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TMI Blog2014 (2) TMI 1393X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 4. That the computation of capital gain, by assuming notional consideration of to non existent flats, not being consistent with the basic scheme of Income tax Act, deserves not to be upheld. 5. That by any reckoning and without prejudice to the outcome of aforesaid grounds, the income under the head capital gain could not have been computed beyond the amount of Rs. 30 lakhs actually received during the year. 6. That exemption u/s 54F, ought to have been allowed, as claimed. 7. That the impugned capital gain, if any, ought to have been assessed in the hands of Punjabi Coop Housing Building Society Ltd. being the owner in possession of the property and not on assessee, being a member thereof. 8. That the orders of authorities below are highly unjust, arbitrary against equity and natural justice and hence liable to be set aside on this score also." 2. The brief facts of the case are that the assessee being an MLA derives income from salary, pension and agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accrued as a result of this transfer was Rs. 3,67,50,000/- and the same was required to be considered for the purpose of computing capital gains. According to Ld. CIT-1, Jalandhar, the order of the AO was erroneous as the provisions of section 48 of the Act had been ignored or misapplied which was a mistake of law and this caused prejudice to the interest of the Revenue. Keeping this facts in view, a show cause notice dated 24.02.2011 was issued to the assessee. In response to the same, the assessee filed her written submission pleading that when two views are possible and the AO has taken one view but with which the Commissioner does not agree, then in such a case, the order cannot be treated as erroneous and prejudicial to the interest of the revenue. Secondly, the consideration was to be received in part as and when the sale deed for the part plot was to be executed. Since at that time only a part of the registry corresponding to the receipt of consideration of Rs. 30 lacs had been executed, thus, only this consideration was liable to be considered for computing capital gain. Ld. CIT-1, Jalandhar considered the written submissions filed by the assessee but did not agree with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing on behalf of different assessees before us in all the 24 present appeals, agreed to the argument made by the Ld. DR. Mr. Mahavir Singh. All the counsels prayed before the Bench to consider their written submissions and decide the issues in all the 24 appeals accordingly. 29. On perusing the facts in the present 24 appeals before us and the facts in the bunch of 30 appeals decided by a consolidated order dated 29.07.2013 by the ITAT Chandigarh Bench (supra) and on perusal of written submissions placed on record by different ARs, we are of the view that the issues decided by the ITAT Chandigarh Bench vide order dated 29.07.2013 (supra) are identical to the issues in the present 24 appeals before us. Therefore, we are proceeding to decide the present appeals by this consolidated order as under: "30. We have heard both the parties and perused the written submissions placed on record by the representatives of the assessees. The main issue in the present appeals is whether the assessee is liable to capital gains tax in the impugned year or not. The said legal issue has been dealt with by the Chandigarh Bench of ITAT in its order dated 29.07.2013 (supra) in the case of Char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advance and whatever money has been received has already been shown as capital gain. It was held that it is not only the money, which is required to be taxed but the consideration which has accrued to the assessee is also required to be taxed. Accordingly, the fourth contention was also rejected. v) Vide para 69 to 74, fifth contention was that since section 53A of the Transfer of Property Act itself has undergone amendment w.e.f. 24.9.2001 by which agreement referred to in that section is required to be registered and therefore, now in section 2(47)(v) only the amended provisions can be read. It was held that non-registration of agreement cannot lead to the conclusion that provision of section 2(47)(v) is not applicable. Accordingly, fifth contention was rejected. vi) Vide paras 75 and 76, the sixth contention was with respect to decision of Hon'ble Bombay High Court in the case of Chaturbhuj dwarkadas Kapadia vs. CIT 260 ITR 491 is not applicable. It was held that the Bench has already discussed the implication of the decision in the case of Chaturbhuj dwarkadas Kapadia (supra) in para 33 to 38 of its order and accordingly this contention was also rejected. via) Vide para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of the assessee was also rejected. ix Vide para 100 to 107, being the ninth contention that assessee has already terminated the agreement and has revoked the Power of Attorney. It was held in view of provision of section 45 read with section 48 of the Act that subsequent events, if at all any will not make any difference because total consideration received or accrued has to be assessed in the year of transfer. The word 'irrevocable' itself shows that in the eyes of law Special Power of Attorney could not have been revoked. In view of this analysis, either the JDA has not been cancelled or in any case the same cannot be considered for determining the taxation of Capital Gain. Accordingly this contention was also rejected. x. Vide para 108 & 109, being the tenth contention that even if the whole consideration has to be taxed then value of the flats cannot be taken at Rs. 4500/- per sq.feet. In view of agreement between HASH and THDC consideration has been shown at Rs. 2000/- per sq. feet for 126 flats whereas it is Rs. 4500/- per sq. feet for three flats. It was held that AO has estimated the value of flats on most reasonable basis. Also vide para 110 there was content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding Society Ltd; which was the owner of 27.3 Acres of land. This land was transferred to THDC/HASH as in the case of Punjabi Co-operative Housing Building Society Ltd; either facts are identical to the case of Sh. Charanjit Singh Atwal (supra). Accordingly, being identical issue as in the case of Sh.Charanjit Singh Atwal (supra), the appeal of the assessee was dismissed. 36. Regarding interest u/s 234B and withdrawal u/s 244A, it was held in para 114 that the same is consequential in nature and AO was directed to charge or withdraw interest in accordance with law. 37. Accordingly, all the grounds and contentions raised in 30 appeals as mentioned hereinabove by the ITAT, Chandigarh Bench have been dismissed. For the sake of convenience, we reproduce the facts in the case of Sh. Charanjit Singh Atwal vs ITO in ITA No.448(CHD/2011 and the findings of the ITAT, Chandigarh Bench on the issues in the appeal vide paras 17 to 115 as under: "17 Brief facts of the case are that while making discreet enquiries in the cases of housing societies, it was gathered that housing society consisting of 95 present and Ex-MLAs of Punjab Legislative Assembly is owner of the 21.2 acres of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement for Sale. Conveyance, Mortgage Deeds, Finance documents and all documents and agreements necessary to create and register the mortgage, conveyance, lease deeds, license agreement, POA, affidavits, declarations, indemnities and all such other documents, letters as may be necessary to carry out, facilitate and enforce the Rights and to register the same with the revenue/Competent authorities and to appear on our behalf before all authorities, statutory or otherwise and before any court of Law (The "Development Rights'). The Owner hereby hands over the original title deeds of the Property as mentioned in the list Annexued hereto and marked as Annexure IV and physical, vacant possession of the Property has been handed over to THDC simultaneously to the execution and registration of this Agreement to develop the same as set out herein." 