Appeal Details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 5399 (ITAT-CUTTACK)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 8 month(s) 30 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-09-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
13-06-2017
Assessment Year
2009-2010
Appeal Filed On
23-12-2014
Judgement Text
1 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 SRI LAXMIDHAR PANDA, PLOT NO.560, PATIA, BHUBANESWAR. VS. ACIT, RANGE - 2, BHUBANESWAR. PAN/GIR NO. BSGPP 0923 C (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI S.C.BHADRA, AR REVENUE BY : SHRI KUNAL SINGH, CIT DR DATE OF HEARING : 30/08 / 2017 DATE OF PRONOUNCEMENT : 22 /09 / 2017 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - BERHAMPUR CAMP: BHUBANESWAR DATED 30.10.2014 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. GROUND NOS.1 & 4 ARE GENERAL IN NATURE AND HENCE, REQUIRE NO SEPARATE ADJUDICATION BY US. 3. GROUND NOS.2 & 3 READS AS UNDER: 2. THAT THE LEARNED ADDITIONAL COMMISSIONER ERRED IN THE POINT OF LAW AND FACT BY COMPUTIN G LONG TERM CAPITAL GAIN TAX ON THE DATE ON WHICH THE DEVELOPMENT AGREEMENT WAS ENTERED INTO WITH THE PROMOTER INSTEAD OF THE DATE ON WHICH THE LAND AND THE TITLE THEREIN WAS ACTUALLY TRANSFERRED. 2 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 3. THAT, THE AUTHORITY OF OWNERSHIP HAVE NOT BEEN PASSED TO THE DEVELOPER AND THE DEVELOPER IS NOT THE OWNER TO EXECUTE SALES. ONLY AN AGREEMENT FOR THE DEVELOPMENT OF LAND WAS EXECUTED WITH THE DEVELOPER WHEREIN MATTERS OF PERMISSION FROM BDA, CONDITIONAL ADVANCE RECEIPT, CONSIDERATION ETC. WERE MENTIONE D. THAT THE LEARNED ADDITIONAL COMMISSIONER ARBITRARILY ESTIMATED THE CONSIDERATION TO BE RECEIVED ON FUTURE DATE ON THE BASIS OF FAIR MARKET PRICE FIXED BY THE BUILDER IN FUTURE. SO ALSO THE HONOURABLE CIT(APPEALS) IGNORED THE SUBMISSIONS MADE BY THE APPE LLANT AND ACCEPTED TO THE VALUE TAKEN BY THE LEARNED ADDITIONAL COMMISSIONER. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS THE OWNER OF THE LAND MEASURING A0.405 DECIMALS OF LAND AT PATIA, BHUBANESWAR. THE ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT ON 9.9.2008 WITH BUILDER SRI JITENDRA HANS . THE ASSESSEE EXECUTED A N IRREVOCABLE GENERAL POWER OF ATTORNEY IN FAVOUR OF THE SAID BUILDER ON THAT DATE. THE ASSESSEE REC EIVED A REFUNDABLE ADVANCE OF RS.20,00,000/ - AND HANDED OVER THE POSSESSION OF THE LAND TO THE BUILDER. THEREAFTER, THE BUILDER OBTAINED APPROVAL FROM THE BHUBANESWAR DEVELOPMENT AUTHORITY IN 2009 FOR CONSTRUCTION OF 32 DWELLING UNIT S ON A PLOT OF LAND OWNED BY THE ASSESSEE. A S PER THE DEVELOPMENT AGREEMENT , THE ASSES SEE TRANSFERRED HIS RIGHT OF DEVELOPMENT AND OWNERSHIP OF THE LAND TO THE DEVELOPER AND IN RETURN FOR 14 FLATS OUT OF 32 FLATS TO BE CONSTRUCTED BY THE BUILDER. THE BUILDER RETAINED THE OWNERSHIP OF THE REMAINING 18 FLATS. THE ASSESSING OFFICER WAS OF THE VI EW THAT IN THE YEAR IN WHICH THIS DEVELOPMENT AGREEMENT WAS SIGNED ALONGWITH IRREVOCABLE POWER OF ATTORNEY GIVEN BY THE ASSESSEE IN FAVOUR OF THE BUILDER TO ENABLE THE BU ILDER TO SELL ITS SHARES OF FLATS, THERE WAS E FFECTIVE TRANSFER AS THE ASSESSEE ALSO HANDED OV ER THE 3 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 POSSESSIONS OF THE LAND. THEREFORE, HE HELD THAT SUCH TRANSFER OF POSSESSION AND OTHER RIGHTS OF DEVELOPMENT DURING THE YEAR AMOUNTED TO A VALID TRANSFER U/S.53A OF THE TRANSFER OF PROPERTY ACT AND THUS, THE ASSESSEE IS LIABLE TO CAP ITAL GAINS TAX U/S.2(47) READ WITH SECTION 45 OF THE ACT. ACCORDINGLY, HE BROUGHT TO TAX THE MARKET VALUE OF 14 FLATS LESS THE VALUE OF PROPORTIONATE VALUE OF THE LAND AND ADDED RS.4,05,87,159/ - TO THE INCOME OF THE ASSESSEE. 5. ON APPEAL, THE CIT(A) CO NFIRMED THE ACTION OF THE ASSESSING OFFICER OBSERVING AS UNDER: 5.3 I HAVE CAREFULLY CONSIDERED THE MATTER AND GONE THROUGH THE ASSESSMENT RECORDS. I DO NOT FIND ANY REASON TO INTERFERE WITH THE ACTION OF THE AO. THE ADMITTED FACTS IN THIS CASE ARE THAT THE APPELLANT OWNS 0.405 ACRES OF LAND AT PATIA, BHUBANESWAR. HE ENTERED INTO A DEVELOPMENT AGREEMENT WITH SHRI JITENDRA HANS ON 09.09.2008 TRANSFERRING THE RIGHT OF DEVELOPMENT TO SHRI HANS. IN RETURN, THE DEVELOPER WAS TO GIVE 14 FLATS OUT OF THE 32 FLAT S TO BE CONSTRUCTED ON THE SAID PIECE OF LAND. THE APPELLANT ALSO SIGNED A GENERAL POWER OF ATTORNEY IN FAVOUR OF SHRI HANS SO AS TO ENABLE HIM TO SALE THE REMAINING 18 FLATS TO PROSPECTIVE CUSTOMERS. IN OTHER WORDS, THE APPELLANT CLEARLY TRANSFERRED HIS I NTEREST IN THE LAND TO THE EXTENT OF THE UNDIVIDED SHARE OF THE 18 FLATS AND IN RETURN GOT BACK 14 FLATS. AFTER SIGNING THE AGREEMENT, THE APPELLANT HANDED OVER THE POSSESSION OF THE LAND TO THE DEVELOPER, WHO WENT AHEAD AND OBTAINED NECESSARY PERMISSION F ROM BDA IN HIS NAME TO DEVELOP THE LAND. THE APPELLANT HAS ARGUED THAT THE AGREEMENT DOES NOT SPECIFY THAT THE POSSESSION OF THE LAND WAS IMMEDIATELY HANDED OVER TO THE DEVELOPER. HOWEVER, THE APPELLANT HAS NOT FILED ANY EVIDENCE THAT THE POSSESSION WAS HA NDED OVER AT ANY LATER DATE. ADMITTEDLY, THE AGREEMENT WAS SIGNED ON 09.09.2008 ALONG WITH THE EXECUTION OF THE GPA IN FAVOUR OF THE DEVELOPER. THE APPELLANT ALSO RE CEIVED A REFUNDABLE ADVANCE OF RS. 20,00,000/ - FROM THE DEVELOPER. THEREFORE, CONSIDERING TH E OVERALL FACTS OF THE CASE AND IN THE ABSENCE OF ANY EVIDENCE TO THE CONTRARY, IT IS QUITE CLEAR THAT THE POSSESSION OF THE LAND WAS HANDED OVER TO THE BUILDER IMMEDIATELY AFTER SIGNING OF THE AGREEMENT. ACCORDINGLY, AS CORRECTLY HELD BY THE AO, THE TRANS ACTION ENTERED INTO BY THE 4 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 APPELLANT SHALL BE A DEEMED TRANSFER WITHIN THE MEANING OF SECTION 2(47). THE AO HAS ALSO CORRECTLY RELIED UPON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN CHARTURBHUJ DWARAKADAS KAPADIA VS. CIT (2003) 260ITR 491 (BOM) AND O F THE RAJASTHAN HIGH COURT IN CIT VS. RAJASTHAN MIRROR MANUFACTURING CO. (2003) 260 ITR 503 (RAJ). 5. 3.1 THE APPELLANT IN HIS LONG WRITTEN SUBMISSIONS HAS CONTESTED THE DECISION OF THE AO PRIMARILY ON THE FOLLOWING GROUNDS; (I) THAT THERE WAS ACTUALLY NO TRANSFER OF LAND, (II) THAT THE S ALES CONSIDERATION IN THE FORM OF 14 FLATS WAS NOT RECEIVED DURING THE YEAR OF AGREEMENT, (III) THAT THE VALUE OF THE SALES CONSIDERATION IS NOT DETERMINATE AND (IV) THAT THE SIGNING OF THE GPA IS NOT A VALID TRANSFER OF LAND. THE APPELLANT HAS ALSO REFERRED TO SOME JUDICIAL DECISIONS IN SUPPORT OF THE ABOVE ARGUMENT. NONE OF THESE ARGUMENTS ARE VALID OR LEGALLY SUSTAINABLE.THE APPELLANT'S RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN SURAJ LAMP (SUPRA) IS MISPLACED. AS HAS BEEN HELD BY THE HON'BLE DELHI HIGH COURT, THAT DECISION DOES NOT AFF ECT THE NATURE OF TRANSATIONS ENTERED THROUGH A GPA. IN PACE DEVELOPERS AND PROMOTERS (P) LTD., VS GOVT. OF NCT (2013 215 TAXMAN 554(DEL.) THE HON'BLE COURT HELD THAT SUCH AN ARGUMENT 'CLEARLY MISCONSTRUES THE OBSERVATIONS OF THE SUPREME COURT MADE IN PARAGRAPH 27 OF THE JUDGMENT IN THE CASE OF SURAJ LAMP & INDUSTRIES (P.) LTD. (SUPRA) '. THE SAID OBSERVATIONS BEING RELE VANT ARE EXTRACTED HEREIN BELOW: '....27. WE MAKE IT CLEAR THAT OUR OBSERVATIONS ARE NOT INTENDED TO IN ANY WAY AFFECT THE VALIDITY OF SALE AGREEMENTS AND POWERS OF ATTORNEY EXECUTED IN GENUINE TRANSACTIONS. FOR EXAMPLE, A PERSON MAY GIVE A POWER OF ATTORNEY TO HIS SPOUSE, SON, DAUGHTER, BROTHER, SISTER OR A RELATIVE TO MANAGE HIS AFFAIRS OR TO EXECUTE A DEED OF CONVEYANCE. A PERSON MAY ENTER INTO A DEVELOPMENT AGREEMENT WITH A LAND DEVELOPER OR BUILDER FOR DEVELOPING THE LAND EITHER BY FORMING PLOTS OR BY CONSTRUCTING APARTMENT BUILDINGS AND IN THAT BEHALF EXECUTE AN AGREEMENT OF SALE AND GRANT A POWER OF ATTORNEY EMPOWERING THE DEVELOPER TO EXECUTE AGREEMENTS OF SALE OR CONVEYANCES IN REGARD TO INDIVIDUAL PLOTS OF LAND OR UNDIVIDED SHARES IN THE LAND RELATING TO APARTMENTS IN FAVOUR OF PR OSPECTIVE PURCHASERS. IN SEVERAL STATES, THE EXECUTION OF SUCH DEVELOPMENT AGREEMENT AND POWERS OF ATTORNEY ARE ALREADY REGULATED BY LAW AND SUBJECTED TO SPECIFIC STAMP DUTY. OUR OBSERVATIONS REGARDING 'SA/GPA/WILL TRANSACTIONS' ARE NOT INTENDED TO APPLY T O SUCH BONA FIDE/GENUINE TRANSACTIONS...' (EMPHASIS SUPPLIED) 5 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 QUITE CLEARLY, THE SUPREME COURT HAS NOT SAID THAT IN NO CASE A CONVEYANCE CAN BE REGISTERED BY TAKING RECOURSE TO A GPA. AS LONG AS THE TRANSACTION IS GENUINE, THE SAME WILL HAVE TO BE REGISTE RED BY THE SUB - REGISTRAR. THERE IS DISTINCTLY A SPECIFIC REFERENCE TO THE FACT THAT, A PERSON MAY ENTER INTO A DEVELOPMENT AGREEMENT WITH A LAND DEVELOPER OR BUILDER FOR DEVELOPMENT OF A PARCEL OF LAND OR FOR CONSTRUCTION OF APARTMENTS IN A BUILDING, AND F OR THIS PURPOSE A POWER OF ATTORNEY EMPOWERING THE DEVELOPER TO EXECUTE SALE AGREEMENTS, CAN BE EXECUTED. APART FROM THE DECISION RELIED UPON BY THE AO, THERE ARE SEVERAL DECISIONS OF VARIOUS HIGH COURTS & TRIBUNALS WHICH CAN BE RELIED UPON IN SUPP ORT OF T HE DECISION TAKEN BY THE AO IN THE INSTANT CASE. IN RAVINDER SINGH ARORA V. ACIT (2012) 24 TAXMANN.COM 346 (HYD), THE HON'BLE IT AT HELD THAT FOR PURPOSE OF CHARGING CAPITAL GAIN TO TAX WHAT IS NEEDED TO BE JUDGED IS POINT OF TIME AT WHICH TRANSFER TOOK PLACE, EITHER BY HANDING OVER OF POSSESSION OR BY ALLOWING ENTRY INTO PREMISES OR MAKING CONSTRUCTIVE PRESENCE OF VENDEE AND NOT YEAR IN WHICH ENTIRE SALE CONSIDERATION IS RECEIVED. IT WAS FURTHER HELD THA T WHERE A LAND OWNER HAS ENTERED INTO AN AGREEMENT FOR DEVELOPMENT OF PROPERTY AND CERTAIN RIGHTS WERE ASSIGNED TO DEVELOPER WHO IN TURN HAS MADE SUBSTANTIAL PAYMENT AND, CONSEQUENTLY, HAS ENTERED INTO PROPERTY AND, THEREAFTER, IF TRANSFEREE (DEVELOPER) HA S TAKEN STEPS IN RELATION TO CONSTRUCTION OF FLATS, THEN IT IS TO BE CONSIDERED AS TRANSFER UNDER SECTION 2(47)(V) ATTRACTING PROVISIONS OF SECTION 45; AND FACT THAT LEGAL OWNERSHIP CONTINUED WITH OWNER, WHICH IS TO BE TRANSFERRED TO DEVELOPER AT A FUTURE DISTANT DATE DOES NOT AFFECT APPLICABILITY OF SECTION 2(47)(V). SIMILAR VIEW WAS EXPRESSED BY THE HON'BLE KARNATAKA HIGH COURT IN CIT T.K.DAYALU (2011) 14 TAXMANN.COM 120 (KARN.)/ (2012) 202 TAXMAN 531 (KARN.). IN THAT CASE, THE ASSESSEE, ON 26.01.1996, ENTERED INTO JOINT VENTURE AGREEMENT WITH DEVELO P AGREEMENT PROVIDED THAT CERTAIN SUM WOULD BE PAID TO ASSESSEE AS NON - REFUNDABLE ADVANC E AND IN ADDITION TO SAME, HE WAS ALSO ENTITLED FOR BUILD - UP AREA TO BE CONSTRUCTED B Y DEVELOPERS AT FREE OF COST. ASSESSEE RETURNED A LONG TERM CAPITAL GAIN. ASSESSING OFFICER IMPOSED TAX ON SAME. ASSESSEE CONTENDED THAT CAPITAL GAIN WAS NOT ASSESSABLE IN YEAR 1997 - 98 AND SAME WAS LIABLE TO BE TAXED IN ASSESSMENT YEAR 2003 - 04 WHEN CONSTRU CTION WAS COMPLETED. IT WAS REVEALED FROM AGREEMENT THAT ACTUAL POSSESSION OF PROPERTY WAS HANDED OVER ON 30.05.1996. THE HON'BLE COURT HELD THAT SINCE POSSESSION OF PROPERTY WAS HANDED OVER ON 30.051996, CAPITAL GAIN WAS LIABLE TO BE TAXED IN ASSESSMENT Y EAR 1997 - 98. SIMILAR VIEW WAS ALSO TAKEN IN G.SREENIVASAN V. DY. CIT(2013) 86 DTR 34 (COCHIN - TRIB.)/ DURDANA KHATOON(MRS.) V. ACIT(2013) 24ITR 55 (HYD.) (TRIB.)/58 SOTL(HYD - TRIB.). 6 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 RECENTLY THE HON'BLE ANDHRA PRADESH HIGH COURT IN POTLA NAGESWAR RAO VS. D C1T(2014) 3651TR 249 (AP) HELD AS UNDER: 'IN AY 2003 - 04, THE ASSESSEE ENTERED INTO AN AGREEMENT WITH BHAVYA CONSTRUCTIONS PURSUANT TO WHICH HE AGREED TO TRANSFER THE LAND IN CONSIDERATION OF THE DEVELOPER GIVING HIM FOUR FLATS IN THE DEVELOPED AREA. THE ASSESSEE RECEIVED A TOKEN ADVANCE AND HANDE D OVER POSSESSION OF THE LAND. THE DEVELOPER OBTAINED THE APPROVAL OF THE MUNICIPALITY TO THE PLAN FOR CONSTRUCTION ON THE PROPERTY. THE AO HELD THAT THE CAPITAL GAINS WAS ASSESSABLE IN AY 2003 - 04 WHILE THE ASSESSEE CLAIMED THAT THE SAME WAS ASSESSABLE IN AY 2004 - 05 WHEN THE CONSIDERATION WAS RECEIVED. THE CIT (A) UPHELD THE CLAIM OF THE AO. THE TRIBUNAL (INCLUDED IN FILE), RELYING ON CHATURBHUJ DWARKADDAS KAPADIA 260 ITR 491 (BOM), DR.T. K. DAYALU 202 TAXMAN 531(KAR) & MAYA SHENOY 124 TTJ (HYD) 692, HELD T HAT AS THE ASSESSEE HAD HANDED OVER POSSESSION OF THE PROPERTY TO THE DEVELOPER, IT WAS A CLEAR CASE OF TRANSFER BY EXCHANGE WITHIN THE MEANING OF S.2(47) (V) READ WITH S. 53A OF THE TRANSFER OF PROPERTY ACT. IT WAS HELD THAT THE FACT THAT THE CONSIDERATIO N WAS RECEIVED IN A LATER YEAR WAS NOT RELEVANT. ON APPEAL BY THE ASSESSEE TO THE HIGH COURT, HELD DISMISSING THE APPEAL: THE ASSESSEE'S CONTENTION THAT NO TRANSFER TAKES PLACE ON THE DATE OF THE AGREEMENT AND HANDING OVER OF POSSESSION IF CONSIDERATION I S NOT RECEIVED BY THE ASSESSEE IS NOT ACCEPTABLE BECAUSE S. 53A OF THE TRANSFER OF PROPERTY ACT, 1882, WHICH IS ENGRAFTED IN THE DEFINITION OF 'TRANSFER' IN S. 2(47) OF THE INCOME - TAX ACT DOES NOT CONTEMPLATE ANY PAYMENT OF CONSIDERATION. PAYMENT OF CONSID ERATION ON THE DATE OF AGREEMENT OF SALE IS NOT REQUIRED . IT MAY BE DEFERRED FOR A FUTURE DATE. THE ELEMENT OF FACTUAL POSSESSION AND AGREEMENT ARE CONTEMPLATED AS TRANSFER WITHIN THE MEANING OF THE AFORESAID SECTION. WHEN THE TRANSFER IS COMPLETE, AUTOMAT ICALLY, CONSIDERATION MENTIONED IN THE AGREEMENT FOR SALE HAS TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF ASSESSMENT OF INCOME FOR THE ASSESSMENT YEAR WHEN THE AGREEMENT WAS ENTERED INTO AND POSSESSION WAS GIVEN. HERE, FACTUALLY IT WAS FOUND THAT BOT H THE AFORESAID ASPECTS TOOK PLACE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2003 - 04. HENCE, THE TRIBUNAL HAS RIGHTLY HELD THAT THE APPELLANT IS LIABLE TO PAY TAX ON THE CAPITAL GAIN FOR THE ASSESSMENT YEAR. ' (EMPHASIS SUPPLIED) 5.3.2 IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE FACTS ON RECORD, I HOLD THAT AS THE DEVELOPMENT AGREEMENT WAS SIGNED AND THE POSSESSION WAS HANDED OVER DURING THE PREVIOUS YEAR RELEVANT ASSESSMENT YEAR 2009 - 10, CAPITAL GAINS HAS BEEN CORRECTLY BR OUGHT TO TAX BY THE AO IN THE ASSESSMENT YEAR 2009 - 10. SO FAR AS THE QUANTUM OF CAPITAL GAINS IS CONCERNED, THE AO HAS CORRECTLY TAKEN 7 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 THE VALUE OF THE FLATS FROM THE REGISTERED AGREEMENTS AND, THEREFORE, I DO NOT SEE ANY REASON TO INTERFERE WITH THE QUANT UM. THE ADDITION OF RS. 4,05,86,159/ - TO THE TOTAL INCOME OF THE APPELLANT IS, ACCORDINGLY, SUSTAINED AND THE GROUNDS ARE DISMISSED. 6. BEFORE US, LD A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE SUBMITTED THAT THE AMENDMENT ACT 2001 AMENDED SECTION 17 OF THE REGISTRATION ACT AS UNDER: (A)AFTER SUB - SECTION 1, THE FOLLOWING SUB - SECTION SHALL BE INSERTED, NAMELY: - '(1A) THE DOCUMENTS CONTAINING CONTRACTS TO TRANSFER FOR CONSIDERATION, ANY IMMOVABLE PROPERTY FOR THE PURPOSE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882, SHALL BE REGISTERED IF THEY HAVE BEEN EXECUTED ON OR AFTER THE COMMENCEMENT OF THE REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001 AND IF SUCH DOCUMENTS ARE NOT REGISTERED ON OR AFTER SUCH COM MENCEMENT, THEN, THEY SHALL HAVE NO EFFECT FOR THE PURPOSES OF THE SAID SECTION 53A.'; (B) IN SUB - SECTION (2), IN CLAUSE (V), FOR THE OPENING WORDS 'ANY DOCUMENT', THE WORDS, BRACKETS, FIGURE AND LETTER' ANY DOCUMENT OTHER THAN THE DOCUMENTS SPECIFIED IN SUB - SECTION (1A)' SHALL BE SUBSTITUTED. 7. HE SUBMITTED THAT T HIS INSERTION OF THE ABOVE PROVISION IN THE REGISTRATION ACT MAKES IT MANDATORY FOR JOINT DEVELOPMENT AGREEMENT TO BE REGISTERED, WITHOUT WHICH SECTION 53A HAS NO EFFECT. FURTHER, HE REL IED ON THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF SURAJ LAMP & INDUSTRIES (P) LTD., VS STATE OF HARYANA, (2012) 1 SCC 656, , WHEREIN, IT WAS HELD, THAT BY SIMPLY EXECUTING A POWER OF ATTORNEY , ONE CANNOT TRANSFER IMMOVABLE PROPERTY. HE FURTHER RELIED ON THE DECISION OF P&H HIGH COURT IN THE CASE OF C.S. ATWAL VS. CIT, LUDHIANA, 378 ITR 8 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 244 (P&H), WHEREIN, IT WAS HELD THAT PRIOR TO THE REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001, AN AGREEMENT ON SALE WHICH FULFILLED THE INGREDIENTS OF SECTION 53A, WAS NOT LIABLE TO BE REGISTERED. BUT THE AMENDMENT MADE BY THE 2001 ACT IN SECTION 53A OF TRANSFER OF PROPERTY ACT AND SECTIONS 17 & 49 OF REGISTRATION ACT, NOW REQUIRES THE AGREEMENT OF SALE TO BE REGISTERED FOR THE PURPOSE OF SECTION 53A ON TRANSFER OF PROPERTY ACT. IN THIS CASE, THE COURT HELD THAT THE DEVELOPER WAS GIVEN POSSESSION UNDER THE JOINT DEVELOPMENT AGREEMENT AND SPECIAL POWER OF ATTORNEY ONLY IN THE CAPACITY OF A LICENSES. THE INGREDIENTS OF SECTION 53A OF TRA NSFER OF PROPERTY ACT WERE NOT FULFILLED AND, THEREFORE, THERE WAS NO TRANSFER IN TERMS OF SECTION 2(47) (V) FOR THE PURPOSE OF LEVYING CAPITAL GAINS TAX. 8. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. HE RELIED ON THE DECISION OF HYDERABAD BENCHES OF THE TRIBUNAL IN THE CASE OF MRS DURDANA KHATOON VS ACIT, 24 ITR (T) 55, WHEREIN, IT WAS HELD THAT THE TRANSFER OF POSSESSION OF PROPERTY TO THE DEVELOPER FOR CONSTRUCTION OF FLATS UNDER JOINT DEVELOPMENT AGREEMENT AS PE R WHICH ASSESSEE WAS ENTITLED TO 50% BUILT UP AREA, IS TRANSFER AS PER SECTION 2(47) AND IS TAXABLE IN THE YEAR IN WHICH AGREEMENT GIVING VACANT AND PEACEFUL POSSESSION TO DEVELOPER, WAS ENTERED INTO BY THE ASSESSEE. 