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TMI Blog2013 (8) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... ney 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) – 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 over all control of the property in the hands of the Developer, eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expiry of one year from the end of relevant A.Y. or before completion of assessment whichever is earlier - limitation of one year would expire on 31.3.2009 whereas revised return had been filed on 7.10.2009 which was clearly beyond the limitation prescribed u/s 139(5) – In any case no disadvantage had occurred to the assessee because in the revised return the assessee had included a sum on account of capital gain and the whole dispute in the assessment relates to capital gain arising out of sale. Introduction of Additional Grounds - Whether the CIT(A) failed to appreciate that the income could have been assessed in the hands of the Society and not the appellant – Held that:- Two additional grounds in respect of charging of capital gain, have been raised which had been argued the same are admitted – both the parties adopted identical arguments - the issue raised and additional grounds i.e. issue of chargeability of capital gain decided against the assesse. - IT Appeal Nos. 448, 858, 986,993,1064, 1070 to 1074, 1088 to 1090,1092, 1099, 1100, 1156, 1178, 1204, 1205, 1219, 1223 and 1238 (Chd.) of 2011, 3, 276, 310, 556, 765 & 1301 (Chd) of 2012 and 196 (Chd) of 2013 - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o by the appellant was subject to various regulatory/statutory/other approvals/permissions, etc. required to be obtained by the other party(ies), which were not received and hence there could be no 'transfer' under the said Agreement. 2.5 That the ld. CIT(A) further erred on facts and in law in holding/observing that certain terms and conditions of the Agreement which provided that the transfer of land was subject to further condition/encumbrances, were not relevant. 2.6 That the ld. CIT(A) erred on facts and in law in not appreciating that actual physical possession of the property was not handed over by the appellant in part performance of the contract, in terms of section 53A of the Transfer of Property Act and hence there was no 'transfer' in law. That the relevant provisions of section 2(47) as also the provisions of section 53A of the Transfer of Property Act, 1882 qua the facts of this case, have been misconstrued by the ld. CIT(A) to confirm the ITO's order. That the ld. CIT(A) failed to appreciate that registration of terms of agreement was a precondition to the handing over the possession of the property. 2.7 That the ld. CIT(A) erred on facts and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has also moved a petition under Rule 29 for admission of additional evidence and has also raised Ground No. 3.1 in this regard. The application for admission of this additional evidence was rejected by the ld. CIT(A) vide para 7. Relevant portion of the same reads as under: "The appellant's plea of taking additional ground of appeal by his letter dated 31.01.2011 is frivolous and irrelevant and is not admissible to the facts of the case." 6. Before us, the ld. counsel of the assessee referred to the petition and pointed out to the list of documents which were sought to be admitted as additional evidence. It was pointed out that these came into existence because of the developments which were subsequent to assessment proceedings. These documents are very material for adjudication of appeal before us. It was also pointed out that similar documents have already been admitted by the ld. CIT(A)-I, Ludhiana in case of Appeal No. 269/IOT/CIT- I/Ludhiana/2010-11 dated 21.12.2011 in case of Satpal Gosain. The revenue is in appeal against that order in ITA No. 276/Chd/2012 and therefore, such documents have to be considered by the Tribunal, therefore, he made a prayer that these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Before us, the ld. counsel of the assessee submitted that the ld. CIT(A) has not given any reason for confirming the action of the Assessing Officer for treating the revised return as nonest. 12. On the other hand, the ld. DR for the revenue submitted that since revised return was late, therefore, same was rightly treated as nonest. 13. After considering the rival submissions we do not find any force in the submissions of the ld. counsel of the assessee. Section 139(5) which deals with the revised return reads as under: "139(5) - If any person, having furnished a return under sub-section (1) or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant Assessment year or before the completion of the assessment, whichever is earlier." 14. The above clearly shows that revised return can be filed at any time before the expiry of one year from the end of relevant assessment year or before completion of assessment which ever is earlier. In case before us, limitation of one year would expire on 31.3.2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Society in its Executive Committee meeting held on 4.01.2007 which was approved in the General Body meeting held on 26.2.2007, passed a resolution to the effect that all the Members would surrender their all rights in the property to the Society and the Society would enter into an agreement on behalf of the Members with THDC/HASH. The Assessing Officer has referred to this resolution as well as various important clauses of the JDA and has placed lot of reliance on clause 2.1 of the JDA which is as under: "The owner hereby irrevocably and unequivocally grants and assigns in perpetuity all its rights to develop, construct, 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The amounts received under the said agreement are actually the advances received and not the sale consideration and the land transferred in favour of THDC Ltd. is only on account of security. A letter from M/s Hash Builders to that effect is enclosed herewith. 3. There are many conditions envisaged in the agreement which need to be fulfilled before the full execution of the agreement and transfer of property to THDC Ltd. and receipt of the consideration. 4. Under the partial execution, the part of property measuring approx, 72 sq yards was registered in favour of THDC and sum of Rs. 12 lacs was received As stated earlier, the amount was received as advance under the agreement and the property was transferred as security towards that advance. There were different legal opinions on the taxability of the amounts received. However in discharge of the duties as responsible citizens and avoid litigation, the members decided to pay capital gain tax on the amounts received voluntarily and such as the assessee has paid due amount of taxes voluntarily during the course of proceedings. It may kindly be appreciated that tax liability will arise only to extent of completed tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. The following cases are enclosed herewith for the reference. a. CIT v. Atam Prakash Sons (2008) 219 CTR (Del.) b. Smt. Raj Rani Devi Ramna v. CIT (1993) 201 ITR 1032 (PAT) c. Zuari Estate Development Investments Co. (P.) Ltd. v. J.R. Kanekar, Deputy CIT (2004) 191 CTR (Bom.) In view of the above you are requested to kindly consideration the capital gain as submitted by us." 9. The case was further fixed for 24.12.2009, On the said date the counsel of the assessee fifed another reply which is reproduced as under: 1. As per Para 6.1 of your letter, you have mentioned that there is a transfer of property upon the surrender of allotment rights. You may kindly refer to the agreement dated 25.02.2007 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/ss 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 exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreement is terminated, THDC Ltd will retain only that much land which has been transferred to them and the remaining land will be retained by the society/members. The actual position is such that no development work has till date been undertaken by the THDC Ltd. because the various conditions stipulated in the agreement have not been fulfilled. The possession as mentioned in the agreement and which is being made the basis by you to consider the transaction as transfer u/s 53A of the Transfer of Property Act is actually not of any consequences and actually there is no transfer except to the extent of land transferred by way of registered sale-deed. 2. Clause 6.1 of the agreement clearly states that handing over the original title -deeds is as security for the adjustable advance. 3. As per clause 9.2 of the agreement, it is very clearly mentioned that the owner shall execute in favour of M/s THDC Ltd: the sale-deeds to complete the aforesaid transaction. So it is evident that the execution of sale-deeds is an integral part of the transaction and the transaction shall remain incomplete. if the sale deeds are not executed. 4. The clause 13 very cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is once again requested that tax may be calculated as per the return filed by the assessee. However If the department choose to disagree with our submissions then It Is submitted that the capital gain should be charged in the hands of the Punjabi Co-operative House Bldg. Society. It will be pertinent to note here that the proceedings in the case of the society have been reopened u/s 148 of the I.T Act 1961 by the learned D.C.I.T Mohali. In the reasons recorded by the learned D.C.I.T, it has clearly been mentioned that he proposes to tax the capital-gain in the hands of the Society. Copy of the reasons recorded is enclosed. It may be appreciated that the same amount can't be taxed twice". On 29,12,2009 again the counsel of the assessee filed a letter and submitted as under: "This being referred to the captioned proceedings Regarding your query about the cost of acquisition is Rs. 11 lacs which is paid as per following dates. Receipt No. 307 09-11-01 5,04,000/- Receipt No. 426 12-02-04 7,00,007/- Out of above amount Rs. 1,00.000/- was refunded to the assessee and Rs, 4000/- was towards membership charges a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 2(47)(vi) which deals with any transaction which had effect of transferring or enabling the enjoyment of any immovable property and assigning various rights in the property in favour of THDC and handing over the original title deeds as well as handing over of the physical vacant possession of land has the effect of transferring or enabling the enjoyment of the said property to THDC/HASH. (iv) There was no force in the contention that the amounts received under the said agreement were advances received and not the sale consideration because total consideration was structured in the JDA and the consideration was to be received as per clause 4(iv) of the JDA. In fact the assessee has himself shown the receipt and returned the same as capital gain 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. To avoid such leakage of revenue clauses (v) and (vi) were inserted to section 2(47) of the Act. He then discussed the decision of Hon'ble Bombay High Court in case of Chaturbhuj Dwarkadas Kapadia v. CIT, 260 ITR 491 (Bom) and extracted the following conditions which were required to be satisfied to cover the case u/s 2(47)(v) r.w.s. 53A of T.P. Act. (a) There should be contract for consideration (b) It should be in writing (c) It should be signed by the transferor or on his behalf (d) It should pertain to transfer of immoveable property (e) Transferee has in part performance of contract has taken possession or part possession of the property. (f) Lastly, transferee should be ready and willing to perform his part of contract. 