TMI Blog2013 (9) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... addition made in the return of income is against the acts and law of the case. 2. That the demised land, being agricultural land, and not being an asset within the ambit of section 2(14)(iii), no capital gain was attracted on its alleged transfer. 3. That the AO has grossly misdirected himself in law and on facts in bringing to tax the notional capital gain on the strength of a Joint Development Agreement, which remained unexecuted for various disputes and finally terminated by the Society, being the owner. 4. That even otherwise, the assessee being only a member of the society and the JDA having been executed by the Society with the developers, in its capacity as owner, the alleged capital gain, if any, ought to have been assessee in the hands of the society. 5. That also, the concept of mutuality being involved in the formation of the Society, the impugned transaction per se was not liable to tax at all. 6. That by any angle, in terms of the amended provisions of section 53A of the Transfer of Property Act, read with section 2(47) of IT Act, 1961, no capital gain, beyond the part of land actually transferred by way of registered sale deed, was liable to tax. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Ld. CIT(A) is bad in law and on facts. 11. That the appellant craves leave to add to or amend the aforesaid grounds at or before the hearing of appeal. 3. In ITA No. 408(Asr)/2013, Sh. Devinder Pal Singh Oberoi, 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 ₹ 1,03,07,560/-, including long terms capital gains of ₹ 1,00,05,000/-. 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 ₹ 1,00,05,000/- 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 ₹ 1,00,05,000/-. 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. 5. 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 3 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. IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viii) Vide paras 89 to 96, being the eighth 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 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 ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Members holding plot of 1000 sqyd was to receive a sum of ₹ 1.65 crores. In addition to this Member holding a plot of 500 sqyd was to receive fully furnished flat measuring 2250 sq. ft. to be constructed by THDC/HASH and Members having 1000 sqyd were to get two such flats. According to the Assessing Officer total consideration to be received by all the Members was ₹ 1,06,42,35,000/- and furnished flats as mentioned above. Before entering into the tripartite agreement the Society in its Executive Committee meeting held on 4.01.2007 which was approved in the General Body meeting held on 26.2.2007, passed a resolution to the effect that all the Members would surrender their all rights in the property to the Society and the Society would enter into an agreement on behalf of the Members with THDC/HASH. The Assessing Officer has referred to this resolution as well as various important clauses of the JDA and has placed lot of reliance on clause 2.1 of the JDA which is as under: The owner hereby irrevocably and unequivocally grants and assigns in perpetuity all its rights to develop, construct, mortgage, lease, license sell and transfer the property along with any and all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain was to be charged in the hands of the assessee in Assessment year 2007-08 by taking full value of the construction at ₹ 3,67,50,000/-. The assessee filed various replies which have been extracted by the Assessing Officer as under: This has reference to your letter dated 7.12.2009, we submitted that under: 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 be fulfilled before the full execution of the agreement and transfer of property to THDC Ltd. 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 ₹ 12 lacs was received. As stated earlier, the amount was received as advance under the agreement and the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tizen 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 ₹ 15 lacs Instead of ₹ 12 lacs. As per the agreement, sum of ₹ 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 MANU/BH/0042/1992 : (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 capital gain as submitted by us. 9. The case was further fixed for 24.12.2009, On the said date the counsel of the assessee filed another reply which is reproduced as under: 1. As 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 capital 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 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 Regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case were similar to the facts in case of CIT V.K. Jeelani Basha, MANU/TN/2956/2002 : 256 ITR 282 (Mad) wherein Hon'ble High Court after analyzing the provisions of section 2(47)(v) had held that once the possession even for a part of the property was handed over to the transferee, for the purpose of Section 2(47)(v) r.w.s. 45, the transfer was complete. (iii) The assessee's case was also covered by the provisions of section 2(47)(vi) which deals with any transaction which had effect of transferring or enabling the enjoyment of any immovable property and assigning various rights in the property in favour of THDC and handing over the original title deeds as well as handing over of the physical vacant possession of land has the effect of transferring or enabling the enjoyment of the said property to THDC/HASH. (iv) There was no force in the contention that the amounts received under the said agreement were advances received and not the sale consideration because total consideration was structured in the JDA and the consideration was to be received as per clause 4(iv) of the JDA. In fact the assessee has himself shown the receipt and returned the same as capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act and observed that clauses (v) to (vi) were inserted in section 2(47) w.e.f. 1.4.1988. He observed that before insertion of this provision, it was always possible to avoid or postpone capital gain by either not executing conveyance deed or postpone such execution because vendor of the property could give the privilege of ownership or enjoyment of the property by executing a Power of Attorney etc. To avoid such leakage of revenue clauses (v) and (vi) were inserted to section 2(47) of the Act. He then discussed the decision of Hon'ble Bombay High Court in case of Chaturbhuj Dwarkadas Kapadia V. CIT, MANU/MH/0152/2003 : 260 ITR 491 (Bom) and extracted the following conditions which were required to be satisfied to cover the case u/s. 2(47)(v) r.w.s. 53A of T.P. Act. (a) There should be contract for consideration (b) It should be in writing (c) It should be signed by the transferor or on his behalf (d) It should pertain to transfer of immoveable property (e) Transferee has in part performance of contract has taken possession or part possession of the property. (f) Lastly, transferee should be ready and willing to perform his part of contract. 