9. WE HAVE HEARD THE RIVAL SUBMISSIO NS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS GIVING 9 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 RISE TO THIS APPEAL IS THAT THE ASSESSEE ENTERED INTO A JOINT DEVELOPMENT AGREEMENT ON 9 TH SEPTEMBER, 2008 WITH SHRI JITENDRA HANS,. THE ASSESSEE RECEIVED RS.20 LAKHS FROM THE SAID SHRI JITENDRA HANDS ON THE DATE OF SIGNING OF THE JOINT DEVELOPMENT AGREEMENT. ARTICLE 3 POINT NO.2 OF T HE SAID JOINT DEVELOPMENT AGREEMENT PROVIDED THAT A SUM OF RS.20 LAKHS PAID TO THE ASS ESSEE AS AN ADVANCE CONSIDERATION MONEY FROM THE DEVELOPER AND IF ANY PROBLEM ARISES WITH BHUBANESWAR DEVELOPMENT AUTHORITY APPROVAL OF PLAN, THE ADVANCE AMOUNT WILL BE REFUNDED. THE BUILDER OBTAINED THE APPROVAL OF BDA IN 26.12.2009. THE ASSESSING OFFIC ER WAS OF THE VIEW THAT IN THE YEAR IN WHICH THE DEVELOPMENT AGREEMENT WAS SIGNED TOGETHER WITH IRREVOCABLE POWER OF ATTORNEY GIVEN BY THE ASSESSEE IN FAVOUR OF THE BUILDER, THERE WAS TRANSFER AS THE ASSESSEE HANDED OVER THE POSSESSION OF THE LAND. HENCE, HE HELD THAT SUCH TRANSFER OF POSSESSION AND OTHER RIGHTS OF DEVELOPMENT AMOUNTED TO A VALID TRANSFER U/S.53A OF THE TRANSFER OF PROPERTY AND, THEREFORE, THE ASSESSEE IS LIABLE TO CAPITAL GAINS TAX U/S.2(47) R.W.S 45 OF THE ACT AND, ACCORDINGLY BROUGHT TO TAX THE MARKET VALUE OF 14 FLATS LESS THE VALUE OF PROPORTIONATE VALUE OF THE LAND AND MADE ADDITION OF RS.4,05,87,159/ - TO THE INCOME OF THE ASSESSEE. 10. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 11. LD A.R. FILED COPY OF JO INT DEVELOPMENT AGREEMENT DATED 9.9.2008 AND POINTED OUT THAT THE SAID AGREEMENT IS AN UNREGISTERED AGREEMENT. 10 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 HE CLAIMED THAT THE AGREEMENT WAS NOT REGISTERED. THE CONTENTION OF THE LD A.R. OF THE ASSESSEE IS THAT THE REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT 2001) HAS BROUGHT ABOUT A RADI C AL CHANGE IN RIGHTS FLOWING ON THE BASIS OF AGREEMENT S EXECUTED IN PART PERFORMANCE OF THE CONTRACT U/S.53A OF 1882 ACT. THE AMENDMENTS HAVE BEEN MADE IN SECTION 53A OF THE 1882 ACT AND SECTION S 17 & 49 OF THE 1908 ACT. THE AMENDMENT , VIDE 2001 ACT, WHICH STOOD ENFORCED W.E.F. SEPTEMBER 24, 2001, THE WORD S THE CONTRACT THOUGH REQUIRED TO BE REGISTERED HAS NOT BEEN REGISTERED. 12. WE FIND THAT HONBLE P&H HIGH COURT IN THE CASE OF C.S. ATWAL (SUPRA), HAS HELD AS UNDER: 9. . THE FOLLOWING ISSUES EMERGE FOR CONSIDERATION AND ADJUDICATION : (I) SCOPE AND LEGISLATIVE INTENT OF SECTION 2(47)(II), (V) AND (VI) OF THE ACT ; (II) THE ESSENTIAL INGREDIENTS FOR APPLICABILITY OF SECTION 53A OF THE 1882 ACT ; (III) MEANING TO BE ASSIGNED TO THE TERM 'POSSESSION' ? (IV) WHETHER, IN THE FACTS AND IN THE CIRCUMSTANCES, ANY TAXABLE CAPITAL GAINS ARISES FROM THE TRANSACTION ENTERED BY THE ASSESSEE ? 10. TAKING UP THE FIRST ISSUE, IT MAY BE NOTICED THAT SECTION 2(14) OF THE ACT DEFINES 'CAPITAL ASSET' WHEREAS SECTION 45 OF THE ACT IS THE CHARGING SECTION IN REGARD TO CAPITAL GAINS. SECTION 48 OF THE ACT PROVIDES FOR MODE OF COMPUTATIO N OF CAPITAL GAINS. BEFORE DELVING INTO THE CONTROVERSY INVOLVED IN THE PRESENT CASE, IT WOULD BE ADVANTAGEOUS TO REFER TO THE RELEVANT PORTION OF SECTION 2(47) OF THE ACT DEFINING 'TRANSFER', WHICH READS THUS : SECTION 2(47) OF INCOME - TAX ACT, 1961 DEFINI TION OF TRANSFER IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES ''TRANSFER', IN RELATION TO A CAPITAL ASSET, INCLUDES, . . . (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN ; OR . . . (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF AN Y IMMOVABLE 11 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 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 SHARE S IN, A CO - OPERATIVE SOCIETY, COMPANY OR OTHER ASSO CIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY. EXPLANATION 1. FOR THE PURPOSES OF SUB - CLAUSES (V) AND (VI), 'IMMOVABLE PROPERTY' SHALL HAVE THE SAME MEANING AS IN CLAUSE (D) OF SECTION 269UA. EXPLANATION 2. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED THAT 'TRANSFER' INCLUDES AND SHALL BE DEEMED TO HAVE ALWAY S INCLUDED DISPOSING OF OR PARTING WITH AN ASSET OR ANY INTEREST THEREIN, OR CRE ATING ANY INTEREST IN ANY ASSET IN ANY MANNER WHATSOEVER, DIRECTLY OR INDIRECTLY, ABSOLUTELY OR CONDITIONALLY, VOLUNTARILY OR INVOLUNTARILY, BY WAY OF AN AGREEMENT (WHETHER ENT ERED INTO IN INDIA OR OUTSIDE INDIA) OR OTHERWISE, NOTWITHSTANDING THAT SUCH TRANSFER OF RIGHTS HAS BEEN CHARACTERISED AS BEING EFFECTED OR DEPENDENT UPON OR FLOWING FROM THE TRANSFER OF A SHARE OR SHARES O F A COMPANY REGISTERED OR INCOR PORATED OUTSIDE IND IA.' CLAUSE (D) OF SECTION 269UA OF THE ACT WHICH DEFINES 'IMMOVABLE PRO PERTY' FOR THE PURPOSES OF SUB - CLAUSES (V) AND (VI) OF SECTION 2(47) OF THE ACT IS IN THE FOLLOWING TERMS : '269UA. DEFINITIONS. IN THIS CHAPTER, UNLESS THE CONTEXT OTHER WISE REQUIRES , . . . (D) 'IMMOVABLE PROPERTY' MEANS (I) ANY LAND OR ANY BUILDING OR PART OF A BUILDING, AND INCLUDES, WHERE ANY LAND OR ANY BUILDING OR PA RT OF A BUILDING IS TO BE TRANS FERRED TOGETHER WITH ANY MACHINERY, PLANT, FURNITURE, FITTINGS OR OTHER THINGS, SUCH MACHINERY, PLANT, FURNITURE, FITTINGS OR OTHER THINGS ALSO. EXPLANATION. FOR THE PURPOSES OF THIS SUB - CLAUSE, LAND, BUILDING, PART OF A BUILDING, MACHINERY, PLANT, FURNITURE, FITTINGS AND OTHER THINGS INCLUDE ANY RIGHTS THEREIN ; (II) ANY RIGHTS IN OR WITH RESPECT TO ANY LAND OR ANY BUILDING OR A PART OF A BUILDING (WHETHER OR NOT INCLUDING ANY MACHINERY, PLANT, FURNITURE, FITTINGS OR OTHER THINGS, THEREIN) WHICH HAS BEEN CONSTRUCTED OR WHICH IS TO BE CONSTRUCTED, ACCRUING OR ARISING FROM ANY TRANSAC TION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO - OPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OF WHATEVER NATURE), NOT BEING A TRANSACTION BY WAY OF SALE, EXCHANGE OR LEA SE OF SUCH LAND, BUILDING OR PART OF A BUILDING ; (E) AND (F) . . .' 11. THE FINANCE ACT, 1987, INTRODUCED CLAUSES (V) AND (VI) IN SECTION 2(47) OF THE ACT WITH EFFECT FROM APRIL 1, 1988. IT PROVIDES THAT 'TRANSFER' INCLUDES (I) ANY TRANSACTION WHICH ALLOW S POSSESSION TO BE TAKEN/RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE 1882 ACT ; AND (II) ANY 12 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 TRANSACTION ENTERED INTO IN ANY MANNER WHICH HAS THE EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOVAB LE PROPERTY. THEREFORE, IN THESE TWO EVENTUALITIES, PROFITS ON ACCOUNT OF CAPITAL GAINS WOULD BE TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO, EVEN IF THE TRANSFER OF THE IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW. UNDER SECTION 2(47)(V) OF THE ACT, ANY TRANSACTION INVOLVING ALLOWING OF POSSESSION REFERRED TO IN SECTION 53A OF THE 1882 ACT WOULD COME WITHIN THE AMBIT OF 'TRANSFER'. EVEN ARRANGEMENTS CONFIRMING PRIVILEGES OF OWNERSHIP WITHOUT TRANSFER OF TITLE CO ULD FALL UNDER SECTION 2(47)(V) OF THE ACT. SECTION 2(47)(V) READ WITH SECTION 45 OF THE ACT INDICATES THAT CAPITAL GAINS IS TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO EVEN IF THE TRANSFER OF IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMP LETE UNDER THE GENERAL LAW. THE PURPOSE OF INTRODUCING CLAUSE (V) IN CONJUNCTION WITH CLAUSE (VI) IN SECTION 2(47) OF THE ACT, DEFINING 'TRANSFER' IS TO WIDEN THE NET OF TAXATION OF CAPITAL GAINS SO AS TO INCLUDE TRANSACTIONS THAT CLOSELY RESEMBLES TRANSFE RS BUT ARE NOT TREATED AS SUCH UNDER THE GENERAL LAW. AVOIDANCE OR POSTPONEMENT OF TAX ON CAPITAL GAINS BY ADOPTING DEVICES SUCH AS THE ENJOYMENT OF PROPERTY IN PURSUANCE OF IRREVOCABLE POWER OF ATTORNEY OR PART PERFORMANCE OF A CONTRACT OF SALE IS ALSO SO UGHT TO BE ARRESTED BY INTRODUCING THE TWO CLAUSES, CLAUSE (V) AND CLAUSE (VI) IN SECTION 2(47) OF THE ACT. ACCORDING TO THE EXPLANATION TO SECTION 2(47) OF THE ACT, OPERATIVE FROM APRIL 1, 1988 (NUMBERED AS EXPLANATION 1 BY THE FINANCE ACT, 2012) FOR THE PURPOSES OF SUB - CLAUSES (V) AND (VI), THE EXPRESSION 'IMMOVABLE PROPERTY' SHALL HAVE THE SAME MEANING AS IN SECTION 269UA(D) OF THE ACT. ` 12. THE CENTRAL BOARD OF DIRECT TAXES (CBDT) CIRCULAR NO. 495, DATED SEPTEMBER 22, 1987 [1987] 168 ITR (ST.) 87 AT PA GE 92, PROVIDES AN INSIGHT INTO THE BACKGROUND AND OBJECTIVES OF THE SAID CLAUSES. THE RELEVANT PORTION IS REPRODUCED AS UNDER : 'DEFINITION OF 'TRANSFER' WIDENED TO INCLUDE CERTAIN TRANSACTIONS 11.1 THE EXISTING DEFINITION OF THE WORD 'TRANSFER' IN SECTION 2(47) DOES NOT INCLUDE TRANSFER OF CERTAIN RIGHTS ACCRUING TO A PURCHASER, BY WAY OF BECOMING A MEMBER OF OR ACQUIRING SHARES IN A CO - OPERATIVE SOCIETY, COMPANY OR ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREE MENT OR ANY ARRANGEMENT WHEREBY SUCH PE RSON ACQUIRES ANY RIGHT IN ANY BUILDING WHICH IS EITHER BEING CONSTRUCTED OR WHICH IS TO BE CON STRUCTED. TRANSACTIONS OF THE NATURE REFERRED TO ABOVE ARE NOT REQUIRED TO BE REGISTERED UNDER THE REGISTRATION ACT, 1908. SUCH ARRANGEMENTS CONFER THE PRIVILEG ES OF OWNERSHIP WITHOUT TRANSFER OF TITLE IN THE BUILDING AND ARE A COMMON MODE OF ACQUIRING FLATS PARTICULARLY IN MULTISTORIED CONSTRUCTIONS IN BIG CITIES. THE DEFINITION ALSO DOES NOT COVER CASES WHERE POSSESSION IS ALLOWED TO BE TAKEN OR RETAINED IN PAR T PERFORMANCE OF A CONTRACT, OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. NEW SUB - CLAUSES (V) AND (VI) HAVE BEEN INSERTED IN SECTION 2(47) TO PREVENT AVOIDANCE OF CAPITAL GAINS LIABILITY BY RECOURSE TO TRANSFER OF RIGHTS IN THE MANNER REFERRED TO ABOVE. 11.2 THE NEWLY INSERTED SUB - CLAUSE (VI) OF SECTION 2(47) HAS BROUGHT INTO THE AMBIT OF 'TRANSFER', THE PRACTICE OF ENJOYMENT OF PROPERTY RIGHTS THROUGH WHAT IS C OMMONLY KNOWN AS POWER OF ATTOR NEY ARRANGEMENTS. THE PRACTICE IN SUCH CASES IS ADOPTED NORMALLY WHERE TRANSFER OF OWNERSHIP IS LEGAL LY NOT PERMITTED. A PERSON HOLD ING THE POWER OF ATTORNEY IS AUTHORI SED THE POWERS OF OWNER, INCLUD ING THAT OF MAKING CONSTRUCTION. THE LEGAL OWNERSHIP IN SUCH CASES CONTINUES TO BE WITH THE TRANSFEROR. 13 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 11.3 THESE AMENDMENTS SHALL COME INTO FORCE WITH EFFECT FROM APRIL 1, 1988, AND WILL, ACCORDINGLY, APPLY TO THE ASSESSMENT YEAR 1988 - 89 AND SUBSEQUENT YEARS (SECTION 3(G) OF THE FINANCE ACT, 1987).' 13. THE LEGISLATIVE INTENT BEHIND INCORPO RATING CLAUSE (V) TO SECTION 2(47) OF THE ACT FROM THE ASSESSMENT YEAR 1988 - 89 AS DISCERNIBLE FROM THE CENTRAL BOARD OF DIRECT TAXES CIRCULAR IS TO EMBRACE WITHIN ITS AMBIT THOSE TRANSACTIONS OF SALE OF PROPERTY WHERE THE ASSESSEE ENTERS INTO AGREEMENTS FO R DEVELOPING PROPERTIES WITH BUILDERS AND THE SELLER CONFERS THE RIGHTS AND PRIVILEGES OF OWNERSHIP TO THE BUYER WITHOUT EXECUTING/REGISTERING A FORMAL CONVEYANCE DEED IN ORDER TO AVOID CAPITAL GAINS TAX. IN ORDER TO THWART SUCH TENDENCIES, TRANSACTIONS WH ERE THE POSSESSION IS GIVEN OR ALLOWED TO BE RETAINED IN PART PERFORMANCE OF CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE 1882 ACT IS HELD TO BE 'TRANSFER' BY FICTION OF LAW THOUGH UNDER GENERAL LAW IT WOULD NOT BE CONSIDERED TO BE 'TRANSFER'. IN OTHER WORDS, BY DEEMING FICTION, 'TRANSFER' IS ASSIGNED EXTENDED MEANING FOR TAXATION PURPOSES BY INCORPORATING AND INCLUDING THAT WHERE POSSESSION OF ANY IMMOVABLE PROPERTY IS TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED T O IN SECTION 53A OF THE 1882 ACT. 14. IN CIT V. K. JEELANI BASHA [2002] 256 ITR 282 (MAD), THE MADRAS HIGH COURT HELD THAT ONCE POSSESSION, EVEN OF A PART OF THE PROPERTY WAS HANDED OVER TO THE TRANSFEREE, FOR THE PURPOSE OF SECTION 2(47)(V) READ WITH SECTION 45 OF THE ACT THE TRANSFER WAS COMPLETE. IT WAS HELD THUS (PAGE 287) : 'IN THIS CASE, POSSESSION WAS PARTED WITH WHEREAS THE ASSESSEE/ VENDOR RECEIVED THE CONSIDERATION THEREFOR. ONCE POSSESSION, EVEN OF A PART OF THE PROPERTY WAS HANDED OVER TO THE T RANSFEREE FOR THE PUR POSE OF SECTION 2(47)(V) READ WITH S ECTION 45, THE TRANSFER WAS COM PLETE AND, THEREFORE, THE TAX AUTHORITIES AND MORE PARTICULARLY, THE TRIBUNAL WERE JUSTIFIED TO CALCULATE THE CONSIDERATION RECEIVED IN THAT PARTICULAR YEAR FOR THAT PART OF THE PROPERTY WHICH WAS PARTED WITH. IN FACT, A REFERENCE CAN BE MADE TO THE JU DGMENT OF THE SUPREME COURT IN ALAPATI VENKATARAMIAH V. CIT [1965] 57 ITR 185 , WHICH MR.RAJAN RELIED UPON AND POINTED OUT THAT BEFORE THE AMENDMENT, TRANSFER WAS VERY STRICTLY CONSTRUED. IN THE SAID DECISION, T HE SUPREME COURT REFUSED TO ACCEPT THE AGREEMENT TO SELL OR THE ENTRIES MADE IN THE ACCOUNT FOR THE RECEIPT OF CONSIDERA TION BY THE TRANSFEROR AS A COM PLETED TRANSFER FOR THE PURPOSE OF THEN SECTION 12B. THE SUPREME COURT OBSERVED THAT TRANSFER MEANS EFFEC TIVE CONVEYANCE OF A CAPITAL ASSET TO THE TRANSFEREE AND DELIVERY OF POSSESSION OF IMMOVABLE PROPERTY COULD NOT BY ITSELF BE TREATED AS EQUIVALENT TO CONVEYANCE OF THE IMMOVABLE PROPERTY. RELYING ON THIS JUDGMENT, LEARNED COUNSEL POINTED OUT THAT THE AMEND MENT HAS EFFECTED A SEA CHANGE IN LAW, INASMUCH AS UNDER SECTION 2(47), DELIVERY OF POSSESSION PROVIDED IT IS IN THE NATURE AS CONTEMPLATED IN SECTION 53 A OF THE TRANSFER OF PRO PERTY ACT, WOULD BE ENOUGH TO BRING THE TRANSACTION INTO THE MISCHIEF OF THE WO RD 'TRANSFER'. THE ARGUMENT IS UNDOUBTEDLY CORRECT. SECTION 2(47)(V) HAS PROBABLY BEEN INTRODUCED TO MEET THE LAW LAID DOWN IN THIS JUDGMENT, WHEREIN THERE USED TO BE A TRANSFER FOR ALL THE PRACTICAL PURPOSES, BUT THE TAX COULD BE AVOIDED ONLY ON THE SOLE GROUND THAT THE TRANSACTION WAS NOT COMPLETED BY WAY OF A SALE DEED. NOW, THE LAW HAVING UNDERGONE THE CHANGE, IT WOULD BE CLEAR THAT WHERE THERE WOULD BE A TRANSFER OF POSSESSION IN THE NATURE AS CON TEMPLATED UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT, THE TRANSACTION WOULD BE COVERED AS A TRANSFER. BY NECESSARY LOGIC THEN, THAT TRANSACTION WOULD BE COVERABLE IN THAT PARTICULAR ASSESSMENT YEAR AS HAS BEEN HELD BY THE DELHI HIGH COURT. THE ONLY QUESTION WAS AS TO WHETHER A TRANSACTION COULD BE CO NSI DERED FOR THE PURPOSE OF CAL CULATION OF CAPITAL GAINS IN PARTS. TH E POSITION IN LAW HAS BEEN INDI CATED BY THE DELHI HIGH COURT THAT IT CAN BE SO TREATED IN PARTS. 14 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 WE RESPECTFULLY AGREE WITH THE DELHI HIGH COURT JUDGMENT. HOWEVER, THE ONLY CONDITIONS WOULD BE THAT (1) SUCH A DELIVERY OF POSSESSION SHOULD BE IN THE NATURE OF A DOCTRINE OF PART PERFORMANCE UNDER SECTION 53A FOR WHICH THERE SHOULD BE AN AGREEMENT BETWEEN THE PARTIES, (2) SUCH AGREEMENT SHOULD BE IN WRITING, (3) A COMPLETED CONTRACT HAS TO BE SP ELT OUT FROM THAT AGREEMENT, AND T HE MOST IMPORTANT (4) THE TRANS FER OF POSSESSION OF THE PROPERTY IN PURSUANCE OF THE SAID AGREEMENT. ALL THESE CONDITIONS UNDOUBTEDLY AND ADMITTEDLY ARE COMPLETED HERE. IF THAT IS SO, THEN THERE WOULD BE NO QUESTION OF INT ERFERING WITH THE TRIBUNAL'S JUDGMENT. IN OUR OPINION, THE TRIBUNAL HAS CORRECTLY HELD THAT THE ASSESSEE WOULD HAVE TO BE ASSESSED ON THE BASIS OF THE TRANS FER OF THE POSSESSION IN PROPORTIONATE TO THE CONSIDERATION.' 