23. If the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and registration of this agreement to develop the same as set out therein". Thus possession in part performance of contract has been handed over to the transferee without any ambiguity in the previous year 2006-07 itself. (e) An irrevocable transfer has thus been made which is not dependent on any condition to be fulfilled. (f) Further coining to "consideration" part . As per Para 4.1 Rs. 6,00,000 per holder of 1000 Sq. Yards has to be paid by transferee on account of earnest money, which has been paid to the assessee, Further as Per Para 4.1 (ii) clearly states that in lieu of. Rs. 12,00,000 per plot holder of 500 Sq. Yards and Rs. 24,00,000 per plot holder of 1000 Sq. Yards is being paid on the execution of agreement against' which the Society on behalf of members will transfer 3.08 Acres of the contiguous land out of property. It has been confirmed that against the above payment the land measuring,3.08 acres has been transferred in the name of THDC and registered vide sale deed dated 02/03/2007 i.e. in the previous year 2006-07. (g) Thus it is clear from above transactions that transferee, M/s Tata Housing development Company Ltd., Mumbai, has performed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the previous year 2006-07 itself. (n) It has already been discussed in detail that registration of conveyance deed and receipt of entire consideration is not at all important in the year in which deemed transfer u/s 2(47)(v) of IT Act has taken place. (o) Further the Agreement is clear and there is no ambiguity regarding irrevocable rights being given to the transferee. As regards certain petty conditions and provisions relating to termination of the contract, it Is observed that these clauses are necessary part of such type of joint development agreement. At the same time such agreements including this agreement has the provisions of 'disclaimer' 'partial invalidity' 'indemnity' and 'arbitration'. The disputes arising, if any, shall be resolved as per the 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 Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a clear indicative of the value of flat, devoid of any special benefit to the members. The rate which could be offered to general public would in any case be not less than Rs. 4500/- per sq.feet. Therefore according to facts the rate of flat taken at Rs.4500 per sq.feet to arrive at the full value of consideration, adopted by the Assessing Officer, is held to be correct." In view of the above, the order of Assessing Officer was confirmed. 24. Before us, the ld. counsel of the assessee made detailed submissions. Further written 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: I First 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 provisions- a There must be contract of transfer for consideration for an immovable property; b Contract must be in writing c Terms necessary to constitute t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JDA was not registered, no possession 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 called 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 possession i.e. control over the property. In this connection he referred to the observation of Authority for Advance Ruling in case of Jasvir Singh Sarkaria, 294 ITR 196. He particularly referred to para 26 to 28 of the judgment. He further referred to clause "F" (page 17 of the paper book) i.e., clause 2.1 of the JDA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 perform 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 obligations 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 all building, 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) Clause 8.4 provided obligation to take timely approval and clause 8.6 provided for payment of various statutory charges in respect of development charges, license fee and external ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Society/ company etc. Therefore, clearly clause (vi) of sec. 2(47) is not applicable in the present case. VIII The ld. counsel of the assessee 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 pro-rata basis corresponding to pro-rata payments received by the Society and respective Members of the Society from THDC/HASH by executing 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. Under the various provisions of the Act, only real income can be taxed which has been earned by the assessee and no notional income can be subjected to tax. In this regard, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 i.e. Rs. 2000/sqft 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 deduction u/s54F of the Act should have been allowed particularly in view of Circular No. 472 dated 15.10.1986. In this regard he relied on the following decisions: CIT v. Sardarmal Kothari, 302 ITR 286 (Mad.) CIT v. R.L. Sood, 245 ITR 727 (Delhi) CIT v. Mrs. Hilla J.B. Wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 possession 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 had surrendered their respective plots in favour of the Society and the Society was authorized to sell/transfer the entire land in favour of THDC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on the following decisions:- (1) Authority for Advance Ruling (AAR) New Delhi in the case of Jasbir Singh Sarkaria 294 ITR 196 (2) Chaturbhuj Dwarkadas Kapadia v. CIT 260 ITR 491 (Bom.) (3) C. Ravi v. Dy. CIT in 325 ITR 417 (Ker.) (4) CIT v. Dr. T.K. Dayalu 202 Taxman 531 (Kar.) (5) D. Kasturi v. CIT 323 ITR 40 (Mad.) (6) CIT v. Dhir Co. Colonisers (P.) Ltd. 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 applicable 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. Joint CIT 91 ITR 429(Mum.), ITAT Hyderabad 'A' Bench in D. Achutha Rao v. Asstt. CIT 106 ITD 388 (Hyd) and ITAT Delhi Bench 'D' Bench in Asstt. CIT v. Smt. Pushpa Devi Jain 93 ITD 289 (Delhi). (IV) He further submitted that clause (v) (vi) of section 2(47) of the Act were inserted w.e.f. 1.4.1988 by Finance Act, 1987. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 v. 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 Act, the registration of Agreement was considered as one of the essential ingredient then section 2(47)(v) would become redundant. The Income Tax Act ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of the project at different levels vigorously. The copy of the order of Hon'ble Punjab Haryana High Court and Hon'ble Supreme Court filed 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 commence which ever is later. This clearly shows that payments was to be made on happening of two events and the time limit was to be applied on the event taking place l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt taking place in 2011 will not have any effect on such transfer. It has been contended through written submissions that total consideration of the property was 2,37,03,75,000/- which was calculated 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 crores 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 to be received was not reflected in such sale deed. Now, if it is believed that contract was cancelled and Developer was allowed to retain the land which has already been regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 Attorney which is not correct because once the JDA is terminated, irrevocable Power of Attorney would come to an end automatically. (c) He contended that simply sayi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion 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 therein ; or (iii) the compulsory acquisition thereof under any law ; or (iv) in a case where the asset is converted by the owner thereof into, or is treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 clauses (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 Venkatramian 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 immovable property. In the meantime apart from this decision a practice came into vogue by which certain properties were being transferred w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty and after Floret investment have obtained all necessary approvals, the Floreat was entitled to demolish various buildings for settling the claims of the tenants. Under clause 14 of the agreement, the assessee was entitled to receive proportionate rent till the payment of last instalments 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 execution of conveyance, however, till the matter was adjudicated by the Hon'ble High Court, no conveyance was executed. Pursuant to this agreement, Floreat obtained various permissions namely (i) clearance from CRZ Authority dated February 7, 1996; (ii) letter from ULC for redevelopment of property dated April 26, 1995. Other permissions were also obtained during the financial year ending March 31, 1996 relevant to assessment year 1996-97. By March, 31, 1996, Floreat had paid almost the entire consideration expect for a small sum of Rs. 9,98,000/-. However, the commencement certificate permitting construction of the building was issued on November 15, 1996. The power of attorney was executed on March 12, 1999. The question arose whether liability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 question 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 following observations at page 499 of the report: " .. The above two clauses were introduced with effect from April 1,1988. They provide that "transfer" includes (i) any transaction which allows possession to be taken/retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, and (ii) any transaction entered into in any manner which has the effect of transferring or enabling the enjoyment of any immovable property (see section 269UA(d)). Therefore, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in general law. They are spread over a period of time. They contemplate various stages. The Bombay High Court in various judgments has taken the view in several matters that the object of entering into a development agreement is to enable a professional builder / contractor to make profits by completing the building and selling the flats at a profit. That the aim of these professional contractors was only to make profits by completing the building and, therefore, no interest in the land stands created in their favour under such agreements. That such agreements are only a mode of remunerating the builder for his services of constructing the building (see Gurudev Developers v. Kurla Konkan Niwas Co-operative Housing Society [2003] 3 Mah LJ 131). It is precisely for this reason that the Legislature has introduced section 2(47)(v) read with section 45 which indicates that capital gains is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law. In this case that test has not been applied by the Department. No reason has been given why that test has not been applied, particularly whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Assessment 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 party becomes entitled to enjoy the property then that date of such transaction itself needs to be construed as the date of transfer. 