Appeal Details
Counselvise Citation
[2014] 140 COUNSELVISE.COM (IT) 77161 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
09-07-2014
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Assessment Year
2008-2009
Appeal Filed On
09-04-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 375/CHD/2014 ASSESSMENT YEARS : 2008-09 VANDEEP SINGH SHERGIL V A.C.I.T. CIRCLE, SANGRUR S/O SHRI BALBIR SINGH VPO DANGARH BARNALA AGXPS 4917 M (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: SHRI MMANJIT SINGH DATE OF HEARING 25.6.2014 DATE OF PRONOUNCEMENT 9.7.2014 O R D E R PER T.R. SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 28. 2.2014 OF THE LD CIT(A), PATIALA. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS: 1 THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ASSUMING THE JURISDICTION U/S 148 AND CONSEQUENTLY ISSUING NOTICE U/S 148 OF THE ACT. 2 THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE A DDITION MADE BY EH ASSESSING OFFICER IN THE HANDS OF ASSESSEE, WHER EAS ASSESSEE IS A MEMBER OF SOCIETY (AOP) AND CAPITAL GAIN, IF ARISES , SHOULD BE ASSESSED IN THE HANDS OF SOCIETY (AOP). 3 NOTWITHSTANDING THE ABOVE GROUND OF APPEAL ,THE L D. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN MAKING THE ADDITION OF RS. 90,92,604/- UNDER THE HEAD LONG TER M CAPITAL GAINS BY IGNORING THE FACT THAT ONLY A SUM OF RS. 16,00,000/ - WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION. 4 THE LD. CIT(A) HAS ERRED IN HOLDING THAT THERE WA S TRANSFER OF PROPERTY DURING THE YEAR UNDER CONSIDERATION. 5 THAT THE LD. CIT(A) HAS ERRED IN APPLYING THE PRO VISIONS OF SECTION 2(47)(II), 2(47)(V) & 2(47)(VI) OF THE ACT . 6 NOTWITHSTANDING THE ABOVE GROUND OF APPEAL THE LD . CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFI CER IN ESTIMATING THE VALUE OF FLAT. 3 GROUND NO. 1 - AFTER HEARING BOTH THE PARTIES WE FIND THAT THE ASSESSEE HAS FILED RETURN OF INCOME DECLARING I NCOME OF 2 RS. 328186/-. LATER ON RETURN WAS REVISED DECLARIN G TOTAL INCOME OF RS. 1845790/- INCLUDING INCOME FROM LONG TERM CAPITAL GAINS AMOUNTING TO RS. 1517604/-. THE RETUR NS WERE PROCESSED U/S 143(1) OF THE ACT. THEREAFTER NOTICE WAS ISSUED U/S 148 AND REASSESSMENT HAS BEEN FRAMED. 4 ON APPEAL ACTION OF THE ASSESSING OFFICER WAS CON FIRMED BY THE LD. CIT(A). 5 BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE FAIRL Y CONCEDED THAT THE ISSUE IS COVERED AGAINST THE ASSE SSEE BY THE DECISION OF THE TRIBUNAL IN CASE OF CHARANJIT SINGH ATWAL & OTHERS V ITO IN ITAS NO. 448/CHD/2011 AND OTHERS. 6 ON THE OTHER HAND, THE LD. D.R. FOR THE REVENUE SUPPORTED THE ORDER OF THE LD. CIT(A). 7 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND T HAT IN CASE OF CHARANJIT SINGH ATWAL & OTHERS V ITO (SUPR A) IT WAS HELD THAT SINCE THE REVENUE HAS GOT INFORMATION WHI LE INVESTIGATING AFFAIRS OF THE GROUP HOUSING SOCIETIE S THAT PUNJABI COOPERATIVE HOUSING BUILDING SOCIETY LTD AND DEFENC E SERVICES COOPERATIVE HOUSE BUILDING SOCIETY LTD. HA D ENTERED INTO A TRIPARTITE JOINT DEVELOPMENT AGREEMENT WITH HASH BUILDLERS PVT LTD (IN SHORT HASH) AND TATA HOUSING DEVELOPMENT CO LTD. (IN SHORT THDC). THROUGH THIS AGREEMENT MEMBERS OF THE SOCIETY HAD CONSENTED THAT THE SOCIE TIES CAN ENTER INTO A DEVELOPMENT AGREEMENT WITH THE DEVELOP ER AND POSSESSION OF LAND CAN BE GIVEN FOR DEVELOPMENT PUR POSES. SINCE THE ASSESSEE HAD NOT DISCLOSED FULL CAPITAL G AIN, THEREFORE NOTICE U/S 148 WAS VALIDLY ISSUED. THERE FORE FOLLOWING THIS DECISION WE UPHOLD THE REOPENING OF THE ASSESSMENT PARTICULARLY IN VIEW OF THE DECISION OF HON'BLE 3 SUPREME COURT IN CASE OF ACIT V RAJESH JHAVERI STOC K BROKERS P. LTD, 291 ITR 500 (S.C). 8 GROUND NO. 2 THE LD. COUNSEL FOR THE ASSESSEE F AIRLY ADMITTED THAT THIS ISSUE IS ALSO COVERED AGAINST TH E ASSESSEE BY THE SAME ORDER. 9 ON THE OTHER HAND, THE LD. D.R FOR THE REVENUE SU PPORTED THE ORDER OF THE LD. CIT(A). 10 AFTER HEARING BOTH THE PARTIES WE FIND THAT THIS ISSUE ALSO CAME UP FOR CONSIDERATION OF THE TRIBUNAL IN CASE O F CHARANJIT SINGH ATWAL & OTHERS V ITO (SUPRA) AND THE SAME WAS DECIDED VIDE PARA 113 WHICH IS AS UNDER: WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AND FIND THAT THE SOCIETY WAS FORMED BY VARIOUS MEMBERS FOR THE PURPOSE OF PURCHA SE 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 SIZE S OF 500SQYD AND 1000SQYD WERE ALLOTTED TO VARIOUS MEMBERS. WHEN THE PROPOSA L FOR DEVELOPMENT OF PROPERTY CAME IT WAS RESOLVED IN THE GENERAL BODY M EETING 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 T HAT THE SOCIETY HAS ENTERED INTO JDA ON BEHALF OF THE MEMBERS. IT IS THE MEMBE RS WHO ARE OWNING THE PLOTS AND THE SOCIETY WAS ONLY A FACILITATOR. IT B ECOMES 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 CHEQUE S IS MADE BY HASH BY ISSUING CHEQUES IN THE NAME OF INDIVIDUAL MEMBER AN D NOT THE SOCIETY. THIS FACT STANDS ADMITTED BECAUSE ASSESSEE HAS FILED A R ETURN 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 I N RESPECT OF TRANSFER TO PLOTS AND THE SOCIETY BEING ONLY A FACILITATOR OR POST OF FICE. SOME MORE DETAILS HAVE BEEN DISCUSSED IN THIS RESPECT WHILE ADJUDICATING T HE APPEAL OF PUNJABI COOP HOUSE BUILDING SOCIETY LTD. IN ITA NO. 310/CHD/2012 AND 556/CHD/2012 WHICH HAVE BEEN ADJUDICATED LITTLE LATER IN THIS ORDER IT SELF. ACCORDINGLY WE FIND NO FORCE IN THE SUBMISSIONS AND THIS GROUND IS REJECTE D. 11 GROUNDS NO. 3 TO 6 AFTER HEARING BOTH THE PART IES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE AO NOTI CED THAT THE ASSESSEE IS A MEMBER OF DEFENCE SERVICES COOPER ATIVE HOUSING BUILDING SOCIETY AND WAS OWNER OF 250 SQYD OF PLOT. THE SOCIETY IN ITS GENERAL MEETING HAD PASSED THE R ESOLUTION TO ENTER INTO A DEVELOPMENT AGREEMENT WITH HASH/THDC. IT WAS ALSO AGREED TO HAND OVER THE POSSESSION OF LAND FOR THE PURPOSE OF DEVELOPMENT. IN CONSIDERATION THE ASSES SEE WAS TO RECEIVE A SUM OF RS. 40 LAKHS AND ALSO A FULLY FURN ISHED FLAT OF 4 1150 SQFT TO BE CONSTRUCTED BY THE DEVELOPER. THE ASSESSING OFFICER AFTER DETAILED DISCUSSION HELD THAT TOTAL C ONSIDERATION AMOUNTING TO RS. 40 LAKHS + COST OF CONSTRUCTION OF THE FLAT @ RS. 4500 PER SQFT TOTALING TO RS. 9175000/- WAS TO BE CHARGED TO CAPITAL GAIN. THEREFORE AFTER REDUCING COST OF A CQUISITION OF RS. 82396/- THE CAPITAL GAIN DETERMINED WAS LONG TE RM CAPITAL GAINS OF RS. 9092604/-. 12 ON APPEAL THE ACTION OF THE ASSESSING OFFICER WA S CONFIRMED BY THE LD. CIT(A). 13 BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE FAIR LY CONCEDED THAT ISSUES RAISED IN THESE GROUNDS ARE CO VERED AGAINST THE ASSESSEE BY THE DECISION OF THE TRIBUNA L IN CASE OF CHARANJIT SINGH ATWAL & OTHERS V ITO (SUPRA). 14 ON THE OTHER HAND, THE LD. D.R FOR THE REVENUE STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 15 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THESE ISSUES HAVE BEEN ADJUDICATED BY THE TRIBUNAL IN CAS E OF CHARANJIT SINGH ATWAL & OTHERS V ITO (SUPRA) VIDE P ARAS NO. 27 TO 110 WHICH ARE AS UNDER: 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND C AREFULLY GONE THROUGH THE WRITTEN SUBMISSIONS FILED BY BOTH THE PARTIES I N THE LIGHT OF MATERIAL ON RECORD, PAPER BOOKS AND VARIOUS JUDGMENTS CITED BY THE PART IES. THE MAIN ISSUE IS WHETHER ASSESSEE IS LIABLE TO CAPITAL GAIN TAX IN T HE YEAR UNDER CONSIDERATION I.E ASSESSMENT YEAR 2007-08 IN VIEW OF THE JDA. FOR CH ARGING CAPITAL GAINS, THE CHARGING SECTION IS 45 AND THE RELEVANT PORTION IS AS UNDER:- SECTION 45. [(1)] ANY PROFITS OR GAINS ARISING FRO M THE TRANSFER OF A CAPITAL ASSET EFFECTED IN THE P REVIOUS YEAR SHALL, SAVE AS OTHERWISE PROVIDED IN SECTIONS [54, 54B, [ [54D, [54E, [54EA, 54EB,] 54F [ 54G AN D 54H], BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD C APITAL GAINS, AND SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLA CE. 28 THE PLAIN READING OF THE ABOVE PROVISION WOULD S HOW THAT CHARGING AN ITEM OF INCOME UNDER THE HEAD CAPITAL GAINS REQUIRE THREE INGREDIENTS I.E. (I) THERE SHOULD BE SOME PROFIT. (II) SUCH PROFIT MUST BE AR ISING ON ACCOUNT OF TRANSFER AND (III) THERE SHOULD BE CAPITAL ASSET WHICH HAS BEEN TRANSFERRED. THERE IS NO DISPUTE THAT A CAPITAL ASSET WAS INVOLVED AND THERE WAS SOME PROFIT ALSO I.E. WHY ASSESSEE HAS HIMSELF RETURNED INCOME UNDER THE HEAD CAPITAL GAINS;. THE DISPUTE IS MAINLY ON ACCOUNT OF TRANSFER AND THAT TOO WHETH ER THE TRANSFER COULD BE COVERED UNDER CLAUSES (II), (V) & (VI) OF SECTION 2 (47) SO AS TO BRING INTO PICTURE THE WHOLE OF CONSIDERATION ARISING ON TRANSFER OF S UCH ASSETS. WE SHALL DEAL WITH EACH OF THE ASPECT IN DETAIL AT APPROPRIATE TIME. 5 29. APART FROM CHARGING PROVISIONS U/S 45 ANOTHER I MPORTANT PROVISION IS SECTION 48 WHICH DEALS WITH THE MODE OF COMPUTATION AND REL EVANT PORTION READS AS UNDER:- 48. THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED, BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RES ULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOW ING AMOUNTS, NAMELY : (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVEL Y 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 COUPO N BOND; OR] [(V) ANY TRANSACTION INVOLVING THE ALLOWING OF T HE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE N ATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) ; OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT O F TRANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY. EXPLANATION.FOR THE PURPOSES OF SUB-CLAUSES (V) AND (VI), IMMOVABLE PROPERTY SHALL HAVE THE SAME MEANING AS IN CLAUSE (D) OF SECTION 269UA ;] CLAUSES (V) & (VI) TO SECTION 2(47) OF THE ACT HAVE BEEN INSERTED BY FINANCE ACT, 1987 W.E.F. 1.4.1988. THE PURPOSE OF THIS INS ERTION HAS BEEN EXPLAINED BY CBDT IN CIRCULAR NO. 495 DATED 22.9.1987. THE R ELEVANT PART 11.1 AND 11.2 OF THE CIRCULAR READS AS UNDER:- 11.1 THE EXISTING DEFINITION OF THE WORD ' TRANSF ER ' IN SECTION 2(47) DOES NOT INCLUDE TRANSFER OF CERTAIN RIGHTS ACCRUING TO A PU RCHASER, BY WAY OF BECOMING A MEMBER OR ACQUIRING SHARES IN A CO-OPERATIVE SOCIET Y, COMPANY, OR AS WAY OF ANY AGREEMENT OR ANY ARRANGEMENT WHEREBY SUCH ANY BUILD ING WHICH IS EITHER BEING CONSTRUCTED OR WHICH IS TO BE CONSTRUCTED. TRANSAC TIONS OF THE NATURE REFERRED TO ABOVE ARE NOT REQUIRED TO BE REGISTERED UNDER THE R EGISTRATION ACT, 1908. SUCH ARRANGEMENTS CONFER THE PRIVILEGES OF OWNERSHIP WIT HOUT TRANSFER OF TITLE IN THE BUILDING AND ARE A COMMON MODE OF ACQUIRING FLATS P ARTICULARLY IN MULTI-STOREYED CONSTRUCTIONS IN BIG CITES. THE DEFINITION ALSO DOE S NOT COVER CASES WHERE POSSESSION IS ALLOWED TO BE TAKEN OR RETAINED IN PA RT PERFORMANCE OF A CONTRACT, OF THE NATURE REFERRED TO IN SECTION 53A OF TRANSFE R OF PROPERTY ACT, 1882. NEW SUB-CLAUSES (V) & (VI) HAVE BEEN INSERTED IN SECTIO N2(47) TO PREVENT AVOIDANCE OF CAPITAL GAINS LIABILITY BY RECOURSE TO TRANSFER OF RIGHTS IN THE MANNER REFERRED TO ABOVE. 11.2 THE NEWLY INSERTED SUB-CLAUSE (VI) OF SECTION 2(47) HAS BROUGHT IN TO THE AMBIT OF TRANSFER, THE PRACTICE OF ENJOYMENT OF PR OPERTY RIGHTS THROUGH WHAT IS COMMONLY KNOWN AS POWER OF ATTORNEY ARRANGEMENTS. T HE 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 I N SUCH CASES CONTINUES TO BE WITH THE TRANSFEROR. 32 BEFORE INSERTION OF THE CLAUSE (V) & (VI) TO SE CTION 2(47) OF THE ACT, THE POSITION OF LAW WAS THAT UNLESS AND UNTIL A SALE DE ED WAS EXECUTED FOR TRANSFER OF IMMOVABLE PROPERTY, THE SAME COULD NOT BE CONSTR UED AS TRANSFER FOR THE PURPOSE OF CHARGING CAPITAL GAIN TAX. THIS WAS PAR TICULARLY 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). I N THIS CASE IT WAS HELD THAT IN THE CONTEXT OF TRANSFER FOR THE PURPOSE OF CAPIT AL GAIN TAX, WHAT IS MEANT BY 6 TRANSFER IS THE EFFECTIVE CONVEYANCE OF THE CAPITAL ASSET BY A TRANSFEROR TO THE TRANSFEREE. DELIVERY OF POSSESSION AND AGREEMENT T O SELL BY ITSELF COULD NOT CONSTITUTE CONVEYANCE OF THE IMMOVABLE PROPERTY. I N THE MEANTIME APART FROM THIS DECISION A PRACTICE CAME INTO VOGUE BY WHICH C ERTAIN PROPERTIES WERE BEING TRANSFERRED WITHOUT EXECUTING THE PROPER SALE DEEDS. THIS WAS BEING DONE BECAUSE THERE WAS RESTRICTION ON SALE OF PROPE RTIES IN VARIOUS TOWNS E.G. IN CASE OF LEASE HOLD PLOTS AND FLATS IN DELHI IF T HE SAME WERE TO BE TRANSFERRED, PERMISSION WAS REQUIRED TO BE TAKEN FR OM THE GOVERNMENT / DDA AND TRANSFEROR WAS REQUIRED TO PAY 50% OF THE MARKE T VALUE COST (I.E. UNEARNED INCREASE) TO THE GOVERNMENT. TO AVOID SUCH PAYMENTS AND / OR ALSO TO AVOID THE PAYMENT OF STAMP DUTY OR CUMBERSOME PR OCEDURE OF OBTAINING PERMISSION, SOME PROPERTIES WERE BEING SOLD BY WAY OF SALE AGREEMENT AND ALSO EXECUTION OF GENERAL POWER OF ATTORNEY AND POS SESSION WAS GIVEN ON RECEIPT OF FULL CONSIDERATION WITHOUT EXECUTING THE PROPER SALE DEEDS ETC. WHICH AS MENTIONED EARLIER WAS NOT EVEN PERMISSIBLE IN SOME CASES. THESE TRANSACTIONS ARE POPULARLY CALLED POWER OF ATTORNE Y TRANSACTIONS. TO AVOID THESE AND TO STOP THE LEAKAGE OF REVENUE, THE PARLI AMENT HAS INSERTED CLAUSES (V) & (VI) TO SECTION 2(47) SO AS SUCH TYPE OF TRAN SACTIONS ARE ALSO BE BROUGHT IN TO TAXATION NET. HOWEVER, INTERPRETATIONS OF TH ESE CLAUSES HAS LED TO LOT OF LITIGATION AND THE MAIN POINT OF LITIGATION WAS TH AT AT WHAT POINT OF TIME THE POSSESSION CAN BE SAID TO HAVE BEEN GIVEN. IN THE P RESENT CASE, THE REVENUE HAS MAINLY RELIED ON TWO DECISIONS NAMELY (I) CHAT URBHUJ DWARKADAS KAPADIA V CIT 260 ITR 491 (BOM.) AND; (II) AUTHORITY FOR AD VANCE RULING (AAR) NEW DELHI IN THE CASE OF JASBIR SINGH SARKARIA 294 ITR 196. 33. IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V C IT (SUPRA), THE FACTS BEFORE THE HON'BLE BOMBAY HIGH COURT WERE THAT ASSE SSEE WHO WAS AN INDIVIDUAL HAD 44/192 UNDIVIDED SHARE IN AN IMMOV ABLE PROPERTY IN GREATER BOMBAY WHICH CONSISTED OF VARIOUS LANDS AND BUILDIN GS. BY AGREEMENT DATED AUGUST 18, 1994, THE ASSESSEE AGREED TO SELL TO FLO REAT INVESTMENT LTD, (HEREIN REFERRED TO FLOREAT) HIS SHARE OF IMMOVAB LE PROPERTY FOR A TOTAL CONSIDERATION OF RS. 1,85,63,220/- WITH RIGHT TO S AID FLOREAT TO DEVELOP THE PROPERTY IN ACCORDANCE WITH THE RULES / REGULATION S FRAMED BY LOCAL AUTHORITIES. FOR THIS PURPOSE, THE ASSESSEE ALSO A GREED TO EXECUTE A LIMITED POWER OF ATTORNEY AUTHORIZING FLOREAT TO DEAL WITH THE PROPERTY AND ALSO OBTAIN PERMISSIONS AND APPROVALS FROM VARIOUS AUTHORITIES. UNDER CLAUSE 11 OF THE AGREEMENT, IT WAS PROVIDED THAT AFTER FLOREAT WAS G IVEN AN IRREVOCABLE LICENSE TO ENTER UPON THE ASSESSEES SHARE OF PROPERTY AND AFTER FLORET INVESTMENT HAVE OBTAINED ALL NECESSARY APPROVALS, THE FLORET W AS ENTITLED TO DEMOLISH VARIOUS BUILDINGS FOR SETTLING THE CLAIMS OF THE TE NANTS. UNDER CLAUSE 14 OF THE AGREEMENT, THE ASSESSEE WAS ENTITLED TO RECEIVE PRO PORTIONATE RENT TILL THE PAYMENT OF LAST INSTALLMENTS AND TILL THAT TIME ASS ESSEE WAS BOUND TO PAY ALL OUTGOINGS. UNDER CLAUSE 20 OF THE AGREEMENT, IT W AS AGREED THAT SALE SHALL BE COMPLETED BY EXECUTION OF CONVEYANCE, HOWEVER, T ILL THE MATTER WAS ADJUDICATED BY THE HON'BLE HIGH COURT, NO CONVEYANC E WAS EXECUTED. PURSUANT TO THIS AGREEMENT, FLOREAT OBTAINED VARIOU S PERMISSIONS NAMELY (I) CLEARANCE FROM CRZ AUTHORITY DATED FEBRUARY 7, 1996 ; (II) LETTER FROM ULC FOR REDEVELOPMENT OF PROPERTY DATED APRIL 26, 1995. OT HER PERMISSIONS WERE ALSO OBTAINED DURING THE FINANCIAL YEAR ENDING MARCH 31, 1996 RELEVANT TO ASSESSMENT YEAR 1996-97. BY MARCH, 31, 1996, FLORE AT 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 EX ECUTED ON MARCH 12, 1999. THE QUESTION AROSE WHETHER LIABILITY OF THE ASSESSEE FOR CAPITAL GAIN AROSE IN THE ASSESSMENT YEAR 1996-97 OR 1999-2000. THE OBSERVATION OF THE COURT HAS BEEN SUMMARIZED IN HEAD NOTE AS UNDER:- CLAUSES (V) AND (VI) WERE INTRODUCED IN SECTION 2( 47) OF THE INCOME-TAX ACT, 1961, WITH EFFECT FROM APRIL 1, 1988. THEY PRO VIDE THAT TRANSFER INCLUDES (I) ANY TRANSACTION WHICH ALLOWS POSSESSIO N TO BE TAKEN/RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REF ERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882, AND (II) ANY TRANSACTION ENTERED INTO IN ANY MANNER WHICH HAS THE EFFECT OF TRANSFER RING OR ENABLING THE ENJOYMENT OF ANY IMMOVABLE PROPERTY. 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. UNDER SECTION 2(47)(V) ANY TRANSACTION INVOLVING ALLOWING OF POSSESSION TO BE TAKEN OVER OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REF ERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT WOULD COME WITHIN T HE AMBIT OF SECTION 2(47)(V). IN ORDER TO ATTRACT SECTION 53A, THE FOLL OWING CONDITIONS NEED TO BE FULFILLED. THERE SHOULD BE A CONTRACT FOR CONSID ERATION ; IT SHOULD BE IN WRITING ; IT SHOULD BE SIGNED BY THE TRANSFEROR ; I T SHOULD PERTAIN TO TRANSFER OF IMMOVABLE PROPERTY ; THE TRANSFEREE SHO ULD HAVE TAKEN POSSESSION OF THE PROPERTY ; LASTLY, THE TRANSFEREE SHOULD BE READY AND WILLING TO PERFORM HIS PART OF THE CONTRACT. EVEN A RRANGEMENTS CONFIRMING PRIVILEGES OF OWNERSHIP WITHOUT TRANSFER OF TITLE C OULD FALL UNDER SECTION 2(47)(V). SECTION 2(47)(V) WAS INTRODUCED IN THE AC T FROM THE ASSESSMENT YEAR 1988-89 BECAUSE PRIOR THERETO, IN MOST CASES, IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT NO TRANSFER TOOK PLACE TILL EXECUTION OF THE CONVEYANCE. ASSESSEES USED TO ENTER INTO AGREEMENTS FOR DEVELOPING PROPERTIES WITH BUILDERS AND UNDER THE ARRANGEMENT WITH THE BUILDERS, THEY USED TO CONFER PRIVILEGES OF OWNERSHIP WITHOUT EXECUTING CONVEYANCE 7 AND TO PLUG THAT LOOPHOLE, SECTION 2(47)(V) CAME TO BE INTRODUCED IN THE ACT. . HELD, THAT SECTION 2(47)(V) READ WITH SECTION 45 I NDICATES THAT CAPITAL GAINS WAS TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS WERE ENTERED INTO EVEN IF THE TRANSFER OF IMMOVABLE PROP ERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW. IN THIS CASE, THE T EST HAD NOT BEEN APPLIED BY THE DEPARTMENT. NO REASON HAD BEEN GIVEN WHY THAT TEST HAD NOT BEEN APPLIED, PARTICULARLY WHEN THE AGREEMENT I N 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 TH E DATE OF THE CONTRACT, VIZ., AUGUST 18, 1994, WOULD BE THE RELEVANT DATE T O 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 EF FECT FROM APRIL 1,1988. THEY PROVIDE THAT TRANSFER INCLUDES (I) A NY TRANSACTION WHICH ALLOWS POSSESSION TO BE TAKEN/RETAINED IN PART PERF ORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, AND (I I) ANY TRANSACTION ENTERED INTO IN ANY MANNER WHICH HAS THE EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOVABLE PROPERTY (S EE SECTION 269UA(D)). THEREFORE, IN THESE TWO CASES CAPITAL GA INS WOULD BE TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO, EVEN IF THE TRANSFER OF THE IMMOVABLE PROPERTY IS NOT EFFEC TIVE OR COMPLETE UNDER THE GENERAL LAW (SEE KANGA AND PALKHIVALAS L AW AND PRACTICE OF INCOME-TAX-VIII EDITION, PAGE 766). THIS TEST IS IM PORTANT TO DECIDE THE YEAR OF CHARGEABILITY OF THE CAPITAL GAINS. 