TMI Blog2013 (9) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... e rise to accrual. It was not only the money which has been received by the assessee which was required to be taxed but the consideration which had accrued to the assessee was also required to be taxed. Deemed transfer of property u/s 2(47) – Part performance - section 2(47)(v) r.w. section 45 indicates that capital gains was taxable in the year in which such transactions were entered into even if the transfer of immovable property was not effective or complete under the general law – Held that:- Charging an item of income under the head 'Capital gains" require that there should be some profit, Such profit must be arising on account of transfer and there should be capital asset which has been transferred - There was no dispute that a capital asset was involved and there was some profit also – Capital gain would be computed by considering the full value of consideration whether received or accruing as a result of the transfer - relying upon Mysore Minerals Ltd. v. CIT [1999 (9) TMI 1 - SUPREME Court] it was not only the consideration received which was relevant but the consideration which had accrued was also relevant - irrevocable general power of attorney which leads to ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had transferred the plot – thus it cannot be said that deduction u/s 54F and 54 was same - no ground had been raised for deduction u/s 54F. - 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. Ownership of the plot - society or members - When the plots remain unallotted and obviously legal ownership and beneficial ownership belonged to the society - Held that:- the Society has entered into JDA on behalf of the Members. It is the members who are owning the plots and the Society was only a facilitator. It becomes clear from the JDA that payment for consideration was to be made to an individual plot holder and in fact consideration was mentioned in terms of per Member. - Decided against the assessee. - I.T.A. No. 180(Asr)/2013, I.T.A. No.475(Asr)/2012, I.T.A. No.564(Asr)/2011, I.T.A. No.472(Asr)/2011, I.T.A. No.13(Asr)/2013, I.T.A. No.480(Asr)/2012, I.T.A. No.08(Asr)/2013, I.T.A. No.466(Asr)/2012, I.T.A. No.63(Asr)/2013, I.T.A. No.33(Asr)/2013, I. - - - Dated:- 19-8-2013 - SH. H.S. SIDHU AND SH. B.P.JAIN, JJ. For the Appellant : S/Sh. Prem Singh Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Sewa Singh Sekhwan Amritsar 06.11.2012 20. 51(Asr)/2013 -do- Sh. Ajit Pal Singh Amritsar 21.11.2012 21. 52(Asr)/2013 -do- Sh. Simranjit Singh Amritsar -do- 22. 56(Asr)/2013 -do- Smt. Satinder Kaur Jalandhar 30.11.2012 58(Asr)/2013 -do- Capt. Balbir Singh Bath Batala 29.11.2012 24. 186(Asr)/2013 -do- Sh. Swaran Ram Chaudhary Jalandhar 01.01.2013 2. In I.T.A. No. 180(ASR)/2013 the assessee has raised following grounds of Appeal: 1. That the Ld. CIT(A) has erred in confirming the order u/s 143(3) read with Section 147 dated 26.11.2011 of the Act. 2. That the authority below has wrongly sustained the re-opening of assessment u/s 147 of the Income Tax Act. 3. That the action of the Assessing Officer to cover the transactions detailed in L.D.A. as transfer within the meaning of section 2(47) of the Income Tax Act, 1961 without appreciating the various clauses of the agreement in arbitrary, illegal and unjustified. 4. That the auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. That charging of interest under sections 234A 234B has been wrongly confirmed. 9. That initiation of penalty under section 271(1)(a) has been wrongly confirmed. 10. That the order under appeal is wholly against law and facts of the case. 4. In I.T.A. NO. 564-ASR-2013 the assessee has raised following grounds of Appeal : 1. That the learned Commissioner of Income-Tax(Appeals) has rejected the contention of the appellant that the assessing officer erred on facts and in law in completing the assessment under section 143(3) of the Income Tax Act, 1961 ( the Act ) at an income of Rs. 18533450/- as against income of Rs. 158450/- returned by the appellant. 2. That the learned Commissioner of Income-Tax (Appeals) has rejected the contention of the appellant that the assessing officer erred on facts and in law in making an addition of long term capital gain of Rs. 18375000/- under section 45 of the Act on account of alleged transfer of property. 2.1 That the learned Commissioner of Income-Tax(Appeals) has rejected the contention of the appellant that the assessing officer erred on facts and in law in alleging that there was dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing officer erred on facts and in law in charging interest under section 234B of the Act and withdrawing interest under section 244A(3) of the Act. 5. That the order of the CIT(A) as well as the A.O. is against the law and the facts of case. 6. That the learned CIT(A) has not considered the various judgments in this regard, as held by the various judicial authorities. 6. That the appellant craves leave to add, alter, amend or vary the above grounds of appeal at or before the time of hearing. 5. In I.T.A. NO. 472-ASR-2011 the assessee has raised following grounds of Appeal : 1. That on the facts and circumstances of the case, the Ld. CIT(A) gravely erred in confirming the addition of long term capital gain of Rs. 1,77,65,846/- under section 45 of the Act on account of alleged transfer of land, which was never transferred in the name of the assessee nor the assessee transferred the same as required by law. 2. That while holding as above, the Ld. CIT(A) erred on facts and in law in holding that there was transfer of property on the date of sighing of the tripartite Joint Development Agreement ( The Agreement ) itself, in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. That sans a speaking order of A.O. disposing of the legal objections taken by the assessee against reopening of case under section 147, the impugned order ought to have been held as bad in law. 3. That order of the learned CIT(A), ostensibly being a most mechanical borrowal of facts and findings of some other case, deserves to be set aside on this very premise. 4. That in the given facts and circumstances of the case, the learned CIT(A) was not justified in upholding that capital gain of Rs. 1,77,35,810.00 was liable to tax in the year under appeal, on a totally erroneous and incorrect reading of the Joint Development Agreement qua the provisions of section 2(47) of the Income Tax Act, 1961. 5. That the reliance placed by learned CIT(A) on various judicial authorities, to uphold the impugned addition on account of capital gain, is not only misplaced but also illegal and arbitrary, when no such authority was confronted to assessee for rebuttal. 6. That the assessee s claim of deduction under section 54F ought to have been allowed by the learned CIT(A). 7. That the learned CIT(A) ought to have considered and allowed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. That the learned Commissioner of Income tax(Appeals), Amritsar has failed to appreciate that the reasons recorded by the Assessing Officer mentioned only escapement of Income of Rs. 30 lacs whereas the Assessee had offered Capital Gain at Rs. 24 Lacs in his return for A/year 2007-08 and that the Assessing Officer during re-assessment proceedings changes his stance to increase escapement of Income at Rs. 165 Lacs plus valuation of 2 flats of 2250 Sq. Ft. each while dealing with objections of the assessee. 3. That the learned Commissioner of Income Tax (Appeals), Amritsar has grossly erred in confirming the addition of Rs. 3,36,68,666/- made by the Assessing Officer on account of alleged Capital Gains. 4. That both learned Commissioner of Income Tax (Appeals), Amritsar and the learned Assessing Officer have failed to appreciate that the developer had not performed and was not willing to perform his part of contract and Sec. 53A of TPA could not be made applicable. 5. That both Commissioner of Income Tax(Appeals), Amritsar and the Assessing Officer have failed to appreciate that the JDA stood cancelled by the Punjabi Co-op Housing Building So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reating Rs.30 lakhs as advance for A.Y.2007-08 and ignoring the amount offered for capital gains for A.Y.2008-09. 1.6 That the Ld. CIT(A) has erred in upholding that developer has not committed any default in payment of consideration while developer has failed to make payments as stipulated in the agreement which specifically provides that time is the essence in the performance of the parties respective obligations. 1.7 That ld. CIT(A) has erred in upholding that appellant has no right to revoke power of attorney in spite of the fact that developer has not performed its part of the contract for the execution of which the power of attorney was bestowed. 1.8 That Ld. CIT(A) has erred in facts and law in upholding the order of AO assessing the capital gains in the hands of assessee where in fact agreement has been cancelled by Punjab Cooperative House Building Society. 1.9 That Ld. CIT(A) erred in holding that capital gain is assessable in the hands of appellant while the land is held in revenue records in the name of Punjab Co-operative House Building Society Limited, Mohali registered under Punjab Co-operative Societies Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowing deduction of Rs.45 lacs paid extra to Shri Vijay Ummat for rescinding the sale agreement to whom assessee sold one half of his plot, on the basis of uncorroborated statement without confronting the assessee. Similarly, the ld. CIT(A) has grossly erred in confirming the same. 5. That the AO has grossly erred in no appreciating the fact that assessee had sold one half share of his share to Sh. Mohit Kumar Garg and Harjinder Singh and the addition of one half of the addition of Rs.1,61,18,658/- should not have been made in the hands of the assessee as the one half share belongs to Sh. Mohit Kumar Garg and Sh. Harjinder Singh and if at all, the addition should have been made in their hands. The Developers Tata Housing had also paid the advance/earnest money to Sh. Mohit Garg and Sh.Harjinder Singh directly. 6. That the authorities below did not appreciate that the written submissions were furnished before them during the course of appellate proceedings as well as before the AO especially when no income had accrued as the developer has not fulfilled most of the conditions of the agreement and the project is marred by controversies and uncertainties and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of the land measuring 21.2 acres. Thus, Capital gain is leviable on the share of land for which possession has been given. The assessee received Rs.3300000 as his share which he invested in the Construction of Residential House which clear from the Balance Sheet filed. 7 That the right to allotment with a member flows from his membership of the society. The allotment of plot of members in contingent upon his being member of a Society. The membership in Society is evidenced by a share certificate. The land is owned by the Society is evidenced by a shat with 3.08+4.62 acres of land yet. Thus, section 2(4) does not apply in this case because as per Agreement only the land proportionate to the payments received has to be relinquished. Thus the society rate quished only 7.70 Acres of land yet and no member of the Society has been allotted any flat yet so the capital gain calculated in wrong and against the true facts of the case which may kindly be cancelled. Agreement to transfer has not been registered under Registered under Registration Act, 1908 as provided in section 269(4A)(a) of the Act. 8. That the cost of the flats to be allotted to members as above the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property which is immovable property registered deed of conveyance only valid for legal transfer. General Power of attorney or agreement not valid and not to create title to or interest in the property. 7. That the observation of the Deptt taxing the same during the AY 2007-08 on the basis of monetary consideration and consideration in kind is baseless having no substance and uncalled for. 8. That there is no provision under the Act to tax notional capital gain on the basis of consideration in kind, which has not yet been received and the work has not yet started. 9. That there is no yard stick for ascertaining the value of furnished flat of 2250 Sft. Which is not in existence and there was no likelihood of any maturity of the agreement because the work has not yet been started. 