Surjit Kaur in ITA No.993/CHD/2011, the assessee was a member of 'The Defence Services Co-operative Housing Building Society Ltd; which was the owner of 27.3 Acres of land. This land was transferred to THDC/HASH as in the case of Punjabi Co-operative Housing Building Society Ltd; either facts are identical to the case of Sh. Charanjit Singh Atwal (supra). Accordingly, being identical issue as in the case of Sh.Charanjit Singh Atwal (supra), the appeal of the assessee was dismissed.

36. Regarding interest u/s 234B and withdrawal u/s 244A, it was held in para 114 that the same is consequential in nature and AO was directed to charge or withdraw interest in accordance with law.

37. Accordingly, all the grounds and contentions raised in 30 appeals as mentioned hereinabove by the ITAT, Chandigarh Bench have been dismissed. For the sake of convenience, we reproduce the facts in the case of Sh. Charanjit Singh Atwal vs ITO in ITA No.448(CHD/2011 and the findings of the ITAT, Chandigarh Bench on the issues in the appeal vide paras 17 to 115 as under:

"^{17 Brief facts of the}case ^{are that while making discreet} enqu i r ies in the cases o f hous ing soc ie t ies , i t was ga the red tha t hous ing soc ie t y cons is t ing o f 95 p resen t and Ex-MLAs o f Pun jab Leg is la t i ve Assemb ly i s owne r o f the 21 .2 ac res o f land in v i l lage Kansa l , D is t t . Moha l i . The v i l l age Kansa l sha res i t s bounda ry w i th cap i ta l c i t y o f Chand iga rh . On 25 .2 .2007 the Hous ing Soc ie t y o f MLAs en te red in to a t r i pa r t i te Jo in t Deve lopment Agreement (he re in a f te r re fer red as "JDA" ) w i th HASH Bu i lde rs (P ) L td (he re ina f te r re fe r red to "HASH") and M/s T a ta Hous ing Deve lopmen t Company L td . (he re ina f te r re fe r red as

"T HDC" ) . By v i r tue o f th is t r ipa r t i te agreemen t i t was ag reed upon among these pa r t ies tha t the Soc ie t y wh ich i s owne r o f 21 .2 acres o f land , sha l l t rans fe r i t s land to THDC/HASH in l i eu o f moneta ry cons ide ra t ion and cons ide ra t ion in k ind . As pe r the agreemen t each Member o f the Soc ie t y hav ing a p lo t o f 500 sqyd in t he Soc ie t y was to rece ive mone ta ry cons ide ra t ion o f Rs . 82 ,50 ,000 / - and the Members ho ld ing p lo t o f 1000 sqyd was to rece ive

32

a sum o f Rs . 1 .65 c ro res . In add i t ion to th i s Member ho ld ing a p lo t o f 500 sqyd was to rece ive fu l l y f u rn ished f la t measu r ing 2250 sqf t to be cons t ruc ted by T HDC/HASH and Members hav ing 1000 sqyd we re to ge t two such f la t s . Acco rd ing to the Assess ing Of f i ce r to ta l cons ide ra t ion to be rece ived by a l l the Members was Rs. 1 ,06 ,42 ,35 ,000 / - and fu rn i shed f la ts as men t ioned above . Be fo re en te r ing in to the t r ipa r t i te agreemen t the Soc ie t y i n i t s Execu t i ve Commi t tee mee t ing he ld on 4 .01 .2007 wh ich was approved in the Gene ra l Body meet ing he ld on 26 .2 .2007 , passed a reso lu t ion to t he e f f ec t tha t a l l the Members wou ld su r rende r the i r a l l r i gh t s in the p rope r t y to the Soc ie t y and the Soc ie t y wou ld en te r in to an ag reemen t on beha l f o f the Members w i th T HDC/HASH. The Assess ing Of f i ce r has re fe r red to th is reso lu t ion as we l l as va r ious impo r tan t c lauses o f the JDA and has p laced lo t o f re l iance on c lause 2 .1 o f the JDA wh ich i s as unde r :

"The owner hereby i r revocaboy and unequivoca l ly grants and ass igns in perpe tui ty a l l i ts r ights to deve lop , cons t ruc t , mortage , lease , l icense se l l and t rans fer the proper ty a long wi th any and a l l the cons t ruc t ions , p remises , heredi taments , easements , t rees thereon in favour o f THDC for the purpose o f deve lopment , cons truct ion, mortgage , sa le , t rans fer , lease , l i cense and /or exp lo i ta t ion for fu l l u t i l i za t ion of the Proper ty (Rights ) and to execu te a l l the documents necessa ry to ca r ry ou t , fac i l i ta te and en fo rce the R igh ts in the P rope r ty inc lud ing to execu te Lease Ag reement . L icense Ag reemen ts , Cons t ruc t ion con t rac ts , Supp l ie r Con t rac ts , Agreement fo r Sa le . Conveyance , Mor tgage Deeds , F inance documents and a l l documents and

ag reemen ts necessa ry to c rea te and reg is te r the mor tgage , conveyance , lease deeds , l i cense agreement , POA, a f f idav i t s , dec la ra t ions , i ndemn i t ies and a l l such o ther documents , l e t te rs as may be necessa ry to ca r ry ou t , fac i l i ta te and en fo rce the R igh ts and to reg is te r the same w i th the revenue /Competen t au tho r i t i es and to appear on our beha l f be fo re a l l au tho r i t ies , s ta tu to ry o r o therw ise and be fo re any cou r t o f Law (The "Deve lopment R igh ts ' ) . The Owner hereby hands over the or ig ina l t i t le deeds of the Proper ty as ment ioned in the l is t Annexued hereto and marked as Annexure IV and

phys ica l , vacant possess ion o f the Proper ty has been handed over to THDC s imul taneous ly to the execut ion

33

and regis t ra t ion o f th is Agreement to deve lop the same as se t out here in ."

18 I t was fu r the r no t i ced tha t t i l l da te a Member hav ing 500 sqyd p lo t i n Soc ie t y had rece ived Rs . 33 .00 lakhs each and a Member hav ing 1000 sqyd p lo t had rece ived Rs . 66 .00 lakh . The assessee was a lso a Member and P res iden t o f the Soc ie t y and was owne r o f a p lo t measur ing 1000 sqyd . There fo re , as pe r JDA, he was to rece ive Rs . 1 .65 c ro res as moneta ry cons ide ra t ion and two fu rn ished f la ts as cons ide ra t ion in k ind and the cos t o f the same as pe r Assess ing Of f i ce r was Rs. 2 ,02 ,50 ,000 / - and to ta l cons idera t ion wou ld be Rs . 3 ,67 ,50 ,000 / - .

19 Acco rd ing to the Assess ing Of f i ce r s ince the Soc ie t y has ass igned a l l r i gh ts in 21 .2 ac res o f l and be long ing to the Soc ie t y i n t e rms o f JDA to T HDC/HASH and a lso handed ove r the phys ica l vacan t possess ion o f the p rope r t y to THDC/HASH, t he re fo re , the assessee became l iab le to cap i ta l ga in tax on h is share o f cons ide ra t ion . Acco rd ing ly a le t te r da ted 7 .12 .2008 was i ssued in t ima t ing the assessee tha t a f te r cons idera t ion o f the va r ious c lauses o f JDA da ted 25 .2 .2007 and the reso lu t i on passed by the Soc ie t y on 26 .2 .2007 , cap i ta l ga in was to be cha rged in the hands o f the assessee in Assessmen t yea r 2007 -08 by tak ing fu l l va lue o f the cons t ruc t ion a t Rs . 3 ,67 ,50 ,000 / - . The assessee f i led va r ious rep l i es wh ich have been ext rac ted by the Assess ing Of f i ce r as under :

"Th is has re fe rence to you r le t te r da ted 7 .12 .2009 , w e submi t ted tha t unde r :

"1 The agreement under reference is only in the nature of an agreement to sell and not a sale deed and therefore no capital gain can arise under the said agreement.

The amounts received under the said agreement are actually the advances received and not the sale consideration and the land transferred in favour of THDC Ltd. is only on account of security. A letter from M/s Hash Builders to that effect is enclosed herewith. There are many conditions envisaged in the agreement which need to

34

be fulfilled before the full execution of the agreement and transfer of property to THDC Lid. and receipt of the consideration.

4 Under the partial execution, the part of property measuring approx, 72 sq yards was registered in favour of THDC and sum of Rs. 12 lacs was received As stated earlier, the amount was received as advance under the agreement and the property was transferred as security towards that advance. There were different legal opinions on the taxability of the amounts received. However in discharge of the duties as responsible citizens and avoid litigation, the members decided to pay capital gain tax on the amounts received voluntarily and such as the assessee has paid due amount of taxes voluntarily during the course of proceedings It may kindly be appreciated that tax liability will

arise only to extent of completed transactions i.e. the capital gain arising on the land which has been transferred and for which consideration has been received. The assessee has fully discharged his liability to that extent There cannot be any tax liability on Incomplete transaction I.e. where the land has not been transferred and the Consideration has not been received,

5 In your letter under consideration, you have considered the national 'value of the proposed flat measuring 2250 sq. feet as a part of the consideration Here the following points need to be considered.

1.) The flat shall be given only after the full land i.e. 500 sq. yard, has been transferred to the buyer.

2) There is no provision in the agreement to allot proportionate flat or make equivalent proportionate payment. So for the present transaction where only a part of the land has been transferred, no consideration on account of flat is available. So no question of any tax liability arise.

3) It may kindly be appreciated that the developer has not even ' acquired the land till date and has not even obtained permission to start development. So there is no question of any construction of fiats now or near future that is to say, there is no capita! asset in existence as on date for which the national value can be considered.

4) Clause No 14 is termination clause of the agreement under reference (copy enclosed), very clearly states the rights of THDC to terminate the agreement and in that situation, the land already transferred to THDC will be retained by them and no further land will be purchased by THDC and no further payment

35

shall be made by them. In that event the amount received by assessee will be considered as full, and final consideration. So there is no question of considering the national value of proposed flat as the unrealized consideration for the purpose of capital gain of the assessee. The assessee is a Hon'ble citizen and regular Income Tax Payee and shall discharge his liability under Income Tax when the whole land will be transferred. 5.) While making the calculation of capital gain tax, the amount of consideration has been wrongly taken of Rs. 15 lacs Instead of Rs,12 lacs. As per the agreement, sum of Rs. 3 lacs is adjustable advance. You are requested to kindly recomputed tax liability,

6.) There are various judgments on this issue. The following cases are enclosed herewith for the reference.

a. CIT vs. Atam Prakash & Sons (2008) 219 CTR (Del) b. Smt. Raj Rani Devi Ramna vs. CIT (1993) 201 ITR

1032 (PAT)

c. Zuari Estate Development & Investments Co. (P) Ltd. Vs. J.R.Kanekar, Deputy CIT. (2004) 191 CTR (Bom)

In view of the above you are requested to kindly consideration the capita! gain as submitted by us."

9. The case was further fixed for 24.12.2009, On the said date the counsel of the assessee fifed another reply which is reproduced as under:

1As per Para 6.1 of your letter, you have mentioned that there is a transfer of property upon the surrender of allotment rights. You may kindly refer to the agreement dated 25,02.2007 wherein it is clearly mentioned that allotment rights have been surrendered by the members in favour of the owner i.e. "Punjabi Co-operative House Building, Society Ltd" and not In favour of the buyers. So therefore, there is no transfer of property u/s 2(14) and 2(47).

2Regarding your observation of having accepted the position of transfer, please note that we understand that transfer of property is only to the extent of the land transferred by way of sale deed.

36

3 It is very clear from the agreement that no transfer of property have taken place only the development right has been transferred. Therefore, there is no transfer of property under section 53A of Transfer of property Act,

4. Clause 9.3 of the agreement is very clearly stating that the ownership has not been transferred. in view of our submission you are requested to complete the Capita! Gains Tax in accordance with our return. The assessee wants to be personally heard and make further submission. You are requested to kindly adjourn the case till 29-12-2009."

11. Vide the above said letter the assessee requested to be personally heard however on 29.12.2009 he did not appear. The counsel of the assessee filed written submission which is reproduced as under:

1 In para 6,1 of your letter dated 7.12.2009, you have written that there is grant and assignment of development rights in the property and there is transfer of property upon the surrender of allotment right. This is not a true factual position. The allotment rights have not been surrendered by the members in favour of THDC LTD or M/s Hash Builders Ltd. The factual position is that the society I.e. M/s Punjabi Co-op House Bldg. Society Ltd. has entered into an agreement with M/s THDC Lid. M/s Hash Builders Ltd. As per clause 2.1 of the agreement it is very clearly mentioned that the possession of the

property has been handed over to THDC Ltd. only to develop the same. A close examination of the agreement clearly reveals that the agreement is a Joint development agreement. The Society intended to develop the land owned by it. However since the requisite expertise were not available with the society, the other two

developers were involved in the project. The cost of development was to be borne by the THDC. The payment to the society was to be made pro-rata on transfer of land in

37

favour of THDC Ltd, It is very clear from the agreement that no consideration was payable to the assessee unless the land was transferred. So there is a clear cut relation between the land transfer and consideration. No consideration will be received if the land is not transferred. As far as the possession as mentioned in the agreement is concerned, the same is for development only and the termination clause very clearly states that if the agreement is terminated, THDC Ltd will retain only that much land which has been transferred to them and the remaining land will be retained by the society/members. The actual position is such that no development work has till date been undertaken by the THDC Lid because the various conditions stipulated in the agreement have not been fulfilled. The possession as mentioned in the agreement and which is being made the basis by you to consider the transaction as transfer u/s 53A of the Transfer of Property Act is actually not of any consequences and actually there is no transfer except to the extent of land transferred by way of registered sale-deed.

2 Clause 6.1 of the agreement clearly states that handing over the original title -deeds is as security for the adjustable advance.

3 As per clause 9.2 of the agreement, it is very clearly mentioned that the owner shall execute in favour of M/s THDC Ltd: the sale-deeds to complete the aforesaid transaction. So it is evident that the execution of sale-deeds is an integral part of the transaction and the transaction shall remain incomplete. if the sale deeds are not executed.

4 The clause 13 very clearly states that the rights transferred relate to Development/construction work and M/s THDC Ltd shall not do anything which adversely affect the right of the owner to receive the entire consideration.

5 Keeping in view the conditions in the agreement and to the fact that M/s THDC Ltd: M/s Hash Builder Ltd have not done any development work on the land under consideration till date in pursuance of the agreement dated 25.2.2007 or in furtherance of the said agreement, no transfer should be considered to have been taken place in respect of the land which is not yet transferred,

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if the views of the department are held to be correct for the sake of discussion, the following situation will arise:

1, Assesses will be deprived from availing the exemption u/s 54EC since no funds are available with the assessee for investment.

2, Assessee will be deprived from availing exemption u/s 54F as no residential house has yet been constructed. This is an ironical situation where assessee is having to pay tax on the notional value of the flat to be given in the future to him as consideration but exemption under section 54F will be denied because the residential house did not exist,

3. Further as per the termination clause of the agreement various conditions have been prescribed under which the agreement can be terminated. It is very clearly mentioned in the agreement that in the event of termination of the agreement the land transferred by the members will be retained by THDC Ltd and consequently no further consideration shall be given to the members. It is evident from the facts in the case that inordinate delay has already taken place In this case. The agreement was originally envisaged to be fully executed In F.Y 2007-08. But now even FY 2009-10 is also going to expire. In that case the assessee will have no remedy available against the tax paid on consideration which will never be received by him. Under such circumstances it will be fully unlawful to charge tax.

4. The value of proposed flat is undeterminable and there is no way to determine the same. There is no provision to pay tax on the notional value. Clause 6.18 of the agreement entitled the assessee to surrender his proposed flat to THDC Ltd. and in that case only 75% of the future market-price will be received by him. In the light of above discussion it is once again requested that tax may be calculated as per the return filed by the assessee. However If the department choose to disagree with our submissions then It Is submitted that the capita! gain should be charged in the hands of the Punjabi Co-operative House Bldg. Society. It will be pertinent to note here that the proceedings in the case of the society have been reopened u/s 148 of the I.T Act 1961 by the learned D.C.I.T Mohali. In the reasons recorded by the learned D.C.I.T, it has clearly been mentioned that he proposes to

39

tax the capital-gain in the hands of the Society. Copy of the reasons recorded is enclosed. It may be appreciated that the same amount can't be taxed twice".

On 29,12,2009 again the counsel of the assessee filed a letter and submitted as under:

"This being referred to the captioned proceedings Regarding your query about the cost of acquisition is Rs. 11 lacs which is paid as per following dates.

Receipt No, 307 09-11-01 5,04,000/-

Receipt No. 426 12-02-04 7,00,007/-

Out of above amount Rs. 1,00.000/- was refunded to the assessee and Rs, 4000/- was towards membership charges and other funds of the society.

In continuation to our earlier reply submitted, we once again reiterate that the possession given by the assessee is only to the extent of land sold by way of registered sale deed. There are certain addendums to the agreement which are not presently available with the assessee & cannot be submitted immediately."

20 The Assess ing Of f i ce r a f te r cons ider ing the submiss ions d id no t f ind any fo rce in the same and obse rved as under :

( i ) The re is no fo rce in the a rgument tha t the JDA was on ly an agreement to se l l and no t a sa le deed because JDA resu l t ed in the t rans fe r o f asse ts . A l l the ing red ien ts o f t rans fe r i .e . cons ide ra t ion f rom schedu le o f payments , r i gh t s and l i ab i l i t ie s o f t he pa r t ies e t c . were ment ioned in the JDA, Cap i ta l ga in a rose because o f the fac t tha t i t was a case o f t rans fe r o f cap i ta l asse t in v iew o f Sec t ion 2 (47 ) ( i i ) , 2 (47 ) (v ) and 2 (47 ) (v i ) . Acco rd ing to h im as pe r c lause 2 .1 o f the JDA owner o f t he land made agreement and i r revocab ly and unequ ivoca l l y g ran ted and ass igned i n pe rpe tu i t y a l l o f i t s r i gh t s to deve lop , cons t ruc t , mo r tgage , lease , l i cense , se l l and t rans fe r the p rope r t y (21 .2 acres o f land ) a long w i th any and a l l cons t ruc t ions t rees e tc . in f avou r o f T HDC/HASH fo r the pu rpose o f deve lopment , cons t ruc t ion , mor tgage , se l l , t rans fe r , l ease , l i cense and /o r exp lo i ta t ion fo r f u l l u t i l i za t ion o f t he p rope r t y and to execu te a l l documen ts necessa ry to ca r ry ou t f ac i l i t ie s and r i gh t s in the p rope r t y . Thus t rans fe r o f p rope r t y was e f f ec ted th rough th i s agreemen t .

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( i i ) The owne r had a l so handed over t he o r ig ina l t i t le deeds o f t he p rope r t y and a lso handed ove r the phys ica l , vacan t possess ion o f the p rope r t y to THDC/HASH s imu l taneous ly to the execu t ion and reg is t ra t ion o f t h i s JDA and the re fo re , the case o f the assessee was cove red by the p rov i s ions o f sec t ion 2 (47) (v ) o f the Ac t r .w .s 53A o f T .P . Ac t . as par t cons ide ra t ion had a l so been rece ived . Acco rd ing to the Assess ing Of f i ce r the fac t s o f the case we re s im i la r to the fac ts in case o f CIT V . K . Jee lan i Basha , 256 ITR 282 (Mad ) whe re in Hon 'b le H igh Cou r t a f te r ana lyz ing the p rov i s ions o f sec t ion 2 (47 ) (v ) had he ld tha t once the possess ion even fo r a par t o f the p rope r t y was handed ove r t o the t rans fe ree , f o r the pu rpose o f Sec t ion 2 (47) (v ) r .w .s 45 , the t rans fe r was comp le te . ( i i i ) The assessee 's case was a lso cove red by the p rov i s ions o f sec t ion 2 (47 ) (v i ) wh ich dea ls w i th any t ransac t ion wh ich had e f f ec t o f t rans fe r r i ng o r enab l ing the en joyment o f any immovab le p rope r t y and ass ign ing va r ious r i gh ts in the p rope r t y in f avou r o f THDC and hand ing ove r the o r ig ina l t i t le deeds as we l l as hand ing ove r o f the phys ica l vacan t possess ion o f land has the e f f ec t o f t rans fe r r i ng o r enab l ing the en joymen t o f the sa id p rope r t y to THDC/HASH.

( i v ) The re was no fo rce in the con ten t ion tha t the amoun ts rece ived unde r the sa id agreement we re

advances rece ived and no t the sa le cons idera t ion because to ta l cons ide ra t ion was s t ruc tu red in the JDA and the cons ide ra t ion was to be rece ived as pe r c lause 4 ( i v ) o f the JDA. In f ac t the assessee has h imse l f shown the rece ip t and re tu rned the same as cap i ta l ga in wh ich con t rad ic ts these a rguments o f the assessee . As per Sec t ion 45 o f IT Ac t , income- tax was to be cha rged unde r the head "cap i t a l ga in " on t rans fe r o f a cap i ta l asse t and sha l l be deemed to be the income o f the p rev ious yea r in wh ich t rans fe r took p lace . The yea r o f t rans fe r i s t he c ruc ia l year and no t the t ime o f the rece ip t . ( v ) The re was no fo rce in the con ten t ion tha t the va lue o f the f la t shou ld no t be inc luded because the assessee has no t rece ived such f la t , because the f l a t was to be rece ived by each Member o f t he Soc ie t y was pa r t o f the en t i re cons idera t ion as per c lause 4 .2 o f JDA. In any case as pe r Sec t ion 45 r .w.s . 48 , i t s f u l l va lue o f

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cons ide ra t ion rece ived o r acc rued wh ich has to be cons ide red .

( v i ) I t was a lso observed tha t su r rende r o f a l lo tmen t l e t t e r by the Members inc lud ing assessee was p rocessed i n o rde r to enab le the Soc ie t y to en te r i n to t r ipa r t i te JDA w i th HASH and THDC. By su r rende r ing the a l lo tmen t l e t t e r , t he r i gh t o f the assessee in immovab le p rope r t y owned by h im go t ex t ingu ished and th i s ext ingu ishment was in l ieu o f en t i re cons ide ra t ion wh ich was rece ived by the Members inc lud ing the assessee . thus th i s case was a lso cove red u /s 2 (47 ) ( i i ) o f the Ac t .

( v i i ) I t was obse rved tha t t he re i s no mer i t in the con ten t ion tha t the assessee wou ld no t be cove red u / s 54EC due to lack o f f unds o r exempt ion u / s 54 was no t re levan t t o the issue abou t taxab i l i t y o f l ong te rm cap i ta l ga ins wh ich was dependen t on ly on t rans fe r .

( v i i i ) I t was obse rved tha t the re was no fo rce in the con ten t ion tha t the va lue o f t he f la t s was unde te rm inab le because the va lue o f the f la t was ve ry much de te rm inab le as pe r the marke t ra te p reva i l i ng wh ich cou ld a lso be asce r ta ined f rom the ra te a t wh ich the f la ts were be ing o f f e red to the gene ra l pub l ic .

( x ) The Assess ing Of f i ce r was o f the v iew tha t the case l aws re l ied on by the assessee we re d is t ingu ishab le f o r wh ich the reasons have been g i ven a t page 23 and 24 o f the assessment o rde r .

21 In th is background the assessee was cha rged to cap i ta l ga in tax u / s 45 fo r the to ta l cons ide ra t ion rece ived and rece ivab le by be ing a Member o f the Soc ie t y in v iew o f JDA.

22 On appea l be fo re the ld . C IT (A ) de ta i led submiss ions we re made ( In the impugned o rde r re fe rence i s made to wr i t ten submiss ions w i thou t d i scuss ing the a rgumen ts ) . The ld . C IT (A ) re fe r red to t he p rov i s ions o f sec t ion 45 and 2 (47 ) o f the Ac t and obse rved tha t c lauses ( v ) t o ( v i ) we re inse r ted in sec t ion 2 (47) w.e . f . 1 .4 .1988 . He observed tha t be fo re inse r t ion o f t h i s p rov is ion , i t was a lways poss ib le to avo id o r pos tpone cap i ta l ga in by e i the r no t execu t ing conveyance deed o r pos tpone such

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execu t ion because vendo r o f the p rope r t y cou ld g ive the p r i v i lege o f owne rsh ip o r en joymen t o f the p roper t y by execu t ing a Power o f A t to rney e t c . To avo id such leakage o f revenue c lauses (v ) and (v i ) we re inse r ted to sec t ion 2 (47 ) o f the Ac t . He then d iscussed the dec is ion o f Hon 'b le Bombay H igh Cou r t in case o f Cha tu rbhu j Dwarkadas Kapad ia V . C IT , 260 IT R 491 (Bom) and ex t rac ted the fo l low ing cond i t ions wh ich we re requ i red to be sa t i s f ied to cove r the case u /s 2 (47 ) (v ) r .w .s . 53A o f T .P . Ac t .

(a ) The re shou ld be con t rac t fo r cons ide ra t ion (b ) I t shou ld be in wr i t ing

( c ) I t shou ld be s igned by the t rans fe ro r o r on h is beha l f (d ) I t shou ld pe r ta in to t rans fe r o f immoveab le p rope r t y (e ) T rans fe ree has in pa r t pe r fo rmance o f con t rac t has taken possess ion o r pa r t possess ion o f t he p rope r t y . ( f ) Las t ly , t rans fe ree shou ld be ready and w i l l ing to pe r fo rm h is pa r t o f con t rac t .

23 I f the above cond i t ions were sa t i s f ied then the t rans fe r can be sa id to have taken p lace fo r the purpose o f Sec t ion 45 . Acco rd ing to h im as pe r t he dec is ion o f Cha tu rbhu j Dwarkadas Kapad ia V . C IT (supra) once the possession or part possession of the property was given by the transferor to the transferee then the transfer can be said to have taken place. He also referred to the decision of Authority for Advance Ruling in case of Jasbir Singh Sarkaria, 164 Taxman 108: 294 ITR 196. He referred to various observations of the Authority in this case and concluded that the receipt of entire consideration was not a factor to be seen for application of Section 2(47)(v). Once these two decisions were considered along with the provisions of section 45 r.w.s. 2(47)(v) then it would emerge as under:

"(a) The Joint development agreement has been entered into between the Punjab Coop Housing Building Society Ltd. Mohali, of which assessee is member, and. M/s Hash Builders (P) Ltd. and M/s Tata Housing development Company Ltd. Mumbai as on 25.2.2007.

b) The members of the society surrendered their allotment rights and the society on behalf of members entered into the joint development agreement in lieu of 'entire consideration' as described in the Joint Development agreement in the previous year 2006-07.

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(c) The receipt of consideration was structured and the assessee received part of the 'entire consideration' during the financial year 2006-

07. This clearly shows that the transferee is ready and willing to perform his part of contract.

(d) In view of clause 2.1 of the Joint Development agreement, the owner has at the time of making the agreement irrevocably and unequivocally granted and-assigned in perpetuity all its rights to develop, construct, mortgage, lease, license, sell and transfer the property i.e (21.2 acres of land) alongwlth any and all constructions, trees etc. in favour of M/s Tata Housing development Company Ltd, for the purpose of development, construction, mortgage, sale , transfer, lease, license and/or exploitation for the full utilization of the property and to execute all the documents necessary to carry out, facilitate and enforce the rights in the property. Thus, in fact the owner has irrevocably and unequivocally granted and assigned in perpetuity all the rights which an owner can have in an immoveable property. All these rights have been given on date of agreement i.e. 25.02.2007 and even possession has been handed over in the financial year 2006-2007. The para 2.1 clearly states that " the owner hereby hands over the original title deeds of the property as mentioned in the list Annexed hereto and marked as Annexure IV and physical, vacant possession of the property has been handed over to THDC simultaneously to the execution and registration of this agreement to develop the same as set out therein". Thus possession in part performance of contract has been handed over to the transferee without any ambiguity in the previous year 2006-07 itself.

e) An irrevocable transfer has thus been made which is not dependent on any condition to be fulfilled.

f) Further coining to "consideration" part . As per Para 4,1 Rs,6,00,000 per holder of 1000 Sq,Yards has to be paid by transferee on account of earnest money , which has been paid to the assessee, Further as Per Para 4.1 (ii) clearly states that in lieu of. Rs, 12,00,000 per plot holder of

500 Sq. Yards and Rs.24,00,000 per plot holder of 1000 Sq. Yards is being paid on the execution of agreement against' which the Society on behalf of members will transfer 3.08 Acres of the contiguous land out of property, It has been confirmed that against the above payment the land measuring,3.08 acres has been transferred in the •name of THDC and registered vide sale deed dated 02/03/2007 i.e. in the previous year 2006-

07.

g) Thus it is clear from above transactions that transferee, M/s Tata Housing development Company Ltd,, Mumabi, has performed and is willing to perform his part of contract and in this part performance of

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contract, the assessee and other members of the Punjab Coop Housing Building Society Ltd, Mohali have given possession of the whole of land of

21.2 acres to the THDC and have further irrevocably and unequivocally granted and assigned all rights in perpetuity to THDC in the said previous year i.e. 2006-07.

h) Hence it is established beyond doubt that transfer has taken place as envisaged as per Section 2(47)(v) of the-Income Tax Act and since it has taken place through Society of which assessee is also member so Sections 2(47) (vi) and 2(47)(ii) would also support Section 2(47)(v) of the income Tax Act.

(i) Now once it has been established that transfer has taken place, then the next important question is the year in which the transfer has taken place and it is the year in which the transfer has taken place, whole of the consideration , whether received or receivable in cash or kind, would be chargeable to capital gains u/s 45, whether the entire consideration has been received in the year of transfer or not.

j) From the discussion in above paras it is clear that not only agreement has been entered into in, the pervious year 2006-07 but the owner has at the time of making the agreement irrevocably and unequivocally granted and assigned in perpetuity all its rights to develop, construct, mortgage, lease, license, sell and transfer the property i.e (21.2 acres of land) alongwith any and all constructions, trees etc. in favour of M/s Tata Housing development Company Ltd.

k) Furthur M/s Tata Housing development Company Ltd has also in part performance of contract has made the payments to the owners and is willing to perform his part, of contract and the members of society in this part performance of contract have assigned full rights in the favour of transferee in the previous year 2006-07 itself and surrendered allotment letters to enable the Society to enter into tripartite agreement with HASH and THDC.

l) Most importantly physical and vacant possession of whole of the land of

21.2 acres has been handed to M/s Tata Housing development company Ltd. in the previous year 2006-07, Same is clear from Para 2.1 of the Joint Development Agreement and discussed in detail in preceeding paragraphs.

m) Thus the "transfer" would be deemed to happen in the previous year 2006-07 itself.

n) It has already been discussed in detail that registration of conveyance deed and receipt of entire consideration is not at all important

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in the year in which deemed transfer u/s 2(47)(v) of IT Act has taken place.

o) Further the Agreement is clear and there is no ambiguity regarding irrevocable rights being given to the transferee. As regards certain petty conditions and provisions relating to termination of the contract, it Is observed that these clauses are necessary part of such type of joint development agreement. At the same time such agreements including this agreement has the provisions of 'disclaimer' 'partial invalidity' 'indemnity' and 'arbitration'. The disputes arising, if any, shall be resolved as per the provisions and awards shall be granted, in appropriate cases by the arbitrator. These provisions are there to safeguard the interest of all the parties to the joint development agreement and parties would be indemnified by each other and shall also receive award if the terms/conditions are not fulfilled.

p) As regards applicability of Section 54F, there are-certain conditions which are attached with Section 54F also which have to be fulfilled before which exemption under that section is available to the assessee. The assessee has not even tried to make any claim by showing that he has fulfilled the said conditions to be eligible for exemption under Section 54F, So exemption cannot be given in such a situation u/s 54F.

q) The judgment relied upon by the assessee are not applicable to the case of assessee as most of them pertain to the previous year before Section 2(47)(v) and 2(47)(vi) was inserted w.e.f. 1.4.1988. Other judgments referred by assessee are distinguishable as follows:

ACIT vs Puspa Devi: This ruling has been in fact in favour of revenue and completely ratifies the principles laid down in the judgment of Chaturbhuh Dwarkadas Kapadia vs CIT as it says that transfer of capital asset took place by virtue of agreement dated 07/09/1991 in the financial year 1991- 92 and as such, the AO was fully justified in levying capital gains in the same previous year.

ii) CIT vs K. Jeeiani Basha: This ruling supports the contention of revenue that entire consideration receivable for that part of property would 'be' taxable which has been parted with or transferred even when whole of the consideration lies not been received.

.

iii) Zuari Estate Development & Investment Co. (P) Ltd, vs DCIT: This case is also not relevant as it pertains to agreement entered into in 1984 much before Section 2(47(v) was inserted .