39. The second relevant decision cited by the Revenue is by Authority for Advance Ruling (AAR) New D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owners will sell their 16% share in the built up area to the Developer or its nominee for consideration of Rs. 42 crore. A sum of Rs. 2 crore was received. This collaboration agreement and balance of Rs. 40 crore was payable by the Developer to the owners in six instalments from March 06, 2008. The instalments could be extended subject to payment of interest and further subject to maximum extension of three months. There were various other clauses which are not relevant for our purposes. The question 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 referring to the provisions of section 45 and observed as under:- " .The section can be analysed thus : (a) transfer of a capital asset effected in the previous year, (b) resultant profits or gains from such transfer, (c) those profits or gains would constitute the income of the assessee/ transferor (d) such income shall be deemed to be the income of the same previous year in which the transfer had taken pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved 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 paid and the transferor has forfeited his right to exercise acts of possession over the land or to resume possession. In our view, there is no warrant to place such a restricted interpretation on the word "possession" occurring in clause (v) of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the same time. An allied concept of concurrent possession has also been explained in paragraph 55 of Salmond's Jurisprudence in the following words : "It was a maxim of the civil law that two persons could not be in possession of the same thing at the same time. As a general proposition this is true : for exclusiveness is of the essence of possession. Two adverse claims of exclusive use cannot both be effectually realized at the same time. Claims, however, which are not adverse, and which are not, therefore, mutually destructive, admit of concurrent realization. Hence, there are several possible cases of duplicate possession. 1. Mediate and immediate possession co-exist in respect of the same thing as already explained. 2. Two or more persons may possess the same thing in common, just as they may owe it in common ." On a fair and reasonable interpretation and on adopting the principle of purposive construction, it must be held that possession contemplated by clause (v) need not necessarily be sole and exclusive possession. So long as the transferee is, by virtue of the possession given, enabled to exercise general control over the property and to ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 upon and exercise acts of possession effectively pursuant to the covenants in the contract. That tantamounts to legal possession. We are referring to this aspect because the authorized representative has submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of construction on the security and mortgage of land falling to the developer's share. The other clauses in the GPA are not relevant for our purpose. The GPA unequivocally grants to the developer a bundle of possessory rights. The acts of management, control and supervision of property are explicitly mentioned. It is fairly clear that the GPA is not a mere licence to enter the land for doing some preliminary acts in relation to the development work. The power of control of the land which is an incidence of possession as explained supra has been conferred on the developer under this GPA. The developer armed with the GPA cannot be regarded merely as a licensee or an agent subject to the control of the owners. His possession cannot be characterized as precarious or tentative in nature. The fact that the agreement describes the GPA as irrevocable and an express declaration to that effect is found in the GPA itself is not without significance. Having regard to the second and supplemental agreement by virtue of which the entire developed property including the owners' share has been agreed to be sold to the developer or his nominees for valuable money consideration, the developer has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 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 instalment should be received by the owner. 3. In the instant case, having regard to the terms of the two agreements and the irrevocable GPA executed pursuant to the agreement, the execution of the GPA shall be regarded as the "transaction involving the allowing of the possession" of land to be taken in part performance of the contract and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,65,00,000/- and two flats consisting of 2250 sqft 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 for this purpose. This resolution was ultimately 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 Notification issued on 18.10.2006 duly substituted by another Notification dated 21.11.2006 and that no part of land of the property falls under Forest Area under the Punjab Land Preservation Act. It has been further recited that the Society has agreed to accept the proposals of Hash and further executed this agreement with THDC/HASH. Hash was responsible to make payment to the owner as described earlier and the flats were to be provided by THDC. In case of Hash fails to make the payment, THDC agreed to make the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Department of Local Bodies, Punjab/Punjab Urban Planning and Development Authority (PUDA) or any other Competent Authority. 2.3 The owner hereby irrevocably and unequivocally grants and assigns all its Development Rights in the property to THDC to develop the property and undertake the project at its own costs, efforts and expenses whereupon the Developer shall be entitled to apply for and obtain necessary sanctions, licences and permissions from all the concerned authorities for the commencement, development and completion of the project on the property." 48. Clause 3 describes the obligations of the developers Society for getting the plans, etc. sanctioned from competent authority / applications to be signed by owner for plans, drawings etc., construction. Clause 4 deals with consideration clauses 5 to 8 deals various aspects of project and obligations of Society and Developer. Clause 9 talks about ownership and rights and read as under: "9 Transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the Project and that THDC shall be entitled 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 termination, General provisions, Disclaimer, Partial Invalidity, Arbitration, Notices and Force Majeure Jurisdiction. 51. In addition to above an irrevocable Special Power of Attorney has also been executed by the Society in favour of the developers i.e. THDC. (Copy of which is available at pages 40 to 52 of the paper book in case of Society in ITA No. 556 of 2012 as discussed earlier in para 25 (complete copy of Supplementary Power of Attorney was not available in the paper book of the assessee, therefore, reference was made to the paper book in case of the Society). 52. The first major contention of the ld. counsel of the assessee is that the possessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither alone or with others for the purpose of development, Coordination, execution, implementation of the Project and commercialization of the Property/Premises. (t) To amalgamate the Property with any other contiguous, adjacent and adjoining lands and properties wherein development and/or other right, benefits 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 adjoining lands for the purpose of constructing buildings and/or structures thereon and/or on the Property or utilize such lands and properties for making provision of parking spaces thereon, and/or may utilize the same for any other lawful purpose, as THDC and/or their associate and/or group concerns may in their sold, absolute and unfettered discretion think fit. (w) To hand over the possession of the Property or any part or portion thereof to the authorities to whom the same is required to be handed over or otherwise and to execute and deliver any undertakings, declarations, affidavits, bonds, deeds, documents, etc. as may be required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is pertinent to note that power/authorization which have been given by the Society to the developer, were in fact were required to be given in terms of various clauses of the JDA. Clause 6.7 reproduced above itself shows that the Society was required to give powers to raise finance to mortgage the property and even the registration of charge was also required to be given. Further through clause 6.15 it was agreed that documents of original title deeds of the property would be handed over to the developer i.e. THDC/HASH so that same can be used in furtherance of development of the Project as well as security for the money paid by the owner. Through clause 6.24 it was agreed that developer THDC/HASH was always permitted by owner to amalgamate the property with any other contiguous, adjacent and adjoining land and the properties wherein developmental and or other rights, benefits and interest were acquired by the developer or would be acquired in future. This clearly shows that the Society was under obligation in terms of agreement itself to allow the developer to amalgamate the project. Towards the end of clause 6.24 it has been clearly stated that in the event of termination of JDA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be given. Clause (aa) clearly authorized the THDC to sell, transfer, lease, licence the premises which were to be constructed on ownership basis and further to receive moneys against such sale etc. and to issue final receipt. Nowhere it is mentioned in this clause that such sale deeds were to be signed by the Society as confirming party. In the absence of possession it is just not possible for the developer to sell and transfer the premises which were to be constructed. This is further clarified by clause (bb) and (cc) which gives the power of execution of conveyance and other documents involving in respect of the premises to be constructed without any interference of the Society being made confirming party. All these clauses clearly show that the possession was given by the Society and/or its members to THDC/HASH on the execution of irrevocable Power of Attorney. Through these clauses of JDA and irrevocable Power of Attorney the developer was able to completely control the property and make use of it not only for the purpose of development but also for the purpose of amalgamation, sale, mortgage etc. When the above clauses are compared on touchstone of the discussion on posses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation 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 interpretation 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 Hiray v. Mr. Justice B. Lentin and another, 176 ITR 1 that for understanding amendment in the Act, perhaps Heydon's Rule is best rule for interpretation of such amendment. We find that without mentioning this rule Ld. Authority For Advance Ruling has discussed this issue in para 27 of the judgment which we have extracted above. It has been held that if 'possession' referred to in clause (v) is to be understood as exclusive basis of the transferee then very purpose of the amendment or enlargement of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handed over the possession of the property to THDC/HASH. 59. Second important contention on behalf of the assessee is that JDA was executed on 25.2.2007 and if possession was given then how the assessee was having possession in terms of later sale deeds executed on 2.3.2007 and 25.4.2007. 