18 It was further noticed that till date a Member having 500 sqyd plot in Society had received Rs. 33.00 lakhs each and a Member having 1000 sqyd plot had received Rs. 66.00 lakh. The assessee was also a Member and President of the Society and was owner of a plot measuring 1000 sqyd. Therefore, as per JDA, he was to receive Rs. 1.65 crores as mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions i.e. the capital gain arising on the land which has been transferred and for which consideration has been received. The assessee has fully discharged his liability to that extent There cannot be any tax liability on Incomplete transaction I.e. where the land has not been transferred and the Consideration has not been received, 5 In your letter under consideration, you have considered the national 'value of the proposed flat measuring 2250 sq. feet as a part of the consideration Here the following points need to be considered. 1.) The flat shall be given only after the full land i.e. 500 sq. yard, has been transferred to the buyer. 2) There is no provision in the agreement to allot proportionate flat or make equivalent proportionate payment. So for the present transaction where only a part of the land has been transferred, no consideration on account of flat is available. So no question of any tax liability arise. 3) It may kindly be appreciated that the developer has not even ' acquired the land till date and has not even obtained permission to start development. So there is no question of any construction of fiats now or near future that is to say, there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty have taken place only the development right has been transferred. Therefore, there is no transfer of property under section 53A of Transfer of property Act, 4. Clause 9.3 of the agreement is very clearly stating that the ownership has not been transferred. in view of our submission you are requested to complete the Capita! Gains Tax in accordance with our return. The assessee wants to be personally heard and make further submission. You are requested to kindly adjourn the case till 29-12-2009." 11. Vide the above said letter the assessee requested to be personally heard however on 29.12.2009 he did not appear. The counsel of the assessee filed written submission which is reproduced as under: 1 In para 6,1 of your letter dated 7.12.2009, you have written that there is grant and assignment of development rights in the property and there is transfer of property upon the surrender of allotment right. This is not a true factual position. The allotment rights have not been surrendered by the members in favour of THDC LTD or M/s Hash Builders Ltd. The factual position is that the society I.e. M/s Punjabi Co-op House Bldg. Society Ltd. has entered into an agreement with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire consideration. 5 Keeping in view the conditions in the agreement and to the fact that M/s THDC Ltd: M/s Hash Builder Ltd have not done any development work on the land under consideration till date in pursuance of the agreement dated 25.2.2007 or in furtherance of the said agreement, no transfer should be considered to have been taken place in respect of the land which is not yet transferred, if the views of the department are held to be correct for the sake of discussion, the following situation will arise: 1, Assesses will be deprived from availing the exemption u/s 54EC since no funds are available with the assessee for investment. 2, Assessee will be deprived from availing exemption u/s 54F as no residential house has yet been constructed. This is an ironical situation where assessee is having to pay tax on the notional value of the flat to be given in the future to him as consideration but exemption under section 54F will be denied because the residential house did not exist, 3. Further as per the termination clause of the agreement various conditions have been prescribed under which the agreement can be terminated. It is very clearly mentioned in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presently available with the assessee & cannot be submitted immediately." 20 The Assessing Officer after considering the submissions did not find any force in the same and observed as under: (i) There is no force in the argument that the JDA was only an agreement to sell and not a sale deed because JDA resulted in the transfer of assets. All the ingredients of transfer i.e. consideration from schedule of payments, rights and liabilities of the parties etc. were mentioned in the JDA, Capital gain arose because of the fact that it was a case of transfer of capital asset in view of Section 2(47)(ii), 2(47)(v) and 2(47)(vi). According to him as per clause 2.1 of the JDA owner of the land made agreement and irrevocably and unequivocally granted and assigned in perpetuity all of its rights to develop, construct, mortgage, lease, license, sell and transfer the property (21.2 acres of land) along with any and all constructions trees etc. in favour of THDC/HASH for the purpose of development, construction, mortgage, sell, transfer, lease, license and/or exploitation for full utilization of the property and to execute all documents necessary to carry out facilities and rights in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered. (vi) It was also observed that surrender of allotment letter by the Members including assessee was processed in order to enable the Society to enter into tripartite JDA with HASH and THDC. By surrendering the allotment letter, the right of the assessee in immovable property owned by him got extinguished and this extinguishment was in lieu of entire consideration which was received by the Members including the assessee. thus this case was also covered u/s 2(47)(ii) of the Act. (vii) It was observed that there is no merit in the contention that the assessee would not be covered u/s 54EC due to lack of funds or exemption u/s 54 was not relevant to the issue about taxability of long term capital gains which was dependent only on transfer. (viii) It was observed that there was no force in the contention that the value of the flats was undeterminable because the value of the flat was very much determinable as per the market rate prevailing which could also be ascertained from the rate at which the flats were being offered to the general public. (x) The Assessing Officer was of the view that the case laws relied on by the assessee were distinguishable for whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 45 r.w.s. 2(47)(v) then it would emerge as under: "(a) The Joint development agreement has been entered into between the Punjab Coop Housing Building Society Ltd. Mohali, of which assessee is member, and. M/s Hash Builders (P) Ltd. and M/s Tata Housing development Company Ltd. Mumbai as on 25.2.2007. b) The members of the society surrendered their allotment rights and the society on behalf of members entered into the joint development agreement in lieu of 'entire consideration' as described in the Joint Development agreement in the previous year 2006-07. (c) The receipt of consideration was structured and the assessee received part of the 'entire consideration' during the financial year 200607. This clearly shows that the transferee is ready and willing to perform his part of contract. (d) In view of clause 2.1 of the Joint Development agreement, the owner has at the time of making the agreement irrevocably and unequivocally granted and-assigned in perpetuity all its rights to