24 . Be fo re us , the ld . counse l o f t he assessee made de ta i led subm iss ions . Fur the r wr i t ten subm iss ions has

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a lso been f i l ed . He ca r r ied us th rough the fac ts o f the case by re fe r r ing to va r ious documen ts i n pape r book and a lso case laws as we l l as commenta ry by , "Mu l la - D inshaw F rede r ick Mu l la " on the in te rp re ta t ion o f Sec t ion 53A o f T rans fe r o f P rope r t y Ac t . The subm iss ions can be summar i zed as unde r :

I F i r s t o f a l l he re fe r red to p rov is ions o f sec t ion 2 (47 ) (v ) o f IT Ac t and Sec t ion 53A o f T .P . Ac t and submi t ted tha t f o l l ow ing cond i t ions emerged fo r a t t rac t ing these p rov i s ions-

a The re mus t be con t rac t o f t rans fe r f o r cons ide ra t ion f o r an immovab le p rope r t y ;

b Con t rac t must be in wr i t i ng

c Te rms necessa ry to cons t i tu te t rans fe r shou ld be asce r ta inab le w i th reasonab le ce r ta in t y . d The t rans fe ree must have in pa r t pe r fo rmance taken the possess ion o f the p rope r t y o r pa r t the reo f f rom the t rans fe ro r and i f a l ready in possess ion , con t inues in the possess ion in pa r t pe r fo rmance o f the con t rac t . e T rans fe ree mus t have done some th ing in f u r the rance o f the con t rac t .

f The t rans fe ree mus t have per fo rmed o r w i l l ing to pe r fo rm h is ob l i ga t ions in such con t rac t . In v iew o f the above cond i t ions in the p resen t case , cond i t ion no . (d ) and ( f ) have no t been comp l ied because the assessee and /o r soc ie t y has no t handed ove r the possess ion to THDC/HASH. In th is rega rd he pa r t i cu la r l y re fe r red to c lause 2 (1 ) o f the JDA and po in ted ou t tha t t he possess ion was to be handed ove r to T HDC/HASH

s imu l taneous ly w i th the execu t ion and reg is t ra t ion o f the JDA . S ince the JDA was no t reg is te red the re fo re , i t i s c lea r tha t the possess ion was no t handed ove r . In any case the possess ion i f a t a l l was g ran ted as perm iss i ve l i cense w i th r i gh t t o deve lope rs i .e . T HDC/HASH on ly f o r the pu rpose o f deve lopment o f the land and no t as pa r t o f pe r fo rmance o f the con t rac t o f t rans fe r o f land . The fac t

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tha t possess ion was no t handed ove r to the THDC/HASH a lso becomes c lea r f rom the sa le deed da ted 2 .3 .2007 (P laced a t page 119 to 136) . He re fe r red to c lause A o f rec i t a t ion c lauses a t page 120 wh ich c lea r l y p rov ides tha t vendo r i .e . the Soc ie t y was owner and in possess ion o f to ta l land measu r ing 160 kana l and 7 mar las equ iva len t to 21 .2 ac res in v i l l age Kansa l D is t t . Moha l i . Th is deed was f o r sa le o f pa r t o f the p rope r t y measur ing abou t 3 .08 ac res ou t o f to ta l land con t rac ted to be g i ven to THDC/HASH measur ing abou t 21 .2 acres . He po in ted ou t tha t sa le deed has been execu ted on 2 .3 .2007 whe reas JDA was execu ted on 25 .2 .2007 . Thus i t i s c lea r tha t no possess ion was g i ven on 25 .2 .2007 o the rw ise the Soc ie t y wou ld no t be in possess ion on 2 .3 .2007 . S im i la r ly one more pa r t o f the land was so ld by second deed execu ted on 25 .4 .2007 whe re in s im i la r c lause 'A ' as in the f i rs t deed i s the re (Re fe r page 138 o f the paper book ) shows tha t the Soc ie t y was in possess ion o f the land on la te r da te . These two sa le deeds c lea r l y show tha t no possess ion was g i ven on the da te o f execu t ion o f the JDA . In any case the JDA makes i t c lea r tha t the possess ion was to be g i ven s imu l taneous ly to the reg is t ra t i on o f JDA and s ince JDA was no t reg is te red , no possess ion was g i ven .

I I I t was submi t ted tha t the possess ion , i f a t a l l , was g i ven to the deve lope rs i .e T HDC/HASH wh ich was a pe rm iss i ve l i cense to deve lop the p ro jec t and no t as pe r fo rmance o f the con t rac t . Re fe rence was made to Sec t ion 52 o f the Ind ian Easement Ac t , 1882 wh ich reads as unde r :

"52 . "L i cence" de f ined

"whe re one pe rson g ran ts to ano ther , o r to a de f in i te number o f o the r pe rsons , a r igh t to do , o r con t inue to do , i n o r upon the immovab le p rope r t y a l l the g ran to r , someth ing wh ich wou ld , in t he absence o f such r igh t , be un lawfu l and such r i gh t does no t amoun t to an easement o r an in te res t in wh ich the p rope r ty , the r igh t i s ca l l ed a l i cense . "

I t was con tended tha t Sec t ion 2 (47 ) (v ) r .w .s . 53A o f T .P Ac t re fe rs to lega l possess ion whe reby the t rans fe ree has a lega l r i gh t to en te r upon and exerc ise r i gh ts o f

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possess ion i .e . con t ro l ove r the p rope r t y . In th is connec t ion he re fe r red to the observa t ion o f Au tho r i t y f o r Advance Ru l ing in case o f Jasv i r S ingh Sarka r ia , 294 IT R 196 . He pa r t i cu la r l y re fe r red to pa ra 26 to 28 o f the j udgment . He fur the r re fe r red to c lause "F " (page 17 o f the pape r book) i .e . , c lause 2 .1 o f t he JDA (page 24 o f the pape r book) and subm i t ted tha t con ten ts o f these c lauses w i l l en t i re l y show tha t possess ion was g i ven and was env isaged in the shape o f l i cense to the deve lope rs f o r under tak ing the deve lopment o f p roper t y and lega l possess ion was ne i the r handed ove r o r in tended to be handed ove r .

I I I Money wh ich i s rece ived a t the t ime o f execu t ion o f JDA can be te rmed as advance payment . In any case when these amoun ts we re ad jus ted as pa r t o f sa le cons ide ra t ion fo r sa le o f pa r t o f the p roper t y and the same have been re tuned by the assessee as long te rm cap i ta l ga ins th rough rev ised re tu rn in the yea r o f rece ip t . IV I t was emphas ized tha t in any case Sec t ion 53A o f T .P . Ac t has been amended by Amendmen t Ac t , 2001 whe reby reg is t ra t ion o f ag reemen t has been made manda to ry f o r the same to be en fo rceab le . S ince JDA was neve r reg is te red the re fo re , recourse cou ld no t be taken to Sec t ion 2 (47 ) (v ) o f the Ac t because JDA was no t reg is te red . Pursuan t to amendmen t i n Sec t ion 53A o f T .P . Ac t w i th e f f ec t f rom 24 .9 .2001 i t was on ly t he amended p rov i s ion wh ich can be read w i th Sec t ion 2 (47 ) (v ) o f the Ac t . In t h i s rega rd he re fe r red to dec is ion o f Hon 'b le Sup reme Cou r t in case o f Surana S tee ls P L td . V . C IT , 237 IT R 777 . In tha t case i t was observed tha t when a sec t ion o r an Ac t o f Par l iament i s in t roduced in to ano the r Ac t , i t mus t be read in the sense i t bo re in the o r ig ina l Ac t . In o ther wo rds , the mean ing a t tached to t he o r ig ina l sec t ion wh ich has been re fe r red in ano ther ac t , has to be unde rs tood as same. The re fo re , once the o r ig ina l sec t ion 53A o f T .P . Ac t unde rgoes amendment the same has to be read in Sec t ion 2 (47 ) (v ) as amended and the re fo re , as JDA is no t reg is te red Sec t ion 2 (47 ) (v ) w i l l no t be app l i cab le .

V The ld . counse l o f the assessee re fe r red to the dec is ion o f Hon 'b le Bomay H igh Cour t in case o f Cha tu rbhu j Dwarkadas Kapad ia V CIT (sup ra ) and t r ied to d is t ingu ish the same. He subm i t ted tha t th i s dec is ion

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canno t be taken as an au thor i t y f o r the p ropos i t ion tha t da te o f ag reement shou ld be reckoned as da te o f t rans fe r . In any case , the dec is ion has to be seen fo r wha t has been he ld in the dec is ion and in th is case u l t ima te ly t he appea l o f the assessee was a l lowed wh ich means the t rans fe r was he ld to have taken e f f ec t on ly a f te r rece ip t o f subs tan t ia l payment o f cons idera t ion .

V I The ld . counse l o f t he assessee fur the r po in ted ou t tha t the re is ano ther impo r tan t cond i t ion in invok ing Sec t ion 2 (47 ) (v ) o f the Ac t r .w .s 53A o f T .P . Ac t i .e . the t rans fe ree must have pe r fo rmed o r w i l l i ng to pe r fo rm h is pa r t o f t he con t rac t . I t was a rgued tha t w i l l ingness o f t he t rans fe ree to pe r fo rm h is pa r t o f the con t rac t i s no t an empty f o rma l i t y and i t has to be abso lu te and unqua l i f ied . Thus w i l l ingness canno t be cond i t iona l o r con t ingen t on subsequen t even ts . I n the JDA fo l low ing ob l i ga t ions we re to be comp l ied by the t rans fe ree -

(a ) As pe r c lause "J " o f the JDA the Gove rnment app rova ls were to be ob ta ined by the t rans fe ree i .e . THDC/HASH.

(b ) As per c lause 3 .1 o f JDA a l l bu i l d ing, p lans and des igns and d rawings e t c . f o r cons t ruc t ion o f the p ro jec t we re to be p repared by the t rans fe ree i .e . T HDC/HASH. ( c ) C lause 4 .1 and 7 .10 o f JDA p rov ided rega rd ing t ime ly paymen t o f cons ide ra t ion .

(d ) C lause 7 .9 o f the JDA p rov ided tha t T HDC/HASH sha l l ob ta in a l l app rova ls and commence cons t ruc t ion w i t h in 6 mon ths o f hand ove r o f f ina l p lans . (e ) C lause 8 .4 p rov ided ob l i ga t ion to take t ime ly app rova l and c lause 8 .6 p rov ided fo r payment o f va r ious s ta tu to ry cha rges in respec t o f deve lopment cha rges , l i cense fee and ex te rna l de fau l t e tc .

Fu r the r to above ob l i ga t ion , t ime was o f essence in the con t rac t wh ich becomes c lea r f rom c lause 1 .2 (a ) , 4 .1 and 7 .10 rega rd ing t ime ly paymen t and c lause 14 ( i v ) rega rd ing te rm ina t ion o f con t rac t .

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In the case be fore us , the re was no w i l l ingness on the pa r t o f deve lope r i .e . THDC/HASH to pe r fo rm the above ob l i ga t ion because o f the fo l low ing - ( i ) THDC/HASH fa i led to ob ta in necessary approva l and d id no t under take any deve lopment wo rk on land . ( i i ) THDC/HASH i .e . deve lope r has no t pa id t ime ly payment in t ime ly ins ta l lmen ts o f ag reed cons ide ra t ion . ( i i i ) HASH has no t ob ta ined app rova l f rom va r ious au tho r i t ies and had no t commenced cons t ruc t ion w i th in s i x months o f hand ing ove r a l l f ina l p lans . (Re fe rence was made to page 34 o f the pape r book ) .

( i v ) THDC/HASH v ide le t te r da ted 4 .2 .2001 (Page 23 to 24 o f the add i t i ona l ev idence) re fused to make fur the r payment as s t ipu la ted in the agreement .

( v ) The t rans fe ro r has gone back on the i r rep resen ta t ion to comp le te cons t ruc t i on in t he t ime bound manner and in hand ing ove r the f la t s t o the Soc ie ty / i t s Members . In th is rega rd he a l so re fe r red to pa ra 16 o f the commenta ry by "MULLA - D inshaw F reder i ck Mu l la " ( copy o f wh ich has been f i l ed a t page 102 and 103 o f the paper book ) . He po in ted ou t how the ld . au tho rs have d i scussed the s ign i f i cance o f the w i l l ingness o f the t rans fe ree to pe r fo rm the i r pa r t o f the con t rac t . In th i s rega rd he a lso re fe r red to va r ious obse rva t ions in the fo l low ing case l aws:

Genera l G lass Co . Pv t L td . V DCIT , 14 SOT 132 (Mum) K Radh ika V DCIT , 149 TTJ 736 (Hyd )

DCIT V . Te j S ingh , 138 ITD 489 (Agra )

The fac ts o f these case laws and the fac t s in the p resen t case be fo re us a re iden t i ca l and the re fo re , s ince as pe r these dec is ions the re was no w i l l ingness on the pa r t o f the t rans fe ree to pe r fo rm h is / i t s ob l i ga t ion the p rov i s ions

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o f Sec t ion 2 (47 ) ( v ) r .w .s . 53A o f T .P . Ac t cou ld no t be app l ied .

V I I I t was con tended tha t revenue has a lso he ld t ha t c lause (v i ) o f Sec t ion 2 (47 ) i s a l so app l icab le wh ich is no t co r rec t because tha t p rov is ion i s app l icab le whe re a pe rson becomes owne r o f the immovab le p rope r t y pu rsuan t to tak ing Membersh ip o f Coope ra t i ve Soc ie t y e t c . In t he p resen t case , the JDA was en te red in to be tween Soc ie t y and two deve lopers i .e . T HDC/HASH and the re fo re , the re was no t ransac t ion invo lv ing Membersh ip o f Coopera t i ve Soc ie t y / company e t c . The re fo re , c lea r l y c lause (v i ) o f sec 2 (47) i s no t app l icab le in the p resen t case .

V I I I The ld . counse l o f the assessee a lso submi t ted tha t as pe r c lause 4 .1 o f the JDA t rans fe r / sa le o f 21 .2 acres o f l and was to be made in f avou r o f THDC/HASH on a p ro - ra ta bas is co r respond ing to p ro - ra ta paymen ts rece ived by the Soc ie t y and respec t i ve Members o f the Soc ie t y f rom THDC/HASH by execu t ing the sa le deed . Th is c lea r ly shows tha t t rans fe r was who l l y dependen t on t ime ly rece ip t o f the cons idera t ion . As po in ted ou t ea r l ie r on ly two sa le deeds cou ld be execu ted and wha teve r payments have been rece ived , have been o f fe red fo r taxa t ion under the head "Cap i ta l ga in " . However , the Assess ing Of f i ce r has sub jec ted to tax who le o f the cons ide ra t ion unde r the JDA as cap i ta l ga in wh ich i s to ta l l y unca l led fo r pa r t i cu la r l y in v iew o f the fac t tha t an agreement has been subsequen t l y t e rm ina ted and th is ac t ion o f t he Assess ing Of f i ce r amounts to taxa t ion o f no t iona l sum wh ich i s no t pe rm iss ib le unde r the law. Unde r the va r ious p rov i s ions o f the Ac t , on ly rea l income can be taxed wh ich has been ea rned by the assessee and no no t iona l income can be sub jec ted to tax . In th is rega rd , re l iance was p laced on the f o l l ow ing dec is ions o f t he Hon 'b le Sup reme Cou r t :

Shoor j i Va l labhdas & Co. , 46 ITR 144 (S .C)

C IT V . Raman and Co . 67 ITR 11 (S .C)

Godhra E lec t r i c i t y Co . L td . V CIT , 225 ITR 746 (S .C)

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CIT V . Ba l rampur Commerc ia l En te rp r ises L td . , 262 IT R 439 (Ca l )

C IT V . K . Jee lan i Basha , 256 ITR 282

FOBEOZ Ind ia (P ) L td . V ITO, ITA No. 9231 /Mum/2010 (copy f i led )

I t was c la imed tha t s ince the f la ts we re neve r cons t ruc ted and g i ven to the assessee , the re fore , i f the va lue o f the f la t i s added in the to ta l cons idera t ion then i t w i l l be to ta l l y on no t iona l bas is and s ince no t iona l income canno t be taxed , the re fore , the va lue o f these f la ts , in no case , shou ld be cons ide red in the to ta l cons ide ra t ion . Fur the r i f no t iona l rece ip ts we re taxed then the assessee wou ld be dep r i ved to take bene f i t ava i lab le in t he IT Ac t . Fo r example i f who le cons ide ra t ion was rece ived the assessee cou ld have eas i l y t aken bene f i t o f Sec t ion 54EC and o the r p rov i s ions l i ke Sec t ion 54 by inves t ing in any spec i f ied asse t o r a house . S ince fu l l cons ide ra t ion has no t been rece ived and the assessment o f the who le cons idera t ion w i l l l ead to un in tended consequences l i ke den ia l o f deduc t ion u /s 54 EC e tc .

IX I t was con tended tha t s ince JDA has a l ready been te rm ina ted v ide Soc ie t y 's reso lu t ion da ted 13 .6 .2011 and the rea f te r on 31 .10 .2011 even spec ia l Power Of A t to rney execu ted ea r l i e r has been revoked , the re fo re , in v iew o f the subsequen t even ts , the ba lance o f cons idera t ion rece ivab le cou ld no t be taxed in the hands o f the assessee . Subsequen t even ts to the da te o f t ransac t ions have to be reckoned be fo re tax ing a pa r t i cu la r t ransac t ion . He a lso submi t ted tha t in a lmost s im i la r c i r cumstances , subsequen t even ts we re reckoned by Mumba i Bench o f the T r ibuna l in case o f Chemosyn L td . V ACIT , 139 ITD 68 . He re fe r red to va r ious pa ras and po in ted ou t how the subsequen t even ts were reckoned by the T r ibuna l .

X The ld . counse l o f the assessee submi t ted tha t w i t hou t p re jud ice to the above i f i t i s cons ide red a case o f t rans fe r then the va lue o f f la t to be a l lo t ted to each o f the Member o f t he Soc ie t y has no t been va lued co r rec t l y . The Assess ing Of f i ce r has re fe r red to c lause 3 .5 o f in te r -se ag reemen t en te red in to be tween THDC and HASH. The

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l d . counse l o f the assessee submi t ted tha t the assessee was no t pa r t y to such agreement and p r i ce a t wh ich THDC was se l l ing f la ts to HASH cou ld no t be adop ted in the case o f the assessee . I t was subm i t ted tha t i f c lause (5 ) was re fe r red to i t can be seen tha t re fe rence has been made to two p r i ces ie . Rs . 2000 /sqf t f o r 126 f la t s and Rs . 4500 pe r sqf t f o r th ree f la t s . Th is p r ice i s no t iona l l y f i xed by two deve lopers and d id no t re f lec t the p r i ce o f the f la t s . In any case the Deve lope rs have no t been ab le to ob ta in necessa ry app rova l f rom the conce rned au tho r i t ies , the re fo re , cons t ruc t ion o f such f la t s has no t commenced and no f la t s have been cons t ruc ted and a l lo t ted to the assessee , the re fore , no t iona l va lue o f the same cou ld no t be adop ted and taxed in the hands o f the assessee . A t bes t the Assess ing Of f i ce r cou ld have taken the p r i ce o f Rs . 2000 pe r sqf t .

X I I t was con tended tha t i f the va lue o f the f l a t was to be recogn ized fo r the pu rpose o f comput ing the cap i ta l ga in , the co r respond ing deduc t ion u /s54F o f the Ac t shou ld have been a l lowed pa r t i cu la r l y i n v iew o f C i rcu la r No . 472 da ted 15 .10 .1986 . I n th i s rega rd he re l ied on the f o l low ing dec is ions :

C IT V . Sa rda rma l Ko tha r i and ano the r , 302 IT R 286 (Mad ) C IT V . R .L . Sood , 245 IT R 727 (De lh i )

C IT V . Mrs . H i l la J .B . W ad ia , 216 ITR 376 (Bom) Mrs . See tha Sub raman ian V ACIT , 59 ITD 94 (Mad Bench ) Usha Va id v ITO, 53 SOT 385

Smt . Ran j i t Sandhu v DCIT , 133 TTJ 46 (Chd )

25 On the o ther hand , the ld . C IT DR f o r the revenue made de ta i led subm iss ions and have a l so f i led wr i t ten submiss ions . I t was po in ted ou t by the C IT -DR fo r the revenue tha t though copy o f the spec ia l power o f a t to rney has been f i led a t pages 153 to 165 bu t two o f the mos t impo r tan t c ruc ia l pages con ta in ing c lause "u " to " z" and l as t page No . 9 a re m iss ing. He made an a l l ega t ion tha t th i s has been done de l ibe ra te l y wh ich was con t rove r ted by the ld . counse l o f the assessee and he subm i t t ed tha t

54

th i s i s a s imp le m is take and he wou ld f i le t hose pape rs . The ld . DR fo r the revenue in v iew o f these submiss ions submi t ted tha t these pages can be re fe r red in case o f Pun jab i Coop House Bu i ld ing Soc ie ty L td . in ITA No. 310& 556 /Chd/2012 a t page 40 to 52 o f the pape r book in tha t case . The subm iss ions o f the revenue can be summar i zed as unde r :

( I ) The Soc ie t y passed a reso lu t ion in i t s execu t i ve commi t tee on 4 .01 .2007 wh ich was con f i rmed / ra t i f ied in the Gene ra l Body Mee t ing on 25 .2 .2007 . In the Soc ie t y the re we re two types o f Members ho ld ing p lo t s o f 500 sqyd and 1000 sqyd . I t was reso lved tha t members wou ld su r rende r the respec t i ve p lo ts o f 500 sqyd and 1000 sqyd i n f avou r o f the Soc ie t y f o r f u r the r t rans fe r o f t he en t i re l and by the Soc ie t y i n f avou r o f T HDC/HASH fo r the deve lopment o f p rope r t y i n l ieu o f cons ide ra t ion o f Rs . 82 ,50 ,000 / - to a Member ho ld ing 500 sqyd p lo t and Rs. 1 ,65 ,00 ,000 / - to a Member ho ld ing 1000 sqyd p lo t to be pa id in f ou r ins ta l lmen ts by HASH d i rec t l y to the Members o f the Soc ie t y . In add i t i on to th is cons ide ra t ion member ho ld ing 500 sqyd p lo t was to rece ive a f u rn ished f la t w i th supe r a rea o f 2250 sqf t to be cons t ruc ted by THDC/HASH and two f la t s in case o f Members ho ld ing 1000 sqyd p lo t s . I t was a lso reso lved th rough th i s reso lu t i on to hand ove r the possess ion o f the p roper t y and o r ig ina l t i t le deeds o f the p rope r t y t o THDC/HASH. The Soc ie t y was fu r the r pe rm i t ted to a l low T HDC/HASH to mor tgage , se l l the p rope r t y and c rea te change in p rope r t y . The Soc ie t y a lso reso lved to execu te i r revocab le power o f a t to rney in f avou r o f T HDC/HASH wh ich was ac tua l l y execu ted on 26 .2 .2007 wh ich was du ly reg is te red a l so . Pu rsuance to th i s reso lu t ion , the JDA was execu ted on 25 .2 .2007 . Th rough c lause 2 .1 i t was spec i f i ca l l y ag reed tha t owne r i .e . the Soc ie t y has i r revocab ly and unequ ivoca l l y gran ted and ass igned in pe rpe tu i t y a l l the r i gh t s t o deve lop / cons t ruc t / mor tgage / lease / l i cense , se l l and t rans fe r the p rope r t y . C lause 6 .7 o f the JDA p rov ides fo r execu t ion o f i r revocab le spec ia l power o f a t to rney th rough wh ich r i gh ts o f deve lopment we re g ran ted in f avou r o f THDC/HASH and r i gh t to ra ise f inance by mor tgage in the p rope r t y and to reg is te r the cha rge w i th compe ten t au tho r i t y and fu r the r power o f sa le e tc . we re a lso g i ven th rough th is power o f a t t o rney. I t was agreed tha t the Soc ie t y wou ld no t revoke such power o f a t t o rney w i thou t ob ta in ing a spec i f i c p r io r wr i t ten consen t o f THDC/HASH.

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The above c lauses c lea r l y show tha t possess ion o f t he p rope r t y was handed ove r to THDC/HASH and fu r the r r i gh t s to mor tgage and sa le o f the p rope r t y was a lso g i ven . The comb ined read ing o f va r ious c lauses in the JDA and power o f a t to rney show tha t :-

( i ) A l l the Members o f the Soc ie ty exp ress ly and w i l l i ng l y had su r rende red the i r respec t i ve p lo t s in favou r o f the Soc ie t y and the Soc ie t y was au tho r ized to se l l / t rans fe r t he en t i re land in f avou r o f THDC/HASH fo r a cons idera t ion wh ich was se t ou t i n t he c lauses o f JDA . The soc ie t y was a l so au tho r i zed to hand ove r o r ig ina l t i t l e deeds and possess ion o f land to THDC/ HASH.

( i i ) The Soc ie t y handed ove r the possess ion o f the land and o r ig ina l t i t l e deeds o f the p rope r t y to THDC/HASH. ( i i i ) Soc ie t y pe rm i t ted T HDC/HASH to mor tgage , se l l and c rea te cha rge in the p rope r t y .

( i v ) The Soc ie t y reso lved to execu te an i r revocab le spec ia l power o f a t to rney wh ich cou ld no t be revoked in any c i r cumstances w i thou t p roper consen t o f THDC/HASH and such power o f a t t o rney was ac tua l l y execu ted on 26 .2 .2007 . Th rough th i s power o f a t t o rney THDC/HASH has been au tho r ized to mor tgage o r c rea te cha rge by the Soc ie t y . THDC/HASH was au tho r i zed to g i ve the possess ion o f the p roper t y o r any pa r t the reo f to the au tho r i t ies to whom same was requ i red to be handed ove r wh ich was no t poss ib le un less THDC/HASH was handed ove r the possess ion o f the p rope r ty and the r i gh t s o f the owne rsh ip . Th rough th is power o f a t to rney the r i gh t to se l l was a l so g i ven wh ich is aga in no t poss ib le w i thou t t rans fe r o f possess ion o r owne rsh ip . These c lauses c lea r l y show tha t comp le te con t ro l ove r the p rope r t y con f i rm ing a l l p r iv i l ege o f owne rsh ip was g i ven in f avou r o f T HDC/HASH and thus such t rans fe r o f owne rsh ip sa t is f ies the requ i rements o f Sec t ion 45 r .w. c lause ( i i ) , ( v ) , ( v i ) o f Sec t ion 2 (47 ) o f the Ac t .

( I I ) The Ld . CIT DR fo r the revenue con tended that Hon 'b le Sup reme Cou r t in case o f Sun i l S idhhara th Bha i V C IT , 156 ITR 509 and C IT V . Narang Produc ts , 219 IT R 478 has c lea r l y he ld tha t de f in i t i on o f t rans fe r u / s 2 (47 ) i s i nc lus i ve one and does no t exc lude con textua l o r o rd ina ry

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wo rd mean ing o f "T rans fe r " . Fur the r in case o f A jay Kumar Shah Jaga t i V CIT , 168 Taxman 53 i t was observed tha t f o r the pu rpose o f Sec t ion 45 o f the Ac t the wo rd

"T rans fe r " as de f ined in IT Ac t i s requ i red to be cons ide red and no t sa le as ind ica ted in the T rans fe r o f P rope r t y Ac t . The re fo re , u / s 2 (47 ) o f the Ac t , i t i s

"T rans fe r " wh ich i s one o f the mos t impo r tan t ing red ien t f o r levy o f taxa t ion u / s 45 wh ich is to be comp l ied w i th . Fo r invok ing Sec t ion 2 (47 ) ( v ) wha t i s requ i red is tha t an ag reemen t to se l l has been en te red by the T rans fe ro r w i th the t rans fe ree and possess ion has been handed ove r by the t rans fe ro r to the t rans fe ree in pa r t pe r fo rmance o f the con t rac t u / s 53A o f T .P . Ac t . In th is regard he re l ied on the fo l low ing dec is ions : -

1 ) Au tho r i t y fo r Advance Ru l ing (AAR) New De lh i in the case o f Jasb i r S ingh Sa rkar ia 294 ITR 196 2 ) Cha tu rbhu j Dwarkadas Kapad ia v C IT 260 ITR 491 (Bom. )

3 ) C .Rav i Vs DCIT in 325 ITR 417 (Ke r )

4 ) C IT v Dr . T .K . Daya lu 202 Taxman 531 (Ka r . ) 5 ) D . Kas tu r i v CIT & An r 323 ITR 40 (Mad. ) 6 ) C IT V Dh i r & Co . Co lon ise rs (P ) L ta 288 ITR 561 (P&H)

( I I I ) The Ld . CIT DR fu r the r subm i t t ed tha t assessee 's case apa r t f rom be ing covered unde r c lause (v ) o f sec t ion 2 (47 ) i s a l so covered by c lause (v i ) o f sec t ion 2 (47) o f the Ac t . C lause (v i ) i s app l icab le i n cases where any t ransac t ion is en te red in to wh ich has the e f fec t o f t rans fe r r ing and enab l ing the en joymen t o f immovab le p rope r t y . I n t h is rega rd he re l i ed on the dec is ions o f Mumba i Bench 'D ' o f the T r ibuna l in Ms Rubab M. Kaze ran i v JCIT 91 IT R 429(Mum.) , ITAT Hyderabad 'A ' Bench in D. Achu tha Rao Vs ACIT 106 IT D 388 (Hyd) and ITAT De lh i Bench 'D ' Bench in ACIT v Smt . Pushpa Dev i Ja in 93 ITD 289 (De lh i ) .

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( IV ) He fu r the r subm i t ted tha t c lause (v ) & (v i ) o f sec t ion 2 (47 ) o f the Ac t we re inse r ted w.e . f . 1 .4 .1988 by F inance Ac t , 1987 . Be fo re tha t , pass ing o f the t i t le i n the p rope r t y was necessa ry cond i t ion to cons t i tu te a t rans fe r under the Ac t in v iew o f the va r ious p ronouncements o f t he Cou r t s . In the mean t ime i t was no t iced by the Gove rnment tha t many p rope r t ies we re be ing t rans fe r red w i thou t execu t ion o f sa le deed th rough va r ious documents wha t i s popu la r l y known as 'power o f a t to rney ' t ransac t ions . To cu rb the l eakage o f Revenue , th rough such t ransac t ion , c lauses (v ) & (v i ) we re added to sec t ion 2 (47 ) wh ich de f ines t rans fe r . Th is has been exp la ined by C i rcu la r No . 495 da ted 22 .9 .1987 . The Boa rd has c la r i f ied th rough pa ras 11 .1 & 11 .2 tha t newly i nse r ted c lauses (v ) & (v i ) wou ld en la rge the de f in i t ion o f t rans fe r whe reby the cases o f t rans fe r wha t i s popu la r l y known as 'power o f a t to rney ' t ransac t ion wh ich a l l ows the en joyment o f r i gh t in the p rope r t y wou ld be cove red by new de f in i t ion . The new c lauses wou ld a l so cove r a r rangements by wh ich the p rope r t y cou ld be en joyed by becom ing a member o f the company o r such o ther a r rangement . Accord ing to h im i t may no t be ou t o f p lace to invoke Heydon 's Ru le o f i n te rp re ta t ion o f s ta tu tes f o r in te rp re t ing these c lauses . The Heydon 's Ru le i s ma in l y app l i cab le whe reve r t he t rue mean ing o f amended p rov i s ions i s t o be unde rs tood . I f the amendmen ts a re seen th rough p r i sm o f Heydon 's Ru le , i t wou ld become c lea r tha t amended c lauses have been b rough t on the s ta tu te to overcome the ea r l i e r m isch ie f . P rope r t ies cou ld be t rans fe r red w i thou t execu t ion o f p rope r sa le deeds and the same cou ld be en joyed by the respec t i ve buye rs w i thou t any taxa t ion on the pa r t o f se l le rs .

(V ) The Ld . DR po in ted ou t tha t the re i s no fo rce in t he submiss ions tha t s ince sec t ion 53A o f the t rans fe r o f p rope r t y Ac t has i t se l f gone unde r amendment w.e . f . 24 .9 .2011 whe re in the reg is t ra t ion o f the agreement has been made mandato ry and , t he re fo re , s ince JDA was no t reg is te red i t canno t be cons t rued to be covered unde r c lause (v ) o f sec t ion 2 (47 ) . I t was con tended tha t doc t r ine o f pa r t pe r fo rmance was g i ven s ta tu to ry recogn i t ion in sec t ion 53A o f the T rans fe r o f P rope r ty Ac t and i t was des i red on ly to p ro tec t possess ion o f a t rans fe ree when the t rans fe r f a l l s sho r t o f requ i rement l a id down by law. The p lea o f the pa r t pe r fo rmance cou ld be taken on ly as sh ie ld in de fence and no t as a swo rd .