23. If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty. 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 ₹ 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 ₹ 12,00,000 per plot holder of 500 Sq. Yards and ₹ 24,00,000 per plot holder of 1000 Sq. Yards is being paid on the execution of agreement against which the Society on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 preceding 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng conditions emerged for attracting these provisions- a. There must be contract of transfer for consideration for an immovable property; b. Contract must be in writing c. Terms necessary to constitute transfer should be ascertainable with reasonable certainty. d. The transferee must have in part performance taken the possession of the property or part thereof from the transferor and if already in possession, continues in the possession in part performance of the contract. e. Transferee must have done something in furtherance of the contract. f. The transferee must have performed or willing to perform his obligations in such contract. In view of the above conditions in the present case, condition No. (d) and (f) have not been complied because the assessee and/or society has not handed over the possession to THDC/HASH. In this regard he particularly referred to clause 2(1) of the JDA and pointed out that the possession was to be handed over to THDC/HASH simultaneously with the execution and registration of the JDA. Since the JDA was not registered therefore, it is clear that the possession was not handed over. In any case the possession if at all was granted as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ruling in case of Jasvir Singh Sarkaria, MANU/AR/0015/2007 : 294 ITR 196. He particularly referred to para 26 to 28 of the judgment. He further referred to clause F (page 17 of the paper book) i.e., clause 2.1 of the JDA (page 24 of the paper book) and submitted that contents of these clauses will entirely show that possession was given and was envisaged in the shape of license to the developers for undertaking the development of property and legal possession was neither handed over or intended to be handed over. III. Money which is received at the time of execution of JDA can be termed as advance payment. In any case when these amounts were adjusted as part of sale consideration for sale of part of the property and the same have been retuned by the assessee as long term capital gains through revised return in the year of receipt. IV. It was emphasized that in any case Section 53A of T.P. Act has been amended by Amendment Act, 2001 whereby registration of agreement has been made mandatory for the same to be enforceable. Since JDA was never registered therefore, recourse could not be taken to Section 2(47)(v) of the Act because JDA was not registered. Pursuant to amendment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction within 6 months of hand over of final plans. (e) Clause 8.4 provided obligation to take timely approval and clause 8.6 provided for payment of various statutory charges in respect of development charges, license fee and external default etc. Further to above obligation, time was of essence in the contract which becomes clear from clause 1.2(a), 4.1 and 7.10 regarding timely payment and clause 14(iv) regarding termination of contract. In the case before us, there was no willingness on the part of developer i.e. THDC/HASH to perform the above obligation because of the following- (i) THDC/HASH failed to obtain necessary approval and did not undertake any development work on land. (ii) THDC/HASH i.e. developer has not paid timely payment in timely installments of agreed consideration. (iii) HASH has not obtained approval from various authorities and had not commenced construction within six months of handing over all final plans. (Reference was made to page 34 of the paper book). (iv) THDC/HASH vide letter dated 4.2.2001 (Page 23 to 24 of the additional evidence) refused to make further payment as stipulated in the agreement. (v) The transferor has gone b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al sum which is not permissible under the law. Under the various provisions of the Act, only real income can be taxed which has been earned by the assessee and no notional income can be subjected to tax. In this regard, reliance was placed on the following decisions of the Hon'ble Supreme Court: Shoorji Vallabhdas Co., MANU/SC/0228/1962 : 46 ITR 144 (S.C.) CIT V. Raman and Co. 67 ITR 11 (S.C.) Godhra Electricity Co. Ltd. V. CIT, MANU/SC/0592/1997 : 225 ITR 746 (S.C.) CIT V. Balrampur Commercial Enterprises Ltd., MANU/WB/0048/2003 : 262 ITR 439 (Cal) CIT V. K. Jeelani Basha, MANU/TN/2956/2002 : 256 ITR 282 FOBEOZ India (P) Ltd. V. ITO, ITA No. 9231/Mum/2010 (copy filed) It was claimed that since the flats were never constructed and given to the assessee, therefore, if the value of the flat is added in the total consideration then it will be totally on notional basis and since notional income cannot be taxed, therefore, the value of these flats, in no case, should be considered in the total consideration. Further if notional receipts were taxed then the assessee would be deprived to take benefit available in the IT Act. For example if whole consideration wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responding deduction u/s. 54F of the Act should have been allowed particularly in view of Circular No. 472 dated 15.10.1986. In this regard he relied on the following decisions: CIT V. Sardarmal Kothari and another, MANU/TN/0835/2008 : 302 ITR 286 (Mad) CIT V. R.L. Sood, 245 ITR 727 (Del.) CIT V. Mrs. Hilla J.B. Wadia, MANU/MH/0188/1993 : 216 ITR 376 (Bom) Mrs. Seetha Subramanian V. ACIT, 59 ITD 94 (Mad