develop, construct, mortgage, lease, license, sell and transfer the property i.e (21.2 acres of land) alongwlth any and all constructions, trees etc. in favour of M/s Tata Housing deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said previous year i.e. 2006-07. h) Hence it is established beyond doubt that transfer has taken place as envisaged as per Section 2(47)(v) of the-Income Tax Act and since it has taken place through Society of which assessee is also member so Sections 2(47) (vi) and 2(47)(ii) would also support Section 2(47)(v) of the income Tax Act. (i) Now once it has been established that transfer has taken place, then the next important question is the year in which the transfer has taken place and it is the year in which the transfer has taken place, whole of the consideration , whether received or receivable in cash or kind, would be chargeable to capital gains u/s 45, whether the entire consideration has been received in the year of transfer or not. j) From the discussion in above paras it is clear that not only agreement has been entered into in, the pervious year 2006-07 but the owner has at the time of making the agreement irrevocably and unequivocally granted and assigned in perpetuity all its rights to develop, construct, mortgage, lease, license, sell and transfer the property i.e (21.2 acres of land) alongwith any and all constructions, trees etc. in favour of M/s Tata Hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable to the case of assessee as most of them pertain to the previous year before Section 2(47)(v) and 2(47)(vi) was inserted w.e.f. 1.4.1988. Other judgments referred by assessee are distinguishable as follows: ACIT vs Puspa Devi: This ruling has been in fact in favour of revenue and completely ratifies the principles laid down in the judgment of Chaturbhuh Dwarkadas Kapadia vs CIT as it says that transfer of capital asset took place by virtue of agreement dated 07/09/1991 in the financial year 199192 and as such, the AO was fully justified in levying capital gains in the same previous year. ii) CIT vs K. Jeeiani Basha: This ruling supports the contention of revenue that entire consideration receivable for that part of property would 'be' taxable which has been parted with or transferred even when whole of the consideration lies not been received. iii) Zuari Estate Development & Investment Co. (P) Ltd, vs DCIT: This case is also not relevant as it pertains to agreement entered into in 1984 much before Section 2(47(v) was inserted . 24. Before us, the ld. counsel of the assessee made detailed submissions. Further written submissions has also been fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as JDA was executed on 25.2.2007. Thus it is clear that no possession was given on 25.2.2007 otherwise the Society would not be in possession on 2.3.2007. Similarly one more part of the land was sold by second deed executed on 25.4.2007 wherein similar clause 'A' as in the first deed is there (Refer page 138 of the paper book) shows that the Society was in possession of the land on later date. These two sale deeds clearly show that no possession was given on the date of execution of the JDA. In any case the JDA makes it clear that the possession was to be given simultaneously to the registration of JDA and since JDA was not registered, no 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to the decision of Hon'ble Bomay High Court in case of Chaturbhuj Dwarkadas Kapadia V CIT (supra) and tried to distinguish the same. He submitted that this decision cannot be taken as an authority for the proposition that date of agreement should be reckoned as date of transfer. In any case, the decision has to be seen for what has been held in the decision and in this case ultimately the appeal of the assessee was allowed which means the transfer was held to have taken effect only after receipt of substantial payment of consideration. VI The ld. counsel of the assessee further pointed out that there is another important condition in invoking Section 2(47)(v) of the Act r.w.s 53A of T.P. Act i.e. the transferee must have performed or willing to perform his part of the contract. It was argued that willingness of the transferee to 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 transfere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was no willingness on the part of the transferee to perform his/its obligation the provisions of Section 2(47) (v) r.w.s. 53A of T.P. Act could not be applied. VII It was contended that revenue has also held that clause (vi) of Section 2(47) is also applicable which is not correct because that provision is applicable where a person becomes owner of the immovable property pursuant to taking Membership of Cooperative Society etc. In the present case, the JDA was entered into between Society and two developers i.e. THDC/HASH and therefore, there was no transaction involving Membership of Cooperative Society/ company etc. Therefore, clearly clause (vi) of sec 2(47) is not applicable in the present case. 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 what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal in case of Chemosyn Ltd. V ACIT, 139 ITD 68. He referred to various paras and pointed out how the subsequent events were reckoned by the Tribunal. X The ld. counsel of the assessee submitted that without prejudice to the above if it is considered a case of transfer then the value of flat to be allotted to each of the Member of the Society has not been valued correctly. The Assessing Officer has referred to clause 3.5 of inter-se agreement entered into between THDC and HASH. The ld. counsel of the assessee submitted that the assessee was not party to such agreement and price at which THDC was selling flats to HASH could not be adopted in the case of the assessee. It was submitted that if clause (5) was referred to it can be seen that reference has been made to two prices ie. Rs. 2000/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, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a furnished flat with super area of 2250 sqft to be constructed by THDC/HASH and two flats in case of Members holding 1000 sqyd plots. It was also resolved through this resolution to hand over the possession of the property and original title deeds of the property to THDC/HASH. The Society was further permitted to allow THDC/HASH to mortgage, sell the property and create change in property. The Society also resolved to execute irrevocable power of attorney in favour of THDC/HASH which was actually executed on 26.2.2007 which was duly registered also. Pursuance to this resolution, the JDA was executed on 25.2.2007. Through clause 2.1 it was specifically agreed that owner i.e. the Society has irrevocably and unequivocally granted and assigned in perpetuity all the rights to develop / construct / mortgage / lease / license, sell and transfer the property. Clause 6.7 of the JDA provides for execution of irrevocable special power of attorney through which rights of development were granted in favour of THDC/HASH and right to raise finance by mortgage in the property and to register the charge with competent authority and further power of sale etc. were also given through this power of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 45 of the Act the word "Transfer" as defined in IT Act is required to be considered and not sale as indicated in the Transfer of Property Act. Therefore, u/s 2(47) of the Act, it is "Transfer" which is one of the most important ingredient for levy of taxation u/s 45 which is to be complied with. For invoking Section 2(47) (v) what is required is that an agreement to sell has been entered by the Transferor with the transferee and possession has been handed over by the transferor to the transferee in part performance of the contract u/s 53A of T.P. Act. In