ORDER

Pradeep Parikh, Vice President :

These cross-appeals are directed against the order of the learned CIT(A), dt. 7th Jan., 2005 for asst. yr. 2001-02. The only issue encompassing both the appeals relates to the computation of capital gains, both long-term and short-term, on the basis of the development agreement entered into by the assessee. The Department is aggrieved against the grant of exemption under s. 54F of the IT Act, 1961 (the Act). There are other related issues also for our consideration. We shall enlist all the issues once we are through with the facts of the case.

2. The assessee derives income from diagnostic services and declared a total income of Rs. 10,86,111 for the year under consideration which was later revised to Rs. 13,86,111. The assessee had purchased a property at Domalguda, Hyderabad, consisting of land admeasuring 923.77 sq. yds. on 15th Nov., 1969 for Rs. 1,07,065 with a double storeyed building standing on it. The assessee entered into a development agreement with one Shri A.S.R. Prasad on 9th March, 1995 for construction of flats. As per the agreement, the developer was to be handed over the possession of the said land and in turn had to give 45 per cent of the constructed area to the owner, i.e., the assessee and that the assessee was to demolish the existing structure. Accordingly, the assessee demolished the structure in 1999 and handed over the vacant land for development. The builder commenced construction in January, 2000 and completed the construction by 31st March, 2001. He handed over flat Nos. 102, 202, 302, 502 and 401 (part) representing assessee's 45 per cent share in the constructed area. During the year, the assessee sold flat Nos. 202 and 401 (part) for a consideration of Rs. 17,91,000. It was submitted that flat No. 502 was used for the residence and flat Nos. 102 and 302 were sold in the subsequent year and the capital gains thereon would arise in asst. yr. 2002-03. The long-term capital gain on sale of flat Nos. 202 and 401 (part) was computed by adopting the value of the original property at Rs. 5 lacs as on 1st April, 1981. It was suitably indexed and the long-term capital gain was worked out at Rs. 11,14,290. The AO was of the view that the working shown by the assessee was not in order. According to him, land given for development in consideration of 4-1/2 flats constituted one transaction liable for long-term capital gain and the flats sold by the assessee constituted a separate transaction liable to long-term/short-term capital gains. The assessee furnished a detailed explanation, the gist of which is that the handing over of the land to the developer is conditional and subject to the transfer of flats by him to the owner. According to the assessee, it is only one transaction which is completed only on the handing over of the owner's share in the newly constructed property. It was -contended that the owner's liability for capital gain arises only when he transfers his share of the constructed area in future to the third parties. However, the AO maintained his stand that they were two transactions, one on transfer of land and the other on sale of the flats. He worked out long-term capital gain on transfer of land at Rs. 22,65,185. On sale of two flats, short-term capital gains were worked out at Rs. 6,49,590. The assessee objected to this computation and again furnished detailed submissions, almost reiterating her earlier stand. The AO rejected the claim of the assessee that development agreement was merely granting of licence to the builder to carry on development activities. He held that for transfer of land the assessee received 4-1/2 flats as consideration and hence it constituted one set of transaction. He rejected the argument of the assessee that development agreement cannot be treated as sale deed for the purpose of s. 2(47) of the Act. He also rejected the assessee's claim for exemption under s. 54F in respect of flat No. 502 retained by her for her residence. The AO did not allow the cost of the existing structure while computing capital gain. He adopted the indexed cost of acquisition of the land at Rs. 2,25,030 as against Rs. 6,76,710 adopted by the assessee. He ascertained the cost of construction of the new property and considered the fact that the assessee was given 9,000 sq. ft., he worked out the cost of construction of the assessee's 45 per cent share at Rs. 24,90,215 which was adopted as the value of consideration received on transfer of land. Thus, long-term capital gain on transfer of land was worked out at Rs. 22,65,185 and short-term capital gain on sale of flats was worked out at Rs. 6,49,590.

3. The CIT(A) in his exhaustive order concurred with the AO to hold that the assessee had entered into two different transactions resulting into two kinds of capital gains—long-term capital gains on transfer of ownership rights over 55 per cent of the undivided share of land and short-term capital gains on sale of flat Nos. 202 and 401 (part). The main reason to hold that there was transfer of land by virtue of the development agreement was that by the said agreement the assessee had given away absolute rights over the 55 per cent of undivided land. He also held it to be a transfer under s. 2(47) of the Act. According to the CIT(A), cl. (vi )of s. 2(47) took within its ambit a development agreement on the strength of which a developer could construct a building without being a legal owner of the land. So far as the computational aspect is concerned, he concurred with the AO that the cost of acquisition can be allowed only in respect of cost of land and not in respect of the building thereon which was purchased by the assessee on 15th Nov., 1969 and demolished by her by 15th Dec, 1999. So far as exemption under s. 54F is concerned he allowed the claim of the assessee, i.e., allowed deduction of Rs. 5,53,381 being the cost of construction of flat No. 502. The CIT(A) upheld the computation of short-term capital gains on the sale of flat Nos. 202 and 401 (part) except for correcting certain computational errors. Thus, the assessee got partial relief from the CIT(A).