35 THE ABOVE OBSERVATIONS WERE MADE ON THE BASIS OF OPINION EXPRESSED BY LD. AUTHOR IN THE COMMENTARY THE LAW AND PRACTICE OF INCOME TAX BY KANGA AND PALKHIVALA EIGHTH EDITION AT PAGE 766. RELEVANT OB SERVATIONS READ AS UNDER: CLS. (V) AND (VI) OF S. 2(47), INSERTED BY THE FIN ANCE ACT 1987 WITH EFFECT FROM 1 ST APRIL 1988, PROVIDE THAT TRANSFER INCLUDES (A) ANY TRAN SACTION WHICH INVOLVES THE ALLOWING OF THE POSSESSION OF AN IMMOVABLE PROPERTY (S. 269UA(D )) TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN S.53A OF THE TRANSFER OF PROPERTY ACT 1882, AND (B) ANY TRANSACTION ENTERED INTO IN A NY MANNER WHICH HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMM OVABLE PROPERTY (S. 269UA(D)). THEREFORE IN THESE TWO CASES CAPITAL GAINS WOULD BE TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO, EVEN IF THE TRANSFER OF THE IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER GENERAL LAW. 36 FROM THE ABOVE, IT IS CLEAR THAT COURT WAS OF TH E VIEW THAT IN CASE ANY TRANSACTION COVERED BY CLAUSE (V) AND (VI) TO SECTI ON 2(47) THE LIABILITY FOR CAPITOL GAIN WOULD ARISE ON THE DATE WHEN SUCH TRAN SACTIONS ARE ENTERED INTO. IN THE JUDGMENT AT SOME OTHER PLACES, THE SIMILAR O BSERVATIONS HAVE BEEN MADE. HOWEVER, DESPITE THIS OBSERVATION THE CASE W AS DECIDED IN FAVOUR OF THE ASSESSEE. THE REASON FOR THE SAME HAVE BEEN G IVEN IN THE JUDGMENT ITSELF. FIRSTLY IT IS OBSERVED THAT PROVISION OF SECTION 2( 47)(V) OF THE ACT WERE NOT INVOKED BY THE REVENUE ITSELF. THIS BECOMES CLEAR FROM THE FO LLOWING PARA: IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT THERE WAS NO EFFECTIVE TRANSFER TILL GRANT OF IRREVOCABLE LICENCE. IN THIS CONNECTION, THE JU DGMENT OF THE HON'BLE SUPREME COURT WERE CITED ON BEHALF OF THE ASSESSEE, BUT ALL THOSE JUDGMENT WERE PRIOR TO INTRODUCTION OF THE CONCEPT OF DEEMED TRANSFER U/S 2(47)(V). IN THIS MATTER, THE AGREEMENT IN QUESTION IS A DEVELOPMENT AGREEMENT. SUCH DEVELOPME NT AGREEMENTS DO NOT CONSTITUTE TRANSFER IN GENERAL LAW. THEY ARE SPREAD OVER A PER IOD OF TIME. THEY CONTEMPLATE VARIOUS STAGES. THE BOMBAY HIGH COURT IN VARIOUS JU DGMENTS 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 B Y COMPLETING THE BUILDING AND SELLING THE FLATS AT A PROFIT. THAT THE AIM OF THESE PROFES SIONAL 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 AG REEMENTS ARE ONLY A MODE OF REMUNERATING THE BUILDER FOR HIS SERVICES OF CONSTR UCTING THE BUILDING (SEE GURUDEV DEVELOPERS V. KURLA KONKAN NIWAS CO-OPERATIVE HOUSI NG SOCIETY [2003] 3 MAH LJ 131). IT IS PRECISELY FOR THIS REASON THAT THE LEGISLATUR E 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 A S A WHOLE, SHOWS THAT IT IS A DEVELOPMENT AGREEMENT. THERE IS A DIFFERENCE BETWEE N THE CONTRACT ON THE ONE HAND AND THE PERFORMANCE ON THE OTHER HAND. IN THIS CASE, THE TRIBUNAL AS WELL AS THE DEPARTMENT HAVE COME TO THE CONCLUSION THAT THE TRANSFER TOOK PLACE DURING THE 8 ACCOUNTING YEAR ENDING MARCH 31,1996, AS SUBSTANTIA L PAYMENTS WERE EFFECTED DURING THAT YEAR AND SUBSTANTIAL PERMISSIONS WERE OBTAINED . IN SUCH CASES OF DEVELOPMENT AGREEMENTS, ONE CANNOT GO BY SUBSTANTIAL PERFORMANC E OF A CONTRACT. IN SUCH CASES, THE YEAR OF CHARGEABILITY IS THE YEAR IN WHICH THE CONTRACT IS EXECUTED. THIS IS IN VIEW OF SECTION 2 (47)(V) OF THE ACT. SECONDLY IT IS MENTIONED IN THE ORDER OF THE COURT THAT LAW WAS NOT VERY CLEAR ON THIS POINT AND SINCE THE ASSESSEE HAS ADMITTED AND PAID CAPITAL GAIN IN THE ASSESSMENT YEAR 1999-2000, THEREFORE, TAX WAS HELD TO BE CHAR GEABLE IN ASSESSMENT YEAR 1999- 2000. THIRDLY CERTAIN SHORTCOMINGS WERE ALSO NOTED IN THE ORDER OF THE TRIBUNAL WHERE CERTAIN DOCUMENTS WERE MENTIONED TO HAVE BEEN EXECU TED BEFORE MARCH 31, 1996 E.G. THE FOLLOWING OBSERVATION OF THE TRIBUNAL WAS NOT FOUND CORRECT AS SOMETHING IS DONE ON IST APRIL, 1997 THEN THE SAME CANNOT FALL IN THE YEAR ENDING 31.3.1996. FROM THE DATES IT IS EVIDENT THAT FROM THE VERY NE XT DAY, I.E., APRIL 1, 1997, FROM THE END OF THE FINANCIAL YEAR ENDING ON MARCH 31, 1996, THE BUILDER WAS USING THE WELL WATER AGAINST PAYMENT OF RELEVANT CH ARGES TO THE ASSESSEE. 37 THUS IT IS VERY CLEAR THAT IN CASES WHERE AN ARR ANGEMENT HAD BEEN ENTERED INTO BY AN ASSESSEE IN TERMS OF CLAUSE (V) OF SECTION 2(47) WHICH HAS EFFECT OF HANDING OVER THE POSSESSION THEN THE TRAN SFER IS SAID TO HAVE BEEN TAKEN PLACE ON THE DATE OF ENTERING INTO SUCH ARRAN GEMENT. 38. WE DO NOT FIND ANY FORCE IN THE CONTENTION OF T HE LD. COUNSEL FOR THE ASSESSEE THAT JUDGMENT HAS TO BE READ IN THE CONTE XT OF THE DECISION MADE IN SUCH JUDGMENT. IN FACT, IT IS WELL SETTLED THAT DO CTRINE OF PRECEDENT WHICH MEANS WHAT NEEDS TO BE FOLLOWED LATER ON PARTICULAR LY BY SUBORDINATE TRIBUNALS AND COURTS IS THE RATIO OF A PARTICULAR JUDGMENT GI VEN BY THE HIGHER COURT OR FORUM. FURTHER, THERE IS NO FORCE IN THE CONTENTIO N THAT DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V CIT (SUPRA) DOES NOT SHOW THAT THE DATE OF AGREEMEN T ITSELF CONSTITUTE THE TRANSFER. AGAIN THERE IS NO FORCE EVEN IN THE CONT ENTION THAT IN THAT CASE IT WAS ULTIMATELY DECIDED THAT CAPITAL GAIN TAXES IS C HARGEABLE IN ASSESSMENT YEAR 1999-2000 BECAUSE OF THE REASONS GIVEN IN ABOV E NOTED PARAS PARTICULARLY BECAUSE THE REVENUE ITSELF NEVER INVOK ED THE PROVISIONS OF SECTION 2(47)(V) OF THE ACT AND HELD IT TO BE TAXABLE IN AS SESSMENT YEAR 1996-97. NO DOUBT IN THAT CASE ULTIMATELY IT WAS HELD THAT CAPI TAL GAIN WAS IN ASSESSMENT YEAR 1999-2000 BUT COURT HAD MADE IT VERY CLEAR THA T 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 VIE W BECAUSE OF THESE REASONS AND HELD THAT CAPITAL GAIN WAS TAXABLE IN ASSESSMEN T YEAR 1999-2000. IT IS QUITE CLEAR THAT RATIO OF THE ABOVE DECISION IS THA T IN CASE OF ANY ARRANGEMENTS OR TRANSACTIONS WHEREBY THE OTHER PART Y BECOMES ENTITLED TO ENJOY THE PROPERTY THEN THAT DATE OF SUCH TRANSACTI ON ITSELF NEEDS TO BE CONSTRUED AS THE DATE OF TRANSFER. 39. THE SECOND RELEVANT DECISION CITED BY THE REVEN UE IS BY AUTHORITY FOR ADVANCE RULING (AAR) NEW DELHI IN THE CASE OF JASBI R SINGH SARKARIA (SUPRA) . IN THAT CASE THE ASSESSEE WAS CO-OWNER OF AGRICULTU RAL LAND MEASURING ABOUT 27.7 ACRES AND HIS SHARE WAS 4/9. THE CO-OWNER DEC IDED TO DEVELOP THE LAND BY CONSTRUCTING RESIDENTIAL COMPLEX THROUGH DEVELOP ER AND ENTERED INTO A COLLABORATION AGREEMENT ON 8.6.2005 WITH M/S SANTUR DEVELOPER PVT LTD, NEW DELHI (HEREIN AFTER CALLED DEVELOPER). ACCORDING TO THE TERMS OF AGREEMENT, THE DEVELOPER SHOULD OBTAIN A LETTER OF INTENT FROM THE CONCERNED GOVERNMENT DEPARTMENT AND OBTAIN OTHER PERMISSIONS AND SANCTIO NS FOR DEVELOPING THE LAND AT ITS OWN RISK AND COST. THE DEVELOPER WAS TO TAK E 84% OF THE BUILT UP AREA AND BALANCE 16% WOULD BELONG TO ASSESSEE AND OTHER CO-OWNER. THE CONSIDERATION FOR THE AGREEMENT WAS TAKEN AS THE BU ILT UP AREA TO BE HANDED OVER TO THE OWNERS FREE OF COST. THE OWNERS WERE E NTITLED TO VISIT THE SITE IN ORDER TO REVIEW THE PROGRESS OF THE PROJECT. IT WA S CLARIFIED BY CLAUSE 18 THAT OWNERSHIP WOULD REMAIN EXCLUSIVELY WITH THE OWNERS TILL IT VESTS WITH BOTH THE PARTIES AS PER THEIR RESPECTIVE SHARES ON THE COMPL ETION OF THE PROJECT. THE OTHER CLAUSES AND THE STEPS IN THE AGREEMENT WERE T HAT A SUM OF RS. 1 CRORE TOWARDS PAYMENT OF EARNEST MONEY AT THE TIME OF ENT ERING INTO AGREEMENT; A SPECIAL POWER OF ATTORNEY WAS TO BE EXECUTED IN FAV OUR OF THE DEVELOPER TO ENABLE TO DEAL WITH THE STATUTORY AUTHORITIES ETC. FOR OBTAINING NECESSARY APPROVALS / SANCTIONS; LETTER OF INTENT WAS TO BE OBTAINED NOT LATER THAN MARCH 8, 2006 AND IN CASE OF A FAILURE TO DO SO, TH E AGREEMENT SHALL STAND TERMINATED. LETTER OF INTENT IS BASICALLY A LICENS E GRANTED BY THE DIRECTOR OF TOWN PLANTING TO DEVELOPER OF LAND FOR THE PURPOSE OF CONSTRUCTING RESIDENTIAL FLATS SUBJECT TO PAYMENT OF CERTAIN CHARGES AND COM PLIANCE OF OTHER CONDITIONS. IT WAS FURTHER STATED IN THE AGREEMENT THAT ON FULFILLMENT OF THE REQUIREMENT IN THE LETTER OF INTENT, OWNERS WILL HA VE TO EXECUTE IRREVOCABLE GENERAL POWER OF ATTORNEY IN FAVOUR OF THE DEVELOPE R AUTHORIZING THE DEVELOPER TO TOOK AND SELL THE DWELLING UNITS OUT OF DEVELOPE RS SHARE AND COLLECT THE MONEY FOR THE SAME. HOWEVER, FINALLY SALE DEEDS COU LD BE EXECUTED ONLY AFTER THE OWNER RECEIVED THEIR SHARE OF CONSTRUCTED AREA. THREE MONTHS LATER, A SUPPLEMENTARY AGREEMENT WAS ENTERED ON SEPTEMBER 15 , 2005 BETWEEN THE ASSESSEE AND OTHER CO-OWNERS AND DEVELOPERS THROUGH WHICH IT WAS AGREED THAT OWNERS WILL SELL THEIR 16% SHARE IN THE BUILT UP AREA TO THE DEVELOPER OR 9 ITS NOMINEE FOR CONSIDERATION OF RS. 42 CRORES. A S UM OF RS. 2 CRORES WAS RECEIVED. THIS COLLABORATION AGREEMENT AND BALANCE OF RS. 40 CRORES WAS PAYABLE BY THE DEVELOPER TO THE OWNERS IN SIX INSTA LLMENTS FROM MARCH 06, 2008. THE INSTALLMENTS COULD BE EXTENDED SUBJECT T O PAYMENT OF INTEREST AND FURTHER SUBJECT TO MAXIMUM EXTENSION OF THREE MONTH S. THERE WERE VARIOUS OTHER CLAUSES WHICH ARE NOT RELEVANT FOR OUR PURPOS ES. THE QUESTION AROSE WHETHER CAPITAL GAIN ACCRUE / ARISE TO THE ASSESSEE DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08 OR DURI NG FINANCIAL YEAR 2007-08 RELEVANT TO ASSESSMENT YEAR 2008-09. 40. ON THE ABOVE, THE HON'BLE AUTHORITY AFTER REFER RING 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 PRE VIOUS YEAR, (B) RESULTANT PROFITS OR GAINS FROM SUCH TRANSFER, (C) THOSE PROFITS OR GAINS WOULD CONSTITUTE THE INC OME 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 EXPRE SSION RECEIVED. BOTH THESE EXPRESSIONS AND IN ADDITION THERETO, THE EXPRESSION ACCRUE ARE USED IN THE INCOME- TAX ACT EITHER COLLECTIVELY OR SEPARATELY ACCORDING TO THE CONTEXT AND NATURE OF THE CHARGING PROVISION. THE SECOND POINT WHICH DESERVES NOTICE IS THAT BY A DEEMING PROVISION, THE PROFITS OR GAINS THAT HAVE ARISEN W OULD BE TREATED AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. TH AT MEANS, THE INCOME ON ACCOUNT OF ARISAL OF CAPITAL GAIN SHOULD BE CHARGED TO TAX IN THE SAME PREVIOUS YEAR IN WHICH THE TRANSFER WAS EFFECTED OR DEEMED TO HAVE TAKEN PLAC E. THE EFFECT AND AMBIT OF THE DEEMING PROVISION CONT AINED IN SECTION 45 HAS BEEN CONSIDERED IN DECIDED CASES AND LEADING TEXT B OOKS. THE FOLLOWING STATEMENT OF LAW IN SAMPATH IYENGARS COMMENTARY (10TH EDITION REVISED BY SHRI S. RAJARATNAM) BRINGS OUT THE CORRECT LEGAL POSITION : SECTION 45 ENACTS THAT THE CAPITAL GAINS SHALL BY FICTION BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER T OOK PLACE. SINCE THIS IS A STATUTORY FICTION, THE ACTUAL YEAR IN WHICH THE SA LE PRICE WAS RECEIVED, WHETHER IT WAS ONE YEAR, TWO YEARS, THREE YEARS, FOUR YEAR S ETC. PREVIOUS TO THE PREVIOUS YEAR OF TRANSFER, IS BESIDE THE POINT. TH E ENTIRETY OF THE SUM OR SUMS RECEIVED IN ANY EARLIER YEAR OR YEARS WOULD BE REGA RDED AS THE CAPITAL GAINS ARISING IN THE PREVIOUS YEAR OF TRANSFER. . . . . IN THE WORDS OF SECTION 45, THE CAPITAL GAI NS 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 T RANSFER, EVEN AS PAYMENTS MADE PRIOR TO THE YEAR OF TRANSFER. 41. THEREAFTER, THE AUTHORITY REFERRED TO SECTION 2(47) AND OBJECTS OF THE INTRODUCTION OF CLAUSES (V) & (VI) AND ALSO REFERRE D TO PARAS 11.1 & 11.2 OF THE BOARD CIRCULAR NO. 495 (WHICH WE HAVE ALREADY DISCU SSED EARLIER). THE HON'BLE AUTHORITY HAS DISCUSSED VARIOUS IMPLICATION S OF CLAUSE (V) OF SECTION 2(47) AND ALSO IMPLICATION OF SECTION 53A OF THE TR ANSFER OF PROPERTY ACT AS WELL AS OBSERVATIONS OF HON'BLE BOMBAY HIGH COURT I N THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V CIT (SUPRA). THE AUTHORITY OB SERVED THAT TO UNDERSTAND THIS PROVISION PROPERLY MEANING OF POSSESSION HAS TO BE UNDERSTOOD PROPERLY AND WENT ON TO DISCUSS THE MEANING OF TERM POSSESS ION, AND HOW THE SAME IS TO BE UNDERSTOOD IN THE CONTEXT OF CLAUSE (V). THE SE ARE VERY IMPORTANT OBSERVATIONS AND HAVE BEEN DISCUSSED IN MOST ELUCID ATED FASHION. THESE OBSERVATIONS WILL ANSWER MANY OF THE QUESTIONS RAIS ED BEFORE US AND, THEREFORE, WE ARE EXTRACTING THESE OBSERVATIONS AS UNDER:- MEANING OF POSSESSION AND HOW SHOULD IT BE UNDER STOOD IN THE CONTEXT OF CLAUSE (V) THE NEXT QUESTION IS, IN WHAT SENSE WE HAVE TO UND ERSTAND THE TERM POSSESSION IN THE CONTEXT OF CLAUSE (V) OF SECTIO N 2(47). SHOULD IT ONLY MEAN THE RIGHT TO EXCLUSIVE POSSESSIONWHICH THE TRANSFE REE CAN MAINTAIN IN HIS OWN RIGHT TO THE EXCLUSION OF EVERYONE INCLUDING THE TR ANSFEROR FROM WHOM HE DERIVED THE POSSESSION ? SUCH A CRITERION WILL BE SATISFIED ONLY AFTER THE ENTIRE SALE CONSIDERATION IS PAID AND THE TRANSFEROR HAS FORFEI TED HIS RIGHT TO EXERCISE ACTS OF POSSESSION OVER THE LAND OR TO RESUME POSSESSION. I N OUR VIEW, THERE IS NO WARRANT TO PLACE SUCH A RESTRICTED INTERPRETATION O N THE WORD POSSESSION OCCURRING IN CLAUSE (V) OF SECTION 2(47). POSSESSI ON IS AN ABSTRACT CONCEPT. IT HAS DIFFERENT SHADES OF MEANING. IT IS VARIOUSLY D ESCRIBED AS A POLYMORPHOUS 10 TERM HAVING DIFFERENT MEANINGS IN DIFFERENT CONTEX TS (PER R. S. SARKARIA J. IN SUPERINTENDENT AND REMEMBRANCE OF LEGAL AFFAIRS, W. B. V. ANIL KUMAR BHUNJA [1979] 4 SCC 274 AND AS A WORD OF OPEN TEXTURE ( SEE SALMOND ON JURISPRUDENCE, PARAGRAPH 51, TWELFTH EDITION, INDI AN REPRINT). SALMOND OBSERVED : TO LOOK FOR A DEFINITION THAT WILL SUMMARIZE TH E MEANINGS OF THE TERM POSSESSION IN ORDINARY LANGUAGE, IN ALL AREAS OF LAW AND IN ALL LEGAL SYSTEMS, IS TO ASK FOR THE IMPOSSIBLE. IN THE ABOVE CASE OF A NIL KUMAR BHUNJA [1979] 4 SCC 274, SARKARIA J. SPEAKING FOR A THREE-JUDGE BENCH A LSO REFERRED TO THE COMMENTS OF DIAS AND HUGHES IN THEIR BOOK ON JURISPRUDENCE T HAT IF A TOPIC EVER SUFFERED TOO MUCH THEORIZING IT IS THAT OF POSSESSION. MU CH OF THE DIFFICULTY IS CAUSED BY THE FACT THAT POSSESSION IS NOT A PURE LEGAL CONCEP T, AS POINTED OUT BY SALMOND. THE LEARNED JUDGE THEN EXPLAINED THE CONNOTATION O F THE EXPRESSION POSSESSION BY REFERRING TO THE WELL KNOWN TREATISES ON JURISP RUDENCE (PAGE 278) : POSSESSION, IMPLIES A RIGHT AND A FACT : THE RIG HT TO ENJOY ANNEXED TO THE RIGHT TO PROPERTY AND THE FACT OF THE REAL INTE NTION. IT INVOLVES POWER OF CONTROL AND INTENT TO CONTROL, (SEE DIAS AND HUG HES) 14 . . . . 15. WHILE RECOGNIZING THAT POSSESSION IS NOT A PU RELY LEGAL CONCEPT BUT ALSO A MATTER OF FACT, SALMOND (12TH ED., 52) DESCR IBES POSSESSION, IN FACT, AS A RELATIONSHIP BETWEEN A PERSON AND A THIN G. ACCORDING TO THE LEARNED AUTHOR, THE TEST FOR DETERMINING WHETHER A PERSON IS IN POSSESSION OF ANYTHING IS WHETHER HE IS IN GENERAL CONTROL OF IT. IN SALMONDS JURISPRUDENCE, AT PARAGRAPH 54, WE FI ND AN ILLUMINATING DISCUSSION ON IMMEDIATE AND MEDIATE POSSESSION. THE LEARNED AUTHOR STATES IN LAW ONE PERSON MAY POSSESS A THING FOR AND ON A CCOUNT OF SOME ONE ELSE. IN SUCH A CASE THE LATTER IS IN POSSESSION BY THE AGEN CY OF HIM WHO SO HOLDS THE THING ON HIS BEHALF. THE POSSESSION THUS HELD BY ON E MAN THROUGH ANOTHER MAY BE TERMED MEDIATE, WHILE THAT WHICH IS ACQUIRED OR RETAINED DIRECTLY OR PERSONALLY MAY BE DISTINGUISHED AS IMMEDIATE OR D IRECT. SALMOND MAKES REFERENCE TO THREE TYPES OF MEDIATE POSSESSION. IN ALL CASES OF MEDIATE POSSESSION, TWO PERSONS ARE IN POSSESSION OF THE S AME THING AT THE SAME TIME. AN ALLIED CONCEPT OF CONCURRENT POSSESSION HAS ALS O BEEN EXPLAINED IN PARAGRAPH 55 OF SALMONDS JURISPRUDENCE IN THE FOL LOWING WORDS : IT WAS A MAXIM OF THE CIVIL LAW THAT TWO PERSONS C OULD 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 EFFE CTUALLY REALIZED AT THE SAME TIME. CLAIMS, HOWEVER, WHICH ARE NOT ADVER SE, AND WHICH ARE NOT, THEREFORE, MUTUALLY DESTRUCTIVE, ADMIT OF CONC URRENT REALIZATION. HENCE, THERE ARE SEVERAL POSSIBLE CASES OF DUPLICAT E POSSESSION. 