10. That a sum of Rs.33 lacs was received by the appellant not in one year but during two years and declared the same but the same was taxed in one year without considering that the appellant received the amount in two assessment years. 11. That the balance amount of Rs.82,50,000/- agreed was not received by the appellant but only 33 lacs as mentioned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order on the issue of cancellation of the joint development agreement. 6. That Ld. CIT(A) has erred in failing to appreciate that the commencement of the project/tripartite agreement has been challenged in Hon ble High Court and the matter is subjudice. 7. That Ld. CIT(A) has not been justified in not appreciating the fact that the Joint Development Agreement was not registered and by virtue of the Registration and other related Laws (Amendment Act,2001) Transfer of Property Act, 1882 has been amended and only registered contracts fall within ambit of Section 53A and consequently u/s 2(47)(v) of the Act. 8. That Ld. CIT(A) has not been justified in not appreciating the registration deeds executed by Society in which it has been clearly mentioned that possession of the property has not been given and is being given only to the extent for which registration deed was being executed and thus conditions which were required to hold joint Development Agreement as Agreement for sale had never been fulfilled. 9. That the entire hypothetical addition is based on an agreement relied upon in parts by the A.O. which in fact has not been implemented ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have read the Joint Development Agreement in totality, so as to not to infer the accrual of capital gain on the very date of execution of the said agreement. 5. That when CIT(A) himself admitted that two flats, made part of sale consideration, were non-existent, his upholding the taxation of capital gain, computed on a sale value, comprised mainly of the value of said two flats, is self contradictory. 6. That the ld. CIT(A) was not justified overlooking various judicial authorities relied upon by assessee, on a facial distinction drawn by him. 7. That the assessee s alternate claim of deduction u/s 54F ought to have been allowed by the ld. CIT(A). 8. That the Ld. CIT(A) wrongly rejected the assessee s claim that the impugned capita gain, if any, could be assessed only in the hands of the Society and not the assessee member. 9. That the assessee s claim not to tax the impugned gain on the principles of mutuality involved in the transactions, has been wrongly rejected by the CIT(A). 10. That charging of interest u/s 234A 234B has been wrongly confirmed. 11. That initiation of penalty u/s 271(1)(c) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was invested under capital gain scheme and the bank renewed the said TDR under normal TDR, deduction u/s 54F cannot be denied by the fault committed by the bank. 5. That the assessee has not received the remaining consideration RS.49,50,000/- and a purposed flat till today and the ITO taxed that amount. 6. That the assessee is deprived of availing the deduction u/s 54F 54EC of the Act by taxing amount of RS.49,50,000/- and Rs.1,01,25,000/- value of the purposed flat. 7. That the provisions of sec. 2(47)(v) is silent where full amount of agreed consideration is charged to tax though very nominal amount might have actually been received resulting in a situation where an assessee may not be having funds to pay the taxes. 8. That there is no provision in the act to reversed the Capital Gain Tax paid by the assessee on account of cancellation of the agreement after the time period for revision of the Income Tax Return. 9. That provision of section 2(47)(v) is ultra virus of the right provided under the Constitution of India and needs amendment to the effect that tax should be charged only to the extend the consideration received a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion dated 13.06.2011 of the Society. 7. That both the learned Commissioner of Income Tax (Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have failed to appreciated that due to termination of the agreement by the Society/allottee, the JDA had ceases to exist with regard to the remaining payments due under the JDA and the same could not be brought to Capital Gains tax at all. 8. That both the learned Commissioner of Income Tax (Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have grossly erred in not allowing deduction U/s 54F of the Income Tax Act, 1961 to the assessee as claimed in the revised return. 9. That both the learned Commissioner of Income Tax(Appeals), Amritsar has grossly erred in rejecting the alternative claim of the assessee U/s 54F of the Income Tax Act, 1961 in respect of the Flats alleged to have been allotted to the assessee. 10. That both the learned Commissioner of Income Tax(Appeals), Amritsar has grossly erred in confirming the action of the Assessing Officer in charging interest U/s234A at Rs. 5,74,656/- and interest U/s 234-B at Rs. 46,79,347/-. 19. In ITA No.37 (Asr)/2013, the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said agreement. 5. That the worthy Commissioner of Income tax (Appeals) erred on facts and in law in considering that the receipt of consideration and registration of property are not relevant factors while determining the transfer of property for calculating capital gain under the Income-tax Act. 6. That the Commissioner of Income Tax(Appeals) erred on facts and in law in confirming the finding of the assessing officer that there was deemed transfer of property on the date of signing of tripartite Joint development Agreement ( the Agreement ) itself, in terms of sub-sections (ii), (v) and (vi) Section 2(47) of the Act. 7. That the Commissioner of Income Tax(Appeals) failed to appreciated that the capital gain on this land has already been assessed in the hands of Society by DCIT, Mohali while making Income tax assessment of Punjabi Housing Cooperative Society and same income (capital gain) cannot be taxed in the hands of the appellant also. It leads to double taxation of the same income. 8. That the Commissioner of Income Tax (Appeals) erred on facts and in law in confirming the additions made of the value of the flat received towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Officer, Ward 5(4), Amritsar have grossly erred in not appreciating that the decision of CIT Vs. V.K. Julani Basha 256 ITR 282 relied upon by the Assessing Officer was in fact in favour of the assessee. 5. That both the learned Commissioner of Income Tax(Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have grossly erred in not appreciating the fact that the Capital Gain could arise to the Society/allottee only on Sale price of Rs. 15,00,000/- on prorate execution of registered Sale Deeds for land of equivalent value being 3.08 Acres as mentioned in Paras 4.1(1),(ii) of the Joint Development Agreement dated 25.02.2007 due to part performance of JDA. 6. That both the learned Commissioner of Income Tax(Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have failed to appreciate that since Hash Builders Pvt. Ltd. and THDC Ltd. did not make payments due under the JDA did not carry out their part of the JDA within the time required, the society/allottee had terminated the JDA under clause 14(iv) of the JDA vide resolution dated 13.06.2011 of the Society. 7. That both the learned Commissioner of Income Tax (Appeals), Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Paras 4.1(1),(ii) of the Joint Development Agreement dated 25.02.2007 due to part performance of JDA. 6. That both the learned Commissioner of Income Tax(Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have failed to appreciate that since Hash Builders Pvt. Ltd. and THDC Ltd. did not make payments due under the JDA did not carry out their part of the JDA within the time required, the society/allottee had terminated the JDA under clause 14(iv) of the JDA vide resolution dated 13.06.2011 of the Society. 7. That both the learned Commissioner of Income Tax (Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have failed to appreciate that due to termination of the agreement by the Society/allottee, the JDA had ceased to exist with regard to the remaining payments due under the JDA and the same could not be brought to Capital Gains tax at all. 8. That both the learned Commissioner of Income Tax(Appeals), Amritsar has grossly erred in rejecting the alternative claim of the assessee U/s 54F of Income Tax Act, 1961 in respect of the Flats alleged to have been allotted to the assessee. 9. That both the learned Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income Tax (Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have failed to appreciate that due to termination of the agreement by the Society/allottee, the JDA had ceased to exist with regard to the remaining payments due under the JDA and the same could not be brought to Capital Gains tax at all. 8. That both the learned Commissioner of Income Tax(Appeals), Amritsar has grossly erred in rejecting the alternative claim of the assessee U/s 54F of Income Tax Act, 1961 in respect of the Flats alleged to have been allotted to the assessee. 9. That both the learned Commissioner of Income Tax (Appeals), Amritsar has grossly erred in confirming the action of the Assessing Officer in charging Interest U/s 234A at 5,23,702/- and interest U/s 234-B at Rs. 5,63,227/-. 24. In ITA No.58(Asr)/2013, the assessee has raised following grounds of appeal: 1. That on the facts and in the circumstances of the case the Learned Commissioner of Income Tax(Appeals) has erred in confirming the addition made by Assessing Officer for Rs. 35343197/- as Long Term Capital Gains. 2. That the Learned CIT(A) has further erred in confirming t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 2. That without prejudice to above, the Ld. CIT(A), in the given facts of the case, erred in upholding the assumption of jurisdiction u/s 147/148. 3. That failure on the part of Ld. A.O. to dispose of legal objections taken by assessee, by passing a speaking order, should not have been overlooked by the Ld. CIT(A). 4. That the Ld. CIT(A) misdirected himself in law and on facts in confirming the taxation of notional capital gain of Rs. 79,10,337/- by wrongly upholding the transfer of land on the date of execution of the Joint Development Agreement with the developers. 5. That the ld. CIT(A) ought to have read the Joint Development agreement in totality, so as not to infer the accrual of capital gain on the very date of execution of the said agreement. 6. That the Ld. CIT(A) wrongly rejected the assessee s claim that the impugned capital gain, if any, was assessable only in the hands of Society and not the assessee member. 7. That charging of interest u/s 234A 234B has been wrongly confirmed. 8. That initiation of penalty u/s 271(1)(c) has been wrongly confirmed. 9. That the order under appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Charanjit Singh Atwal, Ludhiana vs. ITO Ward VI(1), Ludhiana and in ITA No.448/CHD/2011 and others vide order dated 29.07.2013 (supra) vide para 27 to 44. The facts in the case of Charanjit Singh Atwal (supra) in the light of legal position in para 27 to 44 are discussed vide para 45 to 51. The Ld. counsel appearing for the assessee in the case of Charanjit Singh Atwal (supra) has raised mainly following contentions which have been dealt by Chandigarh Bench of ITAT in its order dated 29.07.2013 (supra) as under: i) Vide para 52 to 58 of the order, first contention was that possession was not given by the Society because according to him as per clause 2.1 of the JDA, the possession of the property was to be handed over simultaneously to the execution and registration of JDA and since the JDA was not registered, therefore, the possession was not given. It was held by considering various contentions of Ld. Counsels and Ld. DR and cases of various Courts of law relied upon that by considering the purpose of insertion of clause (v) and clause (vi) of section 2(47) and various clauses of Power of Attorney and JDA, it becomes absolutely clear that the Society has handed over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly this contention was also rejected. via) Vide para 77 to 86, being the contention that it is necessary for invoking of section 2(47)(v) of the Act to comply with the provision of section 53A of the Transfer of Property Act to the extent that there should be willingness on the part of the transferee to perform his part of the contract. It was held that it cannot be said that the builders were not willing to perform their part of the contract in view of clauses 4.1(iv) read with clause 26(v) vii. Vide para 87 and 88, being the seventh contention that revenue wrongly held that even clause (vi) of section 2(47) is applicable. It was held that the developer i.e. THDC/HASH has purchased the membership of the members in the society which now lead to the enjoyment of the property and in that technical sense, clause (v) of the section 2(47) is applicable. viii. Vide paras 89 to 96, being the eightth contention that since the society has transferred the land through JDA on a pro-rata basis, therefore, only whatever money is received against which sale deeds have also been executed can be taxed and notional income i.e. the money to be received later, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has estimated the value of flats on most reasonable basis. Also vide para 110 there was contention with respect to deduction u/s 54F of the Act. It was held that no ground was raised in the appeal. Though reference was made in ground No.2.3 with reference to section 54F and 54EC which are on different facts and therefore deduction u/s 54F and 54 are not the same. Accordingly, the contention was rejected. Also the said issue has been dismissed in the case of Sh. Surinder Singh vs. DCIT in ITA No.1071/CHD/2011 vide para 166 to 169 for the reasons mentioned therein. 