TMI Blog2013 (9) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... ration was to be made to an individual plot holder and in fact consideration was mentioned in terms of per Member. Each Member holding 500sqyd plot was to receive a sum of ₹ 82,50,000/- and one fully furnished flat measuring 2250 sqft and the Members holding 1000sqyd plot were to receive monetary consideration of ₹ 1.65 crores plus two flats measuring 2250 sqft. In fact the payment of cheques is made by Hash by issuing cheques in the name of individual Member and not the Society. This fact stands admitted because assessee has filed a return declaring capital gain against part money received against his plot. Thus it becomes clear that it is the individual member who are liable to tax in respect of transfer to plots and the Society being only a facilitator or Post office. - I.T.A. No. 459(Asr)/2013, I.T.A. No. 467(Asr)/2013, I.T.A. Nos.468 & 469(Asr)/2013, I.T.A. No. 490(Asr)/2013, I.T.A. No. 491(Asr)/2013 - - - Dated:- 12-9-2013 - SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER For the Appellant : Sh.Ashwani Kalia,CA, Sh.P.N.Arora, Advocate For the Respondent :Sh.Mahavir Singh, DR ORDER PER BENCH ; These 6 appeals of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of by the Builder. 6. That the Ld. CIT(A) Bathinda has erred in law and on facts in not appreciating the fact that the JDA having already been terminated due to non performance by the other parties there is no question of transfer of any property by the appellant. 7. That the Ld. CIT(A) Bathinda has erred in law and on facts in not appreciating the fact that the actual physical possession of the property was not handed over by the appellant as part performance of the JDA in terms of section 53A of transfer of Property Act. 8. That the Ld. CIT(A) Bathinda has erred in law and on facts in not allowing deduction u/s 54F of the Act, in case the long term capital gain was assessable in the hands of the assessee. 9. That the order of Ld. CIT(A) is bad in law and on facts. 10. That the appellant craves leave to add to or amend the aforesaid grounds at or before the hearing of appeal. 3. In ITA No.467(Asr)/2013, Sh.Chiranji Lal Garg, the assessee has raised following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in confirming the addition made by A.O. of ₹ 1,77,35,838/- as capital gain by assuming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons very much on the higher side and excessive. 8. That the appellant craves to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 4. In ITA No.468(Asr)/2013, A.Y. 2007-08, Sh.Gurdev Singh Badal, the assessee has raised following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in confirming the addition made by A.O. of ₹ 1,78,75,000/- as capital gain by assuming that there is a transfer of assets by the assessee through JDA with Hash Builders and Tata Housing Development Corporation (Developers). 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred by holding that there is a transfer of assets by the assessee as per JDA without appreciating that the legality of the agreement is still in dispute on account of development of the land made in violation of prevailing law and matter is sub judicious before the Hon ble Punjab Haryana High Court. 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred by holding that there is a transfer of assets by the assessee as per JDA inspite of the fact that the agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd or disposed off. 5. In ITA No.469(Asr)/2013, A.Y. 2008-09, Sh.Gurdev Singh Badal, the assessee has raised following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred by confirming the addition made by the AO of ₹ 16,29,588/- whereas whole of the capital gain on accrual basis has been assessed in the A.Y. 2007-08 and the ld. CIT(A) has confirmed the same. Therefore, the addition of ₹ 16,29,588/- has wrongly been confirmed during the A.Y.2008-09 i.e. assessed twice in the assessment year 2007-08 and 2008-09. Therefore, the addition of ₹ 16,29,588/- being double taxation be deleted. 2. That the appellant craves to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 6. In ITA Nos.490 491(Asr)/2013, Sh.Rajiv Krishan Mahajan, HUF and Smt. Meenu Mahana, the assessees have raised following common grounds of appeal: 1. The Ld. CIT(A) has erred in law and facts upholding the action of the ITO initiation the proceedings u/s 148 upholding the order passed by the ITO, Pathankot who worked out the capital gain on the land which was not transferred at all to the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decided by the ITAT, Chandigarh Bench in the case of Charanjit Singh Atwal,Ludhiana vs. ITO Ward VI(1), Ludhiana in ITA No.448(Asr)/2011 and others dated 29.07.2013 and 24 appeals decided by the ITAT, Amritsar Bench, in the case of Sh. Satnam Singh Kaith vs. ITO Nawanshhar and others in ITA No.180(Asr)/2013 and others, dated 19.08.2013. 9. On the other hand, all the Ld. counsels appearing on behalf of different assessees before us in the present appeals, agreed to the argument made by the Ld. DR. Mr. Mahavir Singh. All the counsels prayed before the Bench to consider their submissions and decide the issues in all the 6 appeals accordingly. 10. On perusing the facts in the present 6 appeals before us and the facts in the bunch of 30 appeals decided by a consolidated order dated 29.07.2013 by the ITAT Chandigarh Bench (supra) and 24 appeals decided by this Bench (supra), we are of the view that the issues decided by the ITAT Chandigarh Bench vide order dated 29.07.2013 (supra) and by this Bench vide order dated 19.08.2013 are identical to the issues in the present six appeals before us. Therefore, we are proceeding to decide the present appeals by this consolidated order. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the possession was only concurrent as the possessory right. Accordingly the second contention was also rejected. iii) Vide para 62 to 63 the third contention was that possession if at was given should be held to be only a license as defined in section 52 of Indian Easement Act. This third contention was also rejected for the reasons that rights given by the society are much larger than what is covered in the term License . iv) Vide paras 64 to 68, the fourth contention was that the money received at the time of execution of JDA can be termed, as advance and whatever money has been received has already been shown as capital gain. It was held that it is not only the money, which is required to be taxed but the consideration which has accrued to the assessee is also required to be taxed. Accordingly, the fourth contention was also rejected. v) Vide para 69 to 74, fifth contention was that since section 53A of the Transfer of Property Act itself has undergone amendment w.e.f. 24.9.2001 by which agreement referred to in that section is required to be registered and therefore, now in section 2(47)(v) only the amended provisions can be read. It was held that non-registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 29.7.2013 (supra) vide paras 97 to 99 has dealt with issue of taxability of flat on the basis of above principles considering clause 4 of JDA, it was held that once this vested right arises out of the above contract, it can be easily said that this right has also accrued to the assessee. Therefore, capital gain tax has to be paid on the total consideration arising on the transfer which would include the consideration which has been received as well as the consideration which has arisen and become due and may be received later on. Accordingly, this contention of the assessee was also rejected. ix Vide para 100 to 107, being the ninth contention that assessee has already terminated the agreement and has revoked the Power of Attorney. It was held in view of provision of section 45 read with section 48 of the Act that subsequent events, if at all any will not make any difference because total consideration received or accrued has to be assessed in the year of transfer. The word irrevocable itself shows that in the eyes of law Special Power of Attorney could not have been revoked. In view of this analysis, either the JDA has not been cancelled or in any case the same cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rejected. Accordingly all the issues, as discussed above in the case of Sh.Charanjit Singh Atwal (supra) were dismissed by the ITAT Chandigarh Bench in its order dated 29.07.2013. 34. As regards issue of notice u/s 148, the same was dealt with in ITA No.986/CHD/2011 in the case of Avtar Singh Brar vs. ITO. It was held that Ld. CIT(A) has done no wrong in rejecting the issue on reopening of assessment. Accordingly, the ground was rejected. 35. In the case of Smt. Surjit Kaur in ITA No.993/CHD/2011, the assessee was a member of The Defence Services Co-operative Housing Building Society Ltd; which was the owner of 27.3 Acres of land. This land was transferred to THDC/HASH as in the case of Punjabi Co-operative Housing Building Society Ltd; either facts are identical to the case of Sh. Charanjit Singh Atwal (supra). Accordingly, being identical issue as in the case of Sh.Charanjit Singh Atwal (supra), the appeal of the assessee was dismissed. 