1. MEDIATE AND IMMEDIATE POSSESSION CO-EXIST IN R ESPECT 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 ADO PTING THE PRINCIPLE OF PURPOSIVE CONSTRUCTION, IT MUST BE HELD THAT POSSES SION CONTEMPLATED BY CLAUSE (V) NEED NOT NECESSARILY BE SOLE AND EXCLUSIVE POSS ESSION. SO LONG AS THE TRANSFEREE IS, BY VIRTUE OF THE POSSESSION GIVEN, E NABLED 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 ENTE R THE PROPERTY TO OVERSEE THE DEVELOPMENT WORK OR TO ENSURE PERFORMANCE OF THE TE RMS OF AGREEMENT DOES NOT INTRODUCE ANY INCOMPATIBILITY. THE CONCURRENT POSSE SSION OF THE OWNER WHO CAN EXERCISE POSSESSORY RIGHTS TO A LIMITED EXTENT AND FOR A LIMITED PURPOSE AND THAT OF THE BUYER/DEVELOPER WHO HAS A GENERAL CONTROL A ND CUSTODY OF THE LAND CAN VERY WELL BE RECONCILED. CLAUSE (V) OF SECTION 2(47 ) WILL HAVE ITS FULL PLAY EVEN IN SUCH A SITUATION. THERE IS NO WARRANT TO POSTPONE T HE OPERATION OF CLAUSE (V) AND THE RESULTANT ACCRUAL OF CAPITAL GAIN TO A POINT OF TIME WHEN THE CONCURRENT POSSESSION WILL BECOME EXCLUSIVE POSSESSION OF DEVE LOPER/TRANSFEREE AFTER HE PAYS FULL CONSIDERATION. FURTHER, IF POSSESSION REFERRED TO IN CLAUSE (V) IS TO BE UNDERSTOOD AS EXCLUSIVE POSSESSION OF THE TRANSFEREE/DEVELOPER, T HEN, THE VERY PURPOSE OF THE AMENDMENT EXPANDING THE DEFINITION OF TRANSFER FOR THE PURPOSE OF CAPITAL GAINS MAY BE DEFEATED. THE REASON IS THIS: THE OWNER OF T HE PROPERTY CAN VERY WELL CONTEND, AS IS BEING CONTENDED IN THE PRESENT CASE, THAT THE DEVELOPER WILL HAVE SUCH EXCLUSIVE POSSESSION IN HIS OWN RIGHT ONLY AFT ER THE ENTIRE AMOUNT IS PAID TO THE OWNER TO THE LAST PIE. THERE IS THEN A POSSIBIL ITY OF STAGGERING THE LAST INSTALMENT OF A SMALL AMOUNT TO A DISTANT DATE, MAY BE, WHEN THE ENTIRE BUILDING COMPLEX GETS READY. EVEN IF SOME AMOUNT, SAY 10 PER CENT., REMAINS TO BE PAID AND THE DEVELOPER/TRANSFEREE FAILS TO PAY, LEADING TO A DISPUTE BETWEEN THE PARTIES, THE RIGHT TO EXCLUSIVE AND INDEFEASIBLE P OSSESSION MAY BE IN JEOPARDY. IN THIS STATE OF AFFAIRS, THE TRANSACTION WITHIN TH E MEANING OF CLAUSE (V) CANNOT BE SAID TO HAVE BEEN EFFECTED AND THE LIABILITY TO PA Y CAPITAL GAINS MAY BE INDEFINITELY POSTPONED. TRUE, IT MAY NOT BE PROFIT ABLE FOR THE DEVELOPER TO ALLOW THIS SITUATION TO LINGER FOR LONG AS THE PROCESS OF TRANSFER OF FLATS TO THE PROSPECTIVE PURCHASERS WILL GET DELAYED. AT THE SAM E TIME, THE OTHER SIDE OF THE PICTURE CANNOT BE OVER-LOOKED. THERE IS A POSSIBIL ITY OF THE OWNER WITH THE CONNIVANCE OF THE TRANSFEREE POSTPONING THE PAYMENT OF CAPITAL GAINS TAX ON THE 11 OSTENSIBLE GROUND THAT THE ENTIRE CONSIDERATION HAS NOT BEEN RECEIVED AND SOME BALANCE IS LEFT. THE MISCHIEF SOUGHT TO BE REMEDIED , WILL THEN PERPETUATE. WE ARE, THEREFORE OF THE VIEW THAT POSSESSION GIVEN TO THE DEVELOPERS NEED NOT RIPEN ITSELF INTO EXCLUSIVE POSSESSION ON PAYMENT OF ALL THE INSTALMENTS IN ENTIRETY FOR THE PURPOSE OF DETERMINING THE DATE OF TRANSFER. WHILE ON THE POINT OF POSSESSION, WE WOULD LIKE TO CLARIFY ONE MORE ASPECT. WHAT IS SPOKEN TO IN CLAUSE (V) OF SECTION 2(47) IS THE TRANSACTION WHICH INVOLVES ALLOWING THE POSSESSION TO BE TAKEN. BY ME ANS 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 P ART 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 DAT E, IF CALLED FOR, LEADS TO COMPLICATED INQUIRIES, WHICH MAY FRUSTRATE THE OBJE CTIVE OF THE LEGISLATIVE PROVISION. IT IS ENOUGH IF THE TRANSFEREE HAS, BY V IRTUE OF THAT TRANSACTION, A RIGHT TO ENTER UPON AND EXERCISE ACTS OF POSSESSION EFFEC TIVELY PURSUANT TO THE COVENANTS IN THE CONTRACT. THAT TANTAMOUNTS TO LEG AL POSSESSION. WE ARE REFERRING TO THIS ASPECT BECAUSE THE AUTHORIZED RE PRESENTATIVE 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 FO R WANT OF CERTAIN APPROVALS, AND THEREFORE, THE DEVELOPER WAS NOT W ILLING TO TAKE POSSESSION OF THE LAND. SUCH AN UNSUBSTANTIATED STATEMENT WHICH IS NOT FOUND IN THE ORIGINAL APPLICATION OR EVEN WRITTEN SUBMISSIONS FILED EARLI ER NEED NOT BE PROBED INTO ESPECIALLY WHEN IT IS NOT HIS CASE THAT THE DEVELOP ER WAS NOT ALLOWED TO TAKE POSSESSION IN TERMS OF THE AGREEMENT. 42. AFTER THE ABOVE DISCUSSION, THE AUTHORITY DISCU SSED THE FACTS OF THE CASE BEFORE IT. IT WAS OBSERVED THAT PARAGRAPH 18 O F THE COLLABORATION AGREEMENT PROVIDES THAT ON ISSUANCE OF LETTER OF IN TENT, THE OWNERS WILL ALLOW AND PERMIT THE DEVELOPER TO ENTER UPON AND SURVEY T HE LAND, ERECT SITE / SALES OFFICE, CARRY OUT THE SITE DEVELOPMENT WORK AND DO ACTIVITIES FOR ADVANCING & SALE PROMOTION, CONSTRUCTION ETC. THE AUTHORITY FU RTHER OBSERVED THAT IF THIS CLAUSE IS READ IN ISOLATION THIS WOULD SUGGEST ON P ASSING OF POSSESSION BUT ACCORDING TO AUTHORITY THE OTHER FACTORS ARE TO BE CONSIDERED. CLAUSE 15 PROVIDED THAT ON FULFILLMENT OF THE REQUIREMENTS LA ID DOWN IN THE LETTER OF INTENT WHICH IS PROVISIONAL LICENSE, THE OWNERS SH OULD EXECUTE AN IRREVOCABLE GENERAL POWER OF ATTORNEY IN FAVOUR OF THE DEVELOPE R ALLOWING INTER ALIA TO BOOK AND SELL THE DWELLING UNIT FAILING UNDER THEIR SH ARE. THIS WAS POSSIBLE ONLY AFTER DEPOSIT OF REQUISITE CHARGES ETC. AND PERHAPS THERE WAS LITIGATION REGARDING OWNERSHIP OF LAND WHICH HAS ALSO TO BE WI THDRAWN. THE AUTHORITY HAS DISCUSSED THE SIGNIFICANCE OF GENERAL POWER OF ATTORNEY AND THE TERMS OF THE GENERAL POWER OF ATTORNEY AT PARA 33 AND THE R ELEVANT PORTION OF THE SAME IS AS UNDER:- A COPY OF THE IRREVOCABLE GPA EXECUTED IN TERMS O F PARAGRAPH 15 OF THE AGREEMENT HAS BEEN FURNISHED BY THE APPLICANT. IT AUTHORIZES THE DEVELOPER : (I) TO ENTER UPON AND SURVEY THE L AND, PREPARE THE LAYOUT PLAN, APPLY FOR RENEWAL/EXTENSION OF LICENCE, SUBMIT THE BUILDING PLANS FOR SANCTION OF THE APPROPRIATE AUTHORITY AND TO CARRY OUT THE WORK OF DEVELOPMENT OF A MULTI- STORIED RESIDENTIAL COMPLEX, (II) TO MANAGE AND CON TROL, LOOK AFTER AND SUPERVISE THE PROPERTY IN ANY MANNER AS THE ATTORNE Y DEEMS FIT AND PROPER, (III) TO OBTAIN WATER, SEWAGE DISPOSAL AND ELECTRIC ITY CONNECTIONS. THE DEVELOPER IS ALSO AUTHORIZED TO BORROW MONEY FOR ME ETING THE COST OF CONSTRUCTION ON THE SECURITY AND MORTGAGE OF LAND F ALLING TO THE DEVELOPERS SHARE. THE OTHER CLAUSES IN THE GPA ARE NOT RELEVAN T FOR OUR PURPOSE. THE GPA UNEQUIVOCALLY GRANTS TO THE DEVELOPER A BUNDLE OF POSSESSORY RIGHTS. THE ACTS OF MANAGEMENT, CONTROL AND SUPERVISION OF PROP ERTY 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 THI S GPA. THE DEVELOPER ARMED WITH THE GPA CANNOT BE REGARDED MERELY AS A L ICENSEE OR AN AGENT SUBJECT TO THE CONTROL OF THE OWNERS. HIS POSSESSIO N CANNOT BE CHARACTERIZED AS PRECARIOUS OR TENTATIVE IN NATURE. THE FACT THAT THE AGREEMENT DESCRIBES THE GPA AS IRREVOCABLE AND AN EXPRESS DECLARATION TO TH AT EFFECT IS FOUND IN THE GPA ITSELF IS NOT WITHOUT SIGNIFICANCE. HAVING REGA RD TO THE SECOND AND SUPPLEMENTAL AGREEMENT BY VIRTUE OF WHICH THE ENTIR E DEVELOPED PROPERTY INCLUDING THE OWNERS SHARE HAS BEEN AGREED TO BE S OLD TO THE DEVELOPER OR HIS NOMINEES FOR VALUABLE MONEY CONSIDERATION, THE DEV ELOPER HAS A VITAL STAKE IN THE ENTIRE PROPERTY. AS FAR AS THE QUALITY OF POSS ESSION 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 C OURSE OF DEVELOPING THE LAND, THAT AGENCY IS COUPLED WITH INTEREST. FOR TH ESE REASONS, THE PREFIX IRREVOCABLE IS DELIBERATELY CHOSEN. AS DISCUSSED EARLIER, THE OWNER'S LIMITED RIGHT TO ENTER THE LAND AND OVERSEE THE DEVELOPMENT WORK IS NOT INCOMPATIBLE WITH THE DEVELOPERS RIGHT OF CONTROL OVER THE LAND WHICH HE DERIVES FROM THE GPA. EXCLUSIVE POSSESSION, AS ALREADY POINTED OUT, IS NOT NECESSARY FOR THE PURPOSE OF SATISFYING THE INGREDIENTS OF CLAUSE (V) OF SECTION 2(47). WE ARE THEREFORE, OF THE VIEW THAT THE IRREVOCABLE GPA EX ECUTED BY THE OWNERS IN FAVOUR OF THE DEVELOPER MUST BE REGARDED AS A TRANS ACTION IN THE EYE OF LAW WHICH ALLOWS POSSESSION TO BE TAKEN IN PART PERFORM ANCE OF THE CONTRACT FOR TRANSFER OF THE PROPERTY IN QUESTION.. 12 43 THUS, THE ABOVE CLEARLY SHOWS THAT IRREVOCABLE G ENERAL POWER OF ATTORNEY WHICH LEADS TO OVER ALL CONTROL OF THE PR OPERTY IN THE HANDS OF THE DEVELOPER, EVEN IF THAT MEANS NO EXCLUSIVE POSSESSI ON BY THE DEVELOPER WOULD CONSTITUTE TRANSFER. IT CAN BE SAID THAT IT HAS TO BE CONSTRUED AS POSSESSION IN TERMS OF CLAUSE (V) OF SECTION 2(47) OF THE ACT. 44 A QUESTION MAY ARISE THAT WHY THE TRANSFER WAS N OT HELD TO BE TAKEN PLACE IN ASSESSMENT YEAR 2006-07 WHEN FIRST AGREEMENT WAS EN TERED INTO ON JUNE 8, 2005. THE SUPPLEMENTARY AGREEMENT WAS ALSO ENTERED INTO ON SE PT 15, 2005 BOTH OF WHICH FALL IN FINANCIAL YEAR 2005-06 RELEVANT TO ASSESSMENT YEAR 2006-07. THEN WHY TRANSFER WAS NOT CONSTRUED IN ASSESSMENT YEAR 2006-07 IT WAS BEC AUSE THE FIRST AGREEMENT ITSELF CONTAINED A CONDITION THAT LETTER OF INTENT SHOUL D BE PROCURED NOT LATER THAN MARCH 8, 2006. IN CASE OF FAILURE TO DO SO THE AGREEMENT SH ALL STAND TERMINATED. THEREFORE, OBTAINING THE LETTER OF INTENT WAS THE CRUCIAL FA CTOR. IT HAS BEEN EXPLAINED IN THE DECISION THAT THE LETTER OF INTENT BASICALLY IS A LICENSE ISSUED BY THE DIRECTOR OF TOWN AND COUNTRY PLANNING, HARYANA WHICH GIVES PERMISSIO N FOR CONSTRUCTION OF THE FLATS. THE OTHER CRUCIAL POINT WAS EXECUTION OF IRREVOCABL E OF GPA WHICH WAS EXECUTED ON MAY 8, 2006 WHICH ACCORDING TO THE LD. AUTHORITY DE PICTS THE INTENTION OF THE HANDING OVER OF THE POSSESSION. THEREFORE, IT BECOMES VER Y CLEAR THAT IT IS NOT NECESSARY THAT TRANSFER WOULD TAKE PLACE ON THE SIGNING OF DEVELOP MENT AGREEMENT BUT THE SAME HAS TO BE INFERRED ONLY WHEN THE POSSESSION HAS BEEN HANDE D 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 T HE DECISION IN PARA 41 WHICH IS AS UNDER: THE FOLLOWING IS THE SUMMARY OF CONCLUSIONS: 1. WHERE THE AGREEMENT FOR TRANSFER OF IMMOVABLE PR OPERTY BY ITSELF DOES NOT PROVIDE FOR IMMEDIATE TRANSFER OF POSSESSION, THE DATE OF E NTERING INTO THE AGREEMENT CANNOT BE CONSIDERED TO BE THE DATE OF TRANSFER WIT HIN 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 NO T 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 CONTRAC T AND THEREFORE, THE TRANSFER WITHIN THE MEANING OF SECTION 2(47)(V) MUST BE DEEM ED 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 ASSE SSMENT YEAR 2007-08 AND THE CAPITAL GAINS MUST BE HELD TO HAVE ARISEN DURING TH AT YEAR. INCIDENTALLY, IT MAY BE MENTIONED THAT DURING THE SAID YEAR, I.E., FINANCIA L YEAR 2006-07, A FINAL LICENSE WAS GRANTED AND THE APPLICANT/OWNERS RECEIVED NEARL Y 2/3RDS OF THE CONSIDERATION. 45. LEGAL POSITION HAS BEEN DISCUSSED IN ABOVE NOTE D PARAS AND NOW LET US DISCUSS THE FACTS OF THE CASE IN THE LIGHT OF ABOVE NOTED LEGAL POSITION. 46 UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESS EE IS A MEMBER OF PUNJABI COOP HOUSE BUILDING SOCIETY LTD. WHICH HAD 96 MEMBERS (NUMBER OF MEMBERS WERE STATED AS 95 DURING ARGUMENTS BUT CLAU SE 13 OF THE JDA REFERS TO NUMBER OF MEMBERS AS 96). THE SOCIETY WAS OWNING 21.2 ACRES OF LAND IN VILLAGE KANSAL DISTT. MOHALI ADJACENT TO CHANDIGARH . THERE WERE TWO TYPES OF MEMBERS FIRSTLY THE MEMBERS WHO WERE OWNING PLOT OF 500 SQYD AND SECONDLY THE MEMBERS WHO ARE HOLDING PLOT OF 1000 SQYD. SOM EWHERE IN 2006 IT WAS DECIDED TO DEVELOP A GROUP HOUSING COMMERCIAL PROJE CT AND DO DEVELOPMENT AS PER THE APPLICABLE MUNICIPAL BUILDING BYE-LAWS I N FORCE AND ACCORDINGLY A BID WAS INVITED THROUGH ADVERTISEMENT IN THE TRIBUN E DATED 31.5.2006. HASH A DEVELOPER, APPROACHED THE SOCIETY WITH PROPOSAL F OR DEVELOPMENT OF THE PROPERTY. SINCE HASH DID NOT HAVE SUFFICIENT MEANS TO DEVELOP THE PROPERTY, HASH HAD APPROACHED THDC FOR DEVELOPMENT OF THE PRO PERTY BY CONSTRUCTING THE BUILDING AND/OR STRUCTURES TO BE USED FOR INTER ALIA RESIDENTIAL, PUBLIC USE AND COMMERCIAL PURPOSES. THIS PROPOSAL WAS DISCUSS ED BY THE SOCIETY IN ITS EXECUTIVE COMMITTEE MEETING ON 4.1.2007. MINUTES O F THE MEETING ARE PLACED AT PAGE 58 TO 65 OF THE PAPER BOOK. IN THE EXECUTI VE COMMITTEE IT WAS DECIDED TO APPOINT HASH WHO WAS ACTING ALONGWITH THE JOINT DEVELOPER THDC AS JOINT DEVELOPER ON THE TERMS AND CONDITIONS TO BE MENTION ED IN THE JDA. IT WAS FURTHER RESOLVED THAT MEMBER OWING PLOT OF 500 SQYD WOULD RECEIVE A CONSIDERATION OF RS. 82,50,000/- EACH TO BE PAID IN FOUR INSTALLMENTS BY HASH DIRECTLY IN FAVOUR OF THE MEMBERS AND ONE FLAT WIT H SUPER AREA OF 2250 SQF TO BE CONSTRUCTED BY THDC. THE MEMBERS WHO HELD THE P LOT OF 1000SQYD WERE TO RECEIVE A CONSIDERATION OF RS. 1,65,00,000/- AND TW O FLATS CONSISTING OF 2250SQFT TO BE CONSTRUCTED BY THE THDC. IT WAS F URTHER 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 B ODY MEETING HELD BY THE SOCIETY ON 25.2.2007. PURSUANT TO THE ABOVE RESOLUT ION, 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 THA T OWNER IS IN POSSESSION OF LAND MEASURING ABOUT 21.2 ACRES OF LAND WHICH HAS C OME IN THE PURVIEW OF NAGAR PANCHAYAT, NAYA GAON VIDE NOTIFICATION ISSUED ON 18.10.2006 DULY SUBSTITUTED BY ANOTHER NOTIFICATION DATED 21.11.200 6 AND THAT NO PART OF LAND OF THE PROPERTY FALLS UNDER FOREST AREA UNDER THE P UNJAB LAND PRESERVATION ACT. IT HAS BEEN FURTHER RECITED THAT THE SOCIETY HAS AGREED TO ACCEPT THE 13 PROPOSALS OF HASH AND FURTHER EXECUTED THIS AGREEME NT WITH THDC/HASH. HASH WAS RESPONSIBLE TO MAKE PAYMENT TO THE OWNER A S 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 A S WELL AS RESOLUTION OF THE GENERAL BODY MEETING OF THE SOCIETY DATED 25.2.2007 WERE MADE PART OF JDA BY WAY OF ANNEXURE. THE SOCIETY AGREED TO EXECUTE AN IRREVOCABLE SPECIAL POWER OF ATTORNEY IN FAVOUR OF THDC AND ALL OTHER NECESSARY DOCUMENTS, AT THE REQUEST OF THE DEVELOPERS. 47 IN CLAUSE 1 OF JDA VARIOUS EXPRESSIONS HAVE BEEN DEFINED. CLAUSE 2 DESCRIBES THE PROJECT AS UNDER: 2.1 THE OWNER HEREBY IRREVOCABLY AND UNEQUIVOCALLY GRANTS AND ASSIGNS IN PERPETUITY ALL ITS RIGHTS TO DEVELOP, CONSTRUCT, MORTGAGE, LEASE, LICENSE, SELL AND TRANSFER THE PROPERTY ALONG WITH ANY AND A LL THE CONSTRUCTION, PREMISES, HEREDITAMENTS, EASEMENTS, TREES THEREON I N 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 A GREEMENT, LICENSE AGREEMENTS, CONSTRUCTION CONTRACTS, SUPPLIER CONTRA CTS, AGREEMENT FOR SALE, CONVEYANCE, MORTGAGE DEEDS, FINANCE DOCUMENTS AND A LL DOCUMENTS AND AGREEMENTS NECESSARY TO CREATE AND REGISTER THE MOR TGAGE, CONVEYANCE, LEASE DEEDS, LICENSE AGREEMENT, POWER OF ATTORNEY, AFFIDA VITS, DECLARATION, INDEMNITIES AND ALL SUCH OTHER DOCUMENTS, LETTERS A S MAY BE NECESSARY TO CARRY OUT, FACILITATE AND ENFORCE THE RIGHTS AND TO REGISTER THE SAME WITH THE REVENUE/COMPETENT AUTHORITY AND TO APPEAR ON OUR BE HALF 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 ANNE XED HERETO AND MARKED AS ANNEXURE IV AND PHYSICAL, VACANT POSSESSION OF T HE PROPERTY HAS BEEN HANDED OVER TO THDC SIMULTANEOUS TO THE EXECUTION A ND REGISTRATION OF THIS AGREEMENT TO DEVELOP THE SAME AS SET OUT HEREI N. IT IS HEREBY AGREED AND CONFIRMED THAT WHAT IS STAT ED IN THE RECITALS HEREINABOVE, SHALL BE DEEMED TO BE DECLARATIONS AND REPRESENTATIONS ON THE PART OF THE OWNER AS IF THE SAME WERE SET OUT HEREI N VERBATIM AND FORMING AN INTEGRAL PART OF THE AGREEMENT. 2.2 THE PROJECT SHALL COMPRISE OF DEVELOPMENT/CONST RUCTION OF THE PROPERTY INTO THE PREMISES AS PERMISSIBLE UNDER PUNJAB MUNIC IPAL BUILDING BYE- LAWS/PUNJAB URBAN DEVELOPMENT AUTHORITY OR ANY OTHE R COMPETENT AUTHORITY BY THE DEVELOPER AT THEIR OWN COST AND EXPENSE. THE P ROJECT SHALL BE DEVELOPED AS MAY BE SANCTIONED BY THE CONCERNED LOCAL AUTHORI TY I.E. DEPARTMENT OF LOCAL BODIES, PUNJAB/PUNJAB URBAN PLANNING AND DEV ELOPMENT 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 D EVELOP 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 AUT HORITIES FOR THE COMMENCEMENT, DEVELOPMENT AND COMPLETION OF THE PRO JECT ON THE PROPERTY. 48 CLAUSE 3 DESCRIBES THE OBLIGATIONS OF THE DEVELO PERS & SOCIETY FOR GETTING THE PLANS, ETC. SANCTIONED FROM COMPETENT A UTHORITY / APPLICATIONS TO BE SIGNED BY OWNER FOR PLANS, DRAWINGS ETC., CONSTR UCTION. CLAUSE 4 DEALS WITH CONSIDERATION CLAUSES 5 TO 8 DEALS VARIOUS ASPECTS OF PROJECT AND OBLIGATIONS OF SOCIETY AND DEVELOPER. CLAUSE 9 TALKS ABOUT OWNE RSHIP AND RIGHTS AND READ AS UNDER: 9 TRANSFER OF OWNERSHIP/RIGHTS 9.1 THE OWNER SHALL SIMULTANEOUSLY ON RECEIPT OF PAYMEN T AS SET OUT IN CLAUSE 4.1 ABOVE, EXECUTE AN IRREVOCABLE SPECIAL PO WER OF ATTORNEY TO THDC FOR DEVELOPMENT OF THE PROPERTY AUTHORIZING TH DC TO DO ALL LAWFUL ACTS, DEEDS, MATTERS AND THINGS PERTAINING TO THE D EVELOPMENT OF THE PROPERTY FOR THE PROJECT ALONG WITH INTERALIA RIGHT TO MORTGAGE THE PROPERTY AND/OR PREMISES, SELL, LEASE, LICENSE THE PREMISES AND RECEIVE/COLLECT MONIES IN ITS NAME IN RESPECT OF THE SAME AND APP ROACH INTERACT, COMMUNICATE WITH THE COMPETENT AUTHORITIES AND FOR DOING ALL ACTS, DEEDS, MATTERS AND THINGS TO BE DONE OR INCURRED BY THDC I N THAT BEHALF AS ALSO TO SIGN ALL LETTERS, APPLICATIONS, AGREEMENTS AND REGI STER THE SAME IF NECESSARY, DOCUMENTS, COURT PROCEEDINGS, AFFIDAVITS AND SUCH OTHER PAPERS CONTAINING TRUE FACTS AND CORRECT PARTICULARS AS MADE FROM TIM E TO TIME BE REQUIRED IN THIS BEHALF. 14 9.2 THE OWNER SHALL EXECUTE IN FAVOUR OF THDC THE SALE DEED IS IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE 4.1(II) TO CLAUSE 4.1(IV) OF THIS AGREEMENT AND EXECUTE ALL OTHER NECESSARY DOCUMENTS AND PAPERS TO COMPLETE THE AFORESAID TRANSACTION. 9.3 THAT ALL THE ORIGINAL TITLE DEEDS PERTAINING T O PROPERTY AS MENTIONED IN ANNEXURE IV HAS BEEN HANDED OVER TO THDC BY THE OWNER AT THE TI ME OF SIGNING OF THIS AGREEMENT AND IN FURTHERANCE OF THE COMMON INTEREST OF THE PARTIES FOR THE DEVELOPMENT OF THE PROJECT AND EXCEPT THE SALE TRANSACTION MADE BY THE OWNER IN FAVOUR OF THDC AS ET OUT IN CLAUSE 4.1 ABOVE. THDC HEREBY UNDERTAKE AND ASSURE THE OWNER THAT THEY SHALL USE THE TITLE DEEDS ONLY FOR THE PURPOSE OF FURTHERANCE OF THE PROJECT IN THE MANNER THAT IT DOES NOT ADVERSELY EFFECT THE OWNER/ALLOTTE E IN ANY MANNER WHATSOEVER. 