4. At the outset, the learned counsel narrated the facts of the case which we have already incorporated earlier and hence do not repeat the same. According to him, there were two alternative approaches to the problem— first, whether the entire transaction starting from the date of development agreement till the sale of flats by the assessee was a single transaction—second, if not a single transaction, then was it to be split into two as the Revenue authorities have done it. It was submitted that if entering into development agreement was a taxable event for 55 per cent of the land, then the capital gain was assessable in asst, yr. 1995-96 as the agreement was entered into in March, 1995. Further, if 55 per cent of the land was transferred by the assessee on the date of agreement, then what was the consideration flowing to the assessee. According to him, the flats given to the assessee could not be considered as consideration. His contention was that all that the assessee received on the date of transfer was only the right to receive property which was still not in existence. It was argued that the right per se is property but then the question would arise as to what is the value of that right. If it cannot be valued, then there is no capital gain. It was argued that events like handing over possession of land, etc. were incidental to the whole transaction. It was argued that if 55 per cent of the land is transferred, then the assessee and the developer became co-owners of the entire property. The contention was that in law, ownership and possession of each co-owner extend to whole property and that percentage is relevant only when the property is partitioned. Therefore, according to him, in respect of two co-owners, s. 53A of the Transfer of Property Act (TP Act) cannot apply.

5. Another question raised by the learned counsel was with regard to the words "any arrangement or in any other manner whatsoever" mentioned in cl. (vi) of s. 2(47) could be said to be arising from the development agreement. The contention was that development agreement is only a joint venture which comes to fruition when it comes into a foreseen form. It is basically an agreement for improvement of property so that the fruits of the venture can be enjoyed by the owners. According to him, the enjoyment for the developer is in the form of profits that will arise to him on the completion of the project and the enjoyment for the owner would be in the form of the enhanced value of land on account of the development. Another argument advanced by the learned counsel was that if there was a transfer of 55 per cent of land in favour of the developer, had the latter any legal right to sell that 55 per cent of the land in his opinion the developer had no such right. It was contended that the development agreement should be viewed as a licence only which becomes irrevocable and can be terminated only in terms of the licence, i.e., the development agreement.

6. The learned counsel then proceeded to assail the order of the CIT(A) on various aspects, both, legally and factually. Referring to the observations of the CIT(A) in para 3 of his order, the learned counsel refuted the finding that the assessee gave possession of vacant land to the developer after demolishing the existing structure on 15th Dec, 1999. The contention was that this handing over is only to enable the developer to carry out the developmental activity and is not in part performance envisaged under s. 53A of the TP Act. Further, according to the CIT(A), the construction was complete by 31st March, 2001, whereas as per the learned counsel, the construction was complete in July, 2001. It was also submitted that all the 4-1/2 flats were received by the assessee not before 31st March, 2001, but some by 31st March, 2001 and some after 31st March, 2001, but before July, 2001. Referring to para 3(b) in the CIT(A)'s order, the learned counsel refuted the observation that the first transaction started/from the date of permitting the builder to construct the apartment and ended on handing over 45 per cent of the constructed area to the assessee by way of 4-1/2 flats. The submission was that this very observation is a subject-matter of dispute by the assessee. Throughout his order, the CIT(A) has used the expression that the assessee "exchanged/relinquished/extinguished her absolute ownership rights....". According to the learned counsel, this is a vague expression and that the CIT(A) himself has not reached to a definite conclusion. In para 3(c), the CIT(A) has observed that the assessee entered into a development agreement with the builder which is irrevocable. The learned counsel strongly disputed the irrevocability finding of the CIT(A). Referring to cl. 6 of the development agreement, it was submitted that what the developer could sell, lease or mortgage was only his share of the built-up area and nothing else. Referring to cl. 7 of the said agreement, it was submitted that land can be owned by one and building can be owned by the other. With reference to cls. 13 and 14 to the effect that the owner shall not have any independent or exclusive claim, right or title over the land, it was argued that this can happen even in a mortgage transaction. According to the learned counsel, this was an unwarranted observation and that merely some restriction cannot lead to the conclusion that the assessee was no longer the owner of the land. According to him, this was a brief and abrupt way to draw conclusion that the transaction had concluded. The learned counsel submitted that there could be two different situations viz., (a) to give away absolute rights, or (b) to place some encumbrance not to have absolute rights. The question he posed was, does s. 2(47) contemplate transfer of capital asset even if some right out of the bundle of rights is transferred. According to him, s. 2(47) must contemplate some right absolutely and permanently. The learned counsel disputed the observation of the CIT(A) on p. 6 of his order that the assessee had parted with the absolute right over the land in consideration of the constructed area of 4-1/2 flats. It was contended that the assessee already owned the land and to say that this was the consideration was a fallacious conclusion drawn by the CIT(A). It was also contended that merely because the assessee could not independently dispose of any part of the land, it did not mean that transfer had taken place on the date of the agreement. According to him, it was settled law that a co-owner or a joint-owner as tenant-in-common has possession over the whole land. It was contended that non-performance on the part of the developer need not be spelt out in the agreement as it is spelt out by law itself, like building never coming up or illegal construction being demolished and so on. Some restriction here and there in the agreement does not totally extinguish or relinquish the right of the owner over the land. With regard to the mention of the developer becoming absolute owner of 55 per cent of the land in the sale deed executed in favour of Shri K. Subrahmanya Sharma on p. 7 of the CIT(A)'s order, it was contended that by virtue of this recital the developer does not become the absolute owner. The legal effect is that the assessee and the developer are estopped to say anything to the contrary. It acts as a shield to the buyer. To convey title, formalities of the TP Act have to be complied with like registration of sale deed because non-registration defeats transfer. The learned counsel resented the surprise expressed by the CIT(A) on p. 9 of his order as to how the assessee could sell the flats which were not handed over to her. The argument was that the right to receive possession which the assessee had could be transferred. It was legally possible and was actually done by the assessee. According to him, it was an unwarranted inference on the part of the CIT(A) that the flats were handed over to the assessee before they were sold. Elaborating on the point that there are two transactions, the CIT(A) on p. 15 of his order has mentioned that the first transaction envisaged two parties the assessee and the developer, the second transaction envisaged either assessee or developer as the first part and the buyer of the flat as the second part. Against this observation, it was contended by the learned counsel that third party, though unnamed, was contemplated as the assessee had to transfer the proportionate share of each flat from the 55 per cent of the land. On p. 21 of his order, the CIT(A) has extracted certain recitals from the sale deed executed in favour of the subsequent buyers of the flats. Referring to these recitals, it was contended that these statements are not right in law and therefore cannot be treated as admission on the part of the assessee. The third party may plead estoppels, but in tax proceedings, legal position has to be seen. Revenue cannot use it as an estoppel against the assessee. According to the learned counsel, the effect in the recital can take place only when the transaction is complete and at best, it can be treated only as a statement accepted by two parties. With regard to the observation of the CIT(A) that cost of acquisition of the superstructure cannot be allowed as deduction, the learned counsel stated that no reason has been ascribed by the CIT(A) for such a conclusion. Finally, the CIT(A) upheld the action of the AO of splitting the entire transaction into two, one that of transfer of land from the assessee to the developer, the other of selling the flats by the assessee to the buyers. He did not allow the cost of superstructure in computing the capital gains but accepted the alternative contention of the assessee that if there are two transactions, then the cost of acquisition of the two flats sold in asst. yr. 2002-03 be taken as Rs. 5,53,381. He also allowed exemption under s. 54F of the Act to the extent of Rs. 5,53,381. There were certain incidental arguments in addition to what has been narrated above in respect of the legal propositions as also in respect of the computational aspect of the transactions. To these arguments we shall advert to later, if necessary. Before closing his arguments, it was also stated by the learned counsel that there were a few decisions of the Tribunal on the issue, copies of which he has placed on record, but according to him, there was no consistent approach in these decisions. He referred to some of these decisions, the observations therein and the conclusion arrived at by the Tribunal. It was, therefore, submitted that a comprehensive and an all-compassing view be taken while adjudicating on this appeal.

7. The learned Departmental Representative fully supported the order of the CIT(A) except for the exemption granted under s. 54F of the Act. It was contended that the transfer of land took place in the year in which the development agreement was executed. In this connection, reliance was placed on the judgment of the Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia… v. Commissioner Of Income-Tax, Bombay City-Viii… [2003] 180 CTR (Bom) 107 : [2003] 260 ITR 491 (Bom) . He also placed reliance on the decision of the Hyderabad Bench of the Tribunal in the case of Smt. Shantha Vidyasagar Annam in ITA No. 885/Hyd/2003, dt. 9th June, 2006. He also supported the proposition that there were two transactions and not one and relied on the decision of the Hyderabad Bench in the case of Smt. Hemalatha Rathi in ITA No. 1756/Hyd/1996, dt. 29th July, 2005. Of course, it was pointed out that another decision of the same Bench in the case of S. Raghurami Reddy in ITA No. 296/Hyd/2003, dt. 30th July, 2004 was contrary to the decision in the case of Hemalatha Rathi (supra). However, at the same time, it was pointed out by the learned Departmental Representative that there was a third opinion expressed by the Authority for Advanced Rulings in Jasbir Singh Sarkaria, In re [2007] 212 CTR (AAR) 107 : [2007] 294 ITR 196 (AAR) . So far as the computational aspect is concerned, the learned Departmental Representative relied on the order of the CIT(A). So far as allowing exemption under s. 54F is concerned, which is the ground in the Departmental appeal, the learned Departmental Representative relied on the order of the AO.