Bench) Usha Vaid v. ITO, 53 SOT 385 Smt. Ranjit Sandhu v. DCIT, 133 TTJ 46 (Chd) 25. On the other hand, the ld. CIT DR for the revenue made detailed submissions and have also filed written submissions. It was pointed out by the CIT-DR for the revenue that though copy of the special power of attorney has been filed at pages 153 to 165 but two of the most important crucial pages containing clause u to z and last page No. 9 are missing. He made an allegation that this has been done deliberately which was controverted by the ld. counsel of the assessee and he submitted that this is a simple mistake and he would file those papers. The ld. DR for the revenue in view of these submissions submitted that these pages can be referred in case of Punjabi Coop House Build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property was also given. The combined reading of various clauses in the JDA and power of attorney show that:- (i) All the Members of the Society expressly and willingly had surrendered their respective plots in favour of the Society and the Society was authorized to sell/transfer the entire land in favour of THDC/HASH for a consideration which was set out in the clauses of JDA. The society was also authorized to hand over original title deeds and possession of land to THDC/HASH. (ii) The Society handed over the possession of the land and original title deeds of the property to THDC/HASH. (iii) Society permitted THDC/HASH to mortgage, sell and create charge in the property. (iv) The Society resolved to execute an irrevocable special power of attorney which could not be revoked in any circumstances without proper consent of THDC/HASH and such power of attorney was actually executed on 26.2.2007. Through this power of attorney THDC/HASH has been authorized to mortgage or create charge by the Society. THDC/HASH was authorized to give the possession of the property or any part thereof to the authorities to whom same was required to be handed over which was not possible unles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied on the decisions of Mumbai Bench 'D' of the Tribunal in Ms. Rubab M. Kazerani v. JCIT 91 ITR 429(Mum.), ITAT Hyderabad 'A' Bench in D. Achutha Rao Vs. ACIT 106 ITD 388 (Hyd) and ITAT Delhi Bench 'D' Bench in ACIT v. Smt. Pushpa Devi Jain 93 ITD 289 (Del.). (IV) He further submitted that clause (v) (vi) of section 2(47) of the Act were inserted w.e.f. 1.4.1988 by Finance Act, 1987. Before that, passing of the title in the property was necessary condition to constitute a transfer under the Act in view of the various pronouncements of the Courts. In the meantime it was noticed by the Government that many properties were being transferred without execution of sale deed through various documents what is popularly known as 'power of attorney' transactions. To curb the leakage of Revenue, through such transaction, clauses (v) (vi) were added to section 2(47) which defines transfer. This has been explained by Circular No. 495 dated 22.9.1987. The Board has clarified through paras 11.1 11.2 that newly inserted clauses (v) (vi) would enlarge the definition of transfer whereby the cases of transfer what is popularly known as 'power of attor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NU/SC/0649/1997 : 226 ITR 625 has clearly held that 'principle of common law, the Transfer of Property Act and the Registration Act were not conclusive for interpretation of provision of Income Tax Act on the question of ownership of the property. If consequent to the amendment in section 53A of the Transfer of property Act, the registration of Agreement was considered as one of the essential ingredient then section 2(47)(v) would become redundant. The Income Tax Act cannot be interpreted in such a way that a particular provision becomes redundant. In any case it has been held by Mumbai Bench of the Tribunal in the case of Suresh Chand Aggarwal Vs. ITO (48 SOT 2010) that amendment made in section 53A of the Transfer of Property Act by which requirement of registration of transfer has been brought on statute need not be applicable for construing the meaning of the transfer with reference to section 2(47) of the Act. Similar view has been taken by the ITAT Cochin Bench in the case of G. Sreenivasan Vs. DCIT 140 ITD 235 and Pune Bench of the Tribunal in the case of Mahesh Memichandra Ganeshwade 51 SOT 155. (VI) It was contended that there is no force in the submissions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... states that payment of ₹ 31,92,75,000/- was to be made to the owner and or respective members of the owner within six months from the date of execution of this agreement or within two months from the date of approval of plan/design and the grant and drawings of final license to develop whereupon the construction can commence which ever is later. This clearly shows that payments was to be made on happening of two events and the time limit was to be applied on the event taking place later on. As per clause 3.3 of the THDC/HASH was required to take permission from competent authority and the competent authority has been defined in JDA as Punjab Urban Planning and Development Authority (PUDA), Department of Town and Country Planning, Nagar Panchayat, Nayagon, Department of Local Bodies (Punjab) and any other Authority under Municipal Authority. It also includes Department of Environment, Electricity Board etc. Since permission from Department of Environment etc was not available because of ongoing litigation which was filed through a PIL, therefore, it cannot be said that Developer was not wiling to make the payment. As per the JDA, the payment would become due only when such pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to consider the value of flats which were contracted to be received by the Members. On the basis of above calculation, the consideration per acre of land would come to about ₹ 11.18 crores whereas Society had registered a sale deed for land measuring 3.08 acres for only ₹ 15.48 crores whereas the actual consideration should be 34.43 crores. This only shows that value of the flats to be received was not reflected in such sale deed. Now, if it is believed that contract was cancelled and Developer was allowed to retain the land which has already been registered in the name of developer then what would happen to the flats which were to be received by the various Members of the Society. No legal action was taken against the Developer for recovery of balance of consideration in the form of flats. This only goes to prove that cancellation is only a make believe story and actually no cancellation has been done. (VIII) It was contended that there is no force in the submissions that the value of the flats which has not been constructed, cannot be included in the total consideration because that would be a case of taxing the notional income. He referred to clause 4 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, it is not only the consideration received which is relevant but the consideration which has accrued is also relevant. 