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The most impo r t ing red ien t o f sec t ion 53A o f T .P . Ac t was the change o f possess ion . The amendmen t to sec t ion 53A o f the T rans fe r o f P rope r t y Ac t has been done pe rhaps to co l lec t Revenue . I n any case , the same canno t have a impac t on the c lause (v ) o f sec t ion 2 (47) . Th is i s so because c lause (v ) c lea r l y emp loys language by us ing the exp ress ion "pa r t pe r fo rmance o f a con t rac t o f the na tu re re fe r red to in sec t ion 53A o f the T rans fe r o f P rope r t y Ac t " . The Leg is la tu re in ten t iona l l y no t emp loyed the exp ress ion

" i n par t pe r fo rmance o f con t rac t as de f ined unde r sec t ion 53A o f T rans fe r o f P rope r t y Ac t " . The re fo re , i t i s na tu re o f con tac t wh ich i s s im i la r to the na tu re o f con t rac t u /s 53A o f the T rans fe r o f P rope r t y Ac t wh ich is re levan t to sec t ion 2 (47 ) (v ) . In any case Hon 'b le Sup reme Cou r t in the case o f C IT Vs Poda r Cement (P ) L td 226 ITR 625 has c lea r l y he ld tha t 'p r inc ip le o f common law, t he T rans fe r o f P rope r t y Ac t and the Reg is t ra t ion Ac t were no t conc lus i ve f o r in te rp re ta t i on o f p rov i s ion o f Income Tax Ac t on the ques t ion o f ownersh ip o f the p rope r t y . I f consequen t to the amendmen t in sec t ion 53A o f the T rans fe r o f p rope r t y Ac t , the reg is t ra t ion o f Agreement was cons ide red as one o f the essen t ia l i ng red ien t then sec t ion 2 (47 ) (v ) wou ld become redundan t . The Income Tax Ac t canno t be

i n te rp re ted in such a way tha t a pa r t i cu la r p rov i s ion becomes redundan t . In any case i t has been he ld by Mumba i Bench o f t he T r ibuna l in the case o f Su resh Chand Aggarwa l Vs ITO (48 SOT 2010 ) t ha t amendment made in sec t ion 53A o f the T rans fe r o f P rope r t y Ac t by wh ich requ i rement o f reg is t ra t ion o f t rans fe r has been b rough t on s ta tu te need no t be app l icab le f o r cons t ru ing the mean ing o f the ' t rans fe r " w i th re fe rence to sec t ion 2 (47 ) o f the Ac t . S im i la r v iew has been taken by the ITAT Coch in Bench in the case o f G. S reen ivasan Vs DCIT 140 IT D 235 and Pune Bench o f the T r ibuna l in the case o f Mahesh Memichand ra Ganeshwade 51 SOT 155 .

(V I ) I t was con tended tha t t he re i s no fo rce in the submiss ions o f the Ld . Counse l f o r the assessee tha t THDC/HASH were no t w i l l i ng to per fo rm the i r pa r t o f the con t rac t . I t was po in ted ou t tha t deve lope rs i .e THDC/HASH have made payments as pe r c lause 4 ( i ) ( i i ) & ( i i i ) o f the JDA. The deve lope rs have a lso approached the conce rned au thor i t ies f o r pe rm iss ions and app rova ls as per t he ob l i ga t ion agreed in the JDA. Howeve r , a P IL was f i led aga ins t t he deve lopers aga ins t TATA Came lo t P ro jec t ( th is i s the name o f the p ro jec t wh ich was to be

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deve loped by THDC on the land acqu i red f rom the Soc ie t y ) . The P IL was d i sm issed v ide o rder da ted 26 .3 .2012 (copy o f o rde r f i led on record ) . A re fe rence to pa ras 3 , 4 , 25 & 26 o f th i s o rder wou ld c lea r l y show tha t Hon 'b le H igh Cour t has obse rved tha t aga ins t the ru les o f sanc t ion unde r the Env i ronment (P ro tec t ion ) Ac t , the responden t i .e . Deve lope rs have sough t a rev iew o f the o rde r because o f t he f ind ings a r r ived a t we re ex .pa r te . No o rde r in t he Rev iew mat te r has been passed by the competen t au tho r i t y because the in te r im o rde r passed in the P IL wh ich was la te r on c la r i f ied by the Hon 'b le Sup reme Cou r t v ide o rde r da ted 31 .01 .2012 pe rm i t t ing the conce rned au tho r i t ies unde r the d i f f e ren t s ta tu tes gove rn ing the mat te r to exerc i se the i r respec t i ve j u r i sd ic t ion in acco rdance w i th the law and such c la r i f i ca t ions came in la te r dec is ion o f the H igh Cour t . As the re jec t ion unde r the W i ld l i f e (Pro tec t ion ) Ac t has been made by the au thor i t y no t compe ten t to do so , the p romote rs have sough t rev iew o f the o rde r wh ich is s t i l l pend ing fo r some o the r reasons . A l l t hese s teps c lea r l y shows tha t deve lope rs we re w i l l ing to pe r fo rm a l l the ob l i ga t ions unde r taken unde r JDA and we re pe rus ing the mat te r o f sanc t ion o f the p ro jec t a t d i f f e ren t leve ls v igo rous ly . The copy o f t he o rde r o f Hon 'b le Pun jab & Ha ryana H igh Cou r t and Hon 'b le Sup reme Cou r t f i l ed a t pages 172 to 174 o f the pape r book a re on the i ssue o f l and fa l l ing w i th in ca tchmen t a rea o f Sukhna lake and l i t i ga t ion in t h i s case i s be ing v igo rous ly f o l lowed by deve lope rs . The assessee has no t led any ev idence to show tha t e i the r the HASH or T HDC have shown

re luc tance to take the va r ious s teps requ i red fo r execu t ion o f p ro jec t . The Ld . CIT DR a lso con tended tha t i t was a rgued on beha l f o f the assessee tha t deve lope r have no t made the paymen ts as agreed in the JDA, wh ich i s no t co r rec t . In th i s connec t ion , he re fe r red to c lause 4 ( i v ) wh ich c lea r l y s ta tes tha t payment o f Rs . 31 ,92 ,75 ,000 / - was to be made to the owne r and o r respec t i ve members o f the owne r w i th in s i x mon ths f rom the da te o f execu t ion o f th is agreemen t o r w i th in two months f rom the da te o f app rova l o f p lan / des ign and the g ran t and d rawings o f f ina l l i cense to deve lop whereupon the cons t ruc t ion can commence wh ich eve r i s la te r . Th is c lea r l y shows tha t payments was to be made on

happen ing o f two even ts and the t ime l im i t was to be app l ied on the even t tak ing p lace la te r on . As per c lause 3 .3 o f the THDC/HASH was requ i red to take pe rm iss ion

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f rom competen t au tho r i t y and the competen t au thor i t y has been de f ined in JDA as Pun jab Urban P lann ing and Deve lopmen t Au tho r i t y (PUDA) , Depa r tment o f Town and Coun t ry P lann ing, Naga r Panchya t , Nayagon , Depa r tment o f Loca l Bod ies (Pun jab ) and any o the r Au tho r i t y unde r Mun ic ipa l Au tho r i t y . I t a l so inc ludes Depa r tment o f Env i ronment , E lec t r i c i t y Boa rd e t c . S ince perm iss ion f rom Depa r tmen t o f Env i ronmen t e t c was no t ava i lab le because o f ongo ing l i t i ga t ion wh ich was f i led th rough a P IL , the re fo re , i t canno t be sa id tha t Deve lope r was no t w i l i ng to make the paymen t . As pe r the JDA, the payment wou ld become due on ly when such pe rmiss ion were g ran ted by va r ious au tho r i t ies . In f ac t M /s Hash Bu i lde r wro te a l e t t e r on 04 .02 .2011 th rough wh ich i t was s ta ted tha t s ince H igh Cou r t has s tayed the cons t ruc t ion , the re fo re , payment cou ld no t be made . Fu r the r , as P IL was f i led in the Hon 'b le H igh Cou r t and the mat te r had gone even to the Hon 'b le Sup reme Cou r t and T HDC/HASH has

v igo rous ly de fended the same . Th is f ac t c lea r l y shows tha t deve lope r i .e . T HDC/HASH was w i l l ing to pe r form in a l l respec ts t o the JDA.

(V I I ) I t was a lso con tended tha t the soc ie t y has a l ready te rm ina ted the con t rac t and in th i s respec t re fe rence was made to the Reso lu t ion passed by gene ra l body o f the meet ing da ted 13 .6 .2011 and lega l no t i ce was issued to THDC/HASH. F i rs t o f a l l , the re i s no ev idence on reco rd to show tha t such no t ice was se rved upon T HDC/HASH. In any case , as con tended ea r l ie r , power o f a t to rney cou ld no t have been revoked because i t was i r revocab le power o f a t to rney as per c lause 6 .7 o f the JDA. Fur the r , t he re was a rb i t ra t ion c lause and tha t means a no t i ce f o r a rb i t ra t ion was requ i red to g i ven o the rw ise such un i la te ra l cance l la t ion was no t va l id in the eyes o f law. I f the JDA was cance led then the re shou ld be documen t showing re tu rn o f wha tever possess ion was g i ven by the soc ie t y . The documen ts showing cance l l a t ion is on ly a se l f se rv ing document , wh ich canno t be re l ied to re fuse the ex i s tence o f JDA and fac t o f g i v ing possess ion by the Soc ie t y to the Deve loper . Fur the r , the subsequen t even t canno t i nva l ida te the con t rac t f o r t rans fe r o f the p rope r t y because unde r the tax laws income has to be de te rm ined f o r each yea r sepa ra te l y and once t rans fe r took e f f ec t i n assessmen t yea r 2007 -08 , then a subsequen t even t tak ing p lace in 2011 w i l l no t have any e f f ec t on such t rans fe r . I t has been con tended th rough wr i t ten

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submiss ions tha t to ta l cons idera t ion o f the p rope r ty was 2 ,37 ,03 ,75 ,000 / - wh ich was ca lcu la ted as unde r : - ( i ) Cons ide ra t ion in cash Rs . 106 ,42 ,50 ,000 / - (Rs . 82 ,50 ,000 x 129 p lo ts )

( i i ) Cons ide ra t ion in k ind Rs . 130 ,61 ,25 ,000 / - (Rs . 101 ,25 ,000 / - x 129

p lo t s )

To ta l Rs . 237 ,03 ,75 ,000 / -

The above to ta l cons ide ra t ion wou ld be enhanced f i gu re because to ta l cons ide ra t ion rece ived and o r agreed aga ins t the sa le o f p roper t y by the Members i s requ i red to cons ider the va lue o f f l a ts wh ich we re con t rac ted to be rece ived by the Members . On the bas is o f above ca l cu la t ion , the cons ide ra t ion per acre o f land wou ld come to abou t Rs . 11 .18 c ro res whereas Soc ie t y had reg is te red a sa le deed fo r land measur ing 3 .08 acres fo r on ly Rs . 15 .48 c ro res whe reas the ac tua l cons idera t ion shou ld be ` 34 .43 c ro res . Th is on ly shows tha t va lue o f the f la t s to be rece ived was no t re f lec ted in such sa le deed . Now, i f i t i s be l ieved tha t con t rac t was cance l led and Deve lope r was a l lowed to re ta in the land wh ich has a l ready been reg is te red in the name o f deve lope r then what wou ld happen to the f la t s wh ich we re to be rece ived by the va r ious Members o f the Soc ie t y . No lega l ac t ion was taken aga ins t the Deve lope r f o r recove ry o f ba lance o f cons ide ra t ion in the fo rm o f f la t s . Th is on ly goes to p rove tha t cance l l a t ion is on ly a make be l i eve s to ry and ac tua l l y no cance l la t i on has been done .

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(V I I I ) I t was con tended tha t t he re i s no fo rce in the submiss ions tha t the va lue o f the f la t s wh ich has no t been cons t ruc ted , canno t be inc luded in the to ta l cons idera t ion because tha t wou ld be a case o f tax ing the no t iona l i ncome . He re fe r red to c lause 4 o f the JDA wh ich dea ls w i t h t he cons ide ra t ion and po in ted ou t tha t a l lo tmen t o f f la t was par t o f the cons ide ra t ion . As pe r the reso lu t ion o f the Execu t i ve Body o f the Soc ie t y wh ich was la t t e r ra t i f ied by the Gene ra l Body as we l l as the te rms o f the JDA ve ry c lea r ly show tha t in add i t ion to mone ta ry cons ide ra t ion each Member hav ing 500sqyd p lo t was en t i t led to rece ive one fu l l y f u rn i shed f la t measu r ing 2250 sq f t and the Members ho ld ing 1000 sqyd p lo t we re en t i t led to two such f la ts . Th is c lea r l y shows tha t upon en te r ing the JDA, the Members go t ves ted r i gh t s to rece ive such f la t s and the re fo re , as pe r the de f in i t i on o f cap i ta l ga in in Sec t ion 45 such f la t has a lso a rosen f rom the JDA and the re fo re , has to be inc luded in the to ta l cons ide ra t ion . He aga in emphas ized tha t rece ip t o f cons ide ra t ion has no th ing to do w i th i t s taxab i l i t y u / s 45 and i t i s the acc rua l o f cons idera t ion wh ich means a po r t ion o f the cons idera t ion wh ich can be rece ived la te r a lso . He a l so subm i t ted tha t as f a r as the va lue o f the f la t i s conce rned , t he same has been taken by the Assess ing Of f i ce r on the bas is o f ag reement en te red be tween THDC and HASH among themse lves and the ra te adop ted is the same a t wh ich THDC had agreed to se l l the f la t t o Hash . He a lso re fe r red to a f ew pape r books f i l ed by o the r assessees where in va r ious News Pape r c l i pp ing has been inc luded wh ich c lea r l y show tha t f la t s we re booked @ Rs . 8000 / - app rox imate l y i n the P re Launch book ings . Such Pre Launch book ings gene ra l l y take p lace a t l owe r ra tes o f fe red then in the gene ra l book ings by the pub l ic . The re fo re , t he va lue o f Rs . 4500 / - i s mos t reasonab le wh ich has been adop ted by the Assess ing Of f i ce r .

26 In the rejoinder, the ld. counsel of the assessee submitted that the assessee and Society had never handed over the possession, therefore, there is no question of executing the documents at the time of cancellation of the agreement for reversing the possession. As no possession was given, therefore, there is no question of taking the back possession. He further submitted:

(a) that normal rules of interpretation should be applied to understand the meaning of clause (v) and (vi) of Section 2(47) and this is not a fit

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case for invocation of Heydon's Rule. He submitted that lot of emphasis has been laid by the ld. DR for the revenue on para 2.1 of JDA to prove that the possession was handed over. However, a careful reading of this para would show that what was contemplated through this para, was to hand over the possession on the execution and registration of the agreement. When an agreement is read it has to be read in whole and therefore, it may not be proper to ignore the word "Registered".

(b) He also contended that lot of emphasis was given on the irrevocability clause in respect of special Power of Attorney which is not correct because once the JDA is terminated, irrevocable Power of Attorney would come to an end automatically.

(c) He contended that simply saying that the cancellation was an unilateral act of the assessee, would not serve any purpose because the revenue can not sit in the judgment when the assessee should cancel the agreement or not. Clause 14 of the JDA specifically provided for termination of the agreement only in the event of default and the assessee was required to give notice of 30 days in terms of clause 14(iv) and such notice has already been given. JDA was entered in 2007 and ended in 2011 and that is why the assessee was forced to cancel this agreement. In any case THDC/HASH are not related to the assessee, therefore, it was not possible to create self serving documents. 27 . W e have cons ide red the r i va l submiss ions and care fu l l y gone th rough the wr i t ten subm iss ions f i led by bo th the pa r t ies in the l i gh t o f ma te r ia l on reco rd , pape r books and va r ious judgments c i ted by the pa r t ies . The ma in issue is whe ther assessee i s l i ab le to cap i ta l ga in tax i n the yea r unde r cons ide ra t ion i .e assessment yea r 2007 -08 in v iew o f the JDA. Fo r cha rg ing cap i ta l ga ins , the cha rg ing sec t ion is 45 and the re levan t po r t ion is as unde r : -

Section 45. [(1)] Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections [54, 54B, [ [54D, [54E, [54EA, 54EB,] 54F [ 54G and 54H], be chargeable to income-tax under the head "Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place.

28 The p la in read ing o f the above p rov i s ion wou ld show tha t cha rg ing an i tem o f income unde r t he head 'Cap i ta l ga ins" requ i re th ree ing red ien ts i .e . ( i ) the re shou ld be some p ro f i t . ( i i ) Such p ro f i t mus t be a r is ing on accoun t o f t rans fe r and ( i i i ) t he re shou ld be cap i ta l asse t wh ich has

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been t rans fe r red . T here i s no d i spu te tha t a cap i ta l asse t was invo lved and the re was some p ro f i t a lso i .e . why assessee has h imse l f re tu rned income under the head ' cap i t a l ga ins ; . The d ispu te i s ma in l y on accoun t o f t rans fe r and tha t too whe the r the t rans fe r cou ld be cove red unde r c lauses ( i i ) , ( v ) & (v i ) o f sec t ion 2 (47 ) so as to b r ing in to p ic tu re t he who le o f cons idera t ion a r is ing on t rans fe r o f such asse ts . W e sha l l dea l w i th each o f the aspec t in de ta i l a t app rop r ia te t ime .

29 . Apa r t f rom charg ing p rov i s ions u /s 45 ano the r impo r tan t p rov i s ion is sec t ion 48 wh ich dea ls w i th the mode o f computa t ion and re levan t po r t ion reads as unde r : -

48. The income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely :—

(i) expenditure incurred wholly and exclusively in connection with such transfer;

(ii) the cost of acquisition of the asset and the cost of any improvement thereto:

30 Aga in p la in read ing wou ld show tha t cap i ta l ga in wou ld be computed by cons ider ing the fu l l va lue o f cons ide ra t ion whe ther rece ived o r acc ru ing as a resu l t o f the t rans fe r . The re fo re , i t i s no t on ly the cons idera t ion rece ived wh ich is re levan t bu t the cons ide ra t ion wh ich has acc rued i s a lso re levan t .

31 . The exp ress ion ' t rans fe r ' has been de f ined u / s 2 (47) o f the Ac t wh ich reads as under : -

2 (47) ["transfer", in relation to a capital asset, includes,—

(i) the sale , exchange or relinquishment of the asset ; or

(ii) the extinguishment of any rights therein ; or

(iii) the compulsory acquisition thereof under any law ; or

(iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment ;] [or]

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[(iva) the maturity or redemption of a zero coupon bond; or] [(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 (4 of 1882) ; or

(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.—For the purposes of sub-clauses (v) and (vi), "immovable property" shall have the same meaning as in clause (d) of section 269UA;]

C lauses (v ) & (v i ) to sec t ion 2 (47 ) o f the Ac t have been inse r ted by F inance Ac t , 1987 w.e . f . 1 .4 .1988 . The pu rpose o f th is inse r t ion has been exp la ined by CBDT in C i rcu la r No . 495 da ted 22 .9 .1987 . The re levan t pa r t 11 .1 and 11 .2 o f the c i r cu la r reads as unde r : -

"11.1 The existing definition of the word " transfer " in section 2(47) does not include transfer of certain rights accruing to a purchaser, by way of becoming a member or acquiring shares in a co-operative society, company, or as way of any agreement or any arrangement whereby such any building which is either being constructed or which is to be constructed. Transactions of the nature referred to above are not required to be registered under the Registration Act, 1908. Such arrangements confer the privileges of ownership without transfer of title in the building and are a common mode of acquiring flats particularly in multi-storeyed constructions in big cites. The definition also does not cover cases where possession is allowed to be taken or retained in part performance of a contract, of the nature referred to in section 53A of Transfer of Property Act, 1882. New sub-clauses (v) & (vi) have been inserted in section2(47) to prevent avoidance of capital gains liability by recourse to transfer of rights in the manner referred to above.

11.2 The newly inserted sub-clause (vi) of section 2(47) has brought in to the ambit of transfer", the practice of enjoyment of property rights through what is commonly known as Power of Attorney arrangements. The practice in such cases is adopted normally where transfer of ownership is legally not permitted. A

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person holding the power of attorney is authorized the powers of owner, including that of making construction. The legal ownership in such cases continues to be with the transferor."

32 Be fo re inse r t ion o f the c lause (v ) & (v i ) to sec t ion 2 (47 ) o f the Ac t , the pos i t ion o f law was tha t un less and un t i l a sa le deed was execu ted for t rans fe r o f immovab le p rope r t y , t he same cou ld no t be cons t rued as t rans fe r f o r the pu rpose o f cha rg ing cap i t a l ga in tax. Th is was pa r t i cu la r l y so in the l i gh t o f va r ious judgmen ts pa r t i cu la r l y the judgmen t o f Hon 'b le Apex Cou r t in the case o f A lapa t i Venka t ram ian v C IT (57 ITR 185 ) (SC) . In th i s case i t was he ld tha t in the con text o f t rans fe r f o r the pu rpose o f cap i ta l ga in tax , wha t i s meant by t rans fe r i s the e f f ec t i ve conveyance o f the cap i ta l asse t by a t rans fe ro r to the t rans fe ree . De l i ve ry o f possess ion and agreemen t to se l l by i t se l f cou ld no t cons t i tu te conveyance o f the immovab le p rope r t y . In the meant ime apa r t f rom th is dec is ion a p rac t ice came in to vogue by wh ich ce r ta in p rope r t ies were be ing t rans fe r red w i thou t execu t ing the p rope r sa le deeds . Th is was be ing done because the re was res t r i c t ion on sa le o f p rope r t ies in va r ious towns e .g . in case o f lease ho ld p lo t s and f la t s in De lh i i f t he same were to be t rans fe r red , pe rm iss ion was requ i red to be taken f rom the Gove rnment / DDA and t rans fe ro r was requ i red to pay 50% o f the marke t va lue - cos t ( i .e . unea rned inc rease) to the Gove rnmen t . To avo id such payments and / o r a lso to avo id the payment o f s tamp du ty o r cumbersome p rocedu re o f ob ta in ing pe rm iss ion , some p rope r t ies we re be ing so ld by way o f sa le agreemen t and a lso execu t ion o f Genera l Power Of A t to rney and possess ion was g iven on rece ip t o f f u l l cons ide ra t ion w i thou t execu t ing the p rope r sa le deeds e t c . wh ich as ment ioned ea r l ie r was no t even pe rmiss ib le i n some cases . These t ransac t ions a re popu la r l y ca l led

"power o f a t to rney" t ransac t ions . To avo id these and to s top the leakage o f Revenue , the Pa r l iament has inser ted c lauses (v ) & (v i ) to sec t ion 2 (47) so as such t ype o f t ransac t ions a re a l so be b rough t i n to taxa t ion ne t . Howeve r , in te rp re ta t i ons o f these c lauses has led to lo t o f l i t i ga t ion and the ma in po in t o f l i t iga t ion was tha t a t wha t po in t o f t ime the possess ion can be sa id to have been g i ven . In the p resen t case , the Revenue has ma in l y re l ied on two dec is ions name ly ( i ) Cha tu rbhu j Dwarkadas Kapad ia v CIT 260 ITR 491 (Bom. ) and ; ( i i ) Au tho r i t y f o r

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Advance Ru l ing (AAR) New De lh i i n the case o f Jasb i r S ingh Sa rka r ia 294 ITR 196 .

33 . In the case o f Cha tu rbhu j Dwarkadas Kapad ia v C IT (supra ) , the f ac ts be fo re t he Hon 'b le Bombay H igh Cou r t we re tha t assessee who was an ind iv idua l had 44 /192 und iv ided sha re in an immovab le p rope r t y in Grea te r Bombay wh ich cons is ted o f va r ious lands and bu i ld ings . By Agreement da ted Augus t 18 , 1994 , the assessee agreed to se l l to F lo rea t Inves tment L td , (he re in re fe r red to 'F lo rea t ' ) h is sha re o f immovab le p rope r t y f o r a to ta l cons ide ra t ion o f Rs . 1 ,85 ,63 ,220 / - w i th r i gh t t o sa id F lo rea t to deve lop the p rope r t y in acco rdance w i th the ru les / regu la t ions f ramed by loca l au tho r i t ies . For th is pu rpose , the assessee a lso agreed to execu te a l im i ted power o f a t to rney au thor i z ing F lo rea t to dea l w i th the p rope r t y and a lso ob ta in pe rm iss ions and app rova ls f rom va r ious au tho r i t i es . Unde r c lause 11 o f t he agreemen t , i t was p rov ided tha t a f te r F lo rea t was g i ven an i r revocab le l i cense to en te r upon the assessee 's sha re o f p rope r t y and a f te r F lo re t inves tment have ob ta ined a l l necessa ry app rova ls , the F lo re t was en t i t led to demo l i sh va r ious bu i ld ings fo r se t t l ing the c la ims o f the tenan ts . Unde r c lause 14 o f the agreemen t , the assessee was en t i t l ed to rece ive p ropo r t iona te ren t t i l l the payment o f las t i ns ta l lmen ts and t i l l t ha t t ime assessee was bound to pay a l l ou tgo ings . Unde r c lause 20 o f the Agreement , i t was agreed tha t sa le sha l l be comp le ted by execu t ion o f conveyance , howeve r , t i l l the mat te r was ad jud ica ted by the Hon 'b le H igh Cou r t , no conveyance was execu ted . Pu rsuan t to th i s agreement , F lo rea t ob ta ined va r ious pe rm iss ions name ly ( i ) c lea rance f rom CRZ Author i t y da ted Feb rua ry 7 , 1996 ; ( i i ) l e t te r f rom ULC fo r redeve lopment o f p rope r t y da ted Ap r i l 26 , 1995 . O the r pe rm iss ions we re a lso ob ta ined dur ing the f inanc ia l yea r end ing March 31 , 1996 re levan t to assessmen t yea r 1996 - 97 . By March , 31 , 1996 , F lo rea t had pa id a lmos t t he en t i re cons ide ra t ion expec t f o r a sma l l sum o f Rs. 9 ,98 ,000 / - . Howeve r , the commencement ce r t i f i ca te pe rm i t t ing cons t ruc t ion o f t he bu i l d ing was i ssued on November 15 , 1996 . The power o f a t to rney was execu ted on March 12 , 1999 . The ques t ion a rose whe the r l iab i l i t y o f the assessee fo r cap i ta l ga in a rose in the assessment yea r 1996 -97 o r 1999 -2000 . The obse rva t ion o f the Cou r t has been summar ized in head no te as unde r : -

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"C lauses (v ) and (v i ) we re in t roduced in sec t ion 2 (47 ) o f the Income- tax Ac t , 1961 , w i t h e f fec t f rom Ap r i l 1 , 1988 . They p rov ide tha t " t rans fe r " i nc ludes ( i ) any t ransac t ion wh ich a l lows possess ion to be

taken / re ta ined in pa r t pe r fo rmance o f a con t rac t o f the na tu re re fe r red to in sec t ion 53A o f the T rans fe r o f P rope r t y Ac t , 1882 , and ( i i ) any t ransac t ion en te red in to in any manner wh ich has the e f fec t o f t rans fe r r ing o r enab l ing the en joyment o f any immovab le p roper ty . The re fo re , in t hese two cases cap i ta l ga ins wou ld be taxab le in the yea r in wh ich such t ransac t ions a re en te red in to , even i f the t rans fe r o f the immovab le p rope r t y i s no t e f fec t i ve o r comp le te unde r the gene ra l l aw . Unde r sec t ion 2 (47) (v ) any t ransac t ion invo lv ing a l low ing o f possess ion to be taken ove r o r re ta ined in par t pe r fo rmance o f a con t rac t o f the na tu re re fe r red to in sec t ion 53A o f the T rans fe r o f P rope r t y Ac t wou ld come w i th in the amb i t o f sec t ion 2 (47 ) (v ) . In o rde r to a t t rac t sec t ion 53A , the fo l low ing cond i t ions need to be fu l f i l l ed . The re shou ld be a con t rac t fo r cons ide ra t ion ; i t shou ld be in w r i t ing ; i t shou ld be s igned by the t rans fe ro r ; i t shou ld pe r ta in to t rans fe r o f immovab le p rope r t y ; the t rans fe ree shou ld have taken possess ion o f the p rope r ty ; las t ly , the t rans fe ree shou ld be ready and w i l l ing to per fo rm h is pa r t o f the con t rac t . Even a r rangements con f i rming p r i v i leges o f ownersh ip w i thou t t rans fe r o f t i t le cou ld fa l l unde r sec t ion 2 (47 ) (v ) . Sec t ion 2 (47) (v ) was in t roduced in the Ac t f rom the assessment yea r 1988 -89 because p r io r the re to , i n mos t cases , i t was a rgued on beha l f o f t he assessee tha t no t rans fe r took p lace t i l l execu t ion o f t he conveyance . Assessees used to en te r i n to ag reements f o r deve lop ing p rope r t ies w i th bu i lde rs and under the a r rangement w i th the bu i lde rs , they used to con fe r p r iv i leges o f owne rsh ip w i thou t execu t ing conveyance and to p lug tha t loopho le , sec t ion 2 (47) (v ) came to be in t roduced in t he Ac t .

…………….

He ld , tha t sec t ion 2 (47 ) (v ) read w i th sec t ion 45 ind ica tes tha t cap i ta l ga ins was taxab le in the year in wh ich such t ransac t ions we re en te red in to even i f the t rans fe r o f immovab le p rope r ty i s no t e f fec t ive o r comp le te unde r the genera l law . In th i s case , the tes t

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had no t been app l ied by the Depa r tmen t . No reason had been g iven why tha t tes t had no t been app l ied , pa r t i cu la r l y when the ag reemen t in ques t ion , read as a who le , showed tha t i t was a deve lopment ag reemen t . Once unde r c lause 8 o f the ag reement a l im i ted power o f a t to rney was in tended to be g iven to the deve lope r to dea l w i th the p rope r t y , then the da te o f the con t rac t , v i z. , Augus t 18 , 1994 , wou ld be the re levan t da te to dec ide the da te o f t rans fe r unde r sec t ion 2 (47 ) (v ) and , in wh ich even t , the ques t ion o f subs tan t ia l pe r fo rmance o f the con t rac t t he rea f te r wou ld no t a r ise……"

34 . The Hon 'b le Cou r t re fe r red to c lauses (v ) & (v i ) o f sec t ion 2 (47 ) and made the fo l low ing obse rva t ions a t page 499 o f the repo r t :

"…….. The above two c lauses we re in t roduced w i th e f fec t f rom Ap r i l 1 ,1988 . They p rov ide tha t " t rans fe r "

i nc ludes ( i ) any t ransac t ion wh ich a l l ows possess ion to be taken / re ta ined in pa r t pe r fo rmance o f a con t rac t o f the na tu re re fe r red to in

sec t ion 53A o f the Trans fe r o f P rope r t y Ac t , and ( i i ) any t ransac t ion en te red in to in any manne r wh ich has the e f fec t o f t rans fe r r ing o r enab l ing the en joyment o f any immovab le p rope r t y ( see sec t ion 269UA(d ) ) . There fo re , in these two cases cap i ta l ga ins wou ld be taxab le in the yea r in wh ich such t ransac t ions a re en te red in to , even i f the t rans fe r o f the immovab le p rope r t y i s no t e f fec t ive o r comp le te unde r the gene ra l law (see Kanga and Pa lkh iva la 's Law and P rac t i ce o f Income- tax -V I I I ed i t ion , page 766 ) . Th is tes t i s impo r tan t to dec ide the yea r o f cha rgeab i l i t y o f the cap i ta l ga ins . "

35 The above observations were made on the basis of opinion expressed by Ld. author in the commentary - "The Law and Practice of Income Tax by Kanga and Palkhivala Eighth Edition at page 766. Relevant observations read as under:

"Cls. (v) and (vi) of s. 2(47), inserted by the Finance Act 1987 with effect from 1^stApril 1988, provide that "transfer" includes (a) any transaction which involves the allowing of the possession of an immovable property (s. 269UA(d)) to be taken or retained in part performance of a contract of the nature referred to in s.53A of the transfer of Property Act 1882, and (b) any transaction entered into in any manner which has the effect of

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transferring, or enabling the enjoyment of, any immovable property (s. 269UA(d)). Therefore in these two cases capital gains would be taxable in the year in which such transactions are entered into, even if the transfer of the immovable property is not effective or complete under general law."

36 F rom the above , i t i s c lea r tha t Cou r t was o f the v iew tha t in case any t ransac t ion cove red by c lause (v ) and (v i ) to sec t ion 2 (47 ) t he l iab i l i t y f o r cap i to l ga in wou ld a r ise on the da te when such t ransac t ions a re en te red in to . In the judgmen t a t some o ther p laces , the s im i la r obse rva t ions have been made . Howeve r , desp i te th is obse rva t ion the case was dec ided in f avou r o f t he assessee . The reason for the same have been given in the judgment itself. Firstly it is observed that provision of section 2(47)(v) of the Act were not invoked by the Revenue itself. This becomes clear from the following para:

"It was argued on behalf of the assessee that there was no effective transfer till grant of irrevocable licence. In this connection, the judgment of the Hon'ble Supreme Court were cited on behalf of the assessee, but all those judgment were prior to introduction of the concept of deemed transfer u/s 2(47)(v). In this matter, the agreement in question is a development agreement. Such development agreements do not constitute transfer in general law. They are spread over a period of time. They contemplate various stages. The Bombay High Court in various judgments has taken the view in several matters that the object of entering into a development agreement is to enable a professional builder / contractor to make profits by completing the building and selling the flats at a profit. That the aim of these professional contractors was only to make profits by completing the building and, therefore, no interest in the land stands created in their favour under such agreements. That such agreements are only a mode of remunerating the builder for his services of constructing the building (see Gurudev Developers v. Kurla Konkan Niwas Co- operative Housing Society [2003] 3 Mah LJ 131). It is precisely for this reason that the Legislature has introduced section 2(47)(v) read with section 45 which indicates that capital gains is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law. In this case that test has not been applied by the Department. No reason has been given why that test has not been applied, particularly when the agreement in question, read as a whole, shows that it is a development agreement. There is a difference between the contract on the one hand and the performance on the other hand. In this case, the Tribunal as well as the Department have come to the conclusion that the transfer took place during the accounting year ending March 31,1996, as substantial payments were effected during that year and substantial

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permissions were obtained. In such cases of development agreements, one cannot go by substantial performance of a contract. In such cases, 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."

Secondly it is mentioned in the order of the Court that law was not very clear on this point and since the assessee has admitted and paid capital gain in the Assessment year 1999-2000, therefore, tax was held to be chargeable in Assessment year 1999-2000.