8. In reply to the arguments of the learned Departmental Representative, the learned counsel had only to say that while interpreting a tax law, the time of accrual of tax liability and the quantum of liability should be certain.

9. We have duly considered the rival contentions and the material on record. Before we embark upon to adjudicate upon the merits of the issues, we would first like to deal with the last plea made by the learned counsel and referred by us at the end of para 6. It pertains to the conflicting views expressed by the various Benches of the Tribunal in similar issues. In this connection, we are tempted to refer to "The Good Faith Thesis" propounded by Steven J. Burton, an eminent jurist. According to him, the Good Faith Thesis permits a meaningful scope for adjudication under law within a constitutional democracy. Familiar jurisprudential treatments of adjudication share a common and undefended commitment to what he calls the "determinacy condition". This condition holds that Judges cannot fulfil their duty to uphold the law unless they reach the single right result determined by the law. The Good Faith Thesis abandons the determinacy condition completely. It understands the law as a provider of legal reasons, not necessarily results. It understands the legitimacy of adjudication to depend on respect for the reason, not agreement with the results, in cases. Good Faith Thesis claims that Judges are bound in law to uphold the conventional law, even when they have discretion, by acting only on reasons by that law as grounds for judicial decision. A companion thesis—the "Permissible Discretion Thesis"—claims that, when exercised in good faith, judicial discretion is compatible with the legitimacy of adjudication in a constitutional democracy. Together, the good faith and permissible discretion thesis allow a meaningful scope for adjudication while maintaining that the, law is conventional and that Judges are constrained to interpret and apply it in all cases within their jurisdiction. Besides, what Steven Burton mentioned as above, we are also keeping in view two maxims, viz., Ut res Magis Valeat Quam Pereat : Et Varba Intentioni None Contra Debent Inservire (Constructions are to be made liberally, on account of the simplicity of the laity, that the thing may rather avail than perish; and words ought to serve the intention, not contrary-wise). These maxims relate to the mode of interpreting written instruments. The Judges will rather apply to words of a document to fulfil its lawful intent, than destroy such intent because of insufficient language, for to the intention, when once discovered, all technical forms of expression must give way. Though several decisions have been cited by both the sides, none of them can be considered a binding precedent for the reason that no document would be identically 'worded and the conduct of the parties also would differ from case to case which certainly will have bearing in drawing inferences and conclusions. With this background we proceed to adjudicate the appeal.

10. Let us first identify the issues which need our consideration. They can be listed as follows :

(a) Does the development agreement have the effect of transferring the land from the assessee to the buyer under any of the clauses in s. 2(47) of the Act ?
(b) If the reply to the above question is yes, then what is the effective date of transfer for the purposes of capital gains ?
(c) Do the events starting from the date of executing the development agreement upto the date of sale of flats by the assessee constitute one single transaction, or they are two separate transactions, involving transfer of land as one transaction and sale of flats as the other ?
(d) If there are capital gains accruing to the assessee in any manner, then the computational aspect of the gains;
(e) Is the assessee entitled to deduction of the superstructure in computing capital gains ?
(f) Is the assessee entitled to exemption under s. 54F of the Act ?

Effect of development agreement:

11. For immediate reference, we reproduce the provisions of s. 2(47) below :

"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
(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 s. 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 AOP 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-cls. (v) and ( vi), 'immovable property' shall have the same meaning as in cl. (d) of s. 269UA;"

The first aspect to be noted is that the term "transfer" has been defined inclusively and not exhaustively. Thus, over and above its natural meaning, the term "transfer" would also encompass the situations mentioned in s. 2(47). The first clause speaks of sale, exchange or relinquishment of the asset. Under the TP Act, "sale" is denned as a transfer of ownership in exchange for price paid or promised or part-paid or part-promised. It is well established that though "price" is not defined in the TP Act, it is used in the same sense as in the Sale of Goods Act, 1930 and means money consideration for the sale of goods. Thus, the presence of money consideration is essential in a sale transaction. In the present case, there is no money consideration flowing from the developer to the assessee and hence it is not a sale transaction. Relinquishment is understood to have taken place when a person gives up, abandons or surrenders his interest. After relinquishment, it is owned by some person other than the one who relinquishes the property. In the present case, the assessee has neither given up, nor abandoned nor surrendered the property. She has, in fact, exchanged her present property for consideration in kind which is in the nature of 4-1/2 flats to be given to her by the developer. Thus, it is a case of exchange as understood in cl. (i) of s. 2(47). However, one of the arguments of the learned counsel is that by transferring 55 per cent of the land to the developer, the latter has become a co-owner of the property and by virtue of his co-ownership the possession of each co-owner extends to the whole property. In our view, the argument is quite spacious. The situation described by the learned counsel is relevant when the whole of the property is owned by co-owners. In the present case, the whole of the property was owned by the assessee and out of the whole property, she transferred 55 per cent of the land to the developer. By parting away with a part of the property, the transferee does not become a co-owner but acquires interest only in the 55 per cent of the land transferred to him. This is more evident from cl. 14 of the agreement which we reproduce below :

"14. The 'owner' shall not put forth any independent or exclusive claim, right or title over the land on which the schedule mentioned premises is constructed except to the extent of undivided share in the land retained by allotted to the owner." (sic) .

From the abovementioned clause it is more than clear that on the 55 per cent of the land, the assessee has no claim whatsoever. Further, the clause makes it clear that she will have right only to the extent of the undivided share in the land proportionate to the 45 per cent of the built-up area allotted to her. This is the position that emerges when cls. 13 and 14 of the agreement are read together. Therefore, the argument of the learned counsel about the co-extensive' possession of both on the entire land holds no water.

12. Another argument of the learned counsel was that the development agreement is a joint venture for improvement' of the property so that the fruits of the venture can be enjoyed by the owners. Well, it is neither the case of the assessee nor is there anything on record to show that the profits made on sale of flats other than those allotted to the assessee were to be shared by both the assessee and the developer. The contention that the enjoyment to the assessee would be in the form of enhanced value is quite hypothetical and not worthy of any serious consideration. We firmly believe that it is not a joint venture at all even when considered in its widest possible sense. We also do not agree with the argument that the enjoyment of the developer is only in the form of profits that will arise to him on the completion of the project. The moment the developer got the exclusive right to exploit the property, his enjoyment starts. In this connection, we may advantageously refer to the decision of the Supreme Court in the case of CIT v. Podar Cement (P) Ltd. [1997] 141 CTR (SC) 67 : [1997] 226 1TR 625 (SC) . We are conscious of the fact that in that case, the Court was considering the concept of "ownership" in the context of s. 22 of the Act. However, the principles are equally relevant in the context of capital gains also and more so, when we are dealing with the provisions of the same legislation. At p. 640 of 226 ITR, the Court made the following observations :

The full rights of an owner as now recognised are :

(a) The power of enjoyment (e.g., the determination of the use to which the res is to be put, the power to deal with produce as he pleases, the power to destroy);
(b) Possession which includes the right to exclude others;
(c) Power to alienate inter vivos, or to charge as security;
(d) Power to leave the res by will."

The Court added that one of the most important of these powers is the right to exclude others. The property right is essentially a guarantee of the exclusion of other persons from the use or handling of the thing. Clause 12 of the agreement provides that the developer shall along with the structures also sell, transfer, convey, gift or otherwise alienate to third parties the undivided share of the land on which the building stands. The assessee is not given such right, leave aside anybody else. Even further construction can be made by the developer only and by no one else. This is the inference that can be drawn from cl. 20 of the agreement. The position of the assessee is no more than any other flat owner and has nothing more than the ownership of the flats along with the proportionate share of the land. Thus, what the assessee is left with is only the husk of the legal title and nothing more. On the other hand, the developer has all the rights of an owner in a practical sense. Enjoyment as an owner only in a practical sense can be attributed to the term "owner". This was the principle laid down way back in 1971 by the Supreme Court in R.B. Jodha Mal Kuthiala v . CIT [1971] 82 ITR 570 (SC) and applied in the case of Podar Cement (P ) Ltd. (supra). It is immaterial whether the developer can sell the land or not, but he certainly has the right to exploit it. If the developer does not build more than 4-1 /2 flats, the assessee has no recourse and cannot compel the developer to build more. There is no embargo on the developer to make use of the land for any other purpose barring giving 4-1/2 flats to the assessee. Another argument of the learned counsel was that the property was handed over only to enable the developer to carry out the developmental activity and is not in part-performance as envisaged under s. 53A of the TP Act. The agreement is certainly for the development of the land and pursuant to this agreement, the assessee has handed over the possession to the developer. It is in consideration of this handing over of the land that the assessee has been promised to be given 45 per cent of the constructed area. Clause 14 of the agreement debars the assessee from putting forth any independent or exclusive claim, right or title over the land on which the premises is constructed. Thus, if in violation of this clause, the assessee puts up a claim on the title of the land, the developer shall have a shield under s. 53A of the TP Act. It is the very principle of s. 53A to provide a shield of protection to the transferee to remain in possession against the original owner who has agreed to transfer the land. As per Mulla's Transfer of Property Act (2005, 10th Edn.), the following postulates are sine qua non for basing a claim on s. 53A of the TP Act :