36. Regarding interest u/s 234B and withdrawal u/s 244A, it was held in para 114 that the same is consequential in nature and AO was directed to charge or withdraw interest in accordance with law. 37. Accordingly, all the grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rants and assigns in perpetuity all its rights to develop, construct, mortage, lease, license sell and transfer the property along with any and all the constructions, premises, hereditaments, easements, trees thereon in favour of THDC for the purpose of development, construction, mortgage, sale, transfer, lease, license and/or exploitation for full utilization of the Property (Rights) and to execute all the documents necessary to carry out, facilitate and enforce the Rights in the Property including to execute Lease Agreement. License Agreements, Construction contracts, Supplier Contracts, Agreement for Sale. Conveyance, Mortgage Deeds, Finance documents and all documents and agreements necessary to create and register the mortgage, conveyance, lease deeds, license agreement, POA, affidavits, declarations, indemnities and all such other documents, letters as may be necessary to carry out, facilitate and enforce the Rights and to register the same with the revenue/Competent authorities and to appear on our behalf before all authorities, statutory or otherwise and before any court of Law (The Development Rights ). The Owner hereby hands over the original title deeds of the Property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in favour of THDC and sum of ₹ 12 lacs was received As stated earlier, the amount was received as advance under the agreement and the property was transferred as security towards that advance. There were different legal opinions on the taxability of the amounts received. However in discharge of the duties as responsible citizens and avoid litigation, the members decided to pay capital gain tax on the amounts received voluntarily and such as the assessee has paid due amount of taxes voluntarily during the course of proceedings It may kindly be appreciated that tax liability will arise only to extent of completed transactions i.e. the capital gain arising on the land which has been transferred and for which consideration has been received. The assessee has fully discharged his liability to that extent There cannot be any tax liability on Incomplete transaction I.e. where the land has not been transferred and the Consideration has not been received, 5 In your letter under consideration, you have considered the national 'value of the proposed flat measuring 2250 sq. feet as a part of the consideration. Here the following points need to be considered. 1.) The flat sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a transfer of property upon the surrender of allotment rights. You may kindly refer to the agreement dated 25,02.2007 wherein it is clearly mentioned that allotment rights have been surrendered by the members in favour of the owner i.e. Punjabi Co-operative House Building, Society Ltd and not In favour of the buyers. So therefore, there is no transfer of property u/s 2(14) and 2(47). 2 Regarding your observation of having accepted the position of transfer, please note that we understand that transfer of property is only to the extent of the land transferred by way of sale deed. 3 It is very clear from the agreement that no transfer of property have taken place only the development right has been transferred. Therefore, there is no transfer of property under section 53A of Transfer of property Act, 4. Clause 9.3 of the agreement is very clearly stating that the ownership has not been transferred. in view of our submission you are requested to complete the Capita! Gains Tax in accordance with our return. The assessee wants to be personally heard and make further submission. You are requested to kindly adjourn the case till 29-12-2009. 11. Vide the above said lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt clearly states that handing over the original title -deeds is as security for the adjustable advance. 3 As per clause 9.2 of the agreement, it is very clearly mentioned that the owner shall execute in favour of M/s THDC Ltd: the sale-deeds to complete the aforesaid transaction. So it is evident that the execution of sale-deeds is an integral part of the transaction and the transaction shall remain incomplete. if the sale deeds are not executed. 4 The clause 13 very clearly states that the rights transferred relate to Development/construction work and M/s THDC Ltd shall not do anything which adversely affect the right of the owner to receive the entire consideration. 5 Keeping in view the conditions in the agreement and to the fact that M/s THDC Ltd: M/s Hash Builder Ltd have not done any development work on the land under consideration till date in pursuance of the agreement dated 25.2.2007 or in furtherance of the said agreement, no transfer should be considered to have been taken place in respect of the land which is not yet transferred, if the views of the department are held to be correct for the sake of discussion, the following situation will arise: 1, Assesses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a letter and submitted as under: This being referred to the captioned proceedings Regarding your query about the cost of acquisition is ₹ 11 lacs which is paid as per following dates. Receipt No, 307 09-11-01 5,04,000/- Receipt No. 426 12-02-04 7,00,007/- Out of above amount ₹ 1,00.000/- was refunded to the assessee and Rs, 4000/- was towards membership charges and other funds of the society. In continuation to our earlier reply submitted, we once again reiterate that the possession given by the assessee is only to the extent of land sold by way of registered sale deed. There are certain addendums to the agreement which are not presently available with the assessee cannot be submitted immediately. 20 The Assessing Officer after considering the submissions did not find any force in the same and observed as under: (i) There is no force in the argument that the JDA was only an agreement to sell and not a sale deed because JDA resulted in the transfer of assets. All the ingredients of transfer i.e. consideration from schedule of payments, rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has himself shown the receipt and returned the same as capital gain which contradicts these arguments of the assessee. As per Section 45 of IT Act, income-tax was to be charged under the head capital gain on transfer of a capital asset and shall be deemed to be the income of the previous year in which transfer took place. The year of transfer is the crucial year and not the time of the receipt. (v) There was no force in the contention that the value of the flat should not be included because the assessee has not received such flat, because the flat was to be received by each Member of the Society was part of the entire consideration as per clause 4.2 of JDA. In any case as per Section 45 r.w.s. 48, its full value of consideration received or accrued which has to be considered. (vi) It was also observed that surrender of allotment letter by the Members including assessee was processed in order to enable the Society to enter into tripartite JDA with HASH and THDC. By surrendering the allotment letter, the right of the assessee in immovable property owned by him got extinguished and this extinguishment was in lieu of entire consideration which was received by the Members in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to perform his part of contract. 23 If the above conditions were satisfied then the transfer can be said to have taken place for the purpose of Section 45. According to him as per the decision of Chaturbhuj Dwarkadas Kapadia V. CIT (supra) once the possession or part possession of the property was given by the transferor to the transferee then the transfer can be said to have taken place. He also referred to the decision of Authority for Advance Ruling in case of Jasbir Singh Sarkaria, 164 Taxman 108: 294 ITR 196. He referred to various observations of the Authority in this case and concluded that the receipt of entire consideration was not a factor to be seen for application of Section 2(47)(v). Once these two decisions were considered along with the provisions of section 45 r.w.s. 2(47)(v) then it would emerge as under: (a) The Joint development agreement has been entered into between the Punjab Coop Housing Building Society Ltd. Mohali, of which assessee is member, and. M/s Hash Builders (P) Ltd. and M/s Tata Housing development Company Ltd. Mumbai as on 25.2.2007. (b) The members of the society surrendered their allotment rights and the society on behalf of members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the Society on behalf of members will transfer 3.08 Acres of the contiguous land out of property, It has been confirmed that against the above payment the land measuring,3.08 acres has been transferred in the name of THDC and registered vide sale deed dated 02/03/2007 i.e. in the previous year 2006- 07. g) Thus it is clear from above transactions that transferee, M/s Tata Housing development Company Ltd,, Mumabi, has performed and is willing to perform his part of contract and in this part performance of contract, the assessee and other members of the Punjab Coop Housing Building Society Ltd, Mohali have given possession of the whole of land of 21.2 acres to the THDC and have further irrevocably and unequivocally granted and assigned all rights in perpetuity to THDC in the said previous year i.e. 2006-07. h) Hence it is established beyond doubt that transfer has taken place as envisaged as per Section 2(47)(v) of the-Income Tax Act and since it has taken place through Society of which assessee is also member so Sections 2(47) (vi) and 2(47)(ii) would also support Section 2(47)(v) of the income Tax Act. (i) Now once it has been established that transfer has taken pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solved as per the provisions and awards shall be granted, in appropriate cases by the arbitrator. These provisions are there to safeguard the interest of all the parties to the joint development agreement and parties would be indemnified by each other and shall also receive award if the terms/conditions are not fulfilled. p) As regards applicability of Section 54F, there are-certain conditions which are attached with Section 54F also which have to be fulfilled before which exemption under that section is available to the assessee. The