Thirdly certain shortcomings were also noted in the o rde r o f the T r ibuna l whe re ce r ta in documents we re ment ioned to have been execu ted be fo re March 31 , 1996 e .g . the fo l low ing obse rva t ion o f the T r ibuna l was no t f ound cor rec t as someth ing is done on Is t Ap r i l , 1997 then the same canno t f a l l in the yea r end ing 31 .3 .1996 .

"F rom the da tes i t i s ev iden t t ha t f rom the ve ry nex t day , i .e . , Ap r i l 1 , 1997 , f rom the end o f t he f inanc ia l yea r end ing on March 31 , 1996 , t he bu i lde r was us ing the we l l wa te r aga ins t payment o f re levan t cha rges to the assessee . "

37 Thus i t i s ve ry c lea r tha t i n cases whe re an a r rangemen t had been en te red in to by an assessee in te rms o f c lause (v ) o f Sec t ion 2 (47 ) wh ich has e f fec t o f hand ing ove r the possess ion then the t rans fe r i s sa id to have been taken p lace on the da te o f en te r ing in to such a r rangemen t .

38 . W e do no t f ind any fo rce in the con ten t ion o f the Ld . Counse l f o r the assessee tha t judgment has to be read in the con tex t o f t he dec is ion made in such judgment . I n f ac t , i t i s we l l se t t l ed tha t doc t r ine o f p receden t wh ich means what needs to be fo l l owed la te r on pa r t i cu la r l y by subo rd ina te T r ibuna ls and Cour ts i s the ra t io o f a pa r t i cu la r judgment g i ven by the h ighe r Cou r t o r Fo rum. Fu r the r , the re is no fo rce in the con ten t ion tha t dec is ion o f the Hon 'b le Bombay H igh Cou r t in the case o f Cha tu rbhu j Dwarkadas Kapad ia v C IT (sup ra ) does no t show tha t the da te o f ag reement i t se l f cons t i tu te the t rans fe r . Aga in the re i s no fo rce even in the con ten t ion tha t in tha t case i t was u l t ima te ly dec ided tha t cap i ta l ga in t axes is chargeab le in Assessment year 1999 -2000 because o f the reasons g i ven in above no ted pa ras pa r t i cu la r l y because the Revenue i t se l f neve r invoked the

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p rov is ions o f sec t ion 2 (47) (v ) o f the Ac t and he ld i t to be taxab le in Assessment yea r 1996-97 . No doub t in tha t case u l t ima te l y i t was he ld tha t cap i ta l ga in was in assessmen t yea r 1999-2000 bu t Cou r t had made i t ve ry c lea r tha t th is i s f i r s t t ime tha t l aw i s be ing la id down and gu ide l ines a re be ing i ssued wh ich means tha t the re was a con fus ion ear l ie r . C lauses (v ) & (v i ) to sec t ion 2 (47 ) we re in t roduced in the yea r on ly in 1998 . Pe rhaps Cou r t took a l en ien t v iew because o f these reasons and he ld t ha t cap i ta l ga in was taxab le i n Assessment yea r 1999 -2000 .

I t is qui te c lea r tha t ra t io o f the above dec is ion is tha t in case o f any a r rangements or t ransac t ions w hereby the other par ty becomes ent i t led to en joy the proper ty then tha t da te of such t ransact ion i tse l f needs to be cons t rued as the da te o f t rans fer .

39 . The second re levan t dec is ion c i ted by the Revenue i s by Au tho r i t y f o r Advance Ru l ing (AAR) New De lh i in the case o f Jasb i r S ingh Sa rka r ia (sup ra ) . In tha t case the assessee was co -owne r o f ag r icu l tu ra l l and measur ing abou t 27 .7 ac res and h i s sha re was 4 /9 . The co -owne r dec ided to deve lop the land by cons t ruc t i ng res iden t ia l comp lex th rough deve loper and en te red in to a Co l labora t ion agreemen t on 8 .6 .2005 w i th M/s San tu r Deve loper Pv t L td , New De lh i (he re in a f te r ca l led 'Deve lope r ' ) . Accord ing to the te rms o f ag reement , the Deve loper shou ld ob ta in a l e t te r o f in ten t f rom the conce rned gove rnment depa r tment and ob ta in o ther pe rm iss ions and sanc t ions fo r deve lop ing the land a t i t s own r isk and cos t . The Deve lope r was to take 84% o f the bu i l t up a rea and ba lance 16% wou ld be long to assessee and o the r co -owne r . The cons idera t ion fo r the agreement was taken as the bu i l t up a rea to be handed ove r to the owne rs f ree o f cos t . The owners we re en t i t led to v i s i t the s i te in o rde r to rev iew the p rogress o f the p ro jec t . I t was c la r i f ied by c lause 18 tha t owne rsh ip wou ld rema in exc lus i ve l y w i th the owne rs t i l l i t ves ts w i th bo th the pa r t ies as pe r the i r respec t i ve sha res on the comp le t ion o f the p ro jec t . The o the r c lauses and the s teps in the agreemen t we re tha t a sum o f Rs . 1 c ro re towa rds payment o f ea rnes t money a t the t ime o f en te r ing in to agreemen t ; a spec ia l power o f a t t o rney was to be execu ted in f avour o f the Deve loper to enab le to dea l w i th the S ta tu to ry au thor i t ies e t c . f o r ob ta in ing necessa ry app rova ls / sanc t ions ; le t t e r o f in ten t was to be ob ta ined no t la te r than March 8 , 2006 and in case o f a f a i lu re to do so , the agreement sha l l s tand te rm ina ted . Le t te r o f i n ten t

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i s bas ica l l y a l i cense g ran ted by the D i rec to r o f Town P lan t ing to Deve lope r o f land fo r the pu rpose o f cons t ruc t ing res iden t ia l f la t s sub jec t to payment o f ce r ta in cha rges and comp l iance o f o the r cond i t ions . I t was fu r the r s ta ted in the agreemen t tha t on fu l f i l lmen t o f the requ i rement in the le t te r o f in ten t , owners w i l l have to execu te i r revocab le genera l power o f a t to rney in f avou r o f the Deve lope r au thor i z ing the Deve lope r to took and se l l the dwe l l ing un i ts ou t o f deve lope r 's share and co l lec t t he money f o r the same. Howeve r , f ina l l y sa le deeds cou ld be execu ted on ly a f te r the owner rece ived the i r share o f cons t ruc ted a rea . Th ree mon ths la te r , a supp lementa ry agreemen t was en te red on Sep tember 15 , 2005 be tween the assessee and o the r co -owne rs and Deve lope rs

th rough wh ich i t was agreed tha t owne rs w i l l se l l the i r 16% sha re in t he bu i l t up a rea to the Deve loper o r i t s nom inee fo r cons ide ra t ion o f Rs . 42 c ro res . A sum o f Rs . 2 c ro res was rece ived . Th is co l labo ra t ion agreement and ba lance o f Rs . 40 c ro res was payab le by the Deve lope r to the owne rs in s i x ins ta l lmen ts f rom March 06 , 2008 . The ins ta l lmen ts cou ld be ex tended sub jec t to paymen t o f i n te res t and fu r the r sub jec t to max imum ex tens ion o f th ree months . The re we re va r ious o ther c lauses wh ich a re no t re levan t f o r ou r pu rposes . The ques t ion a rose whe the r cap i ta l ga in acc rue / a r ise to t he assessee du r ing the f inanc ia l year 2006-07 re levan t to assessment yea r 2007 -08 o r du r ing f inanc ia l year 2007 -08 re levan t to assessmen t year 2008 -09 .

40 . On the above , the Hon 'b le Au tho r i t y a f te r re fe r r ing to the p rov i s ions o f sec t ion 45 and observed as unde r : -

"……….The section can be analysed thus :

(a) transfer of a capital asset effected in the previous year,

(b) resultant profits or gains from such transfer,

(c) those profits or gains would constitute the income of the assessee/ transferor

(d) such income shall be deemed to be the income of the same previous year in which the transfer had taken place.

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Two aspects may be noted at this juncture. Firstly, the expression used is "arising" which is not to be equated with the expression "received".

Both these expressions and in addition thereto, the expression

"accrue" are used in the Income-tax Act either collectively or separately according to the context and nature of the charging provision. The second point which deserves notice is that by a deeming provision, the profits or gains that have arisen would be treated as the income of the previous year in which the transfer took place. That means, the income on account of arisal of capital gain should be charged to tax in the same previous year in which the transfer was effected or deemed to have taken place. The effect and ambit of the deeming provision contained in section 45 has been considered in decided cases and leading text books. The following statement of law in Sampath Iyengar's Commentary (10th Edition— Revised by Shri S. Rajaratnam) brings out the correct legal position :

"Section 45 enacts that the capital gains shall by fiction 'be deemed to be the income of the previous year in which the transfer took place'. Since this is a statutory fiction, the actual year in which the sale price was received, whether it was one year, two years, three years, four years etc. previous to the previous year of transfer, is beside the point. The entirety of the sum or sums received in any earlier year or years would be regarded as the capital gains arising in the previous year of transfer.

. . . . In the words of section 45, the capital gains arising from the transfer 'shall be the income of the previous year in which the transfer took place'. So, the payments of consideration stipulated to be paid in future would have to be attributed, by statutory mandate, to the year of transfer, even as payments made prior to the year of transfer."

41 . The rea f te r , the Au tho r i t y re fe r red to sec t ion 2 (47 ) and ob jec t s o f the in t roduc t ion o f c lauses (v ) & (v i ) and a lso re fe r red to pa ras 11 .1 & 11 .2 o f t he Boa rd C i rcu la r No . 495 (wh ich we have a l ready d iscussed ea r l ie r ) . T he Hon 'b le Au tho r i t y has d iscussed va r ious imp l i ca t ions o f c lause (v ) o f sec t ion 2 (47 ) and a lso imp l i ca t ion o f sec t ion 53A o f the T rans fe r o f P rope r t y Ac t as we l l as obse rva t ions o f Hon 'b le Bombay H igh Cou r t i n the case o f Cha tu rbhu j Dwarkadas Kapad ia v C IT (sup ra ) . T he Au tho r i t y obse rved tha t to unde rs tand th i s p rov i s ion

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p rope r l y mean ing o f 'possess ion ' has to be unde rs tood p rope r l y and went on to d iscuss the mean ing o f te rm 'possess ion , and how the same is to be unde rs tood in the con tex t o f c lause (v ) . These a re ve ry impo r tan t obse rva t ions and have been d iscussed in most e luc ida ted fash ion . These obse rva t ions w i l l answer many o f the ques t ions ra i sed be fo re us and , the re fo re , we a re ex t rac t ing these obse rva t ions as unde r : -

"Meaning of "possession" and how should it be understood in the context of clause (v)

The next question is, in what sense we have to understand the term "possession" in the context of clause (v) of section 2(47). Should it only mean the right to exclusive possession—which the transferee can maintain in his own right to the exclusion of everyone including the transferor from whom he derived the possession ? Such a criterion will be satisfied only after the entire sale consideration is paid and the transferor has forfeited his right to exercise acts of possession over the land or to resume possession. In our view, there is no warrant to place such a restricted interpretation on the word

"possession" occurring in clause (v) of section 2(47). Possession is an abstract concept. It has different shades of meaning. It is variously described as "a polymorphous term having different meanings in different contexts" (per R. S. Sarkaria J. in Superintendent and Remembrance of Legal Affairs, W. B. v. Anil Kumar Bhunja [1979] 4 SCC 274 and as a word of "open texture"

(see Salmond on Jurisprudence, paragraph 51, Twelfth Edition, Indian reprint). Salmond observed : "to look for a definition that will summarize the meanings of the term "possession" in ordinary language, in all areas of law and in all legal systems, is to ask for the impossible". In the above case of Anil Kumar Bhunja [1979] 4 SCC 274, Sarkaria J. speaking for a three-judge Bench also referred to the comments of Dias and Hughes in their book on Jurisprudence that "if a topic ever suffered too much theorizing it is that of 'possession'".

Much of the difficulty is caused by the fact that possession is not a pure legal concept, as pointed out by Salmond. The learned judge then explained the connotation of the expression "possession" by referring to the well known treatises on jurisprudence (page 278) :

"'Possession', implies a right and a fact : the right to enjoy annexed to the right to property and the fact of the real intention. It involves power of control and intent to control, (see Dias and Hughes)

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14 . . . .

15. While recognizing that 'possession' is not a purely legal concept but also a matter of fact, Salmond (12th Ed., 52) describes possession, in fact, as a relationship between a person and a thing. According to the learned author, the test for determining 'whether a person is in possession of anything is whether he is in general control of it'."

In Salmond's Jurisprudence, at paragraph 54, we find an illuminating discussion on "immediate" and "mediate possession". The learned author states "in law one person may possess a thing for and on account of some one else. In such a case the latter is in possession by the agency of him who so holds the thing on his behalf. The possession thus held by one man through another may be termed mediate, while that which is acquired or retained directly or personally may be distinguished as 'immediate or direct'." Salmond makes reference to three types of mediate possession. In all cases of "mediate possession", two persons are in possession of the same thing at the same time. An allied concept of concurrent possession has also been explained in paragraph 55 of Salmond's Jurisprudence in the following words :

"It was a maxim of the civil law that two persons could not be in possession of the same thing at the same time. As a general proposition this is true : for exclusiveness is of the essence of possession. Two adverse claims of exclusive use cannot both be effectually realized at the same time. Claims, however, which are not adverse, and which are not, therefore, mutually destructive, admit of concurrent realization. Hence, there are several possible cases of duplicate possession.

1. Mediate and immediate possession co-exist in respect of the same thing as already explained.

2. Two or more persons may possess the same thing in common, just as they may owe it in common …."

On a fair and reasonable interpretation and on adopting the principle of purposive construction, it must be held that possession contemplated by clause (v) need not necessarily

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be sole and exclusive possession. So long as the transferee is, by virtue of the possession given, enabled to exercise general control over the property and to make use of it for the intended purpose, the mere fact that the owner has also the right to enter the property to oversee the development work or to ensure performance of the terms of agreement does not introduce any incompatibility. The concurrent possession of the owner who can exercise possessory rights to a limited extent and for a limited purpose and that of the buyer/developer who has a general control and custody of the land can very well be reconciled. Clause (v) of section 2(47) will have its full play even in such a situation. There is no warrant to postpone the operation of clause (v) and the resultant accrual of capital gain to a point of time when the concurrent possession will become exclusive possession of developer/transferee after he pays full consideration. Further, if "possession" referred to in clause (v) is to be understood as exclusive possession of the

transferee/developer, then, the very purpose of the amendment expanding the definition of transfer for the purpose of capital gains may be defeated. The reason is this: the owner of the property can very well contend, as is being contended in the present case, that the developer will have such exclusive possession in his own right only after the entire amount is paid to the owner to the last pie. There is then a possibility of staggering the last instalment of a small amount to a distant date, may be, when the entire building complex gets ready. Even if some amount, say 10 per cent., remains to be paid and the developer/transferee fails to pay, leading to a dispute between the parties, the right to exclusive and indefeasible possession may be in jeopardy. In this state of affairs, the transaction within the meaning of clause (v) cannot be said to have been effected and the liability to pay capital gains may be indefinitely postponed. True, it may not be profitable for the developer to allow this situation to linger for long as the process of transfer of flats to the prospective purchasers will get delayed. At the same time, the other side of the picture cannot be over-looked. There is a possibility of the owner with the connivance of the transferee postponing the payment of capital gains tax on the ostensible ground that the entire consideration has not been received and some balance is left. The mischief sought to be remedied, will then perpetuate. We are, therefore of the view that possession given to the developers need not ripen itself into exclusive

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possession on payment of all the instalments in entirety for the purpose of determining the date of transfer. While on the point of possession, we would like to clarify one more aspect. What is spoken to in clause (v) of section 2(47) is the "transaction" which involves allowing the possession to be taken. By means of such transaction, a transferee like a developer is allowed to undertake development work on the land by assuming general control over the property in part performance of the contract. The date of that transaction determines the date of transfer. The actual date of taking physical possession or the instances of possessory acts exercised is not very relevant. The ascertainment of such date, if called for, leads to complicated inquiries, which may frustrate the objective of the legislative provision. It is enough if the transferee has, by virtue of that transaction, a right to enter upon and exercise acts of possession effectively pursuant to the covenants in the contract. That tantamounts to legal possession. We are referring to this aspect because the authorized representative has submitted when he appeared before us in the last week of May, 2007, that even by that date the development work could not be commenced for want of certain approvals, and therefore, the developer was "not willing to take possession of the land". Such an unsubstantiated statement which is not found in the original application or even written submissions filed earlier need not be probed into especially when it is not his case that the developer was not allowed to take possession in terms of the agreement."

42 . A f te r t he above d iscuss ion , the Au thor i t y d i scussed the fac t s o f the case be fo re i t . I t was obse rved tha t pa ragraph 18 o f the Co l labo ra t ion Agreemen t p rov ides tha t on i ssuance o f le t te r o f in ten t , the owne rs w i l l a l low and pe rm i t the Deve lope r to en te r upon and survey the land , e rec t s i te / sa les o f f i ce , ca r ry ou t the s i te deve lopment wo rk and do ac t iv i t ies f o r advanc ing & sa le p romot ion , cons t ruc t ion e tc . The Au tho r i t y f u r the r obse rved tha t i f th i s c lause i s read in i so la t ion th is wou ld sugges t on pass ing o f possess ion bu t accord ing to Au thor i t y t he o the r f ac to rs a re t o be cons ide red . C lause 15 p rov ided tha t on fu l f i l lmen t o f the requ i rements la id down in the le t te r o f i n ten t wh ich i s p rov i s iona l l i cense , the owne rs shou ld execu te an i r revocab le gene ra l power o f a t to rney in

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f avou r o f the deve lope r a l low ing in te r a l i a to book and se l l the dwe l l ing un i t f a i l i ng unde r the i r sha re . Th is was poss ib le on ly a f te r depos i t o f requ is i te cha rges e tc . and pe rhaps the re was l i t i ga t ion regard ing owne rsh ip o f land wh ich has a lso to be w i thd rawn. The Au tho r i t y has d iscussed the s ign i f i cance o f gene ra l power o f a t to rney and the te rms o f the gene ra l power o f a t to rney a t pa ra 33 and the re levan t po r t ion o f the same is as unde r : -

"A copy of the irrevocable GPA executed in terms of paragraph 15 of the agreement has been furnished by the applicant. It authorizes the developer : (i) to enter upon and survey the land, prepare the layout plan, apply for renewal/extension of licence, submit the building plans for sanction of the appropriate authority and to carry out the work of development of a multi-storied residential complex, (ii) to manage and control, look after and supervise the property in any manner as the attorney deems fit and proper, (iii) to obtain water, sewage disposal and electricity connections. The developer is also authorized to borrow money for meeting the cost of construction on the security and mortgage of land falling to the developer's share. The other clauses in the GPA are not relevant for our purpose. The GPA unequivocally grants to the developer a bundle of possessory rights. The acts of management, control and supervision of property are explicitly mentioned. It is fairly clear that the GPA is not a mere licence to enter the land for doing some preliminary acts in relation to the development work. The power of control of the land which is an incidence of possession as explained supra has been conferred on the developer under this GPA. The developer armed with the GPA cannot be regarded merely as a licensee or an agent subject to the control of the owners. His possession cannot be characterized as precarious or tentative in nature. The fact that the agreement describes the GPA as irrevocable and an express declaration to that effect is found in the GPA itself is not without significance. Having regard to the second and supplemental agreement by virtue of which the entire developed property including the owners' share has been agreed to be sold to the developer or his nominees for valuable money consideration, the developer has a vital stake in the entire property. As far as the quality of possession is concerned, he is on a higher pedestal than a developer who apportions built up area with the owner. Even if he is an agent in one sense in the course of developing the land, that agency is coupled with interest. For these reasons, the prefix "irrevocable" is deliberately chosen. As discussed earlier, the owner's limited right to enter the land and oversee the development work is not incompatible with the

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developer's right of control over the land which he derives from the GPA. Exclusive possession, as already pointed out, is not necessary for the purpose of satisfying the ingredients of clause (v) of section 2(47). We are therefore, of the view that the irrevocable GPA executed by the owners in favour of the developer must be regarded as a transaction in the eye of law which allows possession to be taken in part performance of the contract for transfer of the property in question…….."

43 Thus , the above c lea r l y shows tha t i r revocab le gene ra l power o f a t to rney wh ich leads to ove r a l l con t ro l o f t he p rope r t y in the hands o f t he Deve loper , even i f tha t means no exc lus ive possess ion by the Deve lope r wou ld cons t i tu te t rans fe r . I t can be sa id tha t i t has to be cons t rued as 'possess ion ' in te rms o f c lause (v ) o f sec t ion 2 (47 ) o f the Ac t .

44 A question may arise that why the transfer was not held to be taken place in Assessment year 2006-07 when first agreement was entered into on June 8, 2005. The supplementary agreement was also entered into on Sept 15, 2005 both of which fall in Financial Year 2005-06 relevant to Assessment year 2006-07. Then why transfer was not construed in Assessment year 2006-07 it was because the first agreement itself contained a condition that "letter of intent" should be procured not later than March 8, 2006. In case of failure to do so the agreement shall stand terminated. Therefore, obtaining the "letter of intent" was the crucial factor. It has been explained in the decision that the "letter of intent"

basically is a license issued by the Director of Town and Country Planning, Haryana which gives permission for construction of the flats. The other crucial point was execution of irrevocable of GPA which was executed on May 8, 2006 which according to the ld. authority depicts the intention of the handing over of the possession. Therefore, it becomes very clear that it is not necessary that transfer would take place on the signing of development agreement but the same has to be inferred only when the possession has been handed over by the transferor to the developer which can be inferred from the documents e.g. Power of

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Attorney. After above discussion Hon'ble authority has summarized the decision in para 41 which is as under:

"The following is the summary of conclusions:

1. Where the agreement for transfer of immovable property by itself does not provide for immediate transfer of possession, the date of entering into the agreement cannot be considered to be the date of transfer within the meaning of clause (v) of section 2 (47) of the Income-Tax Act.

2. To attract clause (v) of section 2(47), it is not necessary that the entire sale consideration up to the last installment should be received by the owner.

3. In the instant case, having regard to the terms of the two agreements and the irrevocable GPA executed pursuant to the agreement, the execution of the GPA shall be regarded as the "transaction involving the allowing of the possession" of land to be taken in part performance of the contract and therefore, the transfer within the meaning of section 2(47)(v) must be deemed to have taken place on the date of execution of such GPA. The irrevocable GPA was executed on May 8, 2006, i.e., during the previous year relevant to the assessment year 2007-08 and the capital gains must be held to have arisen during that year. Incidentally, it may be mentioned that during the said year, i.e., financial year 2006-07, a final license was granted and the applicant/owners received nearly 2/3rds of the consideration. "

45. Lega l pos i t ion has been d iscussed in above no ted pa ras and now le t us d i scuss the fac ts o f the case in the l i gh t o f above no ted lega l pos i t ion .

46 Und ispu ted fac ts o f the case a re tha t the assessee i s a Member o f Pun jab i Coop House Bu i ld ing Soc ie ty L td . wh ich had 96 members (Number o f members we re s ta ted as 95 du r ing a rguments bu t c lause 13 o f the JDA re fe rs to number o f members as 96) . The Soc ie t y was own ing 21 .2 acres o f l and in v i l l age Kansa l D is t t . Moha l i ad jacen t to Chand iga rh . There we re two t ypes o f members f i r s t l y t he members who we re own ing p lo t o f 500 sqyd and second ly the members who a re ho ld ing p lo t o f 1000 sqyd . Somewhere in 2006 i t was dec ided to deve lop a Group Hous ing commerc ia l p ro jec t and do deve lopmen t as pe r the app l i cab le mun ic ipa l bu i ld ing bye - laws in f o rce and acco rd ing ly a b id was inv i ted th rough adver t i sement in the T r ibune da ted 31 .5 .2006 . HASH a deve lope r , app roached the Soc ie t y w i th p roposa l f o r deve lopmen t o f

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the p rope r t y . S ince Hash d id no t have su f f i c ien t means to deve lop the p rope r t y , Hash had app roached T HDC f o r deve lopment o f the p rope r t y by cons t ruc t i ng the bu i ld ing and /o r s t ruc tu res to be used fo r i n te ra l ia res iden t ia l , pub l ic use and commerc ia l pu rposes . Th is p roposa l was d iscussed by the Soc ie t y i n i t s Execu t i ve Commi t tee meet ing on 4 .1 .2007 . Minu tes o f the meet ing a re p laced a t page 58 to 65 o f the pape r book . In the Execu t i ve commi t tee i t was dec ided to appo in t Hash who was ac t ing a longwi th the jo in t deve loper T HDC as jo in t deve lope r on the te rms and cond i t ions to be ment ioned in the JDA. I t was fu r the r reso lved tha t member owing p lo t o f 500 sqyd wou ld rece ive a cons ide ra t ion o f Rs . 82 ,50 ,000 / - each to be pa id in f ou r ins ta l lmen ts by Hash d i rec t l y i n f avou r o f the members and one f la t w i th supe r a rea o f 2250 sqf to be cons t ruc ted by T HDC. The members who he ld the p lo t o f 1000sqyd were to rece ive a cons ide ra t ion o f Rs . 1 ,65 ,00 ,000 / - and two f la t s cons is t ing o f 2250sqf t to be cons t ruc ted by the THDC. I t was f u r the r reso lved to en te r i n to a JDA wi th THDC/HASH. I t was a lso reso lved to execu te i r revocab le Power o f a t to rney by the Soc ie t y i n f avou r o f THDC f o r th is purpose . Th is reso lu t ion was u l t ima te l y ra t i f ied i n the Gene ra l Body mee t ing he ld by the Soc ie t y on 25 .2 .2007 . Pursuan t to the above reso lu t i on , t r ipa r t i te JDA was execu ted (copy o f the same i s ava i l ab le a t page 15 to 54 o f f i r s t pape r book ) . Th rough rec i ta t ion c lause i t has been ment ioned tha t owne r is in possess ion o f land measur ing abou t 21 .2 acres o f land wh ich has come in the purv iew o f Naga r Panchaya t , Naya Gaon v ide No t i f i ca t i on i ssued on 18 .10 .2006 du ly subs t i tu ted by ano ther no t i f i ca t ion da ted 21 .11 .2006 and tha t no pa r t o f land o f the p rope r ty f a l l s unde r Fo res t A rea under the Pun jab Land Prese rva t ion Ac t . I t has been fu r the r rec i ted tha t the Soc ie ty has agreed to accep t the p roposa ls o f Hash and fu r the r execu ted th i s agreement w i t h THDC/HASH. Hash was respons ib le to make payment to the owne r as desc r ibed ea r l i e r and the f la t s we re to be p rov ided by T HDC. In case o f Hash fa i l s to make the payment , T HDC agreed to make the payments . Copy o f the reso lu t ion o f the Execu t i ve Commi t tee o f the Soc ie t y da ted 4 .1 .2007 as we l l as reso lu t ion o f the Gene ra l Body Mee t ing o f the Soc ie t y da ted 25 .2 .2007 we re made pa r t o f JDA by way o f annexu re . The Soc ie t y agreed to execu te an i r revocab le Spec ia l Power o f A t to rney in f avou r o f T HDC and a l l

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o ther necessa ry documen ts , a t the reques t o f the deve lope rs .

47 In c lause 1 o f JDA var ious express ions have been de f ined . C lause 2 descr ibes the p ro jec t as unde r :

"2 .1 The owner hereby i r revocab ly and unequivoca l ly grants and ass igns in perpe tui ty a l l i ts r ights to deve lop , cons t ruc t , mor tgage , lease , l icense , se l l and t rans fer the proper ty a long wi th any and a l l the cons t ruc t ion, premises , heredi taments , easements , t rees thereon in favour o f THDC for the purpose o f deve lopment , cons truct ion, mortgage , sa le , t rans fer , lease , l i cense and or explo i ta t ion for fu l l u t i l i za t ion of the Proper ty (Rights ) and to execu te a l l the documents necessa ry to ca r ry ou t , fac i l i ta te and en fo rce the R igh ts in the P rope r ty inc lud ing to execu te Lease Ag reement , L icense Agreemen ts , Cons t ruc t ion Con t rac t s , Supp l ie r Con t rac ts , Ag reement fo r sa le , Conveyance , Mor tgage Deeds , f inance documents and a l l documents and

ag reemen ts necessa ry to c rea te and reg is te r the mor tgage , conveyance , lease deeds , l i cense agreement , Power o f A t to rney , a f f idav i t s , dec la ra t ion , indemni t ies and a l l such o the r documents , le t te rs as may be necessary to ca r ry ou t , fac i l i ta te and en fo rce the R igh ts and to reg is te r the same w i th the revenue /Competen t au tho r i t y and to appear on our beha l f be fo re a l l au tho r i t ies , s ta tu to ry o r o therw ise , and be fo re any cou r t o f l aw ( the 'Deve lopment R igh ts ' ) . The owner hereby hands over the or ig ina l t i t le deeds of the Proper ty as ment ioned in the l is t Annexed hereto and marked as Annexure IV and

phys ica l , vacant possess ion o f the proper ty has been handed over to THDC s imul taneous to the execut ion

and regis t ra t ion o f th is agreement to deve lop the same as se t out here in .

I t i s he reby ag reed and con f i rmed tha t wha t i s s ta ted in the rec i ta l s here inabove , sha l l be deemed to be dec la ra t ions and rep resen ta t ions on the pa r t o f the Owner as i f t he same were se t ou t he re in ve rba t im and fo rming an in teg ra l pa r t o f the ag reemen t .

2 .2 The P ro jec t sha l l compr i se o f

deve lopment / cons t ruc t ion o f the P rope r t y in to the p remises as pe rmiss ib le unde r Pun jab Mun ic ipa l Bu i l d ing

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Bye- law s/Pun jab Urban Deve lopment Au tho r i t y o r any o ther Compe ten t Au tho r i t y by the Deve loper a t the i r own cos t and expense . The P ro jec t sha l l be deve loped as may be sanc t ioned by the conce rned loca l au tho r i t y i . e . Depa r tmen t o f Loca l Bod ies , Pun jab /Pun jab U rban P lann ing and Deve lopment Au tho r i t y (PUDA) o r any o ther Competen t Au tho r i t y .

2 .3 The owne r he reby i r revocab ly and unequ ivoca l l y g ran ts and ass igns a l l i t s Deve lopmen t R igh ts in the p rope r t y to THDC to deve lop the p rope r t y and under take the p ro jec t a t i t s own cos ts , e f fo r ts and expenses whe reupon the Deve lope r sha l l be en t i t led to app ly fo r and ob ta in necessary sanc t ions , l i censes and pe rmiss ions f rom a l l the conce rned au thor i t ies fo r the commencement , deve lopment and comp le t ion o f t he p ro jec t on the p rope r t y . "

48 C lause 3 desc r ibes the ob l i ga t ions o f the deve lopers & Soc ie t y f o r ge t t i ng the p lans , e tc . sanc t ioned f rom competen t au thor i t y / app l i ca t ions to be s igned by owne r f o r p lans , d rawings e tc . , cons t ruc t ion . C lause 4 dea ls w i th cons idera t ion c lauses 5 t o 8 dea ls va r ious aspec ts o f p ro jec t and ob l i ga t ions o f Soc ie t y and Deve lope r . C lause 9 ta l ks abou t owne rsh ip and r i gh ts and read as unde r :

"9 T rans fe r o f owne rsh ip /R igh ts 9 .1 The owner sha l l s imul taneously on rece ip t of Payment as set out in C lause 4 .1 above, execute an i r revocable Specia l Power o f At torney to THDC for deve lopment o f the proper ty author iz ing THDC to do a l l lawful ac ts , deeds, matters and th ings per ta in ing to the deve lopment o f the proper ty for the projec t a long w i th in te ra l ia r ight to mortgage the proper ty and/or premises , se l l , lease , l icense the premises and rece ive /co l lec t monies in i t 's name in respec t o f the same and approach i n te rac t , commun ica te w i th the Competen t au thor i t ies and fo r do ing a l l ac t s , deeds , ma t te rs and th ings to be done o r incur red by THDC in t ha t beha l f as a l so to s ign a l l le t te rs , app l ica t ions , ag reements and reg is te r the same i f necessa ry , documents , cou r t p roceed ings , a f f idav i t s and such o ther pape rs con ta in ing

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t rue fac ts and co r rec t pa r t i cu la rs as made f rom t ime to t ime be requ i red in th is beha l f .

9 .2 The owner sha l l execu te in favou r o f THDC the sa le deed i s i n acco rdance w i th the p rov i s ions o f c lause 4 .1 ( i i ) to C lause 4 .1 ( iv ) o f th i s Ag reemen t and execu te a l l o ther necessa ry documents and pape rs t o comp le te the

a fo resa id t ransac t ion .