31. Vide para 111 to 113, it was contended that capital gain should have been taxed in the hands of Society which is legal owner of the land. It was held that the fact stands admitted by the assessee because assessee has filed a return declaring capital gain against part money received against the plot. Thus, it becomes clear that it is the individual member who are liable to tax in respect of transfer of plots and the Society being only a facilitator or post office. Accordingly, this contention was also rejected. 32 Vide paras 5 to 9 also the assessee has raised the additional evidence, which after considering the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsisting of 95 present and Ex-MLAs of Punjab Legislative Assembly is owner of the 21.2 ac res of land in village Kansal , Distt . Mohali. The village Kansal shares its boundary with capital city of Chandigarh. On 25.2.2007 the Housing Society of MLAs entered into a tripartite Joint Development Agreement (herein aftter referred as JDA ) with HASH Builders (P) Ltd (hereinafter referred to HASH ) and M/s Tata Housing Development Company Ltd. (hereinafter referred as THDC ). By virtue of this tripartite agreement it was agreed upon among these parties that the Society which is owner of 21.2 acres of land, shall transfer its land to THDC/HASH in lieu of monetary consideration and consideration in kind. As per the agreement each Member of the Society having a plot of 500 sqyd in the Society was to receive monetary consideration of Rs. 82,50,000/ - and the Member s holding plot of 1000 sqyd was to receive a sum of Rs . 1.65 crores. In addition to this Member holding a plot of 500 sqyd was to receivefully furnished flat measuring 2250 sqf t 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Member and President of the Society and was owner of a plot measuring 1000 sqyd. Therefore, as per JDA, he was to receive Rs. 1.65 crores as monetary consideration and two furnished flats as consideration in kind and the cost of the same as per Assessing Officer was Rs. 2,02,50,000/ - and total consideration would be Rs. 3,67,50,000/ - 19 According to the Asses sing Officer since the Society has assigned all rights in 21.2 ac res of land belonging to the Society in terms of JDA to THDC/HASH and also handed over the physical vacant possesion of the property to THDC/HASH, therefore, the assessee became liable to capital gain tax on his share of consideration. Accordingly a letter dated 7.12.2008 was issued intimating the assessee that after consideration of the various clauses of JDA dated 25.2.2007 and the resolution passed by the Society on 26.2.2007, capital gain was to be charged in the hands of the assessee in Assessment year 2007-08 by taking full value of the construction at Rs . 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' acquired the land till date and has not even obtained permission to start development. So there is no question of any construction of fiats now or near future that is to say, there is no capital asset in existence as on date for which the national value can be considered. 4) Clause No 14 is termination clause of the agreement under reference (copy enclosed), very clearly states the rights of THDC to terminate the agreement and in that situation, the land already transferred to THDC will be retained by them and no further land will be purchased by THDC and no further payment shall be made by them. In that event the amount received by assessee will be considered as full, and final consideration. So there is no question of considering the national value of proposed flat as the unrealized consideration for the purpose of capital gain of the assessee. The assessee is a Hon'ble citizen and regular Income Tax Payee and shall discharge his liability under Income Tax when the whole land will be transferred. 5.) While making the calculation of capital gain tax, the amount of consideration has been wrongly taken of Rs. 15 lacs Instead of Rs,12 lacs. As per the agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the surrender of allotment right. This is not a true factual position. The allotment rights have not been surrendered by the members in favour of THDC LTD or M/s Hash Builders Ltd. The factual position is that the society I.e. M/s Punjabi Co-op House Bldg. Society Ltd. has entered into an agreement with M/s THDC Lid. M/s Hash Builders Ltd. As per clause 2.1 of the agreement it is very clearly mentioned that the possession of the property has been handed over to THDC Ltd. only to develop the same. A close examination of the agreement clearly reveals that the agreement is a Joint development agreement. The Society intended to develop the land owned by it. However since the requisite expertise were not available with the society, the other two developers were involved in the project. The cost of development was to be borne by the THDC. The payment to the society was to be made pro-rata on transfer of land in favour of THDC Ltd, It is very clear from the agreement that no consideration was payable to the assessee unless the land was transferred. So there is a clear cut relation between the land transfer and consideration. No consideration will be received if the land is not transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax on the notional value of the flat to be given in the future to him as consideration but exemption under section 54F will be denied because the residential house did not exist, 3. Further as per the termination clause of the agreement various conditions have been prescribed under which the agreement can be terminated. It is very clearly mentioned in the agreement that in the event of termination of the agreement the land transferred by the members will be retained by THDC Ltd and consequently no further consideration shall be given to the members. It is evident from the facts in the case that inordinate delay has already taken place In this case. The agreement was originally envisaged to be fully executed In F.Y 2007-08. But now even FY 2009-10 is also going to expire. In that case the assessee will have no remedy available against the tax paid on consideration which will never be received by him. Under such circumstances it will be fully unlawful to charge tax. 4. The value of proposed flat is undeterminable and there is no way to determine the same. There is no provision to pay tax on the notional value. Clause 6.18 of the agreement entitled the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and assigned in perpetuity all of its rights to develop, construct, mortgage, lease, license, sell and transfer the property (21.2 acres of land) along with any and all constructions trees etc. in favour of THDC/HASH for the purpose of development , construction, mortgage, sell , transfer , lease, license and/or exploitation for full utilization of the property and to execute all documents necessary to carry out facilities and right s in the property. Thus transfer of property was effected through this agreement . (ii) The owner had also handed over the original title deeds of the property and also handed over the physical , vacant possession of the property to THDC/HASH. simultaneously to the execution and registation of this JDA and therefore, the case of the asses see was covered by the provisions of section 2(47) (v) of the Act r .w.s 53A of T.P. Act . as part consideration had also been received. According to the Assessing Officer the fact s of the case were similar to the facts in case of CIT V. K. Jeelani Basha, 256 ITR 282 (Mad) wherein Hon'ble High Court after analyzing the provisions of section 2(47) (v) had held that once the possesion even for a part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue about taxability of long term capital gains which was dependent only on transfer . (viii) It was observed that there was no force in the contention that the value of the flats was undeterminable because the value of the flat was very much determinable as per the market rate prevailing which could also be ascertained from the rate at which the flats were being offered to the general public . (x) The Asses sing Officer was of the view that the case laws relied on by the assessee were distinguishable for which the reasons have been given at page 23 and 24 of the assessment order . 21. In this background the asses see was charged to capital gain tax u/ s 45 for the total consideration received and receivable by being a Member of the Society in view of JDA. 22. On appeal before the ld. CIT (A) detailed submissions were made (In the impugned order reference is made to writ ten submissions without discussing the arguments ) . The ld. CIT (A) referred to the provisions of section 45 and 2(47) of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) The receipt of consideration was structured and the assessee received part of the entire consideration' during the financial year 2006-07. This clearly shows that the transferee is ready and willing to perform his part of contract. (d) In view of clause 2.1 of the Joint Development agreement, the owner has at the time of making the agreement irrevocably and unequivocally granted and-assigned in perpetuity all its rights to develop, construct, mortgage, lease, license, sell and transfer the property i.e (21.2 acres of land) alongwlth any and all constructions, trees etc. in favour of M/s Tata Housing development Company Ltd, for the purpose of development, construction, mortgage, sale , transfer, lease, license and/or exploitation for the full utilization of the property and to execute all the documents necessary to carry out, facilitate and enforce the rights in the property. Thus, in fact the owner has irrevocably and unequivocally granted and assigned in perpetuity all the rights which an owner can have in an immoveable property. All these rights have been given on date of agreement i.e. 25.02.2007 and even possession has been handed over in the financial year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s taken place, whole of the consideration , whether received or receivable in cash or kind, would be chargeable to capital gains u/s 45, whether the entire consideration has been received in the year of transfer or not. (j) From the discussion in above paras it is clear that not only agreement has been entered into in, the pervious year 2006-07 but the owner has at the time of making the agreement irrevocably and unequivocally granted and assigned in perpetuity all its rights to develop, construct, mortgage, lease, license, sell and transfer the property i.e (21.2 acres of land) alongwith any and all constructions, trees etc. in favour of M/s Tata Housing development Company Ltd. (k) Furthur M/s Tata Housing development Company Ltd has also in part performance of contract has made the payments to the owners and is willing to perform his part, of contract and the members of society in this part performance of contract have assigned full rights in the favour of transferee in the previous year 2006-07 itself and surrendered allotment letters to enable the Society to enter into tripartite agreement with HASH and THDC. (l) Most importantly physical and v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09/1991 in the financial year 1991-92 and as such, the AO was fully justified in levying capital gains in the same previous year. ii) CIT vs K. Jeeiani Basha: This ruling supports the contention of revenue that entire consideration receivable for that part of property would 'be' taxable which has been parted with or transferred even when whole of the consideration lies not been received. iii) Zuari Estate Development Investment Co. (P) Ltd, vs DCIT: This case is also not relevant as it pertains to agreement entered into in 1984 much before Section 2(47(v) was inserted. 