assessee has not even tried to make any claim by showing that he has fulfilled the said conditions to be eligible for exemption under Section 54F, So exemption cannot be given in such a situation u/s 54F. q) The judgment relied upon by the assessee are not applicable to the case of assessee as most of them pertain to the previous year before Section 2(47)(v) and 2(47)(vi) was inserted w.e.f. 1.4.1988. Other judgments referred by assessee are distinguishable as follows: ACIT vs Puspa Devi: This ruling has been in fact in favour of revenue and completely ratifies the principles laid down in the judgment of Chaturbhuh Dwarkadas Kapadia vs CIT as it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as permissive license with right to developers i.e. THDC/HASH only for the purpose of development of the land and not as part of performance of the contract of transfer of land. The fact that possession was not handed over to the THDC/HASH also becomes clear from the sale deed dated 2.3.2007 (Placed at page 119 to 136). He referred to clause A of recitation clauses at page 120 which clearly provides that vendor i.e. the Society was owner and in possession of total land measuring 160 kanal and 7 marlas equivalent to 21.2 acres in village Kansal Distt. Mohali. This deed was for sale of part of the property measuring about 3.08 acres out of total land contracted to be given to THDC/HASH measuring about 21.2 acres. He pointed out that sale deed has been executed on 2.3.2007 whereas JDA was executed on 25.2.2007. Thus it is clear that no possession was given on 25.2.2007 otherwise the Society would not be in possession on 2.3.2007. Similarly one more part of the land was sold by second deed executed on 25.4.2007 wherein similar clause A as in the first deed is there (Refer page 138 of the paper book) shows that the Society was in possession of the land on later date. These two sale de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith effect from 24.9.2001 it was only the amended provision which can be read with Section 2 (47) (v) of the Act. In this regard he referred to decision of Hon'ble Supreme Court in case of Surana Steels P Ltd. V. CIT, 237 ITR 777. In that case it was observed that when a section or an Act of Parliament is introduced into another Act, it must be read in the sense it bore in the original Act. In other words, the meaning attached to the original section which has been referred in another act, has to be understood as same. Therefore, once the original section 53A of T.P. Act undergoes amendment the same has to be read in Section 2(47)(v) as amended and therefore, as JDA is not registered Section 2 (47) (v) will not be applicable. V The ld. counsel of the assessee referred to the decision of Hon'ble Bomay High Court in case of Chaturbhuj Dwarkadas Kapadia V CIT (supra) and tried to distinguish the same. He submitted that this decision cannot be taken as an authority for the proposition that date of agreement should be reckoned as date of transfer. In any case, the decision has to be seen for what has been held in the decision and in this case ultimately the appeal of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction in the time bound manner and in handing over the flats to the Society /its Members. In this regard he also referred to para 16 of the commentary by MULLA - Dinshaw Frederick Mulla (copy of which has been filed at page 102 and 103 of the paper book). He pointed out how the ld. authors have discussed the significance of the willingness of the transferee to perform their part of the contract. In this regard he also referred to various observations in the following case laws: General Glass Co. Pvt Ltd. V DCIT, 14 SOT 132 (Mum) K Radhika V DCIT, 149 TTJ 736 (Hyd) DCIT V. Tej Singh, 138 ITD 489 (Agra) The facts of these case laws and the facts in the present case before us are identical and therefore, since as per these decisions there was no willingness on the part of the transferee to perform his/its obligation the provisions of Section 2 (47) (v) r.w.s. 53A of T.P. Act could not be applied. VII It was contended that revenue has also held that clause (vi) of Section 2(47) is also applicable which is not correct because that provision is applicable where a person becomes owner of the immovable property pursuant to taking Membership of Cooperative Society etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified asset or a house. Since full consideration has not been received and the assessment of the whole consideration will lead to unintended consequences like denial of deduction u/s 54 EC etc. IX It was contended that since JDA has already been terminated vide Society s resolution dated 13.6.2011 and thereafter on 31.10.2011 even special Power Of Attorney executed earlier has been revoked, therefore, in view of the subsequent events, the balance of consideration receivable could not be taxed in the hands of the assessee. Subsequent events to the date of transactions have to be reckoned before taxing a particular transaction. He also submitted that in almost similar circumstances, subsequent events were reckoned by Mumbai Bench of the Tribunal in case of Chemosyn Ltd. V ACIT, 139 ITD 68. He referred to various paras and pointed out how the subsequent events were reckoned by the Tribunal. X The ld. counsel of the assessee submitted that without prejudice to the above if it is considered a case of transfer then the value of flat to be allotted to each of the Member of the Society has not been valued correctly. The Assessing Officer has referred to clause 3.5 of inter-se agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executive committee on 4.01.2007 which was confirmed / ratified in the General Body Meeting on 25.2.2007. In the Society there were two types of Members holding plots of 500 sqyd and 1000 sqyd. It was resolved that members would surrender the respective plots of 500 sqyd and 1000 sqyd in favour of the Society for further transfer of the entire land by the Society in favour of THDC/HASH for the development of property in lieu of consideration of ₹ 82,50,000/- to a Member holding 500 sqyd plot and ₹ 1,65,00,000/- to a Member holding 1000 sqyd plot to be paid in four installments by HASH directly to the Members of the Society. In addition to this consideration member holding 500 sqyd plot was to receive a furnished flat with super area of 2250 sqft to be constructed by THDC/HASH and two flats in case of Members holding 1000 sqyd plots. It was also resolved through this resolution to hand over the possession of the property and original title deeds of the property to THDC/HASH. The Society was further permitted to allow THDC/HASH to mortgage, sell the property and create change in property. The Society also resolved to execute irrevocable power of attorney in favour of THD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of possession or ownership. These clauses clearly show that complete control over the property confirming all privilege of ownership was given in favour of THDC/HASH and thus such transfer of ownership satisfies the requirements of Section 45 r.w. clause (ii), (v), (vi) of Section 2(47) of the Act. (II) The Ld. CIT DR for the revenue contended that Hon'ble Supreme Court in case of Sunil Sidhharath Bhai V CIT, 156 ITR 509 and CIT V. Narang Products, 219 ITR 478 has clearly held that definition of transfer u/s 2(47) is inclusive one and does not exclude contextual or ordinary word meaning of Transfer . Further in case of Ajay Kumar Shah Jagati V CIT, 168 Taxman 53 it was observed that for the purpose of Section 45 of the Act the word Transfer as defined in IT Act is required to be considered and not sale as indicated in the Transfer of Property Act. Therefore, u/s 2 (47) of the Act, it is Transfer which is one of the most important ingredient for levy of taxation u/s 45 which is to be complied with. For invoking Section 2 (47) (v) what is required is that an agreement to sell has been entered by the Transferor with the transferee and possession has been handed ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these clauses. The Heydon s Rule is mainly applicable wherever the true meaning of amended provisions is to be understood. If the amendments are seen through prism of Heydon s Rule, it would become clear that amended clauses have been brought on the statute to overcome the earlier mischief. Properties could be transferred without execution of proper sale deeds and the same could be enjoyed by the respective buyers without any taxation on the part of sellers. (V) The Ld. DR pointed out that there is no force in the submissions that since section 53A of the transfer of property Act has itself gone under amendment w.e.f. 24.9.2011 wherein the registration of the agreement has been made mandatory and, therefore, since JDA was not registered it cannot be construed to be covered under clause (v) of section 2(47). It was contended that doctrine of part performance was given statutory recognition in section 53A of the Transfer of Property Act and it was desired only to protect possession of a transferee when the transfer falls short of requirement laid down by law. The plea of the part performance could be taken only as shield in defence and not as a sword. The most import ingredient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA Camelot Project (this is the name of the project which was to be developed by THDC on the land acquired from the Society). The PIL was dismissed vide order dated 26.3.2012 (copy of order filed on record). A reference to paras 3, 4, 25 26 of this order would clearly show that Hon'ble High Court has observed that against the rules of sanction under the Environment (Protection) Act, the respondent i.e. Developers have sought a review of the order because of the findings arrived at were ex.parte. No order in the Review matter has been passed by the competent authority