(a) There must be a contract to transfer for consideration any immovable property. In the present case, there is a contract to handover possession of immovable property for consideration of 4-1/2 flats.
(b) The contract must be in writing, signed by the transferor, or by someone on his behalf. None of these facts is in dispute and the conditions are fulfilled.
(c) The writing must be in such words from which the terms necessary to construe the transfer can be ascertained. In the present case, cl. 14 is so worded that the assessee has no claim over the land once it is handed over to the developer.
(d) The transferee must in part performance of the contract take possession of the property, or of any part thereof. The fact that the developer has taken possession is not in dispute.
(e) The transferee must have done some act in furtherance of the contract. In the present case, the developer has constructed the flats as stipulated in the agreement. Thus, he has performed his part of the contract.
(f) The transferee must have performed or be willing to perform his part of the contract. We have already mentioned at ( e) above, that the developer had already performed his part of the agreement and hence he is entitled to the shield under s. 53A of the TP Act if the assessee raises any claim over the land.

Therefore, we see no force in the argument of the learned counsel that the handing over of the possession is not in pursuance of part performance of the contract. As is well known, ownership consists of a bundle of rights, the various rights and interests may be vested in different persons, e.g., a mortgagor and a mortgagee, a lessor and a lessee and so on. Mulla in his commentary states that absolute ownership is an aggregate of component rights such as the right of possession, the right of enjoying the usufruct of the land, and so on. These subordinate rights, the aggregate of which makes up absolute ownership, are referred in the TP Act as interests in property. Sec. 5 of the TP Act contemplates that a transfer of property is either a transfer of absolute ownership, or a transfer of one or more of these subordinate rights. Thus, if these principles are applied to the present case, possession of the land being one of the interests in property has been transferred to the developer who also would be enjoying the usufruct of the land.

13. Another argument raised by the learned counsel is that there is no consideration flowing to the assessee for handing over the possession and hence there is no transfer. He has also stated that the 4-1/2 flats receivable by the assessee cannot be considered as considerations. So far as the necessity of consideration is concerned, it is relevant only for the computation of capital gains under the IT Act. If there is no consideration, capital gains would not be computable and the transaction will be dealt with in some other manner in accordance with law. In the present discussion, we are concerned only with the aspect whether there is transfer or not. It is the transfer of property which is the taxable event under the Act and then to compute the gains, consideration becomes relevant. Sec. 5 of the TP Act speaks only of transfer and not necessarily transfer for consideration only. In the earlier paras we have already seen as to how transfer has been effected by the development agreement and also that how the shield of s. 53A of the TP Act is available to the developer. If the shield of s. 53A is available to the developer, it obviously means and we have also held it so, that handing over of the possession is pursuant to the transfer contemplated under the TP Act and hence under cl. (v) of s. 2(47) of the IT Act also. Thus, even for a moment, it is agreed without accepting it that there cannot be a transfer without consideration, then the said argument would be running contrary to the principles of the TP Act. Now, we come to the consideration part. If the transfer is by sale, then obviously, the consideration will have to be money only. However, in the present case, we have already discussed earlier that this is not a sale transaction as money is not the consideration but some other valuable consideration is passing to the assessee in the form of 4-1/2 flats. The argument of the learned counsel is that the assessee has received only the right to receive property and not the actual consideration itself in the form of the property. If the transfer is by way of sale, s. 54 of the TP Act postulates that payment of price is not necessarily a sine qua non to the completion of the sale. Further, s. 53A of the TP Act does not debar a person from taking advantage of that section merely because he has not paid the amount in full. Sec. 118 of the TP Act provides that a transfer of property in completion of an exchange can be made only in manner provided for the transfer of such property by sale. Sec. 120 of the TP Act provides that each party has the rights and is subject to the liabilities of a seller as to that which he gives, and has the rights and is subject to the liabilities of a buyer as to that which he takes. In nutshell, what s. 118 r/w s. 120 of the TP Act contemplates is that all the rules that apply to a transfer by sale, equally apply to a transfer by way of exchange insofar as they are applicable. Therefore, the transfer in the present case is for consideration and it is immaterial that the consideration may be received in future. The argument of the learned counsel has no force insofar as that in the case of Jugalkishore v . Raw Cotton Company AIR 1955 SC 376, the Supreme Court held that the words "in present or in future" in s. 5 of the TP Act qualify the word "conveys" and not the word "property". In other words, a transfer of property not in existence operates as a contract to be performed in future, which is specifically enforceable as soon as the property comes into existence. Thus, this argument of the learned counsel also fails. Therefore, in the light of the foregoing discussion, we are of the considered opinion that the development agreement in the present case has the effect of transfer as contemplated in s. 2(47) of the Act.