15. SIMILAR PROVISIONS WERE CONSIDERE D BY THE BOMBAY HIGH COURT IN CHATURBHUJ DWARKADAS KAPADIA V. CIT [2003] 260 ITR 491 (BOM), WHEREIN IT WAS HELD THAT SECTION 2(47)(V) READ WITH SECTION 45 OF THE ACT INDICATES THAT CAPITAL GAINS WAS TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS WERE ENTERED INTO EVEN IF THE TRANSFER OF IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW. THE RELEVANT FINDINGS READ THUS (PAGE 499) : 'UNDER SECTION 2(47)(V), ANY TRANSA CTION INVOLVING ALLOWING OF POS SESSION TO BE TAKEN OVER OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT WOULD COME WITHIN THE AMBIT OF SECTION 2(47)(V). THAT, IN ORDER TO ATTRACT SECTION 53A, THE FOLLOWING CONDIT IONS NEED TO BE FULFILLED. THERE SHOULD BE A CONTRACT FOR CONSIDERATION ; IT SHOULD BE IN WRITING ; IT SHOULD BE SIGNED BY THE TRANSFEROR ; IT SHOULD PERTAIN TO TRANSFER OF IMMOVABLE PROPERTY ; THE TRANSFEREE SHOULD HAVE TAKEN POSSESSION OF THE PROPERTY ; LASTLY, THE TRANSFEREE SHOULD BE READY AND WILLING TO PER FORM HIS PART OF THE CONTRACT. THAT EVEN ARRANGEMENTS CONFIRMING PRIVILEGES OF OWNERSHIP WITHOUT TRANSFE R OF TITLE COULD FALL UNDER SEC TION 2(47)(V). SECTION 2(47)(V) WAS INTRODUCED IN THE ACT FROM THE ASSESSMENT YEAR 1988 - 89 BECAUSE PRIOR THERETO, IN MOST CASES, IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT NO TRANSFER TOOK PLACE TILL EXECUTION OF THE CONVEYANCE. CONSEQUENTLY, THE ASSESSEES USED TO ENTER INTO AGREEMENTS FOR DEVELOPING PROPERTIES WITH THE BUILDERS AND UNDER THE ARRANGEMENT WITH THE BUIL DERS, THEY USED TO CONFER PRIVI LEGES OF OWNERSHIP WITHOUT EXECUTING CONVEYANCE AND TO PLUG THAT LOOPHOLE, SECTION 2(47)(V) CAME TO BE INTRODUCED IN THE ACT. IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT T HERE WAS NO EFFECTIVE TRANSFER TILL GRANT OF IRREVOCABLE LICENC E. IN THIS CONNECTION, THE JUDG MENTS OF THE SUPREME COURT WERE CITED ON BEHALF OF THE ASSESSEE, BUT ALL THOSE JUDGMENTS WERE PRIOR TO INTRODUCTION OF THE CONCEPT OF DEEMED TRANSFER UNDER SECTIO N 2(47)(V). IN THIS MATTER, THE AGREEMENT IN QUESTION IS A DEVELOPMENT AG REEMENT. SUCH DEVELOPMENT AGREE MENTS DO NOT CONSTITUTE TRANSFER IN GENERAL LA W. THEY ARE SPREAD OVER A PERIO OF TIME. THEY CONTEMPLATE VARIOUS STAGES. THE BOMBAY HIGH COURT IN VARIOUS JUDGMENTS HAS TAKEN THE VIEW IN SEVERAL MATTERS THAT THE OBJECT OF ENTERING INTO A DEVELOPMENT AGREEMENT IS TO ENABLE A PROFESSIONAL BUILDER/CONTRACTOR TO MAKE PROFITS BY COMPLETING THE BUILDING AND SELLING THE FLATS AT A PROFIT. THAT THE AIM OF THESE PRO FESSIONAL 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 CON STRUCTING THE BUILDING (SEE GURUDEV DEVELOPER S V. KURLA KONKAN NIWAS CO - OPER ATIVE HOUSING SOCIETY [2000] 3 MAH LJ 131). IT IS PRECISELY FOR THIS REASON THAT THE LEGISLATURE HAS INTRODUCED SECTION 2(47)(V) READ WITH SECTION 45 WHICH INDICATES THAT CAPITAL G AINS IS TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO EVEN IF THE TRANSFER OF IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW. IN THIS 15 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 CASE THAT TEST HAS NOT BEEN APPLIED BY THE DEPARTMENT. NO REASON HAS BEEN GIVEN W HY THAT TEST HAS NOT BEEN APPLIED, PARTICULARLY WHEN THE AGREEMENT IN QUESTION, READ AS A WHOLE, SHOWS THAT IT IS A DEVELOPMENT AGREEMENT. THERE IS A DIFFERENCE BETWEEN THE CONTRACT ON THE ONE HAND AND THE PERFORMANCE ON THE OTHER HAND. IN THIS CASE, THE T RIBUNAL 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 SUBSTANTIAL PERMISSIONS WERE OBTAINED. IN SUCH CASES OF DEVELOPMENT AGREEMENTS, ONE CANNOT GO BY SUBSTANTIAL PERFORMANCE OF A CONTRACT. IN SUCH CASES, THE YEAR OF CHARGEABILITY IS THE YEAR IN WHICH THE CON TRACT IS EXECUTED. THIS IS IN VIEW OF SECTION 2(47)(V) OF THE ACT.' 16. FURTHER, THE MADRAS HIGH COURT IN CIT V. G. SAROJA [2008] 301 ITR 124 (MAD) HAD NOTICED AS UNDER (PAGE 129) : 'SECTION 2(47)(V) OF THE INCOME - TAX ACT COMES INTO THE AID OF THE DEPARTMENT ONLY IF THE CONDITIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT ARE SATISFIED. FROM A READING OF THE ABOVE PROVISIONS, IT IS CLEAR THAT UNLESS THERE IS A WRITTEN AGREEMENT, SECTION 53A OF THE TRANSFER OF PROPERTY ACT WILL NOT COME INTO OPERATION. IN THE PRESENT CASE, THERE IS NO WRITTEN AGREEMENT AND NO SA LE CONSIDERATION WAS RECEIVED DURING THE RELEVANT PERIOD. THE REVENUE IS ALSO UNABLE TO PROVE THAT THE ASSESSEE HAD PUT THE DEVELOPER IN POSSESSION OF THE PROPERTY BY RECEIVING THE CONSIDERATION PARTLY OR IN FULL. THE FACT REMAINS THAT THERE IS NO SALE AGR EEMENT BETWEEN THE ASSESSEE AND THE BUILDER AND ALSO THE ASSESSEE HAD NOT RECEIVED THE SALE CONSIDERATION. HENCE, THE TRIBUNAL IS RIGHT IN HOLDING THAT THERE IS NO TRANSFER OF PROPERTY, AS CONTEMPLATED UNDER SECTION 2(47(V) OF THE ACT. THE REA SONS GIVEN B Y THE TRIBUNAL ARE BASED ON VALID MATERIALS AND EVIDENCE AND WE DO NOT FIND ANY ERROR OR LEGAL INFIRMITY IN THE ORDER OF THE TRI BUNAL SO AS TO WARRANT INTERFERENCE.' 17. ADVERTING TO CLAUSE (VI) OF SECTION 2(47) OF THE ACT, IT MAY BE NOTICED THAT THE SCOPE AND AMBIT OF THIS CLAUSE AS EXPLAINED BY THE CENTRAL BOARD OF DIRECT TAXES IN ITS CIRCULAR NO. 495, DATED SEPTEMBER 22, 1987, HAS ALREADY BEEN REPRODUCED ABOVE. ON A PERUSAL OF THIS CLAUSE, IT WOULD BE CLEAR THAT IT WAS INTENDED TO COVER THOSE CASES OF TR ANSFER OF OWNERSHIP WHERE THE PROSPECTIVE BUYER BECOMES OWNER OF THE PROPERTY BY BECOMING A MEMBER OF A COMPANY, CO - OPERATIVE SOCIETY, ETC. IN THE PRESENT CASE, JDA WAS EXECUTED BETWEEN THE SOCIETY AND THE DEVELOPERS AND THERE WAS NO TRANSACTION INVOLVING THE DEVELOPER BECOMING A MEMBER OF A CO - OPERATIVE SOCIETY/ COMPANY, ETC., IN TERMS OF SECTION 2(47)(VI) OF THE ACT. THE SURRENDER OF RIGHT TO OBTAIN A PLOT BY THE MEMBERS WAS FOR FACILITATING THE SOCIETY TO ENTER INTO THE JDA WITH THE DEVELOPERS. THERE WAS NO CHANGE IN THE MEMBERSHIP OF THE SOCIETY AS CONTEMPLATED UNDER SECTION 2(47)(VI) OF THE ACT. EQUALLY, CLAUSE (II) OF SECTION 2(47) OF THE ACT HAS NO APPLICABILITY INASMUCH AS THERE WAS NO EXTINGUISHMENT OF ANY RIGHTS OF THE ASSESSEE IN THE CAPITAL ASSET AT THE TIME OF EXECUTION OF THE JDA IN THE ABSENCE OF ANY REGISTERED CONVEYANCE DEED IN FAVOUR OF THE TRANSFEREE IN VIEW OF THE JUDGMENTS IN ALAPATI VENKATARAMIAH V. CIT [1965] 57 ITR 185 (SC) AND ADDL. CIT V. MERCURY GENERAL CORPORATION (P.) LTD. [1982] 133 ITR 525 (DELHI). 18. FOR DETERMINING THE INGREDIENTS FOR APPLICABILITY OF SECTION 53A OF THE 1882 ACT, IT WOULD BE ESSENTIAL TO REPRODUCE THE RELEVANT PROVISION WHICH READS AS UNDER : 'SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 16 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 53A. PART PERFORMANCE. WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY BY WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CO NSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY, 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 POSSESSION I N PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE OF THE CONTRACT, AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT, THEN, NOTWITHSTANDING THAT WHERE THERE IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFOR BY THE LAW FOR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RE SPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSSESSION, OTHER THAN A RIGHT EXPRESSLY PROVIDED BY THE TERMS OF THE CONTRACT : PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF THE CONTRACT OR OF THE PART PERFORMANCE THEREOF.' 19. ANALYSING THE SCOPE OF SECTION 53A OF THE 1882 ACT, NECESSARILY, THE LEGISLATIVE HISTORY OF THE PROVISION IS REQUIRED TO BE SCRUTINISED. SECTION 53A WAS INSERTED IN 1929 BY THE TRANSFER OF PROPERTY (AMENDMENT) ACT, 1929, AND IMPORTS INTO INDIA IN A MODIFIED FORM THE EQUITY OF PART PERFORMANCE AS IT DEVELOPED IN ENGLAND OVER THE YEARS. THE DOCTRINE OF PART PERFORMANCE AS ENSHRINED IN SECTION 53A OF THE 1882 ACT IS AN EQUITABLE DOCTRINE WHICH CREATES A BAR OF ESTOPPEL IN FAVOUR OF THE TRANSFEREE AGAINST THE TRANSFEROR. SECTION 53A OF THE 1882 ACT PROVIDES PROTECTION TO A TRANSFEREE TO RETAIN HIS POSSESSION WHERE IN PART PERFORMANCE OF THE CONTRACT, HE HAD TAKEN POSSESSION OF THE PROPERTY EVEN IF THE LIMITATION TO BRING A SUIT FOR SPECIFIC PERFORMANCE HAD EXPIRED. BUT THERE ARE CERTAIN CONDITIONS WHICH ARE REQUIRED TO BE FULFILLED IF A TRANSFEREE WANTS TO DEFEND OR PROTECT HIS POSSESSION UNDER SECTION 53A OF THE 1882 ACT. THE SUPREME COURT IN SH RIMANT SHAMRAO SURYAVANSHI V. PRALHAD BHAIROBA SURYAVANSHI, AIR 2002 SC 960, HAD REITERATED THE FOLLOWING TO BE NECESSARY CONDITIONS FOR APPLICABILITY OF SECTION 53A OF 1882 ACT : '(1) THERE MUST BE A CONTRACT TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PR OPERTY ; (2) THE CONTRACT MUST BE IN WRITING, SIGNED BY THE TRANSFEROR, OR BY SOMEONE ON HIS BEHALF ; (3) THE WRITING MUST BE IN SUCH WORDS FROM WHICH THE TERMS NECES SARY TO CONSTRUE THE TRANSFER CAN BE ASCERTAINED ; (4) THE TRANSFEREE MUST IN PART PERFOR MANCE OF THE CONTRACT TAKE POSSESSION OF THE PROPERTY, OR OF ANY PART THEREOF ; (5) THE TRANSFEREE MUST HAVE DONE SOME ACT IN FURTHERANCE OF THE CONTRACT ; AND (6) THE TRANSFEREE MUST HAVE PERFORMED OR BE WILLING TO PERFORM HIS PART OF THE CONTRACT.' 20. F OLLOWING THE AFORESAID PRONOUNCEMENT, THE APEX COURT IN RAMBHAU NAMDEO GAJRE V. NARAYAN BAPUJI DHOTRA [2004] 8 SCC 614 OBSERVED AS UNDER : 'PROTECTION PROVIDED UNDER SECTION 53A OF THE ACT TO THE PROPOSED TRANSFEREE IS A SHIELD ONLY AGAINST THE TRANSFEROR. IT DISENTITLES THE TRANSFEROR FROM DISTURBING THE 17 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 POSSESSION OF THE PROPOSED TRANSFEREE WHO IS PUT IN POSSESSION IN PURSUANCE TO SUCH AN AGREEMENT. IT HAS NOTHING TO DO WITH THE OWNERSHIP OF THE PROPOSED TRANSFEROR WHO REMAINS FULL OWNER OF THE PROPERTY T ILL IT IS LEGALLY CONVEYED BY EXECUTING A REGISTERED SALE DEED IN FAVOUR OF THE TRANSFEREE. SUCH A RIGHT TO PROTECT POSSESSION AGAINST THE PROPOSED VENDOR CANNOT BE PRESSED IN SERVICE AGAINST A THIRD PARTY.' AN AGREEMENT OF SALE WHICH FULFILLED THE INGREDI ENTS OF SECTION 53A OF THE 1882 ACT WAS NOT REQUIRED TO BE EXECUTED THROUGH A REGISTERED INSTRUMENT EITHER UNDER THE 1882 ACT OR THE INDIAN REGISTRATION ACT, 1908 (IN SHORT, 'THE 1908 ACT') AS ORIGINALLY ENACTED. 21. THE REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001 (IN SHORT, 'THE 2001 ACT') HAS BROUGHT ABOUT A RADICAL CHANGE IN THE RIGHTS FLOWING ON THE BASIS OF AGREEMENTS EXECUTED IN PART PERFORMANCE OF THE CONTRACT UNDER SECTION 53A OF THE 1882 ACT. THE AMENDMENTS HAVE BEEN MADE IN SECTION 5 3A OF THE 1882 ACT AND SECTIONS 17 AND 49 OF THE 1908 ACT. THE AMENDMENT, VIDE THE 2001 ACT WHICH STOOD ENFORCED WITH EFFECT FROM SEPTEMBER 24, 2001, THE WORDS 'THE CONTRACT, THOUGH REQUIRED TO BE REGISTERED, HAS NOT BEEN REGISTERED, OR' IN SECTION 53A OF THE 1882 ACT HAVE BEEN OMITTED. SIMULTANEOUSLY, SECTIONS 17 AND 49 OF THE 1908 ACT HAVE BEEN AMENDED CLARIFYING THAT UNLESS THE DOCUMENT CONTAINING CONTRACT TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY FOR THE PURPOSE OF SECTION 53A OF THE 1882 ACT IS REGISTERED, IT SHALL NOT HAVE EFFECT FOR PURPOSES OF SECTION 53A OF THE 1882 ACT. SECTION 17(1A) AS INCORPORATED AND SECTION 49 OF THE 1908 ACT AS AMENDED READ THUS : '17. (1A) THE DOCUMENTS CONTAINING CONTRACTS TO TRANSFER FOR CON SIDERATION, ANY IMMO VABLE PROPERTY FOR THE PURPOSE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882), SHALL BE REGISTERED IF THEY HAVE BEEN EXECUTED ON OR AFTER THE COMMENCEMENT OF THE REGIS TRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001, AND IF SUCH DOCU MENTS ARE NOT REGISTERED ON OR AFTER SUCH COMMENCEMENT, THEN, THEY SHALL HAVE NO EFFECT FOR THE PURPOSES OF THE SAID SECTION 53A.' '49. EFFECT OF NON - REGISTRATION OF DOCUMENTS REQUIRED TO BE REGIS TERED. NO DOCUMENT REQUIRED BY SECTION 17 OR BY ANY PROVISI ON OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882), TO BE REGISTERED SHALL (A) AFFECT ANY IMMOVABLE PROPERTY COMPRISED THEREIN, OR (B) CONFER ANY POWER TO ADOPT, OR (C) BE RECEIVED AS EVIDENCE OF ANY TRANSACTION AFFECTING SUCH PRO PERTY OR CONFERRING SUCH POWER,UNLESS IT HAS BEEN REGISTERED : PROVIDED THAT AN UNREGISTERED DOCUMENT AFFECTING IMMOVABLE PROPERTY AND REQUIRED BY THIS ACT OR THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882), TO BE REGISTERED MAY BE RECEIVED AS EVIDENCE OF A CONTRACT IN A SUI T FOR SPECIFIC PERFORMANCE UNDER CHAPTER II OF THE SPECIFIC RELIEF ACT, 1877 (1 OF 1877) OR AS EVIDENCE OF ANY COLLATERAL TRANSACTION NOT REQUIRED TO BE EFFECTED BY REGISTERED INSTRUMENT.' 18 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 THE WORDS 'OR AS EVIDENCE OF PART PERFORMANCE OF A CONTRACT FOR THE PUR POSES OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882' HAVE BEEN OMITTED FROM THE PROVISO TO SECTION 49. 22. SECTION 17(1A) OF THE 1908 ACT INTRODUCED BY THE 2001 ACT PROVIDES THAT NO BENEFIT WOULD BE ADMISSIBLE ON THE BASIS OF UNREGISTERED CONTR ACT FOR THE PURPOSES OF SECTION 53A OF THE 1882 ACT. EQUALLY, DELETION OF THE WORDS 'OR AS EVIDENCE OF PART PERFORMANCE OF A CONTRACT FOR THE PURPOSES OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT' FROM THE PROVISO TO SECTION 49 OF THE 1908 ACT CLARIFIES THE EFFECT OF NON - REGISTRATION OF A CONTRACT EXECUTED IN TERMS OF SECTION 53A OF THE 1882 ACT. A DIVISION BENCH OF THIS COURT INTERPRETING THE AFORESAID PROVISIONS IN RAM KISHAN V. BIJEDER MANN ALIAS VIJENDER MANN [2013] 1 PLR 195 HAD SUCCINCTLY LAID DOWN AS UNDER : '7. A CONTRACT/AGREEMENT THAT SATISFIES THE INGREDIENTS OF SECTION 53A OF 1882 ACT WAS NOT COMPULSORY REGISTRABLE WHETHER UNDER THE TRANSFER OF PROPERTY ACT OR THE INDIAN REGISTRATION ACT, 1908. 8. THE REGISTRATION AND OTHER RELATED LAWS (AMENDM ENT) ACT, 2001 (HEREINAFTER REFERRED TO AS THE 'AMENDMENT ACT OF 2001') HAS, HOWEVER, BROUGHT ABOUT A PARADIGM SHIFT IN RIGHTS FLOWING FROM AGREEMENTS EXECUTED UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. SECTION 17(1A) OF THE INDIAN REGISTRATION ACT INTRODUCED BY THE AMENDMENT ACT OF 2001 PROVIDES THA T CONTRACTS TO TRANSFER FOR CON SIDERATION ANY IMMOVABLE PROPERTY FOR THE PURPOSE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882, SHALL BE REGISTERED IF THEY HAVE BEEN EXECUTED ON OR AFTER THE COMME NCEMENT OF THE REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001. SECTION 17(1A) FURTHER PROVIDES THAT, IN CASE, SUCH A DOCUMENT IS NOT REGISTERED, IT SHALL HAVE NO EFFECT, FOR THE PURPOSE OF SECTION 53A. A COMBINED READING OF SEC TIONS 53A AND 17(1 A), REVEALS THAT A C ONTRACT THAT EVIDENCES PART PER FORMANCE, AS ENVISAGED BY SECTION 53A OF THE TRANSFER OF PROPERTY ACT SHALL, AFTER ENACTMENT OF SECTION 17(1A), BE COMPULSORILY REGISTRABLE AND IF NOT SO REGISTERED, SHALL HAVE NO EFFECT FOR THE PURPOSE OF SECTION 53A OF THE 1882 ACT. SECTION 17(1A) READS AS FOLLOWS : 'SECTION 17(1A) OF THE INDIAN RE GISTRATION ACT, 1908. THE DOCU MENTS CONTAINING CONTRACTS TO TRANSFER FOR CONSIDERATION, ANY IMMOVABLE PROPERTY FOR THE PURPOSE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882), SHALL BE REGISTERED IF THEY HAVE BEEN EXECUTED ON OR AFTER THE COMMENCEMENT OF THE REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001, AND IF SUCH DOCUMENTS ARE NOT REGISTERED ON OR AFTER SUCH COMMENCEMENT, THEN, T HEY SHALL HAVE NO EFFECT FOR THE PURPOSES OF THE SAID SECTION 53A. 9. SECTION 17(1A) OF THE 1908 ACT DECLARES IN NO UNCERTAIN TERMS IF A CONTRACT EXECUTED IN PART PERFORM ANCE OF AN AGREEMENT IS UNREGIS TERED, IT SHALL HAVE NO EFFECT FOR THE PURPOSE OF SECTI ON 53A OF THE 1882 ACT. SECTION 17(1A) DOES NOT REFER TO MUCH LESS PROHIBIT THE FILING OF A SUIT FOR SPECIFIC PERFORMANCE OR LEAD ING OF SUCH A CONTRACT INTO EVI DENCE. 10. THE AMENDMENT ACT ALSO INTRODUCED A PROVISO TO SECTION 49 OF THE INDIAN REGISTRATION ACT TO CLARIFY THE EFFECT OF NON - REGISTRATION OF A CONTRACT EXECUTED IN TERMS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT. SECTION 49 OF THE REGISTRATION ACT 1908, READS AS FOLLOWS : 19 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 '49. EFFECT OF NON - REGISTRATION OF DOCUMENTS REQUIRED TO BE REGIS TERED . NO DOCUMENT REQUIRED BY SECTION 17 OR BY ANY PROVISION OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882), TO BE REGISTERED SHALL (A) AFFECT ANY IMMOVABLE PROPERTY COMPRISED THEREIN, OR (B) CONFER ANY POWER TO ADOPT, OR (C) BE RECEIVED AS EVIDENCE OF ANY TRANSACTION AFFECTING SUCH PRO PERTY OR CONFERRING SUCH POWER, UNLESS IT HAS BEEN REGISTERED : PROVIDED THAT AN UNREGISTERED DOCUMENT AFFECTING IMMOVABLE PROPERTY AND REQUIRED BY THIS ACT OR THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882), TO BE REGISTE RED MAY BE RECEIVED AS EVIDENCE OF A CONTRACT IN A SUIT FOR SPECIFIC PERFORMANCE UNDER CHAPTER II OF THE SPECIFIC RELIEF ACT, 1877 (1 OF 1877), OR AS EVIDENCE OF PART PERFORM ANCE OF A CONTRACT FOR THE PURPOSES OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT , 1882 (4 OF 1882) OR AS EVIDENCE OF ANY COLLATERAL TRANS ACTION NOT REQUIRED TO BE EFFECTED BY REGISTERED INSTRUMENT.' 11. A CONJOINT APPRAISAL OF SECTIONS 53A OF THE TRANSFER OF PROPERTY ACT, 1882, SECTIONS 17(1A) AND 49 OF THE INDIAN REGISTRATION ACT, 1 908, PARTICULARLY THE PROVISO TO SECTION 49 OF THE INDIAN REGISTRATION ACT, IN OUR CONSIDERED OPINION, LEAVES NO AMBIGUITY THAT, THOUGH, A CONTRACT ACCOMPANIED BY DELIVERY OF POSSESSION OR EXECUTED IN FAVOUR OF A PER SON IN POSSESSION, IS COMPULSORILY REGI STRABLE UNDER SECTION 17(1A) OF THE REGISTRATION ACT, 1908, BUT THE FAILURE TO REGISTER SUCH A CONTRACT WOULD ONLY DEPRIVE THE PERSON IN POSSESSION OF ANY BENEFIT CONFERRED BY SECTION 53A OF THE 1882 ACT. THE PROVISO TO SECTION 49 OF THE INDIAN REGISTRATIO N ACT CLEARLY POSTULATES THAT NON - REGISTRATION OF SUCH A CONTRACT WOULD NOT PROHIBIT THE FILING OF A SUIT FOR SPECIFIC PERFORM ANCE BASED UPON SUCH AN AGREEMENT OR THE LEADING OF SUCH AN UNREGISTERED AGREEMENT INTO EVIDENCE. 12. A SUIT FOR SPECIFIC PERFORMA NCE BASED UPON AN UNREGISTERED AGREEMENT TO SELL ACCOMPANIED BY DELIVERY OF POSSESSION OR EXECUTED IN FAVOUR OF A PERSON WHO IS ALREADY IN POSSESSION, CANNOT, THEREFORE, BE SAID TO BE BARRED BY SECTION 17(1A) OF THE REGISTRATION ACT, 1908. 13. SECTION 17(1 A) MERELY DECLARES THAT SUCH AN UNREGISTERED CON TRACT SHALL NOT BE PRESSED INTO SERVICE FOR THE PURPOSE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 18 82. SECTION 17(1A) OF THE REGIS TRATION ACT, 1908, DOES NOT, WHETHER IN SPECIFIC TERMS OR BY NECESSARY INTENT, PROHIBIT THE FILING OF A SUIT FOR SPECIFIC PERFORMANCE BASED UPON AN UNREGISTERED AGREEMENT TO SELL, THAT RECORDS DELIVERY OF POSSESSION OR IS EXECUTED IN FAVOUR OF A PERSON TO WHOM POSSESSION IS DELIVERED AND THE PROVISO TO SECTION 49 OF THE INDI AN REGISTRATION ACT, 1908, PUT PAID TO ANY ARGUMENT TO THE CONTRARY. 