because the interim order passed in the PIL which was later on clarified by the Hon'ble Supreme Court vide order dated 31.01.2012 permitting the concerned authorities under the different statutes governing the matter to exercise their respective jurisdiction in accordance with the law and such clarifications came in later decision of the High Court. As the rejection under the Wildlife (Protection) Act has been made by the authority not competent to do so, the promoters have sought review of the order which is still pending for some other reasons. All these steps clearly shows that developers were willing to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shows that developer i.e. THDC/HASH was willing to perform in all respects to the JDA. (VII) It was also contended that the society has already terminated the contract and in this respect reference was made to the Resolution passed by general body of the meeting dated 13.6.2011 and legal notice was issued to THDC/HASH. First of all, there is no evidence on record to show that such notice was served upon THDC/HASH. In any case, as contended earlier, power of attorney could not have been revoked because it was irrevocable power of attorney as per clause 6.7 of the JDA. Further, there was arbitration clause and that means a notice for arbitration was required to given otherwise such unilateral cancellation was not valid in the eyes of law. If the JDA was canceled then there should be document showing return of whatever possession was given by the society. The documents showing cancellation is only a self serving document, which cannot be relied to refuse the existence of JDA and fact of giving possession by the Society to the Developer. Further, the subsequent event cannot invalidate the contract for transfer of the property because under the tax laws income has to be determined fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft and the Members holding 1000 sqyd plot were entitled to two such flats. This clearly shows that upon entering the JDA, the Members got vested rights to receive such flats and therefore, as per the definition of capital gain in Section 45 such flat has also arosen from the JDA and therefore, has to be included in the total consideration. He again emphasized that receipt of consideration has nothing to do with its taxability u/s 45 and it is the accrual of consideration which means a portion of the consideration which can be received later also. He also submitted that as far as the value of the flat is concerned, the same has been taken by the Assessing Officer on the basis of agreement entered between THDC and HASH among themselves and the rate adopted is the same at which THDC had agreed to sell the flat to Hash. He also referred to a few paper books filed by other assessees wherein various News Paper clipping has been included which clearly show that flats were booked @ ₹ 8000/- approximately in the Pre Launch bookings. Such Pre Launch bookings generally take place at lower rates offered then in the general bookings by the public. Therefore, the value of ₹ 4500/- is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the charging section is 45 and the relevant portion is as under:- Section 45. [(1)] Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections [54, 54B, [ [54D, [54E, [54EA, 54EB,] 54F [ 54G and 54H], be chargeable to income-tax under the head Capital gains , and shall be deemed to be the income of the previous year in which the transfer took place. 28 The plain reading of the above provision would show that charging an item of income under the head Capital gains require three ingredients i.e. (i) there should be some profit. (ii) Such profit must be arising on account of transfer and (iii) there should be capital asset which has been transferred. There is no dispute that a capital asset was involved and there was some profit also i.e. why assessee has himself returned income under the head capital gains;. The dispute is mainly on account of transfer and that too whether the transfer could be covered under clauses (ii), (v) (vi) of section 2(47) so as to bring into picture the whole of consideration arising on transfer of such assets. We shall deal with each of the aspect in detail at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1987. The relevant part 11.1 and 11.2 of the circular reads as under:- 11.1 The existing definition of the word transfer in section 2(47) does not include transfer of certain rights accruing to a purchaser, by way of becoming a member or acquiring shares in a co-operative society, company, or as way of any agreement or any arrangement whereby such any building which is either being constructed or which is to be constructed. Transactions of the nature referred to above are not required to be registered under the Registration Act, 1908. Such arrangements confer the privileges of ownership without transfer of title in the building and are a common mode of acquiring flats particularly in multi-storeyed constructions in big cites. The definition also does not cover cases where possession is allowed to be taken or retained in part performance of a contract, of the nature referred to in section 53A of Transfer of Property Act, 1882. New sub-clauses (v) (vi) have been inserted in section2(47) to prevent avoidance of capital gains liability by recourse to transfer of rights in the manner referred to above. 11.2 The newly inserted sub-clause (vi) of section 2(47) has brought in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to lot of litigation and the main point of litigation was that at what point of time the possession can be said to have been given. In the present case, the Revenue has mainly relied on two decisions namely (i) Chaturbhuj Dwarkadas Kapadia v CIT 260 ITR 491 (Bom.) and; (ii) Authority for Advance Ruling (AAR) New Delhi in the case of Jasbir Singh Sarkaria 294 ITR 196. 33. In the case of Chaturbhuj Dwarkadas Kapadia v CIT (supra), the facts before the Hon'ble Bombay High Court were that assessee who was an individual had 44/192 undivided share in an immovable property in Greater Bombay which consisted of various lands and buildings. By Agreement dated August 18, 1994, the assessee agreed to sell to Floreat Investment Ltd, (herein referred to Floreat ) his share of immovable property for a total consideration of ₹ 1,85,63,220/- with right to said Floreat to develop the property in accordance with the rules / regulations framed by local authorities. For this purpose, the assessee also agreed to execute a limited power of attorney authorizing Floreat to deal with the property and also obtain permissions and approvals from various authorities. Under clause 11 of the ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ambit of section 2 (47) (v). In order to attract section 53A, the following conditions need to be fulfilled. There should be a contract for consideration ; it should be in writing ; it should be signed by the transferor ; it should pertain to transfer of immovable property ; the transferee should have taken possession of the property ; lastly, the transferee should be ready and willing to perform his part of the contract. Even arrangements confirming privileges of ownership without transfer of title could fall under section 2 (47) (v). Section 2 (47) (v) was introduced in the Act from the assessment year 1988-89 because prior thereto, in most cases, it was argued on behalf of the assessee that no transfer took place till execution of the conveyance. Assessees used to enter into agreements for developing properties with builders and under the arrangement with the builders, they used to confer privileges of ownership without executing conveyance and to plug that loophole, section 2 (47) (v) came to be introduced in the Act. . Held, that section 2(47)(v) read with section 45 indicates that capital gains was taxable in the year in which such transactions were entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any immovable property (s. 269UA(d)). Therefore in these two cases capital gains would be taxable in the year in which such transactions are entered into, even if the transfer of the immovable property is not effective or complete under general law. 36 From the above, it is clear that Court was of the view that in case any transaction covered by clause (v) and (vi) to section 2(47) the liability for capitol gain would arise on the date when such transactions are entered into. In the judgment at some other places, the similar observations have been made. However, despite this observation the case was decided in favour of the assessee. The reason for the same have been given in the judgment itself. Firstly it is observed that provision of section 2(47)(v) of the Act were not invoked by the Revenue itself. This becomes clear from the following para: It was argued on behalf of the assessee that there was no effective transfer till grant of irrevocable licence. In this connection, the judgment of the Hon'ble Supreme Court were cited on behalf of the assessee, but all those judgment were prior to introduction of the concept of deemed transfer u/s 2(47)(v). In this matter, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e.g. the following observation of the Tribunal was not found correct as something is done on Ist April, 1997 then the same cannot fall in the year ending 31.3.1996. From the dates it is evident that from the very next day, i.e., April 1, 1997, from the end of the financial year ending on March 31, 1996, the builder was using the well water against payment of relevant charges to the assessee. 37 Thus it is very clear that in cases where an arrangement had been entered into by an assessee in terms of clause (v) of Section 2 (47) which has effect of handing over the possession then the transfer is said to have been taken place on the date of entering into such arrangement. 