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 possession of land total measuring 169 kanal 7 marlas equivalent to approx. 21.2 acres in Village Kansal, Tehsil Mohali and more particularly described in Schedule A hereunder written and delineated in green colour boundary line in the Shizra Plan issued by the Patwari dated 23.2.2007." 60. According to the ld. counsel of the assessee if Society had already given the possession then the Society would not have / had possession on 2.3.2007 of the land. At face value this argument looks attractive but when examined in terms of possession which has been explained in case of Jasbir Singh Sarkaria (supra), actual reality will come forward. In this judgment c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 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 acquired later, right to mortgage etc. clearly show that rights given by the Society 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 provide for taxing of profits and gains arising from the transfer. We have already discussed the implication of Section 45 r.w.s. 48 while discussing the legal position. We had also discussed this issue in the light of the decision in case of Jasbir Singh Sarkaria (supra) and pointed out that when Section 45 is read along with Section 48 it becomes clear that whole of the consideration which is received or accrued is to be taxed once capital asset is transferred in a particular year. 65. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ....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. In T.V. Sundaram Iyengar and Sons Ltd. v. CIT [1959] 37 ITR 26, a Division Bench of the Madras High Court while construing section 12 B of the Indian Income-tax Act, 1922 clarified the import of the expression "arise" as follows "Section 12B does not require that profits should have been actually received. It is sufficient if they have arisen. Throughout the Income-tax Act the words "accrue' and "arise" are used in contradistinction to the word "rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) Important principles.- (a) Meaning - 'Accrue' means 'to arise or spring as a natural growth or result', to come by way of increase'. 'Arising' means 'coming into existence or notice or presenting itself'. 'Accrue' connotes growth or accumulation with a tangible shape so as to be receivable. In a secondary sense, the two words together mean 'to become a present and enforceable right' and 'to become a present right of demand'. In the Act, the two words are used synonymously with each other to denote the same idea or ideas very similar, and the difference lies only in this that one is more appropriate than the other, when applied, to a particular case. It will indeed be difficult to distinguish between the two words, but it is clear that both the words are used in contradistinction to the word 'receive' and indicate a right to receive. They represent a stage anterior to the point of time when the income becomes receivable and connote a character of the income, which is more or less inchoate and which is something less than a receipt. An unenforceable claim to receive an undetermined or undefined sum does not give rise to accrual." 68. Therefore, it is not only the money which ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, clearly 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 originally section 53A of T.P. Act provided that even if "the contract though required to be registered has not been registered", which means the right of defending the possession was available even if the contract was not registered but by Amendment Act 48 of 2001, the expression "though required to be registered has not been registered", has been omitted which means for the purpose of possession u/s 53A of T.P. Act, a person has to prove that possession has been given under a registered agreement. In other words, now u/s 53A of T.P. Act, the agreement referred is required to be registered. This requirement cannot be read in clause (v) of section 2(47) because that refers only to the contract of the nature of section 53A of T.P. Act without going into the controversy whether such agreement is required to be registered or not. The Ld. Counsel for the assessee had referred to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 legitimate to refer to all the rest of that Act in order to ascertain what the Sections meant, though those other Sections are not incorporated in the new Act. (p.244) 72. On the basis 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 depreciation as is given under the Companies Act, 1956. 73. In case of clause (v) to section 2(47), clearly the expression used is "contract of the nature referred to in section 53A of T.P. Act", which means it is not a case of incorporation of one piece of legislation into another piece of legislation. If that was the intention of the Parliament, obviously clause (v) would contain the expression "contract as defined under section 53A of Transfer of Property Act, 1882". Further, it is settled position of law that any interpretation which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty 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 our humble opinion, in the case of a transfer where possession has been given and full consideration has been received, then such transaction needs to be construed as "transfer". Therefore, the amendment made in section 53A by which the requirement of registration has been indirectly brought on the statute need not be applied while construing the meaning of "transfer" with reference to the Income-tax Act. 8. The above situation further becomes clear if we refer to the celebrated decision of Hon'ble Supreme Court in the case of Podar Cement (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. The actual conveyance deed was not executed. The assessee claimed depreciation which was denied by the department. After great discussion, it was observed that for all practicable purposes and for the purpose of Income-tax Act, the assessee shall be construed as owner of the property. In fact, it was held as under:- "Held, reversing the judgment of the High Court, that the finding of fact arrived at in the case at hand was that though a document of title was not executed by the Housing Board in favour of the assessee, the houses were allotted to the assessee by the Housing Board, part payment received and possession delivered so as to confer dominion over the property on the assessee whereafter the assessee had in its own right allotted the quarters to the staff and they were being actually used by the staff of the assessee. The assessee was entitled to depreciation in respect of the seven houses in respect of which the assessee had not obtained a deed of conveyance from the vendor although it had taken possession and made part payment of the consideration". Thus, from the above two decisions, it becomes absolutely clear that for the purpose of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm 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 commentary 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 v. DCIT (supra). In that case it was held that willingness to perform for the purpose of section 53A is something more than a statement of intent and it is unqualified and unconditional willingness on the part of the transferee to perform his obligation. In that case the transferee has agreed to make certain payments in instalments in consideration of the development agreement but such payments were not made. Later on, the agreement was modified and more time was given to the transferee for payment of such instalments. However, the instalments were not paid even under the modified terms and that is why it was ultimately held that such agreement cannot be construed as transfer. 79. The second decision referred to by Ld. Counsel for the assessee is K. Radika v. DCIT (supra). In this case, similar observations were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 permitted to examine the issue on merits under various laws. Further in the JDA there is a clause 26 which deals with the Force Majeure clauses. The clause 26 (i) to (v) reads as under:- FORCE MAJEURE (i) None of the parties shall be liable to the other Party or be deemed to be in breach of this Agreement by reasons of any delay in performing or any failure to perform, any of its own obligations in relation to the Agreement, if the delay or failure is due to any Event of Force Majeure. Event of Force Majeure is any event caused beyond the parties reasonable control. The following shall be regarded as issues beyond the Parties reasonable control. (ii) For the purposes of this Clause, an Event of Force Majeure shall mean events of war, war like condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 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 the respondent No.6-Chandigarh Administration, asserts that necessary sanction/permission under both the Acts have been refused by orders passed by the competent authorities, the promoters of the project contend to the contrary. The facts, as unfolded before us, indicate that against the refusal of sanction under the Environment (Protection) Act, the respondents have sought a review of the order on the ground that the findings arrived at, which have formed the basis of the refusal, are ex parte. No order in the review matter has been passed by the competent authority, perhaps, because of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghly 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 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 Administration 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 demonstrate the need to engage themselves intensively and not acquire a placid approach indicating an eloquent acquiescence to the violation of the 1995 Act, Periphery Control Act and the Periphery Policy. 26. We thus conclude on the aforesaid note by holding and observing that the provisions of the Periphery Control Act and the 1995 Act are complementary to each other and the provisions of the two statutes would apply to the housing project in question. The respondents, therefore, will have to comply with all the requirements spelt out by both the aforesaid statutes. As the requirement of clearances under the Wild Life (Protection) Act and Environment (Protection) Act is not a contentious issue, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art)" 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 instalment was dependent on two contingencies first the expiration of a period of six months from the date of agreement or alternatively on the expiration of a period of two months from the date of approval of plans/designs drawing etc. leading to grant of final licenses which can lead to commencement of construction, whichever is later. The matter was taken up by way of PIL by certain citizens and Administration of the Union Territory before the Hon'ble High Court which initially stayed the sanction of such plan etc. This led to situation where construction could not be commenced and hence payment was not required to be made in view of the pending litigation. The clauses of force majeure came into operation and therefore, it cannot be said that the developer is not willing to perform its part of the contract. In any cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee because it is settled position of law that no notional income can be taxed. Though there is no quarrel that it is a settled principle of law that notional income cannot be taxed but in case of capital gain, Section 45 which is charging Section and Section 48 which is computation section, makes it absolutely clear that rigor of tax in case of capital gain would come into play on the transfer of capital asset and total consideration which is arising on such transfer, has to be taxed. Section 48 clearly talks about full consideration received or accruing as result of transfer. This aspect we have already discussed in detail at paras 64 to 68. 90. Second aspect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 position can be understood by examining some of the provisions of the Act which would show that concept of notional income cannot be extended if specific provision is available in the Act. For example in case of income from house property, the income has to be determined as per section 23. Section 22 of the Income Tax Act provides that it is the annual value of the property which can be taxed under the head "income from house property". Sector 23 prescribes the method for determining the annual value. Section 23(1)(a) reads as under:- 23. (1) For the purposes of section 22, the annual value of any property shall be deemed to be (a) the sum for which the property might reasonably be expected to let from year to year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puted 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 year or for whole of the year then vacancy allowance can be claimed. Here, it is important to note that if property is not let out, then notional income becomes chargeable to the tax because of provisions of sections 22 and 23(1)(a) of the Act. Similarly, under the Mat provisions, it is basically the notional income which is being subjected to charge under the head "income from business and profession". A businessman may have income of Rs. 100/- but because of higher depreciation allowable under the Income-tax Act or some other weighted deductions say for example in case of expenditure on scientific research, the taxable income as per the provisions of the Act may be zero but still because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the whole consideration whether received or accrued, which has to be taxed under the capital gain once transfer of the capital asset takes place. Accordingly, there is no force in this part of the contention. 97. Now let us examine the issue of taxability of flat on the basis of above principles. Relevant portion of clause 4 of the JDA which deals with consideration are as under: "4. Consideration 4.1 It is specifically understood and agreed amongst the Parties that THDC shall use its expertise and its Brand name and/or any other brand name at its discretion to develop the Property into the Premises as per applicable building bye-laws of the Competent Authority and the Owner shall have no objection to the same in whatsoever manner. In consideration of the Owner granting and assigning, its Development Rights in the Property, irrevocably and in perpetuity, to THDC to develop the Property and for transfer of the Property upon the surrender of allotment rights of 500 sq. yards and/or 1000 sq. yards (as the case may be) by its members to the Owner, vide resolution dated 04.01.2007 and 25.02.2007 (copy attached as per Annexure I II), HASH is committed to pay to the Owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttees'). The specifications of the flats would be provided by the Developers to the Owner and more particularly described in the Schedule C attached herein (hereinafter referred to as the 'Specifications'). The Allotment letters shall be issued to the Allottees (members of the Owner) within forty-five (45) days from the date of sanction of the building plans/Design and Drawing and on obtaining final license/permission for the development of the Project from the Competent Authority. Thereafter, the possession of the flats shall be handed over to the Allottees within thirty (30) months from the date of issuance of the Allotment Letter. It is expressly provided that the Payment to be made by HASH to the Owner and/or to the respective members of the Owner (as the case may be) and the Flats to be allotted to the Allottees as set out in this Clause 4.2 shall hereinafter be collectively referred to as the 'Entire Consideration' 98. From this clause it becomes absolutely clear that each Member having 500 sq yd of plot was entitled to receive one furnished flat measuring 2250 sq ft and Members having 1000 sq yd flat were entitled to receive two furnished flats. Thus upon execution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn 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 Nos. 256 257 was sold to a third party M/s Financial Technology Ltd. by a tripartite conveyance deed executed on 5.7.2007 for Rs. 29.11 crores and therefore, additional consideration of Rs. 13 crores has been offered to tax in Assessment year 2008-09. This explanation was rejected by the Assessing Officer because according to him it was a case of transfer u/s 2(47)(v) and total consideration has to be charged in the year of transfer. The Tribunal after considering the provisions of sections 45 48 posed a question to itself that what should be the consideration in the case before the Bench. The case law relied on by the Department was rejected because same was relevant to accrual of interest. The Bench followed the decision of Kalptaru Construction Oversees Pvt Ltd. 13 SOT 194. In that case the assessee had agreed to sell to its subsidiary equity shares for a consideration of Rs. 1.25 crores which was finally settled at Rs. 1.00 crore and the Tribunal held that the consideration of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and hence terminate this Agreement after giving thirty (30) days written notice in this regard or decide to wait for any further times deemed fit by THDC for the grant of the aforesaid approvals and licenses. In the event the Agreement is terminated by THDC, all the lands registered in the name of THDC as per the terms of this Agreement upto the date of the termination shall remain with THDC and the balance lands to be transferred to THDC as per the terms of this Agreement shall not be transferred by the Owner in favour of THDC. Upon the termination, the Owner shall refund to THDC the Adjustable Advance/Earnest Money mentioned in clause 4.1(i) above within one month of such termination. In the event of failure of the Owner to refund the said amount, the Owner hereby agrees to execute a registered sale deed for land of equivalent value in favour of THDC. (iii) In the event THDC is unable to develop the Property due to refusal/non grant of approvals, consents, permission, licenses or revocation of the same by the appropriate statutory authority, then THDC may at its sale discretion terminate this Agreement. In the event the Agreement is terminated by THDC, all the lands reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d some grievance it was duty bound to give a notice for appointment of an Arbitrator to the developer. In the absence of such notice the termination will not stand scrutiny of law. Here it is also pertinent to note that though it was stated that irrevocable Power of Attorney has been revoked and some documents have been filed before us for revocation but clause 6.7 of the JDA which we have reproduced earlier clearly provides that such Power of Attorney cannot be revoked. We reproduce clause 6.7 again which is as under: "6.7 The Owner shall execute an irrevocable special Power of Attorney granting its complete Development Rights in the Property in favour of THDC inter alia including the right to raise finance by mortgaging the property and register the charge with the Competent Authority and execute registered sale deeds) as set out in Clause 4.1 (ii), (iii), (iv) and (v) and the Owner confirms, undertakes, declares and binds itself not to revoke the same for any reason whatsoever out of its own will and discretion without obtaining a specific prior written consent of THDC or any of its duly constituted attorneys." 104. The above clearly shows that this Power of Attorney co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if the contract is finally stand abandoned then what would happen. The contention on behalf of the assessee is that if the contract is abandoned then the assessee would have paid tax in the year of transfer and would be left with no recourse for relief. The contention on behalf of the Department was that the assessee could always file revised return or make a petition u/s 264 and some relief was possible in case of the assessee. However, if revenue fails to tax the total consideration in the year of transfer then same cannot be subjected to tax in any other year. We find that this question was seriously considered by the Ld. Authority for Advance Ruling in case of Jasbir Singh Kataria (supra) which has been relied on by both the parties for various aspects. In that case it was observed at para 39 as under: "We have to advert to one aspect which has caused some concern to us. What will happen if during the year following the one in which the deemed transfer took place, the proposed venture collapses for reasons such as refusal of permissions, the developer facing financial crunch etc. By that time, the owner would have received only a part of the agreed consideration, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completed and if no taxes are held to be payable then later on also the assessee may not be subjected to any tax under the head "capital gain" because then it can be easily contended on behalf of the assessee that the transfer has already taken place on the date when irrevocable Power of Attorney was executed. In that situation the Revenue will have no remedy. 107. The above clearly shows that such hypothetical consideration cannot be considered for giving true meaning to a particular provision. It has also been observed that in some genuine cases the difficulties may arise but it was for the Parliament or the Government to provide remedy in such cases and judicial forums cannot do anything. Therefore, in view of the provisions of Section 45 r.w.s. 48 we are of the opinion that subsequent events, if at all any will not make any difference because total consideration received or accrued has to be assessed in the year of transfer. We may also note that it was stated that irrevocable Power of Attorney has been revoked but the word "irrevocable" itself shows that in the eyes of law special Power of Attorney could not have been revoked. In view of this analysis, we are of the opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 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 sq. feet represents only the cost of constructions to be incurred by THDC which was debited to the account of HASH. Further, HASH has agreed to purchase three Flats @ 4,500/- per square feet. Some news reports were quoted before us in one of the cases to show that various brokers had issued various advertisements for sale of these flats and these flats were ultimately to be sold at Rs. 7,000/- to Rs. 10,000/- per square feet. This also becomes clear from the addendum of agreement in terms of total proceeds of 1272 crores. In any case if the cost of construction is Rs. 2,000/-, then cost of land which has been paid to the society is also to be added to the cost of the flat because this portion of consideration in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for transfer of property in favour of the developer i.e. THDC/HASH. Therefore, capital asset has been sold by the Members. Further the consideration was to be received from HASH by the individual plot owners. 113. We have heard the rival submissions carefully and find that the Society was formed by various Members for the purpose of purchase of land and to develop the same and they allotted the plots to the Members. The Society purchased 21.2 acres of land and ultimately plots in the sizes of 500 sq yd and 1000 sq yd were allotted to various Members. When the proposal for development of property came it was resolved in the General Body Meeting of the Society that the Members would surrender their rights in favour of the Society so that the Society can enter into the JDA. Thus it is clear that the Society has entered into JDA on behalf of the Members. It is the members who are owning the plots and the Society 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. Each Member holding 500 sq yd plot was to receive a sum of Rs. 82,50,000/- and one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 119. On the other hand, the ld. counsel of the assessee, Shri Ajay Vohra also submitted that the arguments made by him in case of Shri Charanjit Singh Atwal may be adopted in this case also. 120. Ground No. 1 - In this case the assessee is the owner of 1000 sqy. plot in Punjabi Coop Housing Building Society which has been transferred by the Society through a JDA to the developer i.e. THDC/HASH. All the facts of the case are identical with the facts of the case of Shri Charanjit Singh Atwal in ITA No. 448/Chd/2011. Therefore, following our decision in Para Nos. 27 to 110, we decide this issue against the assessee. 121. Ground No. 2 - After hearing both the parties we find that during assessment proceedings certain documents were filed by way of additional evidence which have been admitted by the ld. CIT(A) and relied on for reaching his conclusion. However, there is no finding in the order why such evidence has been admitted. The objection of the revenue is that as per Rule 46A(2) such additional evidence could not be admitted without recording the reason. The ld. counsel of the assessee had submitted that all the evidences were generated after the assessment was over and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in ITA No. 448/Chd/2011 and therefore, we proceeded to hear this appeal on ex parte basis because in this group of cases it was clarified that there appeals will be heard on 1st/2nd May, 2013 but despite that none appeared on behalf of the assessee. 127. The ld. DR for the revenue was heard. 128. After considering the submissions of the ld. DR for the revenue and relevant material on record, we find that in this case assessment order clearly mentions that originally the return was processed u/s 143(1) and later on a notice u/s 148 was issued. 129. Notice u/s 148 was issued because the Assessing Officer got the information from the enquiries conducted by the Department in the case of Group Housing Societies that the Society consisting of 95 members of present and Ex. MLAs of Punjab State Legislative Assembly who had formed a Society known as Punjabi Co-op. House Building Society Ltd. and that Society has transferred 21.2 acres of land to developers i.e. THDC/HASH. 130. Regarding first issue since original return was processed u/s 143(1) the Assessing Officer could have issued a notice u/s 148 in view of the fresh material/information received in view of the decision of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. which was the owner of 27.3 acres of land. This land was transferred to developer i.e. THDC/HASH as in case of Punjabi co-op. House Building Society. In this case the consideration for individual plot holder of 500 s.qy was Rs. 80 lakhs plus one furnished flat measuring 2250 sq.ft. Other facts of the case are identical to the case of Shri Charanjit Singh Atwal, ITA No. 448/Chd/2011. The ld. counsel of the assessee submitted that all the arguments made in case of Shri Charanjit Singh Atwal (supra) may be considered except that in this case the notice for cancellation of the JDA was issued by The Defence Services Co-op. House Building Society Ltd. (copy of which is placed at pages 34 to 38 of the paper book). 138. On the other hand, the ld. DR for the revenue adopted his arguments as in case of Shri Charanjit Singh Atwal (supra). 139. After considering the rival submissions we find that since the issue regarding taxability of capital gain against the transfer of plots to developer, is identical to the issues in case of Shri Charanjit Singh Atwal (supra) and only difference is that here the assessee is a Member of The Defence Services Co-op. House Building Society Ltd. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted identical arguments which were given in case of Shri Charanjit Singh Atwal (supra). 152. After considering the rival submissions we find that identical issue has been dealt in case of Shri Charanjit Singh Atwal (supra) and following the decision in that case we decide this issue against the assessee. 153. Ground No. 13 reads as under: "That the ld. CIT(A) has further erred in upholding the non-allowance of benefit provided u/s 54/54F of the Act and claimed on the amount received which is arbitrary and unjustified." 154. The ld. counsel of the assessee adopted the arguments made in case of Shri Charanjit Singh Atwal (supra) in respect of deduction u/s 54F of the Act. 155. On the other hand, the ld. DR for the revenue supported the order of the ld. CIT(A). 156. After considering the rival submissions and on verification of record we find that this issue was raised before the ld. CIT(A) through ground No. 11 which reads as under: "That the Assessing Officer has further erred in not giving the benefit provided u/s 54 of the Act and claimed on the amount received which is arbitrary and unjustified." From above it becomes clear that before the ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue has been dealt in case of Shri Charanjit Singh Atwal (supra) and following the decision in that case we decide this issue against the assessee. 166. Ground No. 13 reads as under: "That the Ld. Commissioner of Income-tax (Appeals) has further erred in upholding the non-allowance of benefit provided under section 54/54 F of the Act and claimed on the amount received which is arbitrary and unjustified." 167. After hearing both parties we find this issue has been adjudicated by Ld. CIT (Appeals) vide paras 6.13 to 6.14, which are as under:- 6.13 The Ld. Counsel for the appellant has also argued that the appellant is entitled to deduction u/s 54F to the extent of investment in the new asset, as reinvestment in flat. For the sake of convenience, provisions of section 54F of the Act are reproduced below: "54F. Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. (1) Subject to the provisions of sub-section (4), where, in the case of an appellant being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital asset. In the instant case, the construction of the flat, which the appellant is to be given, has not yet started and so it cannot be said that the amount has been invested in a new residential house for allowing benefit u/s 54F of the Act. Hence, the appellant is not eligible for deduction u/s 54F " ' 168. Both parties adopted similar arguments before us as in case of Shri Charanjit Singh Atwal. 169. After considering the rival submissions, we find Ld. CIT(A) has adjudicated the issue correctly and has given the reason for rejection of deduction under section 54/54F. Therefore, we find nothing wrong with the order of Ld. CIT(A) and confirm the same. Hence this ground is rejected. 170. Ground No. 14 is regarding charging of interest u/s 234B of the Act. 171. The Assessing Officer is directed to decide the issue of charging of interest u/s 234B of the Act, in accordance with law. 172. In the result, appeal of the assessee is dismissed. ITA No. 1072/Chd/2011 - Mrs. Gurdev Kaur v ITO 173. This appeal is directed against the order of ld. CIT(A), Chandigarh dated 1.8.2011. 174. In this appeal the assessee has raised various grounds of appeal but at the time of he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that case we decide this issue against the assessee. 187. Ground No. 12 is regarding charging of interest u/s 234B of the Act. 188. The Assessing Officer is directed to decide the issue of charging of interest u/s 234B of the Act, in accordance with law. 189. In the result, appeal of the assessee is dismissed. ITA No. 1074/Chd/2011 - Mrs. Satwinder Kaur Dhaliwal v. ITO 190. This appeal is directed against the order of ld. CIT(A), Chandigarh dated 12.8.2011. 191. In this appeal the assessee has raised various grounds of appeal but at the time of hearing the ld. counsel of the assessee submitted that ground Nos. 1 to 3 deals with reopening of the assessment which are not pressed, therefore, these grounds are dismissed as not pressed. 192. Ground Nos. 4 to 13 contain the issue regarding levy of capital gain tax for transfer of plot through the Society in terms of JDA. 193. Both the parties adopted identical arguments which were given in the case of Shri Charanjit Singh Atwal (supra). 194. After considering the rival submissions we find that identical issue has been dealt in case of Shri Charanjit Singh Atwal (supra) and following the decision in that case we decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs in favour of the Society so as the development agreement can be entered into with the developer i.e. THDC/HASH. The members who were having 300 sq.yd were to receive cash consideration of Rs. 48 lakhs and furnished flat measuring 1350 sq.ft whereas the members having 250 sq.yd plot were to receive 34 lakhs in cash and a flat measuring 1350 sq.ft. The whole of cash consideration as well as the value of flat has been subjected to capital gain tax. 206. Both the parties submitted that the arguments given in case of Shri Charanjit Singh Atwal (supra) should be adopted in this case also. 207. After considering the rival submissions we find that identical issue has been dealt in case of Shri Charanjit Singh Atwal (supra) and following the decision in that case we decide this issue against the assessee. 208. Third issue is regarding deduction u/s 54F. Both the parties made similar arguments as in the case of Shri Charanjit Singh Atwal (supra). 209. After considering the rival submissions we find that a careful perusal of the grounds raised before the ld. CIT(A) shows that this issue was not raised before the first appellate authority and the same has therefore, been not adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d similar arguments given in the case of Shri Charanjit Singh Atwal (supra). 223. After considering the rival submissions we find that identical issue has been dealt in case of Shri Charanjit Singh Atwal (supra) and following the decision in that case we decide this issue against the assessee. 224. Second issue is regard denial of deduction u/s 54F of the Act. Both the parties were heard. The Issue has been adjudicated by us in ITA No. 1071/Chd/2011 which we have dealt above. In this case also similar findings have been given by ld. CIT(A). Following our earlier order in ITA No. 1071/Chd/2011, we dismiss this ground. 225. In the result, both the appeals are dismissed. ITA No. 1156/CHD/2011 - Smt. Surjit Kaur v. ITO, Mohali 226. This appeal is directed against the order of CIT (Appeals) Chandigarh dated 23.08.2011. 227. This appeal is late by 22 days. The ld. counsel of the assessee submitted that delay is because the assessee is an illiterate lady and was staying in a village where she fell sick and could not consult a Lawyer and an affidavit to this effect has been filed. 228. The CIT-DR left the matter of condonation of delay to the discretion of the Bench. 229. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld show that the Assessing Officer has issued notice u/s 148 to bring to tax Rs. 15 lakhs received during Financial Year 2006-07. In the re-assessment he has accepted capital gain of Rs. 15 lakhs but at the same time has taxed total capital gain at Rs. 1,62,33,044/-. From this it becomes clear that the Assessing Officer has not assessed the income for which the reasons were recorded u/s 147 which would mean that there were no reason to believe to show any income had escaped the assessment. This clearly shows that the Assessing Officer has no reason to believe that income has escaped the assessment. In this regard he relied on the following decisions: CIT v. Atlas Cycle Industries [1989] 180 ITR 319 (Punj. Har.) CIT v. Gardhara Singh [2008] 173 Taxman 46 (Punj. Har.) Ranbaxy Laboratories v. CIT [2011] 336 ITR 136 (Delhi) CIT v. Jet Airways (I) Ltd. [2011] 331 ITR 236 (Bom.) CIT v. Shri Ram Singh [2008] 306 ITR 243 (Raj.). 240. On the other hand, the ld. DR for the revenue submitted that first of all original return was processed u/s 143(1), therefore, in view of the decision of Hon'ble Supreme Court in case of ACIT v. Rajesh Jhaveri Stock Bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons recorded are pre-dated. Moreover, the appellant has not come out with any evidence that the reasons were, in fact, recorded after issue of notice u/s 148. In may also be mentioned that in view of provisions of section 292B of the Act, the notice issued u/s 148 cannot be held invalid merely on the ground that no date was mentioned on the reasons recorded. Hence, the arguments taken by the appellant in this regard are rejected. 5.4 It has been held by Hon'ble Supreme Court in the case of ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (291 ITR 500) that at the stage of issue of notice u/s 148, the only question to be seen is whether there was relevant material, on the basis of which a reasonable person could have formed the requisite belief. Whether material would conclusively prove escapement of income is not the concern at the stage of issue of notice u/s 148. It is so because the formation of belief is within the realm of the subjective satisfaction of the Assessing Officer. In view of this judgment of Hon'ble Supreme Court and by respectfully following the same, the action of the Assessing Officer of reopening the assessment is upheld. Grounds of appeal Nos. 2 3 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of escaped income on the basis of admissible evidence and then only to issue shown cause to the assessee. The Hon'ble Supreme Court held that the final outcome of the proceedings initiated u/s 147 is not relevant and what is of relevance is the existence of reasons to make the Assessing Officer believe that there has been under-assessment of the assessee's income for a particular year. 14. It is explicit from the post-amendment decisions cited above that once there are reasons for the Assessing Officer to believe, whether such reasons originate out of the record already scrutinized for otherwise, he shall be within his competence to initiate the re-assessment proceedings. The formation of belief by the Assessing Officer must always be tentative and not a firm or final conclusion as the latter will negate the very object of giving an opportunity of hearing to the assessee as it will amount to post-decisional hearing." 10 From the above it emerges that only requirement for reopening the assessment is that there should be a reason to believe that income has escaped assessment and such reasons should be prima facie reason and there is no requirement that the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f plot to the Society in terms of JDA. 246. In respect of second issue both the parties adopted identical arguments which were given in the case of Shri Charanjit Singh Atwal (supra). 247. After considering the rival submissions we find that identical issue has been dealt in case of Shri Charanjit Singh Atwal (supra) and following the decision in that case we decide this issue against the assessee. 248. In the result, appeal of the assessee is dismissed. ITA No. 1204/CHD/2011 - Mr. Balramji Dass Tandon v. ACIT 249. This appeal is directed against the order of CIT (Appeals) Chandigarh dated. 02.09.2011. 250. In this appeal various grounds have been raised but at the time of hearing the ld. counsel of the assessee submitted that in this case there are five disputes which are as under: (i) Reopening of the assessment (ii) Taxability of capital gain (iii) Adjustment of taxes which has been paid in future years (iv) Capital gain should have been levied in the hands of the Society and not in the hands of the assessee. (v) Index cost of acquisition 251. Regarding First issue the ld. counsel of the assessee referred to pages 12 to 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Assessing Officer and so the provisions of section 148(2) have been violated. The Ld. Counsel has relied upon the judgment of Hon'ble ITAT, Chandigarh in the case of Sh. Karanvir Singh Ghosal in ITA No. 377/Chd/2002 and of Hon'ble Punjab Haryana High Court in the case of Sh. Baldev Singh Giani (248 ITR 266). 5.2 I have considered the facts of the case. It is seen that there was information available with the Assessing Officer that the appellant, being a member of M/s Punjabi Co-operative House Building Society Ltd. Mohali (who had 21.2 acres of land in village Kansal and had entered into an agreement with TATA and HASH for sale of land), had received Rs. 15 Lacs as consideration in this year and was liable to pay capital gain tax on sale of land. The appellant had declared Rs. 15 Lacs only as the sale consideration for the purposes of calculation of capital gain on sale of land in the return of income filed on 30.10.2009. This return is non-est in the eyes of law, as it is not a revised return u/s 139 (5) of the Act and so the contention of the appellant that the return of income was revised before issuance of notice u/s 148 of the Act is not relevant. The correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 148. Moreover, the appellant has not come out with any evidence that the reasons were, in fact, recorded after issue of notice u/s 148. It may also be mentioned that in view of provisions of section 292B of the Act, the notice issued u/s 148 cannot be held invalid merely on the ground that no date was mentioned on the reasons recorded. The facts of the case of Hon'ble Punjab Haryana High Court relied upon by the Ld. Counsel for the appellant are distinguishable, since in that case, the records of the department did not contain the reasons recorded by the Assessing Officer. Therefore that was a case of non-recording of reasons and not a case where the reasons are duly recorded but while signing the note, the assessing officer has not dated it. Hence, the arguments taken by the appellant in this regard are rejected. 5.2.2 The appellant has also relied upon the decision of Hon'ble ITAT, Chandigarh Bench in the case of Shri Karanvir Singh Ghosal in ITA No. 377/Chd/2002. In that case, the Hon'ble ITAT has merely set aside the matter to the file of CIT (A) to give a finding on the validity of initiation of proceedings u/s 148. The Hon'ble ITAT had not given any finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 292B observed as under: "A reading of the above reproduced provision makes it clear that a mistake, defect or omission in the return of income, assessment, notice, summons or other proceeding is not sufficient to invalidate an action taken by the competent authority, provided that such return of income, assessment, notice summons or other proceeding is in substance and effect in conformity with or according to the provisions of the Act. To put it differently, section 292 B can be relied upon for resisting a challenge to the notice, etc., only if there is a technical defect or omission in it. However, there is nothing in the plain language of that section from which it can be inferred that the same can be relied upon for curing a jurisdictional defect in the assessment notice, summons or other proceeding. In other words, if the notice, summons or other proceeding taken by an authority suffers from an inherent lacuna affecting his/its jurisdiction, the same cannot be cured by having resort to section 292B." 256. From above it becomes clear that what can be saved in view of Section 292B, is a mistake or defect or omission in an assessment, notice, summons or other proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gain (ii) Mistake in calculating the cost of acquisition (iii) Interest u/s 234B (iv) Deduction u/s 54F 267. In respect of first issue - Both the parties adopted identical arguments which were given in the case of Shri Charanjit Singh Atwal (supra). 268. After considering the rival submissions we find that identical issue has been dealt in case of Shri Charanjit Singh Atwal (supra) and following the decision in that case we decide this issue against the assessee. 269. Second issue - The ld. counsel of the assessee submitted that the Assessing Officer has not allowed full cost of acquisition and benefit of indexation before calculating capital gain. 270. On the other hand, the ld. DR for the revenue supported the order of the Assessing Officer. 271. After considering the rival submissions we find that we have already confirmed the charging of capital gain tax on whole of the consideration, therefore, whole cost of acquisition has to be considered. Since the details are not available therefore, we set aside the issue to the file of Assessing Officer with a direction to compute the capital gain tax after allowing full cost of acquisition after apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder: "As regards the objection of the assessee mentioned above that the income has not been quantified which had escaped assessment, it is stated that the total income escaped from the assessment has duly been quantified in para 2 paras 3 of the reasons for reopening the case under section 147/148 of I.T. Act. The complete details of the total consideration to be received and the manner in which to be received have been mentioned in the reasons for reopening the case u/s 147/148 of the I.T. Act. Therefore the objections raised in this regard are not sustainable. 