this regard he relied on the following decisions:- 1) Authority for Advance Ruling (AAR) New Delhi in the case of Jasbir Singh Sarkaria 294 ITR 196 2) Chaturbhuj Dwarkadas Kapadia v CIT 260 ITR 491 (Bom.) 3) C.Ravi Vs DCIT in 325 ITR 417 (Ker) 4) CIT v Dr. T.K. Dayalu 202 Taxman 531 (Kar.) 5) D. Kasturi v CIT & Anr 323 ITR 40 (Mad.) 6) CIT V Dhir & Co. Colonisers (P) Lta 288 ITR 561 (P&H) (III) The Ld. CIT DR further submitted that assessee's case apart from being covered under clause (v) of section 2(47) is also covered by clause (vi) of section 2(47) of the Act. Clause (vi) is applicable in cases where any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered it cannot be construed to be covered under clause (v) of section 2(47). It was contended that doctrine of part performance was given statutory recognition in section 53A of the Transfer of Property Act and it was desired only to protect possession of a transferee when the transfer falls short of requirement laid down by law. The plea of the part performance could be taken only as shield in defence and not as a sword. The most import ingredient of section 53A of T.P. Act was the change of possession. The amendment to section 53A of the Transfer of Property Act has been done perhaps to collect Revenue. In any case, the same cannot have a impact on the clause (v) of section 2(47). This is so because clause (v) clearly employs language by using the expression "part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act". The Legislature intentionally not employed the expression "in part performance of contract as defined under section 53A of Transfer of Property Act". Therefore, it is nature of contact which is similar to the nature of contract u/s 53A of the Transfer of Property Act which is relevant to section 2(47)(v). In any ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the different statutes governing the matter to exercise their respective jurisdiction in accordance with the law and such clarifications came in later decision of the High Court. As the rejection under the Wildlife (Protection) Act has been made by the authority not competent to do so, the promoters have sought review of the order which is still pending for some other reasons. All these steps clearly shows that developers were willing to perform all the obligations undertaken under JDA and were perusing the matter of sanction of the project at different levels vigorously. The copy of the order of Hon'ble Punjab & Haryana High Court and Hon'ble Supreme Court 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 connect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JDA was canceled then there should be document showing return of whatever possession was given by the society. The documents showing cancellation is only a self serving document, which cannot be relied to refuse the existence of JDA and fact of giving possession by the Society to the Developer. Further, the subsequent event cannot invalidate the contract for transfer of the property because under the tax laws income has to be determined for each year separately and once transfer took effect in assessment year 2007-08, then a subsequent event taking place in 2011 will not have any effect on such transfer. It has been contended through written 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es wherein various News Paper clipping has been included which clearly show that flats were booked @ Rs. 8000/- approximately in the Pre Launch bookings. Such Pre Launch bookings generally take place at lower rates offered then in the general bookings by the public. Therefore, the value of Rs. 4500/- is most reasonable which has been adopted by the Assessing Officer. 26 In the rejoinder, the ld. counsel of the assessee submitted that the assessee and Society had never handed over the possession, therefore, there is no question of executing the documents at the time of cancellation of the agreement for reversing the possession. As no possession was given, therefore, there is no question of taking the back possession. He further submitted: (a) that normal rules of interpretation should be applied to understand the meaning of clause (v) and (vi) of Section 2(47) and this is not a fit case for invocation of Heydon's Rule. He submitted that lot of emphasis has been laid by the ld. DR for the revenue on para 2.1 of JDA to prove that the possession was handed over. However, a careful reading sit in the judgment when the assessee should cancel the agreement or not. Clause 14 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal 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 treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment ;] [or] [(iva) the maturity or redemption of a zero coupon bond; or] [(v) any transaction involving the allowing of the possession of any immova ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal ownership in such cases continues to be with the transferor." 32 Before insertion of the clause (v) & (vi) to section 2(47) of the Act, the position of law was that unless and until a sale deed was executed for transfer of immovable property, the same could not be construed as transfer for the purpose of charging capital gain tax. This was particularly so in the light of various judgments particularly the judgment of Hon'ble Apex Court in the case of Alapati 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 without executing the proper sale deeds. This was being done because there was restriction on sale of properties in various towns e.g. in case of lease hold plots and flats in Delhi if the same were to be transferred, permission was required to be take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nate rent till the payment of last installments and till that time assessee was bound to pay all outgoings. Under clause 20 of the Agreement, it was agreed that sale shall be completed by 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 199697. 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 assessee for capital gain arose in the assessment year 1996-97 or 1999-2000. The observation of the Court has been summarized in head note as under:- "Clauses (v) and (vi) were introduced in section 2(47) of the Income-tax Act, 1961, with eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 these two cases capital gains would be taxable in the year in which such transactions are entered into, even if the transfer of the immovable property is not effective or complete under the general law (see Kanga and Palkhivala's Law and Practic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... builder / contractor to make profits by completing the building and selling the flats at a profit. That the aim of these professional contractors was only to make profits by completing the building and, therefore, no interest in the land stands created in their favour under such agreements. That such agreements are only a mode of remunerating the builder for his services of constructing the building (see Gurudev Developers v. Kurla Konkan Niwas Cooperative Housing Society [2003] 3 Mah LJ 131). It is precisely for this reason that the Legislature has introduced section 2(47)(v) read with section 45 which indicates that capital gains is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law. In this case that test has not been applied by the Department. No reason has been given why that test has not been applied, particularly when the agreement in question, read as a whole, shows that it is a development agreement. There is a difference between the contract on the one hand and the performance on the other hand. In this case, the Tribunal as well as the Department have come to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Delhi in the case of Jasbir Singh Sarkaria (supra). In that case the assessee was co-owner of agricultural land measuring about 27.7 acres and his share was 4/9. The co-owner decided to develop the land by constructing residential complex through developer and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n six installments from March 06, 2008. The installments 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 place. Two aspects may be noted at this juncture. Firstly, the expression used is "arising" which is not to be equated with the expression "received". Both these expressions and in addition thereto, the expression "accrue" are used in the Income-tax Act either coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 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 section 2(47). Possession is an abstract concept. It has different shades of meaning. It is variously described as "a polymorphous term having different meanings in different contexts" (per R. S. Sarkaria J. in Superintendent and Remembrance of Legal Affairs, W. B. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 make use of it for the intended purpose, the mere fact that the owner has also the right to enter the property to oversee the development work or to ensure performance of the terms of agreement does not introduce any incompatibility. The concurrent possession of the owner who can exercise posse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (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 when he appeared before us in the last week of May, 2007, that even by that date the development work could not be commenced for want of certain approvals, and therefore, the developer was "not willing to take possession of the land". Such an unsubstantiated statement which is not found i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 vital stake in the entire property. As far as the quality of possession is concerned, he is on a higher pedestal than a developer who apportions built up area with the owner. Even if he is an agent in one sense in the course of developing the land, that agency is coupled with interest. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above discussion Hon'ble authority has summarized the decision in para 41 which is as under: "The following is the summary of conclusions: 1. Where the agreement for transfer of immovable property by itself does not provide for immediate transfer of possession, the date of entering into the agreement cannot be considered to be the date of transfer within the meaning of clause (v) of section 2 (47) of the Income-Tax Act. 2. To attract clause (v) of section 2(47), it is not necessary that the entire sale consideration up to the last installment should be received by the owner. 3. In the instant case, having regard to the terms of the two agreements and the irrevocable GPA executed pursuant to the agreement, the execution of the GPA shall be regarded as the "transaction involving the allowing of the possession" of land to be taken in part performance of the contract and therefore, the transfer within the meaning of section 2(47)(v) must be deemed to have taken place on the date of execution of such GPA. The irrevocable GPA was executed on May 8, 2006, i.e., during the previous year relevant to the assessment year 2007-08 and the capital gains must be held to have ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified 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 payments. Copy of the resolution of the Executive Committee of the Society dated 4.1.2007 as well as resolution of the General Body Meeting of the Society dated 25.2.2007 were made part of JDA by way of annexure. The Society agreed to execute an irrevocable Special Power of Attorney in favour of T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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, licenses and permissions from all the concerned authorities for the commencement, development and completion of the project on the property." 48 Clause 3 describes the obligations of the developers & Society for getting the plans, etc. sanctioned from competent authority / applications to be signed by owner for plans, drawings etc., construction. Clause 4 deals with consideration clauses 5 to 8 deals various aspects of project and obligations of Society and Developer. Clause 9 talks about ownership and rights and read as under: "9 Transfer of ownership/Rights 9.1 The owner shall simultaneously on receipt of Payment as set out in Clause 4.1 above, execute an irrevocable Special Power of Attorney to THDC for development of the property authorizing THDC to do all lawful acts, deeds, matters and things pertaining to the development of the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 possession was not given by the Society because according to him as per clause 2.1 of the JDA the possession of the property was to be handed over simultaneously to the execution and registration of JDA and since the JDA was not registered, therefore, the possession was not given. We can not accept this contention because in "Pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by the authorities concerned for vesting such a part or portion in such authority and to admit execution thereof before the concerned Competent Authority and get the same registered with the concerned sub-registrar. (y) Reasonable opportunity of hearing shall be given to mortgage, encumber or create a charge on the Property or any part or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, provision of clause 6 would be surviving which clearly shows that developer continues to be in possession for the purpose of development, mortgage etc. even after termination. Clause 8 which describes the obligation and undertaking of the THDC/HASH and provides specifically that all environmental clearance shall be obtained by THDC/HASH out of its own sources. Thus it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 touch stone of the discussion on possession in para 26 to 28 in the case of Jasbir Singh Sarkaria (supra) which we have reproduced above, it becomes clear that the possession has been given. 56 In that discussion, it has been clearly mentioned that the position contemplated by clause (v) of section 2(47) of the Act need not to be exclusive possession. What is required is that the transferee by virtue of posse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 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 the definition of transfer would get defeated. We are reproducing following head note of the Hon'ble Apex Court in case of Dr. Baliram Waman Hiray V. Mr. Justice B. Lentin and another (supra): "The following principles enunciated in Heydon"s caase (1584) 3 Co. Rep 7a and firmly established, are still in full force and effect: "that for the sure and true interpretation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 concept of concurrent possession has also been discussed and following extract of paragraph 55 of Salmond's Jurisprudence has been extracted which reads as under: "It was a maxim of the civil law that two persons could not be in possession of the same thing at the same time. As a general proposition this is true: for exclusiveness is of the essence of possession. Two adverse cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m "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 We would like to discuss this aspect of the issue in little more detail and try to understand why the whole of the consideration is required to be taxed. At the cost of repetition let us again reproduce the observations of the Ld. authority in case of Jasbir Singh Sarkaria (supra) which we have earlier extracted at para 40 and the relevant portion is as under: "40. On the above, the Hon'ble Authority after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 "receive" and indicate a right to receive. This was explained by Fry L.J., in Colquhoun v. Brooks. The learned judge observed: ' I think, therefore, that the words "arise or accruing" are general words descriptive of a right to receive profits.' See also CIT v. Anamallais Timber Trust Ltd. To attract the operation of section 12B it is therefore sufficient if the profits arose. They need not have been actually received." 14. Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ynonymously with each other to denote the same idea or ideas very similar, and the difference lies only in this that one is more appropriate than the other, when applied, to a particular case. It will indeed be difficult to distinguish between the two words, but it is clear that both the words are used in contradistinction to the word 'receive' and indicate a right to receive. They represent a stage anterior to the point of time when the income becomes receivable and connote a character of the income, which is more or less inchoate and which is something less than a receipt. An unenforceable claim to receive an undetermined or undefined sum does not give rise to accrual." 68 Therefore, it is not only the money which has been received by the assessee which is required to be taxed but the consideration which has accrued to the assessee is also required to be taxed. In view of this, this contention is rejected. 69 The fifth contention made by the Ld. Counsel for the assessee was that since section 53A of the Transfer of Property Act itself has undergone amendment w.e.f. 24.9.2001 by which the agreement referred to in that section is required to be registered and therefore, now in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was available even if the contract was not registered but by Amendment Act 48 of 2001, the expression "though required to be registered has not been registered", has been omitted which means for the purpose of possession u/s 53A of T.P. Act, a person has to prove that possession has been given under a registered agreement. In other words, now u/s 53A of T.P. Act, the agreement referred is required to be registered. This requirement cannot be read in clause (v) of section 2(47) because that refers only to the contract of the nature of section 53A of T.P. Act without going into the controversy whether such agreement is required to be registered or not. The Ld. Counsel for the assessee had referred to the decision of Hon'ble Supreme Court in the case of Surana Steels v DCIT 237 ITR 777 (SC) for the proposition that when a section of a particular statute is introduced into another Act it must be read in the same sense as it bore in the original Act. The careful perusal of that judgment would show that situation is applicable only when a particular provision of an Act has been incorporated in the later Act. In that case a question arose that for the purpose of MAT provision what i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n itself refers to clause (b) of sub section (1) of section 205 of Company's Act 1956 and therefore, same meaning was given to past losses or unabsorbed depreciation as is given under the Companies Act, 1956. 73 In case of clause (v) to section 2(47), clearly the expression used is "contract of the nature referred to in section 53A of T.P. Act", which means it is not a case of incorporation of one piece of legislation into another piece of legislation. If that was the intention of the Parliament, obviously clause (v) would contain the expression "contract as defined under section 53A of Transfer of Property Act, 1882". Further, it is settled position of law that any interpretation which could render a particular provision redundant should be avoided. If the contention of the Ld. counsel was to be accepted, obviously the provisions of clause (v) of section 2(47) of the Act would become redundant in the sense that registration of agreement would again be made compulsory but since properties were being sold in the market on "power of attorney" basis through unregistered agreements which would make this provision redundant. This position we have already discussed earlier while discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those transactions where properties were being transferred by way of giving possession and receiving full consideration. Therefore, in our humble opinion, in the case of a transfer where possession has been given and full consideration has been received, then such transaction needs to be construed as "transfer". Therefore, the amendment made in section 53A by which the requirement of registration has been indirectly brought on the statute need not be applied while construing the meaning of "transfer" with reference to the Income-tax Act. 8. The above situation further becomes clear if we refer to the celebrated decision of Hon'ble Supreme Court in the case of Podar Cement (P.) Ltd. (supra}. In that case, the assessee was owner of four flats in a building called "Silver Arch"/on Nepean Sea Road, Bombay. Out of these four flats, two were purchased directly from the Builders, Malabar Industries Pvt. Ltd., and two were purchased by its sister concerns which were later purchased by the assessee. The possession of the flats was taken after full payment of consideration. The flats were let out. The assessee contended that the rental income from these flats was assessable as "income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee, the houses were allotted to the assessee by the Housing Board, part payment received and possession delivered so as to confer dominion over the property on the assessee whereafter the assessee had in its own right allotted the quarters to the staff and they were being actually used by the staff of the assessee. The assessee was entitled to depreciation in respect of the seven houses in respect of which the assessee had not obtained a deed of conveyance from the vendor although it had taken possession and made part payment of the consideration". Thus, from the above two decisions, it becomes absolutely clear that for the purpose of the Income-tax Act the ground reality has to be recognized and if all the ingredients of transfer have been completed, then such transfer has to be recognized. Merely because the particular instrument of transfer has not been registered will not alter the situation. This position is further strengthened by the fact that legislature itself has inserted clause (v) to section 2(47) and while referring to the provisions of section 53A, reference has been made by stating that contracts in the nature of section 53A should also be covered by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nqualified and unconditional willingness on the part of the transferee to perform his obligation. In that case the transferee has agreed to make certain payments in installments in consideration of the development agreement but such payments were not made. Later on, the agreement was modified and more time was given to the transferee for payment of such installments. However, the installments were not paid even under the modified terms and that is why it was ultimately held that such agreement cannot be construed as transfer. 79 The second decision referred to by Ld. Counsel for the assessee is K. Radika v DCIT (supra). In this case, similar observations were made, though it is not pointed out in what respect the transferee has failed to perform his part but it has been observed that the facts of the case shows that transferee has not performed his part of the contract. 