38. We do not find any force in the contention of the Ld. Counsel for the assessee that judgment has to be read in the context of the decision made in such judgment. In fact, it is well settled that doctrine of precedent which means what needs to be followed later on particularly by subordinate Tribunals and Courts is the ratio of a particular judgment given by the higher Court or Forum. Further, there is no force in the contention that decision of the Hon'ble Bombay High Court in the case of Chaturb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project. The other clauses and the steps in the agreement were that a sum of ₹ 1 crore towards payment of earnest money at the time of entering into agreement; a special power of attorney was to be executed in favour of the Developer to enable to deal with the Statutory authorities etc. for obtaining necessary approvals / sanctions; letter of intent was to be obtained not later than March 8, 2006 and in case of a failure to do so, the agreement shall stand terminated. Letter of intent is basically a license granted by the Director of Town Planting to Developer of land for the purpose of constructing residential flats subject to payment of certain charges and compliance of other conditions. It was further stated in the agreement that on fulfillment of the requirement in the letter of intent, owners will have to execute irrevocable general power of attorney in favour of the Developer authorizing the Developer to took and sell the dwelling units out of developer s share and collect the money for the same. However, finally sale deeds could be executed only after the owner received their share of constructed area. Three months later, a supplementary agreement was entered on Septe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the previous year in which the transfer took place . Since this is a statutory fiction, the actual year in which the sale price was received, whether it was one year, two years, three years, four years etc. previous to the previous year of transfer, is beside the point. The entirety of the sum or sums received in any earlier year or years would be regarded as the capital gains arising in the previous year of transfer. . . . . In the words of section 45, the capital gains arising from the transfer 'shall be the income of the previous year in which the transfer took place'. So, the payments of consideration stipulated to be paid in future would have to be attributed, by statutory mandate, to the year of transfer, even as payments made prior to the year of transfer. 41. Thereafter, the Authority referred to section 2(47) and objects of the introduction of clauses (v) (vi) and also referred to paras 11.1 11.2 of the Board Circular No. 495 (which we have already discussed earlier). The Hon'ble Authority has discussed various implications of clause (v) of section 2 (47) and also implication of section 53A of the Transfer of Property Act as well as observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... known treatises on jurisprudence (page 278) : Possession , implies a right and a fact : the right to enjoy annexed to the right to property and the fact of the real intention. It involves power of control and intent to control, (see Dias and Hughes) 15. While recognizing that possession is not a purely legal concept but also a matter of fact, Salmond (12th Ed., 52) describes possession, in fact, as a relationship between a person and a thing. According to the learned author, the test for determining whether a person is in possession of anything is whether he is in general control of it . In Salmond s Jurisprudence, at paragraph 54, we find an illuminating discussion on immediate and mediate possession . The learned author states in law one person may possess a thing for and on account of some one else. In such a case the latter is in possession by the agency of him who so holds the thing on his behalf. The possession thus held by one man through another may be termed mediate, while that which is acquired or retained directly or personally may be distinguished as immediate or direct . Salmond makes reference to three types of mediate possession. In all cases of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, that the developer will have such exclusive possession in his own right only after the entire amount is paid to the owner to the last pie. There is then a possibility of staggering the last instalment of a small amount to a distant date, may be, when the entire building complex gets ready. Even if some amount, say 10 per cent., remains to be paid and the developer/transferee fails to pay, leading to a dispute between the parties, the right to exclusive and indefeasible possession may be in jeopardy. In this state of affairs, the transaction within the meaning of clause (v) cannot be said to have been effected and the liability to pay capital gains may be indefinitely postponed. True, it may not be profitable for the developer to allow this situation to linger for long as the process of transfer of flats to the prospective purchasers will get delayed. At the same time, the other side of the picture cannot be over-looked. There is a possibility of the owner with the connivance of the transferee postponing the payment of capital gains tax on the ostensible ground that the entire consideration has not been received and some balance is left. The mischief sought to be remedied, will t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents laid down in the letter of intent which is provisional license, the owners should execute an irrevocable general power of attorney in favour of the developer allowing inter alia to book and sell the dwelling unit failing under their share. This was possible only after deposit of requisite charges etc. and perhaps there was litigation regarding ownership of land which has also to be withdrawn. The Authority has discussed the significance of general power of attorney and the terms of the general power of attorney at para 33 and the relevant portion of the same is as under:- A copy of the irrevocable GPA executed in terms of paragraph 15 of the agreement has been furnished by the applicant. It authorizes the developer : (i) to enter upon and survey the land, prepare the layout plan, apply for renewal/extension of licence, submit the building plans for sanction of the appropriate authority and to carry out the work of development of a multi-storied residential complex, (ii) to manage and control, look after and supervise the property in any manner as the attorney deems fit and proper, (iii) to obtain water, sewage disposal and electricity connections. The developer is also aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusive possession by the Developer would constitute transfer. It can be said that it has to be construed as possession in terms of clause (v) of section 2 (47) of the Act. 44 A question may arise that why the transfer was not held to be taken place in Assessment year 2006-07 when first agreement was entered into on June 8, 2005. The supplementary agreement was also entered into on Sept 15, 2005 both of which fall in Financial Year 2005-06 relevant to Assessment year 2006-07. Then why transfer was not construed in Assessment year 2006-07 it was because the first agreement itself contained a condition that letter of intent should be procured not later than March 8, 2006. In case of failure to do so the agreement shall stand terminated. Therefore, obtaining the letter of intent was the crucial factor. It has been explained in the decision that the letter of intent basically is a license issued by the Director of Town and Country Planning, Haryana which gives permission for construction of the flats. The other crucial point was execution of irrevocable of GPA which was executed on May 8, 2006 which according to the ld. authority depicts the intention of the handing over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006 it was decided to develop a Group Housing commercial project and do development as per the applicable municipal building bye-laws in force and accordingly a bid was invited through advertisement in the Tribune dated 31.5.2006. HASH a developer, approached the Society with proposal for development of the property. Since Hash did not have sufficient means to develop the property, Hash had approached THDC for development of the property by constructing the building and/or structures to be used for interalia residential, public use and commercial purposes. This proposal was discussed by the Society in its Executive Committee meeting on 4.1.2007. Minutes of the meeting are placed at page 58 to 65 of the paper book. In the Executive committee it was decided to appoint Hash who was acting alongwith the joint developer THDC as joint developer on the terms and conditions to be mentioned in the JDA. It was further resolved that member owing plot of 500 sqyd would receive a consideration of ₹ 82,50,000/- each to be paid in 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 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, Mortgage Deeds, finance documents and all documents and agreements necessary to create and register the mortgage, conveyance, lease deeds, license agreement, Power of Attorney, affidavits, declaration, indemnities and all such other documents, letters as may be necessary to carry out, facilitate and enforce the Rights and to register the same with the revenue/Competent authority and to appear on our behalf before all authorities, statutory or otherwise, and before any court of law (the Development Rights ). The owner hereby hands over the original title deeds of the Property as mentioned in the list Annexed hereto and marked as Annexure IV and physical, vacant possession of the property has been handed over to THDC simultaneous to the execution and registration of this agreement to develop the same as set out herein. It is hereby agreed and confirmed that what is stated in the recitals hereinabove, shall be deemed to be declarations and representations on the part of the Owner as if the 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 permissibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e original title deeds pertaining to property as mentioned in Annexure IV has been handed over to THDC by the owner at the time of signing of this Agreement and in furtherance of the common interest of the Parties for the development of the Project and except the Sale Transaction made by the Owner in favour of THDC as et out in Clause 4.1 above. THDC hereby undertake and assure the owner that they shall use the title deeds only for the purpose of furtherance of the Project in the manner that it does not adversely effect the Owner/Allottee in any manner whatsoever. 49 Clause 10 describes the consent given by the Society to THDC for raising finance for development and completion of project. Clause 11 talks about formation of maintenance Society for the project after its completion. Clause 13 talks about transfer of rights which reads as under: 13 Transfer of Rights The owner herein i.e. The 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 Affidavit/No Objection Certificate/Consent Letter whereby the Developers have been allowed to develop the property in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.7 The Owner shall execute an irrevocable special Power of Attorney granting its complete Development Rights in the Property in favour of THDC interalia including the right to raise finance by mortgaging the property and register the charge with the Competent Authority and execute registered sale deeds) as set out in Clause 4.1 (ii), (iii), (iv) and (v) and the Owner confirms, undertakes, declares and binds itself not to revoke the same for any reason whatsoever out of its own will and discretion without obtaining a specific prior written consent of THDC or any of its duly constituted attorneys. Through this Power of Attorney various powers have been given like to assign, file, amend etc. various plans, designs to represent before various authorities, to appoint architect, Lawyers. Some of the specific clauses relevant, are extracted below: (j) To negotiate and agree to any/or to enter into agreement(s) to construct/sell and to undertake construction/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 fit. (n) To enter upon the Property either a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ful discharge for the receipts. (bb) To execute from time to time all the writing, agreement, deeds etc. in respect of the premises which maybe constructed on the Property and also to execute and sign conveyance, transfer or surrender in respect of the Property or any part thereof. (cc) To sign, execute and register the conveyances or assignments and/or Power of Attorney s and/or other documents and/or agreements and/or any other writings in respect of the Property in part or full and/or the Premises constructed thereon or any part thereof in favour of any person as the Attorneys may determine including in favour of any individual and/or legal entitles and/or Co- operative Society and/or Limited Company and/or any other entity that may be formed for such purpose. (dd) To issue letter of lien/NOC s and to sign documents on behalf of the Owner as required by the prospective buyers/lending instructions to create a charge on the allotted premises. (gg) To look after and maintain the Property and the Premises constructed thereon till its transfer in favour of the Co-operative Society or Limited Company or any other Organisation. 54 It is pertinent to note that power/autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea or adjoining area as per clause (t) of the special Power of Attorney. If the possession was never given to the developer by the Society then how the developer could amalgamate the project with another project which may be acquired latter in the adjoining area. Through clause (w) THDC was authorized to hand over the possession of property or portion thereof to the authority to whom the same is required. In large Housing Society Projects sometimes Municipal authorities takes some portion of land for the purpose of roads, parks or other general utility purposes like installation of electricity transformers and before sanctioning the plans the developer is required to undertake that such portions of land would be given for such a common purpose. If possession was not given then how THDC was authorized to hand over such land or portions thereof which have not been identified in the JDA out of the total land. Similarly through clause (y) THDC has been authorized to mortgage, encumbrance or create charge on the property in favour of any bank or financial institution for raising the funds for the project. In the absence of possession such powers cannot be given. Clause (aa) clearly auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain money for meeting the cost of construction on security and mortgage of land falling only to the developer s share. In that case it was held that GPA was not a license to enter upon for doing some preliminary acts in relation to development of work but the power to control the land has also been confirmed. It has also been noted that the agreement described the Power of Attorney as irrevocable and extra declaration to that effect in the Power of Attorney is not without significance. In case before us, many more powers have been given to THDC in addition to powers which have been described in that judgment and Power of Attorney has been described as irrevocable in clause 6.7 of JDA. Therefore, 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 possession was not given. The issue regarding revocation of irrevocable Power of Attorney and cancellation of the JDA would be discussed later on while dealing with that contention. 57 We find force in the submissions of the ld. DR for the revenue that interpretation of clause (v) to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion thereof. 58 Going by the Heydon s Rule of interpretation if we analyze the purpose of clause (v) of Section 2 (47) then it would emerge that law before making the amendment was that capital gain could be charged only if a transfer has been effected and transfer was interpreted by various Courts including the decision of Hon'ble Supreme Court in case of Alapati Venkatramian V CIT, 57 ITR 185 (SC) that proper conveyance of the property has been made under the common law. The mischief was with regard to transfer in the sense that there was common practice that properties were being transferred in such a manner that transferee could enjoy the benefit of the property without execution of the conveyance deed. Thirdly we need to examine the remedy which was insertion of clause (v) and (vi) so that cases of giving possession 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eveloper should have exclusive possession. The concurrent possession of the owner is possible which gives rights to a limited extent for a limited purpose. Thus it is very much possible to hold concurrent possession. Mere recitation in the sale deed to the effect that the Society was owner of and in possession of land measuring 21.2 acres, does not show that the Society was having actual possession. What the Society was having is only ownership right and the possession was only concurrent as the possessary right. Further it is a standard clause in the conveyance deed and it does not prove or indicate anything except that a portion of land measuring 3.08 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 license as defined in Section 52 of Indian Easement Act because clearly 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g provision, the profits or gains that have arisen would be treated as the income of the previous year in which the transfer took place. That means, the income on account of arisal of capital gain should be charged to tax in the same previous year in which the transfer was effected or deemed to have taken place. The effect and ambit of the deeming provision contained in section 45 has been considered in decided cases and leading text books. The following statement of law in Sampath Iyengar s Commentary (10th Edition- Revised by Shri S. Rajaratnam) brings out the correct legal position : Section 45 enacts that the capital gains shall by fiction be deemed to be the income of the previous year in which the transfer took place . Since this is a statutory fiction, the actual year in which the sale price was received, whether it was one year, two years, three years, four years etc. previous to the previous year of transfer, is beside the point. The entirety of the sum or sums received in any earlier year or years would be regarded as the capital gains arising in the previous year of transfer. . . . . In the words of section 45, the capital gains arising from the transfer ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V Ld. Commissioner of Income Tax, AIR 1954 S.C 470 quoted - Income may accrue to an assessee without the actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. Bhogilal V Income Tax Ld. Commissioner, AIR 1956 Bom 411, 414 (Income Tax Act (11 of 1992) Ss. 16(1) and (3)} 67 The combined reading of these two definitions show that it (i.e. accrual) is not equal to the receipt of income. In fact it is a stage before the point of time when the income becomes receivable. In other words, once the vested rights come to a person then it can be said that such right or income has accrued to such person. The concept of accrual or arousal of income has also been discussed by the ld. author S. Rajaratnam in the commentary of Law of Income Tax by Sampath Iyengar XIth Edition by discussing the meaning of accrued and arise at page 1300 it has been observe as under: (1) Important principles.- (a) Meaning - Accrue means to arise or spring as a natural growth or result , to com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that the contract, [***]where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract 70 A 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a legislative device adopted for the sake of convenience in order to avoid verbatim reproduction of the provisions of the earlier Act into the later. When an earlier Act or certain of its provisions are incorporated by reference into a later Act, the provisions so incorporated become part and parcel of the later Act as if they had been bodily transposed into it . The effect of incorporation is admirably stated by LORD ESHER, M.R. : If a subsequent Act brings into itself by reference some of the clauses of a former Act, the legal effect of that, as has often 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 incorporated 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, I think it must be read in the sense it bore in the original Act from which it was taken, and that consequently it is perfectly legiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icularly in many States of the country properties were being held by various people as leased properties which were allotted by the various Govt. Departments and transfers of such lease were not permissible. People were transferring such properties by executing agreement to sell and general power of attorney as well as Will and receiving full consideration, but since the agreement to sell was not registered and though full consideration was received and even possession was given, still the same transactions could not be subjected to tax because the same could not covered by the definition of transfer . To bring such transactions within the tax net, this amendment was made. It has to be appreciated that clause (v) in section 2(47) does not lift the definition of part performance from section 53A of the Transfer of Property Act, 1882. Rather, it defines any transaction involving allowing of possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act. This means such transfer is hot required to be exactly similar to the one defined u/s.53A of the Transfer of Property Act, other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n who has got valid title legally conveyed to him after comply with the requirements of law such as the Transfer of Property Act, the Registration Act, etc., in the context section 22 of the Income-tax Act, 1961, having regard to the ground realities and further having regard to the object of the Incometax Act, namely, to tax the income, owner is a person who is entitled to receive income from the property in his own right. The requirement of registration of the sale deed in the context of section 22 is not warranted. Thus, from the above, it is clear that it is not necessary to get the instrument of transfer registered for the purpose of Income-tax Act when a person has got a valid legally conveyed after complying with the requirements of the law. 9. Similarly, in the case of Mysore Minerals Ltd. v. CIT [1999] 239 ITR 775/106 Taxman 166 (SC), the assessee had purchased for the use of its staff seven low income group houses from a Housing Board. The payment had been made and in turn possession of the houses was taken over by the assessee. The actual conveyance deed was not executed. The assessee claimed depreciation which was denied by the department. After great discussion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y High Court in case of Chaturbhuj Dwarkadas Kapadia (supra) is not applicable particularly because ultimately in that case it was held that capital gain tax should be charged in Assessment year 1999-2000 whereas agreement was executed in August, 1994. 76 We have already discussed the implications of the decision in case of Chaturbhuj Dwarkadas Kapadia (supra) in para 33 to 38. We had also examined why in that case capital gain was not held to be chargeable in Assessment year 1995-96.There is no need to repeat the same and in view of the said observations, we reject this contention. 77 The next contention is that it is necessary for invoking of section 2(47)(v) of the Act to comply 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 perform 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 perform 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re required to be taken by the Developer as per clauses 3.1, 7.9, 8.4 and 8.6 of the JDA. This is not correct as pointed out by the Ld. CIT DR that assessee had already got the municipal plan sanctioned but in the meantime PIL was filed before the Hon'ble Punjab Haryana High Court against the implementation of the project. Initially, the construction was banned by the Hon'ble High Court. However, later on it was observed in the CWP No. 20425 of 2010 and as clarified by the order of the Hon'ble Supreme Court that refusal of sanction under the Environment (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 passed 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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is capable of doing so, use its best efforts to remove or remedy the cause thereof and minimize the economic damage arising thereof. v) Either Party may terminate this Agreement after giving the other Party a prior notice of fifteen (15) days in writing of the Event of Force Majeure continues for period of ninety (90) days. In the event of termination of this Agreement all obligations of the Parties until such date shall be fulfilled. 82 The combined reading 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/sanctions vigorously. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the jurisdiction of statutory authorities functioning under the two relevant statutes. 22. Insofar as the provisions of the Environment (Protection) Act and the Wild Life (Protection) Act are concerned, it need not be emphasised that every project attracting the provisions of the Periphery Control Act and/or the provisions of the 1995 Act must satisfy the ecological concerns of the area in the light of the provisions of the two statues in 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 interdict any project or activity which even remotely seems to create an imbalance in the pristine 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 highly incorrect on our part to enter into any further discussion on the aforesaid aspect of the case. 25. We also hasten to emphasise that a more rigor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) Payment being ₹ 31,92,75,000/- (Rupees One Crore ninety two lacs seventy five thousand only) calculated @ ₹ 24,75,000/- (Rs. Twenty Four lacs seventy five thousand only) per plot holder of 500 Sq. yards and (Rs. 49,50,000/- (Rs. Forty nine lacs fifty thousand only) as per plot holder of 1000 square yards to be made to the Owner and / or the respective members of the Owner (as the case may be) within 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 bearing Khasra nos. 123/15, 123/6, 123/7 (balance part), 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the effect of transferring, or enabling the enjoyment of, any immovable property . 88 The plain reading of the provision shows that any transaction by way of becoming a Member or acquiring shares in the Cooperative Society or shares in the company which has the effect of transferring or enabling the enjoyment of any immoveable property would be covered by the definition of transfer. In the case before us, initially the Members of the Society were holding shares in the Society for ownership of plot of 500 sqyd or 1000 sqyd. This membership was surrendered to the Society vide resolution of the Society passed in the Executive Committee on 4.1.2007 which was later ratified in the General Body Meeting of the Society on 25.1.2007, so that the society could enter into JDA. In the JDA the Society has agreed to transfer the land. Therefore, technically it can be said that the developer i.e. THDC/HASH has purchased the membership of the Members in the society which would lead to enjoyment of the property and in that technical sense, clause (vi) of Section 2(47) is applicable. 89 Eighth contention is that since the Society has transferred the land through JDA on a pro-rata basis, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gain can be charged u/s 45 only on transfer of capital asset. We do not think that this kind of interpretation can be made while interpreting Section 45 r.w.s. 48 by invoking the rule that there can not be any tax on notional receipt. Generally speaking it is only the real income which can be taxed but this has to be understood subject to limitations. Commenting on these limitations, the Ld. Author Shri S. Rajaratnam in the Commentary of Law of Income Tax by Sampat Iyengar s Volume 1, (11th Edition) 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, 156 (Cal); CIT v. Ganga Properties Ltd., (1970) 77 ITR 637, 647 (Cal); Liquidator, Mahmudabad Properties Ltd. v. CIT, (1972) 83 ITR 470 (Cal), affirmed, (1980) 124 ITR 31 (SC); CIT v. Zorostrian Building Society Ltd., (1976) 102 ITR 499 (Bom); C.J. George V. CIT, (1973) 92 ITR 137 (Ker); D.C. Anand Sons v. CIT, (1981) 131 ITR 77 (Del). Also see, CIT v. Parbutty Churn Law, (1965) 57 ITR 609, 619 (Cal); In the matter of Krishna Lal Seal, AIR 1932 Cal 836; Lalla Mal Samgham Lal v. 