14. WE, THEREFORE, HOLD THAT : (A) A SUIT FOR SPECIFIC PERFORMANCE, BASED UPON AN UNREGISTERED CONTRACT/AGREEMENT TO SELL THAT CONTA INS A CLAUSE RECORDING PART PER FORMANCE OF THE CONTRAC T BY DELIVERY OF POSSESSION OR HAS BEEN EXECUTED WITH A PERSON, WHO IS ALREADY IN POSSESSION SHALL NOT BE DIS MISSED FOR WANT OF REGISTRATION OF THE CONTRACT/AGREEMENT ; 20 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 (B) THE PROVISO TO SECTION 49 OF THE REGISTRATION ACT, LEGITIMISES SUCH A CONTRACT TO THE EXTENT THAT, EVEN THOUGH UNREGISTERED, IT CAN FORM THE BASIS OF A SUIT FOR SPECIFIC PERFORMANCE AND BE LED INTO EVI DENCE AS PROOF OF THE AGREEMENT OR PART PERFORMANCE OF A CONTRACT.' IN SUKHWINDER KAUR V. AMARJIT SINGH [2012] ILR 2 P&H 718, A SINGLE BENCH OF THIS COURT OBSERVED AS FOLLOWS : '8. SECTION 53A OF THE TRANSFER OF PROPERTY ACT BEFORE AMENDMENT PRESCRIBED THAT WHERE IN PURSUANCE TO PART PERFORMANCE OF THE CON TRACT, THE TRANSFEREE HAS TAKEN POSSESSION OF THE PROPERTY AND HAS DONE SOME ACT IN FURTHERANCE OF THE CONTRACT, AND THE TRANSFEROR HAS PERFORMED OR IS WILL TO PERFORM HIS PART OF THE CONTACT THEN DESPITE THE FACT THAT THE CONTRACT WAS REQUIRED TO BE REGISTERED AND HAS NOT BEEN REGISTERED, THE TRANSFERRER SHALL BE DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE ANY RIGHT OTHER THAN A RIGHT EXPRESSLY PROVIDED BY THE CONTRACT. MEANING THEREBY, SECTION 53A OF THE TRANSFER OF PROPERTY ACT RECOGNISED PART PERFORMANCE OF THE CONTRACT EVEN THOUGH THE CON TRACT USED TO BE UNREGISTERED AND THE TRAN SFEREE'S RIGHTS TO REMAIN IN POSSESSION WAS PROTECTED. BY THE AMENDMENT ACT NO. 48 OF 2001 (WITH EFFECT FROM SEPTEMBER 24, 2001), THE WORDS 'THE CONTRACT, THOUGH REQUIRED TO BE REGISTERED, HAS NOT BEEN REGISTERED, OR' HAVE BEEN OMITTED FROM THE PROVISION. THE EFFECT OF THE AMENDMENT IS THAT NOW IF ANY PERSON TAKES POSSESSION IN PURSUANCE TO A CONTRACT WHICH IS REQUIRED TO BE REGISTERED BUT HAS NOT BEEN REGISTERED, THE TRANSFEREE HAS NO RIGHT TO REMAIN IN POSSESSION OF THE PROPERTY. TO GIVE EFFECT TO THIS PR INCIPLE, SECTION 17(1A) HAS ACCORDINGLY BEEN INSERTED IN THE ACT WHICH MANDATES THAT SUCH CONTRACT IS NOW REQUIRED TO BE REGISTERED. IF SUCH A CONTRACT ENTERED INTO AFTER THE AMENDMENT IS NOT REGISTERED THEN PER SECTION 49 OF THE ACT, THE SAME CAN NEITHER AFFECT ANY IMMOVABLE PROPERTY COMPRISED THEREI N NOR WILL IT BE RECEIVED AS EVI DENCE OF ANY TRANSACTION AFFECTING SUCH PROPERTY OR CONFERRING SUCH POWER.' SIMILARLY, THE DELHI HIGH COURT IN MAC ASSOCIATES V. S. P. SINGH CHANDEL RFA NO. 518 OF 2011, DECIDED ON FEBRUARY 7, 2013, DEALING WITH THE ES SEN TIAL REQUIREMENTS OF REGISTRATION IN AN AGREEMENT UNDER SECTION 53A OF THE 1882 ACT AFTER SEPTEMBER 24, 2001, NOTICED AS UNDER : '13. IF THE MATTER IS VIEWED FROM ANOTHER ANGLE THEN ALSO SUIT FOR POSSESSION ON THE BASIS OF COLLABORATION AGREEMENT, WHICH AT BEST CAN BE TAKEN AT PAR WITH THE AGREEMENT TO SELL, IS NOT MAINTAINABLE EVEN IF, FOR THE SAKE OF ARGUMENTS, IT IS ACCEPTED THAT THE RESPONDENT WAS AGENT OF APPELLANT. AGREEMENT TO SELL DOES NOT VEST ANY RIGHT IN FAVOUR OF A PERSON TO THE POSSESSION OF PROPERTY. EVEN IF A PERSON IS PUT IN POSSESSION OF PROPERTY THROUGH AN AGREEMENT TO SELL, HE CANNOT PROT ECT HIS POSSESSION ON THE P RETEXT OF PART PERFORMANCE UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882, UNLESS SUCH AN AGREEMENT IS A REGISTERED DOCUMENT. SECTION 17(1A) OF THE REGISTRATION ACT, 1908, WHICH HAS COME INTO FORCE WITH EFFECT FROM SEPTEMBER 24, 2001, READS AS UND ER : 'DOCUMENTS CONTAINING CONTRACTS TO TRANSFER FOR CONSIDERATION, ANY IMMOVABLE PROPERTY FOR PURPOSE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882), SHALL BE REGISTERED IF THEY HAVE BEEN EXECUTED ON OR AFTER THE COMMENCEMENT OF THE REG ISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001, AND IF SUCH DOCUMENTS ARE NOT REGISTERED ON OR AFTER SUCH COMMENCEMENT, THEN, THEY SHALL HAVE NO EFFECT FOR THE PURPOSES OF THE SAID SECTION 53A.' 21 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 ONCE A PERSON CANNOT EVEN PROTECT THE POSSESSION, WH ICH HE IS HOLDING, IN ABSENCE OF AN UNREGISTERED AGREEMENT TO SELL, THEN HOW SUCH A PERSON CAN SEEK POSSESSION ON THE BASIS OF SUCH A DOCUMENT. IN SUNIL KAPOOR V. HIMMAT SINGH [2010] 167 DELHI LAW TIMES 806, A SINGLE JUDGE OF THIS COURT HAS HELD THUS 'A ME RE AGREEMENT TO SELL OF IMMOVABLE PROPERTY DOES NOT CREATE ANY RIGHT IN THE PROPERTY SAVE THE RIGHT TO ENFORCE THE SAID AGREEMENT. THUS, EVEN IF THE RESPONDENTS/ PLAINTIFFS ARE FOUND TO HAVE AGREED TO SELL THE PROPERTY, THE PETITIONER/ DEFENDANT WOULD NOT GET ANY RIGHT TO OCCUPY THAT PROPERTY AS AN AGREEMENT PURCHASER. THIS COURT IN JIWAN DAS V. NARAIN DAS, AIR 1981 DELHI 291 HAS HELD THAT IN FACT NO RIGHT INURE TO THE AGREEMENT PURCHASER, NOT EVEN AFTER THE PASSI NG OF A DECREE FOR SPECIFIC PER FORMANCE AND TILL CONVEYANCE IN A CCORDANCE WITH LAW AND IN PURSU ANCE THERETO IS EXECUTED.' 23. HAVING ELABORATED THE SCOPE AND LEGISLATIVE INTENT OF SECTION 2(47)(II), (V) AND (VI) OF THE ACT AND ALSO THE MANDATORY INGREDIENTS FOR APPLICABILITY OF SECTION 53A OF THE 18 82 ACT, IT WOULD BE ESSENTIAL TO NOTICE THAT THE PROVISIONS OF SECTION 53A OF THE 1882 ACT HAVE BEEN INTRODUCED IN SECTION 2(47)(V) OF THE ACT BY INCORPORATION. THE CONCEPT OF INCLUSION OF A PROVISION OF ANOTHER STATUTE BY INCORPORATION HAS BEEN DEALT WITH BY THE APEX COURT IN DETAIL IN SURANA STEELS P. LTD. V. DEPUTY CIT [1999] 237 ITR 777 (SC). THE ISSUE BEFORE THE APEX COURT IN SURANA STEELS P. LTD.'S CASE (SUPRA) WAS RELATING TO COMPUTATION OF BOOK PROFIT UNDER SECTION 115J OF THE INCOME - TAX ACT, 1961. SECTION 205 OF THE COMPANIES ACT, 1956, PROVIDED THAT PAST LOSSES OR UNABSORBED DEPREC IATION, WHICHEVER IS LESS, SHALL BE ALLOWED AS SET OFF AGAINST THE BOOK PROFITS OF THE CURRENT YEAR FOR DETERMINING PROFITS FOR THE PURPOSE OF DECLARING DIVIDEND. EXPLANATION CLAUSE (IV) TO SECTION 115J OF THE ACT INCORPORATED THAT BOOK PROFITS SHALL BE RE DUCED BY THE AMOUNT OF THE LOSS OR THE AMOUNT OF DEPRECIATION WHICH WOULD BE REQUIRED TO BE SET OFF AGAINST THE PROFIT OF THE RELEVANT PREVIOUS YEAR AS IF THE PROVISIONS OF CLAUSE (6) OF THE FIRST PROVISO TO SUB SECTION (1) OF SECTION 205 OF THE COMPANIES ACT, 1956, ARE APPLICABLE. IT WAS PRONOUNCED THAT THERE IS NO REASON TO ASSIGN TO THE TERM 'LOSS' AS OCCURRING IN SECTION 205, PROVISO CLAUSE (B) OF THE COMPANIES ACT, A MEANING DIFFERENT FROM THE ONE IN WHICH IT IS UNDERSTOOD THEREIN SOLELY BECAUSE IT IS BEING READ ALONG WITH SECTION 115J OF THE ACT. WHILE DEALING WITH THE PRINCIPLES RELATING TO INTERPRETATION OF TAXING STATUTE WHERE THERE WAS INCLUSION OF A PROVISION OF ANOTHER STATUTE, IT WAS HELD THAT A PROVISION MUST BE CONSTRUED IN THE SENSE IT BORE I N THE STATUTE FROM WHICH IT IS TAKEN. IT WAS RECORDED AS UNDER (PAGE 785) : 'SECTION 115J, EXPLANATION CLAUSE (IV), IS A PIECE OF LEGISLATION BY INCORPORATION. DEALING WITH THE SUBJECT, JUSTICE G. P. SINGH STATES IN PRINCIPLES OF STATUTORY INTERPRETATION (7TH EDITION, 1999) : 'INCORPORATION OF AN EARLIER ACT INTO A LATER ACT IS A LEGISLATIVE DEVICE ADOPTED FOR THE SAKE OF CONVENIENCE IN ORDER TO AVOID VERBATIM REPRODUCTION OF THE PROVISIONS OF THE EARLIER ACT INTO THE LATER. WHEN AN EARLIER ACT OR CERTAIN OF ITS PROVISIONS ARE INCORPORATED BY REFERENCE INTO A LATER ACT, THE PROVISIONS SO I NCORPORATED BECOME PART AND PAR CEL OF THE LATER ACT AS IF THEY HAD BEEN 'BODILY TRANSPOSED INTO IT'. THE EFFECT OF INCORPORATION IS ADMIRABLY STATED BY LORD ESHER M. R. 'I F A SUBSEQUENT ACT BRINGS INTO ITSELF BY REFERENCE SOME OF THE CLAUSES OF A FORMER ACT, THE LEGAL EFFECT OF THAT, AS HAS OFTEN BEEN HELD, IS TO WRITE THOSE SECTIONS INTO THE NEW ACT AS IF THEY HAD BEEN ACTUALLY WRITTEN IN IT WITH THE PEN, OR PRINTED IN IT. ' (PAGE 233) 22 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 'EVEN THOUGH ONLY PARTICULAR SECT IONS OF AN EARLIER ACT ARE INCO PORATED INTO LATER, IN CONSTRUING THE INCORPORATED SECTIONS IT MAY BE AT TIMES NECESSARY AND PERMISSIBLE TO REFER TO OTHER PARTS OF THE EARLIER STATUTE WHICH ARE NOT INCORPORATED . AS WAS STATED BY LORD BLACKBURN : 'WHEN A SINGLE SECTION OF AN ACT OF PARLIAMENT IS INTRODUCED INTO ANOTHER ACT. I THINK IT MUST BE READ IN THE SENSE IT BORE IN THE ORIGINAL ACT FROM WHICH IT WAS TAKEN, AND THAT CONSEQUENTLY IT IS PERFECTLY 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'.' ' 24. SIMILARLY, FOLLOWING THE APEX COURT JUDGMENT IN SURANA STEELS P. LTD.'S CASE (SUPRA), THE GAUHATI HIG H COURT IN ASSAM BENGAL CARRIERS LTD. V. CIT [1999] 239 ITR 862 (GAUHATI), OBSERVED THAT WHEN A LEGAL FICTION IS CREATED FOR AN OBVIOUS PURPOSE, FULL EFFECT OF IT IS TO BE GIVEN. THE RELEVANT OBSERVATIONS READ THUS (PAGE 866) : 24. 'WHEN A LEGAL FICTION IS CREATED FOR AN OBVIOUS PURPOSE FULL EFFECT OF IT IS TO BE GIVEN THERE IS NO HALF WAY HOUSE. IN THIS REGARD IT WOULD BE ADVANTAGEOUS TO REHEARSE THE FOLLOWING PASSAGE FROM LORD ASQUITH IN EAST END DWELLINGS CO. LTD. V. FINSBURY BOROUGH COUNCIL [1951] 2 ALL ER 587 (HL) 'IF YOU ARE BIDDEN TO TREAT AN IMAGINARY STATE OF AFFAIRS AS REAL, YOU MUST SURELY, UNLESS PROHIBITED FROM DOING SO, ALSO IMAGINE AS REAL, THE CONSEQUENCES AND INCIDENTS WHICH, IF THE PUTATIVE STAT E OF AFFAIRS HAD IN FACT EXISTED, MUST INEVITABLY HAVE FLOWED FROM OR ACCOMPANIED IT . . . THE STATUTE SAYS THAT YOU MUST IMAGINE A CERTAIN STATE OF AFFAIRS, IT DOES NOT SAY THAT HAVING DONE SO, YOU MUST CAUSE OR PERMIT YOUR IMAGINATION TO BOGGLE WHEN IT C OMES TO THE INEVITABLE COROLLARIES OF THAT STATE OF AFFAIRS'. WHILE INTERPRETING THE DEEMING PROVISION CONTAINED IN SECTION 43 OF THE INDIAN INCOME - TAX ACT, 1922, THE PRIVY COUNCIL HELD THAT UNDER THE CIRCUMSTANCES SET OUT THEREIN AN AGENT WAS ALSO CHARGE ABLE TO INCOME - TAX AS OF AN ASSESSEE. IN CIT V. BOMBAY TRUST CORPORATION, AIR 1930 PC 54, VISCOUNT DUNEDIN IN THE AFORESAID CASE OBSERVED (PAGE 55) : 'NOW, WHEN A PERSON IS 'DEEMED TO BE' SOMETHING THE ONLY MEANING POSSIBLE IS THAT WHEREAS HE IS NOT IN REA LITY THAT SOMETHING THE ACT OF PARLIAMENT REQUIRES HIM TO BE TREATED AS IF HE WERE'. THE SUPREME COURT ALSO DEALT IN A SIMILAR MANNER INDICATED ALSO FOR GIVING FULL EFFECT TO A LEGAL FICTION REF. STATE OF BOMBAY V. PANDURANG VINAYAK, AIR 1953 SC 244 ; CIT V. S. TEJA SINGH [1959] 35 ITR 408 (SC) ; RAJPUTANA TRADING CO. LTD. V. CIT [1969] 72 ITR 286 (SC) ; A. S. GLITTRE D/5 I/S GARONNE V. CIT [1997] 225 ITR 739 (SC). THERE IS ALSO NO STATUTORY EXCEPTION EXCLUDING THE OPERATION OF SECTION 115J OF THE ACT.' THUS, IT WOULD MEAN THAT SECTION 53A OF THE 1882 ACT HAS BEEN BODILY TRANSPOSED INTO SECTION 2(47)(V) OF THE ACT AND THE EFFECT OF IT WOULD BE THAT SECTION 53A OF THE 1882 ACT SHALL BE TAKEN TO BE AN INTEGRAL PART OF SECTION 2(47)(V) OF THE ACT. IN OTHER WORDS, THE LEGAL REQUIREMENTS OF SECTION 53A OF 1882 ACT ARE REQUIRED TO BE FULFILLED SO AS TO ATTRACT THE PROVISIONS OF S ECTION 2(47)(V) OF THE ACT. 25. EXAMINING THE QUESTION OF POSSESSION, ONE OF THE ESSENTIAL CONDITIONS FOR ENFORCEABILITY OF SECTION 53A OF THE 1882 ACT IS THAT THE TRANSFEREE MUST IN PART PERFORMANCE OF THE CONTRACT TAKE POSSESSION OF THE PROPERTY OR ANY P ART THEREOF. THERE IS A SERIOUS DISPUTE WITH REGARD TO THE NATURE OF POSSESSION CONTEMPLATED BY SECTION 53A OF THE 1882 ACT. IT WAS CONTENDED ON BEHALF OF THE APPELLANT - ASSESSEE THAT REFERENCE TO THE POSSESSION OF THE TRANSFEREE AS POSTULATED UNDER SECTION 53A OF THE 1882 ACT IS THAT IT MUST HAVE BEEN DELIVERED IN FURTHERANCE TO THE CONTRACT AND SHOULD BE SOLE, EXCLUSIVE AND CANNOT BE CONCURRENT. THE POSSESSION IS NOT TO BE IN ANY OTHER CAPACITY TO INVOKE SECTION 53A OF THE 1882 23 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 ACT. ON THE OTHER HAND, LEAR NED COUNSEL FOR THE REVENUE, DRAWING SUPPORT FROM THE JUDGMENT DELIVERED BY THE AUTHORITY FOR ADVANCE RULINGS (AAR) IN JASBIR SINGH SARKARIA, IN RE [2007] 294 ITR 196 (AAR) SUBMITTED THAT THERE CAN BE CONCURREN T POSSESSION OF THE TRANSFEROR AS WELL AS OF THE TRANSFEREE AND IT WOULD BE ENOUGH IF THE TRANSFEREE HAS, BY VIRTUE OF THE TRANSACTION, A RIGHT TO ENTER UPON AND EXERCISE ACTS OF POSSESSION EFFECTIVELY PURSUANT TO THE COVENANTS IN THE CONTRACT. RELIANCE WA S PLACED UPON THE FOLLOWING OBSERVATIONS FOR MEANING OF POSSESSION AND HOW SHOULD IT BE UNDERSTOOD IN THE CONTEXT OF SUB - CLAUSE (V) OF SECTION 2(47) OF THE ACT (PAGE 210) : 'THE NEXT QUESTION IS, IN WHAT SENSE WE HAVE TO UNDERSTAND THE TERM 'POSSESSION' I N THE CONTEXT OF CLAUSE (V) OF SECTION 2(47). SHOULD IT ONLY MEAN THE RIGHT TO EXCLUSIVE POSSESSION WHICH THE TRANSFEREE CAN MAINTAIN IN HIS OWN RIGHT TO THE EXCLUSION OF EVERYONE INCLUDING THE TRANSFEROR FROM WHOM HE DERIVE D THE POSSESSION ? SUCH A CRITE R ION WILL BE SATISFIED ONLY AFTER THE ENTIRE SALE CONSIDERATION IS PAID AND THE TRANSFEROR HAS FORFEITED HIS RIGHT TO EXERCISE ACTS OF POSSESSION OVER THE LAND OR TO RESUME POSSESSION. IN OUR VIEW, THERE IS NO WAR RANT TO PLACE SUCH A RESTRICTED INTERPRETAT ION ON THE WORD 'POSSESSION' OCCURRING IN SUB - CLAUSE (V) OF SECTION 2(47). POSSESSION IS AN ABSTRACT CONCEPT. IT HAS DIFFERENT SHADES OF MEANING. IT IS VARIOUSLY DESCRIBED AS 'A POLYMORPHOUS TERM HAVING DIFFERENT MEANINGS IN DIFFERENT CON TEXTS' (PER R. S. SARKARIA J. IN SUPERINTENDENT AND REMEMBRANCER OF LEGAL AFFAIRS, W. B. V. ANIL KUMAR BHUNJA [1979] 4 SCC 274 AND AS A WORD OF 'OPEN TEXTURE' (SEE SALMOND ON JURISPRUDENCE, PARAGRAPH 51, TWELFTH EDITION, INDIAN REPRINT). SALMOND OBSERVED : 'TO LOOK FOR A D EFINITION THAT WILL SUMMARIZE THE MEANINGS OF THE TERM 'POSSESSION' IN ORDINARY LANGUAGE, IN ALL AREAS OF LAW AND IN ALL LEGAL SYSTEMS, IS TO ASK FOR THE IMPOSSIBLE'. IN THE ABOVE CASE OF ANIL KUMAR BHUNJA [1979] 4 SCC 274, SARKARIA J. SPEAKING FOR A THREE - JUDGE BENCH ALSO REFERRED TO THE COMMENTS OF DIAS AND HUGHES IN THEIR BOOK ON JURIS PRUDENCE THAT 'IF A TOPIC EVER SUFFERED TOO MUCH THEORIZING IT IS THAT OF 'POSSESSION'.'. MUCH 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 EXPLAINED THE CONNOTATION OF THE EXPRESSION 'POSSESSION' BY REFERRING TO THE WELL KNOWN TREATISES ON JURISPRUDENCE (PAGE 278) : ''POSSESSION', IMPLIES A RIGHT AND A FACT : THE RIGHT TO ENJOY ANNEXE D TO THE RIGHT TO PROPERTY AND THE FACT OF THE REAL INTENTION. IT INVOLVES POWER OF CONTROL AND INTENT TO CONTROL (SEE DIAS AND HUGHES) . . . 15. WHILE RECOGNISING THAT 'POSSESSION' IS NOT A PURELY LEGAL CONCEPT BUT ALSO A MATTER OF FACT, SALMOND (12TH ED. , 52) DESCRIBES POSSESSION, IN FACT, AS A RELATIONSHIP BETWEEN A PERSON AND A THING. ACCORDING TO THE LEARNED AUTHOR, THE TEST FOR DETERMINING 'WHETHER A PERSON IS IN POSSESSION OF ANYTHING IS WHETHER HE IS IN GENERAL CONTROL OF IT'. IN SALMOND'S JURISPRUD ENCE, AT PARAGRAPH 54, WE FIND AN ILLUMI NATING DISCUSSION ON 'IMMEDIATE' AND 'MEDIATE POSSESSION'. THE LEARNED AUTHOR STATES 'IN LAW ONE PERSON MAY POSSESS A THING FOR AND ON ACCOUNT OF SOME ONE ELSE. IN SUCH A CASE THE LATTER IS IN POSSESSION BY THE AGENC Y OF HIM WHO SO HOLDS THE THING ON HIS BEHALF. THE POSSESSION THUS HELD BY ONE MAN THROUGH ANOTHER MAY BE TERMED MEDIATE, WHILE THAT WHICH IS ACQUIRED OR RETAINED DIRECTLY OR PERSON ALLY MAY BE DISTINGUISHED AS 'IMMEDIATE OR DIRECT'.' SALMOND MAKES REFEREN CE TO THREE TYPES OF MEDIATE PO SSESSION. IN ALL CASES OF 'MEDI ATE POSSESSION', TWO PERSONS ARE IN POSSESSION OF THE SAME THING AT THE SAME TIME. AN ALLIED CONCEPT OF CONCURRENT 24 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 POSSESSION HAS ALSO BEEN EXPLAINED IN PARAGRAPH 55 OF SALMOND'S JURISPRUDENCE I N THE FOLLOWING WORDS : 'IT WAS A MAXIM OF THE CIVIL LAW THAT TWO PERSONS COULD NOT BE IN POSSESSION OF THE SAME THING AT TH E SAME TIME. AS A GENERAL PROPO SITION THIS IS TRUE : FOR EXCLUSIVENESS IS OF THE ESSENCE OF POSSESSION. TWO ADVERSE CLAIMS OF EXCLUS IVE USE CANNOT BOTH BE EFFECTUALLY REALIZED AT THE SAME TIME. CLAIMS, HOWEVER, WHICH ARE NOT ADVERSE, AND WHICH ARE NOT, THEREFORE, MUTUALLY DESTRUCTIVE, ADMIT OF CONCUR RENT REALISATION. HENCE, THERE ARE SEVERAL POSSIBLE CASES OF DUPLICATE POSSESSION. 1. MEDIATE AND IMMEDIATE POSSESSION CO - EXIST IN RESPECT OF THE SAME THING AS ALREADY EXPLAINED. 2. TWO OR MORE PERSONS MAY POSSESS THE SAME THING IN COMMON, JUST AS THEY MAY OWE IT IN COMMON . . .' ON A FAIR AND REASONABLE INTERPRE TATION AND ON ADOPTING THE PRIN CIPLE OF PURPOSIVE CONSTRUCTION, IT MUST BE HELD THAT POSSESSION CONTEMPLATED BY SUB - CLAUSE (V) NEED NOT NECESSARILY BE SOLE AND EXCLUSIVE POSSESSION. SO LONG AS THE TRANSFEREE IS, BY VIRTUE OF THE POSSESSION GIVEN, ENABLED TO EXERCISE GENERAL CONTROL OVER THE PROPERTY AND TO MAKE USE OF IT FOR THE INTENDED PURPOSE, THE MERE FACT THAT THE OWNER HAS ALSO THE RIGHT TO ENTER THE PROPERTY TO OVERSEE THE DEVELOPMENT WORK OR TO ENSURE PE RFORMANCE OF THE TERMS OF AGREE MENT DOES NOT INTRODUCE ANY INCOMPA TIBILI TY. THE CONCURRENT POSSES SION OF THE OWNER WHO CAN EXERCISE POSSESSORY RIGHTS TO A LIMITED EXTENT AND FOR A LIMITED PURPOSE AND THAT OF THE BUYER/DEVELOPER WHO HAS A GENERAL CONTROL AND CUSTODY OF THE LAND CAN VERY WELL BE RECON CILED. SUB - CLAUSE (V) OF SEC TION 2(47) WILL HAVE ITS FULL PLAY EVEN IN SUCH A SITUATION. THERE IS NO WARRANT TO POSTPONE THE OPERATION OF SUB - CLAUSE (V) AND THE RESULTANT ACCRUAL OF CAPITAL GAIN TO A POINT OF TIME WHEN THE CONCURRENT POSSESSI ON WILL BECOME EXCLUSIVE POSSES SION OF DEV ELOPER/TRANSFEREE AFTER HE PAYS FULL CONSIDERATION. FURTHER, IF 'POSSESSION' REFERRED TO IN SUB - CLAUSE (V) IS TO BE UNDER STOOD AS EXCLUSIVE POSSESSION OF THE TRANSFEREE/DEVELOPER, THEN, THE VERY PURPOSE OF THE AMENDMENT EXPANDING THE DEFINITION OF TRANSFE R 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 CON TENDED IN THE PRESENT CASE, THAT THE DEVELOPER WILL HAVE SUCH EXCLUSIVE POSSESSION IN HIS OWN RIGHT ONLY AFTER THE ENT IRE AMOUNT IS PAID TO THE OWNER TO THE LAST PIE. THERE IS THEN A POSSIBILITY OF STAGGERING THE LAST INSTALMENT OF A SMALL AMOUNT TO A DISTANT DATE, MAY BE, WHEN THE ENTIRE BUILDING COMPLEX GETS READY. EVEN IF SOME AMOUNT, SAY 10 PER CENT., REMAINS TO BE PA ID AND THE DEVELOPER/TRANSFEREE FAILS TO PAY, LEADING TO A DISPUTE BETWEEN THE PARTIES, THE RIGHT TO EXCLUSIVE AND INDEFEASIBLE POSSESSION MAY BE IN JEOPARDY. IN THIS STATE OF AFFAIRS, THE TRANSACTION WITHIN THE MEANING OF SUB - CLAUSE (V) CANNOT BE SAID TO HAVE BEEN EFFECTED AND THE LIABILITY TO PAY CAPITAL GAINS MAY BE INDEFI NITELY POSTPONED. TRUE, IT MAY NOT BE PROFITABLE FOR THE DEVELOPER TO ALLOW THIS SITUATION TO LINGER FOR LONG AS THE PROCESS OF TRANSFER OF FLATS TO THE PROSPECTIVE PURCHASERS WILL GET DELAYED. AT THE SAME TIME, THE OTHER SIDE OF THE PICTURE CANNOT BE OVER LOOKED. THERE IS A POSSIBILITY OF THE OWNER WITH THE CONNIVANCE OF THE TRANSFEREE POSTPONING THE PAYMENT OF CAPITAL GAINS TAX ON THE OSTENSIBLE GROUND THAT THE ENTIRE CONSIDERATION HAS NOT BEEN RECEIVED AND SOME BALANCE IS LEFT. THE MISCHIEF SOUGHT TO BE REMEDIED, WILL THEN PERPETUATE. WE ARE, THERE FORE, OF THE VIEW THAT POSSESSION GIVEN TO THE DEVELOPERS NEED NOT RIPEN ITSELF INTO EXCLUSIVE POSSESSI ON ON PAYMENT OF ALL THE INSTAL MENTS IN ENTIRETY FOR THE PURPOSE OF DETERMINING THE DATE OF TRANSFER. 25 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 WHILE ON THE POINT OF POSSESSION, WE WOULD LIKE TO CLARIFY ONE MORE ASPECT. WHAT IS SPOKEN TO IN SUB - CLAUSE (V) OF SECTION 2(47) IS THE 'TRANSACTION' WHICH INVOLVES ALLOWING THE POSSESSION T O BE TAKEN. BY MEANS OF SUCH TRANSACTION, A TRANSFEREE LIKE A DEVELOPER IS ALLOWED TO UNDERTAKE DEVELOPMENT WORK ON THE LAND BY ASSUMING GENERAL CONTROL OVER THE PROPERTY IN PART PERFORMANCE OF THE CONTRACT. THE DATE OF THAT TRANSACTION DETERMINES THE DATE OF TRANSFER. THE ACTUAL DATE OF TAKING PHYSICAL POSSESSION OR THE IN STANCES OF POSSESSORY ACTS EXER CISED IS NOT VERY RELEVANT. THE ASCERTAINMENT OF SUCH DATE, IF CALLED FOR, LEADS TO COMPLICATED INQUIRIES, WHICH MAY FRUSTRATE THE OBJECTIVE OF THE LEGISLAT IVE PROVISION. IT IS ENOUGH IF THE TRANSFEREE HAS, BY VIRTUE OF THAT TRANSACTION, A RIGHT TO ENTER UPON AND EXERCISE ACTS OF POSSESSION EFFECTIVELY PURSUANT TO THE COVENANTS IN THE CONTRACT. THAT TANTA MOUNTS TO LEGAL POSSESSION. WE ARE REFERRING TO THIS A SPECT BECAUSE THE AUTHORISED REPRESENTATIVE HAS SUBMITTED WHEN HE APPEARED BEFORE US IN THE LAST WEEK OF MAY, 2007, THAT EVEN BY THAT DATE TH E DEVE LOPMENT 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 EARLIER NEED NOT BE PROBED INTO ESPECIALLY WHEN I T IS NOT HIS CASE THAT THE DEVE LOPER WAS NOT ALLOWE D TO TAKE POSSESSION IN TERMS OF THE AGREEMENT.' 26. THE SUPREME COURT CONSIDERING THE REQUIREMENT OF DELIVERY OF POSSESSION FOR A CASE TO BE FALLING UNDER THE PROVISIONS OF SECTION 53A OF THE 1882 ACT, IN SARDAR GOVINDRAO MAHADIK V. DEVI SAHAI, AIR 1982 S C 989, HAD DEALT AS FOLLOWS : '31. WHILE TEXT BOOK WRITERS AND ENGLISH DECISIONS MAY SHED SOME LIGHT TO ILLUMINATE THE BLURRED AREAS AS TO WHETHER PART PAYMENT OF PURCHASE MONEY OR EVEN THE WHOLE OF THE CONSIDERATION WOULD NOT BE SUFFICIENT ACT OF PART PER FORMANCE, IT IS NECESSARY THAT THIS ASPECT MAY BE EXAMINED IN THE BACKGROUND OF STATUTORY REQUIREMENT AS ENACTED IN SECTION 53A. TO QUALIFY FOR THE PROTECTION OF THE DOCTRINE OF PART PERFORMANCE IT MUST BE SHOWN THAT THERE IS A CONTRACT TO TRANSFER FOR CON SIDERATION IMMOVABLE PROPERTY AND THE CONTRACT IS EVIDENCED BY A WRITING SIGNED BY THE PERSON SOUGHT TO BE BOUND BY IT AND FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY. THESE ARE PRE - REQUISITES TO I NVOKE THE EQUITABLE DOCTRINE OF PART PERFORMANCE. AFTER ESTABLISHING THE AFOREMENTIONED CIRCUMSTANCES IT MUST BE FURTHER SHOWN THAT A TRANS FEREE HAD IN PART PERFORMANCE OF THE CONTRACT EITHER TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREOF OR THE TRAN SFEREE BEING ALREADY IN POSSESSION CONTINUES IN POSSESSION IN PART PERFORMANCE OF THE CON TRACT AND HAS DONE SOME ACT IN FURTHERANCE OF THE CONTRACT. THE ACTS CLAIMED TO BE IN PART PERFORMANCE MUST BE UNEQUIVOCALLY REFERABLE TO THE PRE - EXISTING CONTRACT AN D THE ACTS OF PART PERFORMANCE MUST UNEQUIVOCALLY POINT IN THE DIRECTION OF THE EXISTENCE OF CONTRACT AND EVIDENCING IMPLEMENTATION OR PERFORMANCE OF CONTRACT. THERE MUST BE A REAL NEXUS BETWEEN THE CONTRACT AND THE ACTS DONE IN PURSUANCE OF THE CONTRACT O R IN FURTHERANCE OF THE CONTRACT AND MUST BE UNE QUIVOCALLY REFERABLE TO THE CONTRACT. WHEN SERIES OF ACTS ARE DONE IN PART PERFORMANCE, ONE SUCH MAY BE PAYMENT OF CONSIDERATION. ANY ONE ACT BY ITSELF MAY OR MAY NOT BE OF SUCH A CONCLUSIVE NATURE AS TO CONC LUDE THE POINT ONE WAY OR THE OTHER BUT WHEN TAKEN WITH MANY OTHERS PAYMENT OF PART OF THE CONSIDERATION OR THE WHOLE OF THE CON SIDERATION MAY AS WELL BE SHOWN TO BE IN FURTHERANCE OF CONTRACT. THE CORRECT APPROACH WOULD BE, WHAT LORD REID SAID IN STEADMAN 'S CASE [1974] 2 ALL ER 977 (HL) THAT ONE MUST NOT FIRST TOOK AT THE ORAL CONTRACT AND THEN SEE WHETHER THE ALLEGED ACTS OF PART PERFORMANCE ARE CONSISTENT WITH IT. ONE MUST FIRST LOOK AT THE ALLEGED ACTS OF PART PERFORMANCE AND SEE WHETHER THEY PROVE THAT THERE MUST HAVE BEEN A CONTRACT AND IT IS ONLY IF THEY DO SO PROVE THAT ONE CAN BRING IN THE ORAL CONTRACT. THIS VIEW MAY NOT BE WHOLLY APPLICABLE TO THE SITUATION IN INDIA BECAUSE AN ORAL CONTRACT IS NOT ENVISAGED BY SECTION 53A. EVEN FOR INVOKING THE EQ UITABLE DOCTRINE OF PART PERFORMANCE THERE HAS TO BE A CONTRACT IN WRITING FROM WHICH THE 26 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 TERMS NECESSARY TO CON STITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY. THEREFORE, THE CORRECT VIEW IN INDIA WOULD BE, LOOK AT THAT WRITING THAT IS O FFERED AS A CONTRACT FOR TRANSFER FOR CONSIDERATION OF ANY IMMOVABLE PROPERTY AND THEN EXAMINE THE ACTS SAI D TO HAVE BEEN DONE IN FUR THERANCE OF THE CONTRACT AND FIND OUT WHETHER THERE IS A REAL NEXUS BETWEEN THE CONTRACT AND THE ACTS PLEADED AS IN PART PE RFORMANCE SO THAT TO REFUSE RELIEF WOULD BE PERPETUATING THE FRAUD OF THE PARTY WHO AFTER HAVING TAKEN ADVANTAGE OR BENEFIT OF THE CONTRACT BACKS OUT AND PLEADS NON REGISTRATION AS DEFENCE, A DEFENCE ANALOGOUS TO SECTION 4 OF THE STATUTE OF FRAUDS. 32. WE MAY RECALL HERE THAT THE ACTS PRELIMINARY TO THE CONTRACT WOULD BE HARDLY OF ANY ASSISTANCE IN ASCERTAINING WHETHER THEY WERE IN FURTHERANCE OF THE CONTRACT. ANYTHING DONE IN FURTHERANCE OF THE CONTRACT POSTULATES THE PRE - EXISTING CO NTRACT AND THE ACTS DON E IN FUR THERANCE THEREOF. THEREFORE, THE ACTS ANTERIOR TO THE CONTRACT OR MERELY INCIDENTAL TO THE CONTRACT WOULD HARDLY PROVIDE ANY EVIDENCE OF PART PERFORMANCE.' 27. APPLYING THE PRINCIPLE OF LAW LAID DOWN IN SARDAR GOVINDRAO MAHADIK'S CASE (SUPRA), THE APEX COURT IN D. S. PARVATHAMMA V. A. SRINIVASAN, AIR 2003 SC 3542 REITERATED AS UNDER : '9. SECONDLY, THE APPELLANT HAS FAILED TO ALLEGE AND PROVE THAT HE WAS DELIVERED POSSESSION IN PART PERFORMANCE OF THE CONTRACT OR HE, BEING ALREADY IN POSSESSION AS L ESSEE, CONTINUED IN POSSESSION IN PART PERFORMANCE OF THE AGREEMENT TO PURCHASE, I.E., BY MUTUAL AGREEMENT BETWEEN THE PARTIES HIS POSSESSION AS LESSEE CEASED AND COMMENCED AS THAT OF A TRANSFEREE UNDER THE CONTRACT. ON THE CONTRARY, THERE IS A FINDING REC ORDED IN THE EARLIER SUIT THAT IN SPITE OF HIS HAVING ENTERED INTO A CONTRACT TO PURCHASE THE PROPERTY HE HAD NOT DISOWNED HIS CHARACTER AS LESSEE AND HE WAS TREATED AS SUCH BY THE PARTIES. THE JUDGMENT DATED SEPTEMBER 1, 1999, IN THE CIVIL SUIT NOTES THE CONDUCT OF THE PLAINTIFF INCONSISTENT WITH HIS CONDUCT AS VENDEE IN POSSESSION. WHEN A PERSON ALREADY IN POSSESSION OF THE PROPERTY IN SOME OTHER CAPACITY ENTERS INTO A CONTRACT TO PURCHASE THE PROPERTY, TO CONFER THE BENEFIT OF PROTECTING POSSESSION UNDER THE PLEA OF PART PERFORMANCE, HIS ACT EFFECTIVE FROM THAT DAY MUST BE CONSISTENT WITH THE CONTRACT ALLEGED AND ALSO SUCH AS CANNOT BE REFERRED TO THE PRECEDING TITLE. THE HIGH COURT OF MADHYA PRADESH HAD AN OCCASION TO DEAL WITH THE FACTS VERY NEAR TO THE FACTS BEFORE US IN BHAGWANDAS PARSADILAL V. SURAJMAL, AIR 1961 MP 237. A TENANT IN POSSESSION ENTERED INTO AN AGREEMENT TO PURCHASE THE HOUSE FORMING SUBJECT MATTER OF TENANCY. HOWEVER, HE FAILED TO SHOW HIS NATURE OF POSSESSION HAVING ALTERED FROM THAT O F A TENANT INTO THAT OF A TRANSFEREE. IN A SUIT OF EJECTMENT BASED ON LAND LORD - TENANT RELATIONSHIP, THE TENANT SOUGHT TO PROTECT HIS POSSESSION BY RAISING THE PLEA OF PART PERFORMANCE AS AGAINST SUBSEQUENT PUR CHASER OF THE PROPERTY. REFERRING TO SECTION 91 OF THE INDIAN TRUSTS ACT, THE HIGH COURT HELD THAT A SUBSEQUENT PURCHASER OF THE PROPERTY WITH NOTICE OF AN EXISTING CONTRACT AFFECTING THAT PROPERTY MUST HOLD THE PROPERTY FOR THE BENEFIT OF THE PERSON IN WHOSE FAVOUR THE PRIOR AGREEMENT TO SELL HAS BE EN EXECUTED TO THE EXTENT IT IS NECESSARY TO GIVE EFFECT TO THAT CONTRACT. BUT THAT DOES NOT MEAN THAT TILL A FINAL DECISION HAS BEEN REACHED THE CONTRACT CREATES A RIGHT IN THE PERSON IN POSSESSION, I.E., THE TENANT, TO REFUSE TO SURRENDER POSSESSION OF T HE PREMISES EVEN IF SUCH POSSESSION WAS OBTAINED BY HIM NOT IN PART PERFORMANCE OF THE CONTRACT BUT IN HIS CAPACITY AS A TENANT. HAVING ENTERED INTO POSSESSION AS A TENANT AND HAVING CONTINUED TO REMAIN IN POSSESSION IN THAT CAPACITY HE CANNOT BE HEARD TO SAY THAT BY REA SON OF THE AGREEMENT TO SELL HIS POSSESSION WAS NO LONGER THAT OF A TENANT (ALSO SEE DAKSHINAMURTHI MUDALIAR V. DHANAKOTI AMMAL, AIR 1925 MAD 965 AND A. M. A. SULTAN V. SEYDU ZOHRA BEEVI, AIR 1990 KER 186). IN OUR OPINION, THE LAW HAS BEEN CORRECTLY STATED BY THE HIGH COURT OF MADHYA PRADESH IN THE ABOVESAID DECISION.' 27 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 28. IN THOTA RAMBABU ALIAS RAMU V. CHERUKURI VENKATESWARA RAO ALIAS PEDABABU, AIR 2006 AP 114, THE ANDHRA PRADESH HIGH COURT, WHILE CONSIDERING THE QUESTION OF REQUIREMENT OF DELIVERY OF POSSESSION FOR CLAIMING BENEFITS OF SECTION 53A OF THE 1882 ACT IN A SUIT FOR RELIEF OF SPECIFIC PERFORMANCE OF AN AGREEMENT OF SALE, OBSERVED AS UNDER : '30. NOW, THE THIRD POINT : THE PLAINTIFF RAISED A PLEA, AS TO HIS ENTI TLEMENT FOR THE BE NEFIT UNDER SECTION 53A OF THE ACT. SPECIFIC ISSUE WAS FRAMED AND EXTENSIVE DISCUSSION WAS UNDERTAKEN BY THE TRIAL COURT ON THIS. IT IS TRUE THAT SECTION 53A OF THE ACT IS BASICALLY A LEGAL WEAPON TO BE USED IN DEFENCE TO PROTECT THE POSSESSION, UNDER AN A GREEMENT OF TRANSFER, IF THE PERSON IN POSSESSION IS READY AND WILLING TO PERFORM HIS PART OF CONTRACT. IN THE RECENT PAST, COURTS HAVE RECOG NIZED THAT THIS PROVISION CAN BE TREATED AS A SOURCE OF INDEPENDENT RIGHT, AND THAT IT CAN BE ENFORCED BY FILING A SUIT. 31. ONE OF THE MOST IMPORTANT INGREDIENTS OF SECTION 53A OF THE ACT IS THAT THE PERSON CLAIMING THE BENEFIT UNDER IT, MUST BE IN POSSESSION OF THE PROPERTY, WHICH IS THE SUBJECT - MATTER OF THE CON TEMPLATED TRANSFER. BY ITS VERY NATURE, POSSESSION IS A FLUID CONCEPT, AND IS NOT SUSCEPTIBLE TO ANY PRECISE DEFINITION. FOR THE MOST PART OF IT, POSSESSION WAS TREATED AS A QUESTION OF FACT, AND WAS HELD TO DEPEND UPON THE PURPOSE, AS WELL AS THE CONNECTION WITH WHICH IT ARISES. SHARTEL, IN HIS ARTICLE MEANI NGS OF POSSESSION [1932] 16 MINNESOTA LAW REVIEW 611, OBSERVED AS UNDER : 'I WANT TO MAKE THE POINT THAT THERE ARE MANY MEANINGS OF THE WORD 'POSSESSION' ; THAT POSSESSION CAN ONLY BE USEFULLY DEFINED WITH REFERENCE TO THE PURPOSE IN HAND ; AND THAT POSSE SSION MAY HAVE ONE MEANING IN ONE CONNECTION AND ANOTHER MEANING IN ANOTHER.' 32. JURISTS HAILING FROM VARIOUS LEGAL SYSTEMS HAVE POINTED OUT THAT POSSESSION, AS A LEGAL CONCEPT, HAS TWO COMPONENTS, VIZ., CORPUS POSSESSIONS, PHYSICAL POSSESSION O F THE PROP ERTY AND ANIMUS POSSI DENDI, I.E., THE INTENTION TO HOLD IT AS OF RIGHT. THEIR DIFFERENCE OF APPROACH WAS ONLY AS TO THE EMPHASIS ON THESE INGREDIENTS, TO CONSTITUTE A POSITION IN LAW. IN HIS TREATISE ON THE COMMON LAW, O. W. HOLMES [HOLMES THE COMMON LAW C H 6,], OBSERVED AS UNDER : 'I GAIN POSSESSION, THEN, A MAN MUST STAND IN A CERTAIN PHYSICAL RELATION TO THE OBJECT AND TO THE REST OF THE WORLD, AND MUST HAVE A CERTAIN INTENT. THESE RELATIONS AND THIS INTENT ARE THE FACTS OF WHICH WE ARE IN SEARCH.' 33. OPINIONS DRASTICALLY VARIED, AS TO WHETHER POSSESSION IS A QUESTION OF FACT, OR OF LAW. WHILE SOME JURISTS TREATED IT AS A PURE QUESTION OF FACT, OTHERS HELD IT TO BE MATTER OF LAW. DIAS, IN HIS TREATISE ON 'JURISPRUDENCE', STRUCK A BALANCE AND OBSERVED, A S UNDER (DIAS JURIS PRUDENCE, FIFTH EDITION PAGE 290) : 'POSSESSION HAS THREE ASPECTS : FIRSTLY, THE RELATION BETWEEN A PER SON AND A THING IS A FACT. SECONDLY, THE ADVANTAGES ATTACHED BY LAW TO THAT RELATION IS A MATTER OF LAW. THIRDLY, THESE ADVANTAGES ARE ALSO ATTRIBUTED TO A PERSON WHEN CERTAIN OTHER FACTS EXIST. WHAT THEY ARE IN ANY GIVEN TYPE OF CASE IS A MATTER OF LAW.' 34. WHERE THE POSSESSION OF A PROPERTY, MOVABLE OR IMMOVABLE, IS PHYSICALLY DELIVERED TO ANOTHER, IT IS NOT DIFFICULT TO DISCERN, AS TO WHO EXACTLY IS IN POSSESSION OF SUCH PROPERTY. DIFFICULTY, HOWEVER, ARISES, WHERE THE DELIVERY IS IMPLIED OR SYMBOLICAL. IT IS ONLY AN EXAMINATION OF A BUNCH OF FACTS, THAT WOULD 28 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 YIELD AN ANSWER TO THIS. IN THE INSTANT CASE, THE PLAINTIFF PLEADED THA T SYMBOLICAL DELIVERY OF POSSESSION WAS AFFECTED TO HIM. ADMITTEDLY, THE FIRST DEFENDANT IS OWNER OF ONLY ONE - FOURTH SHARE OF THE RICE MILL AND THAT THE MILL, AS A WHOLE, WAS UNDER LEASE TO A THIRD PARTY. 35. SECTION 53A OF ACT IS CLEAR TO THE EFFECT THAT THE PERSON CLAIMING BENEFIT UNDER IT, MUST HAVE 'TAKEN POSSESSION OF THE PROPERTY'. THIS CAN HAPPEN, IF THE TRANSFEREE WAS DELIVERED PHYSICAL POSSESSION OF THE PROPERTY. IT CAN ALSO HAPPEN WHEN A SYMBOLICAL DELIVERY OF POSSESSION WAS EFFECTED, SUCH AS BY ATTORNMENT OF THE EXISTING LEASE OVER SUCH PROPERTY. WHERE THE CONTEMPLATED TRANSFER RELATES TO AN UNDIVIDED SHARE, SECTION 53A TAKES A DIFFERENT COLOUR. THE REASON IS THAT, THERE CANNOT BE DELIVERY OF POSSESSION OF PROPERTY BY A CO - OWNER, OF AN UNDIVIDED PROPERTY, OR THE CORRESPONDING TAKING POSSESSION OF SUCH PROPERTY BY THE TRANSFEREE. SECTIO N 44 OF THE ACT MAKES THIS ABUN DANTLY CLEAR. IT READS AS UNDER : '44. TRANSFER BY ONE CO - OWNER. WHERE ONE OF TWO OR MORE CO - OWNERS OF IMMOVABLE PROPERTY LEGALLY CO MPETENT IN THAT BEHALF TRANS FERS HIS SHARE OF SUCH PROPERTY OR ANY INTEREST THEREIN, THE TRANSFEREE ACQUIRES, AS TO SUCH SHARE OR INTEREST, AND SO FAR AS IS NECESSARY TO GIVE EFFECT TO THE TRANSFER, THE TRANSFEROR'S RIGHT TO JOINT POSSESSION OR OTHER COMM ON OR PART ENJOYMENT OF THE PROPERTY, AND TO ENFORCE A PARTITION OF THE SAME, BUT SUBJECT TO THE CONDITIONS AND LIABILITIES AFFECTING, AT THE DATE OF THE TRANSFER, THE SHARE OR INTEREST SO TRANSFERRED. WHERE THE TRANSFEREE OF A SHARE OF A DWELLING - HOUSE B ELONGING TO AN UNDIVIDED FAMILY IS NOT A MEMBER OF THE FAMILY, NOTHING IN THIS SECTION SHALL BE DEEMED TO ENTITLE HIM TO JOINT POSSESSION OR OTHER COMMON OR PART ENJOYMENT OF THE HOUSE.' IT MANDATES THAT, WHAT A TRANSFEREE, FROM A CO - OWNER OF AN UNDI VIDED PROPERTY, GETS, IS A RIGHT, TO ENFORCE A PARTITION, THAT TOO, SUBJECT TO CONDITIONS AND LIABILITIES, IN RELATION TO THE PROPERTY, BY THE DATE OF TRANSFER. 36. THE PHENOMENA OF CO - OWNERSHIP OF AN UNDIVIDED PROPERTY, ON THE ONE HAND, AND DELIVERING OF PHYSI CAL OR SYMBOLICAL POSSESSION THEREOF DO NOT CO - EXIST. IN FACT, THEY ARE MUTUALLY EXCLUSIVE. IN SALEEM, S/O. YASEEN V. I ADDITIONAL CIVIL JUDGE, SENIOR DIVISION, SAHARANPUR, AIR 1966 ALL 342, IT WAS HELD THAT THE RIGHT OF A TRANSFEREE UNDER SECTION 53A OF T HE ACT DOES NOT HAVE THE EFFECT OF SUPERSEDING, OR FRUSTRATING THE PROVISIONS OF SECTION 44 OF THE ACT. TO THE SAME EFFECT IS THE JUDGMENT OF THE SUPREME COURT IN DORAB CAWASJI WARDEN V. COOMI SORAB WARDEN, AIR 1990 SC 867. THOUGH THEY RELATED TO THE SECON D LIMB OF SECTION 44, BY AND LARGE, THE PRINCIPLE REMAINS THE SAME. 37. IN SMT. LALITA JAMES V. AJIT KUMAR, AIR 1991 MP 15 AND ASHIM RANJANDAS V. SMT. BIMALA GHOSH, AIR 1992 CAL 44, IT WAS HELD THAT A TRANSFEREE FROM A CO - OWNER OF A PORTION OF UNDIVIDED PR OPERTY IS NOT ENTITLED TO RIGHT OF EXCLUSIVE POSSESSION, AND THAT HE CAN, AT THE BEST, ENFORCE A PARTITION OF JOINT ESTATE. THE HIMACHAL PRADESH HIGH COURT IN ITS JUDGMENT IN PALDEV SINGH V. SMT. DARSHANI DEVI, AIR 1993 HP 141, OBSERVED THAT A CO - OWNER CAN NOT BE SAID TO BE IN ACTUAL PHYSICAL OR EXCLUSIVE POSSESSION OF ANY PARCEL, TILL A PARTITION TAKES PLACE, AND THE QUESTION OF HIS DELIVERING THE POSSESSION OF SUCH AN UNDIVIDED SHARE DOES NOT ARISE. AUTHORITIES CAN BE MULTIPLIED ON THIS ASPECT. THE GIST IS THAT THE TRANSFEREE FROM A CO - OWNER OF AN UNDIVIDED PROPERTY GETS NOTHING MORE THAN A RIGHT TO SEEK PARTITION, AND, THEREAFTER, SECURE POSSESSION OF THE SHARE OF PROPERTY PURCHASED BY HIM, AND HE CANNOT CLAIM ANY EXCLUSIVE POSSESSION, ON THE BASIS OF SUCH TRANSFER TILL THE PARTITIONS TAKES PLACE. RESULTANTLY, SUCH A TRANSFEREE CANNOT CLAIM THE BENEFIT OF 29 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 SECTION 53A, SINCE HE DOES NOT GAIN OR TAKE POSSESSION OF THE SUBJECT - MATTER OF TRANSFER. 