49 CLAUSE 10 DESCRIBES THE CONSENT GIVEN BY THE SOC IETY TO THDC FOR RAISING FINANCE FOR DEVELOPMENT AND COMPLETION OF P ROJECT. CLAUSE 11 TALKS ABOUT FORMATION OF MAINTENANCE SOCIETY FOR THE PROJ ECT AFTER ITS COMPLETION. CLAUSE 13 TALKS ABOUT TRANSFER OF RIGHTS WHICH READ S AS UNDER: 13 TRANSFER OF RIGHTS THE OWNER HEREIN I.E. THE PUNJABI COOP HOUSE BUILDI NG SOCIETY LTD. ALONG WITH ALL ITS NINETY SIX (96) MEMBERS HAVE GIVEN THEIR EX PRESS, FREE AND CLEAR CONSENT IN WRITING IN THE FORM OF AN AFFIDAVIT/NO O BJECTION CERTIFICATE/CONSENT LETTER WHEREBY THE DEVELOPERS HAVE BEEN ALLOWED TO DEVELOP THE PROPERTY IN ACCORDANCE WITH THE PROJECT AND THAT THDC SHALL BE ENTITLED TO TRANSFER THE RIGHTS OBTAINED UNDER THIS AGREEMENT TO ANY THIRD P ARTY AND TO GET THE DEVELOPMENT / CONSTRUCTION WORK COMPLETED ON SUCH T ERMS 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 M ENTIONED IN THIS AGREEMENT SUBJECT TO ALL OTHER CONDITIONS MENTIONED THEREIN A S WELL. THE OWNER SHALL AT ALL TIMES PROVIDE FULL SUPPORT TO THE DEVELOPERS HE REIN. 50 OTHER CLAUSES PROVIDE FOR TERMINATION, GENERAL P ROVISIONS, DISCLAIMER, PARTIAL INVALIDITY, ARBITRATION, NOTICES AND FORCE MAJEURE & JURISDICTION. 51 IN ADDITION TO ABOVE AN IRREVOCABLE SPECIAL POWE R OF ATTORNEY HAS ALSO BEEN EXECUTED BY THE SOCIETY IN FAVOUR OF THE DEVEL OPERS I.E. THDC. (COPY OF WHICH IS AVAILABLE AT PAGES 40 TO 52 OF THE PAPER B OOK 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 I N THE PAPER BOOK OF THE ASSESSEE, THEREFORE, REFERENCE WAS MADE TO THE PAP ER 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 ACC ORDING TO HIM AS PER CLAUSE 2.1 OF THE JDA THE POSSESSION OF THE PROPERT Y WAS TO BE HANDED OVER SIMULTANEOUSLY TO THE EXECUTION AND REGISTRATION OF JDA AND SINCE THE JDA WAS NOT REGISTERED, THEREFORE, THE POSSESSION WAS NOT GIVEN. WE CAN NOT ACCEPT THIS CONTENTION BECAUSE IN POWER OF ATTORNEY TRAN SACTIONS, IT IS NOT NECESSARY TO REGISTER THE JDA IF A SPECIAL POWER OF ATTORNEY HAS BEEN GIVEN AND SAME IS REGISTERED. SECONDLY CLAUSE 9.3 OF THE JDA AS REPRODUCED ABOVE CLEARLY SHOW THAT ORIGINAL TITLE DEED WHICH HAVE BE EN MENTIONED ALONG WITH THE POSSESSION IN PARA 2.1 WHICH ACCORDING TO THE LD. C OUNSEL OF THE ASSESSEE WERE TO BE HANDED OVER SIMULTANEOUSLY TO EXECUTION AND REGISTRATION OF THE JDA, IS NOT CORRECT BECAUSE CLAUSE 9.3 CLEARLY MENT ION THAT ORIGINAL TITLE DEED OF THE PROPERTY HAVE BEEN HANDED OVER TO THE THDC A T THE TIME OF SIGNING OF THIS AGREEMENT BECAUSE CLAUSE 9.3 THERE IS NO MENTI ON ABOUT REGISTRATION OF JDA. 53 SPECIAL POWER OF ATTORNEY WHICH HAS BEEN EXECUTE D ON 26.2.2007 AND HAS BEEN REGISTERED ALSO. THE IRREVOCABLE SPECIAL P OWER OF ATTORNEY HAS BEEN EXECUTED AS PROVIDED IN CLAUSE 6.7 OF THE JDA WHICH READS AS UNDER: 6.7 THE OWNER SHALL EXECUTE AN IRREVOCABLE SPECIAL POWER OF ATTORNEY GRANTING ITS COMPLETE DEVELOPMENT RIGHTS IN THE PRO PERTY IN FAVOUR OF THDC INTERALIA INCLUDING THE RIGHT TO RAISE FINANCE BY M ORTGAGING THE PROPERTY AND REGISTER THE CHARGE WITH THE COMPETENT AUTHORITY AN D 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 DISCR ETION WITHOUT OBTAINING A SPECIFIC PRIOR WRITTEN CONSENT OF THDC OR ANY OF ITS DULY CONSTITUTED ATTORNEYS. 15 THROUGH THIS POWER OF ATTORNEY VARIOUS POWERS HAVE BEEN GIVEN LIKE TO ASSIGN, FILE, AMEND ETC. VARIOUS PLANS, DESIGNS TO REPRESEN T BEFORE VARIOUS AUTHORITIES, TO APPOINT ARCHITECT, LAWYERS. SOME OF THE SPECIFI C CLAUSES RELEVANT, ARE EXTRACTED BELOW: (J) TO NEGOTIATE AND AGREE TO ANY/OR TO ENTER INTO AGREEMENT(S) TO CONSTRUCT/SELL AND TO UNDERTAKE CONSTRUCTION/SALE O F THE PREMISES ON THE PROPERTY OR ANY PORTION THEREOF WITH/TO SUCH PERSON S(S) OR BODY AND FOR SUCH CONSIDERATION AND UPON SUCH TERMS AND CONDITIONS AS THE ATTORNEY DEEM FIT. (N) TO ENTER UPON THE PROPERTY EITHER ALONE OR WITH OTHERS FOR THE PURPOSE OF DEVELOPMENT, COORDINATION, EXECUTION, IMPLEMENTA TION OF THE PROJECT AND COMMERCIALIZATION OF THE PROPERTY/PREMISES. (T) TO AMALGAMATE THE PROPERTY WITH ANY OTHER CONTI GUOUS, ADJACENT AND ADJOINING LAND SAND 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/O R THEIR ASSOCIATE AND/OR GROUP CONCERNS/S AND/OR UTILIZE THE FSI, FAR, DR AN D TDR OF THE CONTIGUOUS, ADJACENT AND ADJOINING LANDS FOR THE PURPOSE OF CON STRUCTING BUILDINGS AND/OR STRUCTURES THEREON AND/OR ON THE PROPERTY OR UTILI ZE 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 REQU IRED TO BE HANDED OVER OR OTHERWISE AND TO EXECUTE AND DELIVER ANY UNDERTAKIN GS, DECLARATIONS, AFFIDAVITS, BONDS, DEEDS, DOCUMENTS, ETC. AS MAY BE REQUIRED BY THE AUTHORITIES CONCERNED FOR VESTING SUCH A PART OR PO RTION IN SUCH AUTHORITY AND TO ADMIT EXECUTION THEREOF BEFORE THE CONCERNED COM PETENT AUTHORITY AND GET THE SAME REGISTERED WITH THE CONCERNED SUB-REGISTRA R. (Y) REASONABLE OPPORTUNITY OF HEARING SHALL BE GIVE N TO MORTGAGE, ENCUMBER OR CREATE A CHARGE ON THE PROPERTY OR ANY PART OR PORTION THEREOF AND EXECUTE THE NECESSARY SECURITY DOCUMENTS IN FAVOUR OF ANY BANK/FINANCIAL INSTITUTION TO RAISE FUNDS FOR THE CONSTRUCTION/DEV ELOPMENT OF THE PROPERTY AND FOR THE SAID PURPOSE TO DEPOSIT TITLE DEEDS (IF REQ UIRED) IN RESPECT OF THE PROPERTY IN FAVOUR OF SUCH BANK/FINANCIAL INSTITUT ION, EXECUTE THE NECESSARY DOCUMENTS AND REGISTER THE CHARGE CREATED ON THE PR OPERTY IF SO REQUIRED IN THE REVENUE RECORDS AND/OR DESIRED BY THE ATTORNEY. (AA) TO SELL, TRANSFER, LEASE, LICENSE THE PREMISE S THAT MAY BE CONSTRUCTED ON THE PROPERTY ON OWNERSHIP BASIS, LEASE, LICENSE AND/OR IN ANY OTHER MANNER FOR SUCH PRICE AS THE ATTORNEYS MAY DEEM FIT AND PR OPER. TO COLLECT AND RECEIVE FROM THE PURCHASED, TRANSFEREES, LESSEES, L ICENSEES OF THE PREMISES, MONIES/PRICE AND/OR CONSIDERATION AND/OR MAINTENANC E CHARGES AND TO SIGN AND EXECUTE AND/OR GIVE PROPER AND LAWFUL DISCHARGE FOR THE RECEIPTS. (BB) TO EXECUTE FROM TIME TO TIME ALL THE WRITING, AGREEMENT, DEEDS ETC. IN RESPECT OF THE PREMISES WHICH MAYBE CONSTRUCTED ON THE PROPERTY AND ALSO TO EXECUTE AND SIGN CONVEYANCE, TRANSFER OR SURRENDER IN RESPECT OF THE PROPERTY OR ANY PART THEREOF. (CC) TO SIGN, EXECUTE AND REGISTER THE CONVEYANCES OR ASSIGNMENTS AND/OR POWER OF ATTORNEYS AND/OR OTHER DOCUMENTS AND/OR A GREEMENTS AND/OR ANY OTHER WRITINGS IN RESPECT OF THE PROPERTY IN PART OR FULL AND/OR THE PREMISES CONSTRUCTED THEREON OR ANY PART THEREOF IN FAVOUR O F ANY PERSON AS THE ATTORNEYS MAY DETERMINE INCLUDING IN FAVOUR OF ANY INDIVIDUAL AND/OR LEGAL ENTITLES AND/OR CO-OPERATIVE SOCIETY AND/OR LIMITED COMPANY AND/OR ANY OTHER ENTITY THAT MAY BE FORMED FOR SUCH PURPOSE. (DD) TO ISSUE LETTER OF LIEN/NOCS AND TO SIGN DOCU MENTS ON BEHALF OF THE OWNER AS REQUIRED BY THE PROSPECTIVE BUYERS/LENDING INSTRUCTIONS TO CREATE A CHARGE ON THE ALLOTTED PREMISES. (GG) TO LOOK AFTER AND MAINTAIN THE PROPERTY AND TH E PREMISES CONSTRUCTED THEREON TILL ITS TRANSFER IN FAVOUR OF THE CO-OPER ATIVE SOCIETY OR LIMITED COMPANY OR ANY OTHER ORGANISATION. 54 IT IS PERTINENT TO NOTE THAT POWER/AUTHORIZATION WHICH HAVE BEEN GIVEN BY THE SOCIETY TO THE DEVELOPER, WERE IN FACT WERE REQUIRE D TO BE GIVEN IN TERMS OF VARIOUS CLAUSES OF THE JDA. CLAUSE 6.7 REPRODUCED ABOVE IT SELF SHOWS THAT THE SOCIETY WAS REQUIRED TO GIVE POWERS TO RAISE FINANCE TO MORTGAG E THE PROPERTY AND EVEN THE REGISTRATION OF CHARGE WAS ALSO REQUIRED TO BE GIVE N. FURTHER THROUGH CLAUSE 6.15 IT 16 WAS AGREED THAT DOCUMENTS OF ORIGINAL TITLE DEEDS O F 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 TH DC/HASH WAS ALWAYS PERMITTED BY OWNER TO AMALGAMATE THE PROPERTY WITH ANY OTHER CON TIGUOUS, 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 TERM S OF AGREEMENT ITSELF TO ALLOW THE DEVELOPER TO AMALGAMATE THE PROJECT. TOWARDS THE E ND 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 CONTIN UES TO BE IN POSSESSION FOR THE PURPOSE OF DEVELOPMENT, MORTGAGE ETC. EVEN AFTER TE RMINATION. CLAUSE 8 WHICH DESCRIBES THE OBLIGATION AND UNDERTAKING OF THE THD C/HASH AND PROVIDES SPECIFICALLY THAT ALL ENVIRONMENTAL CLEARANCE SHALL BE OBTAINED BY THDC/HASH OUT OF ITS OWN SOURCES. THUS IT WAS CLEARLY UNDERSTOOD BY THE PAR TIES THAT REQUISITE ENVIRONMENTAL CLEARANCES HAD TO BE OBTAINED BEFORE START OF THE P ROJECT. CLAUSE 10 AGAIN CASTS SPECIFIC OBLIGATION ON THE OWNER SOCIETY TO GIVE CO NSENT TO THDC/HASH TO RAISE FINANCE FOR THE DEVELOPMENT AND COMPLETION OF THE P ROJECT ON THE SECURITY OF THE PROPERTY BY WAY OF MORTGAGING THE PROPERTY. THUS W HATEVER POWER/AUTHORIZATION HAVE BEEN GIVEN THROUGH IRREVOCABLE SPECIAL POWER OF ATT ORNEY ARE EMANATING FROM THE TERMS AND CONDITIONS AGREED TO AMONG THE PARTIES FROM THE JDA. 55 THE COMBINED READING OF THE ABOVE CLAUSES OF THE IRREVOCABLE SPECIAL POWER OF ATTORNEY AND JDA CLEARLY SHOW THAT THE DEV ELOPER WAS AUTHORIZED TO ENTER UPON THE PROPERTY FOR NOT ONLY FOR THE PURPOS E OF DEVELOPMENT BUT OTHER PURPOSES ALSO. THDC WAS AUTHORIZED TO AMALGAMATE T HE PROJECT WITH ANY OTHER PROJECT IN THE ADJACENT AREA OR ADJOINING AREA AS P ER CLAUSE (T) OF THE SPECIAL POWER OF ATTORNEY. IF THE POSSESSION WAS NEVER GIV EN TO THE DEVELOPER BY THE SOCIETY THEN HOW THE DEVELOPER COULD AMALGAMATE TH E PROJECT WITH ANOTHER PROJECT WHICH MAY BE ACQUIRED LATTER IN THE ADJOINI NG AREA. THROUGH CLAUSE (W) THDC WAS AUTHORIZED TO HAND OVER THE POSSESSION OF PROPERTY OR PORTION THEREOF TO THE AUTHORITY TO WHOM THE SAME IS REQUIR ED. IN LARGE HOUSING SOCIETY PROJECTS SOMETIMES MUNICIPAL AUTHORITIES TA KES SOME PORTION OF LAND FOR THE PURPOSE OF ROADS, PARKS OR OTHER GENERAL UT ILITY PURPOSES LIKE INSTALLATION OF ELECTRICITY TRANSFORMERS AND BEFORE SANCTIONING THE PLANS THE DEVELOPER IS REQUIRED TO UNDERTAKE THAT SUCH PORTIO NS OF LAND WOULD BE GIVEN FOR SUCH A COMMON PURPOSE. IF POSSESSION WAS NOT GI VEN THEN HOW THDC WAS AUTHORIZED TO HAND OVER SUCH LAND OR PORTIONS THERE OF WHICH HAVE NOT BEEN IDENTIFIED IN THE JDA OUT OF THE TOTAL LAND. SIMIL ARLY THROUGH CLAUSE (Y) THDC HAS BEEN AUTHORIZED TO MORTGAGE, ENCUMBRANCE OR CRE ATE CHARGE ON THE PROPERTY IN FAVOUR OF ANY BANK OR FINANCIAL INSTIT UTION FOR RAISING THE FUNDS FOR THE PROJECT. IN THE ABSENCE OF POSSESSION SUCH POW ERS CANNOT BE GIVEN. CLAUSE (AA) CLEARLY AUTHORIZED THE THDC TO SELL, TR ANSFER, LEASE, LICENSE 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 WE RE TO BE SINGED BY THE SOCIETY AS CONFIRMING PARTY. IN THE ABSENCE OF POS SESSION 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 DOCUMENT S INVOLVING IN RESPECT OF THE PREMISES TO BE CONSTRUCTED WITHOUT ANY INTERFER ENCE OF THE SOCIETY BEING MADE CONFIRMING PARTY. ALL THESE CLAUSES CLEARLY S HOW 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 CL AUSES OF JDA AND IRREVOCABLE POWER OF ATTORNEY THE DEVELOPER WAS AB LE TO COMPLETELY CONTROL THE PROPERTY AND MAKE USE OF IT NOT ONLY FOR THE PU RPOSE OF DEVELOPMENT BUT ALSO FOR THE PURPOSE OF AMALGAMATION, SALE, MORTGAG E ETC. WHEN THE ABOVE CLAUSES ARE COMPARED ON TOUCH STONE OF THE DISCUSSI ON ON POSSESSION IN PARA 26 TO 28 IN THE CASE OF JASBIR SINGH SARKARIA (SUPR A) WHICH WE HAVE REPRODUCED ABOVE, IT BECOMES CLEAR THAT THE POSSESS ION HAS BEEN GIVEN. 56 IN THAT DISCUSSION, IT HAS BEEN CLEARLY MENTIONE D 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 TRANSFERE E BY VIRTUE OF POSSESSION SHOULD BE ABLE TO EXERCISE CONTROL FROM OVERALL INT ENDED PURPOSES. WE DO NOT THINK IN THE PRESENT CASE THE ASSESSEE HAS GIVEN ON LY A LICENSE AS CLAIMED BY LD. COUNSEL OF THE ASSESSEE BECAUSE OF THE POWERS O F SELLING, AMALGAMATING ETC. MENTIONED IN THE JDA AND IRREVOCABLE SPECIAL POWER OF ATTORNEY. THE ISSUE HAS BEEN DISCUSSED IN HE JUDGMENT OF JASBIR S INGH SARKARIA (SUPRA) IN FURTHER DISCUSSION WHICH HAS BEEN MADE IN PARA 33 R EGARDING POWER OF ATTORNEY (WHICH HAS BEEN REPRODUCED EARLIER). IN T HAT CASE THE POWERS WERE GIVEN TO ENTER UPON AND SURVEY THE LAND, PREPARE LA Y OUT PLANS, SUBMIT BUILDING PLAN FOR SANCTION WITH THE APPROPRIATE AUT HORITIES TO CONTROL, MANAGE AND LOOK AFTER AND SUPERVISE THE PROPERTY, TO OBTAI N WATER AND SEWERAGE, DISPOSAL AND ELECTRICITY CONNECTION. IN THAT CASE THE DEVELOPER WAS AUTHORIZED TO MORTGAGE THE PROPERTY TO OBTAIN MONEY FOR MEETIN G THE COST OF CONSTRUCTION ON SECURITY AND MORTGAGE OF LAND FALLING ONLY TO TH E DEVELOPERS SHARE. IN THAT CASE IT WAS HELD THAT GPA WAS NOT A LICENSE TO ENTE R UPON FOR DOING SOME PRELIMINARY ACTS IN RELATION TO DEVELOPMENT OF WORK BUT THE POWER TO CONTROL THE LAND HAS ALSO BEEN CONFIRMED. IT HAS ALSO BEEN NOTED THAT THE AGREEMENT DESCRIBED THE POWER OF ATTORNEY AS IRREVOCABLE AND EXTRA DECLARATION TO THAT EFFECT IN THE POWER OF ATTORNEY IS NOT WITHOUT SIGN IFICANCE. IN CASE BEFORE US, MANY MORE POWERS HAVE BEEN GIVEN TO THDC IN ADDITIO N TO POWERS WHICH HAVE 17 BEEN DESCRIBED IN THAT JUDGMENT AND POWER OF ATTORN EY HAS BEEN DESCRIBED AS IRREVOCABLE IN CLAUSE 6.7 OF JDA. THEREFORE, IT I S CLEAR THAT THE ASSESSEES PLEA THAT THE POSSESSION WAS TO BE GIVEN ONLY AT TH E TIME OF REGISTRATION OF THE JDA, IS NOT CORRECT. ONCE IRREVOCABLE POWER WAS GI VEN THEN IT CANNOT BE SAID THAT THE POSSESSION WAS NOT GIVEN. THE ISSUE REGAR DING REVOCATION OF IRREVOCABLE POWER OF ATTORNEY AND CANCELLATION OF T HE JDA WOULD BE DISCUSSED LATER ON WHILE DEALING WITH THAT CONTENTION. 57 WE FIND FORCE IN THE SUBMISSIONS OF THE LD. DR F OR THE REVENUE THAT INTERPRETATION OF CLAUSE (V) TO SECTION 2(47) SHOUL D BE MADE IN THE LIGHT OF HEYDONS 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 FAC T THAT NO REASON HAS BEEN GIVEN FOR THE SAME. HEYDONS RULE HAS BEEN APPLIED BY THE INDIAN COURTS MANY TIMES. THE RULE WAS APPLIED AND INITIATED IN HEYDONS CASE (1584) 3 CO. REP 7A. THIS RULE WAS UPHELD BY THE CONSTITUTION B ENCH 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 CONSTITUTIO N. IT HAS BEEN HELD IN CASE OF DR. BALIRAM WAMAN HIRAY V. MR. JUSTICE B. LENTI N AND ANOTHER, 176 ITR 1 THAT FOR UNDERSTANDING AMENDMENT IN THE ACT, PERHAP S HEYDONS 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 UND ERSTOOD AS EXCLUSIVE BASIS OF THE TRANSFEREE THEN VERY PURPOSE OF THE AMENDMENT O R 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. BALIR AM WAMAN HIRAY V. MR. JUSTICE B. LENTIN AND ANOTHER (SUPRA): THE FOLLOWING PRINCIPLES ENUNCIATED IN HEYDONS CA ASE (1584) 3 CO. REP 7A AND FIRMLY ESTABLISHED, ARE STILL IN FULL FORCE AND EFFECT: THAT FOR THE SURE AND TRUE INTERPRETATION OF ALL STATUTES IN GENERALS (BE THEY PENAL OR BENEFICIAL, RESTRICTIVE OR ENLARGING OF THE COMMON LAW), FOUR T HINGS ARE TO BE DISCERNED AND CONSIDERED: (1) WHAT WAS THE COMMON LAW BEFORE THE MAKING OF THE ACT; (2) WHAT WAS THE MISCHIEF AND DEFECT FOR WHICH THE COMMON LAW DID NOT PROVIDE; (3) WHAT REMEDY PARLIAMENT HAS RESOLVED AN D APPOINTED TO CURE THE DISEASE OF THE COMMON WEALTH AND (4) THE TRUE REASO N OF THE REMEDY. AND THEN, THE OFFICE OF ALL THE JUDGES IS ALWAYS TO MAK E SUCH CONSTRUCTION AS SHALL SUPPRESS THE EVASIONS FOR THE CONTINUANCE OF THE MI SCHIEF AND PRO PRIVATE COMMANDO AND TO ADD FORCE AND LIFE TO THE CURE AND REMEDY ACCORDING TO THE TRUE INTENT OF THE MAKERS OF THE ACT PRO BONO PUBLI C. THERE IS NOW THE FURTHER ADDITION THAT REGARD MUST BE HAD NOT ONLY TO THE EX ISTING LAW BUT ALSO TO PRIOR LEGISLATION AND TO THE JUDICIAL INTERPRETATION THER EOF. 58 GOING BY THE HEYDONS RULE OF INTERPRETATION IF WE ANALYZE THE PURPOSE OF CLAUSE (V) OF SECTION 2(47) THEN IT WOULD EMERGE THAT LAW BEFORE MAKING THE AMENDMENT WAS THAT CAPITAL GAIN COULD BE CHARGED ON LY IF A TRANSFER HAS BEEN EFFECTED AND TRANSFER WAS INTERPRETED BY VARIOUS CO URTS INCLUDING THE DECISION OF HON'BLE SUPREME COURT IN CASE OF ALAPATI VENKAT RAMIAN V CIT, 57 ITR 185 (SC) THAT PROPER CONVEYANCE OF THE PROPERTY HAS BEE N MADE UNDER THE COMMON LAW. THE MISCHIEF WAS WITH REGARD TO TRANSFER IN TH E SENSE THAT THERE WAS COMMON PRACTICE THAT PROPERTIES WERE BEING TRANSFER RED IN SUCH A MANNER THAT TRANSFEREE COULD ENJOY THE BENEFIT OF THE PROPERTY WITHOUT EXECUTION OF THE CONVEYANCE DEED. THIRDLY WE NEED TO EXAMINE THE REM EDY WHICH WAS INSERTION OF CLAUSE (V) AND (VI) SO THAT CASES OF GIVING POSS ESSION OF THE PROPERTY, WERE ALSO COVERED BY THE DEFINITION OF TRANSFER. FOURTH LY, TRUE REASON FOR THIS AMENDMENT WAS TO PLUG A LOOP HOLE IN THE LAW. THER EFORE, CONSIDERING THE PURPOSE OF INSERTION OF CLAUSE (V) AND (VI) OF SECT ION 2(47) AND VARIOUS CLAUSES OF POWER OF ATTORNEY AND JDA IT BECOMES ABSOLUTELY CLEAR THAT THE SOCIETY HAS HANDED OVER THE POSSESSION OF THE PROPERTY TO THDC/ HASH. 59 SECOND IMPORTANT CONTENTION ON BEHALF OF THE ASS ESSEE IS THAT JDA WAS EXECUTED ON 25.2.2007 AND IF POSSESSION WAS GIVEN T HEN 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 EXECU TED ON 2.3.2007 FOR 3.08 ACRES AND RECITATION CLAUSE (A) READS AS UNDER: CLAUSE (A) - THE VENDOR IS THE ABSOLUTE OWNER AND I N 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 BO UNDARY 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 HAV E / 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 EXPL AINED IN CASE OF JASBIR SINGH SARKARIA (SUPRA), ACTUAL REALITY WILL COME FO RWARD. IN THIS JUDGMENT CONCEPT OF CONCURRENT POSSESSION HAS ALSO BEEN DISC USSED AND FOLLOWING 18 EXTRACT OF PARAGRAPH 55 OF SALMONDS JURISPRUDENCE HAS BEEN EXTRACTED WHICH READS AS UNDER: IT WAS A MAXIM OF THE CIVIL LAW THAT TWO PERSONS C OULD NOT BE IN POSSESSION OF THE SAME THING AT THE SAME TIME. AS A GENERAL PROP OSITION THIS IS TRUE: FOR EXCLUSIVENESS IS OF THE ESSENCE OF POSSESSION. TWO ADVERSE CLAIMS OF EXCLUSIVE USE CANNOT BOTH BE EFFECTUALLY REALIZED A T THE SAME TIME. CLAIMS, HOWEVER, WHICH ARE NOT ADVERSE, AND WHICH ARE NOT, THEREFORE, MUTUALLY DESTRUCTIVE, ADMIT OF CONCURRENT REALIZATION. HENC E THERE ARE SEVERAL POSSIBLE CASES OF DUPLICATE POSSESSION. 1 MEDIATE AND IMMEDIATE POSSESSION CROSS-OBJECTIONS -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. THE CONCURRENT POSSESSION OF THE OWNER WHO CAN EXER CISE POSSESSION RIGHT TO A LIMITED EXTENT AND FOR A LIMITED PURPOSE AND THAT OF THE BUYER/DEVELOPER WHO HAS A GENERAL CONTROL AND CUSTODY OF THE LAND CAN V ERY WELL BE RECONCILED. 