80 The third judgment relied upon by the Ld. Counsel for the assessee is in the case of DCIT v Tej Singh (supra). In that case land was acquired by the government and the matter went for litigation. During the pendency of litigation, the assessee entered into a Development agreement with a Developer for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause 26 which deals with the Force Majeure clauses. The clause 26 (i) to (v) reads as under:- FORCE MAJEURE i) None of the parties shall be liable to the other Party or be deemed to be in breach of this Agreement by reasons of any delay in performing or any failure to perform, any of its own obligations in relation to the Agreement, if the delay or failure is due to any Event of Force Mejeure. Event of Force Majeure is any event caused beyond the parties reasonable control. The following shall be regarded as issues beyond the Parties reasonable control. ii) For the purposes of this Clause, an Event of Force Majeure shall mean events of war, war like conditions, blockades, embargoes, insurrection, Governmental directions, riots, strikes, acts of terrorism, civil commotion, lock-outs, sabotage, plagues or other epidemics, acts of God including fire, floods, volcanic eruptions, typhoons, hurricanes, storms, tidal waves, earthquake, landslides, lightning, explosions and other natural calamities, prolonged failure of energy, court orders / injunctions, charge of laws, action and / or order by statutory and / or government authority, third party actions affecting the development o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Wild Life (Protection) Act. While the petitioner, who is supported by the respondent No.6Chandigarh Administration, asserts that necessary sanction/permission under both the Acts have been refused by orders passed by the competent authorities, the promoters of the project contend to the contrary. The facts, as unfolded before us, indicate that against the refusal of sanction under the Environment (Protection) Act, the respondents have sought a review of the order on the ground that the findings arrived at, which have formed the basis of the refusal, are ex-parte. No order in the review matter has been passed by the competent authority, perhaps, because of the interim order passed in the PIL which has been clarified by the Hon'ble Supreme Court by order dated 31.1.2012 permitting the concerned authority under the different statutes governing the matter to exercise their respective jurisdictions in accordance with law. Insofar as the Wild Life (Protection) Act is concerned, it appears that the rejection has been made by the Chief Wild Life Warden who, the respondents claim, is merely a recommending authority and is required to forward his recommendation to the Central Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot acquire a placid approach indicating an eloquent acquiescence to the violation of the 1995 Act, Periphery Control Act and the Periphery Policy. 26. We thus conclude on the aforesaid note by holding and observing that the provisions of the Periphery Control Act and the 1995 Act are complementary to each other and the provisions of the two statutes would apply to the housing project in question. The respondents, therefore, will have to comply with all the requirements spelt out by both the aforesaid statutes. As the requirement of clearances under the Wild Life (Protection) Act and Environment (Protection) Act is not a contentious issue, and as we have already held that the process of grant of such clearances is pending before the appropriate authorities under the respective Acts, the same will now have to be brought to its logical conclusion keeping in mind our observations and directions contained hereinabove. 83 The combined reading of the above paras in the order of Hon'ble High Court clearly shows that Developer THDC/ HASH i.e. transferee have made their sincere efforts for obtaining the necessary permissions / sanctions which were required under the JDA. However, som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months from the date of approval of plans / designs drawing etc. leading to grant of final licenses which can lead to commencement of construction, whichever is later. The matter was taken up by way of PIL by certain citizens and Administration of the Union Territory before the Hon'ble High Court which initially stayed the sanction of such plan etc. This led to situation where construction could not be commenced and hence payment was not required to be made in view of the pending litigation. The clauses of force majeure came into operation and therefore, it cannot be said that the developer is not willing to perform its part of the contract. In any case there is no default on the part of the developer as payment was not yet due as per clause 4(i)(iv) of JDA. 86 This position was informed to the Society by letter dated 4.2.2011 by HASH Builder, copy of which has been filed at pages 23 & 24 of the paper book dealing with the additional evidence. Through this letter it has been clearly stated that since permission is pending from the Ministry of Environment and Forest Department and therefore constructions could not commence. These permissions were pending because of the PIL fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause it is settled position of law that no notional income can be taxed. Though there is no quarrel that it is a settled principle of law that notional income can not be taxed but in case of capital gain, Section 45 which is charging Section and Section 48 which is computation section, makes it absolutely clear that rigor of tax in case of capital gain would come into play on the transfer of capital asset and total consideration which is arising on such transfer, has to be taxed. Section 48 clearly talks about full consideration received or accruing as result of transfer. This aspect we have already discussed in detail at paras 64 to 68. 90 Second aspect of this contention was that if consideration which has not been received was to be taxed then the assessee would be deprived for claiming exemption u/s 54 and 54EC. As observed above as per Section 45 r.w.s 48 whole of the consideration, received or accrued has to be taxed. Every person is supposed to know the law and if the transaction is structured in such a way for the transfer of capital asset that some of the consideration would be received later then such person is supposed to know the consequences of the denial of such ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch would show that concept of notional income can not be extended if specific provision is available in the Act. For example in case of income from house property, the income has to be determined as per section 23. Section 22 of the Income Tax Act provides that it is the annual value of the property which can be taxed under the head "income from house property". Sector 23 prescribes the method for determining the annual value. Section 23(1)(a) reads as under:- 23. (1) For the purposes of section 22, the annual value of any property shall be deemed to be - (a) the sum for which the property might reasonably be expected to let from year to year; or (b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or.......... 92 On this aspect the settled position of the law is that the annual value has to be determined even if the property is not let out. This position has been discussed by the Ld. author Chaturvedi & Pithisaria's in Commentary of Income Tax Law (fifth edition) Volume 1 in this respect at pages 1275 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy 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 of the Mat provisions, tax has to be charged on book profits. Similarly in the case of presumptive tax provisions e.g. u/s 44AD if a person is civil contractor and does not maintain books of account and his turnover is less than Rs. 60 lakhs then the profit would be presumed to be 8% of turnover even if he has suffered a loss. Another example of Section 2(22)(e) can be taken. Under this provision a loan or advance given by certain companies to a substantial share holder is to be treated as deemed dividend. Such loan under the normal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brand