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 all the leading commentaries cited above, it has been observed 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 Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Iyengar s Volume 1, page 236 in this regard has observed as under:- Once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however, great the hardship may appear to the judicial mind. Considerations of hardship, injustice or anomalies do not play any useful role in construing taxing statutes unless there be some real ambiguity. Thus, any benevolent construction in favour of the assessee has been held to be uncalled for. 96 Therefore, it can be said that generally speaking 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 asset which would be subjected to charge of capital gain tax and section 48 clearly provides for taking the total consideration into account while computing the capital gains. This aspect we have already discussed in detail 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 cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,000/- (Rupees One Hundred Six Crores Forty Two Lacs Fifty Thousand only) and one hundred and twenty nine (129) flats consisting of Super Area of 2250 Sq. feet ( Flats ); one flat each for sixty five members having a plot of 500 sq. yards, two flats for the (thirty) 30 members having a plot of 1000 sq. yards and 4 flats to the Owner for the 4 plots of 500 sq. yards each as per list annexed with this Agreement as Schedule B ( Sale Transaction ) It is expressly agreed between the Developers that HASH shall be responsible for making all payments to the Owner and/or the respective members of the Owner (as the case may be) as per the negotiated and agreed terms between the Owner and HASH, HASH expressly undertakes to make timely payments of the Payment to the Owner and / or the respective members of the Owner (as the case may be) as under: 4.2 As resolved by the Owner, THDC either by itself or along with HASH shall allot the Flats in the name of members of the Owner as per list annexed with this Agreement as Schedule B attached herein (hereinafter referred to as the Allottees ). The specifications of the flats would be provided by the Developers to the Owner and more particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication or circular is overdue. 99 These comments and the other detailed discussion on this aspect clearly show that capital gain tax has to be paid on the total consideration arising on transfer which would include the consideration which has been received as well as the consideration which has arosen and become due and may be received later on. In view of 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 assessee- company entered into a development agreement with Dipiti Builders for the development rights for a consideration of ₹ 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 ₹ 16.11 crores. It was explained that before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds registered in the name of THDC as per the terms of this Agreement upto the date of the termination shall remain with THDC and the balance lands to be transferred to THDC as per the terms of this Agreement shall not be transferred by the Owner in favour of THDC. Upon the termination, the Owner shall refund to THDC the Adjustable Advance/Earnest Money mentioned in clause 4.1(i) above within one month of such termination. In the event of failure of the Owner to refund the said amount, the Owner hereby agrees to execute a registered sale deed for land of equivalent value in favour of THDC. (ii) In the event all the requisite government and statutory approvals, authorizations, consents, licenses, approvals of all the plans/designs and Drawings as may be required for the development of this Property in relation to the Project and to undertake the Project are not granted within nine (9) months of the submission of the final plans/Designs and Drawings to the Competent Authority for approval then THDC may as its sole discretion either decide that it does not desire to undertake and complete the Project and hence terminate this Agreement after giving thirty (30) days written notice in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Owner in favour of THDC. Upon the termination, the Owner shall forfeit the Adjustable Advance/Earnest Money mentioned in clause 4(i). 103 The reading of the above clause would show that power of termination has been given in many circumstances to THDC vide clause 14(i), (ii) and (iii). The power for termination by the owner has been mentioned in clause 14(iv) only. Reading of this clause would show that right to terminate with the owner i.e. the Society was available only in case of default in making the payment. The issue regarding default for making payment has already been discussed by us in Paras 84 to 86 above while discussing the issue of willingness on the part of the transferee to perform its part of the contract We have already held that there was no default on the part of developer i.e. THDC/HASH in making the payment, therefore, the assessee had no right to terminate the contract. In any case we further find that clause 20 of the JDA refers to Arbitration and it is clearly 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in kind (Rs. 101,25,000/- x 129 plots) ₹ 130,61,25,000/- Total ₹ 237,03,75,000/- Average cost of consideration ₹ 11.18 crores per acre (Total consideration of ₹ 237.03 crores divided by 21.2 acres of land) It is claimed on behalf of the assessee that JDA has been cancelled and the developer has been allowed to retain the property which has also been conveyed to developer through two sale deeds. If that is so then what would happen to the balance consideration because in such situation the assessee has received consideration of only about ₹ 5 croress per acre because the assessee has registered land measuring 3.08 acres for ₹ 15.48 crores through first conveyance deed, whereas consideration as per original agreement was ₹ 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also be kept in view. Here the comments of Shri Rajaratnam quoted at para 5164 above are also relevant again: It is hard on the owners when required to pay tax, when handing over the possession for purposes of construction without being able to enjoy the construction, which is yet to commerce or in the process of construction being put up by the developer, but the solution lies in statutory clarification in such cases. In view of the increasing 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 complet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case Gross Sales Proceeds is equal to ₹ 1272 crores; (c) in addition (b), in the ratio of 60: 40 between THDC and HASH in respect of gross sales Proceeds in excess of ₹ 1272 crores. It is agreed that the minimum guaranteed amount from the Gross Sales Proceeds for THDC and HASH is ₹ 890.40 crores and ₹ 225.76 crores respectively. The minimum guaranteed amount of ₹ 225.76 crores to HASH includes ₹ 58.88 crores that shall be expended by THDC towards construction of 126 flats equivalent to 2,83,500 sq. ft,, which flats are to be allotted in the names of the members of the Society or otherwise, as the case may be, calculated as ₹ 2000 per sq. ft. for the area 2,83,500 sq. ft. and the 72% share of 3 flats of 2250 Sq. ft. to be purchased by HASH @ Rs, 4500/- per sq. ft. 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 sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut that this issue has been rejected wrongly by CIT(A). However, carefully perusal of the grounds of appeal show that no ground in respect of deduction u/s 54F has been raised before us and, therefore, we decline to adjudicate this issue and all the arguments made in this behalf are rejected. Though reference was made to ground No. 2.3 in this regard. The perusal of grounds No. 2.3 would show that reference has been made only to Section 54 and Section 54EC. Section 54 deals with deduction in case the assessee being an individual or HUF, transfers the residential house and in case before us, the assessee has transferred the plot. Therefore, it cannot be said that deduction 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 Soc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 244A (3) should also be done in accordance with law. 115 In the result, appeal of the assessee is partly allowed. Now, we take up the six appeals before this Bench one by one as under: 11. First of all, we take up appeal of the assessee in ITA No.459(Asr)/2013 in the case Sh. Manpreet Singh Badal. 11.1 In grounds No. 1 2, the assessee has raised issue with respect to the validity of assumption of jurisdiction u/s 148 of the Act. The said issue was raised before the Ld. CIT(A), who has dismissed the grounds of the assessee. 11.2 After hearing the rival parties and on perusing the record, we find that the ld. CIT(A) has passed a well reasoned order and we find no infirmity in this regard. Accordingly grounds No. 1 2 of the assessee are dismissed. 12 As regards grounds No. 3 to 10 raised by the assessee, the facts in these grounds are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han Mahajan, HUF In grounds No. 1, the assessee has raised issue with respect to the validity of assumption of jurisdiction u/s 148 of the Act. The said issue was raised before the Ld. CIT(A), who has dismissed the grounds of the assessee. 15.1 After hearing the rival parties and on perusing the record, we find that the ld. CIT(A) has passed a well reasoned order and we find no infirmity in this regard. Accordingly ground No. 1 of the assessee is dismissed. 15.2 As regards grounds No. 2 to 8 raised by the assessee, the facts in these grounds are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), where detailed orders have been passed in the said cases. Since the facts in the present case are identical to the facts in the case of Sh. Charanjit Singh Atwal vs. ITO and others (supra) and in the case of Satnam Singh Kainth vs. ITO and others (supra), therefore, our order in the case of Satnam Singh Kainth vs. ITO and others (supra) is identically applicable to the facts of grounds No. 2 to 8 of the present appeal, which have been discussed in detail in our order in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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