61 IN FURTHER DISCUSSION IN PARA 26 TO 28 OF THE AB OVE DECISION IT HAS BEEN HELD THAT IT IS NOT NECESSARY IN TERMS OF CLAUSE (V ) THAT THE DEVELOPER SHOULD HAVE EXCLUSIVE POSSESSION. THE CONCURRENT POSSESSI ON OF THE OWNER IS POSSIBLE WHICH GIVES RIGHTS TO A LIMITED EXTENT FOR A LIMITED PURPOSE. THUS IT IS VERY MUCH POSSIBLE TO HOLD CONCURRENT POSSESSION. MERE RECITATION IN THE SALE DEED TO THE EFFECT THAT THE SOCIETY WAS OWNER OF AN D IN POSSESSION OF LAND MEASURING 21.2 ACRES, DOES NOT SHOW THAT THE SOCIET Y WAS HAVING ACTUAL POSSESSION. WHAT THE SOCIETY WAS HAVING IS ONLY OW NERSHIP RIGHT AND THE POSSESSION WAS ONLY CONCURRENT AS THE POSSESSARY RI GHT. FURTHER IT IS A STANDARD CLAUSE IN THE CONVEYANCE DEED AND IT DOES NOT PROVE OR INDICATE ANYTHING EXCEPT THAT A PORTION OF LAND MEASURING 3. 08 ACRES, HAS BEEN SOLD / CONVEYED TO THE DEVELOPER. IN THE LIGHT OF THIS POS ITION, THIS CONTENTION IS REJECTED. 62 WE FIND NO FORCE IN THE NEXT CONTENTION OF THE L D. COUNSEL OF THE ASSESSEE THAT POSSESSION IF AT ALL WAS GIVEN SHOULD BE HELD TO BE ONLY A LICENSE AS DEFINED IN SECTION 52 OF INDIAN EASEMENT ACT BECAUSE CLEARLY AS PER SECTION 52 OF THIS ACT, WHERE ONE PERSON GRANTS TO ANOTHER OR MANY OTHER PERSONS TO DO SOMETHING UPON IMMOVEABLE PROPERTY WH ICH IN THE ABSENCE OF SUCH RIGHT WOULD BE UNLAWFUL. 63 HERE IN CASE BEFORE US, THE RIGHT HAS NOT BEEN G IVEN FOR THE PURPOSE OF DOING SOMETHING BUT ALL THE POSSIBLE RIGHTS IN PROP ERTY INCLUDING RIGHT TO SELL, RIGHT TO AMALGAMATE THE PROJECT WITH ANOTHER PROJEC T 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 BE EN RECEIVED HAS ALREADY BEEN SHOWN AS CAPITAL GAIN. WE FIND NO FORCE IN THIS SU BMISSION 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 IMPLICA TION OF SECTION 45 R.W.S. 48 WHILE DISCUSSING THE LEGAL POSITION. WE HAD ALSO DISCUSS ED THIS ISSUE IN THE LIGHT OF THE DECISION IN CASE OF JASBIR SINGH SARKARIA (SUPRA) A ND 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 ASS ET IS TRANSFERRED IN A PARTICULAR YEAR. 65 WE WOULD LIKE TO DISCUSS THIS ASPECT OF THE ISSU E IN LITTLE MORE DETAIL AND TRY TO UNDERSTAND WHY THE WHOLE OF THE CONSIDERATION IS RE QUIRED 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 EXTRAC TED AT PARA 40 AND THE RELEVANT PORTION IS AS UNDER: 40. ON THE ABOVE, THE HON'BLE AUTHORITY AFTER REFE RRING 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 PRE VIOUS YEAR, (B) RESULTANT PROFITS OR GAINS FROM SUCH TRANSFER, (C) THOSE PROFITS OR GAINS WOULD CONSTITUTE THE INC OME OF THE ASSESSEE/ TRANSFEROR 19 (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 EXPRE SSION RECEIVED. BOTH THESE EXPRESSIONS AND IN ADDITION THERETO, THE EXPRESSION ACCRUE ARE USED IN THE INCOME- TAX ACT EITHER COLLECTIVELY OR SEPARATELY ACCORDING TO THE CONTEXT AND NATURE OF THE CHARGING PROVISION. THE SECOND POINT WHICH DESERVES NOTICE IS THAT BY A DEEMING PROVISION, THE PROFITS OR GAINS THAT HAVE ARISEN W OULD BE TREATED AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. TH AT MEANS, THE INCOME ON ACCOUNT OF ARISAL OF CAPITAL GAIN SHOULD BE CHARGED TO TAX IN THE SAME PREVIOUS YEAR IN WHICH THE TRANSFER WAS EFFECTED OR DEEMED TO HAVE TAKEN PLAC E. THE EFFECT AND AMBIT OF THE DEEMING PROVISION CONT AINED IN SECTION 45 HAS BEEN CONSIDERED IN DECIDED CASES AND LEADING TEXT B OOKS. THE FOLLOWING STATEMENT OF LAW IN SAMPATH IYENGARS COMMENTARY (10TH EDITION REVISED BY SHRI S. RAJARATNAM) BRINGS OUT THE CORRECT LEGAL POSITION : SECTION 45 ENACTS THAT THE CAPITAL GAINS SHALL BY FICTION BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER T OOK PLACE. SINCE THIS IS A STATUTORY FICTION, THE ACTUAL YEAR IN WHICH THE SA LE PRICE WAS RECEIVED, WHETHER IT WAS ONE YEAR, TWO YEARS, THREE YEARS, FOUR YEAR S ETC. PREVIOUS TO THE PREVIOUS YEAR OF TRANSFER, IS BESIDE THE POINT. TH E ENTIRETY OF THE SUM OR SUMS RECEIVED IN ANY EARLIER YEAR OR YEARS WOULD BE REGA RDED AS THE CAPITAL GAINS ARISING IN THE PREVIOUS YEAR OF TRANSFER. . . . . IN THE WORDS OF SECTION 45, THE CAPITAL GAI NS 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 T RANSFER, EVEN AS PAYMENTS MADE PRIOR TO THE YEAR OF TRANSFER. 66 THE ABOVE CLEARLY SHOWS THAT IT IS BECAUSE OF EX PRESSION USED IN SECTION 45 THAT IS ARISING WHICH CANNOT BE EQUATED WITH REC EIPT. 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 SEC TION 12 B OF THE INDIAN INCOME-TAX ACT, 1922 CLARIFIED THE IMPORT OF THE EXPRESSION A RISE AS FOLLOWS SECTION 12B DOES NOT REQUIRE THAT PROFITS SHOULD HAVE BEEN ACTUALLY RECEIVED. IT IS SUFFICIENT IF THEY HAVE ARISEN. THROUGHOUT THE INCO ME-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 COLQUHO UN V. BROOKS. THE LEARNED JUDGE OBSERVED: I THINK, THEREFORE, THAT THE WORDS ARISE OR ACCR UING ARE GENERAL WORDS DESCRIPTIVE OF A RIGHT TO RECEIVE PROFITS. SEE ALSO CIT V. ANAMALLAIS TIMBER TRUST LTD. TO ATT RACT THE OPERATION OF SECTION 12B IT IS THEREFORE SUFFICIENT IF THE PROFITS AROSE. THEY NEED NOT HAVE BEEN ACTUALLY RECEIVED. 14. THUS THE CRITERION OF RIGHT TO RECEIVE THE PROF ITS / GAINS WAS APPLIED IN THAT CASE. 15. THE LEGAL POSITION DOES NOT THEREFORE ADMIT OF ANY DOUBT THAT THE ACTUAL RECEIPT OF THE ENTIRE SALE CONSIDERATION DURING THE YEAR OF T RANSFER IS NOT NECESSARY FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. FURTHER THE EXPRESSION ARISING HAS BEEN DEFINED IN THE ADVANCED LAW LEXICON BY P. RAMANATHA AIYER EDITED BY Y.V. CHANDRACHUD, FORMER CHIEF JUSTICE OF INDIA: THE WORDS ARISING OR ACCRUING DESCRIBE A RIGHT T O RECEIVE PROFITS, AND THAT THERE MUST BE A DEBT OWED BY SOMEBODY. LD. COMMISSIONER OF IN COME TAX, WEST BENGAL-II, CALCUTTA V. HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD. AIR 1986 S.C 1805, 1807. THE EXPRESSION ACCRUAL OF INCOME HAS BEEN DEFINED IN THE SAME LEXICON AS UNDER: ACCRUAL OF INCOME. E.D JASSOON & C. LTD. V LD. COM MISSIONER OF INCOME TAX, AIR 1954 S.C 470 QUOTED INCOME MAY ACCRUE TO AN ASSES SEE WITHOUT THE ACTUAL RECEIPT OF THE SAME. IF THE ASSESSEE ACQUIRES A RIGHT TO RECE IVE THE INCOME, THE INCOME CAN BE SAID TO HAVE ACCRUED TO HIM THOUGH IT MAY BE RECEIV ED LATER ON ITS BEING ASCERTAINED. THE BASIC CONCEPTION IS THAT HE MUST HAVE ACQUIRED A RIGHT TO RECEIVE THE INCOME. BHOGILAL V INCOME TAX LD. COMMISSIONER, AIR 1956 BO M 411, 414 (INCOME TAX ACT (11 OF 1992) SS. 16(1) AND (3)} 67 THE COMBINED READING OF THESE TWO DEFINITIONS SH OW THAT IT (I.E. ACCRUAL) IS NOT EQUAL TO THE RECEIPT OF INCOME. IN FACT IT IS A ST AGE BEFORE THE POINT OF TIME WHEN THE INCOME BECOMES RECEIVABLE. IN OTHER WORDS, ONCE TH E VESTED RIGHTS COME TO A PERSON THEN IT CAN BE SAID THAT SUCH RIGHT OR INCOME HAS A CCRUED TO SUCH PERSON. THE CONCEPT OF ACCRUAL OR AROUSAL OF INCOME HAS ALSO BEEN DISCU SSED BY THE LD. AUTHOR S. RAJARATNAM IN THE COMMENTARY OF LAW OF INCOME TAX B Y SAMPATH IYENGAR XITH EDITION BY DISCUSSING THE MEANING OF ACCRUED AND ARISE AT PAGE 1300 IT HAS BEEN OBSERVE AS UNDER: 20 (1) IMPORTANT PRINCIPLES.- (A) MEANING ACCRUE MEANS TO ARISE OR SPRING AS A NATURAL GROWTH OR RESULT, TO COME BY WAY OF INCREASE. AR ISING 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 BE COME A PRESENT RIGHT OF DEMAND. IN THE ACT, THE TWO WORDS ARE USED SYNONYMOUSLY WITH E ACH 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 INDICAT E 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 INCH OATE AND WHICH IS SOMETHING LESS THAN A RECEIPT. AN UNENFORCEABLE CLAIM TO RECEIVE A N UNDETERMINED OR UNDEFINED SUM DOES NOT GIVE RISE TO ACCRUAL. 68 THEREFORE, IT IS NOT ONLY THE MONEY WHICH HAS B EEN 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, TH IS CONTENTION IS REJECTED. 69 THE FIFTH CONTENTION MADE BY THE LD. COUNSEL FO R 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 R EFERRED TO IN THAT SECTION IS REQUIRED TO BE REGISTERED AND THEREFORE, NOW IN SECTION 2(47)(V) ONLY THE AMENDED PROVISIONS CAN BE READ. WE FIND NO FORCE I N THIS CONTENTION. IT IS WELL KNOWN THAT SECTION 53A OF THE TRANSFER OF PROP ERTY ACT WAS PASSED ON EQUITABLE DOCTRINE SO AS TO PROTECT THE TAKING OVER OR RETENTION OF THE POSSESSION BY THE TRANSFEREE. IT WAS NOT A SOURCE BY WHICH TITLE OF IMMOVABLE PROPERTY COULD BE ACQUIRED. SECTION 53A OF TP ACT READ AS UNDER:- 53A. PART PERFORMANCE.- WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVEABLE PROPERTY BY WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAIN TY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREOF, OR THE TRANSFEREE, BEING ALREADY IN P OSSESSION, CONTINUES IN POSSESSION IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT I N FURTHERANCE OF THE CONTRACT, AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO P ERFORM HIS PART OF THE CONTRACT, THEN, NOTWITHSTANDING THAT THE CONTRACT, [***]WHERE THERE IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSFER HA S NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFO R BY THE LAW FOR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL B E DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSSESSION, OTHER THAN A RIGHT EXPR ESSLY PROVIDED BY THE TERMS OF THE CONTRACT 70 A PLAIN READING OF THE ABOVE PROVISION SHOWS THAT IT PROVIDES A SAFETY MEASURE OR A SHIELD IN THE HANDS OF THE TRANSFEREE TO PROTECT THE POSSESSION OF ANY PROPERTY WHICH HAS BEEN GIVEN BY THE TRANSFEROR AS LAWFUL POSSESSION UNDER A PARTICULAR AGREEMENT OF SALE. THIS POSITIO N OF LAW WAS INCORPORATED IN THE DEFINITION OF TRANSFER BY INSERTION OF CLAUSE S (V) & (VI) IN SECTION 2(47) OF THE ACT. IT IS IMPORTANT TO NOTE THAT CLAUSE (V) U SES THE EXPRESSION CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF T.P. AC T, 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 EV EN 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 TH OUGH REQUIRED TO BE REGISTERED HAS NOT BEEN REGISTERED, HAS BEEN OMITT ED 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 AGREEM ENT. IN OTHER WORDS, NOW U/S 53A OF T.P. ACT, THE AGREEMENT REFERRED IS REQU IRED 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 O F 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 TH E 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 STA TUTE IS INTRODUCED INTO ANOTHER ACT IT MUST BE READ IN THE SAME SENSE AS I T BORE IN THE ORIGINAL ACT. THE CAREFUL PERUSAL OF THAT JUDGMENT WOULD SHOW THA T 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 P URPOSE OF MAT PROVISION WHAT IS THE MEANING OF PAST LOSSES OR UNABSORBED DEPRECI ATION. IT WAS FOUND THAT IN EXPLANATION TO SECTION 115J CLAUSE (IV), THE FOLLOW ING EXPRESSION WAS USED:- (IV) THE AMOUNT OF THE LOSS OR THE AMOUNT OF DEPREC IATION WHICH WOULD BE REQUIRED TO BE SET OFF AGAINST THE PROFIT OF THE RELEVANT PREVIOUS YEAR AS IF THE PROVISIONS OF CLAUSE (B) OF THE FIRST PROVISO TO SUB SECTION (I) OF SECTION 205 OF THE COMPANIES ACT , 1956 (1 OF 1956) ARE APPLICABLE. 21 71 THE HON'BLE APEX COURT REFERRED TO THE PRINCIPLE S OF STATUTORY INTERPRETATION BY SHRI G.P.SINGH AND EXTRACTED FOLL OWING PIECE: SECTION 115J, EXPLANATION CLAUSE (IV), IS A PIECE OF LEGISLATION BY INCORPORATION. DEALING WITH THE SUBJECT, JUSTICE G. P. SINGH STATES IN PRINCIPLES OF STATUTORY INTERPRETATION (7TH EDITION , 1999). INCORPORATION OF AN EARLIER ACT INTO A LATER ACT IS A LEGISLATIVE DEVICE ADOPTED FOR THE SAKE OF CONVENIENCE IN ORDER TO AVO ID VERBATIM REPRODUCTION OF THE PROVISIONS OF THE EARLIER ACT I NTO THE LATER. WHEN AN EARLIER ACT OR CERTAIN OF ITS PROVISIONS ARE INCORP ORATED BY REFERENCE INTO A LATER ACT, THE PROVISIONS SO INCORPORATED BE COME PART AND PARCEL OF THE LATER ACT AS IF THEY HAD BEEN 'BODILY TRANSP OSED INTO IT'. THE EFFECT OF INCORPORATION IS ADMIRABLY STATED BY LORD ESHER, M.R. : 'IF A SUBSEQUENT ACT BRINGS INTO ITSELF BY REFERENCE SOME OF THE CLAUSES OF A FORMER ACT, THE LEGAL EFFECT OF THAT, AS HAS OFTEN BEEN HELD, IS TO WRITE THOSE SECTIONS INTO THE NEW ACT AS IF THEY HAD BEEN ACTUALLY WRITTEN IN IT WITH THE PEN, OR PRINTED IN IT.(P.233) EVEN THOUGH ONLY PARTICULAR SECTIONS OF AN EARLIER ACT ARE INCORPORATED INTO LATER, IN CONSTRUING THE INCORPORATED SECTIONS IT MAY BE AT TIMES NECESSARY AND PERMISSIBLE TO REFER TO OTHER PARTS O F THE EARLIER STATUTE WHICH ARE NOT INCORPORATED. AS WAS STATED BY LORD B LACKBURN: 'WHEN A SINGLE SECTION OF AN ACT OF PARLIAMENT IS I NTRODUCED INTO ANOTHER ACT, I THINK IT MUST BE READ IN THE SENSE I T 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 T HAT MEANING OF PAST LOSSES OR UNABSORBED DEPRECIATION HAS TO BE TAKEN S AME AS WAS DEFINED IN THE COMPANIES ACT. IN THIS CASE IT IS CLEAR THAT PROVI SION ITSELF REFERS TO CLAUSE (B) OF SUB SECTION (1) OF SECTION 205 OF COMPANYS 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 LEGI SLATION INTO ANOTHER PIECE OF LEGISLATION. IF THAT WAS THE INTENTION OF THE PARLI AMENT, OBVIOUSLY CLAUSE (V) WOULD CONTAIN THE EXPRESSION CONTRACT AS DEFINED U NDER SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882. FURTHER, IT IS SE TTLED POSITION OF LAW THAT ANY INTERPRETATION WHICH COULD RENDER A PARTICULAR PROV ISION REDUNDANT SHOULD BE AVOIDED. IF THE CONTENTION OF THE LD. COUNSEL WAS T O BE ACCEPTED, OBVIOUSLY THE PROVISIONS OF CLAUSE (V) OF SECTION 2(47) OF THE AC T WOULD BECOME REDUNDANT IN THE SENSE THAT REGISTRATION OF AGREEMENT WOULD AGAI N BE MADE COMPULSORY BUT SINCE PROPERTIES WERE BEING SOLD IN THE MARKET ON POWER OF ATTORNEY BASIS THROUGH UNREGISTERED AGREEMENTS WHICH WOULD MAKE TH IS PROVISION REDUNDANT. THIS POSITION WE HAVE ALREADY DISCUSSED EARLIER WHI LE DISCUSSING THE HEYDONS RULE IN THE INTERPRETATIONS OF THIS CLAUSE. FURTHE R THE ISSUE OF INTERPRETATION OF CLAUSE (V) AND AMENDMENT TO SECTION 53A OF THE T RANSFER OF PROPERTY ACT CAME FOR CONSIDERATION BEFORE THE MUMBAI BENCH OF T HE TRIBUNAL IN THE CASE OF SURESH CHANDER AGGARWAL VS ITO 48 SOT 2010. THE TR IBUNAL DISCUSSED THIS ISSUE AT PAGE 7 AND AFTER QUOTING THE PROVISIONS OF SECTION 2(47) AND ALSO SECTION 53A BEFORE AND AFTER AMENDMENT AS WALL AS P ARA NOS. 11.1 TO 11.2 OF THE BOARDS CIRCULAR NO. 495 DATED 22.9.1987 OBSERV ED AS UNDER:- THE ABOVE CLEARLY SHOWS THAT THERE WAS CERTAIN SIT UATION WHERE PROPERTIES WERE BEING TRANSFERRED WITHOUT REGISTRATION OF TRANSFER INSTRUMENTS AND PEOPLE WERE ESCAPING TAX LIABILITIES ON TRANSFER OF SUCH PROPER TIES BECAUSE THE SAME COULD NOT BE BROUGHT IN THE DEFINITION OF 'TRANSFER' PARTICUL ARLY IN MANY STATES OF THE COUNTRY PROPERTIES WERE BEING HELD BY VARIOUS PEOPL E AS LEASED PROPERTIES WHICH WERE ALLOTTED BY THE VARIOUS GOVT. DEPARTMENTS AND TRANSFERS OF SUCH LEASE WERE NOT PERMISSIBLE. PEOPLE WERE TRANSFERRING SUCH PROP ERTIES BY EXECUTING AGREEMENT TO SELL AND GENERAL POWER OF ATTORNEY AS WELL AS WILL AND RECEIVING FULL CONSIDERATION, BUT SINCE THE AGREEMENT TO SELL WAS NOT REGISTERED AND THOUGH FULL CONSIDERATION WAS RECEIVED AND EVEN POSSESSION WAS GIVEN, STILL THE SAME TRANSACTIONS COULD NOT BE SUBJECTED TO TAX BECAUSE THE SAME COULD NOT COVERED BY THE DEFINITION OF 'TRANSFER'. TO BRING SUCH TRAN SACTIONS WITHIN THE TAX NET, THIS AMENDMENT WAS MADE. IT HAS TO BE APPRECIATED THAT C LAUSE (V) IN SECTION 2(47) DOES NOT LIFT THE DEFINITION OF PART PERFORMANCE FR OM SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. RATHER, IT DEFINES ANY TRANS ACTION INVOLVING ALLOWING OF POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THIS MEANS SUCH TRANSFER IS HOT RE QUIRED 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 INCLUD E TRANSACTIONS DEFINED IN SEC. 22 53A OF THE TRANSFER OF PROPERTY ACT. BUT THE LEGISL ATURE 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 TRANSACTIO NS WHERE PROPERTIES WERE BEING TRANSFERRED BY WAY OF GIVING POSSESSION AND RECEIVI NG 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 BE EN INDIRECTLY BROUGHT ON THE STATUTE NEED NOT BE APPLIED WHILE CONSTRUING THE ME ANING 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 PO DAR 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 B Y THE ASSESSEE. THE POSSESSION OF THE FLATS WAS TAKEN AFTER FULL PAYMEN T OF CONSIDERATION. THE FLATS WERE LET OUT. THE ASSESSEE CONTENDED THAT THE RENTA L INCOME FROM THESE FLATS WAS ASSESSABLE AS 'INCOME FROM OTHER SOURCES' BECAUSE T HE ASSESSEE WAS NOT THE LEGAL OWNER BECAUSE THE TITLE OF THE PROPERTY HAD N OT BEEN CONVEYED TO THE CO- OPERATIVE SOCIETY WHICH WAS FORMED BY THE PURCHASER S OF THE FLATS. THE HON'BLE COURT NOTED THAT SECTION 27 HAD BEEN AMENDED VIDE C LAUSE 3(A) WHEREIN WHEN A PERSON WAS ALLOWED TO TAKE POSSESSION OF THE BUILDI NG IN PART PERFORMANCE OF THE NATURE REFERRED TO IN SECTION 53A, SUCH PERSON SHAL L BE DEEMED TO BE THE OWNER. IT WAS FURTHER OBSERVED THAT FOR ALL PRACTICABLE PU RPOSES THE ASSESSEE WAS THE OWNER AND POSSIBLY THERE CANNOT BE TWO OWNERS OF SA ME PROPERTY AT THE SAME TIME. IN FACT, THE AMENDMENTS TO SECTION 27 WERE MA DE LATER ON BUT WERE TAKEN INTO COGNIZANCE ON THE BASIS OF ABOVE PRINCIPLE AND ULTIMATELY 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 COMPL Y WITH THE REQUIREMENTS OF LAW SUCH AS THE TRANSFER OF PROPERTY ACT, THE RE GISTRATION ACT, ETC., IN THE CONTEXT SECTION 22 OF THE INCOME-TAX ACT, 196 1, HAVING REGARD TO THE GROUND REALITIES AND FURTHER HAVING REGARD TO THE O BJECT OF THE INCOME-TAX ACT, NAMELY, TO TAX THE INCOME, 'OWNER' IS A PERSO N WHO IS ENTITLED TO RECEIVE INCOME FROM THE PROPERTY IN HIS OWN RIGHT. THE REQUIREMENT OF REGISTRATION OF THE SALE DEED IN THE CONTEXT OF SEC TION 22 IS NOT WARRANTED.' THUS, FROM THE ABOVE, IT IS CLEAR THAT IT IS NOT NE CESSARY TO GET THE INSTRUMENT OF TRANSFER REGISTERED FOR THE PURPOSE OF INCOME-TAX A CT WHEN A PERSON HAS GOT A VALID LEGALLY CONVEYED AFTER COMPLYING WITH THE REQ UIREMENTS OF THE LAW. 9. SIMILARLY, IN THE CASE OF MYSORE MINERALS LTD. V. CIT [1999] 239 ITR 775/106 TAXMAN 166 (SC), THE ASSESSEE HAD PURCHASED FOR THE USE OF ITS STAFF SEVEN LOW INCOME GROUP HOUSES FROM A HOUSING BOARD. THE PAYME NT HAD BEEN MADE AND IN TURN POSSESSION OF THE HOUSES WAS TAKEN OVER BY THE ASSESSEE. THE ACTUAL CONVEYANCE DEED WAS NOT EXECUTED. THE ASSESSEE CLAI MED DEPRECIATION WHICH WAS DENIED BY THE DEPARTMENT. AFTER GREAT DISCUSSIO N, 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, TH AT THE FINDING OF FACT ARRIVED AT IN THE CASE AT HAND WAS THAT THOUGH A DO CUMENT 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 D OMINION OVER THE PROPERTY ON THE ASSESSEE WHEREAFTER THE ASSESSEE HA D IN ITS OWN RIGHT ALLOTTED THE QUARTERS TO THE STAFF AND THEY WERE BE ING 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 ALTHO UGH IT HAD TAKEN POSSESSION AND MADE PART PAYMENT OF THE CONSIDERATI ON'. THUS, FROM THE ABOVE TWO DECISIONS, IT BECOMES ABSO LUTELY CLEAR THAT FOR THE PURPOSE OF THE INCOME-TAX ACT THE GROUND REALITY HA S TO BE RECOGNIZED AND IF ALL THE INGREDIENTS OF TRANSFER HAVE BEEN COMPLETED, THEN SUCH TRANSFER HAS TO BE RECOGNIZED. MERELY BECAUSE THE PARTICULAR INSTRU MENT OF TRANSFER HAS NOT BEEN REGISTERED WILL NOT ALTER THE SITUATION. THIS POSIT ION 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, REFEREN CE HAS BEEN MADE BY STATING THAT CONTRACTS IN THE NATURE OF SECTION 53A SHOULD ALSO BE COVERED BY THE DEFINITION OF 'TRANSFER'. THEREFORE, IN OUR HUMBLE VIEW, THE AMENDMENT TO SEC. 53A OF THE TRANSFER OF PROPERTY ACT, WHEREBY THE RE QUIREMENT OF THE DOCUMENTS NOT BEING REGISTERED HAS BEEN OMITTED, WILL NOT ALT ER THE SITUATION FOR HOLDING THE TRANSACTION TO BE A TRANSFER U/S.2(47)(V) IF ALL OT HER INGREDIENTS HAVE BEEN SATISFIED. 