38. EVEN IF WE ASSUME THAT THE FIRST DEFENDANT WAS IN EXCLUSIVE POSSESSION OF THE SUIT SCHEDULE PROPERTY, IT IS DIFFICULT TO INVOKE SEC TION 53A IN FAVOUR OF THE PLAINTIFF. THE REASON IS THAT, EXCEPT PLEADING THAT A SYMBOLIC DELIVERY OF POSSESSION WAS EFFECTED TO HIM, THE PLAIN TIFF WOULD NOT PROVE ITS INGREDIENTS. ONE OF THE MOST WELL - RECOGNISED METHODS OF SYMBOLIC DELIVERY OF POSSESSION OF IMMOVABLE PROPERTY IS, BY ATTORNING EXISTING LEASE IN FAVOUR OF THE TRANSFEREE. SUCH ATTORN MENT CAN TAKE PLACE EITHER WITH THE DIRECT PARTICIPATION OF THE LESSEE, IN A TRIPARTITE TR ANSACTION, OR THROUGH INTIMATION BY THE TRANSFEROR TO THE LESSEE ABOUT THE LATTER'S OBLIGATIONS TO PAY THE RENTS TO THE TRANS FEREE, HENCEFORTH. EVEN WHERE NO SUCH SPECIFIC STEPS ARE TAKEN, AN IMPLIED SYMBOLIC, DELIVERY OF POSSESSION CAN BE CULLED OUT, IF THE TRANSFEREE IS ABLE TO PROVE TO THE SATISFACTION OF THE COURT, THAT HE IS STARTED RECEIVING THE RENTS OF THE PROPERTY, SUBSEQUENT TO THE AGREE MENT, AS OF RIGHT. 39. IN THE ABSENCE OF ANY OF THE CIRCUMSTANCES REFERRED TO ABOVE, THE COURT CANNOT INFER DE LIVERY OF POSSESSION IN FAVOUR OF A TRANSFEREE. TAKING OF POSSESSION, BEING ONE OF THE MOST IMPORTANT INGREDIENTS OF SECTION 53A, THE PLAINTIFF CANNOT DERIVE THE BENEFIT OF THAT PROVISION, ONCE HE FAILED TO PROVE THAT HE HAS TA KEN POSSESSION OF THE SUIT SC HE DULE PROPERTY.' 29. SIMILARLY, THE DELHI HIGH COURT IN R. K. APARTMENTS PVT. LTD. V. SMT. ARUNA BAHREE [1998] 2 ILR 727 (DELHI), DELVING INTO THE ISSUE OF POSSESSION UNDER SECTION 53A OF THE 1882 ACT HAD RECORDED AS UNDER : '14. FROM THE AFORESAID STATEM ENTS MADE IN BOTH THE ARTICLES IT IS MANIFEST THAT THE LEGAL POSITION EN UNCIATED IN HOUNSLOW LONDON BOR OUGH'S CASE (SUPRA), IS NO MORE A GOOD LAW. POSSESSION OF THE SUIT LAND DELIVERED TO DEFENDANTS 1 AND 2 AT THE TIME OF THE EXECUTION OF THE AGREEMENTS DA TED MARCH 1/11, 1985, WAS ONLY BY WAY OF TEMPORARY MEASURE FOR UNDERTAKING THE CONSTRUCTION WORK BY THEM AND THE EXCLUSIVE POSSESSION THEREOF IN LEGA L SENSE REMAINED WITH THE EXECU TANTS OF THE SAID AGREEMENTS. THUS, DEFENDANTS 1 AND 2 PRIMA FACIE ARE NOT E NTITLED TO PROTECT THEIR POSSESSION OVER THE SUIT LAND UNDER SAID SECTION 53A OF THE TRANSFER OF PROPERTY ACT.' 30. THE CONCEPT OF POSSESSION TO BE DEFINED IS AN ENORMOUS TASK TO BE PRECISELY ELABORATED. 'POSSESSION' IS A WORD OF OPEN TEXTURE. IT IS AN ABS TRACT NOTION. IT IMPLIES A RIGHT TO ENJOY WHICH IS ATTACHED TO THE RIGHT TO PROPERTY. IT IS NOT PURELY A LEGAL CONCEPT BUT IS A MATTER OF FACT. THE ISSUE OF OWNERSHIP DEPENDS ON RULE OF LAW WHEREAS POSSESSION IS A QUESTION DEPENDENT UPON FACT WITHOUT REFER ENCE TO LAW. TO PUT IT DIFFERENTLY, OWNERSHIP IS STRICTLY A LEGAL CONCEPT AND POSSESSION IS BOTH A LEGAL AND A NON - LEGAL OR PRE - LEGAL CONCEPT. THE TEST FOR DETERMINING WHETHER ANY PERSON IS IN POSSESSION OF ANYTHING IS TO SEE WHETHER IT IS UNDER HIS GENERA L CONTROL. HE SHOULD BE ACTUALLY HOLDING, USING AND ENJOYING IT, WITHOUT INTERFERENCE ON THE PART OF OTHERS. THE AUTHORITY FOR ADVANCE RULINGS IN JASBIR SINGH SARKARIA'S CASE (SUPRA) HAD OBSERVED THAT THERE CAN BE CONCURRENT POSSESSION OF THE OWNER WHO CAN EXERCISE POSSESSORY RIGHTS TO A LIMITED EXTENT AND FOR A LIMITED PURPOSE AND THAT OF THE BUYER/DEVELOPER WHO HAS GENERAL CONTROL AND CUSTODY OF THE LAND. IT WAS ALSO NOTICED THAT POSSESSION CONTEMPLATED BY SUB - CLAUSE (V) OF SECTION 2(47) OF THE ACT NEED N OT NECESSARILY BE SOLE AND EXCLUSIVE POSSESSION. THE LEGALITY OF THESE CONCLUSIONS WAS, HOWEVER QUESTIONED BY LEARNED COUNSEL FOR THE ASSESSEE. IN OUR OPINION, BROADLY SPEAKING, THE AFORESAID PROPOSITION ENUNCIATED BY THE AUTHORITY FOR ADVANCE RULINGS MAY NOT BE FAULTED AS IT WOULD DEPEND UPON FACTS AND CIRCUMSTANCES OF INDIVIDUAL CASES ON THE CONSTRUCTION OF COMBINED DOCUMENTS EXECUTED BETWEEN THE PARTIES. THE PRIMARY ISSUE BEFORE THE AUTHORITY FOR ADVANCE 30 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 RULINGS WAS THE YEAR OF CHARGEABILITY OF THE INCOM E TO CAPITAL GAIN TAX. INTEGRALLY CONNECTED TO IT WAS THE IDENTIFICATION OF THE PREVIOUS YEAR IN WHICH THE DEEMED TRANSFER WITHIN THE MEANING OF SUB - CLAUSE (V) OF SECTION 2(47) OF THE ACT HAD TAKEN PLACE. IT WAS OBSERVED THAT ONCE IT WAS HELD THAT THE TRAN SACTION OF THE NATURE REFERRED TO IN SUB - CLAUSE (V) OF SECTION 2(47) OF THE ACT HAD TAKEN PLACE ON A PARTICULAR DATE, THE ACTUAL DATE OF TAKING PHYSICAL POSSESSION NEED NOT BE PROBED INTO. IT IS ENOUGH IF THE TRANSFEREE HAS BY VIRTUE OF THAT TRANSACTION A RIGHT TO ENTER UPON AND EXERCISE THE ACTS OF POSSESSION EFFECTIVELY. IT WAS FURTHER HELD IN THAT CASE THAT THE CAPITAL GAINS WHICH AROSE DURING THE FINANCIAL YEAR 2006 - 07 SHALL BE SUBJECTED TO TAX FOR THE ASSESSMENT YEAR 2007 - 08. THE AFORESAID OBSERVATIONS WERE RECORDED IN THAT CONTEXT ON THE FACTS INVOLVED THEREIN. IT WOULD HAVE TO BE ASCERTAINED IN EACH CASE INDEPENDENTLY WHETHER A TRANSFEREE HAS BEEN DELIVERED POSSESSION IN FURTHERANCE OF THE CONTRACT IN ORDER TO FALL UNDER SECTION 53A OF THE 1882 ACT AN D, THUS, AMENABLE TO TAX BY VIRTUE OF SECTION 2(47)(V) READ WITH SECTION 45 OF THE ACT. 31. LASTLY, BOTH THE PARTIES HAD HOTLY AND WITH GREAT VEHEMENCE CONTESTED THE QUESTION OF DELIVERY OF POSSESSION UNDER THE JDA DATED FEBRUARY 25, 2007, AND ALSO THE REG ISTERED SPECIAL POWER OF ATTORNEY DATED FEBRUARY 26, 2007. IT WOULD BE EXPEDIENT TO NOTICE THE RESPECTIVE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE PARTIES. FIRSTLY, NOTING THE ARGUMENTS OF THE ASSESSEE, RELIANCE WAS PLACED ON SECTION 52 OF THE INDIAN EAS EMENTS ACT, 1882, WHICH DEFINES 'LICENCE' IN THE FOLLOWING TERMS : '52. 'LICENCE' DEFINED. WHERE ONE PERSON GRANTS TO ANOTHER, OR TO A DEFINITE NUMBER OF OTHER PERSONS, A RIGHT TO DO, OR CONTINUE TO DO, IN OR UPON THE IMMOVABLE PROPERTY OF THE GRANTOR, SOM ETHING WHICH WOULD, IN THE ABSENCE OF SUCH RIGHT, BE UNLAWFUL, AND SUCH RIGHT DOES NOT AMOUNT TO AN EASEMENT OR AN INTEREST IN THE PROPERTY, THE RIGHT IS CALLED A LICENCE.' IT WAS CONTENDED THAT POSSESSION WAS HANDED OVER TO THE TRANSFEREE AS A LICENSEE TO CARRY OUT DEVELOPMENT OF THE PROPERTY. NO POSSESSION WAS EVER GIVEN BY THE TRANSFEROR TO THE TRANSFEREE IN PART PERFORMANCE OF THE JDA DATED FEBRUARY 25, 2007. JDA HAD NOT CONFERRED ANY RIGHT TO OWN THE PRO PERTY ON THE TRANSFEREE BUT ONLY TO DEVELOP IT. EVEN REGISTERED IRREVOCABLE SPECIAL POWER OF ATTORNEY NOWHERE SPECIFIED GRANTING POSSESSION IN PART PERFORMANCE OF JDA DATED FEBRUARY 25, 2007, AS REQUIRED UNDER SECTION 53A OF THE 1882 ACT. 32. FURTHER, IN ORDER TO DEMONSTRATE THAT NO ABSOLUTE POSSESSION AS REQUIRED UNDER SECTION 53A OF THE 1882 ACT HAD BEEN DELIVERED BY THE TRANSFEROR TO THE TRANSFEREE, THE LEARNED COUNSEL FOR THE ASSESSEE - APPELLANT EXTENSIVELY DREW THE ATTENTION OF THE COURT TO VARIOUS RELEVANT CLAUSES OF THE JDA DATED FEBRUARY 25, 2007, AND ALSO THE REGISTERED SPECIAL POWER OF ATTORNEY DATED FEBRUARY 26, 2007 AS UNDER : (I) CLAUSES OF THE JDA DATED FEBRUARY 25, 2007 2. PROJECT 2.1. THE OWNER HEREBY IRREVOCABLY AND UNEQUIVOCALLY GRANTS AND ASSIGNS IN PERPETUITY ALL ITS RIGHTS TO DEVELOP, CONSTRUCT, MORTGAGE, LEASE, LICENCE, SELL AND TRANSFER THE PROPERTY ALONG WITH ANY AND ALL THE CONSTRUCTION, PREMISES, HEREDITAMENTS, EASEMENTS, TREES THEREON IN FAVOUR OF THDC FOR THE PURPOSE OF DEVELOPMENT, CONSTRUCTION, MORT GAGE, SALE, TRANSFER, LEASE, LICENCE AND/OR EXPLOITATION FOR FULL UTILISATION OF THE PROPERTY ('RIGHTS') AND TO EXECUTE ALL THE DOCUMENTS NECESSARY TO CARRY OUT, FACILITATES AND ENFORCE THE RIGHTS IN THE PROPERTY INCLUDING TO EXECUTE LEASE AGREEMENT, LICENCE AGREEMENTS, CONSTRUCTION CONTRACTS, SUPPLIER CONTRA CTS, AGREEMENT FOR SALE, CONVEY ANCE, MORTGAGE DEEDS, 31 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 FINANCE DOCUMENTS AN D ALL DOCUMENTS AND AGREEMENTS N ECESSARY TO CREATE AN D REGISTER THE MORTGAGE, CONVEY ANCE, LEASE DEEDS, LICENCE AGREEMENT, POWER OF ATTORNEYS, AFFIDAVITS, DEC LARATIONS, INDEMNITIES AND ALL SUCH OTHER DOCUMENTS, LETTERS AS MAY BE NECESSARY TO CARRY OUT, FACILITATE AND ENFORCE THE RIGHTS AND TO REGISTER THE SAME WITH THE REVENUE/COMPETENT AUTHORITIES AND TO APPEAR ON OUR BEHALF BEFORE ALL AUTHORITIES, STATUTORY O R OTHERWISE, AND BEFORE ANY COURT OF LAW (THE DEVELOPMENT RIGHTS). THE OWNER HEREBY HANDS OVER THE ORIGINAL TITLE DEEDS OF THE PROPERTY AS MEN TIONED IN THE LIST ANNEXED HERETO AND MARKED AS ANNEXURE IV AND PHYSICAL, VACANT POSSESSION OF THE PROPERTY HAS BE EN HANDED OVER TO THDC SIMULTANEOUS TO THE EXECUTION AND REGISTRATION OF THIS AGREE MENT TO DEVELOP THE SAME AS SET OUT HEREIN. IT IS HEREBY AGREED AND CONFIRMED THAT WHAT IS STATED IN THE RECITALS HEREINABOVE, SHALL BE DEEMED TO BE DECLARATIONS AND REPRESE NTATIONS ON THE PART OF THE OWNER AS IF THE SAME WERE SET OUT HEREIN IN VERBATIM AND FORMING AN INTEGRAL PART OF THIS AGREEMENT. 4. CONSIDERATION 4.1. IT IS SPECIFICALLY UNDERSTOOD AND AGREED AMONGST THE PARTIES THAT THDC SHALL USE ITS EXPERTISE AND ITS BR AND NAME AND/OR ANY OTHER BRAND NAME AT ITS DISCRETION TO DEVELOP THE PROPERTY INTO THE PREMISES AS PER APPLICABLE BUILDING BYE - LAWS OF THE COMPETENT AUTHORITY AND THE OWNER SHALL HAVE N O OBJECTION TO THE SAME IN WHAT SOEVER MANNER. IN CONSIDERATION OF THE OWNER GRANTING AND SIGNING, ITS DEVELOPMENT RIGHTS IN THE PROPERTY, IRREVOCABLY AND IN PERPETUITY TO THDC TO DEVELOP THE PROPERTY AND FOR TRANSFER OF THE PROPERTY UPON THE SURRENDER OF ALLOTMENT RIGHTS OF 500 SQ. YARDS AND/OR 1,000 SQ. YARDS (AS THE CASE M AY BE) BY ITS MEMBERS TO THE OWNER, VIDE RESOLUTION DATED JANUARY 4, 2007, AND FEBRUARY 25, 2007 (COPY ATTACHED AS PER ANNEXURES I AND II), HASH IS COMMITTED TO PAY TO THE OWNER AND/ OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) A TOTAL AMOUN T OF RS. 106,42,50,000 (RUPEES ONE HUNDRED SIX CRORES FORTY - TWO LAKHS FIFTY THOUSAND ONLY) CALCULATED AT RS. 82,50,000 (RUPEES EIGHTY TWO LAKHS FIFTY THOUSAND ONLY) PAYABLE TO 65 MEMBERS HAVING PLOT OF 500 SQUARE YARDS EACH, RS. 1,65,00,000 (RUPEES ONE CRO RE SIXTY - FIVE LAKHS ONLY) PAYABLE TO 30 MEMBERS HAVING PLOT OF 1000 SQUARE YARDS EACH AND RS. 3,30,00,000 (RUPEES THREE CRORES THIRTY LAKHS ONLY) PAY ABLE TO THE OWNER FOR THE 4 PLOTS OF 500 SQUARE YARDS EACH WHICH SHALL TANTAMOUNT TO THE FULL AND FINAL PA YMENT TO THE OWNER AND/OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CAS E MAY BE) IN A MANNER SET OUT HEREIN BELOW (PAYMENT). FURTHER, THE TRANSFER, SALE AND CONVEY ANCE OF 21.2 ACRES OF LAND OF THE PROPERTY SHALL BE MADE BY THE OWNER IN FAVOUR OF THDC PR O RATA TO THE PAYMENT RECEIVED BY THE OWNER AND/OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) FROM HASH BY EXECUTING SALE DEEDS AND REGISTERING THE SAME. IT IS EXPRESSLY PROVIDED THAT AS RESOLVED BY THE OWNER, THE TOTAL AMOUNT PAYABLE BY HASH TO THE OWNER AND/OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CAS MAY BE) FOR ASSIGNMENT OF THE DEVELOPMENT RIGHTS AND FOR TRANSFER AND SALE OF 21.2 ACRES OF LAND OF THE PROPERTY SHALL BE RS. 106,42,50,000 (RUPEES ONE HUNDRED SIX CRORES FORTY - TWO LAKHS FIFTY THOUSAND ONLY) AND ONE HUNDRED AND TWENTY NINE (129) FLATS CON SISTING OF SUPER AREA OF 2250 SQUARE FEET (FLATS) ONE FLAT EACH FOR SIXTY FIVE (65) MEMBERS HAVING A PLOT OF 500 SQUARE YARDS, TWO FLATS FOR THE (THIRTY) 30 MEMBERS HAVING A PLOT OF 1000 S QUARE YARDS AND 4 FLATS TO THE OWNER FOR THE 4 PLOTS OF 500 SQUARE YARDS EACH AS PER LIST ANNEXED WITH THIS AGREEMENT AS SCHEDULE B (SALE TRANSACTION). 4.2. IT IS EXPRESSLY AGREED BETWEEN THE DEVELOPERS THAT HASH SHALL BE RESPONSIBLE FOR MAKING ALL PAYMENT S TO THE OWNER AND/OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) AS PER THE NEGOTIATED AND AGREED TERMS BETWEEN THE OWNER AND HASH. HASH EXPRESSLY UNDERTAKES TO MAKE TIMELY PAYMENTS OF THE 32 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 PAYMENT TO THE OWNER AND/OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) AS UNDER :' (THE SCHEDULE OF PAYMENT REFERRED IN CLAUSE 4.1 HEREIN HAS ALREADY BEEN REPRODUCED IN THE EARLIER PART OF THE JUDGMENT). 9. TRANSFER OF OWNERSHIP/RIGHTS 9.1. THE OWNER SHALL SIMULTANEOUSLY ON RECEIPT OF PAYMENT A S SET OUT IN CLAUSE 4.1 ABOVE, EXECUTE AN IRR EVOCABLE SPECIAL POWER OF ATTOR NEY IN FAVOUR OF THDC FOR DEVELOPMENT OF THE PROPERTY, AUTHORIZING THDC TO DO ALL LAWFUL ACTS, DEEDS, MATTERS AND THINGS PERTAINING TO THE DEVELOPMENT OF THE PROPERTY FOR THE PROJE CT ALONG WITH INTER ALIA RIGHT TO MORTGAGE THE PROPERTY AND/OR PREMISES, SELL, LEASE, LICENCE THE PREMISES AND RECEIVE/COLLECT MONIES IN ITS NAME IN RESPECT OF THE SAME AND APPROACH, INTERACT, COMMUNICATE WITH THE COMPETENT AUTHORITIES AND FOR DOING ALL AC TS, DEEDS, MATTERS AND THINGS TO BE DONE OR INCURRED BY THDC IN THAT BEHALF AS ALSO TO SIGN ALL LETTERS, APPLICATIONS, AGREEMENTS AND REGISTER THE SAME IF NECESSARY, DOCUMENTS, COURT PROCEEDINGS, AFFIDAVITS AND SUCH OTHER PAPERS CONTAINING TRUE FACTS AND C ORRECT PARTICULARS AS MAY FROM TIME TO TIME BE REQUIRED IN THIS BEHALF. 9.2 THE OWNER SHALL EXECUTE IN FAVOUR OF THDC, THE SALE DEEDS IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE 4.1(II) TO CLAUSE 4.1(V) OF THIS AGREEMENT AND EXECUTE ALL OTHER NECESSARY DOC UMENTS AND PAPERS TO COMPLETE THE AFORESAID TRANSACTION. 9.3 THAT ALL THE ORIGINAL TITLE DEED S PERTAINING TO PROPERTY AS MEN TIONED IN ANNEXURE IV HAVE BEEN HANDED OVER TO THDC BY THE OWNER AT THE TIME OF SIGNING OF THIS AGREEMENT AND IN FURTHERANCE OF THE COMMON INTEREST OF THE PARTIES FOR THE DEVELOPMENT OF THE PROJECT AND EXCEPT THE SALE TRANSACTION MADE BY THE OWNER IN FAVOUR OF THDC AS SET OUT IN CLAUSE 4.1 ABOVE. THDC HEREBY UNDERTAKE AND ASSURE THE OWNER THAT THEY SHALL USE THE TITLE DEEDS ONLY FOR TH E PURPOSE OF FURTHERANCE OF THE PROJECT IN THE MANNER THAT IT DOES NOT ADVERSELY AFFECT THE OWNER/ALLOTTEE IN ANY MANNER WHATSOEVER. 14. TERMINATION (I) SAVE AND EXCEPT THE PROVISIONS OF CLAUSE 26, THDC SHALL AT ALL TIMES HAVE THE RIGHT TO TERMINATE THIS A GREEMENT 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(3 0) DAYS WRITTEN NOTICE FOR RECTIFI CATION OF SUCH BR EACH. 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 UP TO THE DATE OF THE TERMINATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSFERRED TO THDC AS PER THE TERM S OF THIS AGREEMENT SHALL NOT BE TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL REFUND TO THDC THE ADJUSTABLE ADVANCE/EARNEST MONEY MENTIONED IN CLAUSE 4.1(I) ABOVE WITHIN ONE MONTH OF SUCH TERMINATION. IN THE EVENT OF FA ILURE OF THE OWNER TO REFUND THE SAID AMOUNT, THE OWNER HEREBY AGREES TO EXECUTE A REGISTERED SALE DEED FOR LAND OF EQUIVALENT VALUE IN FAVOUR OF THDC. (II) IN THE EVENT ALL THE REQUISITE GOVERNMENTAL AND STATUTORY APPROVALS, AUTHORIZATIONS, CONSENTS, LICE NCES, APPROVALS OF ALL THE PLANS/DESIGN AND DRAWINGS AS MAY BE REQUIRED FOR THE DEVELOPMENT OF THIS PROPERTY IN RELATION TO THE PROJECT AND TO UNDERTAKE THE PROJECT ARE NOT GRANTED WITHIN NINE (9) MONTHS OF THE SUBMISSION OF THE FINAL PLANS/DESIGN AND DRAW INGS TO THE COMPETENT AUTHORITY FOR APPROVAL, THEN THDC MAY AT ITS SOLE DISCRETION EITHER DECIDE THAT IT DOES NOT 33 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 DESIRE TO UNDERTAKE AND COMPLETE THE PROJECT AND HENCE TERMINATE THIS AGREEMENT AFTER GIVING THIRTY (30) DAYS WRITTEN NOTICE IN THIS REGARD OR DECIDE TO WAIT FOR ANY FURTHER TIME AS DEEMED FIT BY THDC FOR THE GRANT OF THE AFORESAID APPROVALS AND LICENCES. 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 UP TO THE DA TE OF THE TERMINATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSFERRED TO THDC AS PER THE TERMS OF THIS AGREEMENT SHALL NOT BE TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL REFUND TO THDC THE ADJUSTABLE ADV ANCE/EARNEST MONEY MENTIONED IN CLAUSE 4.1(I) ABOVE WITHIN ONE MONTH OF SUCH TERMINATION. IN THE EVENT OF FAILURE OF THE OWNER TO REFUND THE SAID AMOUNT, THE OWNER HEREBY AGREES TO EXECUTE A REGISTERED SALE DEED FOR LAND OF EQUIVALENT VALUE IN FAVOUR OF TH DC. (III) IN THE EVENT THDC IS UNABLE TO DEVELOP THE PROPERTY DUE TO REFUSAL/NON GRANT OF APPROVALS, CONSENTS, PERMISSIONS, LICENSES OR REVOCATION OF THE SAME BY THE APPROPRIATE STATUTORY AUTHORITY, THEN THDC MAY AT ITS SOLE DISCRETION TERMINATE THIS AGREE MENT. 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 UP TO THE DATE OF THE TERMINATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSFERRED TO THDC AS PER THE TERM S OF THIS AGREEMENT SHALL NOT BE TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL REFUND TO THDC THE ADJUSTABLE ADVANCE/ EARNEST MONEY MENTIONED IN CLAUSE 4.1(I) ABOVE WITHIN ONE MONTH OF SUCH TERMINATION. IN HE EVENT OF FA ILURE 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 THE AGREEMENT ONLY IN THE EVENT OF DEFAULT BY THE DEVEL OPERS FOR MAKING THE PAYMENT IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT AND THE ALLOTMENT OF FLATS WITHIN THE TIME PERIOD AS MENTIO NED IN THIS AGREEMENT AFTER GIV ING THIRTY (30) DAYS WRITTEN NOTICE FOR RECTIFICATION OF SUCH BREACH OR ANY FURTHER TIME A S MAY BE DESIRED BY THE OWNER. IN THE EVENT THE AGREEMENT IS TERMINATED BY OWNER, ALL THE LANDS REGISTERED IN THE NAME OF THDC AS PER THE TERMS OF THIS AGREEMENT UP TO THE DATE OF THE TERMINATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSFERR ED 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 FORFEIT THE ADJUSTABLE ADVANCE/E ARNEST MONEY MEN TIONED IN CLAUSE 4(I). 26. FORCE MAJEURE (I) NONE OF THE PARTIES SH ALL BE LIABLE TO THE OTHER PARTY OR BE DEEMED TO BE IN BREACH OF THIS AGREEMENT BY REASON OF ANY DELAY IN PERFORMING, OR ANY FAILURE TO PERFORM, ANY OF ITS OWN OBLIGATIONS IN RELATION TO THE AGREEMENT, IF THE DELAY OR FAILURE IS DUE TO ANY EVENT OF FORCE M AJEURE. EVENT OF FORCE MAJEURE IS ANY EVENT CAUSED BEYOND THE PARTIES' REASONABLE CONTROL. THE FOLLOWING SHALL BE REGARDED AS CAUSES BEYOND THE PARTIES REASONABLE CONTROL. (II) FOR THE PURPOSES OF THIS CLAUSE, AN EVENT OF FORCE MAJEURE SHALL MEAN EVENTS OF WAR, WAR LIKE CONDITIONS, BLOCKADES, EMBARGOES, INSURRECTION, GOVERNMENTAL DIRECTION, RIOTS, STRIKES, ACTS OF TERRORISM, CIVIL COMMOTION, LOCK OUTS, SABOTAGE, PLAGUES OR OTHER EPIDEMICS, ACTS OF GOD INCLUDING FIRE, FLOODS, VOLCANIC ERUPTIONS, TYPHOONS, HU RRI CANES, STORMS, TIDAL WAVES, EARTHQUAKE, LANDSLIDES, LIGHTNING, EXPLO SIONS, AND OTHER NATURAL CALAMITIES, PROLONGED FAILURE OF ENERGY, COURT ORDERS/INJUNCTIONS, CHANGE OF LAWS, ACTION AND/OR ORDER BY STATUTORY AND/OR GOVERNMENT AUTHORITY, THIRD PARTY A CTIONS AFFECTING THE DEVE LOPMENT OF THE PROJECT, ACQUISITION/REQUISITION OF THE PROPERTY OR ANY PART THEREOF BY THE 34 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 GOVERNMENT OR ANY OTHER STATUTORY AUTHORITY AND SUCH OTHER CIRCUMSTANCES AFFECTING THE DEVELOPMENT OF THE PROJECT (EVENT OF FORCE MAJEURE). (III) ANY PARTY CLAIMING RESTRICTION ON THE PERFORMANCE OF ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT DUE TO THE HAPPENING OR ARISING OF AN EVENT OF FORCE MAJEURE HEREOF SHALL NOTIFY THE OTHER PARTY OF THE HAPPENING OR ARISING AND THE ENDING OR CEASING O F SUCH EVENT OR CIRCUMSTANCE WITHIN THREE (3) DAYS OF DETERMINING THAT AN EVENT OF FORCE MAJEURE HAS OCCURRED. 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 C LAIMING EVENT OF FORCE MAJEURE CONDITIONS SHALL, IN ALL INSTANCES AND TO THE EXTENT IT IS CAPABLE OF DOING SO, USE ITS BEST EFFORTS TO REMOVE OR REMEDY THE CAU SE THEREOF AND MINIMISE THE ECO NOMIC DAMAGE ARISING THEREOF. (V) EITHER PARTY MAY TERMINATE THIS AGREEMENT AFTER GIVING THE OTHER PARTY A PRIOR NOTICE OF FIFTEEN (15) DAYS IN WRITING IF THE EVENT OF FORCE MAJEURE CONTINUES FOR A PERIOD OF NINETY (90) DA YS. IN THE EVENT OF TER MINATION OF THIS AGREEMENT ALL OBLIGATIONS OF THE PARTIES UNTIL SUCH DATE SHA LL BE FULFILLED. (II) CLAUSES OF SPECIAL POWER OF ATTORNEY DATED FEBRUARY 26, 2007 (A). THE OWNER IS ABSOLUTELY SEIZED AND POSSESSED OF 169 KANALS 7 MARLAS EQUIVALENT TO 21.2 ACRES (APPROX.) OF FREE HOLD LAND SITUATED IN VILLAGE KANSAL, TEHSIL KHARAR, DIST RICT MOHALI, REGISTERED IN THIS NAME VIDE VARIOUS SALE DEEDS DULY REGISTERED WITH SUB - REGISTRAR MAJRI, DIS TRICT RUPNAGAR (NOW WITHIN DISTRICT MOHALI) AND MORE PARTICULARLY DESCRIBED IN THE SCHEDULE A HEREUNDER WRITTEN AND DELINEATED IN GREEN COLOUR BOUNDA RY LINE IN THE PLAN ATTACHED HERETO, ANNEXED AS ANNEXURE I (HEREINAFTER REFERRED TO AS THE 'PROPERTY'). (B). THE OWNER IS THE ABSOLUTE AND UNDISPUTED OWNER OF THE PRO PERTY AND HAS ASSIGNED AND TRANSFERRED ALL ITS RIGHTS TO PLAN, DEVELOP, CONSTRUCT, SELL, LEASE, MORTGAGE THE PROPERTY AS MORE PARTICULARLY SET OUT IN THE JOINT DEVELOPMENT AGREEMENT DATED FEBRUARY 25, 2007, (JOINT DEVELOPMENT AGREEMENT) ENTERED INTO BY THE OWNER WITH HASH BUILDERS P. LTD. HAVING ITS REGISTERED OFFICE AT SCO NO. 311 - 12, 2ND FLO OR, SECTOR 40 - D, CHANDIGARH, HEREINAFTER REFERRED TO AS 'HASH' AND THDC LIMITED HAVING THEIR REGISTERED OFFICE AT ERUCHSHAW BUILDING, FOURTH FLOOR, 249, DR. D. N. ROAD, MUMBAI 400 001, HEREINAFTER REFERRED TO AS 'THDC' WHEREIN THE OWNER ASSIGNED ITS DEVELO PMENT RIGHTS (AS DEFINED IN THE JOINT DEVELOPMENT AGREEMENT IN FAVOUR OF THDC, WHO POSSESSES THE RELEVANT AND REQUIRED SKILLS AND OTHER EXPERTISE FOR DEVELOPING THE PROPERTY BY CONSTRUCTING THEREUPON BUILDINGS AND/OR STRUCTURE TO BE USED FOR, INTER ALIA, R ESIDENTIAL, PUBLIC USE, COMMERCIAL USE, INSTITUTIONAL USE, CLUB USE, PARKING AND ANY OTHER KIND OF STRUCTURES, AND NECESSARY AMENITIES, UTILITIES, INFRASTRUC TURE THERETO AS MAY BE DECIDED BY THDC AND ALL WORK INCLUDING INVESTIGATIONS, STUDIES, DESIGN, PLA NNING, FINANCING, CONSTRUCTING, OPERATIONS, MAINTENANCE AND MARKETING FOR SALE/LEASE/TRANSFER TO PUR CHASERS/LESSEES/TRANSFEREES FOR RESIDENTIAL AND/OR ANY OTHER AUTHORIZED USER TO BE DETERMINED BY THDC (HEREINAFTER REFERRED TO AS THE 'PROJECT'). FURTHER T HE S . . . TO EXECUTE AN IRREVOCABLE SPECIAL POWER OF ATTORNEY IN FAVOUR OF THDC AUTHORISED NOMINEE . . . (D). UNDER THE TERMS AND CONDITIONS OF THE JOINT DEVELOPMENT AGREEMENT, THE OWNER IS REQUIRED TO EXECUTE AND REGISTER AN IRREVO CABLE SPECIAL POWER OF ATTORNEY (IRREVOCABLE SPECIAL POWER OF ATTORNEY) IN FAVOUR OF THDC AND/OR ITS AUTHORISED NOMINEE TO FACILITATE THDC TO CARRY OUT ITS DUTIES AND OBLIGATIONS FOR THE EXECUTION, CO - ORDINATION AND IMPLEMENTATION OF THE PROJECT UNDER THE JOINT DEVELOPMENT AGRE EMENT. IN PURSUANCE THEREOF, THE OWNER HEREBY NOMINATES AND 35 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 APPOINTS THDC AND/OR ITS AUTHORIZED NOMINEE TO ACT FOR AND IN THE NAME OF AND ON THE BEHALF OF THE OWNER AND TO DO ALL ACTS AND THINGS RELATING TO THE PROPERTY. NOW, KNOW ALL AND THESE PRESENTS WI TNESS THAT THE OWNER HEREBY NOMINATES, CONSTITUTES AND APPOINTS THDC LIMITED AND/OR ITS AUTHORISED NOMINEES (THE ATTORNEYS) TO BE THE OWNER'S TRUE AND LAWFUL ATTORNEYS AND TO DO THE FOLLOWING ACTS, DEEDS, MATTERS AND THINGS ON BEHALF OF AND IN THE NAME OF THE OWNER IN RELATION TO THE PROPERTY THAT IS TO SAY. 1. TO MAKE, SIGN, EXECUTE, FILE, DO, PERFORM AND/OR GET REGISTERED ALL ACTS, DEEDS, DOCUMENTS, APPLICATIONS AND OTHER PAPERS, PETITIONS AND ALL PROCEEDS WHATSOEVER AND MATTERS AND THINGS WHATSOEVER AS S HALL OR MAY BE REQUIRED FROM TIME TO TIME TO ENABLE THE DEVELOPMENT OF THE PROPERTY AND FOR UNDERTAKING, EXECUTING AND COMPLETING THE PROJECT AND WITHOUT PREJUDICE TO THE AFOREGOING TO JOINTLY AND SEVER ALLY DO AND PERFORM THE FOLLOWING ACTS, DEEDS, MATTER S AND THINGS, NAMELY : . . . (M) TO APPLY TO THE COMPETENT AUTHORITY AND/OR ANY OTHER BODY (IES) AND/OR ANY OTHER RELEVANT STATUTORY AND/OR GOVERNMENT AUTHORITY (IES) FOR THE TIME BEING CONCERNED THEREWITH FOR THE PERMANENT OR TEMPORARY CONNECTION OF POWE R, LIGHT, WATER, SEWERAGE, GAS AND/OR OTHER FACILITIES TO THE PROPERTY FOR THE CONSTRUCTION OF THE PREMISES OR ANY PARTY THEREOF AND IN CONNECTION THEREWITH TO MAKE ALL DEPOSITS AS SHALL OR MAY BE NECESSARY AND TO DO ALL OTHER ACTS, DEEDS, MATTERS AND THIN GS WHICH THE OWNER CAN DO. (N) TO ENTER UPON THE PROPERTY EITHER ALONE OR WITH OTHERS FOR THE PURPOSE OF DEVELOPMENT, COORDINATION, EXECUTION, IMPLEMENTATION OF THE PROJECT AND COMMERCIALISATION OF THE PROPERTY/PREMISES . . . (T) TO AMALGAMATE THE PROPER TY WITH ANY OTHER CONTIGUOUS, ADJA CENT AND ADJOINING LANDS AND PROPERTIES WHEREIN DEVELOPMENTAL AND/ OR OTHER RIGHTS, BENEFITS AND INTERESTS ARE ACQUIRED AND/OR PROPOSED TO BE ACQUIRED AND DEVELOPED OR PROPOSED TO BE DEVELOPED BY THDC AND/OR THEIR ASSOCIA TE AND/OR GROUP CONCERN/S AND/OR UTILISE THE FSI, FAR, DR AND TDR OF THE CONTIGUOUS, ADJACENT AND ADJOINING LANDS FOR THE PURPOSE OF CONSTRUCTING BUILDINGS AND/OR STRUCTURES THEREON AND/ OR ON THE PROPERTY OR UTILISE SUCH LANDS AND PROPERTIES FOR MAKING PR OVISION OF PARKING SPACES THEREON, AND/OR MAY UTILISE THE SAME FOR ANY OTHER LAWFUL PURPOSE, AS THDC AND/OR THEIR ASSOCIATE AND/OR GROUP CONCERN/S MAY IN THEIR SALE, ABSOLUTE AND UNFETTERED DISCRETION THINK FIT. (AA) TO SELL, TRANSFER, LEASE, LICENCE THE PREMISES THAT MAY BE CON STRUCTED ON THE PROPERTY ON OWNERSHIP BASIS, LEASE, LICENCE AND/OR IN ANY OTHER MANNER FOR SUCH PRICE AS THE ATTORNEYS MAY DEEM FIT AND PROPER. TO COLLECT AND RECEIVE FROM THE PURCHASERS, TRANSFEREES, LESSEES, LICENSEES OF THE PREM ISES, MONIES/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 (HH) . . .' 33. CONVERSELY, LEARNED COUNSEL FOR THE REVENUE, ARGUED THAT WHERE THE INTENTION AND F ACTS ARE CONTAINED IN MORE THAN ONE DOCUMENT BETWEEN THE SAME PARTIES, THEY ARE REQUIRED TO BE READ AND INTERPRETED TOGETHER BY TAKING THEM TO BE ONE 36 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 DOCUMENT. TO GARNER SUPPORT, RELIANCE WAS PLACED ON THE FOLLOWING OBSERVATIONS IN THE JUDGMENT OF THE SUPR EME COURT IN S. CHATTANATHA KARAYALAR V. CENTRAL BANK OF INDIA LIMITED, AIR 1965 SC 1856 : 'THE FIRST QUESTION PRESENTED FOR DETERMINATION IN THIS CASE IS WHETHER THE STATUS OF THE THIRD DEFENDANT IN REGARD TO THE TRANSACTION OF OVERDRAFT ACCOUNT IS THAT O F A SURETY OR OF A CO - OBLIGANT. IT WAS ARGUED BY MR. DESAI ON BEHALF OF THE APPELLANT THAT THE HIGH COURT HAS MISCONSTRUED THE CONTENTS OF EXHIBITS A AND B IN HOLDING THAT THE 3RD DEFENDANT HAS UNDERTAKEN THE LIABILITY AS A CO - OBLIGANT. IT WAS SUBMITTED TH AT THERE WAS AN INTEGRATED TRANSACTION CONSTITUTED BY THE VARIOUS DOCUMENTS EXHIBITS A, B AND G EXECUTED BETWEEN THE PAR TIES ON THE SAME DAY AND THE LEGAL EFFECT OF THE DOCUMENTS WAS TO CONFER ON THE THIRD DEFENDANT THE STATUS OF A SURETY AND NOT OF A CO - OBLIGANT. IN OUR OPINION, THE ARGUMENT PUT FORWARD ON BEHALF OF THE APPELLANT IS WELL - ROUNDED AND MUST BE ACCEPTED AS CORRECT. IT IS TRUE THAT IN THE PROMISSORY NOTE EXHIBIT B ALL THE THREE DEFENDANTS HAVE 'JOINTLY AND SEVERALLY PROMISED TO PAY THE CENTRA L BANK OF INDIA LTD. OR ORDER A SUM OF RS. 4 LAKHS ONLY TOGETHER WITH INTEREST ON SUCH SUM FROM THIS DATE', BUT THE TRANSACTION BETWEEN THE PARTIES IS CONTAINED NOT MERELY IN THE PROMISSORY NOTE EXHIBIT B BUT ALSO IN THE LETTER OF CONTINUITY DATED NOVEMBER 26, 1946 EXHIBIT A WHICH WAS SENT BY THE DEFENDANTS TO THE PLAINTIFF - BANK ALONG WITH PROMISSORY NOTE EXHIBIT B ON THE SAME DATE. THERE IS ANOTHER DOCUMENT EXECUTED BY DEFENDANT NO. 1 ON NOVEMBER 26, 1946 EXHIBIT G - HYPOTHECATION AGREEMENT. THE PRINCIPLE I S WELL - ESTABLISHED THAT IF THE TRANSACTION IS CONTAINED IN MORE THAN ONE DOCUMENT BETWEEN THE SAME PARTIES THEY MUST BE READ AND INTERPRETED TOGETHER AND THEY HAVE THE SAME LEGAL EFFECT FOR ALL PURPOSES AS IF THEY ARE ONE DOCUMENT. IN MANKS V. WHITELEY [19 12] 1 CH 735, AT PAGE 754, (1) MOULTON L. J. STATED : 'WHERE SEVERAL DEEDS FORM PART OF ONE TRANSACTION AND ARE CON TEMPORANEOUSLY EXECUTED THEY HAVE THE SAME EFFECT FOR ALL PURPOSES SUCH AS ARE RELEVANT TO THIS CASE AS IF THEY WERE ONE DEED. EACH IS EXE CUTED ON THE FAITH OF ALL THE OTHERS BEING EXECUTED ALSO AND IS INTENDED TO SPEAK ONLY AS PART OF THE ONE TRANSACTION, AND IF ONE IS SEEKING TO MAKE EQUITIES APPLY TO THE PARTIES THEY MUST BE EQUITIES ARISING OUT OF THE TRANSACTION AS A WHOLE.' ' 34. IT WA S CONTENDED THAT IRREVOCABLE POWER OF ATTORNEY HAD BEEN REGISTERED WHEREIN POWER TO SELL THE PROPERTY AS OWNERS TO THIRD PARTIES HAD BEEN GIVEN TO THE DEVELOPERS AND, THUS, IT PARTAKES OF THE COLOUR OF CONTRACT UNDER SECTION 202 OF THE INDIAN CONTRACT ACT, 1872. THEREFORE, TERMINATION OF AGENCY IN THE PRESENT CASE COULD NOT BE EFFECTED BY THE TRANSFEROR IN VIEW OF SECTION 202 OF THE INDIAN CONTRACT ACT, 1872, WHICH IS IN THE FOLLOWING TERMS : '202. TERMINATION OF AGENCY, WHERE AGENT HAS AN INTEREST IN SUB J ECT - MATTER. WHERE THE AGENT HAS HIMSELF AN INTEREST IN THE PROPERTY WHICH FORMS THE SUBJECT - MATTER OF THE AGENCY, THE AGENCY CANNOT, IN THE ABSENCE OF AN EXPRESS CONTRACT, BE TERMINATED TO THE PREJUDICE OF SUCH INTEREST. ILLUSTRATIONS (A) A GIVES AUTHORITY TO B TO SELL A'S LAND, AND TO PAY HIMSELF, OUT OF THE PROCEEDS, THE DEBTS DUE TO HIM FROM A. A CANNOT REVOKE THIS AUTHORITY, NOR CAN IT BE TERMINATED BY HIS INSANITY OR DEATH. (B) A CONSIGNS 1,000 BALES OF COTTON TO B, WHO HAS MADE ADVANCES TO HIM ON SUCH COTTON, AND DESIRES B TO SELL THE COTTON, AND TO REPAY HIMSELF, OUT OF THE 37 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 PRICE THE AMOUNT OF HIS OWN ADVANCES. A CANNOT REVOKE THIS AUTHORITY, NOR IS IT TERMINATED BY HIS INSANITY OR DEATH.' TO BUTTRESS HER SUBMISSIONS, SUPPORT WAS GATHERED FROM FOLLOWI NG OBSERVATIONS IN THE JUDGMENT RENDERED BY DELHI HIGH COURT IN HARBAS SINGH V. SHANTI DEVI [1977] 13 DLT 369 : '(7) FOR THE PURPOSES OF THE LAW OF CONTRACT, THEREFORE, IT WOULD NOT BE USEFUL TO RESTRICT THE MEANING OF THE WORD 'INTEREST' BY THE NAR ROW CO MPASS IN WHICH THIS WORLD IS USED AT TIMES IN RELATION TO IMMOVABLE PROPERTY. FOR INSTANCE, THE LAST SENTENCE OF SECTION 54 OF THE TRANSFER OF PROPERTY ACT STATES THAT A CONTRACT FOR SALE OF ITSELF DOES NOT CREATE ANY INTEREST IN OR CHARGE ON IMMOVABLE PRO PERTY. SIMILARLY, SECTION 17(1)(B) OF THE REGISTRATION ACT MAKES ONLY THOSE DOCUMENTS COMPULSORILY REGISTRABLE WHICH CREATE, DECLARE, ASSIGN, LIMIT OR EXTIN GUISH ANY RIGHT, TITLE OR INTEREST, WHETHER VESTED OR CONTINGENT, OF THE VALUE OF ONE HUNDRED RUPEE S AND UPWARDS TO OR IN IMMOVABLE PRO PERTY. SINCE AN AGREEMENT FOR SALE DOES NOT CREATE SUCH A RIGHT, TITLE OR INTEREST, IT MAY NOT BE COMPULSORILY REGISTRABLE. BUT IN THE CONTEXT OF THE CONTRACT ACT, IT CANNOT BE SAID THAT A PERSON WHO IS THE BENEFI CIARY OF AN AGREEMENT OF SALE HAS NO RIGHT OR INTEREST IN THE SUBJECT MATTER OF THE SALE. HE HAS A LEGALLY ENFORCEABLE RIGHT AND INTEREST IN ENFORCING THE CONTRACT OF SALE BY THE EXECUTION OF A SALE DEED AND IN GETTING POSSESSION OF THE PROPERTY AGREED TO BE SO LD UNDER THE PRO VISIONS OF THE SPECIFIC RELIEF ACT. IN THE ENGLISH COMMON LAW, THE SPECIFIC PERFORMANCE OF CONTRACTS WAS A PART OF THE LAW OF CONTRACT. THIS IS WHY CHAPTER IV OF THE CONTRACT ACT DEALS WITH THE PERFORM ANCE OF CONTRACTS WHICH INCLUDES THE PERFORMANCE OF CONTRACTS RELATING TO IMMOVABLE PROPERTY ALSO. IN FACT, SECTION 4 OF THE TRANSFER OF PRO PERTY ACT SAYS THAT THE CHAPTERS AND SECTIONS OF THAT ACT WHICH RELATE TO CONTRACTS SHALL BE TAKEN AS PART OF THE INDIAN CONTRACT ACT, 1872. THEREFORE, THE RESPONDENT IN WHOSE FAVOUR THE APPELLANT HAD EXE CUTED AN AGREEMENT FOR THE SALE OF AN IMMOVABLE PROPERTY HAD AN INTEREST IN THE SUBJECT - MATTER OF THE CONTRACT, NAMELY, THE SHOP, TURN THE PURPOSES OF SECTION 202 OF THE CONTRACT ACT IF NOT FOR THE PURPO SES OF THE TRANSFER OF PROPERTY AND THE REGISTRATION ACTS.' 35. THE PRINCIPLE OF LAW ENUNCIATED IN HEYDON'S CASE [1584] 3 CO. REP 7A, WAS PRESSED INTO SERVICE TO URGE THAT WHILE INTERPRETING A STATUTE, THE MISCHIEF AND THE DEFECT WHICH WAS SOUGHT TO BE REM OVED BY THE ENACTMENT, FULL MEANING SHOULD BE ASSIGNED TO IT AND SUCH CONSTRUCTION IS REQUIRED TO BE PUT AS SHALL SUPPRESS THE MISCHIEF. IT WAS STRONGLY PUT FORWARD THAT THE JDA EXECUTED ON FEBRUARY 25, 2007, FOLLOWED BY REGISTERED SPECIAL POWER OF ATTORNE Y DATED FEBRUARY 26, 2007, WHEN READ TOGETHER SUPPORTED THE VIEW OF THE REVENUE THAT PROVISIONS OF SECTION 53A OF THE 1882 ACT STOOD FULFILLED AND AS A NECESSARY COROLLARY TRANSACTION WAS EXIGIBLE TO CAPITAL GAINS TAX UNDER SECTION 2(47)(V) READ WITH SECTI ON 45 OF THE ACT IN THE HANDS OF THE ASSESSEE - APPELLANT. THE FOLLOWING OBSERVATIONS RECORDED BY THE APEX COURT 35. IN BENGAL IMMUNITY CO. LIMITED V. STATE OF BIHAR [1955] 2 SCR 603 WERE REFERRED : 'IT IS A SOUND RULE OF CONSTRUCTION OF A STATUTE FIRMLY ESTABLISHED IN ENGLAND AS FAR BACK AS 1584 WHEN HEYDON'S CASE [1584] 3 CO. REP 7A (V) WAS DECIDED THAT '. . . FOR THE SURE AND TRUE INTERPRETATION OF ALL STATUTES IN GENERAL (BE THEY PENAL OR BENEFICIAL, RESTRICTIVE OR ENLARGING OF THE COMMON LAW) FOUR TH INGS ARE TO BE DISCERNED AND CONSIDERED : 1ST. WHAT WAS THE COMMON LAW BEFORE THE MAKING OF THE ACT. 38 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 2ND. WHAT WAS THE MISCHIEF AND DEFECT FOR WHICH THE COMMON LAW DID NOT PROVIDE. 