4.2.1 As per the decision of the Apex Court in the case of GKN Driveshafts (India) Ltd. (supra), the preliminary objection against issue of notice u/s 148 of the Act has to be disposed off by passing a speaking order and this has been done by the Assessing Officer even before discussing about the disallowance/additions in the assessment order. Further, as per the reasons recorded, the appellant's income exceeded the maximum amount chargeable to tax. 4.2.2 It is seen that there was information available with the Assessing Officer that the appellant, being a member of M/s Punjabi Co-operative Hous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd. The Issue has been adjudicated by us in ITA No. 1071/Chd/2011 which we have dealt above. In this case also similar findings have been given by ld. CIT(A). Following our earlier order in ITA No. 1071/Chd/2011, we dismiss this ground. 283. In the result, appeal of the assessee is dismissed. ITA No. 1223/CHD/2011- Mr. Tej Prakash Singh v. Dy. CIT 284. This appeal is directed against the order of CIT (Appeals), Chandigarh dated 28.09.2011 285. In this appeal various grounds have been raised but at the time of hearing, the ld. counsel of the assessee submitted that only three disputes are involved in this appeal which are as under: (i) Chargeability of capital gain (ii) Deduction u/s 54F (iii) Reopening of assessment 286. The issue regarding reopening of the assessment was not pressed before us and the same is dismissed as not pressed. 287. In respect second issue regarding chargeability of capital gain - both the parties submitted identical arguments which were given in the case of Shri Charanjit Singh Atwal (supra). 288. After considering the rival submissions we find that identical issue has been dealt in case of Shri Charanjit Singh Atwal (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smissed. ITA No. 1238/CHD/2011- Sh. Ranjit Singh v. The ITO, 294. This appeal is directed against the order of CIT (Appeals), Chandigarh dated 11.11.2011. 295. In this appeal various grounds have been raised but at the time of hearing, the ld. counsel of the assessee submitted that only three disputes are involved in this appeal which are as under: (i) Reopening of assessment (ii) Chargeability of capital gain in respect of flat to be received by the assessee on hypothetical basis @ Rs. 4500 sqft (iii) Deduction u/s 54F 296. First issue regarding reopening of assessment was not pressed by the ld. counsel of the assessee and the same is dismissed as not pressed. 297. In addition to above an application dated 1.5.2013 has been made for admission of addition ground which are as under: "1. That the ld. CIT(A) has further erred in upholding the addition of Rs. 80,00,000/- as the alleged consideration received in cash which in fact has not been received till date except Rs. 32,00,000/- and as such the addition upheld is illegal, arbitrary and unjustified. 2. That the ld. CIT(A) has erred in holding that the transaction was squarely covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Annexure "A". In the computation chart filed with the return of income on 17/12/2009, the long-term capital gain of Rs. 26,36,402/- was worked out as per return filed and the assessee claimed exemption u/s 54 F for Rs. 26,36,402/- i.e. to the extent of long-term capital gain as shown in the return and the same was allowed. copy of computation chart is enclosed marked as annexure "B" However, while computing the long term capital gain in the assessment order passed u/s 143(3)/147, the Ld. A.O. has wrongly restricted the claim of exemption u/s 54F at Rs. 26,36,402/- instead allowing to the extent of Rs. 32 Lacs i.e. the amount which was invested in the construction of residential house and evidence for which was provided by the appellant and examined by the Ld. A.O. As such the exemption u/s 54 F is wrongly allowed at Rs. 26,36,402/- instead of Rs. 32 Lacs on this account for which necessary evidence was provided in the course of assessment proceedings. Even the assessee had filed an application for rectification u/s 154 for this purpose vide letter dated 27.01.2011 duly acknowledged by the Ld. A.O. on 31.01.2011 and till date no rectification order either making th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at case we decide this issue against the assessee. 313. Third issue regarding deduction u/s 54F, ld. counsel of the assessee adopted identical arguments as in the case of Shri Chranjit Singh Atwal (supra). 314. On the other hand, the ld. DR for the revenue supported the order of the ld. CIT(A). 315. After considering the rival submissions we find that the issue regarding Section 54F has been adjudicated by the ld. CIT(A) vide para 5.7p which is as under: "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 u/s 54F. So exemption cannot be given in such a situation u/s 54F." Relevant portion of Section 54F reads as under: "54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereinafter in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garh dated.08.05.2012 318. In this appeal various grounds have been raised but at the time of hearing, the ld. counsel of the assessee submitted that only three disputes are involved in this appeal which are as under: (i) Chargeability of capital gain (ii) Deduction u/s 54F (iii) Levy of interest u/s 234B/234C 319. In respect of issue No. 1 regarding chargeability of capital gain - both the parties adopted identical arguments which were given in the case of Shri Charanjit Singh Atwal (supra). 320. After considering the rival submissions we find that the assessee is a Member of Defence Services Coop House Building Society Ltd. and was holding a plot of 500 sqyd. The Society sold the land to the developer THDC/HASH. All the facts are identical with the facts in case of Shri Charanjit Singh Atwal (supra) except that in this case the value of 2250 sqft to be received by the assessee has been adopted at the rate of Rs. 5000 per sqft. Following the decision of Shri Charanjit Singh Atwal (supra) we decide the issue against the assessee. However, we see no reason for adoption of Rs.5000/- per sqft rate for the flat in this case whereas in other cases the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und Nos. 2 3 - Both the parties adopted identical arguments which were given in the case of Shri Charanjit Singh Atwal (supra). 328. After considering the rival submissions we find that identical issue has been dealt in case of Shri Charanjit Singh Atwal (supra) and following the decision in that case we decide this issue against the assessee. 329. In the result, appeal of the assessee is dismissed. ITA No. 196/CHD/2013- Mr. Amrik Singh v. The ITO 330. This appeal is directed against the order of CIT (Appeals)-II, Ludhiana dated.21.12.2012 331. In this appeal various grounds have been raised but at the time of hearing, the ld. counsel of the assessee submitted that only dispute is regarding chargeability of capital gain. 332. Both the parties adopted identical arguments which were given in the case of Shri Charanjit Singh Atwal (supra). 333. After considering the rival submissions we find that identical issue has been dealt in case of Shri Charanjit Singh Atwal (supra) and following the decision in that case we decide this issue against the assessee. 334. In the result, appeal of the assessee is dismissed. ITA No. 1301/CHD/2012- Mr. Devinder Singh Cheema v. ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that on the basis of mutuality the Society had basically purchased land and allotted the plots to the Members, therefore, on principal of mutuality in respect of transfer of four plots could not be subjected to tax. Secondly even if such income was to be taxed the same should have been taxed under the head "business and profession". The Assessing Officer did not agree with the submissions and observed that since the plots have been transferred to the outsiders therefore, principal of mutuality will not apply and since it is a case of transfer of property same has to be subjected to tax under the head "capital gain". Other arguments that this is not a case of transfer, are similar to the arguments made in case of Shri Charanjit Singh Atwal (supra) which were also rejected. 346. On appeal the ld. CIT(A) adjudicated this issue on similar line as in the case of Shri Charanjit Singh Atwal (supra). Further it was observed by the ld. CIT(A) in paras 3.2 and 3.2.1 as under: "3.2 I have considered the submission of the Ld. Counsels for the appellant. The Society entered into a joint development agreement with HASH and THDC on 25.02.2007, as per which it was agreed that the Socie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... THDC/HASH for development and transfer of the property. It seems that four plots were there which were not allotted. These plots obviously would become property of the society because same remained un-allotted. It is a common practice that co-operative housing societies purchase a particular piece of land and develop the same into plots. Some plots always remain un-allotted because at that point of time some new members may join the society to whom such plots could be allotted. If such plots have not been allotted then they would obviously be the property of the society. In other words, the society was owner of such plots on the date of entering the JDA. The issue regarding ownership came for consideration before the Hon'ble Supreme Court in case of CIT v. Podar Cement Pvt Ltd. and others, 226 ITR 625 wherein it was held as under: "Hence, though under the common law "owner" means a person who has got valid title legally conveyed to him after complying with the requirements of law such as the Transfer of Property Act, the Registration Act, etc., in the context of section 22 of the Income-tax Act, 1961, having regard to the ground realities and further having regard to the obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is made in respect of development sale consideration of Rs. 234 crores. 354. Before us the ld. DR for the revenue relied on the grounds of appeal. 355. On the other hand, the ld. counsel of the assessee adopted the arguments made in case of Shri Charanjit Singh Atwal (supra) in respect of ground no. 3 in that appeal. 356. After considering the rival submissions we find that in the assessment order it has been observed by the Assessing Officer that to prevent leakage of revenue entire consideration of Rs. 234 crores consisting of monetary consideration to be received by the members and consideration in the form of flats to be received by the members, was assessed on protective basis in the hands of the society. 357. We have already adjudicated this issue vide para Nos. 111 to 113 in relation to ground no. 3 in case of Shri Charanjit Singh Atwal (supra) where it has been held that it is individual member who is responsible for paying the taxes. We would reiterate that the plots were allotted by the society to the individual members and it was the members who surrendered their rights in the plots in favour of the society so that the society could enter into JDA for transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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