74 THUS, IT IS CLEAR THAT NON REGISTRATION OF AGREE MENT CANNOT LEAD TO THE CONCLUSION THAT PROVISION OF SECTION 2(47) (V) IS N OT APPLICABLE. SIMILAR VIEW HAS BEEN TAKEN BY ITAT COCHIN BENCH OF THE TRIBUNAL IN CASE OF G.SREENIVASAN 23 VS DCIT 28 TXMANN.COM 200 (COCH.) AND ITAT PUNE BEN CH IN THE CASE OF MAHESH NEMICHANDRA GANESHWADE V ITO 21 TAXMANN.COM 136 (PUNE). IN VIEW OF THIS LEGAL POSITION, THIS CONTENTION IS REJECTED . 75 THE NEXT CONTENTION WAS THAT THE DECISION OF HON 'BLE BOMBAY HIGH COURT IN CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA) IS NOT APPLICABLE PARTICULARLY BECAUSE ULTIMATELY IN THAT CASE IT WAS HELD THAT CAPITAL GA IN TAX SHOULD BE CHARGED IN ASSESSMENT YEAR 1999-2000 WHEREAS AGREEMENT WAS EXE CUTED IN AUGUST, 1994. 76 WE HAVE ALREADY DISCUSSED THE IMPLICATIONS OF TH E DECISION IN CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA) IN PARA 33 TO 38. WE HAD ALSO EXAMINED WHY IN THAT CASE CAPITAL GAIN WAS NOT HELD TO BE CHARGEABL E IN ASSESSMENT YEAR 1995-96.THERE IS NO NEED TO REPEAT THE SAME AND IN VIEW OF THE SA ID OBSERVATIONS, WE REJECT THIS CONTENTION. 77 THE NEXT CONTENTION IS THAT IT IS NECESSARY FOR INVOKING OF SECTION 2(47)(V) OF THE ACT TO COMPLY WITH THE PROVISIONS O F SECTION 53A OF THE TRANSFER OF PROPERTY ACT TO THE EXTENT THAT THERE SHOULD BE WILLINGNESS ON THE PART OF THE TRANSFEREE TO PERFORM HIS PART OF THE CONTRACT. 78 IN THIS ASPECT WE HAVE NO QUARREL WITH THE PROPOSITION THAT FOR INVOKING SECTION 53A PF T.P. ACT READ WITH CLAUSE (V) OF SEC TION 2(47), THE TRANSFEREE HAS TO PERFORM OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT. IN THIS RESPECT AS REFERRED TO BY LD. COUNSEL FOR THE ASSESSEE, THE COMMENTS OF THE LD. AUTHOR IN THE COMMENTARY BY MULLA DINSHAN FREDERI CK MULLA VIDE PARA 16 ARE CLEAR AND SHOWS THAT THIS REQUIREMENT HAS TO BE ABS OLUTE AND UNCONDITIONAL. SOME OBSERVATIONS HAVE BEEN MADE IN THE CASE OF GEN ERAL GLASS COMPANY PVT LTD VS DCIT (SUPRA). IN THAT CASE IT WAS HELD THAT WILLINGNESS TO PERFORM FOR THE PURPOSE OF SECTION 53A IS SOMETHING MORE THAN A STATEMENT OF INTENT AND IT IS UNQUALIFIED AND UNCONDITIONAL WILLINGNESS ON THE PART OF THE TRANSFEREE TO PERFORM HIS OBLIGATION. IN THAT CASE THE TRANSFERE E HAS AGREED TO MAKE CERTAIN PAYMENTS IN INSTALLMENTS IN CONSIDERATION OF THE DE VELOPMENT AGREEMENT BUT SUCH PAYMENTS WERE NOT MADE. LATER ON, THE AGREEME NT WAS MODIFIED AND MORE TIME WAS GIVEN TO THE TRANSFEREE FOR PAYMENT O F SUCH INSTALLMENTS. HOWEVER, THE INSTALLMENTS WERE NOT PAID EVEN UNDER THE MODIFIED TERMS AND THAT IS WHY IT WAS ULTIMATELY HELD THAT SUCH AGREEM ENT CANNOT BE CONSTRUED AS TRANSFER. 79 THE SECOND DECISION REFERRED TO BY LD. COUNSEL F OR THE ASSESSEE IS K. RADIKA V DCIT (SUPRA). IN THIS CASE, SIMILAR OBSER VATIONS WERE MADE, THOUGH IT IS NOT POINTED OUT IN WHAT RESPECT THE TRANSFERE E 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. COUNSE L FOR THE ASSESSEE IS IN THE CASE OF DCIT V TEJ SINGH (SUPRA). IN THAT C ASE LAND WAS ACQUIRED BY THE GOVERNMENT AND THE MATTER WENT FOR LITIGATION. DURI NG THE PENDENCY OF LITIGATION, THE ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT WITH A DEVELOPER FOR THE PURPOSE OF DEVELOPMENT OF THE PRO PERTY, HOWEVER, IT WAS CLARIFIED IN THE AGREEMENT THAT THERE IS LITIGATION IN RESPECT OF ACQUISITION OF PROPERTY AND THE DEVELOPER HAS TO TAKE CLEARANCE FR OM THE GOVERNMENT IN THE MATTER OF DENOTIFICATION OF THE LAND. IT WAS HELD THAT SINCE THE LAND WAS UNDER COMPULSORY ACQUISITION AND NO COMPENSATION HAS BEE N RECEIVED, THEREFORE, THERE COULD NOT BE ANY CAPITAL GAIN TAX U/S 2(47) ( III) WHICH DEALS WITH THE COMPULSORY ACQUISITION. IT WAS FURTHER OBSERVED TH AT ASSESSEE COULD NOT HAVE GIVEN POSSESSION UNLESS AND UNTIL THE LAND WAS DENO TIFIED. SINCE FACTS OF THE CASE ARE DIFFERENT THAN THE CASE IN HAND AND THEREF ORE, SAME ARE NOT RELEVANT FOR OUR PURPOSE. 81 NOW COMING TO THE FACTS, FIRSTLY IT WAS CONTENDE D THAT DEVELOPER I.E TRANSFEREE HAS NOT OBTAINED VARIOUS PERMISSIONS WHICH WERE RE QUIRED TO BE TAKEN BY THE DEVELOPER AS PER CLAUSES 3.1, 7.9, 8.4 AND 8.6 OF T HE JDA. THIS IS NOT CORRECT AS POINTED OUT BY THE LD. CIT DR THAT ASSESSEE HAD ALR EADY GOT THE MUNICIPAL PLAN SANCTIONED BUT IN THE MEANTIME PIL WAS FILED BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT AGAINST THE IMPLEMENTATION OF TH E PROJECT. INITIALLY, THE CONSTRUCTION WAS BANNED BY THE HON'BLE HIGH COURT. HOWEVER, LATER ON IT WAS OBSERVED IN THE CWP NO. 20425 OF 2010 AND AS CLARIF IED BY THE ORDER OF THE HON'BLE SUPREME COURT THAT REFUSAL OF SANCTION UNDE R THE ENVIRONMENT (PROTECTION) ACT, THE SOCIETY HAVE SOUGHT A REVIEW OF THE ORDER BECAUSE THE FINDINGS ARRIVED WERE EX.PARTE. NO ORDER IN THE M ATTER HAS BEEN PASSED BY THE COMPETENT AUTHORITY PERHAPS BECAUSE OF THE ORDER OF HIGH COURT. IN THE INTERIM ORDER PASSED IN THE PIL IT HAS BEEN CLARIFIED BY THE HON'BLE SUPREME COURT VIDE ORDER DATED 31.1.2012 PERMITTING THE CONCERNED AUTH ORITY UNDER THE DIFFERENT STATUTES GOVERNING THE MATTER TO THEIR RESPECTIVE J URISDICTION TO BE DECIDED IN ACCORDANCE WITH LAW. THUS, IT BECOMES CLEAR THAT DE VELOPER I.E. THDC HAS APPLIED FOR VARIOUS PERMISSIONS BEFORE THE RELEVANT AUTHORI TIES AND IN SOME CASES PERMISSION WERE DECLINED ON EX.PARTE BASIS AND IN S OME CASES THE SAME WERE DECLINED IN VIEW OF THE HIGH COURT ORDER BANNING TH E 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 TH ERE IS A CLAUSE 26 WHICH DEALS WITH THE FORCE MAJEURE CLAUSES. THE CLAUSE 26 (I) TO (V) READS AS UNDER:- 24 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 R ELATION TO THE AGREEMENT, IF THE DELAY OR FAILURE IS DUE TO ANY EVENT OF FORC E MEJEURE. EVENT OF FORCE MAJEURE IS ANY EVENT CAUSED BEYOND THE PARTIE S REASONABLE CONTROL. THE FOLLOWING SHALL BE REGARDED AS ISSUES BEYOND TH E PARTIES REASONABLE CONTROL. II) FOR THE PURPOSES OF THIS CLAUSE, AN EVENT OF FO RCE MAJEURE SHALL MEAN EVENTS OF WAR, WAR LIKE CONDITIONS, BLOCKADES, EMBA RGOES, INSURRECTION, GOVERNMENTAL DIRECTIONS, RIOTS, STRIKES, ACTS OF TE RRORISM, CIVIL COMMOTION, LOCK-OUTS, SABOTAGE, PLAGUES OR OTHER EPIDEMICS, AC TS OF GOD INCLUDING FIRE, FLOODS, VOLCANIC ERUPTIONS, TYPHOONS, HURRICA NES, STORMS, TIDAL WAVES, EARTHQUAKE, LANDSLIDES, LIGHTNING, EXPLOSIONS AND O THER NATURAL CALAMITIES, PROLONGED FAILURE OF ENERGY, COURT ORDERS / INJUNCT IONS, CHARGE OF LAWS, ACTION AND / OR ORDER BY STATUTORY AND / OR GOVERNM ENT AUTHORITY, THIRD PARTY ACTIONS AFFECTING THE DEVELOPMENT OF THE PROJECT, A CQUISITION / REQUISITION OF THE PROPERTY OR ANY PART THEREOF BY THE GOVERNME NT OR ANY OTHER STATUTORY AUTHORITY AND SUCH CIRCUMSTANCES AFFECTIN G THE DEVELOPMENT OF THE PROJECT (EVENT OF FORCE MAJEURE). III) ANY PARTY CLAIMING RESTRICTION ON THE PERFORMA NCE OF ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT DUE TO THE HAPPENING OR ARISIN G OF AN EVENT OF FORCE MAJEURE HEREOF SHALL NOTIFY THE OTHER PARTY OF THE HAPPENING OR ARISING AND THE ENDING OF CEASING OF SUCH EVENT OR CIRCUMSTANCE WITH THREE (3) DAYS OF DETERMINING THAT AN EVENT OF FORCE MAJEURE HAS OCCU RRED. IN THE EVENT ANY PARTY ANTICIPATES THE HAPPENING OF AN EVENT OF FORC E MAJEURE, SUCH PARTY SHALL PROMPTLY NOTIFY THE OTHER PARTY. IV) THE PARTY CLAIMING EVENT OF FORCE MAJEURE CONDI TIONS SHALL, IN ALL INSTANCES AND TO THE EXTENT IT IS CAPABLE OF DOING SO, USE ITS BEST EFFORTS TO REMOVE OR REMEDY THE CAUSE THEREOF AND MINIMIZE THE ECONOMIC DAMAGE ARISING THEREOF. V) EITHER PARTY MAY TERMINATE THIS AGREEMENT AFTER GIVING THE OTHER PARTY A PRIOR NOTICE OF FIFTEEN (15) DAYS IN WRITING OF THE EVENT OF FORCE MAJEURE CONTINUES FOR PERIOD OF NINETY (90) DAYS. IN THE EVENT OF TERMINATION OF THIS AGREEMENT ALL OBLIGATIONS OF THE PARTIES UNTIL SUCH DATE SHALL BE FULFILLED. 82 THE COMBINED READING OF THESE CLAUSES SHOW THAT IF ANY OF THE PARTY COULD NOT PERFORM ITS PART OF THE OBLIGATION BECAUSE OF THE U NFORESEEN CIRCUMSTANCES WHICH INCLUDED GOVERNMENT DIRECTIONS, COURT ORDERS, INJUN CTIONS ETC. SUCH PARTY WOULD NOT BE LIABLE TO OTHER PARTY. IN VIEW OF FORCE MAJE URE CLAUSE WHICH INCLUDED COURT INJUNCTION IT CAN NOT BE SAID THAT THDC IS NOT WILL ING TO PERFORM ITS OBLIGATION. IN FACT DEVELPERS I.E. THDC/HASH WERE PERUSING THE ISS UE OF PERMISSIONS/SANCTIONS VIGOROUSLY. THESE ASPECTS BECOME FURTHER CLEAR IF T HE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CWP NO. 20425 OF 201 0 VIDE ORDER DATED MARCH 26, 2012 IS PERUSED. PARAS 3, 4, 22, 25 & 26 OF TH E JUDGMENT READ AS UNDER:- 3. THE BROAD CONTOURS OF THE PRESENT PROCEEDING HA VING BEEN OUTLINED, WE MAY NOW PROCEED TO TAKE NOTE OF THE SPECIFIC CON TENTIONS OF THE CONTESTING PARTIES AS MADE BEFORE US. HOWEVER, BEFO RE WE DO SO, IT MAY BE APPROPRIATE TO MENTION THE SOMEWHAT CONFLICTING STAND OF THE PARTIES WITH REGARD TO THE PRESENT STAGE OF THE APPLICATION S FILED UNDER THE PROVISIONS OF THE ENVIRONMENT (PROTECTION) ACT AS W ELL AS THE WILD LIFE (PROTECTION) ACT. WHILE THE PETITIONER, WHO IS SUPP ORTED BY THE RESPONDENT NO.6-CHANDIGARH ADMINISTRATION, ASSERTS THAT NECESSARY SANCTION/PERMISSION UNDER BOTH THE ACTS HAVE BEEN R EFUSED BY ORDERS PASSED BY THE COMPETENT AUTHORITIES, THE PROMOTERS OF THE PROJECT CONTEND TO THE CONTRARY. THE FACTS, AS UNFOLDED BEF ORE US, INDICATE THAT AGAINST THE REFUSAL OF SANCTION UNDER THE ENVIRONME NT (PROTECTION) ACT, THE RESPONDENTS HAVE SOUGHT A REVIEW OF THE ORDER O N THE GROUND THAT THE FINDINGS ARRIVED AT, WHICH HAVE FORMED THE BASI S OF THE REFUSAL, ARE EX-PARTE. NO ORDER IN THE REVIEW MATTER HAS BEEN PA SSED BY THE COMPETENT AUTHORITY, PERHAPS, BECAUSE OF THE INTERI M ORDER PASSED IN THE PIL WHICH HAS BEEN CLARIFIED BY THE HON'BLE SUP REME COURT BY ORDER DATED 31.1.2012 PERMITTING THE CONCERNED AUTHORITY UNDER THE DIFFERENT STATUTES GOVERNING THE MATTER TO EXERCISE THEIR RES PECTIVE JURISDICTIONS IN ACCORDANCE WITH LAW. INSOFAR AS THE WILD LIFE (P ROTECTION) ACT IS CONCERNED, IT APPEARS THAT THE REJECTION HAS BEEN M ADE BY THE CHIEF WILD LIFE WARDEN WHO, THE RESPONDENTS CLAIM, IS MER ELY A RECOMMENDING AUTHORITY AND IS REQUIRED TO FORWARD H IS RECOMMENDATION TO THE CENTRAL GOVERNMENT. AS THE REJECTION UNDER T HE WILD LIFE (PROTECTION) ACT HAS BEEN MADE BY AN AUTHORITY NOT COMPETENT TO DO, THE PROMOTERS OF THE PROJECT HAVE SOUGHT A REVIEW O F THE ORDER WHICH IS STILL PENDING FOR THE SAME REASON(S) AS NOTICED ABO VE. 25 4. ON THESE FACTS WE ARE OF THE VIEW THAT IT WOULD BE PRUDENT ON OUR PART TO TAKE THE VIEW THAT THE ISSUE WITH REGARD TO CLEARANCE/SANCTION UNDER THE TWO ENACTMENTS I.E. ENVIRONMENT (PROTECTI ON) ACT AND WILD LIFE (PROTECTION) ACT IS PRESENTLY PENDING AND AS T HE PROMOTERS OF THE PROJECT HAVE SUBMITTED THEMSELVES TO THE JURISDICTI ON OF THE AUTHORITIES UNDER THE SAID ENACTMENTS WE SHOULD REFRAIN FROM AD DRESSING OURSELVES ON ANY OF THE ISSUES CONNECTED WITH EITHER OF THE T WO STATUTORY ENACTMENTS AS ANY SUCH EXERCISE, EVEN THOUGH MAY BE UNINTENDED, MAY HAVE THE EFFECT OF FETTERING THE JURISDICTION OF ST ATUTORY AUTHORITIES FUNCTIONING UNDER THE TWO RELEVANT STATUTES. 22. INSOFAR AS THE PROVISIONS OF THE ENVIRONMENT (P ROTECTION) ACT AND THE WILD LIFE (PROTECTION) ACT ARE CONCERNED, IT NE ED NOT BE EMPHASISED THAT EVERY PROJECT ATTRACTING THE PROVISIONS OF THE PERIPHERY CONTROL ACT AND/OR THE PROVISIONS OF THE 1995 ACT MUST SATISFY THE ECOLOGICAL CONCERNS OF THE AREA IN THE LIGHT OF THE PROVISIONS OF THE TWO STATUES IN QUESTION. AS ALREADY HELD BY US, A PUBLIC TRUST HAS BEEN BESTOWED ON THE AUTHORITIES BY PROVISIONS OF THE SAID ACTS WHIC H CAST ON SUCH AUTHORITIES A DUTY TO INTERDICT ANY PROJECT OR ACTI VITY WHICH EVEN REMOTELY SEEMS TO CREATE AN IMBALANCE IN THE PRISTI NE ECOLOGY AND ENVIRONMENT OF THE AREA ON WHICH THE CITY OF CHANDI GARH IS SITUATED OR FOR THAT MATTER IN THE IMMEDIATE VICINITY THEREOF. AS ALREADY OBSERVED, NECESSARY CLEARANCES UNDER THE AFORESAID TWO ENACTM ENTS, INSOFAR AS THE RESPONDENTS ARE CONCERNED, ARE PRESENTLY PENDIN G BEFORE THE CONCERNED AUTHORITIES AND, THEREFORE, IT WOULD BE H IGHLY INCORRECT ON OUR PART TO ENTER INTO ANY FURTHER DISCUSSION ON TH E AFORESAID ASPECT OF THE CASE. 25. WE ALSO HASTEN TO EMPHASISE THAT A MORE RIGOROU S REGULATED DEVELOPMENT IN WHAT ARE NOW THE REMNANTS OF THE PER IPHERY AND THE AREAS ADJOINING TO IT IS THE NEED OF THE HOUR FOR W HICH THE STAKEHOLDERS I.E. THE ADMINISTRATION OF CHANDIGARH, THE STATES O F PUNJAB AND HARYANA AS ALSO THE AUTHORITIES UNDER THE ENVIRONME NT (PROTECTION) ACT AND THE WILD LIFE PROTECTION ACT HAVE TO DEMONSTRAT E THE NEED TO ENGAGE THEMSELVES INTENSIVELY AND NOT ACQUIRE A PLA CID APPROACH INDICATING AN ELOQUENT ACQUIESCENCE TO THE VIOLATIO N OF THE 1995 ACT, PERIPHERY CONTROL ACT AND THE PERIPHERY POLICY. 26. WE THUS CONCLUDE ON THE AFORESAID NOTE BY HOLDI NG AND OBSERVING THAT THE PROVISIONS OF THE PERIPHERY CONTROL ACT AN D THE 1995 ACT ARE COMPLEMENTARY TO EACH OTHER AND THE PROVISIONS OF T HE TWO STATUTES WOULD APPLY TO THE HOUSING PROJECT IN QUESTION. THE RESPONDENTS, THEREFORE, WILL HAVE TO COMPLY WITH ALL THE REQUIRE MENTS SPELT OUT BY BOTH THE AFORESAID STATUTES. AS THE REQUIREMENT OF CLEARANCES UNDER THE WILD LIFE (PROTECTION) ACT AND ENVIRONMENT (PROTECT ION) ACT IS NOT A CONTENTIOUS ISSUE, AND AS WE HAVE ALREADY HELD THAT THE PROCESS OF GRANT OF SUCH CLEARANCES IS PENDING BEFORE THE APPR OPRIATE AUTHORITIES UNDER THE RESPECTIVE ACTS, THE SAME WILL NOW HAVE T O 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 O RDER OF HON'BLE HIGH COURT CLEARLY SHOWS THAT DEVELOPER THDC/ HASH I.E. TRANSFEREE HAVE MADE THEIR SINCERE EFFORTS FOR OBTAINING THE NECESSARY P ERMISSIONS / SANCTIONS WHICH WERE REQUIRED UNDER THE JDA. HOWEVER, SOME OF THE SANCTIONS COULD NOT BE TAKEN IN TIME BECAUSE OF THE LITIGATION BY WAY OF P IL BUT SINCE NONE OF THE PARTY WAS LIABLE TO THE OTHER PARTY IN VIEW OF THE CLAUSE 26 DEALING WITH FORCE MAJEURE IT CANNOT BE SAID THAT DEVELOPER WAS NOT WILLING TO PERFORM HIS PART OF CONTRACT. IN ANY CASE NO SPECIFIC EVID ENCE HAS BEEN SHOWN US TO PROVE THAT THDC / HASH WERE DECLINING TO PERFORM PA RTICULAR OBLIGATION PROVIDED IN JDA. IN VIEW OF THIS DISCUSSION, IT CA NNOT BE SAID THAT TRANSFEREE I.E. DEVELOPER THDC/HASH IS NOT WILLING TO PERFORM HIS PART OF CONTRACT. 84 SECONDLY, IT WAS CONTENDED THAT PAYMENTS HAVE N OT BEEN MADE AS PER THE JDA. HOWEVER, AGAIN THIS IS NOT CORRECT. AS PE R CLAUSE 4(IV) OF THE JDA, THE INSTALLMENT FOR RS. 31,92,75,000/- WAS REQUIRED TO BE PAID. THE CLAUSE 4(IV) READ AS UNDER:- IV) PAYMENT BEING RS. 31,92,75,000/- (RUPEES ONE C RORE NINETY TWO LACS SEVENTY FIVE THOUSAND ONLY) CALCULATED @ RS. 2 4,75,000/- (RS. TWENTY FOUR LACS SEVENTY FIVE THOUSAND ONLY) PER PL OT HOLDER OF 500 SQ. YARDS AND (RS. 49,50,000/- (RS. FORTY NINE LACS FIF TY THOUSAND ONLY) AS PER PLOT HOLDER OF 1000 SQUARE YARDS TO BE MADE TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MA Y BE) WITHIN SIX(6) MONTHS FROM THE DATE OF EXECUTION OF THIS AGREEMENT OR WITHIN TWO (2) MONTHS FROM THE DATE OF APPROVAL OF THE PLANS / DE SIGN AND DRAWINGS AND GRANT OF THE FINAL LICENCE TO DEVELOP WHERE UPO N THE CONSTRUCTION CAN COMMENCE, WHICHEVER IS LATER, AGAINST WHICH THE OWNER SHALL EXECUTE A REGISTERED SALE DEED FOR LAND OF EQUIVALE NT VALUE BEING 6.36 ACRES OUT OF THE PROPERTY AS DEMARCATED IN GREEN CO LOUR (ALSO HATCHED IN GREEN COLOUR) IN THE DEMARCATION PLAN ANNEXED HE RETO AS ANNEXURE V 26 AND BEARING KHASRA NOS. 123/15, 123/6, 123/7 (BALAN CE PART), 123/3 (PART), 123//4//1, 123///4//1/2, 123//4/2, 123/5/1, 123//5/2, 123//5/3, 112/24/24 (PART) 85 THE CAREFUL READING OF THE SAID CLAUSE OF THE JD A 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 LICEN SE TO DEVELOP WHERE UPON THE CONSTRUCTION CAN COMMENCE, WHICHEVER IS LATER. THUS , THIS INSTALLMENT WAS DEPENDENT ON TWO CONTINGENCIES FIRST THE EXPIRATION OF A PERIOD OF SIX MONTHS FROM THE DATE OF AGREEMENT OR ALTERNATIVELY ON THE EXPIRATION OF A PERIOD OF TWO MONTHS FROM THE DATE OF APPROVAL OF PLANS / DESIGN S DRAWING ETC. LEADING TO GRANT OF FINAL LICENSES WHICH CAN LEAD TO COMMENCEM ENT OF CONSTRUCTION, WHICHEVER IS LATER. THE MATTER WAS TAKEN UP BY WAY OF PIL BY CERTAIN CITIZENS AND ADMINISTRATION OF THE UNION TERRITORY BEFORE TH E HON'BLE HIGH COURT WHICH INITIALLY STAYED THE SANCTION OF SUCH PLAN ETC. TH IS LED TO SITUATION WHERE CONSTRUCTION COULD NOT BE COMMENCED AND HENCE PAYME NT WAS NOT REQUIRED TO BE MADE IN VIEW OF THE PENDING LITIGATION. THE CLA USES OF FORCE MAJEURE CAME INTO OPERATION AND THEREFORE, IT CANNOT BE SAID TH AT THE DEVELOPER IS NOT WILLING TO PERFORM ITS PART OF THE CONTRACT. IN AN Y CASE THERE IS NO DEFAULT ON THE PART OF THE DEVELOPER AS PAYMENT WAS NOT YET DU E AS PER CLAUSE 4(I)(IV) OF JDA. 86 THIS POSITION WAS INFORMED TO THE SOCIETY BY LET TER 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 FRO M THE MINISTRY OF ENVIRONMENT AND FOREST DEPARTMENT AND THEREFORE CON STRUCTIONS COULD NOT COMMENCE. THESE PERMISSIONS WERE PENDING BECAUSE O F THE PIL FILED BY SHRI AALOK JAGGA BEFORE THE HON'BLE PUNJAB & HARYANA HIG H COURT. ALL THESE FACTS CLEARLY SHOWS THAT IN VIEW OF CLAUSE 4.1(IV) READ W ITH CLAUSE 26(V) OF THE JDA, HASH BUILDER WERE NOT REQUIRED TO MAKE THE PAYMENT AND IT CANNOT BE SAID THAT THEY WERE NOT WILLING TO PERFORM THEIR PART OF THE CONTRACT ON THIS ASPECT. THEREFORE, THIS CONTENTION IS REJECTED. 87 SEVENTH CONTENTION IS THAT REVENUE WRONGLY HELD THAT EVEN CLAUSE (VI) OF SECTION 2(47) IS APPLICABLE. WE FIND NO FORCE IN THIS CONTENTION . CLAUSE (VI) TO SECTION 2(47) READS AS UNDER: ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMB ER OF, OR ACCRUING SHARES IN, A COOPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT O F, ANY IMMOVABLE PROPERTY. 88 THE PLAIN READING OF THE PROVISION SHOWS THAT AN Y TRANSACTION BY WAY OF BECOMING A MEMBER OR ACQUIRING SHARES IN THE COOPERATIVE SOCIE TY OR SHARES IN THE COMPANY WHICH HAS THE EFFECT OF TRANSFERRING OR ENABLING THE ENJO YMENT OF ANY IMMOVEABLE PROPERTY WOULD BE COVERED BY THE DEFINITION OF TRANSFER. IN THE C ASE BEFORE US, INITIALLY THE MEMBERS OF THE SOCIETY WERE HOLDING SHARES IN THE SOCIETY FOR OWNE RSHIP OF PLOT OF 500 SQYD OR 1000 SQYD. THIS MEMBERSHIP WAS SURRENDERED TO THE SOCIETY VIDE RESOLUTION OF THE SOCIETY PASSED IN THE EXECUTIVE COMMITTEE ON 4.1.2007 WHICH WAS LATER RATIFIED IN THE GENERAL BODY MEETING OF THE SOCIETY ON 25.1.2007, SO THAT THE SOCIETY CO ULD ENTER INTO JDA. IN THE JDA THE SOCIETY HAS AGREED TO TRANSFER THE LAND. THEREFORE , TECHNICALLY IT CAN BE SAID THAT THE DEVELOPER I.E. THDC/HASH HAS PURCHASED THE MEMBERSH IP OF THE MEMBERS IN THE SOCIETY WHICH WOULD LEAD TO ENJOYMENT OF THE PROPERTY AND I N THAT TECHNICAL SENSE, CLAUSE (VI) OF SECTION 2(47) IS APPLICABLE. 89 EIGHTH CONTENTION IS THAT SINCE THE SOCIETY HAS TRANSFERRED THE LAND THROUGH JDA ON A PRO-RATA BASIS, THEREFORE, ONLY WHATEVER MONEY IS RECEIVED AGAINST WHICH SALE DEEDS HAVE ALSO BEEN EXECUTED, CAN BE TAXED AND NOTIONAL INCOM E I.E. THE MONEY TO BE RECEIVED LATER, CAN NOT BE TAXED. IN THIS REGARD RELIANCE WAS PLAC ED ON CERTAIN SUPREME COURT DECISIONS AND OTHER CASES FOR THE PROPOSITION THAT NOTIONAL I NCOME CANNOT BE TAXED. THERE IS NO NEED TO DISCUSS THE CASES RELIED ON BY THE LD. COUNSEL O F THE ASSESSEE BECAUSE IT IS SETTLED POSITION OF LAW THAT NO NOTIONAL INCOME CAN BE TAXE D. THOUGH THERE IS NO QUARREL THAT IT IS A SETTLED PRINCIPLE OF LAW THAT NOTIONAL INCOME CAN N OT 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 CA PITAL GAIN WOULD COME INTO PLAY ON THE TRANSFER OF CAPITAL ASSET AND TOTAL CONSIDERATION W HICH IS ARISING ON SUCH TRANSFER, HAS TO BE TAXED. SECTION 48 CLEARLY TALKS ABOUT FULL CONSIDE RATION 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 CON SIDERATION 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 PE R 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 CON SIDERATION WOULD BE RECEIVED LATER THEN SUCH PERSON IS SUPPOSED TO KNOW THE CONS EQUENCES OF THE DENIAL OF SUCH BENEFITS. HOWEVER, IF THE SECTION IS INTERPRET ED IN THE MANNER SUGGESTED BY THE LD. COUNSEL OF THE ASSESSEE THEN NO PERSON WOUL D PAY CAPITAL GAIN TAX ON TRANSFER OF A PROPERTY. THIS WILL BE CLEAR FROM A SIMPLE EXAMPLE. LET US ASSUME IF A SELLS THE PROPERTY TO B FOR A CONSIDERATION O F RS. 100 CRORES AND RECEIVE ONLY A CONSIDERATION OF 1.00 CRORE AND IT IS MENTIONED I N THE TRANSFER INSTRUMENT THAT 27 BALANCE OF CONSIDERATION WOULD BE PAID AFTER 20 YEA RS THEN NO TAX CAN BE LEVIED ON SUCH BALANCE CONSIDERATION OF RS. 99.00 CRORES W HICH HAS NOT BEEN RECEIVED AS PER THE CONTENTION OF THE LD. COUNSEL OF THE ASSESS EE . BUT IN THAT CASE NO TAXES CAN BE LEVIED EVEN AFTER 20 YEARS BECAUSE NO TRANSF ER CAN BE SAID TO HAVE TAKEN PLACE AFTER 20 YEARS AND REVENUE CANNOT DO ANY THIN G BECAUSE CAPITAL GAIN CAN BE CHARGED U/S 45 ONLY ON TRANSFER OF CAPITAL ASSET. W E DO NOT THINK THAT THIS KIND OF INTERPRETATION CAN BE MADE WHILE INTERPRETING SECTI ON 45 R.W.S. 48 BY INVOKING THE RULE THAT THERE CAN NOT BE ANY TAX ON NOTIONAL RECE IPT. GENERALLY SPEAKING IT IS ONLY THE REAL INCOME WHICH CAN BE TAXED BUT THIS HAS TO BE UNDERSTOOD SUBJECT TO LIMITATIONS. COMMENTING ON THESE LIMITATIONS, THE LD. AUTHOR SHR I S. RAJARATNAM IN THE COMMENTARY OF LAW OF INCOME TAX BY SAMPAT IYENGARS VOLUME 1, (11 TH EDITION) HAS OBSERVED AT PAGE 343 AS UNDER:- 5. RESERVATIONS ON REAL INCOME THEORY. - WHETHER ACCRUAL OF INCOME HAS TAKEN PLACE OR NOT, MUST BE JUDGED ON THE PRINCIPLE OF THE REAL IN COME THEORY. AFTER ACCRUAL, NON- CHARGING OF TAX ON THE SAME BECAUSE OF CERTAIN COND UCT BASED ON THE IPSE DIXIT OF A PARTICULAR ASSESSEE CANNOT BE ACCEPTED. IN DETERMIN ING THE QUESTION WHETHER IT IS HYPOTHETICAL INCOME OR WHETHER REAL INCOME HAS MATE RIALIZED OR NOT, VARIOUS FACTORS WILL HAVE TO BE TAKEN INTO ACCOUNT. IT WOULD BE DIFFICULT AND IMPROPER TO EXTEND THE CONCEPT OF REAL INCOME TO ALL CASES DEPENDING UPON THE SELF-SERVING STATEMENT OF THE ASSESSEE. WHAT HAS REALLY ACCRUED TO THE ASSESSEE H AS TO BE FOUND OUT AND WHAT HAS ACCRUED MUST BE CONSIDERED FROM THE POINT OF VIEW O R REAL INCOME TAKING THE PROBABILITY OR IMPROBABILITY OF REALIZATION IN A RE ALISTIC MANNER, BUT ONCE ACCRUAL TAKES PLACE, ON THE CONDUCT OF THE PARTIES SUBSEQUE NT TO THE YEAR OF CLOSING, AN INCOME WHICH HAS BEEN ACCRUED CANNOT BE MADE NO IN COME. 91 THE ABOVE POSITION CAN BE UNDERSTOOD BY EXAMININ G SOME OF THE PROVISIONS OF THE ACT WHICH WOULD SHOW THAT CONCEPT OF NOTIONAL INCOME CAN NOT BE EXTENDED IF SPECIFIC PROVISION IS AVAILABLE IN THE ACT. FOR EXAMPLE IN CASE OF INCOME FROM HOUSE PROPERTY, THE INCOME HAS TO BE DETERMINED AS PER SECTION 23. SECTION 22 OF THE INCOME TAX ACT PROVID ES THAT IT IS THE ANNUAL VALUE OF THE PROPERTY WHICH CAN BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. SECTOR 23 PRESCRIBES THE METH OD 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 L ET 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 AM OUNT SO RECEIVED OR RECEIVABLE; OR. 92 ON THIS ASPECT THE SETTLED POSITION OF THE LAW I S 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 & PITHISARIAS IN COMMENT ARY OF INCOME TAX LAW (FIFTH EDITION) VOLUME 1 IN THIS RESPECT AT PAGES 1275 & 1 276 OBSERVED AS UNDER: ANNUAL VALUE- DETERMINATION OF SECTION 23(1)(A) PROVIDES THAT FOR THE PURPOSES OF SECTION 22, THE ANNUAL VALUE OF ANY PROPERTY SHALL BE DEEMED TO BE THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FR OM YEAR TO YEAR. THE WORD USED IS MIGHT AND NOT CAN OR IS. IT IS THUS A NOTIONA L INCOME TO BE GATHERED FROM WHAT A HYPOTHETICAL TENANT WOULD PAY WHICH IS TO BE OBJECT IVELY ASCERTAINED ON A REASONABLE BASIS IRRESPECTIVE OF THE FACT WHETHER THE PROPERTY IS LET OUT OR NOT [SULTAN BROS. PR. LTD. V. CIT, (1964) 51 ITR 353 (SC); JAMNADAS PRABH UDAS V. CIT, (1951)20 ITR 160(BOM); D.M. VAKIL V. CIT, (1946) 14 ITR 298, 302 (BOM); CIT V. BIMAN BEHARI SHAW, SHEBAIT, (1968) 68 ITR 815 (CAL); SRI SRI RADHA GOV INDA JEW V. CIT, (1972) 84 ITR 150, 156 (CAL); CIT V. GANGA PROPERTIES LTD., (1970 ) 77 ITR 637, 647 (CAL); LIQUIDATOR, MAHMUDABAD PROPERTIES LTD. V. CIT, (1972) 83 ITR 47 0 (CAL), AFFIRMED, (1980) 124 ITR 31 (SC); CIT V. ZOROSTRIAN BUILDING SOCIETY LTD., ( 1976) 102 ITR 499 (BOM); C.J. GEORGE V. CIT, (1973) 92 ITR 137 (KER); D.C. ANAND & SONS V. CIT, (1981) 131 ITR 77 (DEL). ALSO SEE, CIT V. PARBUTTY CHURN LAW, (1965) 57 ITR 609, 619 (CAL); IN THE MATTER OF KRISHNA LAL SEAL, AIR 1932 CAL 836; LALLA MAL SA MGHAM LAL V. CIT, (1936) 4 ITR 250 (LAH); NEW DELHI MUNICIPAL COMMITTEE V. NAND KU MAR BUSSI, (1977) TAX LR 2130 (DEL)] 93 SIMILAR VIEW HAS BEEN EXPRESSED BY SHRI N.A. PAL KHIVALA IN HIS COMMENTARY ON THE LAW LAND PRACTICE OF INCOME TAX, VOLUME 2 (EIGH TH EDITION) BY KANGA AND PALKHIVALAS OBSERVATION AT PAGES 22 & 23. AGAIN E VEN SHRI S. RAJARATNAM IN THE COMMENTARY OF LAW OF INCOME TAX BY SAMPAT IYENGARS VOLUME 2, (11 TH EDITION) EXPRESSED IDENTICAL VIEWS IN HIS COMMENTARY AT PAGE 2738. 94 IN ALL THE LEADING COMMENTARIES CITED ABOVE, IT HAS BEEN OBSERVED THAT ANNUAL VALUE IS TO BE COMPUTED WHETHER PROPERTY HAS BEEN LET OUT OR NOT. THIS MEANS THAT NOTIONAL VALUE OF THE PROPERTY HAS TO BE CHARGED TO THE INCOME TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. FROM THE ABOVE, IT BECOMES 28 CLEAR THAT THOUGH THERE IS NO REAL INCOME FROM LETT ING 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 SO ME PART OF THE YEAR OR FOR WHOLE OF THE YEAR THEN VACANCY ALLOWANCE CAN BE CLA IMED. 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 SECT IONS 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 EXP ENDITURE 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 ACC OUNT AND HIS TURNOVER IS LESS THAN RS. 60 LAKHS THEN THE PROFIT WOULD BE PRE SUMED TO BE 8% OF TURNOVER EVEN IF HE HAS SUFFERED A LOSS. ANOTHER EXAMPLE O F 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 ACCOUNTING PRINCIPLE OR ON COMMERCIAL PR INCIPLES CANNOT BE REGARDED AS INCOME BUT BECAUSE OF THIS SPECIFIC PRO VISION REGARDING DEEMED DIVIDEND SUCH AMOUNT HAS TO BE TREATED AS INCOME OF THE PERSON RECEIVING SUCH LOANS. 95 THE ABOVE POSITION OF LAW MAKES IT ABSOLUTELY CL EAR THAT THEORY OF REAL INCOME IS SUBJECT TO THE PROVISIONS OF THE ACT AND WHENEVER ANY SPECIFIC PROVISIONS OF THE ACT IS THERE FOR CHARGING OF A PA RTICULAR ITEM OF INCOME, THEN THE SAME HAS TO BE CHARGED ACCORDINGLY. IT MAY BE SOMETIMES HARD TO THE ASSESSEES BUT AGAIN IT HAS BEEN HELD IN NUMEROUS D ECISIONS THAT FISCAL STATUES HAVE TO BE INTERPRETED ON THE BASIS OF LANG UAGE USED AND THERE IS NO SCOPE FOR EQUITY OR INTENT. LD. AUTHOR SHRI S. RAJ ARATNAM IN THE COMMENTARY OF LAW OF INCOME TAX BY SAMPAT IYENGARS VOLUME 1, PAGE 236 IN THIS REGARD HAS OBSERVED AS UNDER:- ONCE IT IS SHOWN THAT THE CASE OF THE ASSESSEE COM ES WITHIN THE LETTER OF THE LAW, HE MUST BE TAXED, HOWEVER, GREAT THE HARDSHIP MAY APPEAR TO THE JUDICIAL MIND. CONSIDERATIONS OF HARDSHIP, INJUSTIC E OR ANOMALIES DO NOT PLAY ANY USEFUL ROLE IN CONSTRUING TAXING STATUTES UNLES S THERE BE SOME REAL AMBIGUITY. THUS, ANY BENEVOLENT CONSTRUCTION IN FAV OUR OF THE ASSESSEE HAS BEEN HELD TO BE UNCALLED FOR. 96 THEREFORE, IT CAN BE SAID THAT GENERALLY SPEAKIN G NOTIONAL INCOME COULD NOT BE SUBJECTED TO TAX BUT WHENEVER THERE IS A SPE CIFIC PROVISION, THE SAME HAS TO BE TAXED. NOW, IN CASE OF CAPITAL GAIN, SEC TION 45 READ WITH SECTION 48 VERY CLEARLY PROVIDES THAT IT IS THE PROFIT ARISIN G FROM THE TRANSFER OF A CAPITAL ASSET WHICH WOULD BE SUBJECTED TO CHARGE OF CAPITAL GAIN TAX AND SECTION 48 CLEARLY PROVIDES FOR TAKING THE TOTAL CO NSIDERATION INTO ACCOUNT WHILE COMPUTING THE CAPITAL GAINS. THIS ASPECT WE HAVE ALREADY DISCUSSED IN DETAIL AT PARA NO. 64 TO 68 FROM WHICH IT BECOMES C LEAR THAT IT IS THE WHOLE CONSIDERATION WHETHER RECEIVED OR ACCRUED, WHICH HA S TO BE TAXED UNDER THE CAPITAL GAIN ONCE TRANSFER OF THE CAPITAL ASSET TAK ES PLACE. ACCORDINGLY, THERE IS NO FORCE IN THIS PART OF THE CONTENTION. 97 NOW LET US EXAMINE THE ISSUE OF TAXABILITY OF FL AT ON THE BASIS OF ABOVE PRINCIPLES. RELEVANT PORTION OF CLAUSE 4 OF THE JD A WHICH DEALS WITH CONSIDERATION ARE AS UNDER: 4. CONSIDERATION 4.1 IT IS SPECIFICALLY UNDERSTOOD AND AGREED AMONGS T THE PARTIES THAT THDC SHALL USE ITS EXPERTISE AND ITS BRAND NAME AND / OR ANY O THER BRAND NAME AT ITS DISCRETION TO DEVELOP THE PROPERTY INTO THE PREMISES AS PER APPLI CABLE BUILDING BYE-LAWS OF THE COMPETENT AUTHORITY AND THE OWNER SHALL HAVE NO OBJ ECTION 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 ALLO TMENT 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 P ER ANNEXURE I & II), HASH IS COMMITTED TO PAY TO THE OWNER AND / OR THE RESPECTI VE 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 @ R S. 82,50,000/- (RUPEES EIGHTY TWO LACS FIFTY THOUSANDS ONLY) PAYABLE TO 65 MEMBER S HAVING PLOT OF 500 SQ. YARDS EACH, RS. 1,65,00,000/- (RUPEES ONE CRORE SIXTY FIV E 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 T HE 4 PLOTS OF 500 SQ. YARDS EACH, WHICH SHALL TANTAMOUNT TO THE FULL AND FINAL PAYMEN T TO THE OWNER AND / OR THE 29 RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE ) IN A MANNER SET OUT HEREIN BELOW (PAYMENT). FURTHER, THE TRANSFER, SALE AND CONVEYANCE OF 21.2 ACRES OF LAND OF THE PROPERTY SHALL BE MADE BY THE OWNER IN FAVOUR O F THDC PRO RATA TO THE PAYMENT RECEIVED BY THE OWNER AND/OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) FROM HASH BY EXECUTING SALE DEEDS AND REGISTERI NG THE SAME. IT IS EXPRESSLY PROVIDED THAT AS RESOLVED BY THE OWNER, THE TOTAL A MOUNT PAYABLE BY HASH TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) FOR ASSIGNMENT OF THE DEVELOPMENT RIGHTS AND FOR TRANSF ER AND SALE OF 21.2 ACRES OF LAND OF THE PROPERTY SHALL BE RS. 106,42,50,000/- (RUPEE S ONE HUNDRED SIX CRORES FORTY TWO LACS FIFTY THOUSAND ONLY) AND ONE HUNDRED AND T WENTY NINE (129) FLATS CONSISTING OF SUPER AREA OF 2250 SQ. FEET (FLATS); ONE FLAT EACH FOR SIXTY FIVE MEMBERS HAVING A PLOT OF 500 SQ. YARDS, TWO FLATS FOR THE (THIRTY) 3 0 MEMBERS HAVING A PLOT OF 1000 SQ. YARDS AND 4 FLATS TO THE OWNER FOR THE 4 PLOTS OF 5 00 SQ. YARDS EACH AS PER LIST ANNEXED WITH THIS AGREEMENT AS SCHEDULE B (SALE TRANSACTIO N) IT IS EXPRESSLY AGREED BETWEEN THE DEVELOPERS THAT HASH SHALL BE RESPONSIBLE FOR MAKING ALL PAYMENTS TO THE OWNER AND/OR THE RESPECT IVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) AS PER THE NEGOTIATED AND AGREED TERMS BETWEEN THE OWNER AND HASH, HASH EXPRESSLY UNDERTAKES TO MAKE TIMELY PAYMENTS O F THE PAYMENT TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CA SE MAY BE) AS UNDER: 4.2 AS RESOLVED BY THE OWNER, THDC EITHER BY ITSELF OR ALONG WITH HASH SHALL ALLOT THE FLATS IN THE NAME OF MEMBERS OF THE OWNER AS PE R LIST ANNEXED WITH THIS AGREEMENT AS SCHEDULE B ATTACHED HEREIN (HEREINAFTER REFERRED TO AS THE ALLOTTEES). THE SPECIFICATIONS OF THE FLATS WOULD BE PROVIDED BY TH E DEVELOPERS TO THE OWNER AND MORE PARTICULARLY DESCRIBED IN THE SCHEDULE C ATTACHED H EREIN (HEREINAFTER REFERRED TO AS THE SPECIFICATIONS). THE ALLOTMENT LETTERS SHALL BE I SSUED 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/P ERMISSION FOR THE DEVELOPMENT OF THE PROJECT FROM THE COMPETENT AUTHORITY. THEREAFTE R, THE POSSESSION OF THE FLATS SHALL BE HANDED OVER TO THE ALLOTTEES WITHIN THIRTY(30) MONTHS FORM THE DATE OF ISSUANCE OF THE ALLOTMENT LETTER. IT IS EXPRESSLY PROVIDED THAT THE PAYMENT TO BE MAD E BY HASH TO THE OWNER AND/OR TO THE RESPECTIVE MEMBERS OF THE OWNER (AS T HE 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 ENT IRE CONSIDERATION 98 FROM THIS CLAUSE IT BECOMES ABSOLUTELY CLEAR THA T EACH MEMBER HAVING 500 SQYD OF PLOT WAS ENTITLED TO RECEIVE ONE FURNIS HED FLAT MEASURING 2250SQFT AND MEMBERS HAVING 1000SQYD FLAT WERE ENTITLED TO R ECEIVE 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 T HE 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 SANC TION FROM THE COMPETENT AUTHORITY AND SUCH FLATS WERE PART OF ENTIRE CONSID ERATION. MERELY BECAUSE SUCH ALLOTMENT LETTER HAS NOT BEEN GIVEN BECAUSE OF SANCTIONS / PERMISSIONS COULD NOT BE OBTAINED BECAUSE OF PUBLIC INTEREST LI TIGATION BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT, IT CANNOT BE SAID THAT SUCH RIGHT HAS NOT ACCRUED. THOUGH IT MAY BE HARD ON THE ASSESSEE BUT IT IS WELL SETTLED THAT TAXATION AND EQUITY ARE STRANGERS. FURTHER COMMENT ING ON THIS ASPECT SHRI RAJARATHNAM IN HIS COMMENTARY HAS OBSERVED AT PAGE 5164 AS UNDER: IT IS HARD ON THE OWNERS WHEN REQUIRED TO PAY TAX, WHEN HANDING OVER THE POSSESSION FOR PURPOSES OF CONSTRUCTION WITHOUT BEI NG ABLE TO ENJOY THE CONSTRUCTION, WHICH IS YET TO COMMERCE OR IN THE PR OCESS OF CONSTRUCTION BEING PUT UP BY THE DEVELOPER, BUT THE SOLUTION LIES IN S TATUTORY CLARIFICATION IN SUCH CASES. IN VIEW OF THE INCREASING SCALE OF SUCH DEV ELOPMENT AGREEMENTS TO SOLVE THE HOUSING PROBLEM IN THE CITIES, A STATUTOR Y CLARIFICATION OR CIRCULAR IS OVERDUE. 99 THESE COMMENTS AND THE OTHER DETAILED DISCUSSION ON THIS ASPECT CLEARLY SHOW THAT CAPITAL GAIN TAX HAS TO BE PAID O N THE TOTAL CONSIDERATION ARISING ON TRANSFER WHICH WOULD INCLUDE THE CONSIDE RATION WHICH HAS BEEN RECEIVED AS WELL AS THE CONSIDERATION WHICH HAS ARO SEN AND BECOME DUE AND MAY BE RECEIVED LATER ON. IN VIEW OF THIS DISCUSSI ON THIS CONTENTION IS REJECTED. 30 100 NINTH CONTENTION IS THAT THE ASSESSEE HAS ALREA DY TERMINATED THE AGREEMENT AND HAS REVOKED THE POWER OF ATTORNEY. WE FIND NO F ORCE IN THIS SUBMISSIONS. 101 IN THIS REGARD LD. COUNSEL OF THE ASSESSEE HAS RELIED ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN CASE OF CHEMOSYN LTD. V AC IT (SUPRA). IN THAT CASE THE ASSESSEE-COMPANY WAS OWNER OF TWO PLOTS BEARING 256 & 257 IN GUNDABALI ANDHERI MUMBAI. THE ASSESSEE-COMPANY ENTERED INTO A DEVELO PMENT AGREEMENT WITH DIPITI BUILDERS FOR THE DEVELOPMENT RIGHTS FOR A CONSIDERA TION OF RS. 16.11 CRORES. DIPITI BUILDERS HAD ALSO AGREED TO CONSTRUCT 18000 SQFT CA RPET AREA FOR THE BENEFIT OF ASSESSEE ON PLOT NO. 256. IN THE RETURN OF INCOME TOTAL CONSIDERATION WAS SHOWN ONLY AT RS. 16.11 CRORES. IT WAS EXPLAINED THAT BEFORE DIPITI BUILDERS COULD START THE DEVELOPMENT /CONSTRUCTION WORK, ENTIRE PROPERTY COM PRISING OF PLOT NO. 256 & 257 WAS SOLD TO A THIRD PARTY M/S FINANCIAL TECHNOLOGY LTD. BY A TRIPARTITE CONVEYANCE DEED EXECUTED ON 5.7.2007 FOR RS. 29.11 CRORES AND THERE FORE, 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 ACCOR DING 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 SE CTION 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 BECAUS E SAME WAS RELEVANT TO ACCRUAL OF INTEREST. THE BENCH FOLLOWED THE DECISION OF KALPT ARU CONSTRUCTION OVERSEES PVT LTD. 13 SOT 194. IN THAT CASE THE ASSESSEE HAD AGREED T O SELL TO ITS SUBSIDIARY EQUITY SHARES FOR A CONSIDERATION OF RS. 1.25 CRORES WHIC H 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 WHETHE R IN CASE OF KALAPTARU CONSTRUCTION OVERSEES PVT LTD. (SUPRA) WHICH HAS BE EN 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 WA S MADE IN THE SAME YEAR OR NOT? AS OBSERVED EARLIER WHILE DISCUSSING THE ISSUE OF NOTI ONAL INCOME THAT PROVISIONS OF SECTION 45 R.W.S. 48, ARE ABSOLUTELY CLEAR AND THER E IS NO AMBIGUITY THAT ONCE A CAPITAL ASSET IS TRANSFERRED THEN WHOLE OF THE CONSIDERATIO N RECEIVED OR ACCRUING HAS TO BE CONSIDERED FOR THE PURPOSE OF TAXATION IN THE YEAR IN WHICH THE TRANSFER HAS TAKEN PLACE. WE FURTHER FIND THAT IN THE JDA THERE IS A CLAUSE FOR TERMINATION OF THE AGREEMENT. RELEVANT CLAUSE 14 READS AS UNDER: TERMINATION 14(I) SAVE AND EXCEPT THE PROVISION OF CLAUSE 26, THDC SHALL AT ALL TIMES HAVE THE RIGHT TO TERMINATE THIS AGREEMENT IN THE EVENT THER E IS ANY MATERIAL BREACH OF THE REPRESENTATIONS, WARRANTIES, UNDERTAKINGS, DECLARAT IONS, COVENANTS AND/OR OBLIGATIONS GIVEN BY THE OWNER UNDER THIS AGREEMENT AFTER GIVIN G THIRTY (30) DAYS WRITTEN NOTICE FOR RECTIFICATION OF SUCH BREACH. IN THE EVENT THE AGR EEMENT IS TERMINATION 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 NO T BE TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SH ALL REFUND TO THDC THE ADJUSTABLE ADVANCE/EARNEST MONEY MENTIONED IN CLAUSE 4.1(I) AB OVE WITHIN ONE MONTH OF SUCH TERMINATION. IN THE EVENT OF FAILURE OF THE OWNER TO REFUND THE SAID AMOUNT, THE OWNER HEREBY AGREES TO EXECUTE A REGISTERED SALE DEED FOR LAND OF EQUIVALENT VALUE IN FAVOUR OF THDC. (II) IN THE EVENT ALL THE REQUISITE GOVERNMENT AND STATUTORY APPROVALS, AUTHORIZATIONS, CONSENTS, LICENSES, APPROVALS OF AL L THE PLANS/DESIGNS AND DRAWINGS AS MAY BE REQUIRED FOR THE DEVELOPMENT OF THIS PROPERT Y IN RELATION TO THE PROJECT AND TO UNDERTAKE THE PROJECT ARE NOT GRANTED WITHIN NINE ( 9) MONTHS OF THE SUBMISSION OF THE FINAL PLANS/DESIGNS AND DRAWINGS TO THE COMPETENT A UTHORITY FOR APPROVAL THEN THDC MAY AS ITS SOLE DISCRETION EITHER DECIDE THAT IT DO ES NOT DESIRE TO UNDERTAKE AND COMPLETE THE PROJECT AND HENCE TERMINATE THIS AGREE MENT 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 LICENS ES. 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 SHA LL 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. UPO N 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 PR OPERTY DUE TO REFUSAL/NON GRANT OF APPROVALS, CONSENTS, PERMISSION, LICENSES OR REV OCATION OF THE SAME BY THE APPROPRIATE STATUTORY AUTHORITY, THEN THDC MAY AT I TS SALE DISCRETION TERMINATE THIS AGREEMENT. IN THE EVENT THE AGREEMENT IS TERMINATE D BY THDC, ALL THE LANDS 31 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 TRA NSFERRED 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) AB OVE 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. (IV) THE OWNER SHALL HAVE THE RIGHT TO TERMINATE TH E AGREEMENT ONLY IN THE EVENT OF DEFAULT BY THE DEVELOPERS FOR MAKING THE PAYMENT IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT AND THE ALLOTMENT OF FLATS WITHIN THE TIM E PERIOD AS MENTIONED IN THIS AGREEMENT AFTER GIVING THIRTY (30) DAYS WRITTEN NOT ICE FOR RECTIFICATION OF SUCH BREACH OR ANY FURTHER TIME AS MAY BE DESIRED BY THE OWNER. I N THE EVENT THE AGREEMENT IS TERMINATED BY OWNER, ALL THE LANDS REGISTERED IN TH E NAME OF THDC AS PER THE TERMS OF THIS AGREEMENT UPTO THE DATE OF THE TERMINATION SHA LL 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. UPO N THE TERMINATION, THE OWNER SHALL FORFEIT THE ADJUSTABLE ADVANCE/EARNEST MONEY MENTIO NED IN CLAUSE 4(I). 103 THE READING OF THE ABOVE CLAUSE WOULD SHOW THAT POWER OF TERMINATION HAS BEEN GIVEN IN MANY CIRCUMSTANCES TO THDC VIDE CLAUS E 14(I), (II) AND (III). THE POWER FOR TERMINATION BY THE OWNER HAS BEEN MENTIONED IN CLAUSE 14(IV) ONLY. READING OF THIS CLAUSE WOULD SHOW THAT RIGHT TO TERMINATE WITH THE OWNER I.E. THE SOCIETY WAS AVAILABLE ONLY IN CASE OF DEFAULT IN MAKING THE PAYMENT. THE ISSUE REGARDING DEFAULT FOR MAKING PAYMENT HAS ALREADY BEEN DISCUSSED BY US IN PARAS 8 4 TO 86 ABOVE WHILE DISCUSSING THE ISSUE OF WILLINGNESS ON THE PART OF THE TRANSFE REE TO PERFORM ITS PART OF THE CONTRACT WE HAVE ALREADY HELD THAT THERE WAS NO DEFAULT ON T HE PART OF DEVELOPER I.E. THDC/HASH IN MAKING THE PAYMENT, THEREFORE, THE AS SESSEE HAD NO RIGHT TO TERMINATE THE CONTRACT. IN ANY CASE WE FURTHER FIND THAT CLA USE 20 OF THE JDA REFERS TO ARBITRATION AND IT IS CLEARLY PROVIDED THAT ALL THE DISPUTES UN DER IT SHOULD BE REFERRED TO THE ARBITRATION. THEREFORE, IF THE SOCIETY HAD SOME GR IEVANCE IT WAS DUTY BOUND TO GIVE A NOTICE FOR APPOINTMENT OF AN ARBITRATOR TO THE DEVE LOPER. IN THE ABSENCE OF SUCH NOTICE THE TERMINATION WILL NOT STAND SCRUTINY OF LAW. HER E IT IS ALSO PERTINENT TO NOTE THAT THOUGH IT WAS STATED THAT IRREVOCABLE POWER OF ATTO RNEY 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 PRO PERTY IN FAVOUR OF THDC INTERALIA INCLUDING THE RIGHT TO RAISE FINANCE BY M ORTGAGING THE PROPERTY AND REGISTER THE CHARGE WITH THE COMPETENT AUTHORITY AN D 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 DISCR ETION 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 ATTO RNEY COULD NOT BE REVOKED FOR ANY REASON WITHOUT OBTAINING SPECIFIC P RIOR WRITTEN CONSENT OF THDC/HASH. NO DOCUMENT SHOWING THE CONSENT OF THDC FOR REVOCATION OF THIS IRREVOCABLE POWER OF ATTORNEY HAS BEEN PRODUCED BEF ORE 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 D ISCUSSED EARLIER WHILE CONSIDERING THE LEGAL POSITION, WE WOULD AGAIN RECA LL THE WORDS OF HON'BLE AUTHORITY FOR ADVANCE RULING IN CASE OF JASBIR SING H SARKARIA (SUPRA) WHEREIN AT PARA 33 OF THE DECISION WHILE DISCUSSING THE ISS UE IN RESPECT OF POWER OF ATTORNEY, IT WAS HIGHLIGHTED THAT EXECUTION OF IRRE VOCABLE POWER OF ATTORNEY IS OF SIGNIFICANT NATURE AND THE WORDS IRREVOCABLE A RE VERY IMPORTANT. THE EXPRESSION IRREVOCABLE ITSELF SHOWS THAT NORMALLY SUCH ATTORNEY CANNOT BE REVOKED. THEREFORE, NO COGNIZANCE CAN BE TAKEN IN RESPECT OF REVOCATION OF THE IRREVOCABLE POWER OF ATTORNEY. IN THE ABSENCE OF SPECIFIC CONSENT AS PROVIDED IN CLAUSE 6.7 OF THE JDA FROM THDC. 105 WE MAY ALSO NOTE THAT CIT D.R HAS POINTED OUT T HAT TOTAL CONSIDERATION WAS TO BE DETERMINED AS UNDER: (I) CONSIDERATION IN CASH (RS. 82,50,000 X 129 PLOTS) RS. 106,42,50,000/- 32 (II) CONSIDERATION IN KIND (RS. 101,25,000/- X 129 PLOTS) RS. 130,61,25,000/- TOTAL RS. 237,03,75,000/- AVERAGE COST OF CONSIDERATION RS. 11.18 CRORES PER ACRE (TOTAL CONSIDERATION OF RS. 237.03 CRORES DIVIDED B Y 21.2 ACRES OF LAND) IT IS CLAIMED ON BEHALF OF THE ASSESSEE THAT JDA HA S BEEN CANCELLED AND THE DEVELOPER HAS BEEN ALLOWED TO RETAIN THE PROPERTY WHICH HAS A LSO BEEN CONVEYED TO DEVELOPER THROUGH TWO SALE DEEDS. IF THAT IS SO THEN WHAT WO ULD HAPPEN TO THE BALANCE CONSIDERATION BECAUSE IN SUCH SITUATION THE ASSESSE E HAS RECEIVED CONSIDERATION OF ONLY ABOUT RS. 5 CRORESS PER ACRE BECAUSE THE ASSES SEE HAS REGISTERED LAND MEASURING 3.08 ACRES FOR RS. 15.48 CRORES THROUGH FIRST CONVE YANCE DEED, WHEREAS CONSIDERATION AS PER ORIGINAL AGREEMENT WAS RS. 11.18 CRORES PER ACRE AS SHOWN ABOVE. THE DIFFERENCE IS BECAUSE OF NON RECEIPT OF CONSIDERATI ON IN KIND AND THE ASSESSEE HAS NOT SHOWN ANY EVIDENCE THAT IT HAS MADE THE CLAIM FOR R ECEIPT OF BALANCE CONSIDERATION. THIS LEADS TO THE CONCLUSION THAT THERE WAS NO CANC ELLATION OF THE JDA. 106 SOME ARGUMENTS WERE MADE BY BOTH THE PARTIES TH AT IF THE CONTRACT IS FINALLY STAND ABANDONED THEN WHAT WOULD HAPPEN. THE CONTEN TION 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 REL IEF. 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 O F TRANSFER THEN SAME CANNOT BE SUBJECTED TO TAX IN ANY OTHER YEAR. WE FIND THAT T HIS 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 S OME CONCERN TO US. WHAT WILL HAPPEN IF DURING THE YEAR FOLLOWING THE ONE IN WHIC H 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 OBLIG ED TO FILE THE RETURN SHOWING THE ENTIRE CAPITAL GAIN BASED ON THE FULL SALE PRICE WH ETHER OR NOT RECEIVED DURING THE YEAR OF DEEMED TRANSFER. IN SUCH AN EVENTUALITY, HARDSH IP MAY BE CAUSED TO THE OWNER WHO WOULD HAVE PAID FULL TAX. NO DOUBT, SUCH A SITUATI ON COULD BE AVOIDED IF THE CONTENTION OF THE APPLICANT IS ACCEPTED. ON DEEP CONSIDERATIO N, HOWEVER, WE FIND THAT THE CONSTRUCTION OF THE RELEVANT PROVISION SHOULD NOT B E CONTROLLED BY GIVING UNDUE IMPORTANCE TO SUCH HYPOTHETICAL SITUATIONS. NORMAL LY, THE OWNER EXECUTES A POWER OF ATTORNEY OR DOES SIMILAR ACT TO LEFT THE TRANSFEREE TAKE POSSESSION ONLY AFTER THE BASIC PERMISSIONS ARE GRANTED AND HE IS SATISFIED ABOUT T HE ABILITY OF TRANSFEREE/DEVELOPER TO FULFIL THE CONTRACT. IN SPITE OF THAT, IF SUCH RAT E SITUATIONS TAKE PLACE, THE OWNER/TRANSFEROR WILL NOT BE WITHOUT REMEDY. HE CA N FILE A REVISED RETURN AND MAKE OUT A CASE FOR EXCLUSION OR REDUCTION OF INCOME. HOWEV ER, IF THE TIME-LIMIT FOR FILING A REVISED RETURN EXPIRES, THE DIFFICULTY WILL ARISE. IT IS FOR PARLIAMENT OR THE CENTRAL GOVERNMENT TO PROVIDE A REMEDY TO THE ASSESSEE IN S UCH CASES. MOREOVER, THE OTHER SIDE OF THE PICTURE AS DEPICTED IN PARAGRAPH 27 (SU PRA) SHOULD ALSO BE KEPT IN VIEW. HERE THE COMMENTS OF SHRI RAJARATNAM QUOTED AT PARA 5164 ABOVE ARE ALSO RELEVANT AGAIN: IT IS HARD ON THE OWNERS WHEN REQUIRED TO PAY TAX, WHEN HANDING OVER THE POSSESSION FOR PURPOSES OF CONSTRUCTION WITHOUT BEI NG ABLE TO ENJOY THE CONSTRUCTION, WHICH IS YET TO COMMERCE OR IN THE PR OCESS OF CONSTRUCTION BEING PUT UP BY THE DEVELOPER, BUT THE SOLUTION LIES IN S TATUTORY CLARIFICATION IN SUCH CASES. IN VIEW OF THE INCREASING SCALE OF SUCH DEV ELOPMENT AGREEMENTS TO SOLVE THE HOUSING PROBLEM IN THE CITIES, A STATUTOR Y CLARIFICATION OR CIRCULAR IS OVERDUE. WE MAY MENTION HERE THAT NO DOUBT SOMETIMES AN ASSE SSEE MAY BE PUT IN A DIFFICULT SITUATION AND AS MENTIONED BY HON'BLE AUTHORITY IN CASE OF JASBIR SINGH SARKARIA (SUPRA) AS WELL AS LD. AUTHOR SHRI RAJARATNAM IT IS FOR THE LEGISLATURE TO TAKE CORRECTIVE STEPS. HOWEVER, IT MAY NOT BE OUT OF PLACE THAT IF CONSIDERING THE DIFFICULTY THE INTERPRETATION GIVEN BY THE LD. COUNSEL OF THE ASSE SSEE IS ACCEPTED THEN THE REVENUE MAY NOT BE ABLE TO TAX SUCH ASSESSEES WHEN THESE DI FFICULTIES ARE REMOVED. FOR EXAMPLE IN THE PRESENT CASE IF TOMORROW WHEN ALL PE RMISSIONS ARE OBTAINED AND CONSTRUCTION IS COMPLETED AND IF NO TAXES ARE HELD TO BE PAYABLE THEN LATER ON ALSO THE ASSESSEE MAY NOT BE SUBJECTED TO ANY TAX UNDER THE HEAD CAPITAL GAIN BECAUSE THEN IT CAN BE EASILY CONTENDED ON BEHALF OF THE ASSESSEE T HAT THE TRANSFER HAS ALREADY TAKEN PLACE ON THE DATE WHEN IRREVOCABLE POWER OF ATTORNE Y 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 ARI SE 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 33 CONSIDERATION RECEIVED OR ACCRUED HAS TO BE ASSESSE D 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 EYE S OF LAW SPECIAL POWER OF ATTORNEY COULD NOT HAVE BEEN REVOKED. IN VIEW OF THIS ANALY SIS, WE ARE OF THE OPINION THAT EITHER THE JDA HAS NOT BEEN CANCELLED OR IN ANY CASE THE S AME CANNOT BE CONSIDERED FOR DETERMINING THE TAXATION OF CAPITAL GAIN. ACCORDING LY THIS CONTENTION IS REJECTED. 108 THE NEXT CONTENTION OF THE ASSESSEE IS THAT EVE N IF THE WHOLE CONSIDERATION HAS TO BE TAXED THEN VALUE OF THE FLA TS CANNOT BE TAKEN AT RS. 4,500/- PER SQ. FEET. IT IS ALSO POINTED OUT THAT I N VIEW OF THE AGREEMENT BETWEEN THE HASH & THDC CONSIDERATION HAS BEEN SHOW N AT RS. 2,000/- PER SQ. FEET FOR 126 FLATS WHEREAS IT IS RS. 4,500/- PE R SQ. FEET FOR THREE FLATS. WE FIND NO FORCE IN THESE SUBMISSIONS. THE ASSESSEE HA S FILED ALONG WITH THE WRITTEN SUBMISSIONS COPY OF THE ADDENDUM OF AGREEME NT BETWEEN THDC AND HASH BY JOINT DEVELOPER (AT PAGE 265 & 266) AND TH IS ISSUE IS DISCUSSED IN CLAUSE 5 WHICH IS AS UNDER:- 5. CLAUSES 4.1, 4.2, 4.3 AND 4.4 ON THE PAGE NOS. 18 AND 19 OF THE AGREEMENT SHALL STAND AMENDED, MODIFIED AND SUBSTI TUTED BY THE FOLLOWING:- 4.1 IT IS EXPRESSLY AGREED AND UNDERSTOOD BY AND BE TWEEN THE PARTIES HERETO (A) IN THE RATIO OF 72,28 BETWEEN THDC AND HASH I N CASE GROSS SALES PROCEEDS DOES NOT EXCEED RS. 1272 CRORES; (B) IN THE RATIO OF 70: 30 BETWEEN THDC AND HASH IN CASE GROSS SALES PROCEEDS IS EQUAL TO RS. 1272 CROR ES; (C) IN ADDITION (B), IN THE RATIO OF 60: 40 BETWE EN THDC AND HASH IN RESPECT OF GROSS SALES PROCEEDS INEXCESS OF RS. 1272 CRORES. IT IS AGREED THAT THE MINIMUM GUARANTEED AMOUNT FR OM THE GROSS SALES PROCEEDS FOR THDC AND HASH IS RS. 890.40 CRORES AND RS. 225.76 CRORES RESPECTIVELY. THE MINIMUM GUARANTEED AMOUNT OF RS. 225.76 CRORES TO HASH INCLUDES RS. 58.88 CRORES THAT SHALL BE EXPENDED BY THDC TOWARDS CONSTRUCTION OF 126 FLATS EQUIVALENT TO 2,83,500 SQ . FT,, WHICH FLATS ARE TO BE ALLOTTED IN THE NAMES OF THE MEMBERS OF THE SOCIETY OR OTHERWISE, AS THE CASE MAY BE, CALCULATED AS RS. 2000 PER SQ. FT. FOR THE AREA 2,83,500 SQ. FT. AND THE 72% SHARE OF 3 FLATS OF 2250 SQ. FT. TO BE PURCHASE D BY HASH @ RS, 4500/- PER SQ. FT. SHOULD THE APPLICATION OF THE RATIO STI PULATED IN (A) ABOVE RESULT IN HASH BEING ENTITLED TO A SUM GREATER THAN THE MINIM UM GUARANTEED AMOUNT AND THDC BEING ENTITLED TO A SUM LESS THAN THE MINI MUM GUARANTEED AMOUNT, THDC SHALL-BE ENTITLED TO THE ENTITLEMENT OF HASH WHICH IS IN EXCESS OF ITS MINIMUM, GUARANTEED AMOUNT UNTIL THDC ACHIEVES ITS MINIMUM GUARANTEED AMOUNT.-THE SAME IS ILLUSTRATED IN ANNEXURE I HERET O. 109 THE ABOVE CLEARLY SHOWS THAT HASH WAS ENTITLED TO TOTAL PROCEEDS OF RS. 225.76 CRORES OUT OF TOTAL PROCEEDS OF THE PROJ ECT WHICH WERE AGREED TO BE SHARED BY THDC AND HASH BUT THE PORTION OF HASH INC LUDES 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 FIG URE OF RS. 2,000/- PER SQ. FEET REPRESENTS ONLY THE COST OF CONSTRUCTIONS TO B E 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 R EPORTS 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 FL ATS 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. 2,00 0/-, 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 RECEI VED OR TO BE RECEIVED LATER BY THE SOCIETY IN CASH. CONSIDERING THE PRESENT MA RKET 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 T O 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 SOCIETIES) IN THE PRE LAUNCH OFFER IN THE RANGE OF RS. 7500 TO 8000 PER SQFT. IT IS A COMMON KNOWLEDGE THAT RATES IN PRE LAUNCH OFFE R ARE LOWER THAN THE RATES WHEN BOOKINGS OPEN FOR THE PUBLIC. CONSIDERING THE SE FACTS WE ARE OF THE 34 OPINION THAT ASSESSING OFFICER HAS ESTIMATED THE VA LUE OF THE FLATS ON MOST REASONABLE BASIS. IN VIEW OF THESE OBSERVATIONS TH IS CONTENTION IS REJECTED. 110 THE LD. COUNSEL FOR THE ASSESSEE HAD MADE SOME SUBMISSIONS ON THE ISSUE OF DEDUCTION U/S 54F. HE HAS POINTED OUT THA T THIS ISSUE HAS BEEN REJECTED WRONGLY BY CIT(A). HOWEVER, CAREFULLY PER USAL OF THE GROUNDS OF APPEAL SHOW THAT NO GROUND IN RESPECT OF DEDUCTION U/S 54F HAS BEEN RAISED BEFORE US AND, THEREFORE, WE DECLINE TO ADJUDICATE THIS ISSUE AND ALL THE ARGUMENTS MADE IN THIS BEHALF ARE REJECTED. THOUGH REFERENCE WAS MADE TO GROUND NO. 2.3 IN THIS REGARD. THE PERUSAL OF GROU NDS NO. 2.3 WOULD SHOW THAT REFERENCE HAS BEEN MADE ONLY TO SECTION 54 AND SECTION 54EC. SECTION 54 DEALS WITH DEDUCTION IN CASE THE ASSESSEE BEING AN INDIVIDUAL OR HUF, TRANSFERS THE RESIDENTIAL HOUSE AND IN CASE BEFORE US, THE ASSESSEE HAS TRANSFERRED THE PLOT. THEREFORE, IT CANNOT BE SAI D THAT DEDUCTION U/S 54F AND 54 IS SAME. SINCE NO GROUND HAS BEEN RAISED FOR DE DUCTION U/S 54F, WE REJECT THIS CONTENTION. FOLLOWING THE ABOVE ORDER, WE DECIDE THIS ISSUE AGA INST THE ASSESSEE. 16 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 9.7.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 9.7.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR
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