Effective date of transfer :

14. Having held that the execution of the development agreement resulted into the transfer of land from the assessee to the developer, the next issue which falls for consideration is as to what is the effective date of transfer. Well, this issue should not detain us for too long a time. The moment the transferee gets the right to make use of the land or to enjoy its usufructs, the transfer is complete. Earlier, we have noted that payment of consideration is not necessarily a sine qua non to the completion of the transaction. Under the TP Act, if the intention is that property should pass on registration, the sale is complete as soon as the deed is registered irrespective of whether the price has been paid. However, under the IT Act, as per s. 2(47), any transaction involving the allowing of the possession of any immovable property in part performance of a contract of the nature referred to in s. 53A of the TP Act constitutes transfer. We have noted earlier that possession is one of the important subordinate interests amongst the several components that go to make up absolute right. This is in consonance with s. 5 of the TP Act as also in consonance with the principles enunciated in the judgment in the case of Podar Cement (P) Ltd. (supra). In the present case, though the agreement was entered into in March, 1995, the assessee continued to reside in the old structure for quite sometime thereafter. In fact, the rent earned by her on the part of the structure which was let out by her, has been accounted for till June, 1998. It is on record that the old structure was demolished by the assessee by 15th Dec, 1999 and then the possession of the vacant land was handed over to the developer. Till this date, the agreement was merely an executory agreement and not acted upon. There is no material on record to suggest that either party had taken some step towards the implementation of the agreement. Thus, it can be said that the developer got the possession of the land sometime in December, 1999. This is the first step towards the implementation of the agreement entered into in March, 1995. More importantly, the possession was handed over with all the rights and interests in the property barring the assessee's share in land proportionate to her 45 per cent share in the constructed property. Qua the entire piece of land, the assessee was left with nothing but the husk of title and hence it was a transfer as per s. 2(47) of the Act. It can be said that though the agreement was entered into in 1995, it did not give rise to any rights to either party as the implementation of the agreement did not start till as late as December, 1999. Earlier we have noted that the intention of the parties, as it emanates from the agreement, is to effect transfer of land from the assessee to the developer and on handing over the possession, the assessee actually gave shape to the intention. This handing over of the possession was towards the part performance of the agreement. Therefore, as per cl. (v) of s. 2(47), transfer took place in December, 1999, the effective assessment year being 2000-01.

15. As per s. 45(1) of the Act, capital gain arising from the transfer of a capital asset shall be chargeable to tax in the year in which the transfer took place. In the preceding para we have held that since the transfer took place in December, 1999, the capital gain is chargeable to tax in the asst. yr. 2000-01. In his arguments, it was contended that by the learned counsel that if the taxable event was the entering into the development agreement, which was in 1995, then also, there would be no tax liability as no consideration was received in that year. What the assessee had received was merely a right to receive 4-1/2 flats which were not in existence at the time of entering into agreement. The same argument may be raised by him in connection with asst. yr. 2000-01. Well, it is well established that it is enough if the assessee has received the right to receive the consideration. It may be quantified later or it may be received later, but these factors do not retard or stall the accrual and hence the gain has to be taxed in the year of its accrual only. In support of this view, we rely on the following judgments :

(a) T V. Sundaram Iyengar & Sons Ltd. v . CIT [1959] 37 ITR 26 (Mad);
(b) CIT v . Rohtak Textile Mills Ltd. [1982] 30 CTR (Delhi) 151 : [1982] 138 ITR 195 (Delhi);
(c) Smt. Jeejeebai Shinde v . CIT [1983] 33 CTR (MP) 241 : [1983] 144 ITR 693 (MP);
(d) Addl. CIT v . G.M. Omarkhan [1979] 116 ITR 950 (AP);
(e) B.N. Vyas v . CIT [1985] 49 CTR (Guj) 100 : [1986] 159 ITR 141 (Guj).

and many others. In the case of Rohtak Textile Mills Ltd. (supra), the Delhi High Court observed that for bringing such capital gains to tax the Department cannot be asked to wait until the compensation or price payable is finally determined. All that is necessary is that, by the end of the previous year in question, the assessee must have received or become entitled to receive the consideration. The assessment so made may be liable to modification when the actual consideration is determined. Therefore, in the light of these principles, we have no hesitation in holding that in the instant case, capital gains accrued in the previous year relevant to asst. yr. 2000-01. May be, the AO might have had to resort to estimating the consideration but the same would have been subject to modification later. Thus, we hold that the capital gain arising on the transfer of land is not chargeable to tax in the year under consideration.