9 .3 Tha t a l l the o r ig ina l t i t le deeds pe r ta in ing to p rope r t y as ment ioned in Annexu re IV has been handed over to THDC by the owner a t the t ime o f s igning o f th is Agreement and in fur therance o f the common

in teres t o f the Par t ies for the deve lopment o f the Pro jec t and except the Sa le Transac t ion made by the Owner in favou r o f THDC as e t ou t in C lause 4 .1 above . THDC he reby unde r take and assure the owne r t ha t they sha l l use the t i t le deeds on ly f o r the pu rpose o f fu r the rance o f the P ro jec t i n the manne r tha t i t does no t adve rse ly e f fec t t he Owner /A l lo t tee in any manne r wha tsoever . "

49 C lause 10 descr ibes the consen t g i ven by the Soc ie t y to T HDC fo r ra i s ing f inance fo r deve lopment and comp le t ion o f p ro jec t . C lause 11 ta lks abou t f o rmat ion o f ma in tenance Soc ie t y f o r the p ro jec t a f te r i t s comp le t ion . C lause 13 ta lks abou t t rans fe r o f r i gh t s wh ich reads as unde r :

"13 T rans fe r o f R igh ts The owne r he re in i . e . The Pun jab i Coop House Bu i ld ing Soc ie ty L td . a long w i th a l l i t s n ine ty s i x (96 ) members have g i ven the i r express , f ree and c lea r consen t in w r i t ing i n the fo rm o f an A f f idav i t /No Ob jec t ion Ce r t i f i ca te /Consen t Le t te r whe reby the Deve lope rs have been a l lowed to deve lop the p rope r t y in acco rdance w i th the P ro jec t and tha t THDC sha l l be en t i t led to t rans fe r the r i gh t s ob ta ined unde r th is ag reemen t t o any th i rd pa r t y and to ge t t he deve lopment / cons t ruc t i on work comp le ted on such te rms and cond i t ions as THDC may deem f i t so l ong as i t does no t adve rse ly e f fec t the Owner in te rms o f the i r r igh t to rece ive En t i re cons ide ra t ion as men t ioned in th i s ag reemen t sub jec t t o a l l o ther cond i t ions ment ioned

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the re in as we l l . The owne r sha l l a t a l l t imes p rov ide fu l l suppo r t to the Deve lope rs here in . "

50 O the r c lauses p rov ide fo r te rm ina t ion , Gene ra l p rov i s ions , D isc la imer , Par t i a l Inva l id i t y , A rb i t ra t ion , No t ices and Force Ma jeu re & Jur i sd ic t ion .

51 In add i t ion to above an i r revocab le Spec ia l Power o f A t to rney has a lso been execu ted by the Soc ie t y i n f avou r o f the deve lope rs i .e . T HDC. (Copy o f wh ich is ava i l ab le a t pages 40 to 52 o f the pape r book in case o f Soc ie t y i n ITA No. 556 o f 2012 as d i scussed ea r l ie r in para 25 (comp le te copy o f Supp lementa ry Power o f A t to rney was no t ava i lab le in the pape r book o f the assessee , the re fo re , re fe rence was made to the pape r book in case o f the Soc ie t y ) .

52 The f i rs t ma jo r con ten t ion o f the ld . counse l o f t he assessee is tha t t he possess ion was no t g i ven by the Soc ie t y because acco rd ing to h im as per c lause 2 .1 o f the JDA the possess ion o f the p roper t y was to be handed over s imu l taneous ly to the execu t ion and reg is t ra t ion o f JDA and s ince the JDA was no t reg is te red , t he re fo re , the possess ion was no t g i ven . W e can no t accep t th is con ten t ion because in "Power o f A t to rney" t ransac t ions , i t i s no t necessa ry to reg is te r the JDA i f a spec ia l Power o f A t to rney has been g i ven and same is reg is te red . Second ly c lause 9 .3 o f the JDA as rep roduced above c lea r l y show tha t o r ig ina l t i t le deed wh ich have been ment ioned a long w i th the possess ion in pa ra 2 .1 wh ich acco rd ing to the ld . counse l o f the assessee we re to be handed over s imu l taneous ly to execu t ion and reg is t ra t ion o f the JDA, i s no t co r rec t because c lause 9 .3 c lea r l y ment ion tha t o r ig ina l t i t l e deed o f the p rope r t y have been handed over to the T HDC a t the t ime o f s ign ing o f th is agreemen t because c lause 9 .3 the re is no men t ion abou t reg is t ra t i on o f JDA.

53 Spec ia l Power o f A t to rney wh ich has been execu ted on 26 .2 .2007 and has been reg is te red a lso . The i r revocab le spec ia l Power o f A t to rney has been execu ted as p rov ided in c lause 6 .7 o f the JDA wh ich reads as unde r :

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"6 .7 The Owner sha l l execu te an i r revocab le spec ia l Power o f A t to rney g ran t ing i t s comp le te Deve lopment R igh ts i n the Prope r t y in favour o f THDC in te ra l i a i nc lud ing the r igh t to ra ise f inance by mor tgag ing the p rope r t y and reg is te r the cha rge w i th the Compe ten t Au tho r i t y and execu te reg is te red sa le deeds ) as se t ou t in

Clause 4 .1 ( i i ) , ( i i i ) , ( iv ) and (v ) and the Owner conf i rms , under takes , dec lares and b inds i tse l f not to revoke the same for any reason whatsoever out o f i ts own wi l l and d iscre t ion wi thout obta in ing a spec i f ic pr ior wr i t ten consent of THDC or any o f i ts duly cons t i tu ted a t torneys ."

Through th i s Power o f A t to rney va r ious powers have been g i ven l i ke to ass ign , f i le , amend e tc . va r ious p lans , des igns to rep resen t be fo re va r ious au tho r i t ies , to appo in t a rch i tec t , Lawyers . Some o f t he spec i f i c c lauses re levan t , a re ex t rac ted be low:

( j ) To nego t ia te and agree to any/o r to en te r in to agreemen t (s ) to cons t ruc t / se l l and to unde r take cons t ruc t ion /sa le o f the P rem ises on the P rope r t y o r any po r t ion the reo f wi th / to such pe rsons(s ) o r body and fo r such cons ide ra t ion and upon such te rms and cond i t ions as the A t to rney deem f i t .

(n ) To en te r upon the P rope r t y e i the r a lone o r w i th o thers f o r the pu rpose o f deve lopment , Coo rd ina t ion , execu t ion , imp lementa t ion o f the P ro jec t and commerc ia l i za t ion o f the P rope r t y /Premises . ( t ) To ama lgamate the P rope r t y w i t h any o the r con t iguous , ad jacen t and ad jo in ing land sand p roper t ies whe re in deve lopment and /o r o the r r i gh t , bene f i t s and in te res ts a re acqu i red and /o r p roposed to be acqu i red and deve loped o r p roposed to be deve loped by T HDC and /o r the i r assoc ia te and /o r g roup conce rns /s and /o r u t i l i ze the FSI , FAR, DR and TDR o f the con t iguous , ad jacen t and ad jo in ing lands fo r the pu rpose o f cons t ruc t ing bu i ld ings and /o r s t ruc tu res the reon and /o r on the P rope r ty o r u t i l i ze such lands and p rope r t ies fo r mak ing p rov i s ion o f pa rk ing spaces the reon , and /o r may u t i l i ze the same fo r any o the r l awfu l pu rpose , as T HDC and /o r the i r assoc ia te and /o r g roup concerns may in the i r so ld , abso lu te and un fe t te red d isc re t i on th ink f i t .

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(w) To hand ove r the possess ion o f the P rope r t y o r any pa r t o r po r t ion the reo f to the au thor i t ies to whom the same is requ i red to be handed ove r o r o the rw ise and to execu te and de l i ve r any unde r tak ings , dec la ra t i ons , a f f idav i t s , bonds , deeds , documen ts , e tc . as may be requ i red by the au thor i t ies concerned fo r ves t ing such a pa r t o r po r t ion in such au tho r i t y and to adm i t execu t ion the reo f be fo re the conce rned Competen t Au tho r i t y and ge t the same reg is te red w i th the concerned sub - reg is t ra r . ( y ) Reasonab le oppor tun i t y o f hea r ing sha l l be g i ven to mo r tgage , encumber o r c rea te a cha rge on the P roper t y o r any pa r t o r po r t ion the reo f and execu te the necessa ry secu r i t y documents in f avou r o f any bank / f inanc ia l i ns t i tu t ion to ra ise funds fo r the cons t ruc t ion /deve lopment o f the P rope r t y and fo r t he sa id pu rpose to depos i t t i t le deeds ( i f requ i red) in respec t o f the P rope r t y in f avou r o f such bank / f inanc ia l ins t i tu t ion , execu te the necessa ry documents and reg is te r the cha rge c rea ted on the P rope r t y i f so requ i red in the revenue reco rds and /o r des i red by the A t to rney .

(aa ) To se l l , t rans fe r , l ease , l i cense the P rem ises tha t may be cons t ruc ted on the Proper t y on owne rsh ip bas is , l ease , l i cense and /o r in any o the r manne r f o r such p r i ce as the A t to rneys may deem f i t and p rope r . To co l lec t and rece ive f rom the pu rchased , t rans fe rees , lessees , l i censees o f the P rem ises , mon ies /p r ice and /o r cons ide ra t ion and /o r ma in tenance charges and to s ign and execu te and /o r g i ve p rope r and lawfu l d i scharge fo r the rece ip t s .

(bb ) To execu te f rom t ime to t ime a l l the wr i t i ng , ag reemen t , deeds e tc . i n respec t o f the p rem ises wh ich maybe cons t ruc ted on the P rope r ty and a lso to execu te and s ign conveyance , t rans fe r o r su r rende r in respec t o f the P rope r t y o r any pa r t the reo f .

( cc ) To s ign , execu te and reg is te r the conveyances o r ass ignments and /o r Power o f A t to rney ' s and /o r o ther documents and /o r agreements and /o r any o the r wr i t ings in respec t o f the P rope r t y i n pa r t o r fu l l and /o r the P rem ises cons t ruc ted the reon o r any pa r t t he reo f i n f avou r o f any pe rson as the A t to rneys may de te rm ine inc lud ing in f avou r o f any ind i v idua l and /o r l ega l en t i t les and /o r Co -

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ope ra t i ve Soc ie ty and /o r L im i ted Company and /o r any o ther en t i t y tha t may be fo rmed for such pu rpose . (dd ) To i ssue le t te r o f l ien /NOC's and to s ign documents on beha l f o f t he Owner as requ i red by the p rospec t i ve buye rs / lend ing ins t ruc t ions to c rea te a charge on the a l lo t ted p remises .

(gg ) To look a f te r and ma in ta in the P rope r t y and the P rem ises cons t ruc ted the reon t i l l i t s t rans fe r in f avou r o f the Co -ope ra t i ve Soc ie t y o r L im i ted Company o r any o the r Organ isa t ion .

54 It is pertinent to note that power/authorization which have been given by the Society to the developer, were in fact were required to be given in terms of various clauses of the JDA. Clause 6.7 reproduced above itself shows that the Society was required to give powers to raise finance to mortgage the property and even the registration of charge was also required to be given. Further through clause 6.15 it was agreed that documents of original title deeds of the property would be handed over to the developer i.e. THDC/HASH so that same can be used in furtherance of development of the Project as well as security for the money paid by the owner. Through clause 6.24 it was agreed that developer THDC/HASH was always permitted by owner to amalgamate the property with any other contiguous, adjacent and adjoining land and the properties wherein developmental and or other rights, benefits and interest were acquired by the developer or would be acquired in future. This clearly shows that the Society was under obligation in terms of agreement itself to allow the developer to amalgamate the project. Towards the end of clause 6.24 it has been clearly stated that in the event of termination of JDA, provision of clause 6 would be surviving which clearly shows that developer continues to be in possession for the purpose of development, mortgage etc. even after termination. Clause 8 which describes the obligation and undertaking of the THDC/HASH and provides specifically that all environmental clearance shall be obtained by THDC/HASH out of its own sources. Thus it was clearly understood by the parties that requisite environmental clearances had to be obtained before start of the project. Clause 10 again casts specific obligation on the owner Society to give consent to THDC/HASH to raise finance for the development and completion of the project on the Security of the property by way of mortgaging the property. Thus whatever power/authorization have been given through irrevocable special Power of Attorney are emanating from the terms and conditions agreed to among the parties from the JDA.

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55 The comb ined read ing o f the above c lauses o f the I r revocab le Spec ia l Power o f A t to rney and JDA c lea r l y show tha t the deve lope r was au thor i zed to en te r upon the p rope r t y f o r no t on ly f o r the pu rpose o f deve lopment bu t o ther pu rposes a l so . T HDC was au tho r i zed to ama lgamate the p ro jec t w i th any o the r p ro jec t in the ad jacen t a rea o r ad jo in ing a rea as pe r c lause ( t ) o f the spec ia l Power o f A t to rney . I f t he possess ion was neve r g i ven to t he deve lope r by the Soc ie t y then how the deve lope r cou ld ama lgamate the p ro jec t w i th ano ther p ro jec t wh ich may be acqu i red la t te r i n the ad jo in ing a rea . Th rough c lause (w) T HDC was au tho r i zed to hand ove r the possess ion o f p rope r t y o r po r t ion the reo f t o t he au tho r i t y to whom the same i s requ i red . I n la rge Hous ing Soc ie t y P ro jec ts some t imes Mun ic ipa l au tho r i t ies takes some po r t ion o f land fo r the pu rpose o f roads , pa rks o r o the r gene ra l u t i l i t y pu rposes l i ke ins ta l la t ion o f e lec t r i c i t y t rans fo rmers and be fo re sanc t ion ing the p lans the deve lope r i s requ i red to unde r take tha t such po r t ions o f l and wou ld be g i ven fo r such a common pu rpose . I f possess ion was no t g i ven then how T HDC was au thor i zed to hand over such land o r por t ions the reo f wh ich have no t been iden t i f ied in the JDA ou t o f the to ta l land . S im i la r l y th rough c lause (y ) T HDC has been au tho r ized to

mor tgage , encumbrance o r c rea te cha rge on the p rope r t y i n f avou r o f any bank o r f inanc ia l i ns t i t u t ion fo r ra is ing the funds fo r the p ro jec t . In the absence o f possess ion such powers canno t be g i ven . C lause (aa ) c lea r l y au tho r i zed the THDC to se l l , t rans fe r , lease , l i cense the p rem ises wh ich we re to be cons t ruc ted on owne rsh ip bas is and fu r the r to rece ive moneys aga ins t such sa le e tc . and to issue f ina l rece ip t . Nowhere i t i s men t ioned in th is c lause tha t such sa le deeds we re to be s inged by the Soc ie t y as con f i rm ing pa r t y . In the absence o f possess ion i t i s jus t no t poss ib le fo r t he deve lope r to se l l and t rans fe r the p rem ises wh ich we re to be cons t ruc ted . Th is i s f u r the r c la r i f ied by c lause (bb ) and (cc ) wh ich g i ves the power o f execu t ion o f conveyance and o the r documents invo lv ing in respec t o f the p remises to be cons t ruc ted w i thou t any in te r fe rence o f the Soc ie t y be ing made con f i rm ing pa r t y . A l l these c lauses c lea r l y show tha t the possess ion was g i ven by the Soc ie t y and /o r i t s members to THDC/HASH on the execu t ion o f i r revocab le Power o f A t to rney . Th rough these c lauses o f JDA and i r revocab le Power o f A t to rney the deve lope r was ab le to comp le te l y con t ro l the p rope r t y and make use o f i t no t

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on ly f o r the pu rpose o f deve lopment bu t a l so fo r the pu rpose o f ama lgamat ion , sa le , mo r tgage e t c . W hen the above c lauses a re compared on touch s tone o f the d iscuss ion on possess ion in para 26 to 28 in the case o f Jasb i r S ingh Sa rkar ia ( sup ra ) wh ich we have reproduced above , i t becomes c lea r tha t the possess ion has been g i ven .

56 In tha t d iscuss ion , i t has been c lea r l y ment ioned tha t the pos i t ion con temp la ted by c lause (v ) o f sec t ion 2 (47 ) o f the Ac t need no t to be exc lus i ve possess ion . W ha t i s requ i red is tha t the t rans fe ree by v i r t ue o f possess ion shou ld be ab le to exe rc ise con t ro l f rom ove ra l l in tended pu rposes . W e do no t th ink in the p resen t case the assessee has g iven on ly a l i cense as c la imed by ld . counse l o f the assessee because o f the powers o f se l l ing , ama lgamat ing e tc . ment ioned in the JDA and i r revocab le Spec ia l Power o f A t to rney . The i ssue has been d i scussed in he judgment o f Jasb i r S ingh Sa rkar ia ( sup ra ) in fu r the r d iscuss ion wh ich has been made in para 33 rega rd ing Power o f A t to rney (wh ich has been rep roduced ea r l ie r ) . In tha t case the powers we re g iven to en te r upon and survey the land , p repa re lay ou t p lans , submi t bu i ld ing p lan fo r sanc t ion w i th the app rop r ia te au tho r i t ies to con t ro l , manage and look a f te r and superv i se the p rope r t y , t o ob ta in wa te r and sewerage , d i sposa l and e lec t r i c i t y connec t ion . In tha t case the deve lope r was au tho r i zed to mor tgage the p roper t y to ob ta in money fo r meet ing the cos t o f cons t ruc t ion on secu r i t y and mor tgage o f land fa l l i ng on ly t o the deve loper ' s sha re . In tha t case i t was he ld tha t GPA was no t a l i cense to en te r upon fo r do ing some p re l im ina ry ac ts i n re la t ion to deve lopmen t o f wo rk bu t the power t o con t ro l the land has a l so been con f i rmed. I t has a lso been no ted tha t t he agreement desc r ibed the Power o f A t to rney as i r revocab le and ex t ra dec la ra t ion to tha t e f f ec t in the Power o f A t to rney is no t w i t hou t s ign i f i cance . In case be fo re us , many more powers have been g i ven to THDC in add i t ion to powers wh ich have been desc r ibed in tha t j udgment and Power o f A t to rney has been descr ibed as i r revocab le in c lause 6 .7 o f JDA. The re fo re , i t i s c lea r tha t t he assessee 's p lea tha t the possess ion was to be g i ven on ly a t the t ime o f reg is t ra t i on o f the JDA, i s no t co r rec t . Once i r revocab le power was g i ven then i t canno t be sa id tha t the possess ion was no t g i ven . The issue rega rd ing revoca t ion o f i r revocab le Power o f A t to rney and

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cance l la t ion o f the JDA wou ld be d i scussed la te r on wh i le dea l ing w i th tha t con ten t ion .

57 W e f ind fo rce in the subm iss ions o f the ld . DR fo r the revenue tha t i n te rp re ta t i on o f c lause (v ) t o sec t ion 2 (47 ) shou ld be made in the l igh t o f Heydon 's Ru le . The re is no fo rce in the ob jec t ion o f the ld . counse l o f the assessee tha t th is c lause shou ld be in te rp re ted on gene ra l ru les o f in te rp re ta t ion pa r t i cu la r l y in the l i gh t o f the fac t tha t no reason has been g i ven fo r the same. Heydon 's Ru le has been app l i ed by the Ind ian Cou r t s many t imes . The Ru le was app l ied and in i t i a ted in Heydon 's case (1584 ) 3 Co . Rep 7a . Th is Ru le was

uphe ld by the Cons t i tu t ion Bench o f Hon 'b le Apex Cou r t i n case o f Benga l Immun i t y Co . L td . V S ta te o f B iha r (1955 )

2 SCR 603 fo r cons ide ra t ion o f A r t i c le 286 o f the Cons t i tu t ion . I t has been he ld in case o f D r . Ba l i ram W aman H i ray V . Mr . Jus t i ce B . Len t in and ano ther , 176 IT R 1 tha t f o r unde rs tand ing amendmen t in the Ac t , pe rhaps Heydon 's Ru le is bes t ru le f o r in te rp re ta t ion o f such amendmen t . W e f ind tha t w i thou t ment ion ing th is ru le Ld . Au tho r i t y For Advance Ru l ing has d i scussed th i s i ssue in pa ra 27 o f t he judgmen t wh ich we have ex t rac ted above . I t has been he ld tha t i f 'possess ion ' re fe r red to in c lause (v ) i s to be unders tood as exc lus i ve bas is o f the t rans fe ree then ve ry pu rpose o f the amendmen t o r en la rgement o f the de f in i t ion o f t rans fe r wou ld ge t de fea ted . W e a re reproduc ing fo l low ing head no te o f the Hon 'b le Apex Cou r t in case o f D r . Ba l i ram W aman H i ray V . Mr . Jus t i ce B . Len t in and ano ther (supra ) :

"The fo l low ing p r inc ip les enunc ia ted in Heydon "s caase (1584 ) 3 Co . Rep 7a and f i rmly es tab l ished , a re s t i l l in fu l l fo rce and e f fec t : " tha t f o r the su re and t rue in te rp re ta t i on o f a l l s ta tu tes in gene ra ls (be they pena l o r bene f i c ia l , res t r i c t i ve o r en la rg ing o f the common law ) , fou r th ings a re to be d i sce rned and cons idered : (1 ) wha t was the common law be fo re the mak ing o f the Ac t ; (2 ) wha t was the misch ie f and de fec t fo r wh ich the common law d id no t p rov ide ; (3 ) wha t remedy Pa r l iament has reso lved and appo in ted to cu re the d isease o f the common wea l th and (4 ) the t rue reason o f the remedy . And then , the o f f i ce o f a l l the judges is a lways to make such cons t ruc t ion as sha l l supp ress the evas ions fo r the con t inuance o f the misch ie f and p ro p r iva te commando and to add fo rce and l i fe t o the cu re and remedy accord ing to the t rue in ten t o f

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the make rs o f t he Ac t p ro bono pub l ic . " The re i s now the fu r the r add i t ion tha t rega rd must be had no t on ly to the ex i s t ing law bu t a l so to p r io r leg is la t ion and to the jud ic ia l i n te rp re ta t ion the reo f . "

58 Go ing by the Heydon 's Ru le o f in te rp re ta t ion i f we ana lyze the pu rpose o f c lause (v ) o f Sec t ion 2 (47 ) then i t wou ld emerge tha t law be fo re mak ing the amendment was tha t cap i ta l ga in cou ld be cha rged on ly i f a t rans fer has been e f fec ted and t rans fe r was in te rp re ted by va r ious Cou r t s inc lud ing the dec is ion o f Hon 'b le Sup reme Cou r t i n case o f A lapa t i Venka t ram ian V C IT , 57 ITR 185 (SC) tha t p rope r conveyance o f the p rope r t y has been made unde r the common law. The m isch ie f was w i th regard to t rans fe r in the sense tha t the re was common p rac t i ce tha t p rope r t ies were be ing t rans fe r red in such a manne r tha t t rans fe ree cou ld en joy the bene f i t o f the p roper t y w i thou t execu t ion o f the conveyance deed . Th i rd l y we need to examine the remedy wh ich was inse r t ion o f c lause (v ) and (v i ) so tha t cases o f g i v ing possess ion o f the p rope r t y , we re a lso cove red by the de f in i t ion o f t rans fe r . Fou r th l y , t rue reason fo r th i s amendment was to p lug a loop ho le in the law. There fore , cons ide r ing the pu rpose o f inse r t ion o f c lause (v ) and (v i ) o f sec t ion 2 (47 ) and va r ious c lauses o f Power o f A t to rney and JDA i t becomes abso lu te ly c lea r tha t the Soc ie t y has handed ove r t he possess ion o f the p rope r t y t o THDC/HASH.

59 Second impo r tan t con ten t ion on beha l f o f the assessee is tha t JDA was execu ted on 25 .2 .2007 and i f possess ion was g i ven then how the assessee was hav ing possess ion in te rms o f la te r sa le deeds execu ted on 2 .3 .2007 and 25 .4 .2007 . The Soc ie t y has execu ted two sa le deeds fo r conveyance o f pa r t s o f the to ta l l and . F i r s t sa le deed has been execu ted on 2 .3 .2007 fo r 3 .08 acres and rec i t a t ion c lause (A ) reads as unde r :

Clause (A) - The vendo r i s the abso lu te owne r and in possess ion o f land to ta l measu r ing 169 kana l 7 mar las equ iva len t to approx . 21 .2 ac res in V i l l age Kansa l , Tehs i l Moha l i and more par t i cu la r l y desc r ibed in Schedu le A he reunder w r i t ten and de l inea ted in g reen co lou r bounda ry l ine in t he Sh i zra P lan i ssued by the Pa twa r i da ted 23 .2 .2007 . "

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60 Acco rd ing to the ld . counse l o f the assessee i f Soc ie t y had a l ready g i ven the possess ion then the Soc ie t y wou ld no t have / had possess ion on 2 .3 .2007 o f the land . A t f ace va lue th i s a rgument looks a t t rac t i ve bu t when examined in te rms o f possess ion wh ich has been exp la ined in case o f Jasb i r S ingh Sa rka r ia ( sup ra ) , ac tua l rea l i t y w i l l come fo rwa rd . I n th is judgment concep t o f concu r ren t possess ion has a l so been d i scussed and fo l low ing ex t rac t o f pa ragraph 55 o f Sa lmond 's Ju r i sp rudence has been ex t rac ted wh ich reads as unde r :

" I t was a max im o f the c i v i l law tha t two pe rsons cou ld no t be in possess ion o f the same th ing a t the same t ime. As a gene ra l p ropos i t ion th i s i s t rue : fo r exc lus i veness i s o f the essence o f possess ion . Two adve rse c la ims o f exc lus i ve use canno t bo th be e f fec tua l ly rea l i zed a t the same t ime. C la ims , however , wh ich a re no t adve rse , and wh ich a re no t , the re fo re , mu tua l ly des t ruc t ive , admi t o f concu r ren t rea l i za t ion . Hence there a re seve ra l poss ib le cases o f dup l ica te possess ion .

1 Med ia te and immed ia te possess ion Cross- ob jec t ions -ex i s t in respec t o f the same th ing as a l ready exp la ined .

2 Two o r more pe rsons may possess the same th ing in common ; j us t as they may owe i t in common. The concur ren t possess ion o f the owne r who can exe rc i se possess ion r igh t t o a l im i ted ex ten t and fo r a l im i ted pu rpose and tha t o f the buye r /deve lope r who has a gene ra l con t ro l and cus tody o f the land can ve ry we l l be reconc i led . "

61 In f u r the r d iscuss ion in pa ra 26 to 28 o f the above dec is ion i t has been he ld tha t i t i s no t necessa ry in te rms o f c lause (v ) tha t the deve lope r shou ld have exc lus i ve possess ion . The concu r ren t possess ion o f the owne r i s poss ib le wh ich g i ves r i gh t s t o a l im i ted ex ten t f o r a l im i ted pu rpose . Thus i t i s ve ry much poss ib le t o ho ld concu r ren t possess ion . Me re rec i ta t i on in the sa le deed to the e f f ec t tha t the Soc ie t y was owner o f and in possess ion o f land measu r ing 21 .2 ac res , does no t show tha t the Soc ie t y was hav ing ac tua l possess ion . W hat t he Soc ie t y was hav ing i s on ly owne rsh ip r i gh t and the

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possess ion was on ly concu r ren t as t he possessa ry r i gh t . Fu r the r i t i s a s tanda rd c lause in t he conveyance deed and i t does no t p rove o r ind ica te any th ing excep t tha t a po r t ion o f land measur ing 3 .08 acres , has been so ld / conveyed to t he deve lope r . In the l i gh t o f th is pos i t ion , th i s con ten t ion i s re jec ted .

62 W e f ind no fo rce in the next con ten t ion o f the ld . counse l o f t he assessee tha t possess ion i f a t a l l was g i ven shou ld be he ld to be on ly a l i cense as de f ined in Sec t ion 52 o f Ind ian Easement Ac t because c lea r l y as pe r Sec t ion 52 o f th is Ac t , whe re one pe rson gran ts to ano the r o r many o ther pe rsons to do someth ing upon immoveab le p rope r t y wh ich in the absence o f such r i gh t wou ld be un lawfu l .

63 He re in case be fo re us , the r i gh t has no t been g i ven fo r the pu rpose o f do ing someth ing bu t a l l the poss ib le r i gh t s in p rope r t y inc lud ing r i gh t to se l l , r i gh t to ama lgamate the p ro jec t w i th ano the r p ro jec t in the ad jo in ing a rea wh ich may be acqu i red la te r , r igh t to mor tgage e t c . c lea r l y show tha t r i gh t s g i ven by the Soc ie t y a re much more la rger than wha t i s cove red in the te rm " l i cense " .

64 Fourth contention is that the money received at the time of execution of JDA can be termed as advance and whatever money has been received has already been shown as capital gain. We find no force in this submission because Section 45 which has been extracted above clearly provide for taxing of profits and gains arising from the transfer. We have already discussed the implication of Section 45 r.w.s. 48 while discussing the legal position. We had also discussed this issue in the light of the decision in case of Jasbir Singh Sarkaria (supra) and pointed out that when Section 45 is read along with Section 48 it becomes clear that whole of the consideration which is received or accrued is to be taxed once capital asset is transferred in a particular year.

65 We would like to discuss this aspect of the issue in little more detail and try to understand why the whole of the consideration is required to be taxed. At the cost of repetition let us again reproduce the observations of the Ld. authority in case of Jasbir Singh Sarkaria (supra) which we have earlier extracted at para 40 and the relevant portion is as under:

"40 . On the above , the Hon 'b le Au tho r i t y a f te r re fe r r ing to the p rov i s ions o f sec t ion 45 and observed as unde r : -

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"……….The section can be analysed thus :

(a) transfer of a capital asset effected in the previous year,

(b) resultant profits or gains from such transfer,

(c) those profits or gains would constitute the income of the assessee/ transferor

(d) such income shall be deemed to be the income of the same previous year in which the transfer had taken place. Two aspects may be noted at this juncture. Firstly, the expression used is "arising" which is not to be equated with the expression

"received". Both these expressions and in addition thereto, the expression

"accrue" are used in the Income-tax Act either collectively or separately according to the context and nature of the charging provision. The second point which deserves notice is that by a deeming provision, the profits or gains that have arisen would be treated as the income of the previous year in which the transfer took place. That means, the income on account of arisal of capital gain should be charged to tax in the same previous year in which the transfer was effected or deemed to have taken place. The effect and ambit of the deeming provision contained in section 45 has been considered in decided cases and leading text books. The following statement of law in Sampath Iyengar's Commentary (10th Edition— Revised by Shri S. Rajaratnam) brings out the correct legal position :

"Section 45 enacts that the capital gains shall by fiction 'be deemed to be the income of the previous year in which the transfer took place'. Since this is a statutory fiction, the actual year in which the sale price was received, whether it was one year, two years, three years, four years etc. previous to the previous year of transfer, is beside the point. The entirety of the sum or sums received in any earlier year or years would be regarded as the capital gains arising in the previous year of transfer.

. . . . In the words of section 45, the capital gains arising from the transfer 'shall be the income of the previous year in which the transfer took place'. So, the payments of consideration stipulated to be paid in future would have to be attributed, by statutory mandate, to the year of transfer, even as payments made prior to the year of transfer."

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66 The above clearly shows that it is because of expression used in Section 45 that is "arising" which cannot be equated with "receipt". In this respect the ld. authority has quoted a very old decision of Hon'ble Madras High Court in case of T.V. Sundaram Iyengaar and Sons Ltd. V. CIT, 37 ITR 26 (Mad). At para 13 of the said decision is extracted in the following manner:

" 13. In T.V. Sundaram Iyengar and Sons Ltd. V. CIT [1959] 37 ITR 26, a Division Bench of the Madras High Court while construing section 12 B of the Indian Income-tax Act, 1922 clarified the import of the expression

"arise" as follows

" Section 12B does not require that profits should have been actually received. It is sufficient if they have arisen. Throughout the Income-tax Act the words "accrue' and "arise" are used in contradistinction to the word

"receive" and indicate a right to receive. This was explained by Fry L.J., in Colquhoun v. Brooks. The learned judge observed:

' I think, therefore, that the words "arise or accruing" are general words descriptive of a right to receive profits.'

See also CIT v. Anamallais Timber Trust Ltd. To attract the operation of section 12B it is therefore sufficient if the profits arose. They need not have been actually received."

14. Thus the criterion of right to receive the profits / gains was applied in that case.

15. The legal position does not therefore admit of any doubt that the actual receipt of the entire sale consideration during the year of "transfer" is not necessary for the purpose of computing capital gains."

Further the expression arising has been defined in the Advanced Law Lexicon by P. Ramanatha Aiyer edited by Y.V. Chandrachud, Former Chief Justice of India:

"The words "Arising or accruing" describe a right to receive profits, and that there must be a debt owed by somebody. Ld. Commissioner of Income Tax, West Bengal-II, Calcutta V. Hindustan Housing and Land Development Trust Ltd. AIR 1986 S.C 1805, 1807."

The expression "accrual of income" has been defined in the same Lexicon as under:

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"Accrual of income. E.D Jassoon & C. Ltd. V Ld. Commissioner of Income Tax, AIR 1954 S.C 470 quoted - Income may accrue to an assessee without the actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. Bhogilal V Income Tax Ld. Commissioner, AIR 1956 Bom 411, 414 (Income Tax Act (11 of 1992) Ss. 16(1) and (3)}"

67 The combined reading of these two definitions show that it (i.e. accrual) is not equal to the receipt of income. In fact it is a stage before the point of time when the income becomes receivable. In other words, once the vested rights come to a person then it can be said that such right or income has accrued to such person. The concept of accrual or arousal of income has also been discussed by the ld. author S. Rajaratnam in the commentary of Law of Income Tax by Sampath Iyengar XIth Edition by discussing the meaning of "accrued and arise" at page 1300 it has been observe as under:

"(1) Important principles.- (a) Meaning - 'Accrue' means 'to arise or spring as a natural growth or result', to come by way of increase'. 'Arising' means 'coming into existence or notice or presenting itself'. 'Accrue' connotes growth or accumulation with a tangible shape so as to be receivable. In a secondary sense, the two words together mean 'to become a present and enforceable right' and 'to become a present right of demand'. In the Act, the two words are used synonymously with each other to denote the same idea or ideas very similar, and the difference lies only in this that one is more appropriate than the other, when applied, to a particular case. It will indeed be difficult to distinguish between the two words, but it is clear that both the words are used in contradistinction to the word 'receive' and indicate a right to receive. They represent a stage anterior to the point of time when the income becomes receivable and connote a character of the income, which is more or less inchoate and which is something less than a receipt. An unenforceable claim to receive an undetermined or undefined sum does not give rise to accrual."