31. The expression 'transfer' has been defined u/s. 2(47) of the Act which 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] [(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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment of Hon'ble Apex Court in the case of Alapati Venkatramiah v. CIT (MANU/SC/0108/1965 : 57 ITR 185) (SC). In this case it was held that in the context of transfer for the purpose of capital gain tax, what is meant by transfer is the effective conveyance of the capital asset by a transferor to the transferee. Delivery of possession and agreement to sell by itself could not constitute conveyance of the immovable property. In the meantime apart from this decision a practice came into vogue by which certain properties were being transferred without executing the proper sale deeds. This was being done because there was restriction on sale of properties in various towns e.g. in case of lease hold plots and flats in Delhi if the same were to be transferred, permission was required to be taken from the Government/DDA and transferor was required to pay 50% of the market value-cost (i.e. unearned increase) to the Government. To avoid such payments and/or also to avoid the payment of stamp duty or cumbersome procedure of obtaining permission, some properties were being sold by way of sale agreement and also execution of General Power of Attorney and possession was given on receipt o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reat obtained various permissions namely (i) clearance from CRZ Authority dated February 7, 1996; (ii) letter from ULC for redevelopment of property dated April 26, 1995. Other permissions were also obtained during the financial year ending March 31, 1996 relevant to assessment year 1996-97. By March, 31, 1996, Floreat had paid almost the entire consideration expect for a small sum of ₹ 9,98,000/-. However, the commencement certificate permitting construction of the building was issued on November 15, 1996. The power of attorney was executed on March 12, 1999. The question arose whether liability of the assessee for capital gain arose in the assessment year 1996-97 or 1999-2000. The observation of the Court has been summarized in head note as under:- Clauses (v) and (vi) were introduced in section 2(47) of the Income-tax Act, 1961, with effect from April 1, 1988. They provide that transfer includes (i) any transaction which allows possession to be taken/retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882, and (ii) any transaction entered into in any manner which has the effect of transferring or enabli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Hon'ble Court referred to clauses (v) (vi) of section 2(47) and made the following observations at page 499 of the report: ........ The above two clauses were introduced with effect from April 1, 1988. They provide that transfer includes (i) any transaction which allows possession to be taken/retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, and (ii) any transaction entered into in any manner which has the effect of transferring or enabling the enjoyment of any immovable property (see section 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 the general law (see Kanga and Palkhivala's Law and Practice of Income-tax-VIII edition, page 766). This test is important to decide the year of chargeability of the capital gains. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the builder for his services of constructing the building (see Gurudev Developers v. Kurla Konkan Niwas Cooperative 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 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 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a confusion earlier. Clauses (v) (vi) to section 2(47) were introduced in the year only in 1998. Perhaps Court took a lenient view because of these reasons and held that capital gain was taxable in Assessment year 1999-2000. It is quite clear that ratio of the above decision is that in case of any arrangements or transactions whereby the other party becomes entitled to enjoy the property then that date of such transaction itself needs to be construed as the date of transfer. 39. The second relevant decision cited by the Revenue is by Authority for Advance Ruling (AAR) New Delhi in the case of Jasbir Singh Sarkaria (supra). In that case the assessee was co-owner of agricultural land measuring about 27.7 acres and his share was 4/9. The co-owner decided to develop the land by constructing residential complex through developer and entered into a Collaboration agreement on 8.6.2005 with M/s. Santur Developer Pvt. Ltd., New Delhi (herein after called 'Developer'). According to the terms of agreement, the Developer should obtain a letter of intent from the concerned government department and obtain other permissions and sanctions for developing the land at its own risk a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial year 2006-07 relevant to assessment year 2007-08 or during financial year 2007-08 relevant to assessment year 2008-09. 40. On the above, the Hon'ble Authority after referring to the provisions of section 45 and observed as under:- ... ... ....