name at its discretion to develop the Property into the Premises as per applicable building bye-laws of the Competent Authority and the Owner shall have no objection to the same in whatsoever manner. In consideration of the Owner granting and assigning, its Development Rights in the Property, irrevocably and in perpetuity, to THDC to develop the Property and for transfer of the Property upon the surrender of allotment rights of 500 sq. yards and/or 1000 sq. yards (as the case may be) by its members to the Owner, vide resolution dated 04.01.2007 and 25.02.2007 (copy attached as per Annexure I & II), HASH is committed to pay to the Owner and / or the respective members of the Owner (as the case may be) a total amount of Rs. 106,42,50,000/- (Rupees One Hundred Six Crores Forty Two Lacs Fifty Thousands Only) calculated @ Rs. 82,50,000/- (Rupees Eighty Two Lacs Fifty Thousands Only) payable to 65 members having plot of 500 sq. yards each, Rs. 1,65,00,000/- (Rupees One Crore Sixty Five Lacs Only) payable to 30 members having plot of 1000 sq. yards each and Rs. 3,30,00,000/- (Rupees Three Crores Thirty Lacs Only) payable to the Owner for the 4 plots of 500 sq. yards each, which sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Allottees within thirty(30) months form the date of issuance of the Allotment Letter. It is expressly provided that the Payment to be made by HASH to the Owner and/or to the respective members of the Owner (as the case may be) and the Flats to be allotted to the Allottees as set out in this Clause 4.2 shall hereinafter be collectively referred to as the 'Entire Consideration' 98 From this clause it becomes absolutely clear that each Member having 500 sqyd of plot was entitled to receive one furnished flat measuring 2250sqft and Members having 1000sqyd flat were entitled to receive two furnished flats. Thus upon execution of the JDA vested right came to such Members to receive such flats. Once this vested right arises out of the above contract it can easily be said that this right has also accrued to the assessee. Clause 4.2 makes it absolutely clear that developer i.e. THDC/HASH was to allot the letters of allotment within 45 days from final sanction from the competent authority and such flats were part of entire consideration. Merely because such allotment letter has not been given because of sanctions / permissions could not be obtained because of Public Interest Litigati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 2(47)(v) and total consideration has to be charged in the year of transfer. The Tribunal after considering the provisions of section 45 & 48 posed a question to itself that what should be the consideration in the case before the Bench. The case law relied on by the Department was rejected because same was relevant to accrual of interest. The Bench followed the decision of Kalptaru Construction Oversees Pvt Ltd. 13 SOT 194. In that case the assessee had agreed to sell to its subsidiary equity shares for a consideration of Rs. 1.25 crores which was finally settled at Rs. 1.00 crore and the Tribunal held that the consideration of Rs. 1.00 crore has to be accepted. 102. From the above decision it is not clear whether in case of Kalaptaru Construction Oversees Pvt Ltd. (supra) which has been followed in above case, was concerning capital gain or not? Secondly it is not clear that whether the amended consideration i.e. settlement for Rs. 1.00 crore was made in the same year or not? As observed earlier while discussing the issue of notional income that provisions of section 45 r.w.s. 48, are absolutely clear and there is no ambiguity that once a capital asset is transferred then whole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecial Power of Attorney granting its complete Development Rights in the Property in favour of THDC interalia including the right to raise finance by mortgaging the property and register the charge with the Competent Authority and execute registered sale deeds) as set out in Clause 4.1 (ii), (iii), (iv) and (v) and the Owner confirms, undertakes, declares and binds itself not to revoke the same for any reason whatsoever out of its own will and discretion without obtaining a specific prior written consent of THDC or any of its duly constituted attorneys." 104 The above clearly shows that this Power of Attorney could not be revoked for any reason without obtaining specific prior written consent of THDC/HASH. No document showing the consent of THDC for revocation of this irrevocable Power of Attorney has been produced before us. We fail to understand that in the absence of such document how the assessee can claim that this Power of Attorney has been revoked. As discussed earlier while considering the legal position, we would again recall the words of Hon'ble Authority for Advance Ruling in case of Jasbir Singh Sarkaria (supra) wherein at para 33 of the decision while discussing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, but he is obliged to file the return showing the entire capital gain based on the full sale price whether or not received during the year of deemed transfer. In such an eventuality, hardship may be caused to the owner who would have paid full tax. No doubt, such a situation could be avoided if the contention of the applicant is accepted. On deep consideration, however, we find that the construction of the relevant provision should not be controlled by giving undue importance to such hypothetical situations. Normally, the owner executes a Power of Attorney or does similar act to left the transferee take possession only after t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that either the JDA has not been cancelled or in any case the same cannot be considered for determining the taxation of capital gain. Accordingly this contention is rejected. 108 The next contention of the assessee is that even if the whole consideration has to be taxed then value of the flats cannot be taken at Rs. 4,500/- per sq. feet. It is also pointed out that in view of the agreement between the HASH & THDC consideration has been shown at Rs. 2,000/- per sq. feet for 126 flats whereas it is Rs. 4,500/- per sq. feet for three flats. We find no force in these submissions. The assessee has filed along with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 case was received or to be received later by the society in cash. Considering the present market value of the flats in and around Chandigarh area which is Rs. 4,000/- to 12,000/- per square feet we are of the opinion that value of the flat at Rs. 4,500/- per square feet is absolutely fair. In any case M/s HASH has agreed to purchase the flats at this rate from M/s THDC. It may be noted as pointed out by the ld. DR for the revenue some of the News report clippings filed by various assessees clearly shows that flats were booked in the "Tata Camleot" (this was the name which was given to the Project which was to be developed on the land of two soc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 500sqyd plot was to receive a sum of Rs. 82,50,000/- and one fully furnished flat measuring 2250 sqft and the Members holding 1000sqyd plot were to receive monetary consideration of Rs. 1.65 crores plus two flats measuring 2250 sqft. In fact the payment of cheques is made by Hash by issuing cheques in the name of individual Member and not the Society. This fact stands admitted because assessee has filed a return declaring capital gain against part money received against his plot. Thus it becomes clear that it is the individual member who are liable to tax in respect of transfer to plots and the Society being only a facilitator or Post office. Some more details have been discussed in this respect while adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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