68 Therefore, it is not only the money which has been received by the assessee which is required to be taxed but the consideration which has accrued to the assessee is also required to be taxed. In view of this, this contention is rejected.

69 The f i f th con ten t ion made by the Ld . Counse l f o r the assessee was tha t s ince sec t ion 53A o f t he T rans fe r o f P rope r t y Ac t i t se l f has undergone amendment w.e . f . 24 .9 .2001 by wh ich the agreement re fe r red to in tha t

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sec t ion i s requ i red to be reg is te red and the re fo re , now in sec t ion 2 (47 ) (v ) on ly the amended p rov i s ions can be read . W e f ind no fo rce in th i s con ten t ion . I t i s we l l known tha t sec t ion 53A o f the T rans fe r o f P rope r t y Ac t was passed on equ i tab le doc t r ine so as to p ro tec t t he tak ing ove r o r re ten t ion o f the possess ion by the t rans fe ree . I t was no t a sou rce by wh ich t i t le o f immovab le p rope r t y cou ld be acqu i red . Sec t ion 53A o f TP Ac t read as unde r : - 53A. Part performance.- Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract,

and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that the contract, [***]where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract"

70 A p la in read ing o f the above p rov is ion shows tha t i t p rov ides a sa fe t y measu re o r a sh ie ld in the hands o f the t rans fe ree to p ro tec t the possess ion o f any p rope r t y wh ich has been g i ven by the t rans fe ro r as lawfu l possess ion unde r a par t i cu la r ag reement o f sa le . Th is pos i t ion o f law was inco rpo ra ted in the de f in i t ion o f ' t rans fe r ' by inse r t ion o f c lauses (v ) & (v i ) in sec t ion 2 (47 ) o f the Ac t . I t i s impo r tan t to no te tha t c lause (v ) uses the exp ress ion

"con t rac t o f the na tu re re fe r red to i n sec t ion 53A o f T .P . Ac t , the re fo re , c lea r l y the idea i s tha t an agreement wh ich p rov ides some de fense in the hands o f t rans fe ree was inco rpora ted unde r the de f in i t ion o f ' t rans fe r ' in the Income Tax Ac t . Now or ig ina l l y sec t ion 53A o f T .P . Ac t p rov ided tha t even i f " the con t rac t t hough requ i red to be

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reg is te red has no t been reg is te red " , wh ich means the r i gh t o f de fend ing the possess ion was ava i lab le even i f the con t rac t was no t reg is te red bu t by Amendmen t Ac t 48 o f 2001 , the exp ress ion " t hough requ i red to be reg is te red has no t been reg is te red" , has been omi t ted wh ich means fo r the purpose o f possess ion u /s 53A o f T .P . Ac t , a pe rson has to p rove tha t possess ion has been g i ven unde r a reg is te red agreement . In o the r wo rds , now u /s 53A o f T .P . Ac t , the agreemen t re fe r red i s requ i red to be reg is te red . Th is requ i rement canno t be read in c lause (v ) o f sec t ion 2 (47 ) because tha t re fe rs on ly to the con t rac t o f the na tu re o f sec t ion 53A o f T .P . Ac t w i thou t go ing in to the con t rove rsy whe the r such agreement i s requ i red to be reg is te red o r no t . The Ld . Counse l f o r t he assessee had re fe r red to the dec is ion o f Hon 'b le Supreme Cour t i n the case o f Su rana S tee ls v DCIT 237 ITR 777 (SC) fo r the p ropos i t ion tha t when a sec t ion o f a pa r t i cu la r s ta tu te is i n t roduced in to ano the r Ac t i t mus t be read in the same sense as i t bo re i n the o r ig ina l Ac t . The care fu l pe rusa l o f tha t j udgment wou ld show tha t s i tua t ion is app l icab le on ly when a par t i cu la r p rov i s ion o f an Ac t has been inco rpora ted in the la te r Ac t . In t ha t case a ques t ion a rose tha t f o r the purpose o f MAT p rov i s ion wha t i s the mean ing o f pas t l osses o r unabsorbed dep rec ia t ion . I t was found tha t in exp lana t ion to sec t ion 115J c lause ( i v ) , the fo l low ing exp ress ion was used : -

" ( i v ) the amount o f the loss o r t he amoun t o f dep rec ia t ion wh ich wou ld be requ i red to be se t o f f aga ins t the p ro f i t o f the re levan t p rev ious yea r as i f the p rov is ions o f c lause (b ) o f the f i r s t p rov i so to sub sec t ion ( i ) o f sec t ion 205 o f the Compan ies Ac t , 1956 (1 o f 1956 ) a re app l i cab le .

71 The Hon 'b le Apex Cou r t re fe r red to t he Pr inc ip les o f S ta tu to ry In te rp re ta t i on by Sh r i G .P .S ingh and ex t rac ted fo l low ing p iece :

" Sec t ion 115J , Exp lana t ion c lause ( i v ) , i s a p iece o f l eg is la t ion by i nco rpo ra t ion . Dea l ing w i th the sub jec t , Jus t ice G .P . S ingh s ta tes in P r inc ip les o f S ta tu to ry In te rp re ta t i on (7 th ed i t ion , 1999 ) .

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Inco rpo ra t ion o f an ea r l ie r Ac t in to a la te r Ac t i s a l eg is la t i ve dev ice adop ted for the sake o f conven ience in o rde r to avo id ve rba t im rep roduc t ion o f the p rov i s ions o f the ea r l ie r Ac t in to the la te r . W hen an ea r l ie r Ac t o r ce r ta in o f i t s p rov i s ions a re i nco rpora ted by re fe rence in to a la te r Ac t , the p rov i s ions so inco rpo ra ted become pa r t and pa rce l o f the la te r Ac t as i f they had been "bod i l y t ransposed in to i t " . The e f f ec t o f i nco rpo ra t ion is adm i rab ly s ta ted by LORD ESHER, M.R. : " I f a subsequen t Ac t b r ings in to i t se l f by re fe rence some o f t he c lauses o f a f o rmer Ac t , the lega l e f f ec t o f tha t , as has o f ten been he ld , i s to wr i te those Sec t ions in to the new Ac t as i f they had been ac tua l l y wr i t ten in i t w i th the pen , o r p r in ted in i t . (p .233 )

Even though on ly pa r t i cu la r Sec t ions o f an ea r l ie r Ac t a re i nco rpo ra ted in to l a te r , i n cons t ru ing the inco rpora ted Sec t ions i t may be a t t imes necessa ry and pe rm iss ib le to re fe r to o ther pa r t s o f the ea r l i e r s ta tu te wh ich a re no t inco rpo ra ted . As was s ta ted by LORD BLACKBURN: "W hen a s ing le Sec t ion o f an Ac t o f Pa r l iamen t i s in t roduced in to ano the r Ac t , I th ink i t mus t be read in t he sense i t bo re in t he o r ig ina l Ac t f rom wh ich i t was taken , and that consequen t l y i t i s pe r fec t l y leg i t ima te to re fe r to a l l the res t o f tha t Ac t in o rde r to asce r ta in wha t the Sec t ions meant , though those o ther Sec t ions a re no t i nco rpora ted in the new Ac t . (p .244)

72 On the bas is o f above observa t ion , i t was he ld tha t mean ing o f pas t losses o r unabso rbed dep rec ia t ion has to be taken same as was de f ined in the Compan ies Ac t . I n th i s case i t i s c lea r tha t p rov i s ion i t se l f re fe rs to c lause (b ) o f sub sec t ion (1 ) o f sec t ion 205 o f Company 's Ac t 1956 and there fore , same mean ing was g i ven to pas t l osses o r unabsorbed dep rec ia t ion as i s g i ven unde r the Compan ies Ac t , 1956 .

73 In case o f c lause (v ) to sec t ion 2 (47 ) , c lea r l y the exp ress ion used i s "con t rac t o f the na tu re re fe r red to in sec t ion 53A o f T .P . Ac t " , wh ich means i t i s no t a case o f i nco rpora t ion o f one p iece o f leg is la t ion in to ano the r

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p iece o f leg i s la t i on . I f tha t was the in ten t ion o f the Pa r l iament , obv ious ly c lause (v) wou ld con ta in t he exp ress ion "con t rac t as de f ined unde r sec t ion 53A o f T rans fe r o f P rope r t y Ac t , 1882 " . Fur the r , i t i s se t t l ed pos i t i on o f law tha t any in te rp re ta t i on wh ich cou ld rende r a pa r t i cu la r p rov is ion redundan t shou ld be avo ided . I f the con ten t ion o f the Ld . counse l was to be accep ted , obv ious ly the p rov i s ions o f c lause (v ) o f sec t ion 2 (47 ) o f the Ac t wou ld become redundan t in the sense tha t

reg is t ra t i on o f ag reement wou ld aga in be made compu lso ry bu t s ince p roper t i es we re be ing so ld in the marke t on "power o f a t to rney" bas is th rough un reg is te red agreemen ts wh ich wou ld make th i s p rov i s ion redundan t . Th is pos i t ion we have a l ready d i scussed ear l ie r wh i le d iscuss ing the Heydon 's Ru le in the in te rp re ta t ions o f th is c lause . Fur the r the i ssue o f in te rp re ta t i on o f c lause (v ) and amendmen t to sec t ion 53A o f the T rans fe r o f P rope r t y Ac t came fo r cons ide ra t ion be fo re t he Mumba i Bench o f the T r ibuna l i n t he case o f Suresh Chande r Aggarwa l vs ITO 48 SOT 2010 . The T r ibuna l d iscussed th is i ssue a t page 7 and a f te r quo t ing the p rov i s ions o f sec t ion 2 (47 ) and a l so sec t ion 53A be fo re and a f te r amendment as wa l l as pa ra Nos . 11 .1 to 11 .2 o f the Boa rd 's C i rcu la r No . 495 da ted 22 .9 .1987 obse rved as unde r : -

"The above clearly shows that there was certain situation where properties were being transferred without registration of transfer instruments and people were escaping tax liabilities on transfer of such properties because the same could not be brought in the definition of "transfer" particularly in many States of the country properties were being held by various people as leased properties which were allotted by the various Govt. Departments and transfers of such lease were not permissible. People were transferring such properties by executing agreement to sell and general power of attorney as well as Will and receiving full consideration, but since the agreement to sell was not registered and though full consideration was received and even possession was given, still the same transactions could not be subjected to tax because the same could not covered by the definition of "transfer". To bring such transactions within the tax net, this amendment was made. It has to be appreciated that clause (v) in section 2(47) does not lift the definition of part performance from section 53A of the Transfer of Property Act, 1882. Rather, it defines any transaction involving allowing of 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. This means such transfer is hot required

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to be exactly similar to the one defined u/s.53A of the Transfer of Property Act, otherwise legislature would have simply stated that transfer would include transactions defined in sec. 53A of the Transfer of Property Act. But the legislature in its wisdom has used the words "of a contract, of the nature referred in section 53A".

Therefore, it is only the nature which has to be seen. As discussed above, the purpose of insertion of clause (v) was to tax those transactions where properties were being transferred by way of giving possession and receiving full consideration. Therefore, in our humble opinion, in the case of a transfer where possession has been given and full consideration has been received, then such transaction needs to be construed as "transfer". Therefore, the amendment made in section 53A by which the requirement of registration has been indirectly brought on the statute need not be applied while construing the meaning of "transfer" with reference to the Income-tax Act.

8. The above situation further becomes clear if we refer to the celebrated decision of Hon'ble Supreme Court in the case of Podar Cement (P.) Ltd. (supra}. In that case, the assessee was owner of four flats in a building called "Silver Arch"/on Nepean Sea Road, Bombay. Out of these four flats, two were purchased directly from the Builders, Malabar Industries Pvt. Ltd., and two were purchased by its sister concerns which were later purchased by the assessee. The possession of the flats was taken after full payment of consideration. The flats were let out. The assessee contended that the rental income from these flats was assessable as "income from other sources" because the assessee was not the legal owner because the title of the property had not been conveyed to the Co-operative Society which was formed by the purchasers of the flats. The Hon'ble Court noted that section 27 had been amended vide clause 3(a) wherein when a person was allowed to take possession of the building in part performance of the nature referred to in section 53A, such person shall be deemed to be the owner. It was further observed that for all practicable purposes the assessee was the owner and possibly there cannot be two owners of same property at the same time. In fact, the amendments to section 27 were made later on but were taken into cognizance on the basis of above principle and ultimately it was held as under:

"Hence, though under the common law "owner" means a person who has got valid title legally conveyed to him after comply with the requirements of law such as the Transfer of Property Act, the Registration Act, etc., in the context section 22 of the Income-tax Act, 1961, having regard to the ground

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realities and further having regard to the object of the Income- tax Act, namely, to tax the income, "owner" is a person who is entitled to receive income from the property in his own right. The requirement of registration of the sale deed in the context of section 22 is not warranted."

Thus, from the above, it is clear that it is not necessary to get the instrument of transfer registered for the purpose of Income-tax Act when a person has got a valid legally conveyed after complying with the requirements of the law.

9. Similarly, in the case of Mysore Minerals Ltd. v. CIT [1999] 239 ITR 775/106 Taxman 166 (SC), the assessee had purchased for the use of its staff seven low income group houses from a Housing Board. The payment had been made and in turn possession of the houses was taken over by the assessee. The actual conveyance deed was not executed. The assessee claimed depreciation which was denied by the department. After great discussion, it was observed that for all practicable purposes and for the purpose of Income-tax Act, the assessee shall be construed as owner of the property. In fact, it was held as under:

-

"Held, reversing the judgment of the High Court, that the finding of fact arrived at in the case at hand was that though a document of title was not executed by the Housing Board in favour of the assessee, the houses were allotted to the assessee by the Housing Board, part payment received and possession delivered so as to confer dominion over the property on the assessee whereafter the assessee had in its own right allotted the quarters to the staff and they were being actually used by the staff of the assessee. The assessee was entitled to depreciation in respect of the seven houses in respect of which the assessee had not obtained a deed of conveyance from the vendor although it had taken possession and made part payment of the consideration".

Thus, from the above two decisions, it becomes absolutely clear that for the purpose of the Income-tax Act the ground reality has to be recognized and if all the ingredients of transfer have been completed, then such transfer has to be recognized. Merely because the particular instrument of transfer has not been registered will not alter the situation. This position is further strengthened by the fact that legislature itself has inserted clause (v) to section 2(47) and while referring to the provisions of section 53A, reference has been

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made by stating that contracts in the nature of section 53A should also be covered by the definition of "transfer". Therefore, in our humble view, the amendment to sec. 53A of the Transfer of Property Act, whereby the requirement of the documents not being registered has been omitted, will not alter the situation for holding the transaction to be a transfer u/s.2(47)(v) if all other ingredients have been satisfied."

74 Thus , i t i s c lea r tha t non reg is t ra t i on o f ag reemen t canno t lead to the conc lus ion tha t p rov is ion o f sec t ion 2 (47 ) ( v ) i s no t app l icab le . S im i la r v iew has been taken by ITAT Coch in Bench o f the T r ibuna l in case o f G .S reen ivasan Vs DCIT 28 T xmann.com 200 (Coch . ) and ITAT Pune Bench in the case o f Mahesh Nemichand ra Ganeshwade v ITO 21 Taxmann .com 136 (Pune ) . In v iew o f th is lega l pos i t ion , th is con ten t ion i s re jec ted .

75 The next contention was that the decision of Hon'ble Bombay High Court in case of Chaturbhuj Dwarkadas Kapadia (supra) is not applicable particularly because ultimately in that case it was held that capital gain tax should be charged in Assessment year 1999-2000 whereas agreement was executed in August, 1994.

76 We have already discussed the implications of the decision in case of Chaturbhuj Dwarkadas Kapadia (supra) in para 33 to 38. We had also examined why in that case capital gain was not held to be chargeable in Assessment year 1995-96.There is no need to repeat the same and in view of the said observations, we reject this contention.

77 The next con ten t ion i s tha t i t i s necessa ry f o r i nvok ing o f sec t ion 2 (47 ) (v ) o f the Ac t to comp ly w i th the p rov i s ions o f sec t ion 53A o f the T rans fe r o f P rope r ty Ac t to the ex ten t tha t the re shou ld be w i l l i ngness on the pa r t o f the t rans fe ree to per fo rm h is par t o f the con t rac t .

78 In th is aspec t we have

no qua r re l wi th the p ropos i t ion t ha t fo r invok ing sec t ion 53A p f T .P . Ac t read w i th c lause (v ) o f sec t ion 2 (47) , the t rans fe ree has to pe r fo rm o r i s w i l l i ng to pe r fo rm h is par t o f the con t rac t . In th i s respec t as re fe r red to by Ld . Counse l f o r the assessee , the comments o f the Ld . Au tho r in the

commenta ry by Mu l la - D inshan F rede r ick Mu l la v ide pa ra

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16 a re c lea r and shows tha t th is requ i rement has to be abso lu te and uncond i t iona l . Some observa t ions have been made in the case o f Gene ra l G lass Company Pv t L td Vs DCIT (supra ) . I n t ha t case i t was he ld tha t w i l l ingness to pe r fo rm fo r the pu rpose o f sec t ion 53A i s someth ing more than a s ta tement o f in ten t and i t i s unqua l i f ied and uncond i t iona l w i l l i ngness on the pa r t o f the t rans feree to pe r fo rm h is ob l i ga t ion . In tha t case the t rans fe ree has agreed to make ce r ta in payments in ins ta l lmen ts in cons ide ra t ion o f the deve lopment agreement bu t such payments we re no t made. La te r on , the agreement was mod i f ied and more t ime was g i ven to the t rans fe ree fo r payment o f such ins ta l lmen ts . Howeve r , the ins ta l lmen ts we re no t pa id even unde r the mod i f ied te rms and tha t i s why i t was u l t ima te l y he ld tha t such agreement canno t be cons t rued as t rans fe r .

79 The second dec is ion re fe r red to by Ld . Counse l f o r the assessee i s K . Rad ika v DCIT (sup ra ) . In th i s case , s im i la r obse rva t ions we re made , though i t i s no t po in ted ou t in wha t respec t the t rans fe ree has fa i l ed to pe r fo rm h is pa r t bu t i t has been observed tha t the fac ts o f the case shows tha t t rans fe ree has no t pe r fo rmed h i s pa r t o f the con t rac t .

80 The th i rd judgmen t re l ied upon by the Ld . Counse l f o r the assessee i s in the case o f DCIT v Te j S ingh (sup ra ) . In tha t case land was acqu i red by the gove rnment and the mat te r wen t f o r l i t i ga t ion . Du r ing the pendency o f l i t iga t ion , the assessee en te red in to a Deve lopmen t agreemen t w i th a Deve lope r f o r the pu rpose o f deve lopment o f the p rope r t y , however , i t was c la r i f ied i n the agreement tha t the re is l i t i ga t ion in respec t o f acqu is i t ion o f p rope r t y and the deve lope r has to take c lea rance f rom the gove rnmen t in the mat te r o f deno t i f i ca t ion o f the land . I t was he ld t ha t s ince the land was under compu lso ry acqu is i t i on and no compensa t ion has been rece ived , the re fo re , t he re cou ld no t be any cap i ta l ga in tax u / s 2 (47 ) ( i i i ) wh ich dea ls w i th the compu lso ry acqu is i t ion . I t was fu r the r observed tha t assessee cou ld no t have g i ven possess ion un less and un t i l the land was deno t i f ied . S ince fac ts o f the case a re d i f f e ren t than the case in hand and the re fo re , same a re no t re levan t f o r ou r pu rpose .

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81 Now com ing to t he fac t s , f i rs t l y i t was con tended tha t Deve lope r i .e t rans fe ree has no t ob ta ined va r ious pe rm iss ions wh ich were requ i red to be taken by the Deve lope r as pe r c lauses 3 .1 , 7 .9 , 8 .4 and 8 .6 o f the JDA. Th is i s no t co r rec t as po in ted ou t by the Ld . C IT DR tha t assessee had a l ready go t the mun ic ipa l p lan sanc t ioned bu t in the meant ime P IL was f i led be fo re the Hon 'b le Pun jab & Ha ryana H igh Cou r t aga ins t the imp lementa t ion o f the p ro jec t . In i t i a l l y , the cons t ruc t ion was banned by the Hon 'b le H igh Cou r t . Howeve r , la te r on i t was obse rved in the CW P No. 20425 o f 2010 and as c la r i f ied by the o rde r o f the Hon 'b le Sup reme Cou r t t ha t re fusa l o f sanc t ion unde r the Env i ronmen t (P ro tec t ion ) Ac t , the soc ie t y have sough t a rev iew o f the o rde r because the f ind ings a r r i ved we re ex .pa r te . No o rde r in the mat te r has been passed by the competen t au tho r i t y pe rhaps because o f t he o rder o f H igh Cou r t . In the in te r im o rde r passed in t he P IL i t has been c la r i f ied by the Hon 'b le Sup reme Cou r t v ide o rde r da ted 31 .1 .2012 pe rm i t t ing the conce rned au thor i t y unde r the d i f f e ren t s ta tu tes gove rn ing the mat te r t o the i r respec t i ve j u r i sd ic t ion to be dec ided in acco rdance w i th law. Thus , i t becomes c lea r tha t deve lope r i . e . T HDC has app l ied fo r va r ious pe rm iss ions be fo re the re levan t au tho r i t ies and in some cases pe rm iss ion we re dec l ined on ex.par te bas is and in some cases the same were dec l ined in v iew o f the H igh Cou r t o rder bann ing the cons t ruc t i on . A f te r the c la r i f i ca t ion o f the o rde r o f the H igh Cou r t by Hon 'b le Sup reme Cour t by o rde r da ted 31 .1 .2012 , the au thor i t ies have a l ready been perm i t ted to examine the i ssue on mer i t s unde r va r ious laws. Fu r the r i n the JDA there i s a c lause 26 wh ich dea ls w i th the Fo rce Ma jeu re c lauses . The c lause 26 ( i ) to ( v ) reads as unde r : -

FORCE MAJEURE

i ) None o f the pa r t ies sha l l be l iab le to the o the r Pa r t y o r be deemed to be in b reach o f th i s Agreemen t by

reasons o f any de lay in pe r fo rm ing o r any fa i l u re to pe r fo rm, any o f i t s own ob l i ga t ions in re la t ion to the Agreemen t , i f the de lay o r f a i l u re is due to any Even t o f Fo rce Me jeu re . Even t o f Fo rce Ma jeu re i s any even t caused beyond the pa r t ies reasonab le con t ro l . The fo l low ing sha l l be rega rded as i ssues beyond the Pa r t ies reasonab le con t ro l .

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i i ) Fo r the pu rposes o f th is C lause , an Even t o f Force Ma jeu re sha l l mean even ts o f wa r , wa r l i ke cond i t ions , b lockades , embargoes , insu r rec t ion , Gove rnmenta l d i rec t ions , r io ts , s t r i kes , ac t s o f t e r ro r ism, c iv i l commot ion , lock-ou ts , sabo tage , p lagues o r o the r ep idem ics , ac ts o f God inc lud ing f i re , f loods , vo lcan ic e rup t ions , t yphoons , hu r r i canes , s to rms, t ida l waves , ea r thquake , lands l i des , l i gh tn ing, exp los ions and o the r na tu ra l ca lam i t ies , p ro longed fa i lu re o f ene rgy , cou r t o rde rs / in junc t ions , charge o f laws , ac t ion and / o r o rde r by s ta tu to ry and / o r gove rnment au tho r i t y , th i rd pa r t y ac t ions a f f ec t ing the deve lopment o f the Pro jec t , acqu is i t ion / requ is i t ion o f the Prope r t y o r any pa r t the reo f by t he gove rnment o r any o the r s ta tu to ry au tho r i t y and such c i r cumstances a f f ec t i ng the deve lopment o f the p ro jec t (Even t o f Fo rce Ma jeu re ) . i i i ) Any Par t y c la im ing res t r i c t ion on the pe r fo rmance o f any o f i t s ob l i ga t ions unde r th is agreemen t due to the happen ing o r a r is ing o f an Even t o f Fo rce Ma jeu re he reo f sha l l no t i f y t he o ther Pa r t y o f the happen ing o r a r is ing and the end ing o f ceas ing o f such even t o r c i r cumstance w i th th ree (3 ) days o f de te rm in ing tha t an Even t o f Fo rce Ma jeu re has occur red . In the even t any Pa r t y an t ic ipa tes the happen ing o f an Even t o f Force Ma jeu re , such Pa r t y sha l l p rompt l y no t i f y the o the r pa r t y .

i v ) The Par t y c la im ing Even t o f Force Ma jeu re cond i t ions sha l l , i n a l l ins tances and to the ex ten t i t i s capab le o f do ing so , use i t s bes t e f f o r t s to remove o r remedy the cause the reo f and m in im ize the econom ic damage

a r is ing the reo f .

v ) E i the r Pa r t y may te rm ina te th i s Agreement a f te r g i v ing the o ther Pa r t y a p r io r no t ice o f f i f teen (15 ) days in wr i t ing o f the Even t o f Fo rce Ma jeu re con t inues fo r pe r iod o f n ine ty (90 ) days . In the even t o f te rm ina t ion o f th i s Agreement a l l ob l i ga t ions o f the Pa r t ies un t i l such da te sha l l be fu l f i l l ed .

82 The comb ined read ing o f t hese c lauses show tha t i f any o f the pa r ty cou ld no t pe r fo rm i t s pa r t o f the ob l i ga t ion because o f the un fo reseen c i r cumstances wh ich inc luded gove rnmen t d i rec t ions , cou r t o rde rs , in junc t ions

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e tc . such pa r t y wou ld no t be l iab le to o the r par t y . In v iew o f Fo rce Ma jeu re c lause wh ich inc luded Cou r t In junc t ion i t can no t be sa id tha t T HDC i s no t w i l l ing to pe r fo rm i t s ob l i ga t ion . In f ac t Deve lpers i .e . THDC/HASH were pe rus ing the i ssue o f pe rm iss ions /sanc t ions v igo rous ly . These aspec ts become fu r the r c lea r i f t he judgment o f the Hon 'b le Pun jab & Haryana H igh Cou r t in CW P No. 20425 o f 2010 v ide o rde r da ted March 26 , 2012 is perused . Pa ras 3 , 4 , 22 , 25 & 26 o f the judgment read as unde r : - 3 . The b road con tou rs o f the p resen t p roceed ing hav ing been ou t l ined , we may now p roceed to take no te o f the spec i f i c con ten t ions o f the con tes t ing pa r t ies as made be fo re us . Howeve r , be fo re we do so , i t may be app rop r ia te to ment ion the somewhat con f l i c t ing s tand o f the par t ies w i th rega rd to the p resen t s tage o f t he app l ica t ions f i led unde r the p rov i s ions o f the Env i ronment (Pro tec t ion ) Ac t as we l l as t he W i ld L i f e (P ro tec t ion ) Ac t . W h i le the pe t i t ioner , who i s suppo r ted by the responden t No .6 - Chand iga rh Adm in is t ra t ion , asse r ts tha t necessa ry sanc t ion /pe rm iss ion unde r bo th the Ac ts have been re fused by o rde rs passed by the competen t

au tho r i t ies , the p romote rs o f the p ro jec t con tend to the con t ra ry . The fac ts , as un fo lded be fo re us , i nd ica te t ha t aga ins t t he re fusa l o f sanc t ion under the Env i ronmen t (P ro tec t ion ) Ac t , the responden ts have sough t a rev iew o f the o rde r on the g round tha t the f ind ings a r r i ved a t , wh ich have f o rmed the bas is o f the re fusa l , a re ex-pa r te . No o rde r in the rev iew mat te r has been passed by the competen t au thor i t y , pe rhaps , because o f the in te r im o rde r passed in the P IL wh ich has been c la r i f ied by the Hon 'b le Supreme Cou r t by o rde r da ted 31 .1 .2012 perm i t t ing the conce rned au thor i t y unde r the d i f f e ren t s ta tu tes gove rn ing the mat te r t o exe rc ise the i r respec t i ve j u r i sd ic t ions in acco rdance w i th law. I nso fa r as the W i ld L i f e (Pro tec t ion ) Ac t i s conce rned , i t appea rs tha t the re jec t ion has been made by the Ch ie f W i ld L i f e W arden who, t he responden ts c la im, i s mere ly a recommend ing au thor i t y and is requ i red to f o rwa rd h is recommenda t ion to the Cen t ra l Governmen t . As the re jec t ion under the W i ld L i f e (Pro tec t ion ) Ac t has been made by an au tho r i t y no t competen t to do , the p romote rs o f the p ro jec t have sough t a rev iew o f the

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o rde r wh ich i s s t i l l pend ing fo r t he same reason (s ) as no t i ced above .

4 . On these fac ts we a re o f the v iew tha t i t wou ld be p ruden t on ou r pa r t t o take the v iew tha t the issue w i th rega rd to c lea rance /sanc t ion unde r the two enac tments i .e . Env i ronment (P ro tec t ion ) Ac t and W i ld L i f e (P ro tec t ion ) Ac t i s p resen t l y pend ing and as the p romo te rs o f t he p ro jec t have submi t ted themse lves to the ju r isd i c t ion o f the au tho r i t ies unde r the sa id enac tments we shou ld re f ra in f rom add ress ing ou rse lves on any o f the i ssues connec ted w i th e i the r o f the two s ta tu to ry enac tments as any such exe rc i se , even though may be un in tended , may have the e f f ec t o f f e t te r ing the ju r i sd ic t ion o f s ta tu to ry au tho r i t ies f unc t ion ing unde r the two re levan t s ta tu tes .

22 . I nso fa r as the p rov i s ions o f the Env i ronment (P ro tec t ion ) Ac t and the W i ld L i fe (Pro tec t ion ) Ac t a re conce rned , i t need no t be emphas ised tha t eve ry p ro jec t a t t rac t ing the p rov i s ions o f the Per iphe ry Con t ro l Ac t and /o r the p rov i s ions o f the 1995 Ac t mus t sa t i s f y the eco log ica l conce rns o f t he a rea in the l i gh t o f t he p rov i s ions o f the two s ta tues in ques t ion . As a l ready he ld by us , a pub l i c t rus t has been bes towed on the au tho r i t ies by p rov i s ions o f the sa id Ac ts wh ich cas t on such au tho r i t ies a du ty to i n te rd ic t any p ro jec t o r ac t i v i t y wh ich even remote ly seems to c rea te an imba lance in the p r is t ine eco logy and env i ronment o f the a rea on wh ich the c i t y o f Chand iga rh is s i tua ted o r f o r tha t mat te r in the immed ia te v i c in i t y the reo f . As a l ready obse rved , necessa ry c lea rances unde r the a fo resa id two enac tments , i nso fa r as the responden ts a re conce rned , a re p resen t l y pend ing be fo re the conce rned au tho r i t ies and , the re fo re , i t wou ld be h igh ly inco r rec t on ou r par t to en te r i n to any f u r the r d iscuss ion on the a fo resa id aspec t o f the case . 25 . W e a lso has ten to emphas ise tha t a more r i go rous regu la ted deve lopment in wha t a re now the remnants o f the pe r iphe ry and the a reas ad jo in ing to i t i s the need o f the hou r f o r wh ich the s takeho lde rs i .e . t he Admin is t ra t ion o f Chand iga rh , t he S ta tes o f Pun jab and Haryana as a lso the au tho r i t ies unde r

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the Env i ronment (P ro tec t ion ) Ac t and the W i ld L i f e P ro tec t ion Ac t have to demonst ra te the need to engage themse lves in tens ive ly and no t acqu i re a p lac id app roach ind ica t ing an e loquen t acqu iescence to the v io la t ion o f the 1995 Ac t , Pe r iphe ry Con t ro l Ac t and the Pe r iphe ry Po l icy .

26 . W e thus conc lude on the a fo resa id no te by ho ld ing and obse rv ing tha t the p rov i s ions o f t he Pe r iphe ry Con t ro l Ac t and the 1995 Ac t a re comp lemen ta ry to each o ther and the p rov i s ions o f the two s ta tu tes wou ld app ly to the hous ing p ro jec t i n ques t ion . The responden ts , the re fo re , w i l l have to comp ly w i th a l l the requ i rements spe l t ou t by bo th the a fo resa id s ta tu tes . As the requ i remen t o f c lea rances under t he W i ld L i f e (Pro tec t ion ) Ac t and Env i ronment (P ro tec t ion ) Ac t i s no t a con ten t ious i ssue , and as we have a l ready he ld tha t the p rocess o f g ran t o f such c lea rances i s pend ing be fo re the app rop r ia te au tho r i t ies unde r the respec t i ve Ac ts , the same wi l l now have to be b rough t to i t s l og i ca l conc lus ion keep ing in m ind ou r obse rva t ions and d i rec t ions con ta ined he re inabove .