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 arisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 MANU/SC/0266/1979 : [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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver 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. After the above discussi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 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 developer's right of control over the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Legal posit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion clause it has been mentioned that owner is in possession of land measuring about 21.2 acres of land which has come in the purview of Nagar Panchayat, Naya Gaon vide Notification issued on 18.10.2006 duly substituted by another notification dated 21.11.2006 and that no part of land of the property falls under Forest Area under the Punjab Land Preservation Act. It has been further recited that the Society has agreed to accept the proposals of Hash and further executed this agreement with THDC/HASH. Hash was responsible to make payment to the owner as described earlier and the flats were to be provided by THDC. In case of Hash fails to make the payment, THDC agreed to make the payments. Copy of the resolution of the Executive Committee of the Society dated 4.1.2007 as well as resolution of the General Body Meeting of the Society dated 25.2.2007 were made part of JDA by way of annexure. The Society agreed to execute an irrevocable Special Power of Attorney in favour of THDC and all other necessary documents, at the request of the developers. 47. In clause 1 of JDA various expressions have been defined. Clause 2 describes the project as under: 2.1 The owner hereby irrevocably ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at its own costs, efforts and expenses whereupon the Developer shall be entitled to apply for and obtain necessary sanctions, licenses and permissions from all the concerned authorities for the commencement, development and completion of the project on the property. 48. Clause 3 describes the obligations of the developers Society for getting the plans, etc. sanctioned from competent authority/applications to be signed by owner for plans, drawings etc., construction. Clause 4 deals with consideration clauses 5 to 8 deals various aspects of project and obligations of Society and Developer. Clause 9 talks about ownership and rights and read as under: 9. Transfer of ownership/Rights 9.1 The owner shall simultaneously on receipt of Payment as set out in Clause 4.1 above, execute an irrevocable Special Power of Attorney to THDC for development of the property authorizing THDC to do all lawful acts, deeds, matters and things pertaining to the development of the property for the project along with inter alia right to mortgage the property and/or premises, sell, lease, license the premises and receive/collect monies in it's name in respect of the same and approach interact, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, General provisions, Disclaimer, Partial Invalidity, Arbitration, Notices and Force Majeure Jurisdiction. 51. In addition to above an irrevocable Special Power of Attorney has also been executed by the Society in favour of the developers i.e. THDC. (Copy of which is available at pages 40 to 52 of the paper book in case of Society in ITA No. 556 of 2012 as discussed earlier in para 25 (complete copy of Supplementary Power of Attorney was not available in the paper book of the assessee, therefore, reference was made to the paper book in case of the Society). 52. The first major contention of the ld. counsel of the assessee is that the 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. We can not accept this contention because in Power of Attorney transactions, it is not necessary to register the JDA if a special Power of Attorney has been given and same is registered. Secondly clause 9.3 of the JDA as reproduced above clearly show that original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lands for the purpose of constructing buildings and/or structures thereon and/or on the Property or utilize such lands and properties for making provision of parking spaces thereon, and/or may utilize the same for any other lawful purpose, as THDC and/or their associate and/or group concerns may in their sold, absolute and unfettered discretion think fit. (w) To hand over the possession of the Property or any part or portion thereof to the authorities to whom the same is required to be handed over or otherwise and to execute and deliver any undertakings, declarations, affidavits, bonds, deeds, documents, etc. as may be required by the authorities concerned for vesting such a part or portion in such authority and to admit execution thereof before the concerned Competent Authority and get the same registered with the concerned sub-registrar. (y) Reasonable opportunity of hearing shall be given to mortgage, encumber or create a charge on the Property or any part or portion thereof and execute the necessary security documents in favour of any bank/financial institution to raise funds for the construction/development of the Property and for the said purpose to deposit title deeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 consen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and other documents involving in respect of the premises to be constructed without any interference of the Society being made confirming party. All these clauses clearly show that the possession was given by the Society and/or its members to THDC/HASH on the execution of irrevocable Power of Attorney. Through these clauses of JDA and irrevocable Power of Attorney the developer was able to completely control the property and make use of it not only for the purpose of development but also for the purpose of amalgamation, sale, mortgage etc. When the above clauses are compared on touch stone of the discussion on possession in para 26 to 28 in the case of Jasbir Singh Sarkaria (supra) which we have reproduced above, it becomes clear that the possession has been given. 56. In that discussion, it has been clearly mentioned that the position contemplated by clause (v) of section 2(47) of the Act need not to be exclusive possession. What is required is that the transferee by virtue of possession should be able to exercise control from overall intended purposes. We do not think in the present case the assessee has given only a license as claimed by ld. counsel of the assessee because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. Ltd. V. State of Bihar MANU/SC/0083/1955 : (1955) 2 SCR 603 for consideration of Article 286 of the Constitution. It has been held in case of Dr. Baliram Waman Hiray V. Mr. Justice B. Lentin and another, MANU/SC/0582/1988 : 176 ITR 1 that for understanding amendment in the Act, perhaps Heydon's Rule is best rule for interpretation of such amendment. We find that without mentioning this rule Ld. Authority For Advance Ruling has discussed this issue in para 27 of the judgment which we have extracted above. It has been held that if 'possession' referred to in clause (v) is to be understood as exclusive basis of the transferee then very purpose of the amendment or enlargement of the definition of transfer would get defeated. We are reproducing following head note of the Hon'ble Apex Court in case of Dr. Baliram Waman Hiray V. Mr. Justice B. Lentin and another (supra): The following principles enunciated in Heydon's case (1584) 3 Co. Rep 7a and firmly established, are still in full force and effect: that for the sure and true interpretation of all statutes in generals (be they penal or beneficial, restrictive or enlarging of the common law), four things are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as under: Clause (A) - The vendor is the absolute owner and in possession of land total measuring 169 kanal 7 marlas equivalent to approx. 