24. Before us, the ld. counsel of the assessee made detailed submissions. Further writ ten submissions has also been filed. He carried us through the facts of the case by referring to various documents in paper book and also case laws as well as commentary by, Mulla Dinshaw Frederick Mulla on the interpretation of Section 53A of Transfer of Property Act . The submissions can be summarized as under: IFirst of all he referred to provisions of section 2(47) (v) of IT Act and Section 53A of T.P. Act and submitted that following conditions emerged for attracting these provisional a. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... session was given on the date of execution of the JDA. In any case the JDA makes it clear that the possession was to be given simultaneously to the registration of JDA and since JDA was not registered, no possesion was given. II. It was submitted that the possession, if at all, was given to the developers i .e THDC/HASH which was a permissive license to develop the project and not as performance of the contract. Reference was made to Section 52 of the Indian Easement Act, 1882 which reads as under : 52. Licence defined where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property all the grantor, something which would, in the absence of such right, be unlawful and such right does not amount to an easement or an interest in which the property , the right is callled a license. It was contended that Section 2(47) (v) r .w. s. 53A of T.P Act refers to legal possession whereby the transferee has a legal right to enter upon and exercise rights of possesion i .e. control over the property. In this connection he referred to the observation of Authority for Advance Ruling in case of Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich means the transfer was held to have taken effect only after receipt of substantial payment of consideration. VIThe ld. counsel of the assessee further pointed out that there is another important condition in invoking Section 2(47) (v) of the Act r.w.s 53A of T.P. Act i .e. the transferee must have performed or willing to perform his part of the contract. .It was argued that willingness of the transferee to per form his part of the contract is not an empty formality and it has to be absolute and unqualified. Thus willingness cannot be conditional or contingent on subsequent events. In the JDA following obligat ions were to be complied by the transferee (a) As per clause J of the JDA the Government approvals were to be obtained by the transferee i .e. THDC/HASH. (b) As per clause 3.1 of JDA al l bui lding, plans and designs and drawings etc. for construction of the project were to be prepared by the transferee i .e. THDC/HASH. (c) Clause 4.1 and 7.10 of JDA provided regarding timely payment of consideration. (d) Clause 7.9 of the JDA provided that THDC/HASH shall obtain all approvals and commence construction within 6 months of hand over of final plans. (e) Claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, the JDA was entered into between Society and two developers i .e. THDC/HASH and therefore, there was no transaction involving Membership of Cooperative Society/ company etc. Therefore, clearly clause ( vi ) of sec 2(47) is not applicable in the present case. VI I IThe ld. counsel of the as ses see also submitted that as per clause 4.1 of the JDA transfer / sale of 21.2 acres of land was to be made in favour of THDC/HASH on a prorate basis corresponding to pro- rata payments received by the Society and respective Members of the Society from THDC/HASH by execut ing the sale deed. This clearly shows that transfer was wholly dependent on timely receipt of the consideration. As pointed out earlier only two sale deeds could be executed and whatever payments have been received, have been offered for taxation under the head Capital gain .However , the Assessing Officer has subjected to tax whole of the consideration under the JDA as capital gain which is totally uncalled for particularly in view of the fact that an agreement has been subsequently terminated and this action of the Assessing Officer amounts to taxation of notional sum which is not permissible under the law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement entered into between THDC and HASH. The ld. counsel of the assessee submitted that the assessee was not party to such agreement and price at which THDC was selling flats to HASH could not be adopted in the case of the assessee. It was submitted that if clause (5) was referred to it can be seen that reference has been made to two prices ie. Rs. 2000/sqf t for 126 flats and Rs . 4500 per sqft for three flats. This price is notionally fixed by two developers and did not reflect the price of the flats. In any case the Developers have not been able to obtain necessary approval from the concerned authorities, therefore, construction of such flats has not commenced and no flats have been constructed and allotted to the assessee, therefore, notional value of the same could not be adopted and taxed in the hands of the assessee. At best the Assessing Officer could have taken the price of Rs . 2000 per sqft . XI It was contended that if the value of the flat was to be recognized for the purpose of computing the capital gain, the corresponding deduct ion u/s54F of the Act should have been al lowed particularly in view of Circular No. 472 dated 15.10.1986. In this regard he relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avour of THDC/HASH which was actually executed on 26.2.2007 which was duly registered also. Pursuance to this resolution, the JDA was executed on 25.2.2007. Through clause 2.1 it was specifically agreed that owner i .e. the Society has irrevocably and unequivocally granted and assigned in perpetuity all the rights to develop / construct / mortgage / lease / license, sell and transfer the property. Clause 6.7 of the JDA provides for execution of irrevocable special power of attorney through which rights of development were granted in favour of THDC/HASH and right to raise finance by mortgage in the property and to register the charge with competent authority and further power of sale etc. were also given through this power of attorney. It was agreed that the Society would not revoke such power of attorney without obtaining a specific prior written consent of THDC/HASH. The above clauses clearly show that pos ses s ion of the property was handed over to THDC/HASH and further rights to mortgage and sale of the 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd possesion has been handed over by the transferor to the transferee in part performance of the contract u/ s 53A of T.P. Act . In this regard he relied on the following decisions: - 1) Authority for Advance Ruling (AAR) New Delhi in the case of Jasbir Singh Sarkar ia 294 ITR 196 2) Chaturbhuj Dwarkadas Kapadia v CIT 260 ITR 491 (Bom. ) 3) C.Ravi Vs DCIT in 325 ITR 417 (Ker ) 4) CIT v Dr. T.K. Dayalu 202 Taxman 531 (Kar. ) 5) D. Kasturi v CIT Anr 323 ITR 40 (Mad. ) 6) CIT V Dhi r Co. Colonisers (P) Lta 288 ITR 561 (P H) (III) The Ld. CIT DR further submitted that assessee s case apart from being covered under clause ( v) of section 2(47) is also covered by clause (vi) of section 2(47) of the Act . Clause ( vi ) is appl icable in cases where any transaction is entered into which has the effect of transferring and enabling the enjoyment of immovable property. In this regard he relied 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 (Delhi ) . (IV) He further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shield in defence and not as a sword. The most import ingredient of section 53A of T.P. Act was the change of possession. The amendment to section 53A of the Transfer of Property Act has been done perhaps to collect Revenue. In any case, the same cannot have a impact on the clause (v) of section 2(47) . This is so because clause (v) clearly employs language by using the expression part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act . The Legislature intentionally not employed the expression in part performance of contract as defined under section 53A of Transfer of Property Act . Therefore, it is nature of contact which is similar to the nature of contract u/s 53A of the Transfer of Property Act which is relevant to section 2(47) (v) . In any case Hon'ble Supreme Court in the case of CIT Vs Podar Cement (P) Ltd 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 Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other reasons. All these steps clearly shows that developers were willing to perform all the obligations under taken under JDA and were perusing the matter of sanction of the project at different levels vigorously. The copy of the order of Hon'ble Punjab Haryana High Court and Hon'ble Supreme Court fild at pages 172 to 174 of the paper book are on the issue of land falling within catchment area of Sukhna lake and litigation in this case is being vigorously followed by developers . The assessee has not led any evidence to show that either the HASH or THDC have shown reluctance to take the various steps required for execution of project. The Ld. CIT DR also contended that it was argued on behalf of the assessee that developer have not made the payments as agreed in the JDA, which is not correct . In this connection, he referred to clause 4 (iv) which clearly states that payment of Rs. 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 comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer of the property because under the tax laws income has to be determined for each year separately and once transfer took effect in assessment year 2007-08, then a subsequent event taking place in 2011 will not have any effect on such transfer . It has been contended through written submis ions that total consideration of the property was 2,37,03,75,000/ - which was cal culated as under : - (i) Consideration in cash (Rs. 82,50,000 x 129 plots ) Rs . 106,42,50,000/ - (ii) Consideration in kind (Rs . 101,25,000/- x 129 plots ) Rs . 130,61,25,000/ - Total Rs . 237,03,75,000/ - The above total consideration would be enhanced figure because total consideration received and or agreed against the sale of property by the Members is required 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 Rs. 11.18 c rores whereas Society had registered a sale deed for land measuring 3.08 acres for only Rs. 15.48 crores whereas the actual consideration should be Rs. 34.43 crores. This only shows that value of the flats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/ - is most reasonable which has been adopted by the Assessing Officer. 26 In the rejoinder, the ld. counsel of the assessee submitted that the assessee and Society had never handed over the possession, therefore, there is no question of executing the documents at the time of cancellation of the agreement for reversing the possession. As no possession was given, therefore, there is no question of taking the back possession. He further submitted: (a) that normal rules of interpretation should be applied to understand the meaning of clause (v) and (vi) of Section 2(47) and this is not a fit case for invocation of Heydon s Rule. He submitted that lot of emphasis has been laid by the ld. DR for the revenue on para 2.1 of JDA to prove that the possession was handed over. However, a careful reading of this para would show that what was contemplated through this para, was to hand over the possession on the execution and registration of the agreement. When an agreement is read it has to be read in whole and therefore, it may not be proper to ignore the word Registered . (b) He also contended that lot of emphasis was given on the irrevocability clause in respect of special Power of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aspec t in detail at appropriate time. 29. Apart from charging provisions u/s 45 another important provision is section 48 which deal s with the mode of computat ion and relevant portion reads as under : - 48. The income chargeable under the head Capital gains shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely : (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto: 30 Again plain reading would show that capital gain would be computed by considering the full value of consideration whether received or accruing as a result of the transfer . Therefore, 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 therei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 2(47) has brought in to the ambit of transfer , the practice of enjoyment of property rights through what is commonly known as Power of Attorney arrangements. The practice in such cases is adopted normally where transfer of ownership is legally not permitted. A person holding the power of attorney is authorized the powers of owner, including that of making construction. The legal ownership in such cases continues to be with the transferor. 32 Before insertion of the clause ( v) ( vi ) to section 2(47) of the Act , the position of law was that unless and until a sale deed was executed for transfer of immovable property, the same could not be construed as transfer for the purpose of charging capital gain tax. This was particularly so in the light of various judgments particularly the judgment of Hon'ble Apex Court in the case of Alapati Venkat ramian v CIT (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 im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious authorities . Under clause 11 of the agreement, it was provided that after Floreat was given an irrevocable license to enter upon the assessee s share of property and after Floret investment have obtainedall necessary approvals, the Floret was entitled to demolish various buildings for settling the claims of the tenants . Under clause 14 of the agreement , the assessee was ent it led to receive proportionate rent till the payment of last installments and till that time assessee was bound to pay all outgoings . Under clause 20 of the Agreement , it was agreed that sale shall be completed by execut ion of conveyance, however , till the mat ter was adjudicated by the Hon'ble High Court , no conveyance was executed. Pursuant to this agreement , Floreat obtained various permis sions namely ( i ) clearance from CRZ Authority dated February 7, 1996; (ii) letter from ULC for redevelopment of property dated April 26, 1995. Other permis sions were also obtained during the financial year ending March 31, 1996 relevant to assessment year 1996- 97. By Mar ch, 31, 1996, Floreat had paid almos t the entire consideration expect for a small sum of Rs. 9,98,000/ - . However, the commencement ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that capital gains was taxable in the year in which such transactions were entered into even if the transfer of immovable property is not effective or complete under the general law. In this case, the test had not been applied by the Department . No reason had been given why that test had not been applied, particularly when the agreement in question, read as a whole, showed that it was a development agreement . Once under clause 8 of the agreement a limited power of attorney was intended to be given to the developer to deal with the property, then the date of the contract , viz. , August 18, 1994, would be the relevant date to decide the date of transfer under section 2(47) (v ) and, in which event , the ques t ion of substantial performance of the contract thereafter would not arise 34. The Hon'ble Court referred to clauses ( v) ( vi ) of section 2(47) and made the fol lowing observations at page 499 of the repor t : .. 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 per formance of a contract of the nature referred to in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee, but all those judgment were prior to introduction of the concept of deemed transfer u/s 2(47)(v). In this matter, the agreement in question is a development agreement. Such development agreements do not constitute transfer in general law. They are spread over a period of time. They contemplate various stages. The Bombay High Court in various judgments has taken the view in several matters that the object of entering into a development agreement is to enable a professional builder / contractor to make profits by completing the building and selling the flats at a profit. That the aim of these professional contractors was only to make profits by completing the building and, therefore, no interest in the land stands created in their favour under such agreements. That such agreements are only a mode of remunerating the builder for his services of constructing the building (see Gurudev Developers v. Kurla Konkan Niwas 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igher Court or Forum. Further , there is no force in the contention that decision of the Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia v CIT ( supra) does not show that the date of agreement itself constitute the transfer. Again there is no force even in the contention that in that case it was ultimately decided that capital gain taxes is chargeable in Assessment year 1999-2000 because of the reasons given in above noted paras particularly because the Revenue itself never invoked the provisions of section 2(47) ( v) of the Act and held it to be taxable in As sessment year 1996-97. No doubt in that case ultimately it was held that capital gain was in assessment year 1999-2000 but Court had made it very clear that this is first time that law is being laid down and guidelines are being issued which means that there 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nally sale deeds could be executed only after the owner received their share of constructed area. Three months later, a supplementary agreement was entered on September 15, 2005 between the assessee and other co-owner s and Developers through which it was agreed that owners will sell their 16% share in the built up area to the Developer or its nominee for consideration of Rs. 42 crores. A sum of Rs. 2 crores was received. This collaboration agreement and balance of Rs. 40 crores was payable by the Developer to the owners in six installments from March 06, 2008. The installments could be extended subject to payment of interest and fur ther subject to maximum extension of three months. There were various other clauses whi ch are not relevant for our purposes . The quest ion arose whether capital gain accrue / arise to the assessee during the financial 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 refer r ing to the provisions of section 45 and obser ved as under : - .The section can be analysed thus : (a) transfer of a capital asset effected in the previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious implications of clause ( v) of section 2(47) and also implication of section 53A of the Transfer of Property Act as well as observations of Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia v CIT ( supra) . The Authority observed that to understand this provision properly meaning of possession has to be understood properly and went on to discuss the meaning of term possession, and how the same is to be understood in the context of clause ( v) . These are very important observations and have been discussed in most elucidated fashion. These observations will answer many of the questions raised before us and, therefore, we are extracting these observations as under : - Meaning of possession and how should it be understood in the context of clause (v) The next question is, in what sense we have to understand the term possession in the context of clause (v) of section 2(47). Should it only mean the right to exclusive possession which the transferee can maintain in his own right to the exclusion of everyone including the transferor from whom he derived the possession ? Such a criterion will be satisfied only after the entire sale consideration is pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or retained directly or personally may be distinguished as immediate or direct . Salmond makes reference to three types of mediate possession. In all cases of mediate possession , two persons are in possession of the same thing at the same time. An allied concept of concurrent possession has also been explained in paragraph 55 of Salmond s Jurisprudence in the following words : It was a maxim of the civil law that two persons could not be in possession of the same thing at the same time. As a general proposition this is true : for exclusiveness is of the essence of possession. Two adverse claims of exclusive use cannot both be effectually realized at the same time. Claims, however, which are not adverse, and which are not, therefore, mutually destructive, admit of concurrent realization. Hence, there are several possible cases of duplicate possession. 1. Mediate and immediate possession co-exist in respect of the same thing as already explained. 2. Two or more persons may possess the same thing in common, just as they may owe it in common . On a fair and reasonable interpretation and on adopting the principle of purposive construction, it must be held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f capital gains tax on the ostensible ground that the entire consideration has not been received and some balance is left. The mischief sought to be remedied, will then perpetuate. We are, therefore of the view that possession given to the developers need not ripen itself into exclusive possession on payment of all the instalments in entirety for the purpose of determining the date of transfer. While on the point of possession, we would like to clarify one more aspect. What is spoken to in clause (v) of section 2(47) is the transaction which involves allowing the possession to be taken. By means of such transaction, a transferee like a developer is allowed to undertake development work on the land by assuming general control over the property in part performance of the contract. The date of that transaction determines the date of transfer. The actual date of taking physical possession or the instances of possessory acts exercised is not very relevant. The ascertainment of such date, if called for, leads to complicated inquiries, which may frustrate the objective of the legislative provision. It is enough if the transferee has, by virtue of that transaction, a right to enter upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter and supervise the property in any manner as the attorney deems fit and proper, (iii) to obtain water, sewage disposal and electricity connections. The developer is also authorized to borrow money for meeting the cost of construction on the security and mortgage of land falling to the developer s share. The other clauses in the GPA are not relevant for our purpose. The GPA unequivocally grants to the developer a bundle of possessory rights. The acts of management, control and supervision of property are explicitly mentioned. It is fairly clear that the GPA is not a mere licence to enter the land for doing some preliminary acts in relation to the development work. The power of control of the land which is an incidence of possession as explained supra has been conferred on the developer under this GPA. The developer armed with the GPA cannot be regarded merely as a licensee or an agent subject to the control of the owners. His possession cannot be characterized as precarious or tentative in nature. The fact that the agreement describes the GPA as irrevocable and an express declaration to that effect is found in the GPA itself is not without significance. Having regard to the seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other crucial point was execution of irrevocable of GPA which was executed on May 8, 2006 which according to the ld. authority depicts the intention of the handing over of the possession. Therefore, it becomes very clear that it is not necessary that transfer would take place on the signing of development agreement but the same has to be inferred only when the possession has been handed over by the transferor to the developer which can be inferred from the documents e.g. Power of Attorney. After above discussion Hon'ble authority has summarized the decision in para 41 which is as under: The following is the summary of conclusions: 1. Where the agreement for transfer of immovable property by itself does not provide for immediate transfer of possession, the date of entering into the agreement cannot be considered to be the date of transfer within the meaning of clause (v) of section 2 (47) of the Income-Tax Act. 2. To attract clause (v) of section 2(47), it is not necessary that the entire sale consideration up to the last installment should be received by the owner. 3. In the instant case, having regard to the terms of the two agreements and the irrevocable GPA executed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n four installments by Hash directly in favour of the members and one flat with super area of 2250 sqf to be constructed by THDC. The members who held the plot of 1000sqyd were to receive a consideration of Rs . 1,65,00,000/ - and two flats consisting of 2250sqft to be constructed by the THDC. It was further resolved to enter into a JDA with THDC/HASH. It was also resolved to execute irrevocable Power of attorney by the Society in favour of THDC f or this purpose. This resolution was ultimateyy ratified in the General Body meeting held by the Society on 25.2.2007. Pursuant to the above resolution, tripartite JDA was executed (copy of the same is available at page 15 to 54 of first paper book). Through recitation 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 Notificat ion issued on 18.10.2006 dul y 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same were set out herein verbatim and forming an integral part of the agreement . 2.2 The Project shall comprise of development / construction of the Property into the premises as permis sible under Punjab Municipal Bui lding Bye- laws/Punjab Urban Development Authority or any other Competent Authority by the Developer at their own cost and expense. The Project shall be developed as may be sanctioned by the concerned local authority i .e. Depar tment of Local Bodies, Punjab/Punjab Urban Planning and Development Author ity (PUDA) or any other Competent Authority. 2.3 The owner hereby irrevocably and unequivocally grants and as signs all its Development Rights in the property to THDC to develop the property and under take the project 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Punjabi Coop House Building Society Ltd. along with all its ninety six (96) members have given their express, free and clear consent in writing in the form of an Affidadit /No Objection Certificate/Consent Letter whereby the Developers have been allowed to develop the property in accordance with the Project and that THDC shall be ent it led to transfer the rights obtained under this agreement to any third party and to get the development / construction work completed on such terms and conditions as THDC may deem fit so long as it does not adversely effect the Owner in terms of their right to receive Entire consideration as mentioned in this agreement subject to all other conditions mentioned therein as well . The owner shall at all times provide full support to the Developers herein. 50 Other clauses provide for terminat ion, General provisions , Disc laimer , Partial Invalidity, Arbitration, Notices and Force Majeure Jurisdiction. 51 In addit ion 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 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To negot iate and agree to any/or to enter into agreement (s) to construct / sell and to under take construct ion/sale of the Premises on the Property or any portion thereof with/ to such persons( s) or body and for such consideration and upon such terms and conditions as the Attorney deem f it . (n) To enter upon the Property either alone or with others for the purpose of development , Coordination, execution, implementation of the Projec t and commercialization of the Property/Premises. (t) To amalgamate the Property with any other contiguous, adjacent and adjoining land sand properties wherein development and/or otherright , benef its and interests are acquired and/or proposed to be acquired and developed or proposed to be developed by THDC and/or their associate and/or group concerns/s and/or utilize the FSI , FAR, DR and TDR of the contiguous, adjacent and adjoininglands 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 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of lien/NOC s and to sign documents on behalf of the Owner as required by the prospective buyers/ lending ins t ruc t ions to create a charge on the allotted premises . (gg) To look after and maintain the Property and the Premises const ruc ted thereon till its transfer in favour of the Co-operative Society or Limited Company or any other Organisat ion. 54 It is pertinent to note that power/authorization which have been given by the Society to the developer, were in fact were required to be given in terms of various clauses of the JDA. Clause 6.7 reproduced above itself shows that the Society was required to give powers to raise finance to mortgage the property and even the registration of charge was also required to be given. Further through clause 6.15 it was agreed that documents of original title deeds of the property would be handed over to the developer i.e. THDC/HASH so that same can be used in furtherance of development of the Project as well as security for the money paid by the owner. Through clause 6.24 it was agreed that developer THDC/HASH was always permitted by owner to amalgamate the property with any other contiguous, adjacent and adjoining land and the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not given then how THDC was author i zed to hand over such land or por t ions thereof which have not been ident if ied in the JDA out of the total land. Simi lar l y through clause ( y) THDC has been author ized to mor tgage, encumbrance or create charge on the property in favour of any bank or f inanc ial inst itut ion for rais ing the funds for the project . In the absence of possession such powers cannot be given. Clause (aa) clearly author i zed the THDC to sell , transfer , lease, license the premises which were to be cons t ruc ted on ownership basis and fur ther to recei ve moneys against such sale etc. and to issue final receipt . Nowhere it is mentioned in this clause that such sale deeds were to be singed by the Soc iet y as confirming party. In the absence of possesion it is just not poss ible for the developer to sell and transfer the premises which were to be constructed. This is fur ther clar if ied by clause (bb) and ( cc ) whi ch gives the power of execut ion of conveyance and other document s invol ving in respect of the premises to be cons t ructed without any inter ference of the Soc iet y being made conf i rming par t y. All these clauses clearly show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, it is clear that the assessee s plea that the possession was to be given only at the time of registration of the JDA, is not correct. Once irrevocable power was given then it cannot be said that the possesion was not given. The issue regarding revocat ion of irrevocable Power of Attorney and cancellation of the JDA would be discussed later on while deal ing with that contention. 57 We find force in the submissions of the ld. DR for the revenue that interpretat ion of clause (v) to section 2(47) should be made in the light of Heydon s Rule. There is no force in the objection of the ld. counsel of the assessee that this clause should be interpreted on general rules of interpretat ion particularly in the light of the fact that no reason has been given for the same. Heydon s Rule has been applied by the Indian Courts many times. The Rule was applied and initiated in Heydon s case (1584) 3 Co. Rep 7a. This Rule was upheld by the Constitution Bench of Hon'ble Apex Court in case of Bengal Immunity Co. Ltd. V State of Bihar (1955) 2 SCR 603 for consideration of Article 286 of the Constitution. It has been held in case of Dr. Baliram Waman Hi ray V. Mr. Justice B. Lent in and anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty without execut ion of the conveyance deed. Thirdly we need to examine the remedy which was insertion of clause (v) and (vi) so that cases of giving possesion of the property, were also covered by the definition of transfer . Fourthly, true reason for this amendment was to plug a loop hole in the law. Therefore, considering the purpose of insertion of clause ( v) and ( 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 property to THDC/HASH. 59 Second important contention on behal f of the assessee is that JDA was executed on 25.2.2007 and if possesion was given then how the assessee was having possesion in terms of later sale deeds executed on 2.3.2007 and 25.4.2007. The Society has executed two sale deeds for conveyance of parts of the total land. First sale deed has been executed on 2.3.2007 for 3.08 acres and recitation clause (A) reads as under : Clause (A) - The vendor is the absolute owner and in possesion 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 her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acres, has been sold /conveyed to the developer. In the light of this position, this contention is rejected. 62 We find no force in the next contention of the ld. counsel of the assessee that possession if at all was given should be held to be only a l icense as def ined in Section 52 of Indian Easement Act because clealy as per Section 52 of this Act, where one person grants to another or many other persons to do something upon immoveable property which in the absence of such right would be unlawful . 63 Here in case before us , the right has not been given for the purpose of doing something but all the possible rights in property including right to sell , right to amalgamate the project with another project in the adjoining area which may be acqui red later , right to mortgage et c. clear l y show that right s given by the Soc iet y are much more larger than what is covered in the term license 64 Fourth contention is that the money received at the time of execution of JDA can be termed as advance and whatever money has been received has already been shown as capital gain. We find no force in this submission because Section 45 which has been extracted above clearly pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deemed to be the income of the previous year in which the transfer took place . Since this is a statutory fiction, the actual year in which the sale price was received, whether it was one year, two years, three years, four years etc. previous to the previous year of transfer, is beside the point. The entirety of the sum or sums received in any earlier year or years would be regarded as the capital gains arising in the previous year of transfer. . . . . In the words of section 45, the capital gains arising from the transfer 'shall be the income of the previous year in which the transfer took place'. So, the payments of consideration stipulated to be paid in future would have to be attributed, by statutory mandate, to the year of transfer, even as payments made prior to the year of transfer. 66 The above clearly shows that it is because of expression used in Section 45 that is arising which cannot be equated with receipt . In this respect the ld. authority has quoted a very old decision of Hon'ble Madras High Court in case of T.V. Sundaram Iyengaar and Sons Ltd. V. CIT, 37 ITR 26 (Mad). At para 13 of the said decision is extracted in the following manner: 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of time when the income becomes receivable. In other words, once the vested rights come to a person then it can be said that such right or income has accrued to such person. The concept of accrual or arousal of income has also been discussed by the ld. author S. Rajaratnam in the commentary of Law of Income Tax by Sampath Iyengar XIth Edition by discussing the meaning of accrued and arise at page 1300 it has been observe as under: (1) Important principles.- (a) Meaning Accrue means to arise or spring as a natural growth or result , to come by way of increase . Arising means coming into existence or notice or presenting itself . Accrue connotes growth or accumulation with a tangible shape so as to be receivable. In a secondary sense, the two words together mean to become a present and enforceable right and to become a present right of demand . In the Act, the two words are used synonymously with each other to denote the same idea or ideas very similar, and the difference lies only in this that one is more appropriate than the other, when applied, to a particular case. It will indeed be difficult to distinguish between the two words, but it is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t expressly provided by the terms of the contract 70 A plain reading of the above provision shows that it provides a safety measure or a shield in the hands of the transferee to protect the possession of any property which has been given by the transferor as lawful possession under a particular agreement of sale. This position of law was incorporated in the definition of transfer by insertion of clauses ( v) ( vi ) in section 2(47) of the Act . It is important to note that clause ( v) uses the expression contract of the nature referred to in section 53A of T.P. Act , therefore, c lear l y the idea is that an agreement which provides some defense in the hands of transferee was incorporated under the definition of transfer in the Income Tax Act . Now or iginal l y section 53A of T.P. Act provided that even if the contract though required to be regis tered has not been registered , which means the right of defending the possesion was avai lable even if the contract was not registered but by Amendment Act of 2001, the expression though required to be registered has not been registered , has been omit ted which means for the purpose of possession u/s 53A of T.P. Act , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legal effect of that , as has of ten been held, is to write those Sections into the new Act as if they had been actually written in it with the pen, or printed in it . (p.233) Even though only particular Sections of an earlier Act are incorporated into later, in construing the ncorporated Sections it may be at times necessary and permissible to refer to other parts of the earlier statute which are not incorporated. As was stated by LORD BLACKBURN: "When a single Section of an Act of Parliament is introduced into another Act, Ithink it must be read in the sense it bore in the original Act from which it was taken, and that consequently it is perfectly legitimate to refer to all the rest of that Act in order to as certain what the Sections meant , though those other Sections are not incorporated in the new Act . (p.244) 72 On the bas is of above observation, it was held that meaning 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 deprec i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions could not be subjected to tax because the same could not covered by the definition of "transfer". To bring such transactions within the tax net, this amendment was made. It has to be appreciated that clause (v) in section 2(47) does not lift the definition of part performance from section 53A of the Transfer of Property Act, 1882. Rather, it defines any transaction involving allowing of possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act. This means such transfer is hot required to be exactly similar to the one defined u/s.53A of the Transfer of Property Act, otherwise legislature would have simply stated that transfer would include transactions defined in sec. 53A of the Transfer of Property Act. But the legislature in its wisdom has used the words "of a contract, of the nature referred in section 53A". Therefore, it is only the nature which has to be seen. As discussed above, the purpose of insertion of clause (v) was to tax those transactions where properties were being transferred by way of giving possession and receiving full consideration. Therefore, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 is not warranted." Thus, from the above, it is clear that it is not necessary to get the instrument of transfer registered for the purpose of Income-tax Act when a person has got a valid legally conveyed after complying with the requirements of the law. 9. Similarly, in the case of Mysore Minerals Ltd. v. CIT [1999] 239 ITR 775/106 Taxman 166 (SC), the assessee had purchased for the use of its staff seven low income group houses from a Housing Board. The payment had been made and in turn possession of the houses was taken over by the assessee. The actual conveyance deed was not executed. The assessee claimed depreciation which was denied by the department. After great discussion, it was observed that for all practicable purposes and for the purpose of Income-tax Act, the assessee shall be construed as owner of the property. In fact, it was held as under: - "Held, reversing the judgment of the High Court, that the finding of fact arrived at in the case at hand was that though a document of title was not executed by the Housing Board in favour of the assessee, the houses were allotted to the assessee by the Housing Board, part payment received and possession deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .There is no need to repeat the same and in view of the said observations, we reject this contention. 77 The next contention is that it is necessary for invok ing of section 2(47) (v) of the Act to compl y with the provisions of section 53A of the Transfer of Property Act to the extent that there should be willingness on the part of the transferee to per form his part of the contract . 78 In this aspect we have no quarrel with the proposition that for invoking section 53A pf T.P. Act read with clause ( v) of section 2(47) , the transferee has to per form or is willing to perform his part of the contract. In this respect as referred to by Ld. Counsel for the assessee, the comments of the Ld. Author in the commentar y by Mulla Dinshan Frederick Mulla vide para 16 are clear and shows that this requirement has to be absolute and unconditional . Some observations have been made in the case 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the order of the Hon'ble Supreme Court that refusal of sanction under the Envi ronment (Protection) Act , the society have sought a review of the order because the findings arrived were ex.parte. No order in the matter has been passed by the competent authority perhaps because of the order of High Court . In the interim order pas sed in the PIL it has been clarified by the Hon'ble Supreme Court vide order dated 31.1.2012 permitting the concerned authority under the different statutes governing the matter to their respective jurisdiction to be decided in accordance with law. Thus, it becomes clear that developer i .e. THDC has applied for various permissions before the relevant authorities and in some cases permission were declined on ex.parte basis and in some cases the same were declined in view of the High Court order banning the construction. After the clarification of the order of the High Court by Hon'ble Supreme Court by order dated 31.1.2012, the authorities have already been permit ted to examine the issue on mer its under various laws. Further in the JDA there is a clause 26 which deal s with the Force Majeure clauses . The clause 26 (i) to ( v) reads as under : - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these clauses show that if any of the party could not perform its part of the obligation because of the unforeseen circumstances which included government directions, Court orders, injunctions etc. such party would not be liable to other party. In view of Force Majeure clause which included Court Injunction it can not be said that THDC is not willing to perform its obligation. In fact Develpers i .e. THDC/HASH were perusing the issue of permissions /sanct ions vigorousl y. These aspects become further clear if the judgment of the Hon'ble Punjab Haryana High Court in CWP No. 20425 of 2010 vide order dated March 26, 2012 is perused. Paras 3, 4, 22, 25 26 of the judgment read as under : - 3. The broad contours of the present proceeding having been outlined, we may now proceed to take note of the specific contentions of the contesting parties as made before us. However , before we do so, it may 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question. As already held by us, a public trust has been bestowed on the authorities by provisions of the said Acts which cast on such authorities a duty to interdic t any project or activit y which even remotely seems to create an imbalance in the pr ist ine ecology and environment of the area on which the city of Chandigarh is situated or for that matter in the immediate vicinity thereof . As already observed, necessary clearances under the aforesaid two enactments, insofar as the respondents are concerned, are presently pending before the concerned authorities and, therefore, it would be highl y incor rect on our part to enter into any further discussion on the aforesaid aspect of the case. 25. We also has ten to emphasise that a more rigorous regulated development in what are now the remnants of the periphery and the areas adjoining to it is the need of the hour for which the stakeholders i .e. the Administ ration of Chandigarh, the States of Punjab and Haryana as also the authorities under the Environment (Protection) Act and the Wild Life Protection Act have to demonst rate the need to engage themsel ves intensively and not acquire a placid approach indicat ing an eloquent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin six (6) months from the date of execution of this agreement or within two (2) months from the date of approval of the plans / Design and Drawings and grant of the final licence to develop where upon the construction can commence, whichever is later, against which the Owner shall execute a registered sale deed for land of equivalent value being 6.36 acres out of the Property as demarcated in green colour (also hatched in green colour ) in the Demarcation Plan annexed hereto as Annexure V and bear ing Khasra nos. 123/15, 123/6, 123/7 (balance par t ) , 123/3 (part ) , 123/ /4/ /1, 123/ / /4/ /1/2, 123/ /4/2, 123/5/1, 123/ /5/2, 123/ /5/3, 112/24/24 (part) 85 The careful reading of the said clause of the JDA would show this payment was required to be made within a period of six months from the date of execution of this agreement or within two months from the date of approval of plan /sanction and drawing grant of final license to develop where upon the construction can 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase before us, initially the Members of the Society were holding shares in the Society for ownership of plot of 500 sqyd or 1000 sqyd. This membership was surrendered to the Society vide resolution of the Society passed in the Executive Committee on 4.1.2007 which was later ratified in the General Body Meeting of the Society on 25.1.2007, so that the society could enter into JDA. In the JDA the Society has agreed to transfer the land. Therefore, technically it can be said that the developer i.e. THDC/HASH has purchased the membership of the Members in the society which would lead to enjoyment of the property and in that technical sense, clause (vi) of Section 2(47) is applicable. 89 Eighth contention is that since the Society has transferred the land through JDA on a pro-rata basis, therefore, only whatever money is received against which sale deeds have also been executed, can be taxed and notional income i.e. the money to be received later, can not be taxed. In this regard reliance was placed on certain Supreme Court decisions and other cases for the proposition that notional income cannot be taxed. There is no need to discuss the cases relied on by the ld. counsel of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthor Shri. S. Rajaratnam in the Commentary of Law of Income Tax by Sampat Iyengar s Volume 1, (11th Edit ion) has observed at page 343 as under: - 5. Reservations on real income theory. - Whether accrual of income has taken place or not, must be judged on the principle of the real income theory. After accrual, non-charging of tax on the same because of certain conduct based on the ipse dixit of a particular assessee cannot be accepted. In determining the question whether it is hypothetical income or whether real income has materialized or not, various factors will have to be taken into account. It would be difficult and improper to extend the concept of real income to all cases depending upon the self-serving statement of the assessee. What has really accrued to the assessee has to be found out and what has accrued must be considered from the point of view or real income taking the probability or improbability of realization in a realistic manner, but once accrual takes place, on the conduct of the parties subsequent to the year of closing, an income which has been accrued cannot be made no income . 91 The above pos it ion can be unders tood by examining some of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65) 57 ITR 609, 619 (Cal); In the matter of Krishna Lal Seal, AIR 1932 Cal 836; Lalla Mal Samgham Lal v. CIT, (1936) 4 ITR 250 (Lah); New Delhi Municipal Committee v. Nand Kumar Bussi, (1977) Tax LR 2130 (Del)] 93 Similar view has been expressed by Shri N.A. Palkhivala in his commentary on the Law land Practice of Income Tax, Volume 2 (Eighth edition) by Kanga and Palkhivala s observation at pages 22 23. Again even Shri. S. Rajaratnam in the Commentary of Law of Income Tax by Sampat Iyengar s Volume 2, (11th edition) expressed identical views in his commentary at page 2738. 