83 The comb ined read ing o f the above pa ras in t he o rde r o f Hon 'b le H igh Cou r t c lea r ly shows tha t Deve lope r THDC/ HASH i .e . t rans fe ree have made the i r s ince re e f f o r ts f o r ob ta in ing the necessa ry pe rm iss ions / sanc t ions wh ich we re requ i red unde r the JDA. Howeve r , some o f the sanc t ions cou ld no t be taken in t ime because o f the l i t i ga t ion by way o f P IL bu t s ince none o f the pa r t y was l iab le to the o the r pa r t y in v iew o f the c lause 26 dea l ing w i th FORCE MAJEURE i t canno t be sa id tha t Deve loper was no t w i l l ing to pe r fo rm h is pa r t o f con t rac t . In any case no spec i f i c ev idence has been shown us to p rove tha t THDC / HASH were dec l in ing to pe r fo rm pa r t i cu la r ob l i ga t ion p rov ided in JDA. In v iew o f th is d iscuss ion , i t canno t be sa id tha t t rans fe ree i .e . Deve loper THDC/HASH i s no t w i l l ing to pe r fo rm h is pa r t o f con t rac t .

84 Second ly , i t was con tended tha t payments have no t been made as pe r t he JDA. Howeve r , aga in th is i s no t co r rec t . As pe r c lause 4 ( i v ) o f the JDA, the ins ta l lmen t

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f o r Rs . 31 ,92 ,75 ,000 / - was requ i red to be pa id . The c lause 4 ( i v ) read as unde r : -

" i v ) Paymen t be ing Rs . 31 ,92 ,75 ,000 / - (Rupees One Crore n ine ty two lacs seven ty f i ve thousand on ly ) ca l cu la ted @ Rs . 24 ,75 ,000 / - (Rs . Twenty Four l acs seven ty f i ve thousand on ly ) pe r p lo t ho lder o f 500 Sq . ya rds and (Rs . 49 ,50 ,000 / - (Rs . Fo r ty n ine lacs f i f t y thousand on ly ) as pe r p lo t ho lde r o f 1000 squa re ya rds to be made to the Owner and / o r the respec t i ve members o f the Owner (as the case may be ) w i t h in s i x (6 ) months f rom the da te o f execu t ion o f th i s ag reement o r w i th in two (2 ) months f rom the da te o f app rova l o f t he p lans / Des ign and Draw ings and g ran t o f the f i na l l i cence to deve lop whe re upon the cons t ruc t ion can commence , wh icheve r i s la te r , aga ins t wh ich the Ow ner sha l l execu te a reg is te red sa le deed fo r land o f equ iva len t va lue be ing 6 .36 acres ou t o f the P rope r t y as demarca ted in g reen co lour (a lso ha tched in g reen co lou r ) in the Demarca t ion P lan annexed he re to as Annexu re V and bea r ing Khasra nos . 123 /15 , 123 /6 , 123 /7 (ba lance par t ) , 123 /3 (pa r t ) , 123 / /4 / /1 , 123 / / /4 / /1 /2 , 123 / /4 /2 , 123 /5 /1 , 123 / /5 /2 , 123 / /5 /3 , 112 /24 /24 (pa r t ) "

85 The ca re fu l read ing o f the sa id c lause o f the JDA wou ld show th i s payment was requ i red to be made w i th in a per iod o f s i x mon ths f rom the da te o f execu t ion o f th is agreemen t o r w i t h in two months f rom the da te o f approva l o f p lan / sanc t ion and d rawing g ran t o f f ina l l i cense to deve lop whe re upon the cons t ruc t ion can commence , wh icheve r i s l a te r . Thus , th is ins ta l lmen t was dependen t on two con t ingenc ies f i rs t the exp i ra t ion o f a pe r iod o f s i x months f rom the da te o f ag reement o r a l te rna t i ve l y on the exp i ra t i on o f a pe r iod o f two months f rom the da te o f app rova l o f p lans / des igns d rawing e t c . lead ing to g ran t o f f ina l l i censes wh ich can lead to commencement o f cons t ruc t ion , wh icheve r i s la te r . The ma t te r was taken up by way o f P IL by ce r ta in c i t i zens and Adm in is t ra t ion o f t he Un ion Ter r i to ry be fo re the Hon 'b le H igh Cou r t wh ich in i t ia l l y s tayed the sanc t ion o f such p lan e t c . Th is l ed to s i tua t ion whe re cons t ruc t i on cou ld no t be commenced and hence payment was no t requ i red to be made in v iew o f the pend ing l i t i ga t ion . The c lauses o f f o rce ma jeu re came in to ope ra t ion and there fo re , i t canno t be sa id tha t the

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deve lope r i s no t w i l l i ng t o pe r fo rm i t s pa r t o f the con t rac t . In any case the re is no de fau l t on the pa r t o f the

deve lope r as payment was no t ye t due as pe r c lause

4 ( i ) ( i v ) o f JDA.

86 Th is pos i t ion was in fo rmed to the Soc ie t y by l e t t e r da ted 4 .2 .2011 by HASH Bu i lde r , copy o f wh ich has been f i led a t pages 23 & 24 o f the pape r book dea l i ng w i th the add i t iona l ev idence . Th rough th i s le t te r i t has been c lea r l y s ta ted tha t s ince pe rm iss ion is pend ing f rom the M in i s t r y o f Env i ronment and Fores t Depa r tment and the re fo re cons t ruc t ions cou ld no t commence . These pe rm iss ions we re pend ing because o f the P IL f i led by Sh r i Aa lok Jagga be fore the Hon 'b le Pun jab & Ha ryana H igh Cou r t . A l l t hese fac ts c lea r l y shows tha t i n v iew o f c lause 4 .1 ( i v ) read w i th c lause 26(v ) o f the JDA, HASH Bu i lde r we re no t requ i red to make the payment and i t canno t be sa id t ha t they were no t w i l l ing to pe r fo rm the i r pa r t o f t he con t rac t on th i s aspec t . The re fore , th is con ten t ion is re jec ted .

87 Seventh contention is that revenue wrongly held that even clause

(vi) of Section 2(47) is applicable. We find no force in this contention. Clause (vi) to Section 2(47) reads as under:

"any transaction (whether by way of becoming a member of, or accruing shares in, a cooperative 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".

88 The plain reading of the provision shows that any transaction by way of becoming a Member or acquiring shares in the Cooperative Society or shares in the company which has the effect of transferring or enabling the enjoyment of any immoveable property would be covered by the definition of transfer. In the case before us, initially the Members of the Society were holding shares in the Society for ownership of plot of 500 sqyd or 1000 sqyd. This membership was surrendered to the Society vide resolution of the Society passed in the Executive Committee on 4.1.2007 which was later ratified in the General Body Meeting of the Society on 25.1.2007, so that the society could enter into JDA. In the JDA the Society has agreed to transfer the land. Therefore, technically it can be said that the developer i.e. THDC/HASH has purchased the membership of the Members in the society which would lead to enjoyment of the property and in that technical sense, clause (vi) of Section 2(47) is applicable.

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89 Eighth contention is that since the Society has transferred the land through JDA on a pro-rata basis, therefore, only whatever money is received against which sale deeds have also been executed, can be taxed and notional income i.e. the money to be received later, can not be taxed. In this regard reliance was placed on certain Supreme Court decisions and other cases for the proposition that notional income cannot be taxed. There is no need to discuss the cases relied on by the ld. counsel of the assessee because it is settled position of law that no notional income can be taxed. Though there is no quarrel that it is a settled principle of law that notional income can not be taxed but in case of capital gain, Section 45 which is charging Section and Section 48 which is computation section, makes it absolutely clear that rigor of tax in case of capital gain would come into play on the transfer of capital asset and total consideration which is arising on such transfer, has to be taxed. Section 48 clearly talks about full consideration received or accruing as result of transfer. This aspect we have already discussed in detail at paras 64 to 68.

90 Second aspec t o f th i s con ten t ion was tha t i f cons ide ra t ion wh ich has no t been rece ived was to be taxed then the assessee wou ld be dep r i ved fo r c la im ing exempt ion u /s 54 and 54EC. As obse rved above as pe r Sec t ion 45 r .w.s 48 who le o f the cons ide ra t ion , rece ived o r acc rued has to be taxed . Eve ry pe rson is supposed to know the law and i f the t ransac t ion i s s t ruc tu red in such a way fo r the t rans fe r o f cap i ta l asse t t ha t some o f the cons ide ra t ion wou ld be rece ived la te r then such person is supposed to know the consequences o f the den ia l o f such bene f i t s . However , i f the sec t ion i s in te rp re ted in the manne r sugges ted by the ld . counse l o f t he assessee then no pe rson wou ld pay cap i ta l ga in tax on t rans fe r o f a p rope r t y . T h is w i l l be c lea r f rom a s imp le examp le . Le t us assume i f "A " se l l s the p rope r t y t o "B " f o r a cons idera t ion o f Rs . 100 c ro res and rece ive on ly a cons ide ra t ion o f 1 .00 c ro re and i t i s men t ioned in the t rans fe r ins t rument tha t ba lance o f cons ide ra t ion wou ld be pa id a f te r 20 yea rs then no tax can be lev ied on such ba lance cons ide ra t ion o f Rs . 99 .00 c ro res wh ich has no t been rece ived as pe r the con ten t ion o f the ld . counse l o f the assessee . Bu t in tha t case no taxes can be lev ied even a f te r 20 yea rs because no t rans fe r can be sa id to have taken p lace a f te r 20 years and Revenue canno t do any th ing because

cap i ta l ga in can be charged u /s 45 on ly on t rans fe r o f cap i ta l asse t . W e do no t th ink tha t t h i s k ind o f i n te rp re ta t ion can be made wh i le in te rp re t i ng Sec t ion 45 r .w.s . 48 by invok ing the ru le tha t t he re can no t be any

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tax on no t iona l rece ip t . Generally speaking i t is only the real income which can be taxed but this has to be understood subject to l imitations. Commenting on these limitations, the Ld. Author Shri S. Rajaratnam in the Commentary of Law of Income Tax by Sampat Iyengar's Volume 1, (11 ^thEdit ion) has observed at page 343 as under:-

"5. Reservations on real income theory. - Whether accrual of income has taken place or not, must be judged on the principle of the real income theory. After accrual, non-charging of tax on the same because of certain conduct based on the ipse dixit of a particular assessee cannot be accepted. In determining the question whether it is hypothetical income or whether real income has materialized or not, various factors will have to be taken into account. It would be difficult and improper to extend the concept of real income to all cases depending upon the self-serving statement of the assessee. What has really accrued to the assessee has to be found out and what has accrued must be considered from the point of view or real income taking the probability or improbability of realization in a realistic manner, but once accrual takes place, on the conduct of the parties subsequent to the year of closing, an income which has been accrued cannot be made "no income'."

91 The above pos i t ion can be unde rs tood by exam in ing some o f the p rov i s ions o f the Ac t wh ich wou ld show tha t concep t o f no t iona l income can no t be extended i f spec i f i c p rov i s ion is ava i lab le in the Ac t . Fo r example in case o f i ncome f rom house p rope r t y , the income has to be de te rm ined as per sec t ion 23 . Sec t ion 22 o f the Income Tax Ac t p rov ides tha t i t i s the annua l va lue o f t he p rope r t y wh ich can be taxed under the head " income f rom house p rope r t y " . Sec to r 23 p resc r ibes the method fo r de te rm in ing the annua l va lue . Sec t ion 23(1 ) (a ) reads as unde r : -

23. (1) For the purposes of section 22, the annual value of any property shall be deemed to be —

(a) the sum for which the property might reasonably be expected to let from year to year; or

(b ) where the p roper ty o r any pa r t o f the p roper ty i s le t and the ac tua l ren t rece ived o r rece ivab le by the owne r in respec t the reo f i s in excess o f the sum re fe r red to i n c lause (a ) , the amount so rece ived o r rece ivab le ; o r……….

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92 On this aspect the settled position of the law is that the annual value has to be determined even if the property is not let out. This position has been discussed by the Ld. author Chaturvedi & Pithisaria's in Commentary of Income Tax Law (fifth edition) Volume 1 in this respect at pages 1275 & 1276 observed as under:

"Annual value- determination of - Section 23(1)(a) provides that for the purposes of section 22, the annual value of any property shall be deemed to be the sum for which the property might reasonably be expected to let from year to year. The word used is 'might' and not 'can' or 'is'. It is thus a notional income to be gathered from what a hypothetical tenant would pay which is to be objectively ascertained on a reasonable basis irrespective of the fact whether the property is let out or not [Sultan Bros. Pr. Ltd. v. CIT, (1964) 51 ITR 353 (SC); Jamnadas Prabhudas v. Commissioner Of Income-Tax, Bombay City, (1951)20 ITR 160(Bom); D.M. Vakil v. CIT, (1946) 14 ITR 298, 302(Bom); CIT v. Biman Behari Shaw, Shebait, (1968) 68 ITR 815 (Cal); Sri Sri Radha Govinda Jew v. CIT, (1972) 84 ITR 150, 156 (Cal); CIT v. Ganga Properties Ltd., (1970)

77 ITR 637, 647 (Cal); Liquidator, Mahmudabad Properties Ltd. v. CIT, (1972) 83 ITR 470 (Cal), affirmed, (1980) 124 ITR 31 (SC); CIT

v. Zorostrian Building Society Ltd., (1976) 102 ITR 499 (Bom); C.J. George V. CIT, (1973) 92 ITR 137 (Ker); D.C. Anand & Sons v. CIT, (1981) 131 ITR 77 (Del). Also see, CIT v. Parbutty Churn Law, (1965)

57 ITR 609, 619 (Cal); In the matter of Krishna Lal Seal, AIR 1932 Cal 836; Lalla Mal Samgham Lal v. Commissioner of Income-tax, (1936) 4 ITR 250 (Lah); New Delhi Municipal Committee v. Nand Kumar Bussi, (1977) Tax LR 2130 (Del)]"

93 Similar view has been expressed by Shri N.A. Palkhivala in his commentary on the Law land Practice of Income Tax, Volume 2 (Eighth edition) by Kanga and Palkhivala's observation at pages 22 & 23. Again even Shri S. Rajaratnam in the Commentary of Law of Income Tax by Sampat Iyengar's Volume 2, (11^thedition) expressed identical views in his commentary at page 2738.

94 In a l l the lead ing commenta r ies c i ted above , i t has been obse rved tha t annua l va lue is to be compu ted whethe r p rope r t y has been le t ou t o r no t . Th is means tha t no t iona l va lue o f the p roper t y has to be charged to the Income Tax unde r the head " income f rom house p rope r t y " . F rom the above , i t becomes c lea r tha t t hough the re i s no rea l income f rom le t t ing ou t o f the p rope r t y , s t i l l the no t iona l annua l va lue i s sub jec ted to tax under the head

" i ncome f rom house p roper t y " . Howeve r , we may men t ion tha t u /s 23 (1 ) (c ) o f the Ac t i f the p rope r t y i s le t ou t and

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then rema ined vacan t f o r some pa r t o f the yea r o r f o r who le o f the yea r then vacancy a l lowance can be c la imed. He re , i t i s impo r tan t to no te tha t i f p rope r t y i s no t le t ou t , then no t iona l income becomes cha rgeab le t o the tax because o f p rov i s ions o f sec t ions 22 and 23 (1 ) (a ) o f the Ac t . S im i la r l y , unde r the Ma t p rov i s ions , i t i s bas ica l l y the no t iona l i ncome wh ich is be ing sub jec ted to cha rge unde r the head " income f rom bus iness and p ro fess ion " . A bus inessman may have income o f Rs . 100 / - bu t because o f h ighe r deprec ia t ion a l lowab le unde r the Income- tax Ac t o r some o the r we igh ted deduc t ions say fo r examp le in case o f expend i tu re on sc ien t i f i c resea rch , the taxab le i ncome as pe r the p rov is ions o f the Ac t may be ze ro bu t s t i l l because o f the Mat p rov i s ions , tax has to be cha rged on book p ro f i t s . S im i la r l y i n the case o f p resumpt i ve tax p rov i s ions e .g . u /s 44AD i f a pe rson i s c i v i l con t rac to r and does no t ma in ta in books o f accoun t and h i s tu rnove r i s l ess than Rs. 60 lakhs then the p ro f i t wou ld be p resumed to be 8% o f tu rnove r even i f he has su f fe red a l oss . Ano the r example o f Sec t ion 2 (22 ) (e ) can be taken . Unde r th i s p rov i s ion a l oan o r advance g i ven by ce r ta in compan ies to a subs tan t ia l sha re ho lde r i s to be t rea ted as deemed d iv idend . Such loan unde r the no rma l

accoun t ing p r inc ip le o r on commerc ia l p r inc ip les canno t be regarded as income bu t because o f th i s spec i f i c p rov i s ion rega rd ing deemed d iv idend such amount has to be t rea ted as income o f the pe rson rece iv ing such loans .

95 The above pos i t ion o f l aw makes i t abso lu te l y c lea r tha t theo ry o f rea l income i s sub jec t to the p rov i s ions o f the Ac t and wheneve r any spec i f i c p rov i s ions o f the Ac t i s the re fo r cha rg ing o f a par t i cu la r i tem o f income , then the same has to be cha rged accord ing ly . I t may be somet imes ha rd to the assessee 's bu t aga in i t has been he ld in numerous dec is ions tha t F isca l s ta tues have to be in te rp re ted on the bas is o f language used and the re i s no scope fo r equ i t y o r in ten t . Ld . Au thor Sh r i S . Ra ja ra tnam in the Commenta ry o f Law o f Income Tax by Sampat I yenga r 's Vo lume 1 , page 236 in th is rega rd has obse rved as unde r : -

"Once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however, great the hardship may appear to the judicial mind. Considerations of hardship, injustice or anomalies do not play any useful role in construing taxing statutes unless there be some real ambiguity. Thus, any

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benevolent construction in favour of the assessee has been held to be uncalled for.

96 The re fo re , i t can be sa id tha t gene ra l l y speak ing no t iona l income cou ld no t be sub jec ted to tax bu t wheneve r the re is a spec i f i c p rov is ion , the same has to be taxed . Now, in case o f cap i ta l ga in , sec t ion 45 read w i th sec t ion 48 ve ry c lea r l y p rov ides tha t i t i s the p ro f i t

"a r i s ing " f rom the t rans fe r o f a cap i ta l asse t wh ich wou ld be sub jec ted to cha rge o f cap i ta l ga in tax and sec t ion 48 c lea r l y p rov ides fo r t ak ing the to ta l cons ide ra t ion in to accoun t wh i le comput ing the cap i ta l ga ins . Th is aspec t we have a l ready d iscussed in de ta i l a t pa ra No . 64 to 68 f rom wh ich i t becomes c lea r tha t i t i s the who le cons ide ra t ion whe ther rece ived o r acc rued , wh ich has to be taxed unde r the cap i ta l ga in once t rans fe r o f the cap i ta l asse t takes p lace . Acco rd ing ly , the re is no fo rce in t h i s pa r t o f the con ten t ion .

97 Now le t us exam ine the issue o f taxab i l i t y o f f la t on the bas is o f above p r inc ip les . Re levan t po r t ion o f c lause 4 o f the JDA wh ich dea ls w i th cons ide ra t ion a re as unde r :

"4 . CONSIDERATION

4.1 It is specifically understood and agreed amongst the Parties that THDC shall use its expertise and its Brand name and / or any other brand name at its discretion to develop the Property into the Premises as per applicable building bye-laws of the Competent Authority and the Owner shall have no objection to the same in whatsoever manner. In consideration of the Owner granting and assigning, its Development Rights in the Property, irrevocably and in perpetuity, to THDC to develop the Property and for transfer of the Property upon the surrender of allotment rights of 500 sq. yards and/or 1000 sq. yards (as the case may be) by its members to the Owner, vide resolution dated 04.01.2007 and 25.02.2007 (copy attached as per Annexure I & II), HASH is committed to pay to the Owner and / or the respective members of the Owner (as the case may be) a total amount of Rs. 106,42,50,000/- (Rupees One Hundred Six Crores Forty Two Lacs Fifty Thousands Only) calculated @ Rs. 82,50,000/- (Rupees Eighty Two Lacs Fifty Thousands Only) payable to 65 members having plot of 500 sq. yards each, Rs. 1,65,00,000/- (Rupees One Crore Sixty Five Lacs Only) payable to 30 members having plot of 1000 sq. yards each and Rs. 3,30,00,000/- (Rupees Three Crores

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Thirty Lacs Only) payable to the Owner for the 4 plots of 500 sq. yards each, which shall tantamount to the full and final payment to the Owner and / or the respective members of the Owner (as the case may be) in a manner set out herein below ('Payment'). Further, the transfer, sale and conveyance of 21.2 acres of land of the Property shall be made by the Owner in favour of THDC pro rata to the Payment received by the Owner and/or the respective members of the Owner (as the case may be) from HASH by executing sale deeds and registering the same. It is expressly provided that as resolved by the Owner, the total amount payable by HASH to the Owner and / or the respective members of the Owner (as the case may be) for assignment of the Development Rights and for transfer and sale of 21.2 acres of land of the Property shall be Rs. 106,42,50,000/- (Rupees One Hundred Six Crores Forty Two Lacs Fifty Thousand only) and one hundred and twenty nine (129) flats consisting of Super Area of 2250 Sq. feet ('Flats'); one flat each for sixty five members having a plot of 500 sq. yards, two flats for the (thirty) 30 members having a plot of 1000 sq. yards and 4 flats to the Owner for the 4 plots of 500 sq. yards each as per list annexed with this Agreement as Schedule B ('Sale Transaction') It is expressly agreed between the Developers that HASH shall be responsible for making all payments to the Owner and/or the respective members of the Owner (as the case may be) as per the negotiated and agreed terms between the Owner and HASH, HASH expressly undertakes to make timely payments of the Payment to the Owner and / or the respective members of the Owner (as the case may be) as under:

4.2 As resolved by the Owner, THDC either by itself or along with HASH shall allot the Flats in the name of members of the Owner as per list annexed with this Agreement as Schedule B attached herein (hereinafter referred to as the 'Allottees'). The specifications of the flats would be provided by the Developers to the Owner and more particularly described in the Schedule C attached herein (hereinafter referred to as the 'Specifications'). The Allotment letters shall be issued to the Allottees (members of the Owner) within forty-five (45) days from the date of sanction of the building plans / Design and Drawing and on obtaining final license/permission for the development of the Project from the Competent Authority. Thereafter, the possession of the flats shall be handed over to the Allottees within thirty(30) months form the date of issuance of the Allotment Letter.

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I t i s exp ress ly p rov ided tha t the Payment to be made by HASH to the Owner and /o r to the respec t ive members o f the Owner (as the case may be ) and the F la t s to be a l lo t ted to the A l lo t tees as se t ou t i n th is C lause 4 .2 sha l l he re ina f te r be co l lec t i ve ly re fe r red to as the 'En t i re Cons ide ra t ion '

98 F rom th i s c lause i t becomes abso lu te l y c lea r tha t each Member hav ing 500 sqyd o f p lo t was en t i t led to rece ive one fu rn ished f la t measur ing 2250sqf t and Members hav ing 1000sqyd f l a t were en t i t led to rece ive two fu rn ished f la t s . Thus upon execu t ion o f the JDA ves ted r i gh t came to such Members to rece ive such f l a t s . Once th i s ves ted r i gh t a r ises ou t o f the above con t rac t i t can eas i l y be sa id t ha t th i s r i gh t has a l so acc rued to t he assessee . C lause 4 .2 makes i t abso lu te l y c lea r tha t deve lope r i .e . THDC/HASH was to a l lo t the le t te rs o f a l lo tment w i th in 45 days f rom f ina l sanc t ion f rom the competen t au tho r i t y and such f la ts we re pa r t o f en t i re cons ide ra t ion . Me re ly because such a l lo tment le t te r has no t been g i ven because o f sanc t ions / pe rm iss ions cou ld no t be ob ta ined because o f Pub l ic I n te res t L i t iga t ion be fo re t he Hon 'b le Pun jab & Ha ryana H igh Cou r t , i t canno t be sa id tha t such r i gh t has no t accrued . Though i t may be ha rd on the assessee bu t i t i s we l l se t t l ed tha t taxa t ion and equ i ty a re s t rangers . Fu r the r commen t ing on th i s aspec t Sh r i Ra ja ra thnam in h is commenta ry has obse rved a t page 5164 as unde r :

" I t i s ha rd on the owne rs when requ i red to pay tax , when hand ing ove r the possess ion fo r pu rposes o f cons t ruc t ion w i thou t be ing ab le t o en joy the cons t ruc t ion , wh ich i s ye t to commerce o r in the p rocess o f cons t ruc t ion be ing pu t up by the deve lope r , bu t t he so lu t i on l i es in s ta tu to ry c la r i f i ca t ion in such cases . In v iew o f the inc reas ing sca le o f such deve lopment ag reements to so l ve the hous ing p rob lem in t he c i t ies , a s ta tu to ry c la r i f i ca t ion o r c i rcu la r i s ove rdue . "

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99 These commen ts and the o the r de ta i l ed d iscuss ion on th is aspec t c lea r l y show tha t cap i ta l ga in tax has to be pa id on the to ta l cons ide ra t ion a r i s ing on t rans fe r wh ich wou ld inc lude the cons ide ra t ion wh ich has been rece ived as we l l as t he cons ide ra t ion wh ich has a rosen and become due and may be rece ived la te r on . I n v iew o f th i s d iscuss ion th i s con ten t ion is re jec ted .

100 Ninth contention is that the assessee has already terminated the agreement and has revoked the Power of Attorney. We find no force in this submissions.

101 In this regard ld. counsel of the assessee has relied on the decision of Mumbai Bench of the Tribunal in case of Chemosyn Ltd. V ACIT (supra). In that case the assessee-Company was owner of two plots bearing 256 & 257 in Gundabali Andheri Mumbai. The assessee- company entered into a development agreement with Dipiti Builders for the development rights for a consideration of Rs. 16.11 crores. Dipiti Builders had also agreed to construct 18000 sqft carpet area for the benefit of assessee on plot No. 256. In the return of income total consideration was shown only at Rs. 16.11 crores. It was explained that before Dipiti Builders could start the development /construction work, entire property comprising of plot no. 256 & 257 was sold to a third party M/s Financial Technology Ltd. by a tripartite conveyance deed executed on 5.7.2007 for Rs. 29.11 crores and therefore, additional consideration of Rs. 13 crores has been offered to tax in Assessment year 2008-09. This explanation was rejected by the Assessing Officer because according to him it was a case of transfer u/s 2(47)(v) and total consideration has to be charged in the year of transfer. The Tribunal after considering the provisions of section 45 & 48 posed a question to itself that what should be the consideration in the case before the Bench. The case law relied on by the Department was rejected because same was relevant to accrual of interest. The Bench followed the decision of Kalptaru Construction Oversees Pvt Ltd. 13 SOT 194. In that case the assessee had agreed to sell to its subsidiary equity shares for a consideration of Rs. 1.25 crores which was finally settled at Rs. 1.00 crore and the Tribunal held that the consideration of Rs. 1.00 crore has to be accepted.

102. From the above decision it is not clear whether in case of Kalaptaru Construction Oversees Pvt Ltd. (supra) which has been followed in above case, was concerning capital gain or not? Secondly it is not clear that whether the amended consideration i.e. settlement for Rs.

1.00 crore was made in the same year or not? As observed earlier while discussing the issue of notional income that provisions of section 45 r.w.s. 48, are absolutely clear and there is no ambiguity that once a capital asset is transferred then whole of the consideration received or accruing has to

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be considered for the purpose of taxation in the year in which the transfer has taken place. We further find that in the JDA there is a clause for termination of the agreement. Relevant clause 14 reads as under:

"Termination

"14(i) Save and except the provision of clause 26, THDC shall at all times have the right to terminate this Agreement in the event there is any material breach of the representations, warranties, undertakings, declarations, covenants and/or obligations given by the Owner under this Agreement after giving thirty (30) days written notice for rectification of such breach. In the event the Agreement is termination by THDC, all the lands registered in the name of THDC as per the terms of this Agreement upto the date of the termination shall remain with THDC and the balance lands to be transferred to THDC as per the terms of this Agreement shall not be transferred by the Owner in favour of THDC. Upon the termination, the Owner shall refund to THDC the Adjustable Advance/Earnest Money mentioned in clause 4.1(i) above within one month of such termination. In the event of failure of the Owner to refund the said amount, the Owner hereby agrees to execute a registered sale deed for land of equivalent value in favour of THDC.

(ii) In the event all the requisite government and statutory approvals, authorizations, consents, licenses, approvals of all the plans/designs and Drawings as may be required for the development of this Property in relation to the Project and to undertake the Project are not granted within nine (9) months of the submission of the final plans/Designs and Drawings to the Competent Authority for approval then THDC may as its sole discretion either decide that it does not desire to undertake and complete the Project and hence terminate this Agreement after giving thirty (30) days written notice in this regard or decide to wait for any further times deemed fit by THDC for the grant of the aforesaid approvals and licenses. In the event the Agreement is terminated by THDC, all the lands registered in the name of THDC as per the terms of this Agreement upto the date of the termination shall remain with THDC and the balance lands to be transferred to THDC as per the terms of this Agreement shall not be transferred by the Owner in favour of THDC. Upon the termination, the Owner shall refund to THDC the Adjustable Advance/Earnest Money mentioned in clause 4.1(i) above within one month of such termination. In the event of failure of the Owner to refund the said amount, the Owner hereby agrees to execute a registered sale deed for land of equivalent value in favour of THDC.

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(iii) In the event THDC is unable to develop the Property due to refusal/non grant of approvals, consents, permission, licenses or revocation of the same by the appropriate statutory authority, then THDC may at its sale discretion terminate this Agreement. In the event the Agreement is terminated by THDC, all the lands registered in the name of THDC as per the terms of this Agreement upto the date of the termination shall remain with THDC and the balance lands to be transferred to THDC as per the terms of this Agreement shall not be transferred by the Owner in favour of THDC. Upon the termination, the Owner shall refund to THDC the Adjustable Advance/Earnest Money mentioned in clause 4.1(i) above within one month of such termination. In the event of failure of the Owner to refund the said amount, the Owner hereby agrees to execute a registered sale deed for land of equivalent value in favour of THDC.

(iv) The owner shall have the right to terminate the Agreement only in the event of default by the Developers for making the Payment in accordance with the terms of this Agreement and the allotment of Flats within the time period as mentioned in this Agreement after giving Thirty

(30) days written notice for rectification of such breach or any further time as may be desired by the Owner. In the event the Agreement is terminated by Owner, all the lands registered in the name of THDC as per the terms of this Agreement upto the date of the termination shall remain with THDC and the balance lands to be transferred to THDC as per the terms of this Agreement shall not be transferred by the Owner in favour of THDC. Upon the termination, the Owner shall forfeit the Adjustable Advance/Earnest Money mentioned in clause 4(i)."

103 The reading of the above clause would show that power of termination has been given in many circumstances to THDC vide clause 14(i), (ii) and (iii). The power for termination by the owner has been mentioned in clause 14(iv) only. Reading of this clause would show that right to terminate with the owner i.e. the Society was available only in case of default in making the payment. The issue regarding default for making payment has already been discussed by us in Paras 84 to 86 above while discussing the issue of willingness on the part of the transferee to perform its part of the contract We have already held that there was no default on the part of developer i.e. THDC/HASH in making the payment, therefore, the assessee had no right to terminate the contract. In any case we further find that clause 20 of the JDA refers to Arbitration and it is clearly

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provided that all the disputes under it should be referred to the arbitration. Therefore, if the Society had some grievance it was duty bound to give a notice for appointment of an Arbitrator to the developer. In the absence of such notice the termination will not stand scrutiny of law. Here it is also pertinent to note that though it was stated that irrevocable Power of Attorney has been revoked and some documents have been filed before us for revocation but clause 6.7 of the JDA which we have reproduced earlier clearly provides that such Power of Attorney cannot be revoked. We reproduce clause 6.7 again which is as under:

"6 .7 The Owner sha l l execu te an i r revocab le spec ia l Power o f A t to rney g ran t ing i t s comp le te Deve lopment R igh ts i n the Prope r t y in favour o f THDC in te ra l i a i nc lud ing the r igh t to ra ise f inance by mor tgag ing the p rope r t y and reg is te r the cha rge w i th the Compe ten t Au tho r i t y and execu te reg is te red sa le deeds ) as se t ou t in

Clause 4 .1 ( i i ) , ( i i i ) , ( iv ) and (v ) and the Owner conf i rms , under takes , dec lares and b inds i tse l f not to revoke the same for any reason whatsoever out o f i ts own wi l l and d iscre t ion wi thout obta in ing a spec i f ic pr ior wr i t ten consent of THDC or any o f i ts duly cons t i tu ted a t torneys ."

104 The above c lea r l y shows tha t th is Power o f A t to rney cou ld no t be revoked fo r any reason w i thou t ob ta in ing spec i f i c p r io r w r i t ten consen t o f THDC/HASH. No document showing the consen t o f THDC fo r revoca t ion o f th i s i r revocab le Power o f A t to rney has been p roduced be fo re us . W e fa i l to unde rs tand tha t in the absence o f such document how the assessee can c la im tha t t h i s Power o f A t to rney has been revoked . As d i scussed ea r l i e r wh i le cons ide r ing the lega l pos i t ion , we wou ld aga in reca l l the wo rds o f Hon 'b le Au tho r i t y f o r Advance Ru l ing in case o f Jasb i r S ingh Sa rka r ia ( sup ra ) whe re in a t pa ra 33 o f the dec is ion wh i le d iscuss ing the issue in respec t o f Power o f A t to rney, i t was h igh l i gh ted tha t execu t ion o f i r revocab le Power o f A t to rney i s o f s ign i f i can t na tu re and the wo rds " i r revocab le " a re ve ry impo r tan t . The exp ress ion " i r revocab le " i t se l f shows tha t no rma l l y such a t to rney canno t be revoked . The re fo re , no cogn izance can be taken in respec t o f revoca t ion o f t he i r revocab le Power o f A t to rney . I n the absence o f spec i f i c consen t as p rov ided in c lause 6 .7 o f the JDA f rom T HDC.