21.2 acres in Village Kansal, Tehsil Mohali and more particularly described in Schedule A hereunder written and delineated in green colour boundary line in the Shizra Plan issued by the Patwari dated 23.2.2007. 60. According to the ld. counsel of the assessee if Society had already given the possession then the Society would not have/had possession on 2.3.2007 of the land. At face value this argument looks attractive but when examined in terms of possession which has been explained in case of Jasbir Singh Sarkaria (supra), actual reality will come forward. In this judgment concept of concurrent possession has also been discussed and following extract of paragraph 55 of Salmond's Jurisprudence has been extracted which reads as under: 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, how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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'ble Authority after referring to the provisions of section 45 and observed as under:- ... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his respect the ld. authority has quoted a very old decision of Hon'ble Madras High Court in case of T.V. Sundaram lyengaar and Sons Ltd. V. CIT, MANU/TN/0174/1960 : 37 ITR 26 (Mad). At para 13 of the said decision is extracted in the following manner: 13. In T.V. Sundaram lyengar and Sons Ltd. V. CIT MANU/TN/0174/1960 : [1959] 37 ITR 26, a Division Bench of the Madras High Court while construing section 12B 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;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 fifth contention made by the Ld. Counsel for the assessee was that since section 53A of the Transfer of Property Act itself has undergone amendment w.e.f. 24.9.2001 by which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act though required to be registered has not been registered , which means the right of defending the possession was available even if the contract was not registered but by Amendment Act 48 of 2001, the expression though required to be registered has not been registered , has been omitted which means for the purpose of possession u/s. 53A of T.P. Act, a person has to prove that possession has been given under a registered agreement. In other words, now u/s. 53A of T.P. Act, the agreement referred is required to be registered. This requirement cannot be read in clause (v) of section 2(47) because that refers only to the contract of the nature of section 53A of T.P. Act without going into the controversy whether such agreement is required to be registered or not. The Ld. Counsel for the assessee had referred to the decision of Hon'ble Supreme Court in the case of Surana Steels v. DCIT MANU/SC/0262/1999 : 237 ITR 777 (SC) for the proposition that when a section of a particular statute is introduced into another Act it must be read in the same sense as it bore in the original Act. The careful perusal of that judgment would show that situation is applicable only when a particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of past losses or unabsorbed depreciation has to be taken same as was defined in the Companies Act. In this case it is clear that provision itself refers to clause (b) of sub section (1) of section 205 of Company's Act 1956 and therefore, same meaning was given to past losses or unabsorbed depreciation as is given under the Companies Act, 1956. 73. In case of clause (v) to section 2(47), clearly the expression used is contract of the nature referred to in section 53A of T.P. Act , which means it is not a case of incorporation of one piece of legislation into another piece of legislation. If that was the intention of the Parliament, obviously clause (v) would contain the expression contract as defined under section 53A of Transfer of Property Act, 1882 . Further, it is settled position of law that any interpretation which could render a particular provision redundant should be avoided. If the contention of the Ld. counsel was to be accepted, obviously the provisions of clause (v) of section 2(47) of the Act would become redundant in the sense that registration of agreement would again be made compulsory but since properties were being sold in the market on power of at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eversing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of General Glass Company Pvt. Ltd. Vs. DCIT (supra). In that case it was held that willingness to perform for the purpose of section 53A is something more than a statement of intent and it is unqualified and unconditional willingness on the part of the transferee to perform his obligation. In that case the transferee has agreed to make certain payments in installments in consideration of the development agreement but such payments were not made. Later on, the agreement was modified and more time was given to the transferee for payment of such installments. However, the installments were not paid even under the modified terms and that is why it was ultimately held that such agreement cannot be construed as transfer. 79. The second decision referred to by Ld. Counsel for the assessee is K. Radika v. DCIT (supra). In this case, similar observations were made, though it is not pointed out in what respect the transferee has failed to perform his part but it has been observed that the facts of the case shows that transferee has not performed his part of the contract. 80. The third judgment relied upon by the Ld. Counsel for the assessee is in the case of DCIT v. Tej Singh (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the High Court by Hon'ble Supreme Court by order dated 31.1.2012, the authorities have already been permitted to examine the issue on merits under various laws. Further in the JDA there is a clause 26 which deals with the Force Majeure clauses. The clause 26(i) to (v) reads as under:- FORCE MAJEURE i) None of the parties shall be liable to the other Party or be deemed to be in breach of this Agreement by reasons of any delay in performing or any failure to perform, any of its own obligations in relation to the Agreement, if the delay or failure is due to any Event of Force Mejeure. Event of Force Majeure is any event caused beyond the parties reasonable control. The following shall be regarded as issues beyond the Parties reasonable control. ii) For the purposes of this Clause, an Event of Force Majeure shall mean events of war, war like conditions, blockades, embargoes, insurrection, Governmental directions, riots, strikes, acts of terrorism, civil commotion, lock-outs, sabotage, plagues or other epidemics, acts of God including fire, floods, volcanic eruptions, typhoons, hurricanes, storms, tidal waves, earthquake, landslides, lightning, explosions and othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be appropriate to mention the somewhat conflicting stand of the parties with regard to the present stage of the applications filed under the provisions of the Environment (Protection) Act as well as the Wild Life (Protection) Act. While the petitioner, who is supported by the respondent No. 6-Chandigarh Administration, asserts that necessary sanction/permission under both the Acts have been refused by orders passed by the competent authorities, the promoters of the project contend to the contrary. The facts, as unfolded before us, indicate that against the refusal of sanction under the Environment (Protection) Act, the respondents have sought a review of the order on the ground that the findings arrived at, which have formed the basis of the refusal, are ex-parte. No order in the review matter has been passed by the competent authority, perhaps, because of the interim order passed in the PIL which has been clarified by the Hon'ble Supreme Court by order dated 31.1.2012 permitting the concerned authority under the different statutes governing the matter to exercise their respective jurisdictions in accordance with law. Insofar as the Wild Life (Protection) Act is concerned, it a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andigarh, the States of Punjab and Haryana as also the authorities under the Environment (Protection) Act and the Wild Life Protection Act have to demonstrate the need to engage themselves intensively and not acquire a placid approach indicating an eloquent acquiescence to the violation of the 1995 Act, Periphery Control Act and the Periphery Policy. 26. We thus conclude on the aforesaid note by holding and observing that the provisions of the Periphery Control Act and the 1995 Act are complementary to each other and the provisions of the two statutes would apply to the housing project in question. The respondents, therefore, will have to comply with all the requirements spelt out by both the aforesaid statutes. As the requirement of clearances under the Wild Life (Protection) Act and Environment (Protection) Act is not a contentious issue, and as we have already held that the process of grant of such clearances is pending before the appropriate authorities under the respective Acts, the same will now have to be brought to its logical conclusion keeping in mind our observations and directions contained hereinabove. 83. The combined reading of the above paras in the order of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n commence, whichever is later. Thus, this installment was dependent on two contingencies first the expiration of a period of six months from the date of agreement or alternatively on the expiration of a period of two months from the date of approval of plans/designs drawing etc. leading to grant of final licenses which can lead to commencement of construction, whichever is later. The matter was taken up by way of PIL by certain citizens and Administration of the Union Territory before the Hon'ble High Court which initially stayed the sanction of such plan etc. This led to situation where construction could not be commenced and hence payment was not required to be made in view of the pending litigation. The clauses of force majeure came into operation and therefore, it cannot be said that the developer is not willing to perform its part of the contract. In any case there is no default on the part of the developer as payment was not yet due as per clause 4(i)(iv) of JDA. 86. This position was informed to the Society by letter dated 4.2.2011 by HASH Builder, copy of which has been filed at pages 23 24 of the paper book dealing with the additional evidence. Through this lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd 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 aspect of this contention was that if consideration which has not been received was to be taxed then the assessee would be deprived for claiming exemption u/s. 54 and 54EC. As observed above as per section 45 r.w.s. 48 whole of the consideration, received or accrued has to be taxed. Every person is supposed to know the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 position can be understood by examining some of the provisions of the Act which would show that concept of notional income can not be extended if specific provision is available in the Act. For example in case of income from house property, the income has to be determined as per section 23. Section 22 of the Income Tax Act provides that it is the annual value of the property which can be taxed under the head income from house property . Sector 23 prescribes the method for determining the annual value. Section 23(1)(a) reads as under:- 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 property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or... ... ... 92. On this aspect the settled position of the law is that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been let out or not. This means that notional value of the property has to be charged to the Income Tax under the head income from house property . From the above, it becomes clear that though there is no real income from letting out of the property, still the notional annual value is subjected to tax under the head income from house property . However, we may mention that u/s. 23(1)(c) of the Act if the property is let out and then remained vacant for some part of the year or for whole of the year then vacancy allowance can be claimed. Here, it is important to note that if property is not let out, then notional income becomes chargeable to the tax because of provisions of sections 22 and 23(1)(a) of the Act. Similarly, under the Mat provisions, it is basically the notional income which is being subjected to charge under the head income from business and profession . A businessman may have income of ₹ 100/- but because of higher depreciation allowable under the Income-tax Act or some other weighted deductions say for example in case of expenditure on scientific research, the taxable income as per the provisions of the Act may be zero but still because of the Mat provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le consideration whether received or accrued, which has to be taxed under the capital gain once transfer of the capital asset takes place. Accordingly, there is no force in this part of the contention. 97. Now let us examine the issue of taxability of flat on the basis of above principles. Relevant portion of clause 4 of the JDA which deals with consideration are as under: 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred 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. It is expressly provided that the Payment to be made by HASH to the Owner and/or to the respective members of the Owner (as the case may be) and the Flats to be allotted to the Allottees as set out in this Clause 4.2 shall hereinafter be collectively referred to as the 'Entire Consideration' 98. From this clause it becomes absolutely clear that each Member having 500 sqyd of plot was entitled to receive one furnished flat measuring 2250 sq. ft. and Members having 1000 sqyd flat were entitled to receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the benefit of assessee on plot No. 256. In the return of income total consideration was shown only at ₹ 16.11 crores. It was explained that before Dipti 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 ₹ 29.11 crores and therefore, additional consideration of ₹ 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 ₹ 1.25 crores which was finally settl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould 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 shall execute an irrevocable special Power of Attorney granting its complete Development Rights in the Property in favour of THDC inter alia including the right to raise finance by mortgaging the property and register the charge with the Competent Authority and execute registered sale deeds) as set out in Clause 4.1 (ii), (iii), (iv) and (v) and the Owner confirms, undertakes, declares and binds itself not to revoke the same for any reason whatsoever out of its own will and discretion without obtaining a specific prior written consent of THDC or any of its duly constituted attorneys. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hown 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: 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, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see 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 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 irrevoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to a sum less than the minimum guaranteed amount, THDC shall-be entitled to the entitlement of HASH which is in excess of its minimum, guaranteed amount until THDC achieves its minimum guaranteed amount. The same is illustrated in Annexure I hereto. 109. The above clearly shows that HASH was entitled to total proceeds of ₹ 225.76 crores out of total proceeds of the project which were agreed to be shared by THDC and HASH but the portion of HASH includes a sum of ₹ 58.88 crores which was required to be spent towards construction of 126 flats equivalent to 283500 square feet area which were to be allotted to the members of the society. Thus, it is clear that figure of ₹ 2,000/- per sq. feet represents only the cost of constructions to be incurred by THDC which was debited to the account of HASH. Further, HASH has agreed to purchase three Flats @ 4,500/- per square feet. Some news reports were quoted before us in one of the cases to show that various brokers had issued various advertisements for sale of these flats and these flats were ultimately to be sold at ₹ 7,000/- to ₹ 10,000/- per square feet. This also becomes clear from the addendum of ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Society which is legal owner of the land. 112. On the other hand, the ld. DR for the revenue submitted that the Society was acting on behalf of the Members and the Members have surrendered their rights in favour of the Society so as to enable the Society to enter into JDA for transfer of property in favour of the developer i.e. THDC/HASH. Therefore, capital asset has been sold by the Members. Further the consideration was to be received from Hash by the individual plot owners. 113. We have heard the rival submissions carefully and find that the Society was formed by various Members for the purpose of purchase of land and to develop the same and they allotted the plots to the Members. The Society purchased 21.2 acres of land and ultimately plots in the sizes of 500 sqyd and 1000 sqyd were allotted to various Members. When the proposal for development of property came it was resolved in the General Body Meeting of the Society that the Members would surrender their rights in favour of the Society so that the Society can enter into the JDA. Thus it is clear that the Society has entered into JDA on behalf of the Members. It is the members who are owning the plots and the Society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 are dismissed. In the result, the appeal in ITA No. 404(Asr)/2013 is dismissed. 9. ITA No. 406(Asr)/2013 - Bikramjit Singh Gill 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. 9.1 After hearing the ld. DR and on perusing the record, we find that the ld. CIT(A) has passed a well reasoned order and we find no infirmity in this regard. Accordingly grounds No. 1 2 of the assessee are dismissed. 9.2 As regards grounds No. 3 to 11 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 Si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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