94 In al l the leading commentar ies c ited above, it has been obser ved that annual value is to be computed whether property 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 yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some real ambiguity. Thus, any benevolent construction in favour of the assessee has been held to be uncalled for. 96 Therefore, it can be said that generally speak ing notional income could not be subjected to tax but whenever there is a specific provision, the same has to be taxed. Now, in case of capital gain, section 45 read with section 48 very clearly provides that it is the profit arising from the transfer of a capital as set which would be subjected to charge of capital gain tax and section 48 clearly provides for tak ing the total consideration into account whi le comput ing the capital gains . This aspec t we have already discussed in detai l at para No. 64 to 68 from which it becomes clear that it is the whole consideration whether received or accrued, which has to be taxed under the capital gain once transfer of the capital as set 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each as per list annexed with this Agreement as Schedule B ( Sale Transaction ) It is expressly agreed between the Developers that HASH shall be responsible for making all payments to the Owner and/or the respective members of the Owner (as the case may be) as per the negotiated and agreed terms between the Owner and HASH, HASH expressly undertakes to make timely payments of the Payment to the Owner and / or the respective members of the Owner (as the case may be) as under: 4.2 As resolved by the Owner, THDC either by itself or along with HASH shall allot the Flats in the name of members of the Owner as per list annexed with this Agreement as Schedule B attached herein (hereinafter referred to as the Allottees ). The specifications of the flats would be provided by the Developers to the Owner and more particularly described in the Schedule C attached herein (hereinafter referred to as the Specifications ). The Allotment letters shall be issued to the Allottees (members of the Owner) within forty-five (45) days from the date of sanction of the building plans / Design and Drawing and on obtaining final license/permission for the development of the Project from the Compet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this discussion this contention is rejected. 100 Ninth contention is that the assessee has already terminated the agreement and has revoked the Power of Attorney. We find no force in this submissions. 101 In this regard ld. counsel of the assessee has relied on the decision of Mumbai Bench of the Tribunal in case of Chemosyn Ltd. V ACIT (supra). In that case the assessee-Company was owner of two plots bearing 256 257 in Gundabali Andheri Mumbai. The assesseecompany entered into a development agreement with Dipiti Builders for the development rights for a consideration of Rs. 16.11 crores. Dipiti Builders had also agreed to construct 18000 sqft carpet area for the benefit of assessee on plot No. 256. In the return of income total consideration was shown only at Rs. 16.11 crores. It was explained that before Dipiti Builders could start the development /construction work, entire property comprising of plot no. 256 257 was sold to a third party M/s Financial Technology Ltd. by a tripartite conveyance deed executed on 5.7.2007 for Rs. 29.11 crores and therefore, additional consideration of Rs. 13 crores has been offered to tax in Assessment year 2008-09. This explanation was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne month of such termination. In the event of failure of the Owner to refund the said amount, the Owner hereby agrees to execute a registered sale deed for land of equivalent value in favour of THDC. (ii) In the event all the requisite government and statutory approvals, authorizations, consents, licenses, approvals of all the plans/designs and Drawings as may be required for the development of this Property in relation to the Project and to undertake the Project are not granted within nine (9) months of the submission of the final plans/Designs and Drawings to the Competent Authority for approval then THDC may as its sole discretion either decide that it does not desire to undertake and complete the Project and hence terminate this Agreement after giving thirty (30) days written notice in this regard or decide to wait for any further times deemed fit by THDC for the grant of the aforesaid approvals and licenses. In the event the Agreement is terminated by THDC, all the lands registered in the name of THDC as per the terms of this Agreement upto the date of the termination shall remain with THDC and the balance lands to be transferred to THDC as per the terms of this Agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show that right to terminate with the owner i.e. the Society was available only in case of default in making the payment. The issue regarding default for making payment has already been discussed by us in Paras 84 to 86 above while discussing the issue of willingness on the part of the transferee to perform its part of the contract We have already held that there was no default on the part of developer i.e. THDC/HASH in making the payment, therefore, the assessee had no right to terminate the contract. In any case we further find that clause 20 of the JDA refers to Arbitration and it is clearly provided that all the disputes under it should be referred to the arbitration. Therefore, if the Society had some grievance it was duty bound to give a notice for appointment of an Arbitrator to the developer. In the absence of such notice the termination will not stand scrutiny of law. Here it is also pertinent to note that though it was stated that irrevocable Power of Attorney has been revoked and some documents have been filed before us for revocation but clause 6.7 of the JDA which we have reproduced earlier clearly provides that such Power of Attorney cannot be revoked. We reproduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to developer through two sale deeds. If that is so then what would happen to the balance consideration because in such situation the assessee has received consideration of only about Rs. 5 croress per acre because the assessee has registered land measuring 3.08 acres for Rs. 15.48 crores through first conveyance deed, whereas consideration as per original agreement was Rs. 11.18 crores per acre as shown above. The difference is because of non receipt of consideration in kind and the assessee has not shown any evidence that it has made the claim for receipt of balance consideration. This leads to the conclusion that there was no cancellation of the JDA. 106 Some arguments were made by both the parties that if the contract is finally stand abandoned then what would happen. The contention on behalf of the assessee is that if the contract is abandoned then the assessee would have paid tax in the year of transfer and would be left with no recourse for relief. The contention on behalf of the Department was that the assessee could always file revised return or make a petition u/s 264 and some relief was possible in case of the assessee. However, if revenue fails to tax the total conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scale of such development agreements to solve the housing problem in the cities, a statutory clarification or circular is overdue. We may mention here that no doubt sometimes an assessee may be put in a difficult situation and as mentioned by Hon'ble Authority in case of Jasbir Singh Sarkaria (supra) as well as Ld. Author Shri Rajaratnam it is for the legislature to take corrective steps. However, it may not be out of place that if considering the difficulty the interpretation given by the ld. counsel of the assessee is accepted then the Revenue may not be able to tax such assessees when these difficulties are removed. For example in the present case if tomorrow when all permissions are obtained and 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 mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by THDC towards construction of 126 flats equivalent to 2,83,500 sqft , which flats are to be allotted in the names of the members of the Society or otherwise, as the case may be, calculated as Rs. 2000 per sqft. for the area 2,83,500 sqft. and the 72% share of 3 flats of 2250 Sqft. to be purchased by HASH @ Rs , 4500/ - per sqft . Should the application of the ratio stipulated in (a) above result in HASH being entitled to a sum greater than the minimum guaranteed amount and THDC being entitled 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 Rs. 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 Rs. 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 Rs . 2,000/ - per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being an individual or HUF, transfers the res identical house and in case before us, the assessee has transferred the plot. Therefore, it cannot be said that deduc t ion u/s 54F and 54 is same. Since no ground has been raised for deduction u/ s 54F, we reject this contention. 111 Ground No. 3 - The ld. counsel of the assessee submitted that without prejudice to the issues raised in grounds No. 2, 5 6, capital gain should have been taxed in the hands of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A No. 448(Asr)/2011 and others vide order dated 29.07.2013 (supra) and decision therein is, therefore, identically applicable in the present case. Accordingly, we find no infirmity in the order of the ld. CIT (A), who has rightly upheld the action of the A.O. in reopening the assessment. Thus, grounds No.1 2 of the assessee are dismissed. ii) As regards grounds No. 3 to 6, the facts are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra) hereinabove on the taxability of the capital gain. Therefore, the decision in the case of Sh.Charanjit Singh Atwal vs. ITO (supra) is identically applicable in the present case. Therefore, grounds No. 3 to 6 are dismissed. iii) Grounds No. 7 to 11 are general in nature and therefore, do not require any adjudication . iv) In the result, the appeal in ITA No.180(Asr)/2011 is dismissed. 2 . ITA No. 475(Asr)/2012 Sh.Mohal Lal Sharma The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cally applicable to the grounds which have been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No.13(Asr)/2013 are dismissed. 6. ITA No.187(Asr)/2012 Smt. Rajwinder Kaur Bhullar The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the present case are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No. 187(Asr)/2012 are dismissed. 7. ITA No.480(Asr)/2012 Sh. Ranjit Singh Brahampura The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of Sh. Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No.63(Asr)/2013 are dismissed. 11. ITA No.33(Asr)/2013 Dr.Rattan Singh The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the present case are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No. 33(Asr)/2013 are dismissed. 12. ITA No.34(Asr)/2013 Dr.Baldev Chawla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the present case are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No. 338(Asr)/2013 are dismissed. 16. ITA No.244(Asr)/2011 Sh. Balbir Singh Miani The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the present case are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ITA No.51(Asr)/2013 Sh. Ajit Pal Singh The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the present case are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No. 51(Asr)/2013 are dismissed. 21 . ITA No.52(Asr)/2013 Sh. Simranjit Singh The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the present case are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No.186(Asr)/2013 are dismissed. 39. In the result ITA No. Appeal by Result 180(Asr)/203 Sh.Satnam Singh Kaith Dismissed 475(Asr)/2012 Sh.Mohan Lal Sharma Dismissed 564(Asr)/2011 Sh.Sarwan Singh Phillaur Dismissed 472(Asr)/2011 Sh.Kanwajit Singh Lally Dismissed 13(Asr)/2013 Sh.Raghunath Puri (Decd.) Dismissed 187(Asr)/2012 Smt. Balwinder Kaur Bhullar Dismissed 480(Asr)/2012 Sh.Ranjit Singh Brahampura Dismissed 08(Asr)/2013 Sh.Jagdish Sawhney Dismissed 466(Asr)/2012 Sh.Jagdish Sawhney Dismissed 33(Asr)/2013 Dr.Rattan Singh Dismissed 34(Asr)/2013 Dr.Baldev Raj Chawla Dismissed 162(Asr)/2013 Sh. Tikshan Sud Dismissed 277(Asr)/2013 Sh. Ajit Singh Khokhar Dismissed 338(Asr)/2013 Sh. Balwinder Singh Dhillon Dismissed 244(Asr)/2011 Sh. Balbir S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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