Whether single transaction or two transactions :

16. The contention of the learned counsel has been that commencing from the date of transferring the land to the developer and ending on the date when the assessee sold her share of flats constitute a single transaction. The argument is too fallacious to be accepted. The land is one capital asset transferred by the assessee and the flats allotted to her in consideration for the transfer of land constitute a different capital asset for the assessee. How can transfer of two capital assets transferred on different dates constitute a single transaction for the purpose of capital gains under the Act ? It is not a conversion of an asset from one form to the other. Such a conversion is deemed to be a transfer only when a capital asset is converted into stock-in-trade by a person. In the instant case, it is not in dispute that the land held by the assessee was her capital asset. It cannot also be disputed that the flats acquired by her were also her capital assets. The acquisition of the new asset may have been by any mode, but simply because the new asset came to her by way of consideration for transfer of earlier asset, the transfer of new asset does not cease to be a transfer as per s. 2(47) of the Act constituting altogether a new transaction. If the argument of the learned counsel were to be accepted, the assessee can easily defeat the very charging provision of s. 45 of the Act by postponing the sale of the new asset indefinitely. Such a situation is not envisaged under the Act. And why talk of postponement at all. She may very well decide not to sell any of the flats coming to her share. The situation would be like this. As per the development agreement she has no claim over the land which has been given to the developer and she may not sell any of the flats coming to her share. In that case, despite there being transfer of land as per s. 2(47) of the Act, the assessee could escape the liability of capital gains tax. Therefore, as mentioned earlier, the stand of the assessee to treat the two transactions as one is too fallacious. It does not merit acceptance. Accordingly, we hold that transfer of land in consideration of the flats constitute one transaction giving rise to capital gains and the sale of flats by the assessee constitute another transaction giving rise to capital gains.

Computational aspect of the capital gains :

17. Having held that there are two transactions, one involving transfer of land, and the other involving transfer of flats, we come to the computational aspect of the capital gains in the two transactions. This would also cover the remaining two issues, viz., whether the cost of old superstructure is to be allowed as deduction or not and whether the assessee is entitled to deduction under s. 54F.

18. So far as exemption under s. 54F is concerned, the same has been rightly allowed by the CIT(A) as the provision is very clear to the effect that the exemption is to be denied only when the assessee is having more than one residential house on the date of transfer of the asset. In other words, if the assessee is having one residential house as on the date of transfer of the asset, then the assessee would be entitled to exemption under s. 54F of the Act. Therefore, on this issue we uphold the order of the CIT(A) and reject the ground raised by the Revenue.

19. Another issue relates to the allowability of the cost of the old superstructure demolished by the assessee before handing over the possession of the land to the developer. This issue is undoubtedly covered in favour of the assessee by the order of the Hyderabad Bench of the Tribunal in the case of Prabhandam Prakash v . CIT in ITA No. 147/Hyd/2007, dt. 25th Jan., 2008. Even otherwise also, as per the TP Act, immovable property would include land, benefits to arise out of land and things attached to the earth, or permanently fastened to anything attached to the earth. Thus, the building being attached to the earth will pass on to the transferee along with the land. It is immaterial that the said building was demolished by the assessee. It was merely taking upon oneself a responsibility. Further, it also makes no difference if the sale proceeds of the scrap are taken by the owner, i.e., the transferor. This fact does not necessarily lead us to the inference that the building is not transferred along with the land. Thus, unless there is a specific agreement to the contrary, when land is transferred, things attached to it or fastened to anything attached to the earth will also get automatically transferred. At the most, if the owner receives the. sale proceeds of the scrap, then while computing capital gains on transfer of land, the proceeds so received may be added to the overall consideration received by the assessee.

20. Having decided about the two deductions as above, we can now embark on the actual computational aspect. However, we do not wish to do so for the reasons that follow. Firstly, the assessee returned long-term capital gains by treating the entire transaction as one transaction, i.e., starting from the transfer of land to the sale of 1-1/2 flats during the year. However, we have upheld the stand of the Revenue treating the transfer of land as one taxable event, and the sale of flats as the second taxable event. Even in the course of proceedings before us, though the learned counsel handed over some sheets showing the computation according to his view point, the same does not proceed on the basis of two transactions. There also appear to be conceptual differences between the computation made by the assessee and that made by the CIT(A). Most importantly, we have held that the long-term capital gain arising on transfer of land is not taxable during the year under consideration as it has accrued in the previous year relevant to asst. yr. 2000-01. Therefore, the AO may consider, if law permits and if so advised, to compute the gains in the year to which it pertains. Accordingly, we do not wish to enter into that aspect in this appeal. So far as computation of gains on sale of flats is concerned, there is no dispute that two flats were sold in the year relevant to the asst. yr. 2002-03. Hence, that part does not fall for our consideration. During the year, there is a sale of 1-1/2 flats. In this also, there are differences in all the three computations viz., that made by the AO, by the CIT(A) and by the assessee. Accordingly, this issue is restored back to the file of the AO with the direction to recompute the short-term capital gains on sale of 1-1/2 flats after considering the view point of the CIT(A) and also after giving due opportunity of being heard to the assessee.

21. In the result, the appeal of the assessee is partly allowed and that of the Department is dismissed.