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105 We may also note that CIT D.R has pointed out that total consideration was to be determined as under:

( i ) Cons ide ra t ion in cash Rs . 106 ,42 ,50 ,000 / - (Rs . 82 ,50 ,000 x 129 p lo ts )

( i i ) Cons ide ra t ion in k ind Rs . 130 ,61 ,25 ,000 / - (Rs . 101 ,25 ,000 / - x 129

p lo t s )

To ta l Rs . 237 ,03 ,75 ,000 / -

Average cost of consideration Rs. 11.18 crores per acre

(Total consideration of Rs. 237.03 crores divided by 21.2 acres of land)

It is claimed on behalf of the assessee that JDA has been cancelled and the developer has been allowed to retain the property which has also been conveyed to developer through two sale deeds. If that is so then what would happen to the balance consideration because in such situation the assessee has received consideration of only about Rs. 5 croress per acre because the assessee has registered land measuring 3.08 acres for Rs.

15.48 crores through first conveyance deed, whereas consideration as per original agreement was Rs. 11.18 crores per acre as shown above. The difference is because of non receipt of consideration in kind and the assessee has not shown any evidence that it has made the claim for receipt of balance consideration. This leads to the conclusion that there was no cancellation of the JDA.

106 Some arguments were made by both the parties that if the contract is finally stand abandoned then what would happen. The contention on behalf of the assessee is that if the contract is abandoned then the assessee would have paid tax in the year of transfer and would be left with no recourse for relief. The contention on behalf of the Department was that the assessee could always file revised return or make a petition u/s 264 and some relief was possible in case of the assessee. However, if revenue fails to tax the total consideration in the year of transfer then same cannot be subjected to tax in any other year. We find that this question was seriously considered by the Ld. Authority for Advance Ruling in case of Jasbir Singh Kataria (supra) which has been relied on by both the parties for various aspects. In that case it was observed at para 39 as under:

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"We have to advert to one aspect which has caused some concern to us. What will happen if during the year following the one in which the deemed transfer took place, the proposed venture collapses for reasons such as refusal of permissions, the developer facing financial crunch etc. By that time, the owner would have received only a part of the agreed consideration, but he is obliged to file the return showing the entire capital gain based on the full sale price whether or not received during the year of deemed transfer. In such an eventuality, hardship may be caused to the owner who would have paid full tax. No doubt, such a situation could be avoided if the contention of the applicant is accepted. On deep consideration, however, we find that the construction of the relevant provision should not be controlled by giving undue importance to such hypothetical situations. Normally, the owner executes a Power of Attorney or does similar act to left the transferee take possession only after the basic permissions are granted and he is satisfied about the ability of transferee/developer to fulfil the contract. In spite of that, if such rate situations take place, the owner/transferor will not be without remedy. He can file a revised return and make out a case for exclusion or reduction of income. However, if the time-limit for filing a revised return expires, the difficulty will arise. It is for Parliament or the Central Government to provide a remedy to the assessee in such cases. Moreover, the other side of the picture as depicted in paragraph 27 (supra) should also be kept in view."

Here the comments of Shri Rajaratnam quoted at para 5164 above are also relevant again:

" " I t i s ha rd on the owne rs when requ i red to pay tax , when hand ing ove r t he possess ion fo r pu rposes o f cons t ruc t ion w i thou t be ing ab le to en joy t he cons t ruc t ion , wh ich i s ye t to commerce o r in the p rocess o f cons t ruc t ion be ing pu t up by the deve lope r , bu t the so lu t ion l ies in s ta tu to ry c la r i f i ca t ion in such cases . I n v iew o f the inc reas ing sca le o f such deve lopment ag reemen ts to so l ve the hous ing p rob lem in t he c i t ies , a s ta tu to ry c la r i f i ca t ion o r c i r cu la r i s ove rdue . "

We may mention here that no doubt sometimes an assessee may be put in a difficult situation and as mentioned by Hon'ble Authority in case of Jasbir Singh Sarkaria (supra) as well as Ld. Author Shri Rajaratnam it is for the legislature to take corrective steps. However, it may not be out of place that if considering the difficulty the interpretation given by the ld. counsel of the assessee is accepted then the Revenue may not be able to tax such assessees when these difficulties are removed. For example in the present case if tomorrow when all permissions are obtained and

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construction is completed and if no taxes are held to be payable then later on also the assessee may not be subjected to any tax under the head

"capital gain" because then it can be easily contended on behalf of the assessee that the transfer has already taken place on the date when irrevocable Power of Attorney was executed. In that situation the Revenue will have no remedy.

107 The above clearly shows that such hypothetical consideration cannot be considered for giving true meaning to a particular provision. It has also been observed that in some genuine cases the difficulties may arise but it was for the Parliament or the Government to provide remedy in such cases and judicial forums cannot do anything. Therefore, in view of the provisions of Section 45 r.w.s. 48 we are of the opinion that subsequent events, if at all any will not make any difference because total consideration received or accrued has to be assessed in the year of transfer. We may also note that it was stated that irrevocable Power of Attorney has been revoked but the word "irrevocable" itself shows that in the eyes of law special Power of Attorney could not have been revoked. In view of this analysis, we are of the opinion that either the JDA has not been cancelled or in any case the same cannot be considered for determining the taxation of capital gain. Accordingly this contention is rejected.

108 The nex t con ten t ion o f t he assessee is tha t even i f the who le cons ide ra t ion has to be taxed then va lue o f the f la t s canno t be taken a t Rs . 4 ,500 / - pe r sq . f ee t . I t i s a l so po in ted ou t tha t i n v iew o f the ag reemen t be tween the HASH & T HDC cons ide ra t ion has been shown a t Rs .

2 ,000 / - pe r sq . f ee t f o r 126 f la ts whe reas i t i s Rs . 4 ,500 / - pe r sq . f ee t f o r th ree f la ts . W e f i nd no fo rce in these submiss ions . The assessee has f i l ed a long w i th the wr i t ten submiss ions copy o f t he addendum o f ag reement be tween THDC and HASH by Jo in t Deve loper (a t page 265 & 266 ) and th is i ssue is d iscussed in c lause 5 wh ich i s as unde r : -

"5 . C lauses 4 .1 , 4 .2 , 4 .3 and 4 .4 on the page nos . 18 and 19 o f the Agreement sha l l s tand amended, mod i f ied and subs t i tu ted by the fo l low ing: - 4 .1 I t i s exp ress ly agreed and unde rs tood by and be tween the Pa r t ies he re to

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(a ) i n the ra t io o f 72 ,28 be tween THDC and HASH in case Gross Sa les P roceeds does no t exceed Rs . 1272 c ro res ;

(b ) in the ra t i o o f 70 : 30 be tween THDC and HASH in case Gross Sa les P roceeds i s equa l to Rs . 1272 c ro res ;

( c ) i n add i t ion (b ) , in the ra t io o f 60 : 40 be tween THDC and HASH in respec t o f g ross sa les P roceeds i n excess o f Rs . 1272 c ro res .

" I t i s ag reed tha t t he min imum gua ran teed amoun t f rom the Gross Sa les P roceeds fo r THDC and HASH i s Rs . 890 .40 c ro res and Rs. 225 .76 c ro res respec t ive l y . The min imum gua ran teed amount o f Rs . 225 .76 c ro res to HASH inc ludes Rs . 58 .88 c ro res tha t sha l l be expended by THDC towards cons t ruc t ion o f 126 f la t s equ iva len t to 2 ,83 ,500 sq . f t , , wh ich f l a ts a re to be a l lo t ted in the names o f the members o f the Soc ie t y o r o the rw ise , as the case may be , ca lcu la ted as Rs . 2000 pe r sq . f t . fo r the a rea 2 ,83 ,500 sq . f t . and the 72% sha re o f 3 f la t s o f 2250 Sq . f t . to be pu rchased by HASH @ Rs , 4500 / - pe r sq . f t . Shou ld the app l i ca t ion o f t he ra t io s t ipu la ted in (a ) above resu l t i n HASH be ing en t i t led to a sum g rea te r than the min imum guaran teed amount and THDC be ing en t i t led to a sum less than the min imum guaran teed amount , THDC sha l l -be en t i t led to the en t i t l ement o f HASH wh ich i s in excess o f i t s min imum, gua ran teed amount un t i l THDC ach ieves i t s min imum gua ran teed amount . -The same i s i l lu s t ra ted in Annexu re I he re to ."

109 The above c lea r ly shows tha t HASH was en t i t led to to ta l p roceeds o f Rs . 225 .76 c ro res ou t o f to ta l p roceeds o f the p ro jec t wh ich we re agreed to be sha red by THDC and HASH bu t the po r t ion o f HASH inc ludes a sum o f Rs . 58 .88 c ro res wh ich was requ i red to be spen t t owa rds cons t ruc t ion o f 126 f la t s equ iva len t to 283500 squa re fee t a rea wh ich we re to be a l lo t ted to the members o f the soc ie t y . Thus , i t i s c lea r tha t f i gu re o f Rs . 2 ,000 / - pe r sq . f ee t rep resen ts on ly the cos t o f cons t ruc t i ons to be incu r red by T HDC wh ich was deb i ted to the accoun t o f

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HASH. Fu r ther , HASH has agreed to pu rchase th ree F la t s @ 4 ,500 / - pe r squa re fee t . Some news repo r ts we re quo ted be fo re us i n one o f the cases to show tha t va r ious b rokers had issued var ious adver t i sements f o r sa le o f these f la t s and these f la t s we re u l t ima te l y to be so ld a t Rs . 7 ,000 / - to Rs . 10 ,000 / - pe r squa re fee t . Th is a l so becomes c lea r f rom the addendum o f ag reement i n te rms o f to ta l p roceeds o f 1272 c ro res . In any case i f the cos t o f cons t ruc t ion i s Rs . 2 ,000 / - , t hen cos t o f land wh ich has been pa id to the soc ie t y i s a lso to be added to the cos t o f the f la t because th i s po r t ion o f cons ide ra t ion in any case was rece ived o r to be rece ived la te r by the soc ie t y in cash . Cons ide r ing the p resen t marke t va lue o f the f la t s in and a round Chand iga rh a rea wh ich is Rs . 4 ,000 / - to 12 ,000 / - pe r squa re fee t we a re o f the op in ion tha t va lue o f t he f l a t a t Rs . 4 ,500 / - pe r squa re fee t i s abso lu te l y f a i r . In any case M/s HASH has agreed to pu rchase the f la ts a t th i s ra te f rom M/s T HDC. I t may be no ted as po in ted ou t by the ld . DR fo r the revenue some o f the News repo r t c l i pp ings f i led by va r ious assessees c lea r l y shows tha t f la ts were booked in the "Ta ta Camleo t " ( th is was the name wh ich was g i ven to the P ro jec t wh ich was to be deve loped on the land o f two soc ie t ies ) in the P re Launch o f f e r in the range o f Rs . 7500 to 8000 pe r sqf t . I t i s a common knowledge tha t ra tes in P re Launch o f f e r a re lowe r than the ra tes when book ings open fo r the Pub l i c . Cons ide r ing these fac t s we a re o f the op in ion tha t Assess ing Of f i ce r has es t imated the va lue o f the f la t s on most reasonab le bas is . In v iew o f these obse rva t ions th i s con ten t ion is re jec ted .

110 The Ld . Counse l f o r the assessee had made some submiss ions on the issue o f deduc t ion u /s 54F. He has po in ted ou t tha t th is i ssue has been re jec ted wrong ly by C IT (A) . However , ca re fu l l y pe rusa l o f t he g rounds o f appea l show tha t no g round in respec t o f deduc t ion u /s 54F has been ra ised be fo re us and , the re fo re , we dec l ine to ad jud ica te th is i ssue and a l l the a rgumen ts made in th i s beha l f a re re jec ted . Though re fe rence was made to g round No. 2 .3 in t h is regard . The perusa l o f g rounds No. 2 .3 wou ld show tha t re fe rence has been made on ly to Sec t ion 54 and Sec t ion 54EC. Sec t ion 54 dea ls w i th deduc t ion in case the assessee be ing an ind iv idua l o r HUF, t rans fe rs the res iden t ia l house and in case be fo re us , the assessee has t rans fe r red the p lo t . The re fo re , i t canno t be sa id tha t deduc t ion u /s 54F and 54 is same.

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S ince no g round has been ra ised fo r deduc t ion u / s 54F, we re jec t th i s con ten t ion .

111 Ground No. 3 - The ld . counse l o f the assessee submi t ted tha t w i thou t p re jud ice to the i ssues ra i sed in g rounds No. 2 , 5 & 6 , cap i t a l ga in shou ld have been taxed in the hands o f the Soc ie t y wh ich i s l ega l owner o f the land .

112 On the o the r hand , t he ld . DR fo r the revenue submi t ted tha t the Soc ie t y was ac t ing on beha l f o f the Members and the Members have su r rende red the i r r i gh t s i n f avou r o f t he Soc ie t y so as to enab le the Soc ie t y t o en te r i n to JDA for t rans fe r o f p rope r t y i n f avou r o f the deve lope r i . e . THDC/HASH. The re fo re , cap i ta l asse t has been so ld by the Members . Fu r ther the cons idera t ion was to be rece ived f rom Hash by the ind i v idua l p lo t owne rs .

113 W e have hea rd the r i va l subm iss ions ca re fu l l y and f ind tha t the Soc ie t y was fo rmed by va r ious Members f o r the pu rpose o f pu rchase o f l and and to deve lop the same and they a l lo t ted the p lo ts to the Members . The Soc ie t y pu rchased 21 .2 ac res o f land and u l t ima te l y p lo t s in the s i zes o f 500sqyd and 1000sqyd we re a l lo t ted to va r ious Members . W hen the p roposa l f o r deve lopment o f p rope r t y came i t was reso lved in the Gene ra l Body Meet ing o f the Soc ie t y tha t t he Members wou ld su r rende r the i r r i gh t s in f avou r o f the Soc ie t y so tha t t he Soc ie t y can en te r i n to the JDA. Thus i t i s c lea r tha t the Soc ie t y has en te red in to JDA on beha l f o f the Members . I t i s the members who a re own ing the p lo t s and the Soc ie t y was on ly a f ac i l i ta to r . I t becomes c lea r f rom the JDA tha t payment f o r

cons ide ra t ion was to be made to an ind iv idua l p lo t ho lde r and in f ac t cons ide ra t ion was ment ioned in te rms o f pe r Member . Each Member ho ld ing 500sqyd p lo t was to

rece ive a sum o f Rs . 82 ,50 ,000 / - and one fu l l y f u rn ished f la t measu r ing 2250 sqf t and the Members ho ld ing 1000sqyd p lo t we re to rece ive mone ta ry cons idera t ion o f Rs . 1 .65 c ro res p lus two f la t s measu r ing 2250 sqf t . In f ac t the payment o f cheques i s made by Hash by i ssu ing cheques in the name o f ind i v idua l Member and no t the Soc ie t y . Th is f ac t s tands admi t ted because assessee has f i led a re tu rn dec la r ing cap i ta l ga in aga ins t pa r t money rece ived aga ins t h is p lo t . Thus i t becomes c lea r tha t i t i s the ind i v idua l member who a re l iab le t o tax i n respec t o f

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t rans fe r to p lo t s and the Soc ie t y be ing on ly a f ac i l i ta to r o r Pos t o f f i ce . Some more de ta i l s have been d iscussed in th i s respec t wh i le ad jud ica t ing the appea l o f Pun jab i Coop House Bu i ld ing Soc ie t y L td . in ITA No . 310 /Chd/2012 and 556 /Chd/2012 wh ich have been ad jud ica ted l i t t le la te r in th i s o rder i t se l f . Acco rd ing ly we f ind no fo rce in the submiss ions and th is g round i s re jec ted .

114 Ground No . 7 - The issue rega rd ing levy o f in te res t u / s 234B and w i thd rawa l u /s 244A (3 ) i s o f consequen t ia l na tu re and the Assess ing Of f i ce r i s d i rec ted to cha rge in te res t u /s 234B o f the Ac t in accordance w i th law. W i thdrawa l o f in te res t u /s 244A (3 ) shou ld a l so be done in acco rdance w i th law.

115 In the result, appeal of the assessee is partly allowed."

38. Now, we take up`the 24 appeals before this Bench one by one as under:

1) ITA No.180(Asr)/2011 - Shri Satnam Singh Kainth vs ITO

i) Grounds No. 1 & 2 relate to reopening of assessment under section 147 of the Act. The facts of these grounds are identical to the facts as in the case of Sh.Avtar Singh Brar (supra)and other 30 appeals decided by the ITAT Chandigarh Bench in ITA No. 448(Asr)/2011 and others vide order dated 29.07.2013 (supra) and decision therein is, therefore, identically applicable in the present case. Accordingly, we find no infirmity in the order of the ld. CIT(A), who has rightly upheld the action of the A.O. in reopening the assessment. Thus, grounds No.1 & 2 of the assessee are dismissed.

ii) As regards grounds No. 3 to 6, the facts are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra) hereinabove on the taxability of the capital gain. Therefore, the decision in the case of Sh.Charanjit Singh Atwal vs. ITO (supra) is identically applicable in the present case. Therefore, grounds No. 3 to 6 are dismissed.

iii) Grounds No. 7 to 11 are general in nature and therefore, do not require any adjudication .

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iv) In the result, the appeal in ITA No.180(Asr)/2011 is dismissed."

20. Now, we take up appeal of the assessee in ITA No.188(Asr)/2013 in the case Sh. Manoranjan Kalia, Jalandhar. In grounds No. 1 & 2, the assessee has raised issue with respect to the validity of assumption of jurisdiction u/s 147/148 of the Act. The said issue was raised before the Ld. CIT(A), who has dismissed the grounds of the assessee.

20.1. On perusal of the record and the arguments made by both the parties, we find that the ld. CIT(A) has passed a well reasoned order in para 13 & 14 of his order and we find no infirmity in this regard. Accordingly grounds No. 1 & 2 of the assessee are dismissed.

20.2. Grounds No. 11 & 12 are general in nature. Therefore, they do not require any adjudication.

20.3. As regards grounds No.3 to 10, the facts in these grounds are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case in grounds No. 3 to 10 are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the

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case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the grounds 3 to 10 of the present appeal, which have been discussed in detail in our order in the case of Sh. Satnam Singh Kainth vs ITO (supra). Therefore, in the facts and circumstances, all the grounds i.e.3 to 10 of the assessee are dismissed. In the result, the appeal in ITA No.188(Asr)/20132 is dismissed.

21. ITA No.225(Asr)/2013 - Jatinder Singh Kariha (decd) L/H Smt. Satinder Kaur.

21.1. The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order in the case of Sh. Satnam Singh Kainth vs ITO (supra). Therefore, in the facts and circumstances, all the grounds i.e.3 to 10 of the assessee are dismissed. In the result, the appeal in ITA No.188(Asr)/20132 is dismissed.

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22. ITA No.301(Asr)/2013 - Sh.Manjit Pal Singh L/H of Smt. Harjit Kaur

As regards grounds No. 1 & 3, the same have been taken before the ld. CIT(A), who has dismissed the same vide para 7 of his order.

22.1. After considering the arguments made by the assessee and facts on record, we find no infirmity in the order of the ld. CIT(A) who has passed a very reasoned order vide para 7 and has rightly dismissed the grounds of the assessee. According grounds No. 1 & 3 of the assessee are dismissed.

22.2. As regards grounds No.2 & 4, the ld. counsel for the assessee, Mr. J.S.Bhasin, Advocate argued that Smt. Harjit Kaur expired in January, 2006 which is a fact on record available at page 1 of AO's order. Therefore, no assessment can be made on deceased and which should have been assessed in the hands of an AOP. The AO has made assessment in the name of legal heir Sh. Manjit Pal Singh. Therefore, the order itself is bad in law.

22.3. The Ld. DR, on the other hand, argued that legal heir Sh. Manjit Pal Singh was brought on record before the AO and the assessment has been made on the legal heir where as all the correct legal heirs were brought on record by the ld. CIT(A) and accordingly, the ld. CIT(A) has made the rectification having concurrent jurisdiction and there is no defect in the assessment so made. He opposed the arguments made by the ld. counsel for the assessee.

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22.4. We have heard the rival submissions and perused the facts of the case with regard to ground No. 2 & 4. The assessment has not been made on the deceased and therefore, the arguments made by the ld. counsel for the assessee cannot be accepted. The assessment has been made on the legal heirs and all the legal heirs have been corrected as and when brought on record before the ld. CIT(A) and as such we find no error in this regard in the assessment so made. The arguments so made by the ld. counsel for the assessee, Mr. J.S.Bhasin are therefore rejected and accordingly grounds No. 2 & 4 of the assessee are dismissed.

22.5 As regards grounds No. 5 to 10 raised by the assessee, the facts in these grounds are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of grounds No. 5 to 10 of the present appeal, which have been discussed in detail in our order in the case of Sh. Satnam Singh

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Kainth vs ITO (supra). Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No.301(Asr)/2013 are dismissed.

23. ITA No.384(Asr)/2013 - Smt. Jagdish Kaur Dhillon

As regards to grounds No. 1 to 3 with regard to reassessment u/s 147 of the Act, the similar grounds were taken before the ld. CIT(A), who has dismissed the same for the reasons mentioned in his order.

23.1. After hearing the ld. DR, we find no infirmity in the order of the ld. CIT(A) who has rightly rejected the legal grounds of the assessee by following the case in the case of Nirmal Singh Kahlon which is part of the CIT(A)'s order. Accordingly, grounds No. 1 to 3 of the assessee are dismissed.

23.2. As regards grounds No. 4 to 11, the facts in these grounds are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order in the

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case of Sh. Satnam Singh Kainth vs ITO (supra). Therefore, in the facts and circumstances, all the grounds i.e.4 to 11 of the assessee are dismissed. In the result, the appeal in ITA No.384(Asr)/2013 is dismissed.

24. ITA No.439(Asr)/2013 - Bhai Harnirpal Singh

The issue in grounds No. 1 & 2 is with regard to reopening of the assessment was raised before the ld. CIT(A), who has rightly dismissed the grounds of the assessee. Accordingly, we dismiss grounds No. 1 & 2 of the assessee.

24.1. As regards grounds No. 3 & 4, the facts in these grounds are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order in the case of Sh. Satnam Singh Kainth vs ITO (supra). Therefore, in the facts and circumstances, grounds 3 & 4 of the assessee are dismissed. In the result, the appeal in ITA No.439(Asr)/2013 is dismissed.

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25. ITA No.440(Asr)/2013 - Bhai Harnirpal Singh

The issue involved in grounds No. 1 & 2 is with regard to reopening of the assessment was raised before the ld. CIT(A), who has rightly dismissed the grounds of the assessee. Accordingly, we dismiss grounds No. 1 & 2 of the assessee.

25.1. As regards grounds No.3, the facts in this ground are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order in the case of Sh. Satnam Singh Kainth vs ITO (supra). Therefore, in the facts and circumstances, grounds 3 of the assessee is dismissed. In the result, the appeal in ITA No.440(Asr)/2013 is dismissed.

26. ITA No.447(Asr)/2013 - Dr. Ram Kumar Goyal

As regards ground No.1, it is pertinent to reproduce the grounds raised before the ld. CIT(A) in his order at page 1 to 4 as under:

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"1. That the order passed by the Ld. AO Ward 2(3) is illegal, bad in law, against facts and without jurisdiction.

2. That in the facts & circumstances of the case, Ld. AO erred in rejecting arbitrarily the claim of the status of appellant as that of HUF in respect of acquisition of plot and consequential effect thereof.

3. That in the facts & circumstances of the case, Ld. AO erred in rejecting the claim of the appellant regarding assignment on 21.02.2002 of 500 sq. had plot to Manju Rinwa inspite of having furnished Photostat copies of receipt dt. 21.02.2002 affidavit of the appellant dt. 26.03.2002, letter addressed by Smt. Manju Rinwa to the President of the society and sum of Rs.3300000 (Thirty three lacs only) vide account payee cheque as part payment on account of advance towards surrender of her right in plot of 500 sq.yd held in the society having been received by Manju Rinwa in financial year 2007-

08.

4. That in the facts & circumstances of the case, Ld. AO erred in holding that the tripartite agreement dt. 25.02.2007 in respect of land constitute a transaction of transfer envisaged u/s 2(47)(V) of Income Tax Act.

5. That in the facts & circumstances of the case, Ld. AO erred in ignoring the fact that property in question is agriculture land and is exempt from capital gain tax as not being capital asset within the meaning of sec. 2(14)V) of the Act.

6. That in the facts & circumstances of the case, Ld. AO erred in computing the capital gain at Rs.35750000/-.

7. That without prejudice to ground No.5, the ld. AO erred in not allowing exemption of Rs.20250000/- u/s 54F of the Act without assigning any reason.

8. That in the facts & circumstances of the case, Ld. AO erred in charging interest u/s 234A & 234B.

9. That humble appellant prays for permission to add or amend any ground of appeal before disposal of the appeal.

3. Brief facts are that the appellant is a member of a society named Punjab Cooperative Housing Society, Mohali and entered into a tripartite agreement with one M/s. Hash Builders and M/s. Tata Housing Development Corporation on 25.02.2007. The facts are identical in each case of an MLA and all the issue has been dealt in details by me in case of Sh. Nirmal Singh Kahlon in appeal No. 214-

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IT/10-11 dated 07.03.2013 i.e. the even date of this order wherein the appeal of assessee is dismissed.

4. Grounds of appeal relating to the claim of the appellant that he is owner of 500 sq. yd and the remaining 500 sq. yd was owned by his wife Smt. Manjut Rinwa is decided as under:

i) The appellant claimed during the course of assessment proceedings that out of the plot of 1000 sq. yard, he had already sold 500 sq. yard to Smt. Manju Rinwa and he had already received Rs.600000/- as sale consideration of the plot. The evidence regarding the necessary documentation with Punjabi Cooperative Building Society was filed during the course of assessment proceedings. But the AO did not accept the explanation of the appellant and assessed the capital gain arising from the surrender of rights in the plot of 1000 sq. yds in the hands of the appellant.

ii) During the course of appellate proceedings, the appellant once again reiterated the submissions on this issue made during the course of assessment proceedings and also filed a certificate from the developers regarding payment of Rs.33,00,000/- to Smt. Manju Rinwa during F.Y. 2007-08. The AO was asked to file his comments on the evidence filed by the A/R of the appellant during the course of appellate proceedings but the AO in his remand report has made no comment on this documentary evidence. In view of the facts stated above, I direct the AO to assess ½ of the capital gains arising from the above said plot with Punabi Co- operative Building Society owned by the appellant and his wife in equal shares, in the hands of the appellant. But the AO may take action in accordance with the provisions of Income Tax Act, 1961 to assess the capital gains arising from plot of 500 sq. yards in the hands of Manju Rinwa.

The ground of appeal is treated as allowed.

5. Ground of appeal relating to the claim of the appellant that the plot of 500 sq. yards with Punjabi Cooperative Building Society was owned by him in the status of HUF is decided as under:

i) The A/R of the appellant has argued that the investment in the plot was made form the funds of HUF as the appellant owns

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agriculture land from which agriculture income derived by him and the investment in the plot was made out of the agriculture income. But the AO rejected the claim of the appellant and assessed the capital gain in the hands of individual.

ii) During the course of appellate proceedings, the A/R of the appellant has again relied on the submissions made during the course of assessment proceedings.

I have gone through the written submissions and documents filed during the course of assessment as well as appellate proceedings and I find that the receipt of Rs.6,00,000/- by the appellant from Smt. Manju Rinwa, has been signed by him as "Ram Kumar Goyal MLA Punjab Vidhan Sabha Abohar Constituency Abohar Distt. Ferozepur." This vital document signed and prepared by the appellant himself shows that the appellant was owner of the above said plot in individual capacity because if the HUF funds were invested then the receipt of payment should have also been signed in the capacity of karta of HUF. Thus, the appellant was owner of this plot in individual capacity and the capital gain has been rightly assessed in the hands of individual.

In view of the above said evidence, the ground of appeal is dismissed."

26.1. The Ld. counsel for the assessee Mr. P.N.Arora argued that the funds have been invested out of HUF and none of the authorities below have appreciated these facts and the case of the assessee is void ab initio.

26.2. The Ld. DR relied upon the order of the ld. CIT(A).

26.3. We have heard the rival submissions and perused the facts of the case. We concur with the views of the ld. CIT(A) that the receipt of Rs.6 lacs by the assessee from his wife Mrs. Manju Rinwa has been signed by him in the individual capacity which shows that the assessee was the owner of the plot

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in the individual capacity and not in the hands of HUF. In the facts and circumstances ground No.1 of the assessee is dismissed.

26.4. As regards grounds No. 2 to 11, the facts in these grounds are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order in the case of Sh. Satnam Singh Kainth vs ITO (supra). Therefore, in the facts and circumstances, grounds 2 to 11 of the assessee are dismissed. In the result, the appeal in ITA No.447(Asr)/2013 is dismissed.

27. ITA No.453(Asr)/2013 - Surjit Kumar Jayani

The facts relating to all the grounds raised in this appeal are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh

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Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order in the case of Sh. Satnam Singh Kainth vs ITO (supra). Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No.453(Asr)/2013 are dismissed.

28. ITA No.454(Asr)/2013 - Sh. Nirmal Singh Kahlon

The facts relating to all the grounds raised in this appeal are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order in the case of Sh. Satnam Singh Kainth vs ITO (supra). Therefore, in the facts and

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circumstances, all the grounds of the assessee in ITA No.454(Asr)/2013 are dismissed.

29. ITA No.460(Asr)/2013 - Smt. Gurmail Kaur

As regards ground No.6, being the legal issue under section 148 which has been raised before the ld. CIT(A), we have perused the records and the arguments made by the assessee and we find no infirmity in the order of the ld. CIT(A). Thus, ground No.6 is dismissed.

29.1. As regards ground No.7, the same general in nature and does not require any adjudication.

29.2. As regards grounds No.1 to 5, the facts in these grounds are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order in the case of Sh. Satnam Singh Kainth vs ITO (supra). Therefore, in the facts and circumstances, the grounds no. 1 to 5

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of the assessee are dismissed. In the result, the appeal of the assessee in ITA No.460(Asr)/2013 is dismissed.

30. ITA No.461(Asr)/2013 - S. Jora Singh Mann

The facts relating to all the grounds raised in this appeal are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order in the case of Sh. Satnam Singh Kainth vs ITO (supra). Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No.4461(Asr)/2013 are dismissed.

31. ITA No.462(Asr)/2013 - Sh.Sher Singh

The facts relating to all the grounds raised in this appeal are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and

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in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order in the case of Sh. Satnam Singh Kainth vs ITO (supra). Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No.462(Asr)/2013 are dismissed.

32. ITA No. 463(Asr)/2013 - Sh.Inderjit Singh

As regards grounds No.6, 7 & 8 with regard to issuance of notice u/s 148 of the Act, the same has been dealt by the ld. CIT(A) and who has rightly dismissed the same by passing a well reasoned order in para 4 (page 3 & 4). We find no infirmity in the order of the ld. CIT(A) and accordingly grounds No. 6, 7 & 8 are dismissed.

32.1 As regards grounds No. 1 to 5, the same are general in nature and therefore, do not require any adjudication.

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32.2. As regards grounds No. 9 to 12, the facts in these grounds are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order in the case of Sh. Satnam Singh Kainth vs ITO (supra). Therefore, in the facts and circumstances, grounds No. 9 to 12 of the assessee are dismissed. In the result, the appeal of the assessee in ITA No.463(Asr)/2013 is dismissed.

33. ITA No.402(Asr)/2013 -AY 2008-09 - Sh.Charanjit Singh Sandhu

As regards grounds No. 1 to 3 with regard to provisions of section 147/148, the ld. CIT(A) has passed a well reasoned order and has dismissed the grounds of the assessee and we find no infirmity in his order. Thus, grounds No. 1 to 3 of the assessee are dismissed.

33.1 As regard grounds No. 4 to 13, the facts in these grounds are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others

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(supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order in the case of Sh. Satnam Singh Kainth vs ITO (supra). Therefore, in the facts and circumstances, grounds No. 4 to 13 of the assessee are dismissed. In the result, the appeal of the assessee in ITA No.402(Asr)/2013 is dismissed.

34. ITA No.334(Asr)/2013 - Sh.Shingara Ram Sanghura

As regards grounds No. 2, 3 & 4, the same were dealt by the ld. CIT(A), who has passed a well reasoned order and has dismissed the same. Accordingly, we find no infirmity in the order of the ld. CIT(A) and grounds No. 2, 3 & 4 of the assessee are dismissed.

34.1 As regards grounds No. 1, 5 to 10, the facts in these grounds are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit

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Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of the present appeal, which have been discussed in detail in our order in the

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Order pronounced in the open court on 28th August, 2013.

Sd/- Sd/-

(H.S. SIDHU) (B.P. JAIN)

JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: 28th August, 2013 /SKR/

Copy of the order forwarded to:

1. The Assessees:

2. The

3. The CIT(A)

4. The CIT

5. The SR DR, ITAT, Amritsar. True copy

By order

(Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar.