Smt. Preneet Kaur, Patiala V. ACIT, Patiala

ITA 384/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68455 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 09-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Capital asset; Depreciation; Advance ruling; Cost of acquisition; Deemed dividend; Competent authority; Revised return; Unabsorbed depreciation
• Section: 44AD; 54F; 148; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, JM ITA NO. 384/CHD/2013 ASSESSMENT YEAR : 2008-09 SMT. PRENEET KAUR VS. A.C.I.T., CIRCLE NEW MOTI BAGH PALACE PATIALA PATIALA ABCPK 3113 (APPELLANT) (RESPONDENT) APPELLANT BY NONE RESPONDENT BY: SHRI J.S. NAGAR DATE OF HEARING 21.8.2013 DATE OF PRONOUNCEMENT 3.9.2013 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 26. 2.2013 OF THE LD. CIT(A), PATIALA. 2 IN THIS APPEAL NONE APPEARED DESPITE NOTICE. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE ISSUES RAISED IN THIS APPEAL ARE COVERED BY THE ORDER OF THE TRIBUNAL IN CASE OF SHRI CHARANJIT SINGH ATWAL AND OTHERS, ITA NO. 448/CHD/2 011 AND OTHERS. THEREFORE, WE HAVE PROCEEDED TO DECIDE TH E APPEAL ON EX-PARTE BASIS. 3 IN THIS APPEAL THE ASSESSEE HAS RAISED THE OLLOWI NG GROUNDS: 1 THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT NO TICE U/S 148 IS VALID WHEN THE GROUNDS AS PER REASON REC ORDED ARE NOT AS PER LAW. 2 THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE RE IS TRANSFER WITHIN THE MEASURING OF SECTION 2(47) OF T HE ACT. FIRSTLY THE LD. CIT(A) HELD THAT THE CASE FALLS UND ER PROVISIONS OF SECTION 53A IGNORING THE FACT THAT POSSESSION WILL BE HANDED OVER ONLY IN CASE OF REGISTRATION AND THERE IS NO REGISTRATION OF THE AG REEMENT 2 HENCE 53A IS NOT OTHERWISE APPLICABLE. FURTHER LD. CIT(A) HAS ERRED IN HOLDING THAT CASE STILL QUALIFIES FOR TRANSFER U/S 2(47)(II) & 2(47)(VI) WITHOUT GIVING ANY SPECIF IC REASON FOR THE SAME. HENCE THE RELIEF BE GIVEN. 3 THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION ON THE BASIS OF ESTIMATED VALUE OF FLAT AT RS. 1,01,25000/- WHEN THE LAND BELONGS TO THE APPELLANT AND COST OF CONSTRUCTION IS JUST ESTIMATE WITHOUT ANY B ASIS. 4 GROUND NO. 1 - THE LD. DR FOR THE REVENUE WAS HEARD. AFTER CONSIDERING THE SUBMISSIONS OF THE LD . DR FOR THE REVENUE AND RELEVANT MATERIAL ON RECORD WE FIND THA T ORIGINAL RETURN IN THIS CASE WAS PROCESSED U/S 143(1). LATE R ON INFORMATION CAME TO BE AVAILABLE WITH THE DEPARTMEN T WHICH SHOWS THAT THE PUNJABI COOP HOUSING BUILDING SOCIET Y LTD. HAS TRANSFERRED LAND MEASURING 27.3 ACRES TO M/S TATA H OUSING DEVELOPMENT COMPANY LTD. AND OR HASH BUILDERS PVT L TD. THEREFORE, NOTICE U/S 148 WAS ISSUED. 5 SINCE ORIGINALLY NO ASSESSMENT WAS FRAMED U/S 14 3(3) OF THE ACT AND INFORMATION ALSO CAME TO THE REVENUE, T HEREFORE, REVENUE HAD RIGHT TO REOPEN THE ASSESSMENT PARTICUL ARLY IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN CASE OF ACIT V. RAJESH JHAVERI STOCK BROKER PVT. LTD. 291 ITR 500. THEREFORE, WE FIND NOTHING WRONG WITH THE ORDER OF THE CIT(A) IN RESPECT OF THIS ISSUE AND CONFIRM THE SAME. 6 GROUNDS NO. 2 & 3 - THROUGH THESE GROUNDS THE ASS ESSEE HAS CHALLENGED THE CHARGEABILITY OF CAPITAL GAIN ON THE TRANSFER OF PLOT. THE ASSESSEE IS A MEMBER OF THE PUNJABI C OOP HOUSE BUILDING SOCIETY LTD. AND WAS OWNER OF PLOT MEASURI NG 500 SQYD FOR WHICH THE ASSESSEE WAS ENTITLED TO RECEIVE A SUM OF RS. 82,50,000/- AS MONETARY CONSIDERATION AND A FUR NISHED FLAT MEASURING 2250 SQFT WHICH HAS BEEN VALUED AT RS. 45 00 PER SQFT. AT RS. 1,01,25,000/-. WHOLE OF THE CONSIDERA TION AMOUNTING TO RS. 1,83,75,000/- HAS BEEN SUBJECTED T O CHARGE OF CAPITAL GAIN. THIS ISSUE HAS BEEN CONSIDERED BY US IN DETAIL IN CASE OF SHRI CHARANJIT SINGH ATWAL (SUPRA). THE IS SUE HAS BEEN DECIDED VIDE PARAS 27 TO 110 WHICH ARE AS UNDE R: 3 27 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CA REFULLY GONE THROUGH THE WRITTEN SUBMISSIONS FILED BY BOTH THE P ARTIES IN THE LIGHT OF MATERIAL ON RECORD, PAPER BOOKS AND VARIOUS JUDG MENTS CITED BY THE PARTIES. THE MAIN ISSUE IS WHETHER ASSESSEE IS LIA BLE TO CAPITAL GAIN TAX IN THE YEAR UNDER CONSIDERATION I.E ASSESSMENT YEAR 2007-08 IN VIEW OF THE JDA. FOR CHARGING CAPITAL GAINS, THE C HARGING 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 PREVIOUS YEAR SHALL, SAVE AS OTHERWISE PROVIDED IN SECTIONS [54, 54B, [ [54D, [54E, [54EA , 54EB,] 54F [ 54G AND 54H], BE CHARGEABLE TO INCOME-TAX UNDER THE HEA D CAPITAL GAINS, AND SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. 28 THE PLAIN READING OF THE ABOVE PROVISION WOULD S HOW THAT CHARGING AN ITEM OF INCOME UNDER THE HEAD CAPITAL GAINS RE QUIRE THREE INGREDIENTS I.E. (I) THERE SHOULD BE SOME PROFIT. (II) SUCH PROFIT MUST BE ARISING ON ACCOUNT OF TRANSFER AND (III) THERE SHOULD BE CAPITAL ASSET WHICH HAS BEEN TRANSFERRED. THERE IS NO DISPU TE 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 T OO WHETHER THE TRANSFER COULD BE COVERED UNDER CLAUSES (II), (V) & (VI) OF SECTION 2(47) SO AS TO BRING INTO PICTURE THE WHOLE OF CONS IDERATION ARISING ON TRANSFER OF SUCH ASSETS. WE SHALL DEAL WITH EACH OF THE ASPECT IN DETAIL AT APPROPRIATE TIME. 29. APART FROM CHARGING PROVISIONS U/S 45 ANOTHER I MPORTANT PROVISION IS SECTION 48 WHICH DEALS WITH THE MODE O F COMPUTATION AND RELEVANT PORTION READS AS UNDER:- 48. THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED, BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS, NAMELY : (I) EXPENDITURE INCURRED WHOLLY AND 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 CONSIDERA TION WHETHER RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER. THEREFORE, IT IS NOT 4 ONLY THE CONSIDERATION RECEIVED WHICH IS RELEVANT B UT 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 ASSE T, INCLUDES, (I) THE SALE , EXCHANGE OR RELINQUISHMENT OF THE ASSET ; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN ; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW ; OR (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK-IN-TRADE OF A BUSINESS CARRIED ON BY HIM, SUCH CONVERSION OR TREATMENT ;] [OR] [(IVA) THE MATURITY OR REDEMPTION OF A ZERO COUPON BOND; OR] [(V) ANY TRANSACTION INVOLVING THE ALLOWING OF T HE 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, 1882 (4 OF 1882) ; OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPAN Y OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT O R ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHIC H HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT O F, 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 INSERTION HAS BEEN EXPLAINED BY CBDT IN CIRCULAR NO . 495 DATED 22.9.1987. THE RELEVANT 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 PURCHASER, BY WAY OF BECOMING A MEMBER OR ACQUIRIN G SHARES IN A CO-OPERATIVE SOCIETY, COMPANY, OR AS WAY OF ANY AGR EEMENT OR ANY ARRANGEMENT WHEREBY SUCH ANY BUILDING WHICH IS EITH ER BEING CONSTRUCTED OR WHICH IS TO BE CONSTRUCTED. TRANSAC TIONS OF THE NATURE REFERRED TO ABOVE ARE NOT REQUIRED TO BE REG ISTERED UNDER THE REGISTRATION ACT, 1908. SUCH ARRANGEMENTS CONFER TH E PRIVILEGES OF OWNERSHIP WITHOUT TRANSFER OF TITLE IN THE BUILDING AND ARE A COMMON MODE OF ACQUIRING FLATS PARTICULARLY IN MULTI-STORE YED CONSTRUCTIONS IN BIG CITES. THE DEFINITION ALSO DOES NOT COVER CA SES WHERE POSSESSION IS ALLOWED TO BE TAKEN OR RETAINED IN PA RT PERFORMANCE OF A CONTRACT, OF THE NATURE REFERRED TO IN SECTION 53 A OF TRANSFER OF 5 PROPERTY ACT, 1882. NEW SUB-CLAUSES (V) & (VI) HAVE BEEN INSERTED IN SECTION2(47) TO PREVENT AVOIDANCE OF CAPITAL GA INS LIABILITY BY RECOURSE TO TRANSFER OF RIGHTS IN THE MANNER REFERR ED 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 PROPERTY RIGHTS THROUGH WHAT IS COMMONLY KNOWN AS P OWER OF ATTORNEY ARRANGEMENTS. THE PRACTICE IN SUCH CASES I S ADOPTED NORMALLY WHERE TRANSFER OF OWNERSHIP IS LEGALLY NOT PERMITTED. A PERSON HOLDING THE POWER OF ATTORNEY IS AUTHORIZED THE POWERS OF OWNER, INCLUDING THAT OF MAKING CONSTRUCTION. THE LEGAL OWNERSHIP IN SUCH CASES CONTINUES TO BE WITH THE TRANSFEROR. 32 BEFORE INSERTION OF THE CLAUSE (V) & (VI) TO SE CTION 2(47) OF THE ACT, THE POSITION OF LAW WAS THAT UNLESS AND UN TIL A SALE DEED WAS EXECUTED FOR TRANSFER OF IMMOVABLE PROPERTY, TH E SAME COULD NOT BE CONSTRUED AS TRANSFER FOR THE PURPOSE OF CHA RGING CAPITAL GAIN TAX. THIS WAS PARTICULARLY SO IN THE LIGHT OF VARIOUS JUDGMENTS PARTICULARLY THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF ALAPATI VENKATRAMIAN V CIT (57 ITR 185) (SC). IN T HIS CASE IT WAS HELD THAT IN THE CONTEXT OF TRANSFER FOR THE PURPOS E OF CAPITAL GAIN TAX, WHAT IS MEANT BY TRANSFER IS THE EFFECTIVE CON VEYANCE OF THE CAPITAL ASSET BY A TRANSFEROR TO THE TRANSFEREE. D ELIVERY OF POSSESSION AND AGREEMENT TO SELL BY ITSELF COULD NO T CONSTITUTE CONVEYANCE OF THE IMMOVABLE PROPERTY. IN THE MEANT IME APART FROM THIS DECISION A PRACTICE CAME INTO VOGUE BY W HICH CERTAIN PROPERTIES WERE BEING TRANSFERRED WITHOUT EXECUTING THE PROPER SALE DEEDS. THIS WAS BEING DONE BECAUSE THERE WAS RESTRICTION ON SALE OF PROPERTIES IN VARIOUS TOWNS E.G. IN CASE OF LEASE HOLD PLOTS AND FLATS IN DELHI IF THE SAME WERE TO BE TRANSFERR ED, PERMISSION WAS REQUIRED TO BE TAKEN FROM THE GOVERNMENT / DDA AND TRANSFEROR WAS REQUIRED TO PAY 50% OF THE MARKET VA LUE COST (I.E. UNEARNED INCREASE) TO THE GOVERNMENT. TO AVOID SUCH PAYMENTS AND / OR ALSO TO AVOID THE PAYMENT OF STAMP DUTY OR CUMBERSOME PROCEDURE OF OBTAINING PERMISSION, SOME PROPERTIES WERE BEING SOLD BY WAY OF SALE AGREEMENT AND ALSO EXECUTION OF GENERAL POWER OF ATTORNEY AND POSSESSION WAS GIVEN ON RECEI PT OF FULL CONSIDERATION WITHOUT EXECUTING THE PROPER SALE DEE DS ETC. WHICH AS MENTIONED EARLIER WAS NOT EVEN PERMISSIBLE IN SO ME CASES. THESE TRANSACTIONS ARE POPULARLY CALLED POWER OF A TTORNEY TRANSACTIONS. TO AVOID THESE AND TO STOP THE LEAK AGE OF REVENUE, THE PARLIAMENT HAS INSERTED CLAUSES (V) & (VI) TO S ECTION 2(47) SO AS SUCH TYPE OF TRANSACTIONS ARE ALSO BE BROUGHT IN TO TAXATION NET. HOWEVER, INTERPRETATIONS OF THESE CLAUSES HAS LED T O 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 PRESENT CASE, THE REVENUE HAS MAINLY RELIED ON TWO DECISION S NAMELY (I) CHATURBHUJ DWARKADAS KAPADIA V CIT 260 ITR 491 (BOM .) AND; (II) 6 AUTHORITY FOR ADVANCE RULING (AAR) NEW DELHI IN THE CASE OF JASBIR SINGH SARKARIA 294 ITR 196. 33. IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V C IT (SUPRA), THE FACTS BEFORE THE HON'BLE BOMBAY HIGH COURT WERE THA T ASSESSEE WHO WAS AN INDIVIDUAL HAD 44/192 UNDIVID ED SHARE IN AN IMMOVABLE PROPERTY IN GREATER BOMBAY WHICH CONSI STED OF VARIOUS LANDS AND BUILDINGS. BY AGREEMENT DATED AU GUST 18, 1994, THE ASSESSEE AGREED TO SELL TO FLOREAT INVEST MENT LTD, (HEREIN REFERRED TO FLOREAT) HIS SHARE OF IMMOVAB LE PROPERTY FOR A TOTAL CONSIDERATION OF RS. 1,85,63,220/- WITH RIGH T TO SAID FLOREAT TO DEVELOP THE PROPERTY IN ACCORDANCE WITH THE RUL ES / REGULATIONS FRAMED BY LOCAL AUTHORITIES. FOR THIS PURPOSE, THE ASSESSEE ALSO AGREED TO EXECUTE A LIMITED POWER OF ATTORNEY AUTHO RIZING FLOREAT TO DEAL WITH THE PROPERTY AND ALSO OBTAIN PERMISSIO NS AND APPROVALS FROM VARIOUS AUTHORITIES. UNDER CLAUSE 1 1 OF THE AGREEMENT, IT WAS PROVIDED THAT AFTER FLOREAT WAS G IVEN AN IRREVOCABLE LICENSE TO ENTER UPON THE ASSESSEES SH ARE OF PROPERTY AND AFTER FLORET INVESTMENT HAVE OBTAINED ALL NECES SARY APPROVALS, THE FLORET WAS ENTITLED TO DEMOLISH VARIOUS BUILDIN GS FOR SETTLING THE CLAIMS OF THE TENANTS. UNDER CLAUSE 14 OF THE A GREEMENT, THE ASSESSEE WAS ENTITLED TO RECEIVE PROPORTIONATE RENT TILL THE PAYMENT OF LAST INSTALLMENTS AND TILL THAT TIME ASS ESSEE WAS BOUND TO PAY ALL OUTGOINGS. UNDER CLAUSE 20 OF THE AGRE EMENT, IT WAS AGREED THAT SALE SHALL BE COMPLETED BY EXECUTION OF CONVEYANCE, HOWEVER, TILL THE MATTER WAS ADJUDICATED BY THE HON 'BLE HIGH COURT, NO CONVEYANCE WAS EXECUTED. PURSUANT TO THIS AGREE MENT, FLOREAT OBTAINED VARIOUS PERMISSIONS NAMELY (I) CLEARANCE F ROM 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, FLOREAT HAD PAID ALMOST THE ENTIRE CONSID ERATION EXPECT FOR A SMALL SUM OF RS. 9,98,000/-. HOWEVER, THE CO MMENCEMENT CERTIFICATE PERMITTING CONSTRUCTION OF THE BUILDING WAS ISSUED ON NOVEMBER 15, 1996. THE POWER OF ATTORNEY WAS EXECU TED ON MARCH 12, 1999. THE QUESTION AROSE WHETHER LIABILI TY OF THE ASSESSEE FOR CAPITAL GAIN AROSE IN THE ASSESSMENT Y EAR 1996-97 OR 1999-2000. THE OBSERVATION OF THE COURT HAS BEEN S UMMARIZED 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, 198 8. THEY PROVIDE THAT TRANSFER INCLUDES (I) ANY TRANSACTIO N 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, 1882, AND (II) ANY TRANSA CTION ENTERED INTO IN ANY MANNER WHICH HAS THE EFFECT OF 7 TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOV ABLE PROPERTY. THEREFORE, IN THESE TWO CASES CAPITAL GAI NS WOULD BE TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO, EVEN IF THE TRANSFER OF THE IMMOVABLE PROPERT Y IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW. UNDER SECTION 2(47)(V) ANY TRANSACTION INVOLVING ALLOWING OF POSS ESSION TO BE TAKEN OVER OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSF ER OF PROPERTY ACT WOULD COME WITHIN THE AMBIT OF SECTION 2(47)(V). IN ORDER TO ATTRACT SECTION 53A, THE FOLLOWING COND ITIONS NEED TO BE FULFILLED. THERE SHOULD BE A CONTRACT FOR CON SIDERATION ; IT SHOULD BE IN WRITING ; IT SHOULD BE SIGNED BY TH E TRANSFEROR ; IT SHOULD PERTAIN TO TRANSFER OF IMMOVABLE PROPERTY ; THE TRANSFEREE SHOULD HAVE TAKEN POSSESSION OF THE PROP ERTY ; LASTLY, THE TRANSFEREE SHOULD BE READY AND WILLING TO PERFORM HIS PART OF THE CONTRACT. EVEN ARRANGEMENTS CONFIRM ING PRIVILEGES OF OWNERSHIP WITHOUT TRANSFER OF TITLE C OULD FALL UNDER SECTION 2(47)(V). SECTION 2(47)(V) WAS INTROD UCED IN THE ACT FROM THE ASSESSMENT YEAR 1988-89 BECAUSE PRIOR THERETO, IN MOST CASES, IT WAS ARGUED ON BEHALF OF THE ASSES SEE THAT NO TRANSFER TOOK PLACE TILL EXECUTION OF THE CONVEY ANCE. ASSESSEES USED TO ENTER INTO AGREEMENTS FOR DEVELOP ING PROPERTIES WITH BUILDERS AND UNDER THE ARRANGEMENT WITH THE BUILDERS, THEY USED TO CONFER PRIVILEGES OF OWNERSH IP WITHOUT EXECUTING CONVEYANCE AND TO PLUG THAT LOOPHOLE, SEC TION 2(47)(V) CAME TO BE INTRODUCED IN THE ACT. . HELD, THAT SECTION 2(47)(V) READ WITH SECTION 45 INDICATES THAT CAPITAL GAINS WAS TAXABLE IN THE YEA R IN WHICH SUCH TRANSACTIONS WERE ENTERED INTO EVEN IF THE TRA NSFER OF IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UND ER THE GENERAL LAW. IN THIS CASE, THE TEST HAD NOT BEEN AP PLIED BY THE DEPARTMENT. NO REASON HAD BEEN GIVEN WHY THAT TEST HAD NOT BEEN APPLIED, PARTICULARLY WHEN THE AGREEMENT IN QU ESTION, READ AS A WHOLE, SHOWED THAT IT WAS A DEVELOPMENT AGREEMENT. ONCE UNDER CLAUSE 8 OF THE AGREEMENT A L IMITED POWER OF ATTORNEY WAS INTENDED TO BE GIVEN TO THE D EVELOPER TO DEAL WITH THE PROPERTY, THEN THE DATE OF THE CON TRACT, VIZ., AUGUST 18, 1994, WOULD BE THE RELEVANT DATE TO DECI DE THE DATE OF TRANSFER UNDER SECTION 2(47)(V) AND, IN WHI CH EVENT, THE QUESTION OF SUBSTANTIAL PERFORMANCE OF THE CONT RACT 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 4 99 OF THE REPORT: .. THE ABOVE TWO CLAUSES WERE INTRODUCED WITH EF FECT FROM APRIL 1,1988. THEY PROVIDE THAT TRANSFER INC LUDES (I) ANY TRANSACTION WHICH ALLOWS POSSESSION TO BE TAKEN/RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, AND (I I) ANY TRANSACTION ENTERED INTO IN ANY MANNER WHICH HAS TH E EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IM MOVABLE PROPERTY (SEE SECTION 269UA(D)). THEREFORE, IN THES E TWO CASES CAPITAL GAINS WOULD BE TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO, EVEN IF THE TRA NSFER OF THE IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW (SEE KANGA AND PALKHIVALAS LAW AND PRACTICE OF INCOME-TAX-VIII EDITION, PAGE 766). THI S TEST IS IMPORTANT TO DECIDE THE YEAR OF CHARGEABILITY OF TH E CAPITAL GAINS. 8 35 THE ABOVE OBSERVATIONS WERE MADE ON THE BASIS OF OPINION EXPRESSED BY LD. AUTHOR IN THE COMMENTARY THE L AW AND PRACTICE OF INCOME TAX BY KANGA AND PALKHIVALA EIGHTH EDITION A T PAGE 766. RELEVANT OBSERVATIONS 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) A NY TRANSACTION WHICH INVOLVES THE ALLOWING OF THE POSSESSION OF AN IMMOVABLE PROPERTY (S. 269UA(D)) TO BE TAKEN OR RETAINED IN PART PERFO RMANCE 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 ANY MANNER WHIC H HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMM OVABLE PROPERTY (S. 269UA(D)). THEREFORE IN THESE TWO CASES CAPITAL GAI NS 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 SECTION 2(47) THE LIABILITY FOR CAPITOL GAIN WOULD ARISE ON THE DATE WHEN SUCH TRANSACTIONS ARE ENTERED INTO. IN THE JUDGMEN T AT SOME OTHER PLACES, THE SIMILAR OBSERVATIONS HAVE BEEN MADE. H OWEVER, DESPITE THIS OBSERVATION THE CASE WAS DECIDED IN FA VOUR OF THE ASSESSEE. THE REASON FOR THE SAME HAVE BEEN GIVEN IN THE JUDGMENT ITSELF. FIRSTLY IT IS OBSERVED THAT PROVISION OF S ECTION 2(47)(V) OF THE ACT WERE NOT INVOKED BY THE REVENUE ITSELF. THIS BECOM ES CLEAR FROM THE FOLLOWING PARA: IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT THERE WAS NO EFFECTIVE TRANSFER TILL GRANT OF IRREVOCABLE LICENCE. IN THI S CONNECTION, THE JUDGMENT OF THE HON'BLE SUPREME COURT WERE CITED ON BEHALF O F THE ASSESSEE, BUT ALL THOSE JUDGMENT WERE PRIOR TO INTRODUCTION OF TH E CONCEPT OF DEEMED TRANSFER U/S 2(47)(V). IN THIS MATTER, THE AGREEME NT IN QUESTION IS A DEVELOPMENT AGREEMENT. SUCH DEVELOPMENT 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 I N VARIOUS JUDGMENTS HAS TAKEN THE VIEW IN SEVERAL MATTERS THA T THE OBJECT OF ENTERING INTO A DEVELOPMENT AGREEMENT IS TO ENABLE A PROFESSIONAL BUILDER / CONTRACTOR TO MAKE PROFITS BY COMPLETING THE BUILDING AND SELLING THE FLATS AT A PROFIT. THAT THE AIM OF THESE 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 AGREEMENTS ARE ONLY A MODE OF REMUNERATING THE BUILDER FOR HIS SERVICES OF CONSTRUCTING THE BUILDI NG (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 LEGISLATURE HAS INTRODUCED SECTION 2(47)(V) READ WITH SECTION 45 WH ICH INDICATES THAT CAPITAL GAINS IS TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO EVEN IF THE TRANSFER OF IMMOVABLE PROP ERTY 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 AGREEME NT IN QUESTION, READ AS A WHOLE, SHOWS THAT IT IS A DEVELOPMENT AGR EEMENT. THERE IS A DIFFERENCE BETWEEN THE CONTRACT ON THE ONE HAND A ND 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 ACCOUNTING YEAR ENDING MARCH 31,1996, AS SUBSTANTIAL PAYMENTS WERE EFFECTED DURING THAT YEAR AND SUBSTAN TIAL PERMISSIONS WERE OBTAINED. IN SUCH CASES OF DEVELOPMENT AGREEME NTS, ONE CANNOT GO BY SUBSTANTIAL PERFORMANCE 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. 9 SECONDLY IT IS MENTIONED IN THE ORDER OF THE COURT THAT LAW WAS NOT VERY CLEAR ON THIS POINT AND SINCE THE ASSESSEE HAS ADMI TTED AND PAID CAPITAL GAIN IN THE ASSESSMENT YEAR 1999-2000, THEREFORE, TAX WAS HELD TO BE CHARGEABLE 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 EXECUTED BEFORE MARCH 31, 1996 E.G. THE FOLLOWING O BSERVATION OF THE TRIBUNAL WAS NOT FOUND CORRECT AS SOMETHING IS DONE ON IST APRIL, 1997 THEN THE SAME CANNOT FALL IN THE YEAR E NDING 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 CHARGES 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 POSSESSI ON THEN THE TRANSFER IS SAID TO HAVE BEEN TAKEN PLACE ON THE DA TE OF ENTERING INTO SUCH ARRANGEMENT. 38. WE DO NOT FIND ANY FORCE IN THE CONTENTION OF T HE LD. COUNSEL FOR THE ASSESSEE THAT JUDGMENT HAS TO BE R EAD IN THE CONTEXT OF THE DECISION MADE IN SUCH JUDGMENT. IN FACT, IT IS WELL SETTLED THAT DOCTRINE OF PRECEDENT WHICH MEANS WHAT NEEDS TO BE FOLLOWED LATER ON PARTICULARLY BY SUBORDINATE TRIBU NALS AND COURTS IS THE RATIO OF A PARTICULAR JUDGMENT GIVEN 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 CHA TURBHUJ DWARKADAS KAPADIA V CIT (SUPRA) DOES NOT SHOW THAT THE DATE OF AGREEMENT ITSELF CONSTITUTE THE TRANSFER. AGAIN TH ERE IS NO FORCE EVEN IN THE CONTENTION THAT IN THAT CASE IT WAS ULT IMATELY DECIDED THAT CAPITAL GAIN TAXES IS CHARGEABLE IN ASSESSMENT YEAR 1999- 2000 BECAUSE OF THE REASONS GIVEN IN ABOVE NOTED PA RAS 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 ASSESSMENT YEAR 1996-97. NO DOUBT IN THAT CASE ULTIMATELY IT WAS HELD THAT CAPITAL GAIN WAS IN ASSESSMENT YEAR 1 999-2000 BUT COURT HAD MADE IT VERY CLEAR THAT THIS IS FIRST TIM E THAT LAW IS BEING LAID DOWN AND GUIDELINES ARE BEING ISSUED WHICH MEA NS THAT THERE WAS A CONFUSION EARLIER. CLAUSES (V) & (VI) TO SEC TION 2(47) WERE INTRODUCED IN THE YEAR ONLY IN 1998. PERHAPS COURT TOOK A LENIENT VIEW BECAUSE OF THESE REASONS AND HELD THAT CAPITAL GAIN WAS TAXABLE IN ASSESSMENT YEAR 1999-2000. IT IS QUITE CLEAR THAT RATIO OF THE ABOVE DECISION IS THAT IN CASE OF ANY ARRANGEMENTS OR TRANSACTIONS WHEREBY THE OTHER PARTY BECOMES ENT ITLED TO 10 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 JASBIR SINGH SARKARIA (SUPRA) . IN THAT CASE THE ASSESSEE WAS CO-OWNER OF AGRICULTURAL LAND MEASURING ABOUT 27.7 ACRES AND HIS SHARE WAS 4/9. THE CO-OWNER DECIDED TO DEVELOP THE LAND BY C ONSTRUCTING RESIDENTIAL COMPLEX THROUGH DEVELOPER AND ENTERED I NTO 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 SANCTIONS FOR DEVELOPING THE LAND A T ITS OWN RISK AND COST. THE DEVELOPER WAS TO TAKE 84% OF THE BUI LT UP AREA AND BALANCE 16% WOULD BELONG TO ASSESSEE AND OTHER CO-O WNER. THE CONSIDERATION FOR THE AGREEMENT WAS TAKEN AS THE BU ILT UP AREA TO BE HANDED OVER TO THE OWNERS FREE OF COST. THE OWN ERS WERE ENTITLED TO VISIT THE SITE IN ORDER TO REVIEW THE P ROGRESS OF THE PROJECT. IT WAS CLARIFIED BY CLAUSE 18 THAT OWNERS HIP WOULD REMAIN EXCLUSIVELY WITH THE OWNERS TILL IT VESTS WITH BOTH THE PARTIES AS PER THEIR RESPECTIVE SHARES ON THE COMPLETION OF THE PR OJECT. THE OTHER CLAUSES AND THE STEPS IN THE AGREEMENT WERE THAT A SUM OF RS. 1 CRORE TOWARDS PAYMENT OF EARNEST MONEY AT THE TIME OF ENTERING INTO AGREEMENT; A SPECIAL POWER OF ATTORNEY WAS TO BE EXECUTED IN FAVOUR OF THE DEVELOPER TO ENABLE TO DEAL WITH THE STATUTORY AUTHORITIES ETC. FOR OBTAINING NECESSARY APPROVALS / SANCTIONS; LETTER OF INTENT WAS TO BE OBTAINED NOT LATER THAN MARCH 8, 2006 AND IN CASE OF A FAILURE TO DO SO, THE AGREEMENT SH ALL 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 O F CERTAIN CHARGES AND COMPLIANCE OF OTHER CONDITIONS. IT WAS FURTHER STATED IN THE AGREEMENT THAT ON FULFILLMENT OF THE REQUIREMENT IN THE LETTER OF INTENT, OWNERS WILL HAVE TO EXECUTE IRREVOCABLE GEN ERAL POWER OF ATTORNEY IN FAVOUR OF THE DEVELOPER AUTHORIZING THE DEVELOPER TO TOOK AND SELL THE DWELLING UNITS OUT OF DEVELOPERS SHARE AND COLLECT THE MONEY FOR THE SAME. HOWEVER, FINALLY SA LE DEEDS COULD BE EXECUTED ONLY AFTER THE OWNER RECEIVED THEIR SHA RE OF CONSTRUCTED AREA. THREE MONTHS LATER, A SUPPLEMENT ARY AGREEMENT WAS ENTERED ON SEPTEMBER 15, 2005 BETWEEN THE ASSES SEE AND OTHER CO-OWNERS AND DEVELOPERS THROUGH WHICH IT WAS AGREED THAT OWNERS WILL SELL THEIR 16% SHARE IN THE BUILT UP AR EA TO THE DEVELOPER OR ITS NOMINEE FOR CONSIDERATION OF RS. 4 2 CRORES. A SUM OF RS. 2 CRORES WAS RECEIVED. THIS COLLABORATION AG REEMENT AND BALANCE OF RS. 40 CRORES WAS PAYABLE BY THE DEVELOP ER TO THE OWNERS IN SIX INSTALLMENTS FROM MARCH 06, 2008. TH E INSTALLMENTS 11 COULD BE EXTENDED SUBJECT TO PAYMENT OF INTEREST AN D FURTHER SUBJECT TO MAXIMUM EXTENSION OF THREE MONTHS. THER E WERE VARIOUS OTHER CLAUSES WHICH ARE NOT RELEVANT FOR OU R PURPOSES. THE QUESTION AROSE WHETHER CAPITAL GAIN ACCRUE / AR ISE TO THE ASSESSEE DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08 OR DURING FINANCIAL YEAR 2007-08 RELEV ANT 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 EXPRESSION 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 T HE CHARGING PROVISION. THE SECOND POINT WHICH DESERVES NOTICE IS THAT BY A DEEMING PROVISION, THE PROFITS OR GAINS THAT HAVE ARISEN WOULD BE TRE ATED AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE . THAT MEANS, THE INCOME ON ACCOUNT OF ARISAL OF CAPITAL GAIN SHOULD BE CHARGED TO TAX IN THE SAME PREVIOUS YEAR IN WHICH THE TRANSFER WAS E FFECTED OR DEEMED TO HAVE TAKEN PLACE. THE EFFECT AND AMBIT OF THE DEEMING PROVISION CONT AINED IN SECTION 45 HAS BEEN CONSIDERED IN DECIDED CASES AN D LEADING TEXT BOOKS. THE FOLLOWING STATEMENT OF LAW IN SAMPATH I YENGARS COMMENTARY (10TH EDITION REVISED BY SHRI S. RAJARA TNAM) 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 WH ICH THE TRANSFER TOOK PLACE. SINCE THIS IS A STATUTORY FI CTION, THE ACTUAL YEAR IN WHICH THE SALE PRICE WAS RECEIVED, WHETHER IT WAS ONE YEAR, TWO YEARS, THREE YEARS, FOUR YEARS ETC. PREV IOUS 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 W OULD BE REGARDED AS THE CAPITAL GAINS ARISING IN THE PREVI OUS 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 CONSIDER ATION STIPULATED TO BE PAID IN FUTURE WOULD HAVE TO BE ATTRIBUTED, BY STATUTORY 12 MANDATE, TO THE YEAR OF TRANSFER, EVEN AS PAYMENTS MADE PRIOR TO THE YEAR OF TRANSFER. 41. THEREAFTER, THE AUTHORITY REFERRED TO SECTION 2(47) AND OBJECTS OF THE INTRODUCTION OF CLAUSES (V) & (VI) A ND ALSO REFERRED TO PARAS 11.1 & 11.2 OF THE BOARD CIRCULAR NO. 495 (WHICH WE HAVE ALREADY DISCUSSED EARLIER). THE HON'BLE AUTHORITY HAS DISCUSSED VARIOUS IMPLICATIONS OF CLAUSE (V) OF SECTION 2(47) AND ALSO IMPLICATION OF SECTION 53A OF THE TRANSFER OF PROPE RTY ACT AS WELL AS OBSERVATIONS OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V CIT (SUPRA). THE A UTHORITY OBSERVED THAT TO UNDERSTAND THIS PROVISION PROPERLY MEANING OF POSSESSION HAS TO BE UNDERSTOOD PROPERLY AND WENT ON TO DISCUSS THE MEANING OF TERM POSSESSION, AND HOW THE SAME I S TO BE UNDERSTOOD IN THE CONTEXT OF CLAUSE (V). THESE ARE VERY IMPORTANT OBSERVATIONS AND HAVE BEEN DISCUSSED IN MOST ELUCID ATED FASHION. THESE OBSERVATIONS WILL ANSWER MANY OF THE QUESTION S RAISED BEFORE US AND, THEREFORE, WE ARE EXTRACTING THESE O BSERVATIONS 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 SECTION 2(47). SHOULD IT ONLY MEAN THE RIGHT TO EXCLUSIVE POSSESS IONWHICH THE TRANSFEREE CAN MAINTAIN IN HIS OWN RIGHT TO THE EX CLUSION OF EVERYONE INCLUDING THE TRANSFEROR FROM WHOM HE DERI VED THE POSSESSION ? SUCH A CRITERION WILL BE SATISFIED ONL Y AFTER THE ENTIRE SALE CONSIDERATION IS PAID AND THE TRANSFEROR HAS F ORFEITED HIS RIGHT TO EXERCISE ACTS OF POSSESSION OVER THE LAND OR TO RESUME POSSESSION. IN OUR VIEW, THERE IS NO WARRANT TO PLA CE SUCH A RESTRICTED INTERPRETATION ON THE WORD POSSESSION OCCURRING IN CLAUSE (V) OF SECTION 2(47). POSSESSION IS AN ABST RACT CONCEPT. IT HAS DIFFERENT SHADES OF MEANING. IT IS VARIOUSLY D ESCRIBED AS A POLYMORPHOUS TERM HAVING DIFFERENT MEANINGS IN DIF FERENT CONTEXTS (PER R. S. SARKARIA J. IN SUPERINTENDENT AND REMEMB RANCE OF LEGAL AFFAIRS, W. B. V. ANIL KUMAR BHUNJA [1979] 4 SCC 27 4 AND AS A WORD OF OPEN TEXTURE (SEE SALMOND ON JURISPRUDENC E, PARAGRAPH 51, TWELFTH EDITION, INDIAN REPRINT). SALMOND OBSE RVED : TO LOOK FOR A DEFINITION THAT WILL SUMMARIZE THE MEANINGS OF T HE TERM POSSESSION IN ORDINARY LANGUAGE, IN ALL AREAS OF LAW AND IN ALL LEGAL SYSTEMS, IS TO ASK FOR THE IMPOSSIBLE. IN T HE ABOVE CASE OF ANIL KUMAR BHUNJA [1979] 4 SCC 274, SARKARIA J. SP EAKING FOR A THREE-JUDGE BENCH ALSO REFERRED TO THE COMMENTS OF DIAS AND HUGHES IN THEIR BOOK ON JURISPRUDENCE THAT IF A T OPIC 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 CONCEPT, AS POINTED OUT BY SALMOND. THE LEARNED JUDGE THEN EXPL AINED THE CONNOTATION OF THE EXPRESSION POSSESSION BY REFER RING TO THE WELL KNOWN TREATISES ON JURISPRUDENCE (PAGE 278) : POSSESSION, IMPLIES A RIGHT AND A FACT : THE RIG HT TO ENJOY ANNEXED TO THE RIGHT TO PROPERTY AND THE FACT OF T HE REAL INTENTION. IT INVOLVES POWER OF CONTROL AND INTENT TO CONTROL, (SEE DIAS AND HUGHES) 14 . . . . 13 15. WHILE RECOGNIZING THAT POSSESSION IS NOT A PU RELY LEGAL CONCEPT BUT ALSO A MATTER OF FACT, SALMOND (12TH ED ., 52) DESCRIBES POSSESSION, IN FACT, AS A RELATIONSHIP B ETWEEN A PERSON AND A THING. ACCORDING TO THE LEARNED AUTHO R, 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 MEDIAT E POSSESSION. THE LEARNED AUTHOR STATES IN LAW ONE PERSON MAY P OSSESS A THING FOR AND ON ACCOUNT OF SOME ONE ELSE. IN SUCH A CAS E THE LATTER IS IN POSSESSION BY THE AGENCY OF HIM WHO SO HOLDS THE T HING ON HIS BEHALF. THE POSSESSION THUS HELD BY ONE MAN THROUG H ANOTHER MAY BE TERMED MEDIATE, WHILE THAT WHICH IS ACQUIRED OR RETAINED DIRECTLY OR PERSONALLY MAY BE DISTINGUISHED AS IMMEDIATE OR DIRECT. SALMOND MAKES REFERENCE TO THREE TYPES OF MEDIATE P OSSESSION. IN ALL CASES OF MEDIATE POSSESSION, TWO PERSONS ARE IN POSSESSION OF THE SAME THING AT THE SAME TIME. AN ALLIED CONCEPT OF CONCURRENT POSSESSION HAS ALSO BEEN EXPLAINED IN PARAGRAPH 55 OF SALMONDS JURISPRUDENCE IN THE FOLLOWING 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 EXCLUSIVENES S IS OF THE ESSENCE OF POSSESSION. TWO ADVERSE CLAIMS OF EXCLU SIVE USE CANNOT BOTH BE EFFECTUALLY REALIZED AT THE SAME TI ME. CLAIMS, HOWEVER, WHICH ARE NOT ADVERSE, AND WHICH ARE NOT, THEREFORE, MUTUALLY DESTRUCTIVE, ADMIT OF CONCURREN T REALIZATION. HENCE, THERE ARE SEVERAL POSSIBLE CASE S OF DUPLICATE POSSESSION. 1. MEDIATE AND IMMEDIATE POSSESSION CO-EXIST IN RESPECT OF THE SAME THING AS ALREADY EXPLAINED. 2. TWO OR MORE PERSONS MAY POSSESS THE SAME THING IN COMMON, JUST AS THEY MAY OWE IT IN COMM ON . ON A FAIR AND REASONABLE INTERPRETATION AND ON ADO PTING THE PRINCIPLE OF PURPOSIVE CONSTRUCTION, IT MUST BE HE LD THAT POSSESSION CONTEMPLATED BY CLAUSE (V) NEED NOT NECESSARILY BE SOLE AND EXCLUSIVE POSSESSION. SO LONG AS THE TRANSFEREE IS , BY VIRTUE OF THE POSSESSION GIVEN, ENABLED TO EXERCISE GENERAL CONT ROL OVER THE PROPERTY AND TO MAKE USE OF IT FOR THE INTENDED PUR POSE, THE MERE FACT THAT THE OWNER HAS ALSO THE RIGHT TO ENTER THE PROPERTY TO OVERSEE THE DEVELOPMENT WORK OR TO ENSURE PERFORMAN CE OF THE TERMS OF AGREEMENT DOES NOT INTRODUCE ANY INCOMPAT IBILITY. THE CONCURRENT POSSESSION OF THE OWNER WHO CAN EXERCISE POSSESSORY RIGHTS TO A LIMITED EXTENT AND FOR A LIMITED PURPOS E AND THAT OF THE BUYER/DEVELOPER WHO HAS A GENERAL CONTROL AND CUST ODY 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 WAR RANT TO POSTPONE THE OPERATION OF CLAUSE (V) AND THE RESULTANT ACCRU AL OF CAPITAL GAIN TO A POINT OF TIME WHEN THE CONCURRENT POSSESSION W ILL BECOME EXCLUSIVE POSSESSION OF DEVELOPER/TRANSFEREE AFTER HE PAYS FULL CONSIDERATION. FURTHER, IF POSSESSION REFERRED TO IN CLAUSE (V) IS TO BE UNDERSTOOD AS EXCLUSIVE POSSESSION OF THE TRANSFERE E/DEVELOPER, THEN, THE VERY PURPOSE OF THE AMENDMENT EXPANDING T HE DEFINITION OF TRANSFER FOR THE PURPOSE OF CAPITAL GAINS MAY BE DEFEATED. THE REASON IS THIS: THE OWNER OF THE PROPERTY CAN VERY WELL CONTEND, AS IS BEING CONTENDED IN THE PRESENT CASE, THAT THE DE VELOPER WILL HAVE SUCH EXCLUSIVE POSSESSION IN HIS OWN RIGHT ONLY AFT ER THE ENTIRE 14 AMOUNT IS PAID TO THE OWNER TO THE LAST PIE. THERE IS THEN A POSSIBILITY OF STAGGERING THE LAST INSTALMENT OF A SMALL AMOUNT TO A DISTANT DATE, MAY BE, WHEN THE ENTIRE BUILDING COMP LEX GETS READY. EVEN IF SOME AMOUNT, SAY 10 PER CENT., REMAINS TO B E PAID AND THE DEVELOPER/TRANSFEREE FAILS TO PAY, LEADING TO A DIS PUTE BETWEEN THE PARTIES, THE RIGHT TO EXCLUSIVE AND INDEFEASIBLE P OSSESSION MAY BE IN JEOPARDY. IN THIS STATE OF AFFAIRS, THE TRANSACT ION WITHIN THE MEANING OF CLAUSE (V) CANNOT BE SAID TO HAVE BEEN EFFECTED AND THE LIABILITY TO PAY CAPITAL GAINS MAY BE INDEFINITELY POSTPONED. TRUE, IT MAY NOT BE PROFITABLE FOR THE DEVELOPER TO ALLOW TH IS SITUATION TO LINGER FOR LONG AS THE PROCESS OF TRANSFER OF FLATS TO THE PROSPECTIVE PURCHASERS WILL GET DELAYED. AT THE SAME TIME, THE OTHER SIDE OF THE PICTURE CANNOT BE OVER-LOOKED. THERE IS A POSSIBIL ITY OF THE OWNER WITH THE CONNIVANCE OF THE TRANSFEREE POSTPONING TH E PAYMENT OF CAPITAL GAINS TAX ON THE OSTENSIBLE GROUND THAT TH E ENTIRE CONSIDERATION HAS NOT BEEN RECEIVED AND SOME BALAN CE IS LEFT. THE MISCHIEF SOUGHT TO BE REMEDIED, WILL THEN PERPETUA TE. WE ARE, THEREFORE OF THE VIEW THAT POSSESSION GIVEN TO THE DEVELOPERS NEED NOT RIPEN ITSELF INTO EXCLUSIVE POSSESSION ON PAYME NT OF ALL THE INSTALMENTS IN ENTIRETY FOR THE PURPOSE OF DETERMIN ING 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 SE CTION 2(47) IS THE TRANSACTION WHICH INVOLVES ALLOWING THE POSSESSIO N TO BE TAKEN. BY MEANS OF SUCH TRANSACTION, A TRANSFEREE LIKE A DEVE LOPER IS ALLOWED TO UNDERTAKE DEVELOPMENT WORK ON THE LAND BY ASSUMI NG GENERAL CONTROL OVER THE PROPERTY IN PART PERFORMANCE OF T HE CONTRACT. THE DATE OF THAT TRANSACTION DETERMINES THE DATE OF TR ANSFER. THE ACTUAL DATE OF TAKING PHYSICAL POSSESSION OR THE INSTANCES OF POSSESSORY ACTS EXERCISED IS NOT VERY RELEVANT. THE ASCERTAINM ENT OF SUCH DATE, IF CALLED FOR, LEADS TO COMPLICATED INQUIRIES, WHIC H MAY FRUSTRATE THE OBJECTIVE OF THE LEGISLATIVE PROVISION. IT IS ENOUG H IF THE TRANSFEREE HAS, BY VIRTUE OF THAT TRANSACTION, A RIGHT TO ENTE R UPON AND EXERCISE ACTS OF POSSESSION EFFECTIVELY PURSUANT TO THE COVE NANTS IN THE CONTRACT. THAT TANTAMOUNTS TO LEGAL POSSESSION. WE ARE REFERRING TO THIS ASPECT BECAUSE THE AUTHORIZED REPRESENTATIVE HAS SUBMITTED WHEN HE APPEARED BEFORE US IN THE LAST WEEK OF MAY , 2007, THAT EVEN BY THAT DATE THE DEVELOPMENT WORK COULD NOT BE COMMENCED FOR WANT OF CERTAIN APPROVALS, AND THEREFORE, THE DEVELOPER WAS NOT WILLING TO TAKE POSSESSION OF THE LAND. SUCH AN UNSUBSTANTIATED STATEMENT WHICH IS NOT FOUND IN THE ORIGINAL APPLICATION OR EVEN WRITTEN SUBMISSIONS FILED EARLI ER NEED NOT BE PROBED INTO ESPECIALLY WHEN IT IS NOT HIS CASE THA T THE DEVELOPER 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 PARAGRA PH 18 OF THE COLLABORATION AGREEMENT PROVIDES THAT ON ISSUANCE O F LETTER OF INTENT, THE OWNERS WILL ALLOW AND PERMIT THE DEVELO PER TO ENTER UPON AND SURVEY THE LAND, ERECT SITE / SALES OFFICE , CARRY OUT THE SITE DEVELOPMENT WORK AND DO ACTIVITIES FOR ADVANCI NG & SALE PROMOTION, CONSTRUCTION ETC. THE AUTHORITY FURTHER OBSERVED THAT IF THIS CLAUSE IS READ IN ISOLATION THIS WOULD SUGGEST ON PASSING OF POSSESSION BUT ACCORDING TO AUTHORITY THE OTHER FAC TORS ARE TO BE CONSIDERED. CLAUSE 15 PROVIDED THAT ON FULFILLMENT OF THE REQUIREMENTS LAID DOWN IN THE LETTER OF INTENT WHIC H IS PROVISIONAL LICENSE, THE OWNERS SHOULD EXECUTE AN IRREVOCABLE G ENERAL POWER OF ATTORNEY IN FAVOUR OF THE DEVELOPER ALLOWING INT ER ALIA TO BOOK AND SELL THE DWELLING UNIT FAILING UNDER THEIR SH ARE. THIS WAS 15 POSSIBLE ONLY AFTER DEPOSIT OF REQUISITE CHARGES ET C. AND PERHAPS THERE WAS LITIGATION REGARDING OWNERSHIP OF LAND WH ICH HAS ALSO TO BE WITHDRAWN. THE AUTHORITY HAS DISCUSSED THE SIGN IFICANCE OF GENERAL POWER OF ATTORNEY AND THE TERMS OF THE GENE RAL POWER OF ATTORNEY AT PARA 33 AND THE RELEVANT PORTION OF TH E SAME IS AS UNDER:- A COPY OF THE IRREVOCABLE GPA EXECUTED IN TERMS O F PARAGRAPH 15 OF THE AGREEMENT HAS BEEN FURNISHED B Y THE APPLICANT. IT AUTHORIZES THE DEVELOPER : (I) TO ENTER UPON AND SURVEY THE LAND, PREPARE THE LAYOUT PLAN, APPLY FO R RENEWAL/EXTENSION OF LICENCE, SUBMIT THE BUILDING P LANS FOR SANCTION OF THE APPROPRIATE AUTHORITY AND TO CARRY OUT THE WORK OF DEVELOPMENT OF A MULTI-STORIED RESIDENTIAL COMPLEX , (II) TO MANAGE AND CONTROL, LOOK AFTER AND SUPERVISE THE PROPERTY IN ANY MANNER AS THE ATTORNEY DEEMS FIT AND PROPER, (III) TO OBT AIN WATER, SEWAGE DISPOSAL AND ELECTRICITY CONNECTIONS. THE DEVELOPE R IS ALSO AUTHORIZED TO BORROW MONEY FOR MEETING THE COST OF CONSTRUCTION ON THE SECURITY AND MORTGAGE OF LAND FALLING TO THE DEVELOPERS SHARE. THE OTHER CLAUSES IN THE GPA ARE NOT RELEVAN T FOR OUR PURPOSE. THE GPA UNEQUIVOCALLY GRANTS TO THE DEVEL OPER A BUNDLE OF POSSESSORY RIGHTS. THE ACTS OF MANAGEMENT, CONT ROL AND SUPERVISION OF PROPERTY ARE EXPLICITLY MENTIONED. I T IS FAIRLY CLEAR THAT THE GPA IS NOT A MERE LICENCE TO ENTER THE LA ND FOR DOING SOME PRELIMINARY ACTS IN RELATION TO THE DEVELOPMEN T WORK. THE POWER OF CONTROL OF THE LAND WHICH IS AN INCIDENCE OF POSSESSION AS EXPLAINED SUPRA HAS BEEN CONFERRED ON THE DEVELO PER UNDER THIS GPA. THE DEVELOPER ARMED WITH THE GPA CANNOT B E REGARDED MERELY AS A LICENSEE OR AN AGENT SUBJECT TO THE CON TROL OF THE OWNERS. HIS POSSESSION CANNOT BE CHARACTERIZED AS PRECARIOUS OR TENTATIVE IN NATURE. THE FACT THAT THE AGREEMENT DE SCRIBES THE GPA AS IRREVOCABLE AND AN EXPRESS DECLARATION TO TH AT EFFECT IS FOUND IN THE GPA ITSELF IS NOT WITHOUT SIGNIFICANCE . HAVING REGARD TO THE SECOND AND SUPPLEMENTAL AGREEMENT BY VIRTUE OF WHICH THE ENTIRE DEVELOPED PROPERTY INCLUDING THE OWNERS SH ARE HAS BEEN AGREED TO BE SOLD TO THE DEVELOPER OR HIS NOMINEES FOR VALUABLE MONEY CONSIDERATION, THE DEVELOPER HAS A VITAL STA KE IN THE ENTIRE PROPERTY. AS FAR AS THE QUALITY OF POSSESSION IS C ONCERNED, HE IS ON A HIGHER PEDESTAL THAN A DEVELOPER WHO APPORTIO NS BUILT UP AREA WITH THE OWNER. EVEN IF HE IS AN AGENT IN ONE SENSE IN THE COURSE OF DEVELOPING THE LAND, THAT AGENCY IS COUPL ED WITH INTEREST. FOR THESE REASONS, THE PREFIX IRREVOCAB LE IS DELIBERATELY CHOSEN. AS DISCUSSED EARLIER, THE OWNE R'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 SA TISFYING THE INGREDIENTS OF CLAUSE (V) OF SECTION 2(47). WE ARE THEREFORE, OF THE VIEW THAT THE IRREVOCABLE GPA EXECUTED BY THE OWNE RS IN FAVOUR OF THE DEVELOPER MUST BE REGARDED AS A TRANSACTION IN THE EYE OF LAW WHICH ALLOWS POSSESSION TO BE TAKEN IN PART PER FORMANCE OF THE CONTRACT FOR TRANSFER OF THE PROPERTY IN QUEST ION.. 43 THUS, THE ABOVE CLEARLY SHOWS THAT IRREVOCABLE G ENERAL POWER OF ATTORNEY WHICH LEADS TO OVER ALL CONTROL OF THE PROPERTY IN THE HANDS OF THE DEVELOPER, EVEN IF THAT MEANS NO E XCLUSIVE POSSESSION BY THE DEVELOPER WOULD CONSTITUTE TRANSF ER. IT CAN BE SAID THAT IT HAS TO BE CONSTRUED AS POSSESSION IN TERMS OF CLAUSE (V) OF SECTION 2(47) OF THE ACT. 16 44 A QUESTION MAY ARISE THAT WHY THE TRANSFER WAS N OT HELD TO BE TAKEN PLACE IN ASSESSMENT YEAR 2006-07 WHEN FIRST A GREEMENT WAS ENTERED INTO ON JUNE 8, 2005. THE SUPPLEMENTARY AG REEMENT WAS ALSO ENTERED INTO ON SEPT 15, 2005 BOTH OF WHICH FALL IN FINANCIAL YEAR 2005- 06 RELEVANT TO ASSESSMENT YEAR 2006-07. THEN WHY T RANSFER WAS NOT CONSTRUED IN ASSESSMENT YEAR 2006-07 IT WAS BECAUSE THE FIRST AGREEMENT ITSELF CONTAINED A CONDITION THAT LETTER OF INTENT SHOULD BE PROCURED NOT LATER THAN MARCH 8, 2006. IN CASE OF FAILURE TO DO SO THE AGREEMENT SHALL STAND TERMINATED. THEREFORE, OBTA INING THE LETTER OF INTENT WAS THE CRUCIAL FACTOR. IT HAS BEEN EXPLAI NED IN THE DECISION THAT THE LETTER OF INTENT BASICALLY IS A LICENSE ISSU ED BY THE DIRECTOR OF TOWN AND COUNTRY PLANNING, HARYANA WHICH GIVES PERMISSIO N FOR CONSTRUCTION OF THE FLATS. THE OTHER CRUCIAL POINT WAS EXECUTIO N OF IRREVOCABLE OF GPA WHICH WAS EXECUTED ON MAY 8, 2006 WHICH ACCORDING T O THE LD. AUTHORITY DEPICTS THE INTENTION OF THE HANDING OVER OF THE PO SSESSION. THEREFORE, IT BECOMES VERY CLEAR THAT IT IS NOT NECESSARY THAT TRANSFER WOULD TAKE PLACE ON THE SIGNING OF DEVELOPMENT AGREEMENT BUT T HE SAME HAS TO BE INFERRED ONLY WHEN THE POSSESSION HAS BEEN HANDED O VER BY THE TRANSFEROR TO THE DEVELOPER WHICH CAN BE INFERRED F ROM THE DOCUMENTS E.G. POWER OF ATTORNEY. AFTER ABOVE DISCUSSION HON' BLE AUTHORITY HAS SUMMARIZED THE DECISION IN PARA 41 WHICH IS AS UND ER: 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 POSSESSI ON, THE DATE OF ENTERING INTO THE AGREEMENT CANNOT BE CONSIDERED TO BE THE DATE OF TRANSFER WITHIN THE MEANING OF CLAUSE (V) OF SECTIO N 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 INSTALLMEN T 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 AG REEMENT, THE EXECUTION OF THE GPA SHALL BE REGARDED AS THE TRAN SACTION INVOLVING THE ALLOWING OF THE POSSESSION OF LAND TO BE TAKEN IN PART PERFORMANCE OF THE CONTRACT AND THEREFORE, THE TRAN SFER WITHIN THE MEANING OF SECTION 2(47)(V) MUST BE DEEMED TO HAVE TAKEN PLACE ON THE DATE OF EXECUTION OF SUCH GPA. THE IRREVOCABLE GPA WAS EXECUTED ON MAY 8, 2006, I.E., DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08 AND THE CAPITAL GAINS M UST BE HELD TO HAVE ARISEN DURING THAT YEAR. INCIDENTALLY, IT MAY BE MENTIONED THAT DURING THE SAID YEAR, I.E., FINANCIAL YEAR 2006-07, A FINAL LICENSE WAS GRANTED AND THE APPLICANT/OWNERS RECEIVED NEARLY 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 LIG HT 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 17 BUT CLAUSE 13 OF THE JDA REFERS TO NUMBER OF MEMBER S AS 96). THE SOCIETY WAS OWNING 21.2 ACRES OF LAND IN VILLAGE KA NSAL DISTT. MOHALI ADJACENT TO CHANDIGARH. THERE WERE TWO TYPE S OF MEMBERS FIRSTLY THE MEMBERS WHO WERE OWNING PLOT OF 500 SQY D AND SECONDLY THE MEMBERS WHO ARE HOLDING PLOT OF 1000 S QYD. SOMEWHERE IN 2006 IT WAS DECIDED TO DEVELOP A GROUP HOUSING COMMERCIAL PROJECT AND DO DEVELOPMENT AS PER THE AP PLICABLE MUNICIPAL BUILDING BYE-LAWS IN FORCE AND ACCORDINGL Y A BID WAS INVITED THROUGH ADVERTISEMENT IN THE TRIBUNE DATED 31.5.2006. HASH A DEVELOPER, APPROACHED THE SOCIETY WITH PROPO SAL FOR DEVELOPMENT OF THE PROPERTY. SINCE HASH DID NOT HA VE SUFFICIENT MEANS TO DEVELOP THE PROPERTY, HASH HAD APPROACHED THDC FOR DEVELOPMENT OF THE PROPERTY BY CONSTRUCTING THE BUI LDING AND/OR STRUCTURES TO BE USED FOR INTERALIA RESIDENTIAL, P UBLIC USE AND COMMERCIAL PURPOSES. THIS PROPOSAL WAS DISCUSSED B Y THE SOCIETY IN ITS EXECUTIVE COMMITTEE MEETING ON 4.1.2007. MI NUTES OF THE MEETING ARE PLACED AT PAGE 58 TO 65 OF THE PAPER BO OK. IN THE EXECUTIVE COMMITTEE IT WAS DECIDED TO APPOINT HASH WHO WAS ACTING ALONGWITH THE JOINT DEVELOPER THDC AS JOINT DEVELOPER ON THE TERMS AND CONDITIONS TO BE MENTIONED IN THE JDA . IT WAS FURTHER RESOLVED THAT MEMBER OWING PLOT OF 500 SQYD WOULD RECEIVE A CONSIDERATION OF RS. 82,50,000/- EACH TO BE PAID IN FOUR INSTALLMENTS BY HASH DIRECTLY IN FAVOUR OF THE MEM BERS AND ONE FLAT WITH SUPER AREA OF 2250 SQF TO BE CONSTRUCTED BY THDC. THE MEMBERS WHO HELD THE PLOT OF 1000SQYD WERE TO RECEI VE A CONSIDERATION OF RS. 1,65,00,000/- AND TWO FLATS CO NSISTING OF 2250SQFT TO BE CONSTRUCTED BY THE THDC. IT WAS F URTHER RESOLVED TO ENTER INTO A JDA WITH THDC/HASH. IT WAS ALSO RE SOLVED TO EXECUTE IRREVOCABLE POWER OF ATTORNEY BY THE SOCIET Y IN FAVOUR OF THDC FOR THIS PURPOSE. THIS RESOLUTION WAS ULTIMATE LY RATIFIED IN THE GENERAL BODY MEETING HELD BY THE SOCIETY ON 25. 2.2007. PURSUANT TO THE ABOVE RESOLUTION, TRIPARTITE JDA WA S EXECUTED (COPY OF THE SAME IS AVAILABLE AT PAGE 15 TO 54 OF FIRST PAPER BOOK). THROUGH RECITATION CLAUSE IT HAS BEEN MENTI ONED THAT OWNER IS IN POSSESSION OF LAND MEASURING ABOUT 21.2 ACRES OF LAND WHICH HAS COME IN THE PURVIEW OF NAGAR PANCHAYAT, NAYA GA ON VIDE NOTIFICATION ISSUED ON 18.10.2006 DULY SUBSTITUTED BY ANOTHER NOTIFICATION DATED 21.11.2006 AND THAT NO PART OF L AND OF THE PROPERTY FALLS UNDER FOREST AREA UNDER THE PUNJAB L AND PRESERVATION ACT. IT HAS BEEN FURTHER RECITED THAT THE SOCIETY HAS AGREED TO ACCEPT THE PROPOSALS OF HASH AND FURTHER EXECUTED THIS AGREEMENT WITH THDC/HASH. HASH WAS RESPONSIBLE TO MAKE PAYMENT TO THE OWNER AS DESCRIBED EARLIER AND THE F LATS WERE TO BE PROVIDED BY THDC. IN CASE OF HASH FAILS TO MAKE TH E PAYMENT, THDC AGREED TO MAKE THE PAYMENTS. COPY OF THE RESO LUTION OF THE EXECUTIVE COMMITTEE OF THE SOCIETY DATED 4.1.2007 A S WELL AS 18 RESOLUTION OF THE GENERAL BODY MEETING OF THE SOCIE TY DATED 25.2.2007 WERE MADE PART OF JDA BY WAY OF ANNEXURE. THE SOCIETY AGREED TO EXECUTE AN IRREVOCABLE SPECIAL PO WER 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 PRO PERTY ALONG WITH ANY AND ALL THE CONSTRUCTION, PREMISES, HEREDI TAMENTS, EASEMENTS, TREES THEREON IN FAVOUR OF THDC FOR THE PURPOSE OF DEVELOPMENT, CONSTRUCTION, MORTGAGE, SALE, TRANSFER , LEASE, LICENSE AND OR EXPLOITATION FOR FULL UTILIZATION OF THE PROPERTY (RIGHTS) AND TO EXECUTE ALL THE DOCUMENTS NECESSARY TO CARR Y OUT, FACILITATE AND ENFORCE THE RIGHTS IN THE PROPERTY I NCLUDING TO EXECUTE LEASE AGREEMENT, LICENSE AGREEMENTS, CONSTR UCTION CONTRACTS, SUPPLIER CONTRACTS, AGREEMENT FOR SALE, CONVEYANCE, MORTGAGE DEEDS, FINANCE DOCUMENTS AND ALL DOCUMENTS AND AGREEMENTS NECESSARY TO CREATE AND REGISTER THE MOR TGAGE, CONVEYANCE, LEASE DEEDS, LICENSE AGREEMENT, POWER O F ATTORNEY, AFFIDAVITS, DECLARATION, INDEMNITIES AND ALL SUCH O THER DOCUMENTS, LETTERS AS MAY BE NECESSARY TO CARRY OUT, FACILITAT E AND ENFORCE THE RIGHTS AND TO REGISTER THE SAME WITH THE REVENUE/CO MPETENT AUTHORITY AND TO APPEAR ON OUR BEHALF BEFORE ALL AU THORITIES, 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 I N THE LIST ANNEXED HERETO AND MARKED AS ANNEXURE IV AND PHYSIC AL, VACANT POSSESSION OF THE PROPERTY HAS BEEN HANDED O VER TO THDC SIMULTANEOUS TO THE EXECUTION AND REGISTRATION OF THIS AGREEMENT TO DEVELOP THE SAME AS SET OUT HEREIN. IT IS HEREBY AGREED AND CONFIRMED THAT WHAT IS STAT ED IN THE RECITALS HEREINABOVE, SHALL BE DEEMED TO BE DECLARA TIONS AND REPRESENTATIONS ON THE PART OF THE OWNER AS IF THE SAME WERE SET OUT HEREIN VERBATIM AND FORMING AN INTEGRAL PART OF THE AGREEMENT. 2.2 THE PROJECT SHALL COMPRISE OF DEVELOPMENT/CONST RUCTION OF THE PROPERTY INTO THE PREMISES AS PERMISSIBLE UNDER PUNJAB MUNICIPAL BUILDING BYE-LAWS/PUNJAB URBAN DEVELOPMEN T AUTHORITY OR ANY OTHER COMPETENT AUTHORITY BY THE DEVELOPER A T THEIR OWN COST AND EXPENSE. THE PROJECT SHALL BE DEVELOPED A S MAY BE SANCTIONED BY THE CONCERNED LOCAL AUTHORITY I.E. DE PARTMENT 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 DEVELOP THE PROPERTY AND UNDERTAKE THE PROJECT AT I TS OWN COSTS, EFFORTS AND EXPENSES WHEREUPON THE DEVELOPER SHALL BE ENTITLED TO APPLY FOR AND OBTAIN NECESSARY SANCTIONS, LICENSES AND PERMISSIONS FROM ALL THE CONCERNED AUTHORITIES FOR THE COMMENCEMENT, DEVELOPMENT AND COMPLETION OF THE PRO JECT ON THE PROPERTY. 48 CLAUSE 3 DESCRIBES THE OBLIGATIONS OF THE DEVELO PERS & SOCIETY FOR GETTING THE PLANS, ETC. SANCTIONED FROM COMPETENT 19 AUTHORITY / APPLICATIONS TO BE SIGNED BY OWNER FOR PLANS, DRAWINGS ETC., CONSTRUCTION. CLAUSE 4 DEALS WITH CONSIDERAT ION CLAUSES 5 TO 8 DEALS VARIOUS ASPECTS OF PROJECT AND OBLIGATIONS OF SOCIETY AND DEVELOPER. CLAUSE 9 TALKS ABOUT OWNERSHIP AND RIGHT S 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 POWER OF ATTORNEY TO THDC FOR DEVELOPMENT OF THE PR OPERTY AUTHORIZING THDC TO DO ALL LAWFUL ACTS, DEEDS, MATT ERS AND THINGS PERTAINING TO THE DEVELOPMENT OF THE PROPERT Y 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 APPROACH INTERACT, COMMUNICATE WITH THE COMPETENT AUTHORITIE S AND FOR DOING ALL ACTS, DEEDS, MATTERS AND THINGS T O BE DONE OR INCURRED BY THDC IN THAT BEHALF AS ALSO TO SIGN ALL LETTERS, APPLICATIONS, AGREEMENTS AND REGISTER THE SAME IF N ECESSARY, DOCUMENTS, COURT PROCEEDINGS, AFFIDAVITS AND SUCH OTHER PAPERS CONTAINING TRUE FACTS AND CORRECT PARTICULARS AS MA DE FROM TIME TO TIME BE REQUIRED IN THIS BEHALF. 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 NEC ESSARY DOCUMENTS AND PAPERS TO COMPLETE THE AFORESAID TRAN SACTION. 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 TIME OF SIGNING OF THIS AGREEMENT AND IN FURTHERANCE OF THE COMMON INTEREST OF THE PARTIES F OR THE DEVELOPMENT OF THE PROJECT AND EXCEPT THE SALE TRAN SACTION 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 F URTHERANCE OF THE PROJECT IN THE MANNER THAT IT DOES NOT ADVERSELY EF FECT THE OWNER/ALLOTTEE IN ANY MANNER WHATSOEVER. 49 CLAUSE 10 DESCRIBES THE CONSENT GIVEN BY THE SOC IETY TO THDC FOR RAISING FINANCE FOR DEVELOPMENT AND COMPLE TION OF PROJECT. CLAUSE 11 TALKS ABOUT FORMATION OF MAINTE NANCE SOCIETY FOR THE PROJECT AFTER ITS COMPLETION. CLAUSE 13 TA LKS ABOUT TRANSFER OF RIGHTS WHICH READS 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 HAV E GIVEN THEIR EXPRESS, FREE AND CLEAR CONSENT IN WRITING IN THE F ORM OF AN AFFIDAVIT/NO OBJECTION CERTIFICATE/CONSENT LETTER W HEREBY THE DEVELOPERS HAVE BEEN ALLOWED TO DEVELOP THE PROPERT Y IN ACCORDANCE WITH THE PROJECT AND THAT THDC SHALL BE ENTITLED TO TRANSFER THE RIGHTS OBTAINED UNDER THIS AGREEMENT T O ANY THIRD PARTY AND TO GET THE DEVELOPMENT / CONSTRUCTION WORK COMP LETED ON SUCH TERMS AND CONDITIONS AS THDC MAY DEEM FIT SO LONG A S IT DOES NOT 20 ADVERSELY EFFECT THE OWNER IN TERMS OF THEIR RIGHT TO RECEIVE ENTIRE CONSIDERATION AS MENTIONED IN THIS AGREEMENT SUBJEC T TO ALL OTHER CONDITIONS MENTIONED THEREIN AS WELL. THE OWNER SH ALL AT ALL TIMES PROVIDE FULL SUPPORT TO THE DEVELOPERS HEREIN. 50 OTHER CLAUSES PROVIDE FOR TERMINATION, GENERAL P ROVISIONS, DISCLAIMER, PARTIAL INVALIDITY, ARBITRATION, NOTICE S AND FORCE MAJEURE & JURISDICTION. 51 IN ADDITION TO ABOVE AN IRREVOCABLE SPECIAL POWE R OF ATTORNEY HAS ALSO BEEN EXECUTED BY THE SOCIETY IN F AVOUR OF THE DEVELOPERS I.E. THDC. (COPY OF WHICH IS AVAILABLE AT PAGES 40 TO 52 OF THE PAPER BOOK IN CASE OF SOCIETY IN ITA NO. 556 OF 2012 AS DISCUSSED EARLIER IN PARA 25 (COMPLETE COPY OF SUPP LEMENTARY POWER OF ATTORNEY WAS NOT AVAILABLE IN THE PAPER BO OK 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 ACCORDING TO HIM AS PER CLAUSE 2.1 OF THE JDA THE P OSSESSION OF THE PROPERTY WAS TO BE HANDED OVER SIMULTANEOUSLY T O THE EXECUTION AND REGISTRATION OF JDA AND SINCE THE JDA WAS NOT REGISTERED, THEREFORE, THE POSSESSION WAS NOT GIVE N. WE CAN NOT ACCEPT THIS CONTENTION BECAUSE IN POWER OF ATTORNE Y TRANSACTIONS, IT IS NOT NECESSARY TO REGISTER THE J DA IF A SPECIAL POWER OF ATTORNEY HAS BEEN GIVEN AND SAME IS REGIST ERED. SECONDLY CLAUSE 9.3 OF THE JDA AS REPRODUCED ABOVE CLEARLY SHOW THAT ORIGINAL TITLE DEED WHICH HAVE BEEN 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 E XECUTION AND REGISTRATION OF THE JDA, IS NOT CORRECT BECAUSE CLA USE 9.3 CLEARLY MENTION THAT ORIGINAL TITLE DEED OF THE PROPERTY HA VE BEEN HANDED OVER TO THE THDC AT THE TIME OF SIGNING OF THIS AGR EEMENT BECAUSE CLAUSE 9.3 THERE IS NO MENTION ABOUT REGISTRATION O F JDA. 53 SPECIAL POWER OF ATTORNEY WHICH HAS BEEN EXECUTE D ON 26.2.2007 AND HAS BEEN REGISTERED ALSO. THE IRREVOC ABLE SPECIAL POWER 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 I N THE PROPERTY IN FAVOUR OF THDC INTERALIA INCLUDING THE RIGHT TO RAISE FINANCE BY MORTGAGING THE PROPERTY AND REGISTER THE CHARGE WIT H THE COMPETENT AUTHORITY AND EXECUTE REGISTERED SALE DEE DS) 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 D ISCRETION 21 WITHOUT OBTAINING A SPECIFIC PRIOR WRITTEN CONSENT OF THDC OR ANY OF ITS DULY CONSTITUTED ATTORNEYS. THROUGH THIS POWER OF ATTORNEY VARIOUS POWERS HAVE BEEN GIVEN LIKE TO ASSIGN, FILE, AMEND ETC. VARIOUS PLANS, DES IGNS TO REPRESENT BEFORE VARIOUS AUTHORITIES, TO APPOINT ARCHITECT, L AWYERS. SOME OF THE SPECIFIC CLAUSES RELEVANT, ARE EXTRACTED BELOW: (J) TO NEGOTIATE AND AGREE TO ANY/OR TO ENTER INTO AGREEMENT(S) TO CONSTRUCT/SELL AND TO UNDERTAKE CONSTRUCTION/SAL E OF THE PREMISES ON THE PROPERTY OR ANY PORTION THEREOF WIT H/TO SUCH PERSONS(S) OR BODY AND FOR SUCH CONSIDERATION AND U PON 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 , IMPLEMENTATION 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 ACQU IRED AND/OR PROPOSED TO BE ACQUIRED AND DEVELOPED OR PROPOSED T O BE DEVELOPED BY THDC AND/OR THEIR ASSOCIATE AND/OR GRO UP CONCERNS/S AND/OR UTILIZE THE FSI, FAR, DR AND TDR OF THE CONT IGUOUS, ADJACENT AND ADJOINING LANDS FOR THE PURPOSE OF CON STRUCTING BUILDINGS AND/OR STRUCTURES THEREON AND/OR ON THE P ROPERTY OR UTILIZE SUCH LANDS AND PROPERTIES FOR MAKING PROVIS ION OF PARKING SPACES THEREON, AND/OR MAY UTILIZE THE SAME FOR ANY OTHER LAWFUL PURPOSE, AS THDC AND/OR THEIR ASSOCIATE AND/OR GROU P CONCERNS MAY IN THEIR SOLD, ABSOLUTE AND UNFETTERED DISCRETI ON THINK FIT. (W) TO HAND OVER THE POSSESSION OF THE PROPERTY OR ANY PART OR PORTION THEREOF TO THE AUTHORITIES TO WHOM THE SAME IS REQUIRED TO BE HANDED OVER OR OTHERWISE AND TO EXECUTE AND DELI VER ANY UNDERTAKINGS, DECLARATIONS, AFFIDAVITS, BONDS, DEED S, DOCUMENTS, ETC. AS MAY BE REQUIRED BY THE AUTHORITIES CONCERNE D FOR VESTING SUCH A PART OR PORTION IN SUCH AUTHORITY AND TO ADM IT EXECUTION THEREOF BEFORE THE CONCERNED COMPETENT AUTHORITY AN D GET THE SAME REGISTERED WITH THE CONCERNED SUB-REGISTRAR. (Y) REASONABLE OPPORTUNITY OF HEARING SHALL BE GIVE N TO MORTGAGE, ENCUMBER OR CREATE A CHARGE ON THE PROPER TY OR ANY PART OR PORTION THEREOF AND EXECUTE THE NECESSARY SECURI TY DOCUMENTS IN FAVOUR OF ANY BANK/FINANCIAL INSTITUTION TO RAI SE FUNDS FOR THE CONSTRUCTION/DEVELOPMENT OF THE PROPERTY AND FOR TH E SAID PURPOSE TO DEPOSIT TITLE DEEDS (IF REQUIRED) IN RESPECT OF THE PROPERTY IN FAVOUR OF SUCH BANK/FINANCIAL INSTITUTION, EXECUTE THE NECESSARY DOCUMENTS AND REGISTER THE CHARGE CREATED ON THE PR OPERTY IF SO REQUIRED IN THE REVENUE RECORDS AND/OR DESIRED BY T HE ATTORNEY. (AA) TO SELL, TRANSFER, LEASE, LICENSE THE PREMISE S THAT MAY BE CONSTRUCTED ON THE PROPERTY ON OWNERSHIP BASIS, LEA SE, LICENSE AND/OR IN ANY OTHER MANNER FOR SUCH PRICE AS THE AT TORNEYS MAY DEEM FIT AND PROPER. TO COLLECT AND RECEIVE FROM T HE PURCHASED, TRANSFEREES, LESSEES, LICENSEES OF THE PREMISES, MO NIES/PRICE AND/OR CONSIDERATION AND/OR MAINTENANCE 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 C ONSTRUCTED ON 22 THE PROPERTY AND ALSO TO EXECUTE AND SIGN CONVEYANC E, TRANSFER OR SURRENDER IN RESPECT OF THE PROPERTY OR ANY PART T HEREOF. (CC) TO SIGN, EXECUTE AND REGISTER THE CONVEYANCES OR ASSIGNMENTS AND/OR POWER OF ATTORNEYS AND/OR OTHER DOCUMENTS AND/OR AGREEMENTS AND/OR ANY OTHER WRITINGS IN RESP ECT OF THE PROPERTY IN PART OR FULL AND/OR THE PREMISES CONSTR UCTED THEREON OR ANY PART THEREOF IN FAVOUR OF ANY PERSON AS THE AT TORNEYS MAY DETERMINE INCLUDING IN FAVOUR OF ANY INDIVIDUAL AN D/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 PRE MISES. (GG) TO LOOK AFTER AND MAINTAIN THE PROPERTY AND TH E PREMISES CONSTRUCTED THEREON TILL ITS TRANSFER IN FAVOUR OF THE CO-OPERATIVE SOCIETY OR LIMITED COMPANY OR ANY OTHER ORGANISATIO N. 54 IT IS PERTINENT TO NOTE THAT POWER/AUTHORIZATION WHICH HAVE BEEN GIVEN BY THE SOCIETY TO THE DEVELOPER, WERE IN FACT WERE REQUIRED TO BE GIVEN IN TERMS OF VARIOUS CLAUSES OF THE JDA. CLAU SE 6.7 REPRODUCED ABOVE ITSELF SHOWS THAT THE SOCIETY WAS REQUIRED TO GIVE POWERS TO RAISE FINANCE TO MORTGAGE THE PROPERTY AND EVEN THE REGIS TRATION OF CHARGE WAS ALSO REQUIRED TO BE GIVEN. FURTHER THROUGH CLAUSE 6.15 IT WAS AGREED THAT DOCUMENTS OF ORIGINAL TITLE DEEDS OF THE PROPE RTY WOULD BE HANDED OVER TO THE DEVELOPER I.E. THDC/HASH SO THAT SAME C AN BE USED IN FURTHERANCE OF DEVELOPMENT OF THE PROJECT AS WELL A S SECURITY FOR THE MONEY PAID BY THE OWNER. THROUGH CLAUSE 6.24 IT WA S AGREED THAT DEVELOPER THDC/HASH WAS ALWAYS PERMITTED BY OWNER T O AMALGAMATE THE PROPERTY WITH ANY OTHER CONTIGUOUS, ADJACENT AN D 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 OBLIG ATION IN TERMS OF AGREEMENT ITSELF TO ALLOW THE DEVELOPER TO AMALGAMA TE THE PROJECT. TOWARDS THE END OF CLAUSE 6.24 IT HAS BEEN CLEARLY STATED THAT IN THE EVENT OF TERMINATION OF JDA, PROVISION OF CLAUSE 6 WOULD BE SURVIVING WHICH CLEARLY SHOWS THAT DEVELOPER CONTINUES TO BE IN POSSESSION FOR THE PURPOSE OF DEVELOPMENT, MORTGAGE ETC. EVEN AFTER TE RMINATION. CLAUSE 8 WHICH DESCRIBES THE OBLIGATION AND UNDERTAKING OF T HE THDC/HASH AND PROVIDES SPECIFICALLY THAT ALL ENVIRONMENTAL CLEARA NCE SHALL BE OBTAINED BY THDC/HASH OUT OF ITS OWN SOURCES. THUS IT WAS C LEARLY UNDERSTOOD BY THE PARTIES THAT REQUISITE ENVIRONMENTAL CLEARAN CES HAD TO BE OBTAINED BEFORE START OF THE PROJECT. CLAUSE 10 AGAIN CASTS SPECIFIC OBLIGATION ON THE OWNER SOCIETY TO GIVE CONSENT TO THDC/HASH TO R AISE FINANCE FOR THE DEVELOPMENT AND COMPLETION OF THE PROJECT ON THE SE CURITY OF THE PROPERTY BY WAY OF MORTGAGING THE PROPERTY. THUS W HATEVER POWER/AUTHORIZATION HAVE BEEN GIVEN THROUGH IRREVOC ABLE SPECIAL POWER OF ATTORNEY ARE EMANATING FROM THE TERMS AND CONDIT IONS AGREED TO AMONG THE PARTIES FROM THE JDA. 23 55 THE COMBINED READING OF THE ABOVE CLAUSES OF THE IRREVOCABLE SPECIAL POWER OF ATTORNEY AND JDA CLEAR LY SHOW THAT THE DEVELOPER WAS AUTHORIZED TO ENTER UPON THE PROP ERTY FOR NOT ONLY FOR THE PURPOSE OF DEVELOPMENT BUT OTHER PURPO SES ALSO. THDC WAS AUTHORIZED TO AMALGAMATE THE 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 W AS NEVER GIVEN TO THE DEVELOPER BY THE SOCIETY THEN HOW THE DEVELO PER COULD AMALGAMATE THE PROJECT WITH ANOTHER PROJECT WHICH M AY BE ACQUIRED LATTER IN THE ADJOINING AREA. THROUGH CLAU SE (W) THDC WAS AUTHORIZED TO HAND OVER THE POSSESSION OF PROPE RTY OR PORTION THEREOF TO THE AUTHORITY TO WHOM THE SAME IS REQUIR ED. IN LARGE HOUSING SOCIETY PROJECTS SOMETIMES MUNICIPAL AUTHOR ITIES TAKES SOME PORTION OF LAND FOR THE PURPOSE OF ROADS, PARK S OR OTHER GENERAL UTILITY PURPOSES LIKE INSTALLATION OF ELECT RICITY TRANSFORMERS AND BEFORE SANCTIONING THE PLANS THE DEVELOPER IS R EQUIRED TO UNDERTAKE THAT SUCH PORTIONS OF LAND WOULD BE GIVEN FOR SUCH A COMMON PURPOSE. IF POSSESSION WAS NOT GIVEN THEN HO W THDC WAS AUTHORIZED TO HAND OVER SUCH LAND OR PORTIONS THERE OF WHICH HAVE NOT BEEN IDENTIFIED IN THE JDA OUT OF THE TOTAL LAN D. SIMILARLY THROUGH CLAUSE (Y) THDC HAS BEEN AUTHORIZED TO MORT GAGE, ENCUMBRANCE OR CREATE CHARGE ON THE PROPERTY IN FAV OUR OF ANY BANK OR FINANCIAL INSTITUTION FOR RAISING THE FUNDS FOR THE PROJECT. IN THE ABSENCE OF POSSESSION SUCH POWERS CANNOT BE GIVEN. CLAUSE (AA) CLEARLY AUTHORIZED THE THDC TO SELL, TR ANSFER, LEASE, LICENSE THE PREMISES WHICH WERE TO BE CONSTRUCTED O N OWNERSHIP BASIS AND FURTHER TO RECEIVE MONEYS AGAINST SUCH SA LE ETC. AND TO ISSUE FINAL RECEIPT. NOWHERE IT IS MENTIONED IN TH IS CLAUSE THAT SUCH SALE DEEDS WERE TO BE SINGED BY THE SOCIETY AS CONFIRMING PARTY. IN THE ABSENCE OF POSSESSION IT IS JUST NOT POSSIBLE FOR THE DEVELOPER TO SELL AND TRANSFER THE PREMISES WHICH W ERE TO BE CONSTRUCTED. THIS IS FURTHER CLARIFIED BY CLAUSE ( BB) AND (CC) WHICH GIVES THE POWER OF EXECUTION OF CONVEYANCE AND OTHE R DOCUMENTS INVOLVING IN RESPECT OF THE PREMISES TO BE CONSTRUC TED WITHOUT ANY INTERFERENCE OF THE SOCIETY BEING MADE CONFIRMING P ARTY. ALL THESE CLAUSES CLEARLY SHOW THAT THE POSSESSION WAS GIVEN BY THE SOCIETY AND/OR ITS MEMBERS TO THDC/HASH ON THE EXECUTION OF IRREVOCABLE POWER OF ATTORNEY. THROUGH THESE CLAUSES OF JDA AN D IRREVOCABLE POWER OF ATTORNEY THE DEVELOPER WAS ABLE TO COMPLE TELY CONTROL THE PROPERTY AND MAKE USE OF IT NOT ONLY FOR THE PU RPOSE OF DEVELOPMENT BUT ALSO FOR THE PURPOSE OF AMALGAMATIO N, SALE, MORTGAGE ETC. WHEN THE ABOVE CLAUSES ARE COMPARED O N TOUCH STONE OF THE DISCUSSION ON POSSESSION IN PARA 26 TO 28 IN THE CASE 24 OF JASBIR SINGH SARKARIA (SUPRA) WHICH WE HAVE REPR ODUCED ABOVE, IT BECOMES CLEAR THAT THE POSSESSION 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 REQUI RED IS THAT THE TRANSFEREE BY VIRTUE OF POSSESSION SHOULD BE ABLE T O EXERCISE CONTROL FROM OVERALL INTENDED PURPOSES. WE DO NOT THINK IN THE PRESENT CASE THE ASSESSEE HAS GIVEN ONLY A LICENSE AS CLAIMED BY LD. COUNSEL OF THE ASSESSEE BECAUSE OF THE POWERS O F SELLING, AMALGAMATING ETC. MENTIONED IN THE JDA AND IRREVOC ABLE SPECIAL POWER OF ATTORNEY. THE ISSUE HAS BEEN DISCUSSED IN HE JUDGMENT OF JASBIR SINGH SARKARIA (SUPRA) IN FURTHER DISCUSS ION WHICH HAS BEEN MADE IN PARA 33 REGARDING POWER OF ATTORNEY (W HICH HAS BEEN REPRODUCED EARLIER). IN THAT CASE THE POWERS WERE GIVEN TO ENTER UPON AND SURVEY THE LAND, PREPARE LAY OUT PLA NS, SUBMIT BUILDING PLAN FOR SANCTION WITH THE APPROPRIATE AUT HORITIES TO CONTROL, MANAGE AND LOOK AFTER AND SUPERVISE THE P ROPERTY, TO OBTAIN WATER AND SEWERAGE, DISPOSAL AND ELECTRICIT Y CONNECTION. IN THAT CASE THE DEVELOPER WAS AUTHORIZED TO MORTGAGE THE PROPERTY TO OBTAIN MONEY FOR MEETING THE COST OF CONSTRUCTIO N ON SECURITY AND MORTGAGE OF LAND FALLING ONLY TO THE DEVELOPER S SHARE. IN THAT CASE IT WAS HELD THAT GPA WAS NOT A LICENSE TO ENTE R UPON FOR DOING SOME PRELIMINARY ACTS IN RELATION TO DEVELOPM ENT OF WORK BUT THE POWER TO CONTROL THE LAND HAS ALSO BEEN CONFIRM ED. IT HAS ALSO BEEN NOTED THAT THE AGREEMENT DESCRIBED THE POWER O F ATTORNEY AS IRREVOCABLE AND EXTRA DECLARATION TO THAT EFFECT IN THE POWER OF ATTORNEY IS NOT WITHOUT SIGNIFICANCE. IN CASE BEFO RE US, MANY MORE POWERS HAVE BEEN GIVEN TO THDC IN ADDITION TO POWER S WHICH HAVE BEEN DESCRIBED IN THAT JUDGMENT AND POWER OF ATTORN EY HAS BEEN DESCRIBED AS IRREVOCABLE IN CLAUSE 6.7 OF JDA. THE REFORE, IT IS CLEAR THAT THE ASSESSEES PLEA THAT THE POSSESSION WAS TO BE GIVEN ONLY AT THE TIME OF REGISTRATION OF THE JDA, IS NOT CORRECT. ONCE IRREVOCABLE POWER WAS GIVEN THEN IT CANNOT BE SAID THAT THE POSSESSION WAS NOT GIVEN. THE ISSUE REGARDING REVO CATION OF IRREVOCABLE POWER OF ATTORNEY AND CANCELLATION OF T HE JDA WOULD BE DISCUSSED LATER ON WHILE DEALING WITH THAT CONTE NTION. 57 WE FIND FORCE IN THE SUBMISSIONS OF THE LD. DR F OR THE REVENUE THAT INTERPRETATION OF CLAUSE (V) TO SECTIO N 2(47) SHOULD BE MADE IN THE LIGHT OF HEYDONS RULE. THERE IS NO FO RCE IN THE OBJECTION OF THE LD. COUNSEL OF THE ASSESSEE THAT T HIS CLAUSE SHOULD BE INTERPRETED ON GENERAL RULES OF INTERPRETATION P ARTICULARLY IN THE LIGHT OF THE FACT 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. 25 REP 7A. THIS RULE WAS UPHELD BY THE CONSTITUTION B ENCH OF HON'BLE APEX COURT IN CASE OF BENGAL IMMUNITY CO. L TD. V STATE OF BIHAR (1955) 2 SCR 603 FOR CONSIDERATION OF ARTICLE 286 OF THE CONSTITUTION. IT HAS BEEN HELD IN CASE OF DR. BALI RAM WAMAN HIRAY V. MR. JUSTICE B. LENTIN AND ANOTHER, 176 ITR 1 TH AT FOR UNDERSTANDING AMENDMENT IN THE ACT, PERHAPS HEYDON S RULE IS BEST RULE FOR INTERPRETATION OF SUCH AMENDMENT. WE FIND THAT WITHOUT MENTIONING THIS RULE LD. AUTHORITY FOR ADVA NCE RULING HAS DISCUSSED THIS ISSUE IN PARA 27 OF THE JUDGMENT WHI CH WE HAVE EXTRACTED ABOVE. IT HAS BEEN HELD THAT IF POSSESS ION REFERRED TO IN CLAUSE (V) IS TO BE UNDERSTOOD AS EXCLUSIVE BASI S OF THE TRANSFEREE THEN VERY PURPOSE OF THE AMENDMENT OR EN LARGEMENT OF THE DEFINITION OF TRANSFER WOULD GET DEFEATED. WE ARE REPRODUCING FOLLOWING HEAD NOTE OF THE HON'BLE APEX COURT IN CA SE OF DR. BALIRAM WAMAN HIRAY V. MR. JUSTICE B. LENTIN AND A NOTHER (SUPRA): THE FOLLOWING PRINCIPLES ENUNCIATED IN HEYDONS CA ASE (1584) 3 CO. REP 7A AND FIRMLY ESTABLISHED, ARE STILL IN FUL L FORCE AND EFFECT: THAT FOR THE SURE AND TRUE INTERPRETATION OF ALL S TATUTES IN GENERALS (BE THEY PENAL OR BENEFICIAL, RESTRICTIVE OR ENLARG ING OF THE COMMON LAW), FOUR THINGS ARE TO BE DISCERNED AND CONSIDERE D: (1) WHAT WAS THE COMMON LAW BEFORE THE MAKING OF THE ACT; (2) WH AT WAS THE MISCHIEF AND DEFECT FOR WHICH THE COMMON LAW DID NO T PROVIDE; (3) WHAT REMEDY PARLIAMENT HAS RESOLVED AND APPOINTED T O 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 MAKE SUCH CONSTRUCTION AS SHALL SUPPRESS THE EVASIONS FO R THE CONTINUANCE OF THE MISCHIEF AND PRO PRIVATE COMMAND O AND TO ADD FORCE AND LIFE TO THE CURE AND REMEDY ACCORDING TO THE TRUE INTENT OF THE MAKERS OF THE ACT PRO BONO PUBLIC. 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 INTER PRETATION THEREOF. 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 CAPIT AL GAIN COULD BE CHARGED ONLY IF A TRANSFER HAS BEEN EFFECTED AND TRANSFER WAS INTERPRETED BY VARIOUS COURTS INCLUDING THE DECISIO N OF HON'BLE SUPREME COURT IN CASE OF ALAPATI VENKATRAMIAN V CI T, 57 ITR 185 (SC) THAT PROPER CONVEYANCE OF THE PROPERTY HAS BEE N MADE UNDER THE COMMON LAW. THE MISCHIEF WAS WITH REGARD TO TRA NSFER IN THE SENSE THAT THERE WAS COMMON PRACTICE THAT PROPERTIE S WERE BEING TRANSFERRED IN SUCH A MANNER THAT TRANSFEREE COULD ENJOY THE BENEFIT OF THE PROPERTY WITHOUT EXECUTION OF THE CO NVEYANCE DEED. THIRDLY WE NEED TO EXAMINE THE REMEDY WHICH WAS INS ERTION OF CLAUSE (V) AND (VI) SO THAT CASES OF GIVING POSSESS ION OF THE PROPERTY, WERE ALSO COVERED BY THE DEFINITION OF TR ANSFER. FOURTHLY, TRUE REASON FOR THIS AMENDMENT WAS TO PLUG A LOOP H OLE IN THE LAW. THEREFORE, CONSIDERING THE PURPOSE OF INSERTION OF CLAUSE (V) AND (VI) OF SECTION 2(47) AND VARIOUS CLAUSES OF POWER OF ATTORNEY AND 26 JDA IT BECOMES ABSOLUTELY CLEAR THAT THE SOCIETY HA S 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 POSSESSIO N WAS GIVEN THEN HOW THE ASSESSEE WAS HAVING POSSESSION IN TERM S OF LATER SALE DEEDS EXECUTED ON 2.3.2007 AND 25.4.2007. THE SOCIETY HAS EXECUTED TWO SALE DEEDS FOR CONVEYANCE OF PARTS OF THE TOTAL LAND. FIRST SALE DEED HAS BEEN EXECUTED ON 2.3.2007 FOR 3 .08 ACRES AND RECITATION CLAUSE (A) READS AS UNDER: CLAUSE (A) - THE VENDOR IS THE ABSOLUTE OWNER AND I N POSSESSION OF LAND TOTAL MEASURING 169 KANAL 7 MARL AS EQUIVALENT TO APPROX. 21.2 ACRES IN VILLAGE KANSAL, TEHSIL MOH ALI AND MORE PARTICULARLY DESCRIBED IN SCHEDULE A HEREUNDER WRIT TEN AND DELINEATED IN GREEN COLOUR BOUNDARY LINE IN THE SHI ZRA PLAN ISSUED BY THE PATWARI DATED 23.2.2007. 60 ACCORDING TO THE LD. COUNSEL OF THE ASSESSEE IF SOCIETY HAD ALREADY GIVEN THE POSSESSION THEN THE SOCIETY WOULD NOT HAVE / HAD POSSESSION ON 2.3.2007 OF THE LAND. AT FACE VA LUE THIS ARGUMENT LOOKS ATTRACTIVE BUT WHEN EXAMINED IN TERM S OF POSSESSION WHICH HAS BEEN EXPLAINED IN CASE OF JASB IR SINGH SARKARIA (SUPRA), ACTUAL REALITY WILL COME FORWARD. IN THIS JUDGMENT CONCEPT OF CONCURRENT POSSESSION HAS ALSO BEEN DISC USSED AND FOLLOWING EXTRACT OF PARAGRAPH 55 OF SALMONDS JURI SPRUDENCE 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 PROPOSITION THIS IS TRUE: FOR EXCLUSIVENESS IS OF T HE ESSENCE OF POSSESSION. TWO ADVERSE CLAIMS OF EXCLUSIVE USE CA NNOT BOTH BE EFFECTUALLY REALIZED AT THE SAME TIME. CLAIMS, HOW EVER, WHICH ARE NOT ADVERSE, AND WHICH ARE NOT, THEREFORE, MUTUALLY DESTRUCTIVE, ADMIT OF CONCURRENT REALIZATION. HENCE THERE ARE S EVERAL POSSIBLE CASES OF DUPLICATE POSSESSION. 1 MEDIATE AND IMMEDIATE POSSESSION CROSS-OBJECTIONS - EXIST IN RESPECT OF THE SAME THING AS ALREADY EXPL AINED. 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 LIMI TED PURPOSE AND THAT OF THE BUYER/DEVELOPER WHO HAS A GENERAL CONTR OL AND CUSTODY OF THE LAND CAN VERY 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. TH E CONCURRENT POSSESSION OF THE OWNER IS POSSIBLE WHICH GIVES RIG HTS TO A LIMITED EXTENT FOR A LIMITED PURPOSE. THUS IT IS VERY MUCH POSSIBLE TO HOLD 27 CONCURRENT POSSESSION. MERE RECITATION IN THE SALE DEED TO THE EFFECT THAT THE SOCIETY WAS OWNER OF AND IN POSSESS ION OF LAND MEASURING 21.2 ACRES, DOES NOT SHOW THAT THE SOCIET Y WAS HAVING ACTUAL POSSESSION. WHAT THE SOCIETY WAS HAVING IS ONLY OWNERSHIP RIGHT AND THE POSSESSION WAS ONLY CONCURRENT AS THE POSSESSARY RIGHT. FURTHER IT IS A STANDARD CLAUSE IN THE CONV EYANCE DEED AND IT DOES NOT PROVE OR INDICATE ANYTHING EXCEPT THAT A PORTION OF LAND MEASURING 3.08 ACRES, HAS BEEN SOLD / CONVEYED TO T HE DEVELOPER. IN THE LIGHT OF THIS POSITION, THIS CONTENTION IS R EJECTED. 62 WE FIND NO FORCE IN THE NEXT CONTENTION OF THE L D. COUNSEL OF THE ASSESSEE THAT POSSESSION IF AT ALL WAS GIVEN SH OULD BE HELD TO BE ONLY A LICENSE AS DEFINED IN SECTION 52 OF INDIA N EASEMENT ACT BECAUSE CLEARLY AS PER SECTION 52 OF THIS ACT, WHER E ONE PERSON GRANTS TO ANOTHER OR MANY OTHER PERSONS TO DO SOMET HING UPON IMMOVEABLE PROPERTY WHICH IN THE ABSENCE OF SUCH RI GHT 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 RIG HTS IN PROPERTY INCLUDING RIGHT TO SELL, RIGHT TO AMALGAMATE THE PR OJECT WITH ANOTHER PROJECT IN THE ADJOINING AREA WHICH MAY BE ACQUIRED LATER, RIGHT TO MORTGAGE ETC. CLEARLY SHOW THAT RIGHTS GIVEN BY THE SOCIETY ARE MUCH MORE LARGER THAN WHAT IS COVERED IN THE TERM LICENSE. 64 FOURTH CONTENTION IS THAT THE MONEY RECEIVED AT THE TIME OF EXECUTION OF JDA CAN BE TERMED AS ADVANCE AND WHAT EVER MONEY HAS BEEN RECEIVED HAS ALREADY BEEN SHOWN AS CAPITAL GAI N. WE FIND NO FORCE IN THIS SUBMISSION BECAUSE SECTION 45 WHICH HAS BEE N EXTRACTED ABOVE CLEARLY PROVIDE FOR TAXING OF PROFITS AND GAINS ARI SING FROM THE TRANSFER. WE HAVE ALREADY DISCUSSED THE IMPLICATION OF SECTIO N 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 SARKA RIA (SUPRA) AND POINTED OUT THAT WHEN SECTION 45 IS READ ALONG WITH SECTION 48 IT BECOMES CLEAR THAT WHOLE OF THE CONSIDERATION WHICH IS RECEIVED O R ACCRUED IS TO BE TAXED ONCE CAPITAL ASSET IS TRANSFERRED IN A PARTIC ULAR 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 C ONSIDERATION IS REQUIRED TO BE TAXED. AT THE COST OF REPETITION LE T US AGAIN REPRODUCE THE OBSERVATIONS OF THE LD. AUTHORITY IN CASE OF JASBIR SINGH SARKARIA (SUPRA) WHICH WE HAVE EARLIER EXTRACTED AT PARA 40 AND THE RELEVANT PORTION IS AS UNDER: 40. ON THE ABOVE, THE HON'BLE AUTHORITY AFTER REFE RRING TO THE PROVISIONS OF SECTION 45 AND OBSERVED AS UNDER:- 28 .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 EXPRESSION 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 T HE CHARGING PROVISION. THE SECOND POINT WHICH DESERVES NOTICE IS THAT BY A DEEMING PROVISION, THE PROFITS OR GAINS THAT HAVE ARISEN WOULD BE TRE ATED AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE . THAT MEANS, THE INCOME ON ACCOUNT OF ARISAL OF CAPITAL GAIN SHOULD BE CHARGED TO TAX IN THE SAME PREVIOUS YEAR IN WHICH THE TRANSFER WAS E FFECTED OR DEEMED TO HAVE TAKEN PLACE. THE EFFECT AND AMBIT OF THE DEEMING PROVISION CONT AINED IN SECTION 45 HAS BEEN CONSIDERED IN DECIDED CASES AN D LEADING TEXT BOOKS. THE FOLLOWING STATEMENT OF LAW IN SAMPATH I YENGARS COMMENTARY (10TH EDITION REVISED BY SHRI S. RAJARA TNAM) 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 WH ICH THE TRANSFER TOOK PLACE. SINCE THIS IS A STATUTORY FI CTION, THE ACTUAL YEAR IN WHICH THE SALE PRICE WAS RECEIVED, WHETHER IT WAS ONE YEAR, TWO YEARS, THREE YEARS, FOUR YEARS ETC. PREV IOUS 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 W OULD BE REGARDED AS THE CAPITAL GAINS ARISING IN THE PREVI OUS 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 CONSIDER ATION STIPULATED TO BE PAID IN FUTURE WOULD HAVE TO BE ATTRIBUTED, BY STATUTORY MANDATE, TO THE YEAR OF TRANSFER, EVEN AS PAYMENTS MADE PRIOR TO THE YEAR OF TRANSFER. 66 THE ABOVE CLEARLY SHOWS THAT IT IS BECAUSE OF EX PRESSION USED IN SECTION 45 THAT IS ARISING WHICH CANNOT BE EQUATE D WITH RECEIPT. IN THIS RESPECT THE LD. AUTHORITY HAS QUOTED A VERY OL D 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 DECIS ION 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 CON STRUING SECTION 12 B OF THE INDIAN INCOME-TAX ACT, 1922 CLARIFIED THE IM PORT OF THE EXPRESSION ARISE AS FOLLOWS SECTION 12B DOES NOT REQUIRE THAT PROFITS SHOULD HAVE BEEN ACTUALLY RECEIVED. IT IS SUFFICIENT IF THEY HAVE ARISEN. THR OUGHOUT THE INCOME-TAX ACT THE WORDS ACCRUE AND ARISE ARE USED IN CONT RADISTINCTION TO THE 29 WORD RECEIVE AND INDICATE A RIGHT TO RECEIVE. THI S WAS EXPLAINED BY FRY L.J., IN COLQUHOUN V. BROOKS. THE LEARNED JUDGE OBS ERVED: 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 PROFI TS 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 DUR ING THE YEAR OF TRANSFER IS NOT NECESSARY FOR THE PURPOSE OF COMP UTING CAPITAL GAINS. FURTHER THE EXPRESSION ARISING HAS BEEN DEFINED IN THE ADVANCED LAW LEXICON BY P. RAMANATHA AIYER EDITED BY Y.V. CHANDR ACHUD, 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. CO MMISSIONER OF INCOME TAX, WEST BENGAL-II, CALCUTTA V. HINDUSTAN H OUSING 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 AC CRUE TO AN ASSESSEE WITHOUT THE ACTUAL RECEIPT OF THE SAME. I F THE ASSESSEE ACQUIRES A RIGHT TO RECEIVE THE INCOME, THE INCOME CAN BE SAID TO HAVE ACCRUED TO HIM THOUGH IT MAY BE RECEIVED LATER ON I TS BEING ASCERTAINED. THE BASIC CONCEPTION IS THAT HE MUST HAVE ACQUIRED A RIGHT TO RECEIVE THE INCOME. BHOGILAL V INCOME TAX LD. COMMISSIONER, A IR 1956 BOM 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 STAGE BEFORE THE POINT OF TIME WHEN THE INCOME BECOMES RECEIVABL E. IN OTHER WORDS, ONCE THE VESTED RIGHTS COME TO A PERSON THEN IT CAN BE SAID THAT SUCH RIGHT OR INCOME HAS ACCRUED TO SUCH PERSON. THE C ONCEPT OF ACCRUAL OR AROUSAL OF INCOME HAS ALSO BEEN DISCUSSED 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: (1) IMPORTANT PRINCIPLES.- (A) MEANING ACCRUE MEANS TO ARISE OR SPRING AS A NATURAL GROWTH OR RESULT, TO COME BY W AY OF INCREASE. ARISING MEANS COMING INTO EXISTENCE OR NOTICE OR PRESENTING ITSELF. ACCRUE CONNOTES GROWTH OR ACCUMULATION WITH A TAN GIBLE 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 SYNO NYMOUSLY WITH EACH OTHER TO DENOTE THE SAME IDEA OR IDEAS VERY SIMILAR , AND THE DIFFERENCE LIES ONLY IN THIS THAT ONE IS MORE APPROPRIATE THAN THE OTHER, WHEN APPLIED, TO A PARTICULAR CASE. IT WILL INDEED BE DI FFICULT TO DISTINGUISH BETWEEN THE TWO WORDS, BUT IT IS CLEAR THAT BOTH TH E 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 TIM E WHEN THE INCOME 30 BECOMES RECEIVABLE AND CONNOTE A CHARACTER OF THE I NCOME, WHICH IS MORE OR LESS INCHOATE AND WHICH IS SOMETHING LESS T HAN A RECEIPT. AN UNENFORCEABLE CLAIM TO RECEIVE AN UNDETERMINED OR U NDEFINED 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, THIS 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 REFERRED TO IN THAT SECTION IS REQUIRED T O BE REGISTERED AND THEREFORE, NOW IN SECTION 2(47)(V) ONLY THE AME NDED PROVISIONS CAN BE READ. WE FIND NO FORCE IN THIS CONTENTION. IT IS WELL KNOWN THAT SECTION 53A OF THE TRANSFER OF PROPERTY ACT WA S PASSED ON EQUITABLE DOCTRINE SO AS TO PROTECT THE TAKING OVER OR RETENTION OF THE POSSESSION BY THE TRANSFEREE. IT WAS NOT A SO URCE BY WHICH TITLE OF IMMOVABLE PROPERTY COULD BE ACQUIRED. SEC TION 53A OF TP ACT READ AS UNDER:- 53A. PART PERFORMANCE.- WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVEABLE PROPERTY BY WRITIN G SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CER TAINTY, 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 POSSESSION, CONTINUES IN POSSESSIO N 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 CO NTRACT, [***]WHERE THERE IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSF ER HAS NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFOR BY THE LAW FOR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON C LAIMING UNDER HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE TR ANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSS ESSION, OTHER THAN A RIGHT EXPRESSLY PROVIDED BY THE TERMS OF THE CONTRACT 70 A PLAIN READING OF THE ABOVE PROVISION SHOWS THAT IT PROVIDES A SAFETY MEASURE OR A SHIELD IN THE HANDS OF THE TR ANSFEREE TO PROTECT THE POSSESSION OF ANY PROPERTY WHICH HAS BE EN GIVEN BY THE TRANSFEROR AS LAWFUL POSSESSION UNDER A PARTICU LAR AGREEMENT OF SALE. THIS POSITION OF LAW WAS INCORPORATED IN THE DEFINITION OF TRANSFER BY INSERTION OF CLAUSES (V) & (VI) IN SE CTION 2(47) OF THE ACT. IT IS IMPORTANT TO NOTE THAT CLAUSE (V) USES THE EXPRESSION CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF T.P. ACT, 31 THEREFORE, CLEARLY THE IDEA IS THAT AN AGREEMENT WH ICH PROVIDES SOME DEFENSE IN THE HANDS OF TRANSFEREE WAS INCORPO RATED UNDER THE DEFINITION OF TRANSFER IN THE INCOME TAX ACT. NOW ORIGINALLY SECTION 53A OF T.P. ACT PROVIDED THAT EVEN IF THE CONTRACT THOUGH REQUIRED TO BE REGISTERED HAS NOT BEEN REGISTERED, WHICH MEANS THE RIGHT OF DEFENDING THE POSSESSION WAS AVAILABLE EVEN IF THE CONTRACT WAS NOT REGISTERED BUT BY AMENDMENT ACT 48 OF 2001, THE EXPRESSION THOUGH REQUIRED TO BE REGISTERED HAS NO T BEEN REGISTERED, HAS BEEN OMITTED WHICH MEANS FOR THE P URPOSE OF POSSESSION U/S 53A OF T.P. ACT, A PERSON HAS TO PRO VE THAT POSSESSION HAS BEEN GIVEN UNDER A REGISTERED AGREEM ENT. IN OTHER WORDS, NOW U/S 53A OF T.P. ACT, THE AGREEMENT REFER RED IS REQUIRED TO BE REGISTERED. THIS REQUIREMENT CANNOT BE READ I N CLAUSE (V) OF SECTION 2(47) BECAUSE THAT REFERS ONLY TO THE CONT RACT OF THE NATURE OF SECTION 53A OF T.P. ACT WITHOUT GOING INT O THE CONTROVERSY WHETHER SUCH AGREEMENT IS REQUIRED TO B E REGISTERED OR NOT. THE LD. COUNSEL FOR THE ASSESSEE HAD REFER RED TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SU RANA STEELS V DCIT 237 ITR 777 (SC) FOR THE PROPOSITION THAT WHEN A SECTION OF A PARTICULAR STATUTE IS INTRODUCED INTO ANOTHER ACT I T MUST BE READ IN THE SAME SENSE AS IT BORE IN THE ORIGINAL ACT. THE CAREFUL PERUSAL OF THAT JUDGMENT WOULD SHOW THAT SITUATION IS APPLI CABLE ONLY WHEN A PARTICULAR PROVISION OF AN ACT HAS BEEN INCORPORA TED 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 UNA BSORBED DEPRECIATION. IT WAS FOUND THAT IN EXPLANATION TO SECTION 115J CLAUSE (IV), THE FOLLOWING 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 P ROFIT 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. 71 THE HON'BLE APEX COURT REFERRED TO THE PRINCIPLE S OF STATUTORY INTERPRETATION BY SHRI G.P.SINGH AND EXTR ACTED FOLLOWING PIECE: SECTION 115J, EXPLANATION CLAUSE (IV), IS A PIECE OF LEGISLATION BY INCORPORATION. DEALING WITH THE SUBJ ECT, JUSTICE G.P. SINGH STATES IN PRINCIPLES OF STATUTOR Y INTERPRETATION (7TH EDITION, 1999). INCORPORATION OF AN EARLIER ACT INTO A LATER ACT IS A LEGISLATIVE DEVICE ADOPTED FOR THE SAKE OF CONVENIE NCE IN ORDER TO AVOID VERBATIM REPRODUCTION OF THE PROVISI ONS OF THE EARLIER ACT INTO THE LATER. WHEN AN EARLIER ACT OR CERTAIN OF ITS PROVISIONS ARE INCORPORATED BY REFERENCE INTO A LATER ACT, THE PROVISIONS SO INCORPORATED BECOME PART AND PARC EL OF THE LATER ACT AS IF THEY HAD BEEN 'BODILY TRANSPOSED IN TO IT'. THE EFFECT OF INCORPORATION IS ADMIRABLY STATED BY LORD ESHER, 32 M.R. : 'IF A SUBSEQUENT ACT BRINGS INTO ITSELF BY R EFERENCE SOME OF THE CLAUSES OF A FORMER ACT, THE LEGAL EFFE CT 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 INCORPOR ATED SECTIONS IT MAY BE AT TIMES NECESSARY AND PERMISSIB LE TO REFER TO OTHER PARTS OF THE EARLIER STATUTE WHICH A RE NOT INCORPORATED. AS WAS STATED BY LORD BLACKBURN: 'WHE N A SINGLE SECTION OF AN ACT OF PARLIAMENT IS INTRODUCE D 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 SAME AS WAS DEFINED IN THE COMPANIES ACT. IN THIS CASE IT IS CLEAR THAT PROVISION ITSELF REFERS TO CLAUSE (B) OF SUB SECTI ON (1) OF SECTION 205 OF COMPANYS ACT 1956 AND THEREFORE, SAME MEAN ING 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 SECT ION 53A OF T.P. ACT, WHICH MEANS IT IS NOT A CASE OF INCORPORATION OF ONE PIECE OF LEGISLATION INTO ANOTHER PIECE OF LEGISLATION. IF T HAT WAS THE INTENTION OF THE PARLIAMENT, OBVIOUSLY CLAUSE (V) W OULD CONTAIN THE EXPRESSION CONTRACT AS DEFINED UNDER SECTION 53A O F TRANSFER OF PROPERTY ACT, 1882. FURTHER, IT IS SETTLED POSITI ON OF LAW THAT ANY INTERPRETATION WHICH COULD RENDER A PARTICULAR PROV ISION REDUNDANT SHOULD BE AVOIDED. IF THE CONTENTION OF THE LD. COU NSEL WAS TO BE ACCEPTED, OBVIOUSLY THE PROVISIONS OF CLAUSE (V) OF SECTION 2(47) OF THE ACT WOULD BECOME REDUNDANT IN THE SENSE THAT RE GISTRATION OF AGREEMENT WOULD AGAIN BE MADE COMPULSORY BUT SINCE PROPERTIES WERE BEING SOLD IN THE MARKET ON POWER OF ATTORNEY BASIS THROUGH UNREGISTERED AGREEMENTS WHICH WOULD MAKE THIS PROVI SION REDUNDANT. THIS POSITION WE HAVE ALREADY DISCUSSED EARLIER WHILE DISCUSSING THE HEYDONS RULE IN THE INTERPRETATIONS OF THIS CLAUSE. FURTHER THE ISSUE OF INTERPRETATION OF CLAUSE (V) A ND AMENDMENT TO SECTION 53A OF THE TRANSFER OF PROPERTY ACT CAME FO R CONSIDERATION BEFORE THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SURESH CHANDER AGGARWAL VS ITO 48 SOT 2010. THE TRIBUNAL DISCUSSED THIS ISSUE AT PAGE 7 AND AFTER QUOTING THE PROVISIO NS OF SECTION 2(47) AND ALSO SECTION 53A BEFORE AND AFTER AMENDME NT AS WALL AS 33 PARA NOS. 11.1 TO 11.2 OF THE BOARDS CIRCULAR NO. 495 DATED 22.9.1987 OBSERVED AS UNDER:- THE ABOVE CLEARLY SHOWS THAT THERE WAS CERTAIN SIT UATION WHERE PROPERTIES WERE BEING TRANSFERRED WITHOUT REGISTRAT ION OF TRANSFER INSTRUMENTS AND PEOPLE WERE ESCAPING TAX LIABILITIE S ON TRANSFER OF SUCH PROPERTIES BECAUSE THE SAME COULD NOT BE BROUG HT IN THE DEFINITION OF 'TRANSFER' PARTICULARLY IN MANY STATE S OF THE COUNTRY PROPERTIES WERE BEING HELD BY VARIOUS PEOPLE AS LEA SED PROPERTIES WHICH WERE ALLOTTED BY THE VARIOUS GOVT. DEPARTMENT S AND TRANSFERS OF SUCH LEASE WERE NOT PERMISSIBLE. PEOPLE WERE TRA NSFERRING SUCH PROPERTIES BY EXECUTING AGREEMENT TO SELL AND GENER AL POWER OF ATTORNEY AS WELL AS WILL AND RECEIVING FULL CONSIDE RATION, 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 BEC AUSE THE SAME COULD NOT COVERED BY THE DEFINITION OF 'TRANSFER'. TO BRING SUCH TRANSACTIONS WITHIN THE TAX NET, THIS AMENDMENT WAS MADE. IT HAS TO BE APPRECIATED THAT CLAUSE (V) IN SECTION 2(47) DOE S NOT LIFT THE DEFINITION OF PART PERFORMANCE FROM SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. RATHER, IT DEFINES ANY TRANSACT ION INVOLVING ALLOWING OF 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. THI S MEANS SUCH TRANSFER IS HOT REQUIRED TO BE EXACTLY SIMILAR TO T HE ONE DEFINED U/S.53A OF THE TRANSFER OF PROPERTY ACT, OTHERWISE LEGISLATURE WOULD HAVE SIMPLY STATED THAT TRANSFER WOULD INCLUDE TRAN SACTIONS DEFINED IN SEC. 53A OF THE TRANSFER OF PROPERTY ACT. BUT TH E LEGISLATURE IN ITS WISDOM HAS USED THE WORDS 'OF A CONTRACT, OF THE NA TURE REFERRED IN SECTION 53A'. THEREFORE, IT IS ONLY THE NATURE WHIC H HAS TO BE SEEN. AS DISCUSSED ABOVE, THE PURPOSE OF INSERTION OF CLA USE (V) WAS TO TAX THOSE TRANSACTIONS WHERE PROPERTIES WERE BEING TRANSFERRED BY WAY OF GIVING POSSESSION AND RECEIVING FULL CONSIDE RATION. THEREFORE, IN OUR HUMBLE OPINION, IN THE CASE OF A TRANSFER WHERE POSSESSION HAS BEEN GIVEN AND FULL CONSIDERATION HA S BEEN RECEIVED, THEN SUCH TRANSACTION NEEDS TO BE CONSTRU ED AS 'TRANSFER'. THEREFORE, THE AMENDMENT MADE IN SECTION 53A BY WHI CH THE REQUIREMENT OF REGISTRATION HAS BEEN INDIRECTLY BRO UGHT 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 PODAR CEMENT (P.) LTD. (SUPRA}. IN THAT CASE, THE ASSESSE E WAS OWNER OF FOUR FLATS IN A BUILDING CALLED 'SILVER ARCH'/ON NE PEAN 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 PA YMENT OF CONSIDERATION. THE FLATS WERE LET OUT. THE ASSESSEE CONTENDED THAT THE RENTAL INCOME FROM THESE FLATS WAS ASSESSABLE A S 'INCOME FROM OTHER SOURCES' BECAUSE THE ASSESSEE WAS NOT THE LEG AL OWNER BECAUSE THE TITLE OF THE PROPERTY HAD NOT BEEN CONV EYED 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 AM ENDED VIDE CLAUSE 3(A) WHEREIN WHEN A PERSON WAS ALLOWED TO TA KE POSSESSION OF THE BUILDING IN PART PERFORMANCE OF THE NATURE R EFERRED TO IN SECTION 53A, SUCH PERSON SHALL BE DEEMED TO BE THE OWNER. IT WAS FURTHER OBSERVED THAT FOR ALL PRACTICABLE PURPOSES THE ASSESSEE WAS THE OWNER AND POSSIBLY THERE CANNOT BE TWO OWNERS O F SAME PROPERTY AT THE SAME TIME. IN FACT, THE AMENDMENTS TO SECTION 27 WERE MADE LATER ON BUT WERE TAKEN INTO COGNIZANCE O N 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 34 COMPLY WITH THE REQUIREMENTS OF LAW SUCH AS THE TRA NSFER OF PROPERTY ACT, THE REGISTRATION ACT, ETC., IN THE CO NTEXT SECTION 22 OF THE INCOME-TAX ACT, 1961, HAVING REGA RD 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 PERSON WHO IS ENTITLED TO RECEIVE INCOME FROM THE P ROPERTY IN HIS OWN RIGHT. THE REQUIREMENT OF REGISTRATION OF T HE SALE DEED IN THE CONTEXT OF SECTION 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 O F INCOME-TAX ACT WHEN A PERSON HAS GOT A VALID LEGALLY CONVEYED AFTE R COMPLYING WITH THE REQUIREMENTS OF THE LAW. 9. SIMILARLY, IN THE CASE OF MYSORE MINERALS LTD. V. CIT [1999] 239 ITR 775/106 TAXMAN 166 (SC), THE ASSESSEE HAD PURCH ASED FOR THE USE OF ITS STAFF SEVEN LOW INCOME GROUP HOUSES FROM A HOUSING BOARD. THE PAYMENT HAD BEEN MADE AND IN TUR N POSSESSION OF THE HOUSES WAS TAKEN OVER BY THE ASSESSEE. THE A CTUAL CONVEYANCE DEED WAS NOT EXECUTED. THE ASSESSEE CLAI MED DEPRECIATION WHICH WAS DENIED BY THE DEPARTMENT. AF TER GREAT DISCUSSION, IT WAS OBSERVED THAT FOR ALL PRACTICABL E PURPOSES AND FOR THE PURPOSE OF INCOME-TAX ACT, THE ASSESSEE SHALL B E CONSTRUED AS OWNER OF THE PROPERTY. IN FACT, IT WAS HELD AS UNDE R: - '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 DOCUMENT OF TITLE WAS NOT EXECUTED BY THE HOUSING BOARD IN FAVOUR OF THE ASSESSEE, THE HOUSES WERE ALLOTTED TO THE ASSESSEE BY THE HOUSING BOARD, PART PAYMENT RECEI VED AND POSSESSION DELIVERED SO AS TO CONFER DOMINION OVER THE PROPERTY ON THE ASSESSEE WHEREAFTER THE ASSESSEE HA D IN ITS OWN RIGHT ALLOTTED THE QUARTERS TO THE STAFF AND TH EY WERE BEING ACTUALLY USED BY THE STAFF OF THE ASSESSEE. T HE ASSESSEE WAS ENTITLED TO DEPRECIATION IN RESPECT OF THE SEVEN HOUSES IN RESPECT OF WHICH THE ASSESSEE HAD NOT OBT AINED A DEED OF CONVEYANCE FROM THE VENDOR ALTHOUGH 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 GROU ND REALITY HAS TO BE RECOGNIZED AND IF ALL THE INGREDIENTS OF TRANSF ER HAVE BEEN COMPLETED, THEN SUCH TRANSFER HAS TO BE RECOGNIZ ED. MERELY BECAUSE THE PARTICULAR INSTRUMENT OF TRANSFER HAS N OT BEEN REGISTERED WILL NOT ALTER THE SITUATION. THIS POSIT ION IS FURTHER STRENGTHENED BY THE FACT THAT LEGISLATURE ITSELF HA S INSERTED CLAUSE (V) TO SECTION 2(47) AND WHILE REFERRING TO THE PRO VISIONS OF SECTION 53A, REFERENCE HAS BEEN MADE BY STATING THAT CONTRA CTS IN THE NATURE OF SECTION 53A SHOULD ALSO BE COVERED BY THE DEFINITION OF 'TRANSFER'. THEREFORE, IN OUR HUMBLE VIEW, THE AMEN DMENT TO SEC. 53A OF THE TRANSFER OF PROPERTY ACT, WHEREBY THE RE QUIREMENT OF THE DOCUMENTS NOT BEING REGISTERED HAS BEEN OMITTED, WI LL NOT ALTER THE SITUATION FOR HOLDING THE TRANSACTION TO BE A TRANS FER U/S.2(47)(V) IF ALL OTHER 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 NOT APPLICABLE. SIMILAR VIEW HAS BEEN TAKEN BY ITAT CO CHIN BENCH OF THE TRIBUNAL IN CASE OF G.SREENIVASAN VS DCIT 28 TX MANN.COM 200 (COCH.) AND ITAT PUNE BENCH IN THE CASE OF MAHE SH 35 NEMICHANDRA GANESHWADE V ITO 21 TAXMANN.COM 136 (PU NE). IN VIEW OF THIS LEGAL POSITION, THIS CONTENTION IS REJ ECTED. 75 THE NEXT CONTENTION WAS THAT THE DECISION OF HON 'BLE BOMBAY HIGH COURT IN CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPR A) IS NOT APPLICABLE PARTICULARLY BECAUSE ULTIMATELY IN THAT CASE IT WAS HELD THAT CAPITAL GAIN TAX SHOULD BE CHARGED IN ASSESSMENT YEAR 1999-2000 WHEREAS AGREEMENT WAS EXECUTED IN AUGUST, 1994. 76 WE HAVE ALREADY DISCUSSED THE IMPLICATIONS OF TH E DECISION IN CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA) IN PAR A 33 TO 38. WE HAD ALSO EXAMINED WHY IN THAT CASE CAPITAL GAIN WAS NOT HELD TO BE CHARGEABLE IN ASSESSMENT YEAR 1995-96.THERE IS NO N EED TO REPEAT THE SAME AND IN VIEW OF THE SAID OBSERVATIONS, WE REJEC T 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 PROV ISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT TO THE EXTENT T HAT THERE SHOULD BE WILLINGNESS ON THE PART OF THE TRANSFEREE TO PER FORM HIS PART OF THE CONTRACT. 78 IN THIS ASPECT WE HAVE NO QUARREL WITH THE PROPOSITION THAT FOR INVOKING SECTION 53A PF T.P. ACT READ WITH CLAU SE (V) OF SECTION 2(47), THE TRANSFEREE HAS TO PERFORM OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT. IN THIS RESPECT AS REFERRED TO BY LD. COUNSEL FOR THE ASSESSEE, THE COMMENTS OF THE LD. AUTHOR IN THE COMMENTARY BY MULLA DINSHAN FREDERICK MULLA VIDE PARA 16 ARE CLEAR AND SHOWS THAT THIS REQUIREMENT HAS TO BE ABS OLUTE AND UNCONDITIONAL. SOME OBSERVATIONS HAVE BEEN MADE I N THE CASE OF GENERAL GLASS COMPANY PVT LTD VS DCIT (SUPRA). IN THAT CASE IT WAS HELD THAT WILLINGNESS TO PERFORM FOR THE PURPOS E OF SECTION 53A IS SOMETHING MORE THAN A STATEMENT OF INTENT AND IT IS UNQUALIFIED AND UNCONDITIONAL WILLINGNESS ON THE PART OF THE TR ANSFEREE TO PERFORM HIS OBLIGATION. IN THAT CASE THE TRANSFERE E HAS AGREED TO MAKE CERTAIN PAYMENTS IN INSTALLMENTS IN CONSIDERAT ION OF THE DEVELOPMENT AGREEMENT BUT SUCH PAYMENTS WERE NOT MA DE. LATER ON, THE AGREEMENT WAS MODIFIED AND MORE TIME WAS GI VEN TO THE TRANSFEREE FOR PAYMENT OF SUCH INSTALLMENTS. HOWEV ER, THE INSTALLMENTS WERE NOT PAID EVEN UNDER THE MODIFIED TERMS AND THAT IS WHY IT WAS ULTIMATELY HELD THAT SUCH AGREEMENT C ANNOT 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 36 OBSERVATIONS WERE MADE, THOUGH IT IS NOT POINTED OU T IN WHAT RESPECT THE TRANSFEREE HAS FAILED TO PERFORM HIS PA RT 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 CASE LAND WAS ACQUIRED BY THE GOVERNMENT AND THE MATTER WENT FOR LITIGATION. DURING THE PENDENCY OF LITIGATION, THE ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT WITH A DEVELOPER FOR T HE PURPOSE OF DEVELOPMENT OF THE PROPERTY, HOWEVER, IT WAS CLARIF IED IN THE AGREEMENT THAT THERE IS LITIGATION IN RESPECT OF AC QUISITION OF PROPERTY AND THE DEVELOPER HAS TO TAKE CLEARANCE FR OM THE GOVERNMENT IN THE MATTER OF DENOTIFICATION OF THE L AND. IT WAS HELD THAT SINCE THE LAND WAS UNDER COMPULSORY ACQUISITIO N AND NO COMPENSATION HAS BEEN RECEIVED, THEREFORE, THERE C OULD NOT BE ANY CAPITAL GAIN TAX U/S 2(47) (III) WHICH DEALS WI TH THE COMPULSORY ACQUISITION. IT WAS FURTHER OBSERVED THAT 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 HA ND AND THEREFORE, 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 REQUIRED TO BE TAKEN BY THE DEVELOPER AS PER CLAUSES 3.1, 7.9, 8.4 AND 8.6 OF THE JDA. THIS IS NOT CORR ECT AS POINTED OUT BY THE LD. CIT DR THAT ASSESSEE HAD ALREADY GOT THE MUNICIPAL PLAN SANCTIONED BUT IN THE MEANTIME PIL WAS FILED B EFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT AGAINST THE IM PLEMENTATION OF THE PROJECT. INITIALLY, THE CONSTRUCTION WAS BA NNED BY THE HON'BLE HIGH COURT. HOWEVER, LATER ON IT WAS OBSER VED IN THE CWP NO. 20425 OF 2010 AND AS CLARIFIED BY THE ORDER OF THE HON'BLE SUPREME COURT THAT REFUSAL OF SANCTION UNDER THE EN VIRONMENT (PROTECTION) ACT, THE SOCIETY HAVE SOUGHT A REVIEW OF THE ORDER BECAUSE THE FINDINGS ARRIVED WERE EX.PARTE. NO OR DER IN THE MATTER HAS BEEN PASSED BY THE COMPETENT AUTHORITY P ERHAPS BECAUSE OF THE ORDER OF HIGH COURT. IN THE INTERIM ORDER PASSED IN THE PIL IT HAS BEEN CLARIFIED BY THE HON'BLE SU PREME COURT VIDE ORDER DATED 31.1.2012 PERMITTING THE CONCERNED AUTH ORITY UNDER THE DIFFERENT STATUTES GOVERNING THE MATTER TO THEI R RESPECTIVE JURISDICTION TO BE DECIDED IN ACCORDANCE WITH LAW. THUS, IT BECOMES CLEAR THAT DEVELOPER I.E. THDC HAS APPLIED FOR VARI OUS PERMISSIONS BEFORE THE RELEVANT AUTHORITIES AND IN SOME CASES P ERMISSION WERE DECLINED ON EX.PARTE BASIS AND IN SOME CASES THE SA ME WERE DECLINED IN VIEW OF THE HIGH COURT ORDER BANNING TH E CONSTRUCTION. AFTER THE CLARIFICATION OF THE ORDER OF THE HIGH CO URT BY HON'BLE 37 SUPREME COURT BY ORDER DATED 31.1.2012, THE AUTHORI TIES HAVE ALREADY BEEN PERMITTED TO EXAMINE THE ISSUE ON MERI TS UNDER VARIOUS LAWS. FURTHER IN THE JDA THERE IS A CLAUSE 26 WHICH DEALS WITH THE FORCE MAJEURE CLAUSES. THE CLAUSE 26 (I) TO (V) READS AS UNDER:- FORCE MAJEURE I) NONE OF THE PARTIES SHALL BE LIABLE TO THE OTHER PARTY OR BE DEEMED TO BE IN BREACH OF THIS AGREEMENT BY REASONS OF ANY DELAY IN PERFORMING OR ANY FAILURE TO PERFORM, ANY OF ITS OWN OBLIGATIONS IN RELATION TO THE AGREEMENT, IF THE DE LAY OR FAILURE IS DUE TO ANY EVENT OF FORCE MEJEURE. EVENT OF FOR CE MAJEURE IS ANY EVENT CAUSED BEYOND THE PARTIES REASONABLE C ONTROL. THE FOLLOWING SHALL BE REGARDED AS ISSUES BEYOND THE PA RTIES REASONABLE CONTROL. II) FOR THE PURPOSES OF THIS CLAUSE, AN EVENT OF FO RCE MAJEURE SHALL MEAN EVENTS OF WAR, WAR LIKE CONDITIONS, BLOC KADES, EMBARGOES, INSURRECTION, GOVERNMENTAL DIRECTIONS, R IOTS, STRIKES, ACTS OF TERRORISM, CIVIL COMMOTION, LOCK-O UTS, SABOTAGE, PLAGUES OR OTHER EPIDEMICS, ACTS OF GOD INCLUDING F IRE, FLOODS, VOLCANIC ERUPTIONS, TYPHOONS, HURRICANES, STORMS, T IDAL WAVES, EARTHQUAKE, LANDSLIDES, LIGHTNING, EXPLOSIONS AND O THER NATURAL CALAMITIES, PROLONGED FAILURE OF ENERGY, COURT ORDE RS / INJUNCTIONS, CHARGE OF LAWS, ACTION AND / OR ORDER BY STATUTORY AND / OR GOVERNMENT AUTHORITY, THIRD PARTY ACTIONS AFFECTING THE DEVELOPMENT OF THE PROJECT, ACQUISITION / REQUISITI ON OF THE PROPERTY OR ANY PART THEREOF BY THE GOVERNMENT OR A NY 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 HAPPENI NG OR ARISING OF AN EVENT OF FORCE MAJEURE HEREOF SHALL N OTIFY THE OTHER PARTY OF THE HAPPENING OR ARISING AND THE END ING 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 FORCE 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 DO ING 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 NIN ETY (90) DAYS. IN THE EVENT OF TERMINATION OF THIS AGREEMEN T 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 OBLIGAT ION BECAUSE OF THE UNFORESEEN CIRCUMSTANCES WHICH INCLUDED GOVERNM ENT DIRECTIONS, COURT ORDERS, INJUNCTIONS ETC. SUCH PAR TY WOULD NOT BE LIABLE TO OTHER PARTY. IN VIEW OF FORCE MAJEURE CLA USE WHICH INCLUDED COURT INJUNCTION IT CAN NOT BE SAID THAT T HDC IS NOT 38 WILLING TO PERFORM ITS OBLIGATION. IN FACT DEVELPE RS I.E. THDC/HASH WERE PERUSING THE ISSUE OF PERMISSIONS/SA NCTIONS VIGOROUSLY. THESE ASPECTS BECOME FURTHER CLEAR IF T HE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CWP NO. 20425 OF 2010 VIDE ORDER DATED MARCH 26, 2012 IS PERUSED. P ARAS 3, 4, 22, 25 & 26 OF THE JUDGMENT READ AS UNDER:- 3. THE BROAD CONTOURS OF THE PRESENT PROCEEDING HA VING BEEN OUTLINED, WE MAY NOW PROCEED TO TAKE NOTE OF T HE SPECIFIC CONTENTIONS OF THE CONTESTING PARTIES AS M ADE BEFORE US. HOWEVER, BEFORE WE DO SO, IT MAY BE APPROPRIATE TO MENTION THE SOMEWHAT CONFLICTING STAND OF THE PARTI ES WITH REGARD TO THE PRESENT STAGE OF THE APPLICATIONS FIL ED UNDER THE PROVISIONS OF THE ENVIRONMENT (PROTECTION) ACT AS WELL AS THE WILD LIFE (PROTECTION) ACT. WHILE THE PETITIONE R, WHO IS SUPPORTED BY THE RESPONDENT NO.6-CHANDIGARH ADMINISTRATION, ASSERTS THAT NECESSARY SANCTION/PER MISSION UNDER BOTH THE ACTS HAVE BEEN REFUSED BY ORDERS PAS SED BY THE COMPETENT AUTHORITIES, THE PROMOTERS OF THE PRO JECT CONTEND TO THE CONTRARY. THE FACTS, AS UNFOLDED BEF ORE US, INDICATE THAT AGAINST THE REFUSAL OF SANCTION UNDER THE ENVIRONMENT (PROTECTION) ACT, THE RESPONDENTS HAVE SOUGHT A REVIEW OF THE ORDER ON THE GROUND THAT THE FINDINGS ARRIVED AT, WHICH HAVE FORMED THE BASIS OF THE REFUSAL, ARE EX-PARTE. NO ORDER IN THE REVIEW MATTER HAS BEEN PASSED BY TH E COMPETENT AUTHORITY, PERHAPS, BECAUSE OF THE INTERI M ORDER PASSED IN THE PIL WHICH HAS BEEN CLARIFIED BY THE H ON'BLE SUPREME COURT BY ORDER DATED 31.1.2012 PERMITTING T HE CONCERNED AUTHORITY UNDER THE DIFFERENT STATUTES GO VERNING THE MATTER TO EXERCISE THEIR RESPECTIVE JURISDICTIO NS IN ACCORDANCE WITH LAW. INSOFAR AS THE WILD LIFE (PROT ECTION) ACT IS CONCERNED, IT APPEARS THAT THE REJECTION HAS BEEN MADE BY THE CHIEF WILD LIFE WARDEN WHO, THE RESPOND ENTS CLAIM, IS MERELY A RECOMMENDING AUTHORITY AND IS RE QUIRED TO FORWARD HIS RECOMMENDATION TO THE CENTRAL GOVERNMEN T. AS THE REJECTION UNDER THE WILD LIFE (PROTECTION) ACT HAS BEEN MADE BY AN AUTHORITY NOT COMPETENT TO DO, THE PROMO TERS OF THE PROJECT HAVE SOUGHT A REVIEW OF THE ORDER WHICH IS STILL PENDING FOR THE SAME REASON(S) AS NOTICED ABOVE. 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 RE GARD TO CLEARANCE/SANCTION UNDER THE TWO ENACTMENTS I.E. ENVIRONMENT (PROTECTION) ACT AND WILD LIFE (PROTECT ION) ACT IS PRESENTLY PENDING AND AS THE PROMOTERS OF THE PR OJECT HAVE SUBMITTED THEMSELVES TO THE JURISDICTION OF TH E AUTHORITIES UNDER THE SAID ENACTMENTS WE SHOULD REF RAIN FROM ADDRESSING OURSELVES ON ANY OF THE ISSUES CONNECTED WITH EITHER OF THE TWO STATUTORY ENACTMENTS AS ANY SUCH EXERCISE, EVEN THOUGH MAY BE UNINTENDED, MAY HAVE THE EFFECT OF FETTERING THE JURISDICTION OF STATUTORY 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 CONCERNE D, IT NEED NOT BE EMPHASISED THAT EVERY PROJECT ATTRACTING THE PROVISIONS OF THE PERIPHERY CONTROL ACT AND/OR THE PROVISIONS OF THE 1995 ACT MUST SATISFY THE ECOLOGICAL CONCERN S OF THE AREA IN THE LIGHT OF THE PROVISIONS OF THE TWO STAT UES IN QUESTION. AS ALREADY HELD BY US, A PUBLIC TRUST HAS BEEN BESTOWED ON THE AUTHORITIES BY PROVISIONS OF THE SA ID ACTS WHICH CAST ON SUCH AUTHORITIES A DUTY TO INTERDICT ANY PROJECT OR ACTIVITY WHICH EVEN REMOTELY SEEMS TO CREATE AN IMBALANCE IN THE PRISTINE ECOLOGY AND ENVIRONMENT O F THE 39 AREA ON WHICH THE CITY OF CHANDIGARH IS SITUATED OR FOR THAT MATTER IN THE IMMEDIATE VICINITY THEREOF. AS ALREAD Y OBSERVED, NECESSARY CLEARANCES UNDER THE AFORESAID TWO ENACTMENTS, INSOFAR AS THE RESPONDENTS ARE CONCERNE D, ARE PRESENTLY PENDING BEFORE THE CONCERNED AUTHORITIES AND, THEREFORE, IT WOULD BE HIGHLY INCORRECT ON OUR PART TO ENTER INTO ANY FURTHER DISCUSSION ON THE AFORESAID ASPECT OF THE CASE. 25. WE ALSO HASTEN TO EMPHASISE THAT A MORE RIGOROU S REGULATED DEVELOPMENT IN WHAT ARE NOW THE REMNANTS OF THE PERIPHERY AND THE AREAS ADJOINING TO IT IS THE NEED OF THE HOUR FOR WHICH THE STAKEHOLDERS I.E. THE ADMINISTRA TION OF CHANDIGARH, THE STATES OF PUNJAB AND HARYANA AS ALS O THE AUTHORITIES UNDER THE ENVIRONMENT (PROTECTION) ACT AND THE WILD LIFE PROTECTION ACT HAVE TO DEMONSTRATE THE NE ED TO ENGAGE THEMSELVES INTENSIVELY AND NOT ACQUIRE A PLA CID APPROACH INDICATING AN ELOQUENT ACQUIESCENCE TO THE VIOLATION OF THE 1995 ACT, PERIPHERY CONTROL ACT AN D THE PERIPHERY POLICY. 26. WE THUS CONCLUDE ON THE AFORESAID NOTE BY HOLDI NG AND OBSERVING THAT THE PROVISIONS OF THE PERIPHERY CONT ROL ACT AND THE 1995 ACT ARE COMPLEMENTARY TO EACH OTHER AN D THE PROVISIONS OF THE TWO STATUTES WOULD APPLY TO THE H OUSING PROJECT IN QUESTION. THE RESPONDENTS, THEREFORE, WI LL HAVE TO COMPLY WITH ALL THE REQUIREMENTS SPELT OUT BY BOTH THE AFORESAID STATUTES. AS THE REQUIREMENT OF CLEARANCE S UNDER THE WILD LIFE (PROTECTION) ACT AND ENVIRONMENT (PRO TECTION) ACT IS NOT A CONTENTIOUS ISSUE, AND AS WE HAVE ALRE ADY HELD THAT THE PROCESS OF GRANT OF SUCH CLEARANCES IS PEN DING BEFORE THE APPROPRIATE AUTHORITIES UNDER THE RESPEC TIVE ACTS, THE SAME WILL NOW HAVE TO BE BROUGHT TO ITS LOGICAL CONCLUSION KEEPING IN MIND OUR OBSERVATIONS AND DIR ECTIONS CONTAINED HEREINABOVE. 83 THE COMBINED READING OF THE ABOVE PARAS IN THE O RDER OF HON'BLE HIGH COURT CLEARLY SHOWS THAT DEVELOPER THD C/ HASH I.E. TRANSFEREE HAVE MADE THEIR SINCERE EFFORTS FOR OBTA INING THE NECESSARY PERMISSIONS / SANCTIONS WHICH WERE REQUIR ED UNDER THE JDA. HOWEVER, SOME OF THE SANCTIONS COULD NOT BE T AKEN IN TIME BECAUSE OF THE LITIGATION BY WAY OF PIL BUT SINCE N ONE 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 SP ECIFIC EVIDENCE HAS BEEN SHOWN US TO PROVE THAT THDC / HASH WERE DE CLINING TO PERFORM PARTICULAR OBLIGATION PROVIDED IN JDA. IN VIEW OF THIS DISCUSSION, IT CANNOT BE SAID THAT TRANSFEREE I.E. DEVELOPER THDC/HASH IS NOT WILLING TO PERFORM HIS PART OF CON TRACT. 84 SECONDLY, IT WAS CONTENDED THAT PAYMENTS HAVE N OT BEEN MADE AS PER THE JDA. HOWEVER, AGAIN THIS IS NOT COR RECT. AS PER 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) CALCULA TED @ RS. 40 24,75,000/- (RS. TWENTY FOUR LACS SEVENTY FIVE THOU SAND ONLY) PER PLOT HOLDER OF 500 SQ. YARDS AND (RS. 49, 50,000/- (RS. FORTY NINE LACS FIFTY THOUSAND ONLY) AS PER PL OT HOLDER OF 1000 SQUARE YARDS TO BE MADE TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE ) WITHIN SIX(6) MONTHS FROM THE DATE OF EXECUTION OF THIS AGREEMENT OR WITHIN TWO (2) MONTHS FROM THE DATE O F APPROVAL OF THE PLANS / DESIGN AND DRAWINGS AND GRA NT OF THE FINAL LICENCE TO DEVELOP WHERE UPON THE CONSTRUCTIO N CAN COMMENCE, WHICHEVER IS LATER, AGAINST WHICH THE OWN ER SHALL EXECUTE A REGISTERED SALE DEED FOR LAND OF EQUIVALE NT VALUE BEING 6.36 ACRES OUT OF THE PROPERTY AS DEMARCATED IN GREEN COLOUR (ALSO HATCHED IN GREEN COLOUR) IN THE DEMARC ATION PLAN ANNEXED HERETO AS ANNEXURE V AND BEARING KHASR A NOS. 123/15, 123/6, 123/7 (BALANCE PART), 123/3 (PART), 123//4//1, 123///4//1/2, 123//4/2, 123/5/1, 123//5/2, 123//5/3 , 112/24/24 (PART) 85 THE CAREFUL READING OF THE SAID CLAUSE OF THE 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 LICENSE TO DEVELOP WHERE UPON THE CO NSTRUCTION CAN COMMENCE, WHICHEVER IS LATER. THUS, THIS INSTALLMEN T WAS DEPENDENT ON TWO CONTINGENCIES FIRST THE EXPIRATION OF A PERIOD OF SIX MONTHS FROM THE DATE OF AGREEMENT OR ALTERNATIV ELY ON THE EXPIRATION OF A PERIOD OF TWO MONTHS FROM THE DATE OF APPROVAL OF PLANS / DESIGNS DRAWING ETC. LEADING TO GRANT OF FI NAL LICENSES WHICH CAN LEAD TO COMMENCEMENT OF CONSTRUCTION, WH ICHEVER IS LATER. THE MATTER WAS TAKEN UP BY WAY OF PIL BY CER TAIN CITIZENS AND ADMINISTRATION OF THE UNION TERRITORY BEFORE TH E HON'BLE HIGH COURT WHICH INITIALLY STAYED THE SANCTION OF SUCH P LAN ETC. THIS LED TO SITUATION WHERE CONSTRUCTION COULD NOT BE COMMEN CED AND HENCE PAYMENT WAS NOT REQUIRED TO BE MADE IN VIEW OF THE PENDING LITIGATION. THE CLAUSES OF FORCE MAJEURE CAME INTO OPERATION AND THEREFORE, IT CANNOT BE SAID THAT THE DEVELOPER IS NOT WILLING TO PERFORM ITS PART OF THE CONTRACT. IN ANY CASE THER E 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 FI LED AT PAGES 23 & 24 OF THE PAPER BOOK DEALING WITH THE ADDITION AL EVIDENCE. THROUGH THIS LETTER IT HAS BEEN CLEARLY STATED THAT SINCE PERMISSION IS PENDING FROM THE MINISTRY OF ENVIRONMENT AND FOR EST DEPARTMENT AND THEREFORE CONSTRUCTIONS COULD NOT COMMENCE. TH ESE PERMISSIONS WERE PENDING BECAUSE OF THE PIL FILED B Y SHRI AALOK JAGGA BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COUR T. ALL THESE FACTS CLEARLY SHOWS THAT IN VIEW OF CLAUSE 4.1(IV) READ WITH CLAUSE 26(V) OF THE JDA, HASH BUILDER WERE NOT REQUIRED TO MAKE THE PAYMENT AND IT CANNOT BE SAID THAT THEY WERE NOT WI LLING TO PERFORM 41 THEIR PART OF THE CONTRACT ON THIS ASPECT. THEREFOR E, 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 T HIS 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 O R ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHIC H HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF, 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 COOPER ATIVE SOCIETY OR SHARES IN THE COMPANY WHICH HAS THE EFFECT OF TRAN SFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOVEABLE PROPERTY WOULD BE COVER ED BY THE DEFINITION OF TRANSFER. IN THE CASE BEFORE US, INITIALLY THE MEM BERS OF THE SOCIETY WERE HOLDING SHARES IN THE SOCIETY FOR OWNERSHIP OF PLOT OF 500 SQYD OR 1000 SQYD. THIS MEMBERSHIP WAS SURRENDERED TO THE SOCIE TY VIDE RESOLUTION OF THE SOCIETY PASSED IN THE EXECUTIVE COMMITTEE ON 4. 1.2007 WHICH WAS LATER RATIFIED IN THE GENERAL BODY MEETING OF THE SOCIETY ON 25.1.2007, SO THAT THE SOCIETY COULD ENTER INTO JDA. IN THE JDA THE SOCIE TY HAS AGREED TO TRANSFER THE LAND. THEREFORE, TECHNICALLY IT CAN BE SAID T HAT THE DEVELOPER I.E. THDC/HASH HAS PURCHASED THE MEMBERSHIP OF THE MEMBE RS 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 W HATEVER MONEY IS RECEIVED AGAINST WHICH SALE DEEDS HAVE ALSO BEEN EX ECUTED, CAN BE TAXED AND NOTIONAL INCOME I.E. THE MONEY TO BE RECEIVED L ATER, CAN NOT BE TAXED. IN THIS REGARD RELIANCE WAS PLACED ON CERTAIN SUPRE ME COURT DECISIONS AND OTHER CASES FOR THE PROPOSITION THAT NOTIONAL INCOM E CANNOT BE TAXED. THERE IS NO NEED TO DISCUSS THE CASES RELIED ON BY THE LD . COUNSEL OF THE ASSESSEE BECAUSE IT IS SETTLED POSITION OF LAW THAT NO NOTIO NAL INCOME CAN BE TAXED. THOUGH THERE IS NO QUARREL THAT IT IS A SETTLED PRI NCIPLE OF LAW THAT NOTIONAL INCOME CAN NOT BE TAXED BUT IN CASE OF CAPITAL GAIN , SECTION 45 WHICH IS CHARGING SECTION AND SECTION 48 WHICH IS COMPUTATIO N SECTION, MAKES IT ABSOLUTELY CLEAR THAT RIGOR OF TAX IN CASE OF CAPIT AL GAIN WOULD COME INTO PLAY ON THE TRANSFER OF CAPITAL ASSET AND TOTAL CONSIDER ATION WHICH IS ARISING ON SUCH TRANSFER, HAS TO BE TAXED. SECTION 48 CLEARLY TALKS ABOUT FULL CONSIDERATION RECEIVED OR ACCRUING AS RESULT OF TRA NSFER. THIS ASPECT WE HAVE ALREADY DISCUSSED IN DETAIL AT PARAS 64 TO 68. 90 SECOND ASPECT OF THIS CONTENTION WAS THAT IF CO NSIDERATION WHICH HAS NOT BEEN RECEIVED WAS TO BE TAXED THEN TH E ASSESSEE WOULD 42 BE DEPRIVED FOR CLAIMING EXEMPTION U/S 54 AND 54EC. AS OBSERVED ABOVE AS PER SECTION 45 R.W.S 48 WHOLE OF THE CONSI DERATION, RECEIVED OR ACCRUED HAS TO BE TAXED. EVERY PERSON IS SUPPOS ED TO KNOW THE LAW AND IF THE TRANSACTION IS STRUCTURED IN SUCH A WAY FOR THE TRANSFER OF CAPITAL ASSET THAT SOME OF THE CONSIDERATION WOU LD BE RECEIVED LATER THEN SUCH PERSON IS SUPPOSED TO KNOW THE CONS EQUENCES OF THE DENIAL OF SUCH BENEFITS. HOWEVER, IF THE SECTION IS INTERPRETED IN THE MANNER SUGGESTED BY THE LD. COUNSEL OF THE ASSESSEE THEN NO PERSON WOULD PAY CAPITAL GAIN TAX ON TRANSFER OF A PROPER TY. THIS WILL BE CLEAR FROM A SIMPLE EXAMPLE. LET US ASSUME IF A S ELLS THE PROPERTY TO B FOR A CONSIDERATION OF RS. 100 CRORES AND RE CEIVE ONLY A CONSIDERATION OF 1.00 CRORE AND IT IS MENTIONED IN THE TRANSFER INSTRUMENT THAT BALANCE OF CONSIDERATION WOULD BE P AID AFTER 20 YEARS THEN NO TAX CAN BE LEVIED ON SUCH BALANCE CONSIDERA TION OF RS. 99.00 CRORES WHICH HAS NOT BEEN RECEIVED AS PER THE CONTE NTION OF THE LD. COUNSEL OF THE ASSESSEE . BUT IN THAT CASE NO TAXE S CAN BE LEVIED EVEN AFTER 20 YEARS BECAUSE NO TRANSFER 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. WE DO NOT THINK THAT THIS KIND OF INTERPRETATION CA N BE MADE WHILE INTERPRETING SECTION 45 R.W.S. 48 BY INVOKING THE R ULE THAT THERE CAN NOT BE ANY TAX ON NOTIONAL RECEIPT. GENERALLY SPEAK ING IT IS ONLY THE REAL INCOME WHICH CAN BE TAXED BUT THIS HAS TO BE UNDERS TOOD SUBJECT TO LIMITATIONS. COMMENTING ON THESE LIMITATIONS, THE LD. AUTHOR SHRI S. RAJARATNAM IN THE COMMENTARY OF LAW OF INCOME TAX B Y 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 INCOME THEORY. AFTER ACCRUAL, NON-CHARGING OF TAX ON THE S AME BECAUSE OF CERTAIN CONDUCT BASED ON THE IPSE DIXIT OF A PARTICULAR ASS ESSEE CANNOT BE ACCEPTED. IN DETERMINING THE QUESTION WHETHER IT IS HYPOTHETICAL INCOME OR WHETHER REAL INCOME HAS MATERIALIZED OR NOT, VAR IOUS 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 U PON THE SELF- SERVING STATEMENT OF THE ASSESSEE. WHAT HAS REALLY ACCRUED TO THE ASSESSEE HAS TO BE FOUND OUT AND WHAT HAS ACCRUED M UST BE CONSIDERED FROM THE POINT OF VIEW OR REAL INCOME TAKING THE PR OBABILITY OR IMPROBABILITY OF REALIZATION IN A REALISTIC 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 INCOME. 91 THE ABOVE POSITION CAN BE UNDERSTOOD BY EXAMININ G SOME OF THE PROVISIONS OF THE ACT WHICH WOULD SHOW THAT CON CEPT OF NOTIONAL INCOME CAN NOT BE EXTENDED IF SPECIFIC PRO VISION IS AVAILABLE IN THE ACT. FOR EXAMPLE IN CASE OF INCOM E FROM HOUSE PROPERTY, THE INCOME HAS TO BE DETERMINED AS PER SE CTION 23. SECTION 22 OF THE INCOME TAX ACT PROVIDES THAT IT I S THE ANNUAL VALUE OF THE PROPERTY WHICH CAN BE TAXED UNDER THE HEAD INCOME 43 FROM HOUSE PROPERTY. SECTOR 23 PRESCRIBES THE METHOD FOR DETERMINING THE ANNUAL VALUE. SECTION 23(1)(A) REA DS 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 AMOUNT SO RECEIVED OR RECEIVABLE; O R. 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 CHATU RVEDI & PITHISARIAS IN COMMENTARY OF INCOME TAX LAW (FIFTH EDITION) VOL UME 1 IN THIS RESPECT AT PAGES 1275 & 1276 OBSERVED AS UNDER: ANNUAL VALUE- DETERMINATION OF SECTION 23(1)(A) PROVIDES THAT FOR THE PURPOSES OF SECTION 22, THE ANNUAL VALUE OF ANY PRO PERTY SHALL BE DEEMED TO BE THE SUM FOR WHICH THE PROPERTY MIGHT R EASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR. THE WORD USED IS MIGHT AND NOT CAN OR IS. IT IS THUS A NOTIONAL INCOME TO BE GATHERE D FROM WHAT A HYPOTHETICAL TENANT WOULD PAY WHICH IS TO BE OBJECT IVELY ASCERTAINED ON A REASONABLE BASIS IRRESPECTIVE OF THE FACT WHETHER T HE PROPERTY IS LET OUT OR NOT [SULTAN BROS. PR. LTD. V. CIT, (1964) 51 ITR 353 (SC); JAMNADAS PRABHUDAS V. CIT, (1951)20 ITR 160(BOM); D.M. VAKIL V. CIT, (1946) 14 ITR 298, 302(BOM); CIT V. BIMAN BEHARI SHAW, SHEBAI T, (1968) 68 ITR 815 (CAL); SRI SRI RADHA GOVINDA 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, (197 2) 83 ITR 470 (CAL), AFFIRMED, (1980) 124 ITR 31 (SC); CIT V. ZOROSTRIAN BUILDING SOCIETY LTD., (1976) 102 ITR 499 (BOM); C.J. GEORGE V. CIT, (1973) 92 ITR 137 (KER); D.C. ANAND & SONS V. CIT, (1981) 131 ITR 77 (DEL). ALSO SEE, CIT V. PARBUTTY CHURN LAW, (1965) 57 ITR 609, 619 (CAL) ; IN THE MATTER OF KRISHNA LAL SEAL, AIR 1932 CAL 836; LALLA MAL SAMGH AM LAL V. CIT, (1936) 4 ITR 250 (LAH); NEW DELHI MUNICIPAL COMMITT EE V. NAND KUMAR 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 (EIGHTH EDITION) BY KANGA AND PALKHIVALAS OBSERVATION AT P AGES 22 & 23. AGAIN EVEN 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 WHETHE R 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 B ECOMES CLEAR THAT THOUGH THERE IS NO REAL INCOME FROM LETTING OU T OF THE PROPERTY, STILL THE NOTIONAL ANNUAL VALUE IS SUBJEC TED TO TAX UNDER 44 THE HEAD INCOME FROM HOUSE PROPERTY. HOWEVER, WE MAY MENTION THAT U/S 23(1)(C) OF THE ACT IF THE PROPERTY IS LET OUT AND THEN REMAINED VACANT FOR SOME PART OF THE YEAR OR FOR WH OLE OF THE YEAR THEN VACANCY ALLOWANCE CAN BE CLAIMED. HERE, IT IS IMPORTANT TO NOTE THAT IF PROPERTY IS NOT LET OUT, THEN NOTIONA L INCOME BECOMES CHARGEABLE TO THE TAX BECAUSE OF PROVISIONS OF SECT IONS 22 AND 23 (1)(A) OF THE ACT. SIMILARLY, UNDER THE MAT PROVI SIONS, IT IS BASICALLY THE NOTIONAL INCOME WHICH IS BEING SUBJEC TED TO CHARGE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION . A BUSINESSMAN MAY HAVE INCOME OF RS. 100/- BUT BECAUS E 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 PROVIS IONS, 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 C ONTRACTOR AND DOES NOT MAINTAIN BOOKS OF ACCOUNT AND HIS TURNOVER IS LESS THAN RS. 60 LAKHS THEN THE PROFIT WOULD BE PRESUMED TO B E 8% OF TURNOVER EVEN IF HE HAS SUFFERED A LOSS. ANOTHER EXAMPLE OF SECTION 2(22)(E) CAN BE TAKEN. UNDER THIS PROVISION A LOAN OR ADVANCE GIVEN BY CERTAIN COMPANIES TO A SUBSTANTIAL SHARE HOLDER IS TO BE TREATED AS DEEMED DIVIDEND. SUCH LOAN UND ER THE NORMAL ACCOUNTING PRINCIPLE OR ON COMMERCIAL PRINCIPLES CA NNOT BE REGARDED AS INCOME BUT BECAUSE OF THIS SPECIFIC PRO VISION REGARDING DEEMED DIVIDEND SUCH AMOUNT HAS TO BE TRE ATED 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 THER E FOR CHARGING OF A PARTICULAR ITEM OF INCOME, THEN THE SAME HAS TO B E CHARGED ACCORDINGLY. IT MAY BE SOMETIMES HARD TO THE ASSES SEES BUT AGAIN IT HAS BEEN HELD IN NUMEROUS DECISIONS THAT F ISCAL STATUES HAVE TO BE INTERPRETED ON THE BASIS OF LANGUAGE USE D AND THERE IS NO SCOPE FOR EQUITY OR INTENT. LD. AUTHOR SHRI S. RAJARATNAM 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, INJUSTICE OR ANOMALIES DO NOT PLAY ANY USEFUL ROLE IN CONSTRUING TAXING STATUTES UNLESS THERE BE SOME REAL AMBIGUITY . THUS, ANY BENEVOLENT CONSTRUCTION IN FAVOUR OF THE ASSESSEE H AS BEEN HELD TO BE UNCALLED FOR. 45 96 THEREFORE, IT CAN BE SAID THAT GENERALLY SPEAKIN G NOTIONAL INCOME COULD NOT BE SUBJECTED TO TAX BUT WHENEVER T HERE IS A SPECIFIC PROVISION, THE SAME HAS TO BE TAXED. NOW, IN CASE OF CAPITAL GAIN, SECTION 45 READ WITH SECTION 48 VERY CLEARLY PROVIDES THAT IT IS THE PROFIT ARISING FROM THE TRANSFER OF A CAPITAL ASSET WHICH WOULD BE SUBJECTED TO CHARGE OF CAPITAL GAIN TAX AND SECTION 48 CLEARLY PROVIDES FOR TAKING THE TOTAL CONSIDERAT ION INTO ACCOUNT WHILE COMPUTING THE CAPITAL GAINS. THIS ASPECT WE HAVE ALREADY DISCUSSED IN DETAIL AT PARA NO. 64 TO 68 FROM WHICH IT BECOMES CLEAR THAT IT IS THE WHOLE CONSIDERATION WHETHER RE CEIVED OR ACCRUED, WHICH HAS TO BE TAXED UNDER THE CAPITAL GA IN ONCE TRANSFER OF THE CAPITAL ASSET TAKES PLACE. ACCORDI NGLY, 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 CL AUSE 4 OF THE JDA 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 OTHER BRAND NAME AT ITS DISCRETION TO DEVELOP THE PROPERT Y INTO THE PREMISES AS PER APPLICABLE BUILDING BYE-LAWS OF THE COMPETENT A UTHORITY AND THE OWNER SHALL HAVE NO OBJECTION TO THE SAME IN WHATSO EVER MANNER. IN CONSIDERATION OF THE OWNER GRANTING AND ASSIGNING, ITS DEVELOPMENT RIGHTS IN THE PROPERTY, IRREVOCABLY AND IN PERPETUI TY, TO THDC TO DEVELOP THE PROPERTY AND FOR TRANSFER OF THE PROPERTY UPON THE SURRENDER OF ALLOTMENT RIGHTS OF 500 SQ. YARDS AND/OR 1000 SQ. YARDS (AS THE CASE MAY BE) BY ITS MEMBERS TO THE OWNER, VIDE RESOLUTION DA TED 04.01.2007 AND 25.02.2007 (COPY ATTACHED AS PER ANNEXURE I & II), HASH IS COMMITTED TO PAY TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) A TOTAL AMOUNT OF RS. 106,42,50,000/- (RUPEES ONE HUNDRED SIX CRORES FORTY TWO LACS FIFTY THOUSANDS O NLY) CALCULATED @ RS. 82,50,000/- (RUPEES EIGHTY TWO LACS FIFTY THOUS ANDS ONLY) PAYABLE TO 65 MEMBERS HAVING PLOT OF 500 SQ. YARDS EACH, RS . 1,65,00,000/- (RUPEES ONE CRORE SIXTY FIVE LACS ONLY) PAYABLE TO 30 MEMBERS HAVING PLOT OF 1000 SQ. YARDS EACH AND RS. 3,30,00,000/- ( RUPEES THREE CRORES THIRTY LACS ONLY) PAYABLE TO THE OWNER FOR THE 4 PL OTS OF 500 SQ. YARDS EACH, WHICH SHALL TANTAMOUNT TO THE FULL AND FINAL PAYMENT TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS TH E CASE MAY BE) IN A MANNER SET OUT HEREIN BELOW (PAYMENT). FURTHER, T HE TRANSFER, SALE AND CONVEYANCE OF 21.2 ACRES OF LAND OF THE PROPERTY SH ALL BE MADE BY THE OWNER IN FAVOUR OF THDC PRO RATA TO THE PAYMENT REC EIVED BY THE OWNER AND/OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) FROM HASH BY EXECUTING SALE DEEDS AND REGISTERING THE SA ME. 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 O F THE OWNER (AS THE CASE MAY BE) FOR ASSIGNMENT OF THE DEVELOPMENT RIGHTS AND FOR TRANSFER AND SALE OF 21.2 ACRES OF LAND OF THE PROP ERTY SHALL BE RS. 106,42,50,000/- (RUPEES ONE HUNDRED SIX CRORES FORT Y TWO LACS FIFTY THOUSAND ONLY) AND ONE HUNDRED AND TWENTY NINE (129 ) FLATS CONSISTING OF SUPER AREA OF 2250 SQ. FEET (FLATS); ONE FLAT EACH FOR SIXTY FIVE MEMBERS HAVING A PLOT OF 500 SQ. YARDS, TWO FLATS F OR THE (THIRTY) 30 MEMBERS HAVING A PLOT OF 1000 SQ. YARDS AND 4 FLATS TO THE OWNER FOR THE 4 PLOTS OF 500 SQ. YARDS EACH AS PER LIST ANNEXED W ITH THIS AGREEMENT AS SCHEDULE B (SALE TRANSACTION) 46 IT IS EXPRESSLY AGREED BETWEEN THE DEVELOPERS THAT HASH SHALL BE RESPONSIBLE FOR MAKING ALL PAYMENTS TO THE OWNER AN D/OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) AS PER TH E NEGOTIATED AND AGREED TERMS BETWEEN THE OWNER AND HASH, HASH EXPRE SSLY UNDERTAKES TO MAKE TIMELY PAYMENTS OF THE PAYMENT TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE ) AS UNDER: 4.2 AS RESOLVED BY THE OWNER, THDC EITHER BY ITSELF OR ALONG WITH HASH SHALL ALLOT THE FLATS IN THE NAME OF MEMBERS O F THE OWNER AS PER LIST ANNEXED WITH THIS AGREEMENT AS SCHEDULE B ATTA CHED HEREIN (HEREINAFTER REFERRED TO AS THE ALLOTTEES). THE S PECIFICATIONS OF THE FLATS WOULD BE PROVIDED BY THE DEVELOPERS TO THE OWNER AN D MORE PARTICULARLY DESCRIBED IN THE SCHEDULE C ATTACHED HEREIN (HEREIN AFTER REFERRED TO AS THE SPECIFICATIONS). THE ALLOTMENT LETTERS SHALL BE ISSUED TO THE ALLOTTEES (MEMBERS OF THE OWNER) WITHIN FORTY-FIVE (45) DAYS FROM THE DATE OF SANCTION OF THE BUILDING PLANS / DESIGN AND DRAWING AND ON OBTAINING FINAL LICENSE/PERMISSION FOR THE DEVELOPM ENT OF THE PROJECT FROM THE COMPETENT AUTHORITY. THEREAFTER, THE POSSE SSION OF THE FLATS SHALL BE HANDED OVER TO THE ALLOTTEES WITHIN THIRT Y(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 O WNER (AS THE CASE MAY BE) AND THE FLATS TO BE ALLOTTED TO THE AL LOTTEES AS SET OUT IN THIS CLAUSE 4.2 SHALL HEREINAFTER BE COLLECT IVELY REFERRED TO AS THE ENTIRE CONSIDERATION 98 FROM THIS CLAUSE IT BECOMES ABSOLUTELY CLEAR THA T EACH MEMBER HAVING 500 SQYD OF PLOT WAS ENTITLED TO RECE IVE ONE FURNISHED FLAT MEASURING 2250SQFT AND MEMBERS HAVIN G 1000SQYD FLAT WERE ENTITLED TO RECEIVE TWO FURNISHED FLATS. THUS UPON EXECUTION OF THE JDA VESTED RIGHT CAME TO SUCH MEMB ERS TO RECEIVE SUCH FLATS. ONCE THIS VESTED RIGHT ARISES OUT OF THE ABOVE CONTRACT IT CAN EASILY BE SAID THAT THIS RIGHT HAS ALSO ACCRUED TO THE ASSESSEE. CLAUSE 4.2 MAKES IT ABSOLUTELY CLEAR THAT DEVELOPER I.E. THDC/HASH WAS TO ALLOT THE LETTERS OF ALLOTMEN T WITHIN 45 DAYS FROM FINAL SANCTION FROM THE COMPETENT AUTHORITY AN D SUCH FLATS WERE PART OF ENTIRE CONSIDERATION. MERELY BECAUSE SUCH ALLOTMENT LETTER HAS NOT BEEN GIVEN BECAUSE OF SANCTIONS / PE RMISSIONS COULD NOT BE OBTAINED BECAUSE OF PUBLIC INTEREST LITIGATI ON BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT, IT CANNOT BE S AID THAT SUCH RIGHT HAS NOT ACCRUED. THOUGH IT MAY BE HARD ON TH E ASSESSEE BUT IT IS WELL SETTLED THAT TAXATION AND EQUITY ARE STR ANGERS. FURTHER COMMENTING ON THIS ASPECT SHRI RAJARATHNAM IN HIS C OMMENTARY HAS OBSERVED AT PAGE 5164 AS UNDER: 47 IT IS HARD ON THE OWNERS WHEN REQUIRED TO PAY TAX, WHEN HANDING OVER THE POSSESSION FOR PURPOSES OF CONSTRUCTION WI THOUT BEING ABLE TO ENJOY THE CONSTRUCTION, WHICH IS YET TO COM MERCE OR IN THE PROCESS OF CONSTRUCTION BEING PUT UP BY THE DEVELOP ER, BUT THE SOLUTION LIES IN STATUTORY CLARIFICATION IN SUCH CA SES. IN VIEW OF THE INCREASING SCALE OF SUCH DEVELOPMENT AGREEMENTS TO SOLVE THE HOUSING PROBLEM IN THE CITIES, A STATUTORY CLARIFIC ATION OR CIRCULAR IS OVERDUE. 99 THESE COMMENTS AND THE OTHER DETAILED DISCUSSION ON THIS ASPECT CLEARLY SHOW THAT CAPITAL GAIN TAX HAS TO BE PAID ON THE TOTAL CONSIDERATION ARISING ON TRANSFER WHICH WOULD INCLUDE THE CONSIDERATION WHICH HAS BEEN RECEIVED AS WELL AS TH E CONSIDERATION WHICH HAS AROSEN AND BECOME DUE AND M AY BE RECEIVED LATER ON. IN VIEW OF THIS DISCUSSION THIS CONTENTION IS REJECTED. 100 NINTH CONTENTION IS THAT THE ASSESSEE HAS ALREA DY TERMINATED THE AGREEMENT AND HAS REVOKED THE POWER OF ATTORNEY. WE FIND NO FORCE IN THIS SUBMISSIONS. 101 IN THIS REGARD LD. COUNSEL OF THE ASSESSEE HAS RELIED ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN CASE OF CHEMOSYN LTD. V ACIT (SUPRA). IN THAT CASE THE ASSESSEE-COMPANY WA S OWNER OF TWO PLOTS BEARING 256 & 257 IN GUNDABALI ANDHERI MUMBAI . THE ASSESSEE- COMPANY ENTERED INTO A DEVELOPMENT AGREEMENT WITH D IPITI BUILDERS FOR THE DEVELOPMENT RIGHTS FOR A CONSIDERATION OF RS. 1 6.11 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 COMPRISING OF PLOT NO. 256 & 257 WA S SOLD TO A THIRD PARTY M/S FINANCIAL TECHNOLOGY LTD. BY A TRIPARTITE CONVE YANCE DEED EXECUTED ON 5.7.2007 FOR RS. 29.11 CRORES AND THEREFORE, AD DITIONAL CONSIDERATION OF RS. 13 CRORES HAS BEEN OFFERED TO TAX IN ASSESSM ENT YEAR 2008-09. THIS EXPLANATION WAS REJECTED BY THE ASSESSING OFFI CER BECAUSE ACCORDING TO HIM IT WAS A CASE OF TRANSFER U/S 2(47 )(V) AND TOTAL CONSIDERATION HAS TO BE CHARGED IN THE YEAR OF TRA NSFER. THE TRIBUNAL AFTER CONSIDERING THE PROVISIONS OF SECTION 45 & 48 POSED A QUESTION TO ITSELF THAT WHAT SHOULD BE THE CONSIDERATION IN THE CASE BEFORE THE BENCH. THE CASE LAW RELIED ON BY THE DEPARTMENT WAS REJECT ED BECAUSE SAME WAS RELEVANT TO ACCRUAL OF INTEREST. THE BENCH FOL LOWED THE DECISION OF KALPTARU CONSTRUCTION OVERSEES PVT LTD. 13 SOT 194. IN THAT CASE THE ASSESSEE HAD AGREED TO SELL TO ITS SUBSIDIARY EQUIT Y SHARES FOR A CONSIDERATION OF RS. 1.25 CRORES WHICH WAS FINALLY SETTLED AT RS. 1.00 CRORE AND THE TRIBUNAL HELD THAT THE CONSIDERATION OF RS. 1.00 CRORE HAS TO BE ACCEPTED. 48 102. FROM THE ABOVE DECISION IT IS NOT CLEAR WHETHE R IN CASE OF KALAPTARU CONSTRUCTION OVERSEES PVT LTD. (SUPRA) WH ICH HAS BEEN FOLLOWED IN ABOVE CASE, WAS CONCERNING CAPITAL GAIN OR NOT? SECONDLY IT IS NOT CLEAR THAT WHETHER THE AMENDED CONSIDERATION I.E. SETTLEMENT FOR RS. 1.00 CRORE WAS MADE IN THE SAME YEAR OR NOT? A S OBSERVED EARLIER WHILE DISCUSSING THE ISSUE OF NOTIONAL INCOME THAT PROVISIONS OF SECTION 45 R.W.S. 48, ARE ABSOLUTELY CLEAR AND THERE IS NO AMBIGUITY THAT ONCE A CAPITAL ASSET IS TRANSFERRED THEN WHOLE OF THE CONS IDERATION RECEIVED OR ACCRUING HAS TO BE CONSIDERED FOR THE PURPOSE OF TA XATION IN THE YEAR IN WHICH THE TRANSFER HAS TAKEN PLACE. WE FURTHER FIN D THAT IN THE JDA THERE IS A CLAUSE FOR TERMINATION OF THE AGREEMENT. RELE VANT 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 THERE IS ANY MATERIAL BREACH OF THE REPRESENTATIONS, WARRANTIES, UNDERTAKINGS, DECLARATIONS, COVENANTS AND/OR OBLIGATIONS GIVEN BY THE OWNER UNDER THIS AGREEMENT AFTER GIVING THIRTY (30) DAYS WRITTEN NOT ICE FOR RECTIFICATION OF SUCH BREACH. IN THE EVENT THE AGREEMENT IS TERMINA TION BY THDC, ALL THE LANDS REGISTERED IN THE NAME OF THDC AS PER THE TER MS OF THIS AGREEMENT UPTO THE DATE OF THE TERMINATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSFERRED TO THDC AS PER THE TERMS OF THIS AGREEMENT SHALL NOT BE TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL REFUND TO THDC THE ADJ USTABLE 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 THD C. (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 PROPERTY IN RELATION TO THE PROJECT AND TO UNDERTAKE THE PROJEC T ARE NOT GRANTED WITHIN NINE (9) MONTHS OF THE SUBMISSION OF THE FIN AL PLANS/DESIGNS AND DRAWINGS TO THE COMPETENT AUTHORITY FOR APPROVAL TH EN THDC MAY AS ITS SOLE DISCRETION EITHER DECIDE THAT IT DOES NOT DESI RE TO UNDERTAKE AND COMPLETE THE PROJECT AND HENCE TERMINATE THIS AGREE MENT AFTER GIVING THIRTY (30) DAYS WRITTEN NOTICE IN THIS REGARD OR D ECIDE TO WAIT FOR ANY FURTHER TIMES DEEMED FIT BY THDC FOR THE GRANT OF T HE AFORESAID APPROVALS AND LICENSES. IN THE EVENT THE AGREEMENT IS TERMINATED BY THDC, ALL THE LANDS REGISTERED IN THE NAME OF THDC AS PER THE TERMS OF THIS AGREEMENT UPTO THE DATE OF THE TERMINATION 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. UPON THE TERMINATION, THE OWNER SHALL REFUND TO THD C 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 THD C. (III) IN THE EVENT THDC IS UNABLE TO DEVELOP THE PR OPERTY DUE TO REFUSAL/NON GRANT OF APPROVALS, CONSENTS, PERMISSIO N, LICENSES OR 49 REVOCATION OF THE SAME BY THE APPROPRIATE STATUTORY AUTHORITY, THEN THDC MAY AT ITS SALE DISCRETION TERMINATE THIS AGREEMENT . IN THE EVENT THE AGREEMENT IS TERMINATED BY THDC, ALL THE LANDS REGI STERED 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 AGREEM ENT SHALL NOT BE TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL REFUND TO THDC THE ADJUSTABLE ADVANCE/E ARNEST MONEY MENTIONED IN CLAUSE 4.1(I) ABOVE WITHIN ONE MONTH O F 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 T HE PAYMENT IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT AND THE ALLOTMENT OF FLATS WITHIN THE TIME PERIOD AS MENTIONED IN THIS AGREEME NT AFTER GIVING THIRTY (30) DAYS WRITTEN NOTICE FOR RECTIFICATION OF SUCH BREACH OR ANY FURTHER TIME AS MAY BE DESIRED BY THE OWNER. IN 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 TH E TERMINATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSF ERRED TO THDC AS PER THE TERMS OF THIS AGREEMENT SHALL NOT BE TRANSF ERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SH ALL FORFEIT THE ADJUSTABLE ADVANCE/EARNEST MONEY MENTIONED IN CLAUS E 4(I). 103 THE READING OF THE ABOVE CLAUSE WOULD SHOW THAT POWER OF TERMINATION HAS BEEN GIVEN IN MANY CIRCUMSTANCES TO THDC VIDE CLAUSE 14(I), (II) AND (III). THE POWER FOR TERMINATION B Y THE OWNER HAS BEEN MENTIONED IN CLAUSE 14(IV) ONLY. READING OF THIS C LAUSE 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 R EGARDING DEFAULT FOR MAKING PAYMENT HAS ALREADY BEEN DISCUSSED BY US IN PARAS 84 TO 86 ABOVE WHILE DISCUSSING THE ISSUE OF WILLINGNESS ON THE PART OF THE TRANSFEREE TO PERFORM ITS PART OF THE CONTRACT WE HAVE ALREADY HELD THAT THERE WAS NO DEFAULT ON THE PART OF DEVELOPER I.E. THDC/HASH IN MAKING THE PAYMENT, THEREFORE, THE ASSESSEE HAD NO RIGHT TO TERMINATE THE CONTRACT. IN ANY CASE WE FURTHER FIND THAT CLAUSE 20 OF THE JDA REFERS TO ARBITRATION AND IT IS CLEARLY PROVIDED THAT ALL THE DISPUTES UNDER IT SHOULD BE REFERRED TO THE ARBITRATION. THEREFORE, IF THE SOCIETY HAD SOME GRIEVANCE IT WAS DUTY BOUND TO GIVE A NOTICE FOR AP POINTMENT OF AN ARBITRATOR TO THE DEVELOPER. IN THE ABSENCE OF SUC H NOTICE THE TERMINATION WILL NOT STAND SCRUTINY OF LAW. HERE IT IS ALSO PERTINENT TO NOTE THAT THOUGH IT WAS STATED THAT IRREVOCABLE POWER OF ATTORNEY HAS BEEN REVOKED AND SOME DOCUMENTS HAVE BEEN FILED BEFORE U S FOR REVOCATION BUT CLAUSE 6.7 OF THE JDA WHICH WE HAVE REPRODUCED EARLIER CLEARLY PROVIDES THAT SUCH POWER OF ATTORNEY CANNOT BE REVO KED. 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 I N THE PROPERTY 50 IN FAVOUR OF THDC INTERALIA INCLUDING THE RIGHT TO RAISE FINANCE BY MORTGAGING THE PROPERTY AND REGISTER THE CHARGE WIT H THE COMPETENT AUTHORITY AND EXECUTE REGISTERED SALE DEE DS) 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 D ISCRETION 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 SPE CIFIC PRIOR WRITTEN CONSENT OF THDC/HASH. NO DOCUMENT SHOWING THE CONSENT OF THDC FOR REVOCATION OF THIS IRREVOCABLE POWER OF ATTORNEY HAS BEEN PRODUCED BEFORE US. WE FAIL TO UNDERSTAND THA T IN THE ABSENCE OF SUCH DOCUMENT HOW THE ASSESSEE CAN CLAIM THAT THIS POWER OF ATTORNEY HAS BEEN REVOKED. AS DISCUSSED E ARLIER WHILE CONSIDERING THE LEGAL POSITION, WE WOULD AGAIN RECA LL THE WORDS OF HON'BLE AUTHORITY FOR ADVANCE RULING IN CASE OF JAS BIR SINGH SARKARIA (SUPRA) WHEREIN AT PARA 33 OF THE DECISION WHILE DISCUSSING THE ISSUE IN RESPECT OF POWER OF ATTORN EY, IT WAS HIGHLIGHTED THAT EXECUTION OF IRREVOCABLE POWER OF ATTORNEY IS OF SIGNIFICANT NATURE AND THE WORDS IRREVOCABLE ARE VERY IMPORTANT. THE EXPRESSION IRREVOCABLE ITSELF SHOWS THAT NORM ALLY SUCH ATTORNEY CANNOT BE REVOKED. THEREFORE, NO COGNIZA NCE CAN BE TAKEN IN RESPECT OF REVOCATION OF THE IRREVOCABLE POWER OF ATTORNEY. IN THE ABSENCE OF SPECIFIC CONSENT AS PR OVIDED 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/- (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 PROPER TY WHICH HAS ALSO BEEN CONVEYED TO DEVELOPER THROUGH TWO SALE DEEDS. IF THAT IS SO THEN WHAT WOULD HAPPEN TO THE BALANCE CONSIDERATION BECA USE IN SUCH SITUATION THE ASSESSEE HAS RECEIVED CONSIDERATION OF ONLY ABOUT RS. 5 CRORESS PER ACRE BECAUSE THE ASSESSEE HAS REGISTERE D LAND MEASURING 51 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 R ECEIPT OF CONSIDERATION IN KIND AND THE ASSESSEE HAS NOT SHOW N ANY EVIDENCE THAT IT HAS MADE THE CLAIM FOR RECEIPT OF BALANCE CONSID ERATION. THIS LEADS TO THE CONCLUSION THAT THERE WAS NO CANCELLATION OF TH E JDA. 106 SOME ARGUMENTS WERE MADE BY BOTH THE PARTIES TH AT IF THE CONTRACT IS FINALLY STAND ABANDONED THEN WHAT WOULD HAPPEN. THE CONTENTION ON BEHALF OF THE ASSESSEE IS THAT IF THE CONTRACT IS ABANDONED THEN THE ASSESSEE WOULD HAVE PAID TAX IN THE YEAR O F TRANSFER AND WOULD BE LEFT WITH NO RECOURSE FOR RELIEF. THE CONTENTIO N 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 POSSIBL E IN CASE OF THE ASSESSEE. HOWEVER, IF REVENUE FAILS TO TAX THE TOT AL CONSIDERATION IN THE YEAR OF TRANSFER THEN SAME CANNOT BE SUBJECTED TO T AX IN ANY OTHER YEAR. WE FIND THAT THIS QUESTION WAS SERIOUSLY CONSIDERED BY THE LD. AUTHORITY FOR ADVANCE RULING IN CASE OF JASBIR SINGH KATARIA (SUPRA) WHICH HAS BEEN RELIED ON BY BOTH THE PARTIES FOR VARIOUS ASPE CTS. 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 O NE IN WHICH THE DEEMED TRANSFER TOOK PLACE, THE PROPOSED VENTURE CO LLAPSES FOR REASONS SUCH AS REFUSAL OF PERMISSIONS, THE DEVELOPER FACIN G FINANCIAL CRUNCH ETC. BY THAT TIME, THE OWNER WOULD HAVE RECEIVED ONLY A PART OF THE AGREED CONSIDERATION, BUT HE IS OBLIGED TO FILE THE RETURN SHOWING THE ENTIRE CAPITAL GAIN BASED ON THE FULL SALE PRICE WHETHER O R NOT RECEIVED DURING THE YEAR OF DEEMED TRANSFER. IN SUCH AN EVENTUALIT Y, HARDSHIP MAY BE CAUSED TO THE OWNER WHO WOULD HAVE PAID FULL TAX. NO DOUBT, SUCH A SITUATION COULD BE AVOIDED IF THE CONTENTION OF THE APPLICANT IS ACCEPTED. ON DEEP CONSIDERATION, HOWEVER, WE FIND THAT THE CO NSTRUCTION OF THE RELEVANT PROVISION SHOULD NOT BE CONTROLLED BY GIVI NG UNDUE IMPORTANCE TO SUCH HYPOTHETICAL SITUATIONS. NORMALLY, THE OWN ER EXECUTES A POWER OF ATTORNEY OR DOES SIMILAR ACT TO LEFT THE TRANSFE REE TAKE POSSESSION ONLY AFTER THE BASIC PERMISSIONS ARE GRANTED AND HE IS S ATISFIED ABOUT THE ABILITY OF TRANSFEREE/DEVELOPER TO FULFIL THE CONTR ACT. IN SPITE OF THAT, IF SUCH RATE SITUATIONS TAKE PLACE, THE OWNER/TRANSFER OR WILL NOT BE WITHOUT REMEDY. HE CAN FILE A REVISED RETURN AND MAKE OUT A CASE FOR EXCLUSION OR REDUCTION OF INCOME. HOWEVER, IF THE TIME-LIMIT FOR FILING A REVISED RETURN EXPIRES, THE DIFFICULTY WILL ARISE. IT IS F OR 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 (SUPRA) 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 WI THOUT BEING ABLE TO ENJOY THE CONSTRUCTION, WHICH IS YET TO COM MERCE OR IN THE PROCESS OF CONSTRUCTION BEING PUT UP BY THE DEVELOP ER, BUT THE SOLUTION LIES IN STATUTORY CLARIFICATION IN SUCH CA SES. IN VIEW OF THE INCREASING SCALE OF SUCH DEVELOPMENT AGREEMENTS TO SOLVE THE 52 HOUSING PROBLEM IN THE CITIES, A STATUTORY CLARIFIC ATION 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'BL E AUTHORITY IN CASE OF JASBIR SINGH SARKARIA (SUPRA) AS WELL AS LD. AUTHOR SHRI RAJARATNAM IT IS FOR THE LEGISLATURE TO TAKE CORRECTIVE STEPS. HOWE VER, IT MAY NOT BE OUT OF PLACE THAT IF CONSIDERING THE DIFFICULTY THE INT ERPRETATION GIVEN BY THE LD. COUNSEL OF THE ASSESSEE IS ACCEPTED THEN THE RE VENUE MAY NOT BE ABLE TO TAX SUCH ASSESSEES WHEN THESE DIFFICULTIES ARE REMOVED. FOR EXAMPLE IN THE PRESENT CASE IF TOMORROW WHEN ALL PE RMISSIONS ARE OBTAINED AND CONSTRUCTION IS COMPLETED AND IF NO TA XES 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 B E EASILY CONTENDED ON BEHALF OF THE ASSESSEE THAT THE TRANSFER HAS ALREAD Y TAKEN PLACE ON THE DATE WHEN IRREVOCABLE POWER OF ATTORNEY WAS EXECUTE D. 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 P ARTICULAR PROVISION. IT HAS ALSO BEEN OBSERVED THAT IN SOME GENUINE CASES T HE DIFFICULTIES MAY ARISE BUT IT WAS FOR THE PARLIAMENT OR THE GOVERNME NT TO PROVIDE REMEDY IN SUCH CASES AND JUDICIAL FORUMS CANNOT DO ANYTHIN G. THEREFORE, IN VIEW OF THE PROVISIONS OF SECTION 45 R.W.S. 48 WE A RE OF THE OPINION THAT SUBSEQUENT EVENTS, IF AT ALL ANY WILL NOT MAKE ANY DIFFERENCE BECAUSE TOTAL CONSIDERATION RECEIVED OR ACCRUED HAS TO BE A SSESSED IN THE YEAR OF TRANSFER. WE MAY ALSO NOTE THAT IT WAS STATED THAT IRREVOCABLE POWER OF ATTORNEY HAS BEEN REVOKED BUT THE WORD IRREVOCABLE ITSELF SHOWS THAT IN THE EYES OF LAW SPECIAL POWER OF ATTORNEY COULD NOT HAVE BEEN REVOKED. IN VIEW OF THIS ANALYSIS, WE ARE OF THE OPINION THA T EITHER THE JDA HAS NOT BEEN CANCELLED OR IN ANY CASE THE SAME CANNOT BE CO NSIDERED 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 POINT ED OUT THAT IN VIEW OF THE AGREEMENT BETWEEN THE HASH & THDC CONSIDERA TION HAS BEEN SHOWN AT RS. 2,000/- PER SQ. FEET FOR 126 FLAT S WHEREAS IT IS RS. 4,500/- PER SQ. FEET FOR THREE FLATS. WE FIND N O FORCE IN THESE SUBMISSIONS. THE ASSESSEE HAS FILED ALONG WITH THE WRITTEN SUBMISSIONS COPY OF THE ADDENDUM OF AGREEMENT BETWE EN THDC AND HASH BY JOINT DEVELOPER (AT PAGE 265 & 266) AN D THIS ISSUE IS DISCUSSED IN CLAUSE 5 WHICH IS AS UNDER:- 53 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 SUBSTITUTED 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 IN EXCESS 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 CROR ES 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 MA Y BE, CALCULATED AS RS. 2000 PER SQ. FT. FOR THE AREA 2,8 3,500 SQ. FT. AND THE 72% SHARE OF 3 FLATS OF 2250 SQ. FT. TO BE PURC HASED BY HASH @ RS, 4500/- PER SQ. FT. SHOULD THE APPLICATION OF THE RATIO STIPULATED IN (A) ABOVE RESULT IN HASH BEING ENTITL ED TO A SUM GREATER THAN THE MINIMUM GUARANTEED AMOUNT AND THDC BEING ENTITLED TO A SUM LESS THAN THE MINIMUM GUARANTEED AMOUNT, THDC SHALL-BE ENTITLED TO THE ENTITLEMENT OF HASH WHICH IS IN EXCESS OF ITS MINIMUM, GUARANTEED AMOUNT UNTIL THDC ACHIEVES ITS MINIMUM GUARANTEED AMOUNT.-THE SAME IS ILLUSTRATED IN ANNEX URE I HERETO. 109 THE ABOVE CLEARLY SHOWS THAT HASH WAS ENTITLED TO TOTAL PROCEEDS OF RS. 225.76 CRORES OUT OF TOTAL PROCEEDS OF THE PROJECT WHICH WERE AGREED TO BE SHARED BY THDC AND HASH BUT THE PORTION OF HASH INCLUDES A SUM OF RS. 58.88 CRORES WHICH WAS REQUIRED TO BE SPENT TOWARDS CONSTRUCTION OF 126 FL ATS EQUIVALENT TO 283500 SQUARE FEET AREA WHICH WERE TO BE ALLOTTE D 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 CONSTRUCTI ONS TO BE INCURRED BY THDC WHICH WAS DEBITED TO THE ACCOUNT O F HASH. FURTHER, HASH HAS AGREED TO PURCHASE THREE FLATS @ 4,500/- PER SQUARE FEET. SOME NEWS REPORTS WERE QUOTED BEFORE US IN ONE OF THE CASES TO SHOW THAT VARIOUS BROKERS HAD ISSUED V ARIOUS 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 AGREEM ENT IN TERMS OF TOTAL PROCEEDS OF 1272 CRORES. IN ANY CAS E IF THE COST OF CONSTRUCTION IS RS. 2,000/-, THEN COST OF LAND WHI CH HAS BEEN PAID TO THE SOCIETY IS ALSO TO BE ADDED TO THE COST OF T HE FLAT BECAUSE THIS PORTION OF CONSIDERATION IN ANY CASE WAS RECEI VED OR TO BE 54 RECEIVED LATER BY THE SOCIETY IN CASH. CONSIDERING THE PRESENT MARKET VALUE OF THE FLATS IN AND AROUND CHANDIGARH AREA WHICH IS RS. 4,000/- TO 12,000/- PER SQUARE FEET WE ARE OF T HE OPINION THAT VALUE OF THE FLAT AT RS. 4,500/- PER SQUARE FEET IS ABSOLUTELY FAIR. IN ANY CASE M/S HASH HAS AGREED TO PURCHASE THE FLA TS AT THIS RATE FROM M/S THDC. IT MAY BE NOTED AS POINTED OUT BY T HE 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) I N THE PRE LAUNCH OFFER IN THE RANGE OF RS. 7500 TO 8000 PER S QFT. IT IS A COMMON KNOWLEDGE THAT RATES IN PRE LAUNCH OFFER ARE LOWER THAN THE RATES WHEN BOOKINGS OPEN FOR THE PUBLIC. CONSI DERING THESE FACTS WE ARE OF THE OPINION THAT ASSESSING OFFICER HAS ESTIMATED THE VALUE OF THE FLATS ON MOST REASONABLE BASIS. I N VIEW OF THESE OBSERVATIONS THIS 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 THAT THIS ISSUE HAS BEEN REJECTED WRONGLY BY CIT(A). HOWEVER, CAREFULL Y PERUSAL OF THE GROUNDS OF APPEAL SHOW THAT NO GROUND IN RESPECT OF DEDUCTION U/S 54F HAS BEEN RAISED BEFORE US AND, THEREFORE, WE DECLIN E TO ADJUDICATE THIS ISSUE AND ALL THE ARGUMENTS MADE IN THIS BEHALF ARE REJECTED. THOUGH REFERENCE WAS MADE TO GROUND NO. 2.3 IN THIS REGARD . THE PERUSAL OF GROUNDS NO. 2.3 WOULD SHOW THAT REFERENCE HAS BEEN MADE ONLY TO SECTION 54 AND SECTION 54EC. SECTION 54 DEALS WITH DEDUCTION IN CASE THE ASSESSEE BEING AN INDIVIDUAL OR HUF, TRANSFERS THE RESIDENTIAL HOUSE AND IN CASE BEFORE US, THE ASSESSEE HAS TRANSFERRED THE PLOT. THEREFORE, IT CANNOT BE SAID THAT DEDUCTION U/S 54F AND 54 IS SAME. SINCE NO GROUND HAS BEEN RAISED FOR DEDUCTION U/S 54F, WE RE JECT THIS CONTENTION. FOLLOWING THE ABOVE WE DECIDE THIS ISSUE AGAINST TH E ASSESSEE. 8 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 3.9.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 3.9.2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 55