3RD. WHAT REMEDY THE PARLIAMENT HATH RESOLVED AND APPOINTED TO CURE THE DIS EASE OF THE COMMONWEALTH, AND 4TH. THE TRUE REASON OF THE REMEDY ; AND THEN THE OFFICE OF ALL THE JUDGES IS ALWAYS TO MAKE SUCH CONSTRUCTION AS SHALL SUPPRESS THE MIS CHIEF, AND ADVANCE THE REMEDY, AND TO SUPPRESS SUBTLE INVENTIONS AND EVASIONS FOR CONTINU ANCE OF THE MISCHIEF, AND 'PRO PRIVATO COM MODO', AND TO ADD FORCE AND LIFE TO THE CURE AND REMEDY, ACCORDING TO THE TRUE INTENT OF THE MAKERS OF THE ACT, 'PRO BONO PUBLICO'.' IN IN RE MAYFAIR PROPERTY CO. [1896] 2 CH 28, AT PAGE 35 (W) LIND LEY, M. R. IN 1898 FOUND THE RULE 'AS NECESSARY NOW AS IT WAS WHEN LORD COKE REPORTED HEYDON'S CASE'. IN (V) EASTMAN PHOTOGRAPHIC MATERIAL COMPANY V. COMPTROLLER GENERAL OF PATENTS, DESIGNS AND TRADE MARKS [1898] AC 571 AT PAGE 576 EARL OF HALSBURY RE - AFFIRMED THE RULE AS FOLLOWS : 'MY LORDS, IT APPEARS TO ME THAT TO CONSTRUE THE STATUTE IN QUESTION, IT IS NOT ONLY LEGITIMATE BUT HIGHLY CONVENIENT TO REFER BOTH TO THE FORMER ACT AND TO THE ASCERTAINED EVILS TO WHICH THE FORMER ACT HAD GIVEN RISE, AND TO THE LATER ACT WHI CH PROVIDED THE REMEDY. THESE THREE BEING COMPARED I CANNOT DOUBT THE CONCLUSION'.' 36. RELIANCE WAS PLACED ON THE CONCLUSION OF THE APEX COURT IN DR. BALIRAM WAMAN HIRAY V. MR. JUSTICE B. LENTIN [1989] 176 ITR 1 (SC), WHEREIN FOLLOWING BENGAL IMMUNITY'S CASE (SUPRA), IT WAS OBSERVED AS UNDER (PAGE 23) : 'NO RULE IS MORE FIRMLY ESTABLISHED THAN THE PRINCIPLES ENUNCIATED IN HEYDON'S CASE. WHICH HAVE BEEN CONTINUALLY CITED WITH APPROVAL NOT ONLY BY THE ENGLISH COU RTS BUT ALSO BY THE PRIVY COUNCIL AS WELL AS THIS COURT. THE PRINCIPLES LAID DOWN IN HEYDON'S CASE HAVE BEEN ENUNCIATED IN CRAIES ON STATUTE LAW, 6TH EDITION. AT PAGE 96 AS FOL LOWS : 'THAT FOR THE SURE AND TRUE INTERPRETATION OF ALL STATUTES IN GENERAL (B E THEY PENAL OR BENEFICIAL RESTRICTIVE OR ENLARGING OF THE COMMON LAW), FOUR THINGS ARE TO BE DISCERNED AND CONSIDERED : (1) WHAT WAS THE COMMON LAW BEFORE THE MAKING OF THE ACT, (2) WHAT WAS THE MIS CHIEF AND DEFECT FOR WHICH THE COMMON LAW DID NOT PROVID E, (3) WHAT REMEDY PARLIAMENT HATH RESOLVED AND APPOINTED TO CURE THE DISEASE OF THE COMMONWEALTH AND (4) THE TRUE REASON OF THE REMEDY. AND THEN THE OFFICE OF ALL THE JUDGES IS ALWAYS TO MAKE SUCH CONSTRUCTION AS SHALL SUPPRESS THE MISCHIEF AND ADVANCE TH E REMEDY, AND TO SUPPRESS SUB TLE INVENTIONS AND EVASIONS FOR THE CONTINUANCE OF THE MISCHIEF AND PRO PRIVATO COMMODO, AND TO ADD FORCE AND LIFE TO THE CURE AND REMEDY ACCORDING TO THE TRUE INTENT OF THE MAKERS OF THE ACT PRO BONO PUBLICO.' THESE RULES ARE STILL IN FULL FORCE AND EFFECT, WITH THE ADDITION THAT REGARD MUST NOW BE HAD NOT ONLY TO THE EXISTING LAW BUT ALSO TO PRIOR LEGISLATION AND TO THE JUDICIAL INTERPRETATION THEREOF. THE COURT APPLIED THE RULE ENUNCIATED IN HEYDON'S CASE AND IN BENGAL IMMUN ITY COM PANY LTD. V. STATE OF BIHAR [1955] 2 SCR 603 IN THE CONSTRUCTION OF ARTICLE 286 OF THE CONSTITUTION.' 37. THE CLAIM OF THE ASSESSEE WAS ALSO CONTESTED RELYING UPON A JUDGMENT IN SURAJ LAMP AND INDUSTRIES P. LTD. V. STATE OF HARYANA [2012] 340 ITR 1 (SC) BY URGING THAT WHILE INTERPRETING SECTIONS 54, 55, 53A OF THE 1882 ACT, THE APEX COURT HELD THAT TRANSFER OF IMMOVABLE PROPERTY BY WAY OF SALE CAN ONLY BE BY A 39 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 DEED OF CONVEYANCE (SALE DEED). IN THE ABSENC E OF A DEED OF CONVEYANCE DULY STAMPED AND REGISTERED AS REQUIRED BY LAW, NO RIGHT, TITLE OR INTEREST IN AN IMMOVABLE PROPERTY CAN BE TRANSFERRED. ANY CONTRACT OF SALE WHICH IS NOT A REGISTERED DEED OF CONVEYANCE WOULD FALL SHORT OF THE REQUIREMENTS OF SEC TIONS 54 AND 55 OF THE 1882 ACT AND WILL NOT CONFER ANY TITLE NOR TRANSFER ANY INTEREST IN AN IMMOVABLE PROPERTY EXCEPT TO THE LIMITED RIGHT GRANTED UNDER SECTION 53A OF THE 1882 ACT. THE FOLLOWING OBSERVATIONS WERE REFERRED TO (PAGE 12) : '24. WE THEREFOR E, REITERATE THAT IMMOVABLE PROPERTY CAN BE LEGALLY AND LAWFULLY TRANSFERRED/CONVEYED O NLY BY A REGISTERED DEED OF CON VEYANCE. TRANSACTIONS OF THE NATURE OF 'GPA SALES' OR 'SA/GPA/WILL TRANSFERS' DO NOT CONVEY TITLE AND DO NOT AMOUNT TO TRANSFER, NOR CAN T HEY BE RECOGNIZED OR VALID MODE OF TRANSFER OF IMMOVABLE PROPERTY. THE COURTS WILL NOT TREAT SUCH TRANSACTIONS AS COMPLETED OR CONCLUDED TRANSFERS OR AS CONVEYANCES AS THEY NEITHER CONVEY TITLE NOR CREATE ANY INTEREST IN AN IMMOVABLE PROPERTY. THEY CANNOT BE RECOGNIZED AS DEEDS OF TITLE, EXCEPT TO THE LIMITED EXTENT OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT. SUCH TRANSACTIONS CANNOT BE RELIED UPON OR MADE THE BASIS FOR MUTATIONS IN MUNICIPAL OR REVENUE RECORDS. WHAT IS STATED ABOVE WILL APPLY NOT ONLY TO DEEDS OF CONVEYANCE IN REGARD TO FREE HOLD PROPERTY BUT ALSO TO TRANSFER OF LEASEHOLD PROPERTY. A LEASE CAN BE VALIDLY TRANSFERRED ONLY UNDER A REGISTERED ASSIGNMENT OF LEASE. IT IS TIME THAT AN END IS PUT TO THE PERNICIOUS PRACTICE OF SA/GPA/WILL TRANS ACTIONS KNOWN AS GPA SALES . . . 26. WE HAVE MERELY DRAWN ATTENTION TO AND REITERATED THE WELL - SET TLED LEGAL POSITION THAT SA/GPA/WILL TRANSACTIONS ARE NOT 'TRANSFERS' OR 'SALES' AND THAT SUCH TRANSACTIONS CANNOT BE TREATED AS COMPLETED TRANSFERS OR CONVE YANCES. THEY CAN CONTINUE TO BE TREATED AS EXISTING AGREEMENT OF SALE. NOTHING PREVENTS AFFECTED PARTIES FROM GETTING REG ISTERED DEEDS OF CONVEYANCE TO COMPLETE THEIR TITLE. THE SAID 'SA/ GPA/WILL TRANSACTIONS' MAY ALSO BE USED TO OBTAIN SPECIFIC PERFORM ANCE OR TO DEFEND POSSESSION UNDER SECTION 53A OF TRANSFER OF PROP ERTY ACT. IF THEY ARE ENTERED BEFORE THIS DAY, THEY MAY BE RELIED UPON TO APPLY FOR REGULARIZATION OF ALLOTMENTS/LEASES BY DEVELOPMENT AUTHORITIES. WE MAKE IT CLEAR THAT IF THE DOCUMENTS RE LATING TO 'SA/ GPA/WILL TRANSACTIONS' HAS BEEN ACCEPTED ACTED UPON BY DDA OR OTHER DEVELOPMENTAL AUTHORITIES OR BY THE MUNICIPAL OR REVENUE AUTHORITIES TO EFFECT MUTATION, THEY NEED NOT BE DISTURBED, MERELY ON ACCOUNT OF THIS DECISION. 27. WE MAKE IT CLEAR THAT OUR OBSERVATIONS ARE NOT INTENDED TO IN ANY WAY AFFECT THE VALIDITY OF SALE AGREEMENTS AND POWERS OF ATTORNEY EXECUTED IN GENUINE TRANSACTIONS. FOR EXAMPLE, A PERSON MAY GIVE A POWER OF ATTORNEY TO HIS SPOUSE, SON, DAUGHTER, BROTHER, SISTER OR A RELA TIVE TO MANAGE HIS AFFAIRS OR TO EXECUTE A DEED OF CONVEYANCE. A PERSON MAY ENTER INTO A DEVELOP MENT AGREEMENT WITH A LAND DEVE LOPER OR BUILDER FOR DEVELOPING THE LAND EITHER BY FORMING PLOTS OR BY CONSTRUCTING APARTMENT BUILDINGS AND IN THAT BEHALF EXECUT E AN AGREE MENT OF SALE AND GRANT A POWER OF ATT ORNEY EMPOWERING THE DEVE LOPER TO EXECUTE AGREEMENTS OF SALE OR CONVEYANCES IN REGARD TO INDIVIDUAL PLOTS OF LAND OR UNDIVIDED SHARES IN THE LAND RELATING TO APARTMENTS IN FAVOUR OF PROSPECTIVE PURCHASERS. IN SEVERAL STATES, THE EXECUTION OF SUCH DEVELOPMENT AGREEMENTS AND POWERS OF ATTORNEY ARE ALREADY REGULATED BY LAW AND SUBJECTED TO SPECIFIC STAMP DUTY. OUR OBSERVATIONS REGARDING 'SA/GPA/WILL TRANSACTIONS' ARE NOT INTENDED TO APPLY TO SUCH BONA FIDE/GENUINE TRANSACTIONS.' 38. IN SO FAR AS ENUNCIATION OF LEGAL PRINCIPLES IN VARIOUS PRONOUNCEMENTS RELIED UPON BY LEARNED COUNSEL FOR THE REVENUE ARE CONCERNED, THEY ARE WELL RECOGNISED BUT THEIR APPLICABILITY HAS TO BE JUDGED IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 40 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 39. IT WOULD BE APT TO NOTICE UNDISPUTED FACTS AS DISCERNIBLE FROM THE RECORD OF THE CASE. THE ASSESSEE IS A MEMBER OF PUNJABI CO - OPERATIVE HOUSE BUILDING SOCIETY LTD. WHO OWNED 21.2 ACRES OF LAND IN VILLAGE KANSAL, DISTRICT MOHALI. CERTAIN MEMBERS WERE OWNING PLOTS MEASURING 500 SQUARE YARDS WHEREAS OTHERS WERE HOLDING PLOTS OF 1,000 SQUARE YARDS. ON ADVERTISEMENT HAVING BEEN FLOATED BY THE SOCIETY TO DEVELOP A GROUP HOUSING COMMERCIAL PROJECT AND DO DEVELOPMENT AS PER THE MUNICIPAL BUILDING BYE - LAWS, HASH A DEVELOPER APPROACHED THEM WITH PROPOSAL FOR THE DEVELOPMENT OF THE PROPERTY. HASH IN TURN DUE TO PAUCITY OF FUNDS WITH IT FOR CONSTRUCTING THE BUILDING AND/OR STRUCTURES ENTERED INTO AN AGREEMENT WITH THDC FOR THE SAID PURPOSE. THE E XECUTIVE COMMITTEE OF THE SOCIETY DECIDED TO APPOINT HASH ALONG WITH THE JOINT DEVELOPER THDC IN TERMS OF JDA. IT WAS RESOLVED THAT THE MEMBERS OF THE SOCIETY OWNING PLOTS MEASURING 500 SQUARE YARDS WOULD RECEIVE RS. 82,50,000 EACH TO BE PAID BY HASH IN FO UR INSTALMENTS AND ONE FLAT WITH SUPER AREA OF 2,250 SQUARE FEET TO BE CONSTRUCTED BY THDC. THE MEMBERS OWNING PLOTS OF 1,000 SQUARE YARDS WERE TO RECEIVE DOUBLE THE AMOUNT OF SETTLEMENT OF PLOT HOLDERS OF 500 SQUARE YARDS. FOR THIS PURPOSE, IRREVOCABLE PO WER OF ATTORNEY WAS ALSO AGREED TO BE EXECUTED FOR THIS PURPOSE. THE RESOLUTION OF THE EXECUTIVE COMMITTEE WAS RATIFIED IN THE GENERAL BODY MEETING HELD ON FEBRUARY 25, 2007, PURSUANT TO WHICH TRIPARTITE JDA WAS EXECUTED ON THE SAME DAY. THE POSSESSION OF THE OWNERS ON LAND MEASURING 21.2 ACRES WAS RECOGNISED, VIDE THIS JDA. HASH WAS RESPONSIBLE TO MAKE THE PAYMENT FAILING WHICH IT WAS THE RESPONSIBILITY OF THDC. A COPY OF THE JDA DATED FEBRUARY 25, 2007, HAS BEEN ANNEXED AS ANNEXURE A.2 WITH I. T. A. NO. 2 00 OF 2013. IT MAY BE ADVANTAGEOUS TO BROADLY REFER TO VARIOUS CLAUSES OF THE JDA DATED FEBRUARY 25, 2007, AND IRREVOCABLE SPECIAL POWER OF ATTORNEY DATED FEBRUARY 26, 2007. A PLAIN READING OF THE JDA DATED FEBRUARY 25, 2007, SPELLS OUT THAT CLAUSE 1 THERE OF HAS DEFINED VARIOUS EXPRESSIONS. CLAUSE 2 ENUMERATES THE DESCRIPTION OF THE PROJECT. CLAUSE 3 DESCRIBES THE OBLIGATIONS OF THE DEVELOPERS FOR GETTING BUILDING PLANS, DESIGNS, DRAWINGS, ETC., SANCTIONED FROM THE COMPETENT AUTHORITY. CLAUSE 4 DEALS WITH C ONSIDERATION WHEREAS CLAUSES 5 TO 8 ARE RELATING TO VARIOUS ASPECTS OF PROJECT AND OBLIGATIONS OF THE SOCIETY AND DEVELOPERS. UNDER CLAUSE 9 OF THE JDA, THE METHOD OF TRANSFER OF OWNERSHIP AND RIGHTS HAVE BEEN PRESCRIBED. CLAUSE 10 SPEAKS ABOUT CONSENT GIV EN BY THE SOCIETY TO THDC FOR RAISING FINANCE FOR DEVELOPMENT AND COMPLETION OF PROJECT. OTHER CLAUSES PROVIDE FOR GENERAL PROVISIONS, DISCLAIMER PARTIAL INVALIDITY, FORMATION OF MAINTENANCE SOCIETY FOR THE PROJECT AFTER ITS COMPLETION, TRANSFER OF RIGHTS, NOTICES AND JURISDICTION WHEREAS TERMINATION UNDER CLAUSE 14 AND FORCE MAJEURE UNDER CLAUSE 26 ARE ALSO MATERIAL CLAUSES WHICH HAD BEEN STRENUOUSLY REFERRED BY THE APPELLANTS. IN ADDITION TO THE JDA DATED FEBRUARY 25, 2007, IRREVOCABLE REGISTERED SPECIAL POWER OF ATTORNEY DATED FEBRUARY 26, 2007, HAD ALSO BEEN EXECUTED BY THE SOCIETY IN FAVOUR OF THDC. VARIOUS RELEVANT CLAUSES A, B, D AND OTHER CONDITIONS RELIED UPON BY THE PARTIES HAVE ALREADY BEEN REPRODUCED IN THE EARLIER PART OF THE JUDGMENT. 40. UNDER CLAUSE 2.1 OF THE JDA, THE POSSESSION OF THE PROPERTY WAS TO BE HANDED OVER SIMULTANEOUSLY WITH THE EXECUTION AND REGISTRATION OF THE SAID AGREEMENT. THE JDA DATED FEBRUARY 25, 2007, WAS NEVER REGISTERED AND, THEREFORE, THE PRESUMPTION OF DELIVERY OF POSS ESSION TO THE DEVELOPERS CANNOT BE ASSUMED. THE DELIVERY OF TITLE DEEDS WOULD NOT NECESSARILY RAISE THE PRESUMPTION OF DELIVERY OF POSSESSION AS THESE ARE TWO DISTINCT ACTIONS. FURTHER, THE IRREVOCABLE REGISTERED SPECIAL POWER OF ATTORNEY ALSO RECORDS THAT ON FEBRUARY 26, 2007 (I.E., THE DATE OF ITS EXECUTION AND REGISTRATION), THE POSSESSION CONTINUED TO BE WITH THE MEMBERS OF THE SOCIETY. STILL FURTHER, EVEN THE TWO SALE DEEDS EXECUTED BETWEEN THE PARTIES ON MARCH 2, 2007, AND APRIL 25, 2007, IN RESPECT O F 3.08 ACRES AND 4.62 ACRES, RESPECTIVELY, CLEARLY STIPULATES THAT POSSESSION WAS DELIVERED UNDER THE SAID INSTRUMENTS WHICH WOULD SHOW THAT THE PARTIES HAD AGREED FOR PRO RATA TRANSFER OF 41 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 LAND. A COMBINED READING OF THE VARIOUS CLAUSES OF THE JDA DATED FE BRUARY 25, 2007, AND IRREVOCABLE REGISTERED SPECIAL POWER OF ATTORNEY DATED FEBRUARY 26, 2007, CLEARLY SHOWS THAT THE DEVELOPER WAS ENTITLED TO ENTER UPON THE PROPERTY FOR THE PURPOSES OF DEVELOPMENT, ETC. FOR INVOKING SECTION 53A OF THE 1882 ACT, IT WAS M ANDATORY TO ESTABLISH THAT POSSESSION IN PART PERFORMANCE OF AN AGREEMENT WAS DELIVERED BY THE TRANSFEROR TO THE TRANSFEREE. SECTION 53A OF THE 1882 ACT DOES NOT DEFINE ANY CONTRACT BUT RELATES TO A PARTICULAR NATURE OF CONTRACT WHERE THE TRANSFEREE IS ENT ITLED TO PROTECT HIS POSSESSION WHEN HE HAS BEEN DELIVERED THE SAME IN PART PERFORMANCE OF A CONTRACT. IN OTHER WORDS, THE SOCIETY OR ITS MEMBERS HAD NEVER PARTED POSSESSION OF THE PROPERTY THOUGH UNDER THE JDA AND THE SPECIAL POWER OF ATTORNEY, THE DEVELO PER WAS GIVEN POWER TO RAISE FINANCE BY MORTGAGING THE PROPERTY AND FOR THE PURPOSE OF REGISTRATION OF THE CHARGE THEREON. IF AT ALL, IT IS TO BE HELD THAT POSSESSION WAS DELIVERED TO THE DEVELOPERS THEN IT WOULD BE AS A LICENSEE ONLY. THE DEVELOPER WAS AU THORISED TO AMALGAMATE THE PROJECT AND IN THE EVENT OF TERMINATION OF THE JDA, THE PROVISIONS OF CLAUSE 6 THEREOF WERE AGREED TO BE SURVIVING. THE ENVIRONMENTAL CLEARANCE WAS THE RESPONSIBILITY OF THE DEVELOPER THDC/HASH OUT OF ITS OWN SOURCES. THE TRIBUNA L HAD SOUGHT TO RAISE THE PRESUMPTION OF DELIVERY OF POSSESSION WHICH ON THE BASIS OF THE PRECEDING ANALYSIS OF FACTUAL MATRIX INVOLVED HEREIN WAS LEGALLY NOT PERMISSIBLE. THE JDA DATED FEBRUARY 25, 2007, TO BE COVERED UNDER SECTION 53A OF THE 1882 ACT WAS REQUIRED TO BE A REGISTERED INSTRUMENT EVEN FOR PURPOSES OF ENFORCING CIVIL LAW RIGHTS. ONCE IT WAS EMBODIED IN SECTION 2(47)(V) OF THE ACT BY INCORPORATION, ALL THE LEGAL REQUIREMENTS OF SECTION 53A OF THE 1882 ACT HAD TO BE COMPLIED WITH. IN THE ABSENCE OF REGISTRATION OF SUCH AN AGREEMENT, THE SAME WAS NOT ENFORCEABLE UNDER GENERAL LAW KEEPING IN VIEW THE PROVISIONS OF SECTIONS 17(1A) AND 49 OF THE 1908 ACT AND AT THE SAME TIME, THE TRANSACTION WOULD NOT FALL UNDER SECTION 2(47)(V) OF THE ACT. 41. UNDER THE JDA DATED FEBRUARY 25, 2007, IT WAS THE OBLIGATION OF THE DEVELOPERS TO PREPARE, SUBMIT AND OBTAIN SANCTION OF THE PLANS, DESIGNS AND DRAWINGS FOR CONSTRUCTION OF THE PROJECT FROM THE COMPETENT AUTHORITY WHICH WAS TO BE WITHIN THE PRESCRIBED TIME. THE COSTS FOR NECESSARY APPROVALS WERE ALSO TO BE BORNE BY THEM. IT WAS ALSO THE OBLIGATION OF THE DEVELOPERS TO MAKE TIMELY PAYMENT OF THE CONSIDERATION IN THE MANNER SET OUT THEREIN WHICH WAS AN ESSENCE OF THE JDA. ADDITIONALLY, IT WAS THE RESPONSIBILITY OF THE DEVELOPERS TO OBTAIN REQUISITE GOVERNMENT AND STATUTORY APPROVALS, SANCTIONS OF ALL DRAWINGS AND PLANS REQUIRED FOR DEVELOPMENT OF THE PROJECT AND ALSO TO UNDERTAKE THE PROJECT WITHIN SIX MONTHS OF THE HANDING OVER OF THE FINAL PLANS, DESIGNS AND DRAW INGS TO THE DEVELOPER FOR SUBMISSION OF THE SAME TO THE COMPETENT AUTHORITY FOR OBTAINING THE APPROVAL WHICH WAS TO BE DONE BY HASH AND THDC WITHIN THE PRESCRIBED TIME SCHEDULE. THE EXTERNAL DEVELOPMENT CHARGES, LICENCE FEE, CLU CHARGES AND ANY OTHER RELAT ED CHARGES WERE THE LIABILITY OF THDC. 42. APART FROM THE ABOVE, HASH/THDC HAD MADE PAYMENT OF ADJUSTABLE ADVANCE OF RS. 3 LAKHS TO THE PLOT HOLDER OF 500 SQUARE YARDS BESIDES MAKING PAYMENT OF RS. 12 LAKHS AND RS. 18 LAKHS AS FIRST AND SECOND INSTALMENTS RESPECTIVELY. THDC DEFAULTED IN MAKING PAYMENT OF THIRD INSTALMENT OF RS. 24.75 LAKHS AS REQUIRED UNDER CLAUSE 4.1(IV) OF THE JDA. IT WAS DOUBLE THE AFORESAID AMOUNT FOR PLOT HOLDER OF 1,000 SQUARE YARDS. THE PROJECT WAS DELAYED DUE TO VARIOUS SUBSEQUENT D EVELOPMENTS. A PUBLIC INTEREST LITIGATION BEARING CWP NO. 20425 OF 2010 WAS FILED IN THIS COURT WHERE CONSTRUCTION/DEVELOPMENT OF THE PROJECT WAS STAYED, VIDE ORDER DATED JANUARY 20, 2011. ON MARCH 26, 2012, THIS COURT HAD DIRECTED THE DEVELOPERS TO OBTAIN ADDITIONAL PERMISSION UNDER THE PUNJAB NEW CAPITAL (PERIPHERY) CONTROL ACT, 1952. SUBSEQUENTLY, IN CWP NO. 18253 OF 2009 TITLED COURT ON ITS OWN MOTION V. STATE OF PUNJAB, CHANDIGARH, THIS COURT, VIDE ORDER DATED MAY 14, 2012, DIRECTED STAY OF CONSTRUCTIO N IN THE ENTIRE CATCHMENT AREA OF 42 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 SUKHNA LAKE AS PER THE SURVEY OF INDIA RECORD INCLUDING THE PROJECT UNDER CONSIDERATION. DEMOLITION OF THE EXISTING STRUCTURE AFTER MARCH 11, 2011, WAS ALSO ORDERED. HOWEVER, THE APEX COURT, VIDE ORDER DATED MAY 22, 2012, GRANTED STATUS QUO AND DIRECTED THAT NO CONSTRUCTION SHOULD BE UNDERTAKEN IN THE AREA AND STAYED DEMOLITION OF THE EXISTING STRUCTURE. THE DEVELOPERS WHO WERE NOT PARTY IN CWP NO. 18253 OF 2009 WERE ALSO IMPLEADED THEREIN. THE SOCIETY IN THE MEANTIME ISSUE D LETTER DATED JANUARY 28, 2011, TO HASH FOR PAYMENT OF THE THIRD INSTALMENT AS PER CLAUSE 4.1(IV) OF THE JDA. VIDE LETTER DATED FEBRUARY 4, 2011, HASH STATED THAT THE THIRD INSTALMENT WOULD BECOME DUE ONLY AFTER OBTAINING PERMISSION TO COMMENCE CONSTRUCTI ON WHICH WAS STILL PENDING WITH THE MINISTRY OF ENVIRONMENT AND FORESTS. THE HIGH COURT, VIDE ORDER DATED JANUARY 28, 2011, HAD ALREADY RESTRAINED THE DEVELOPERS TO START CONSTRUCTION. THE SOCIETY NOT SATISFIED WITH THE STAND TAKEN BY THE DEVELOPERS SENT L EGAL NOTICE DATED MAY 11, 2011, TO THEM STATING THEREIN THAT TIME WAS THE ESSENCE OF THE JDA AND THERE WAS DELAY ON THEIR PART TO OBTAIN NECESSARY APPROVAL FROM THE COMPETENT AUTHORITY. THE SOCIETY GAVE 30 DAYS TIME TO THE DEVELOPERS TO MAKE PAYMENT OF THE THIRD INSTALMENT FAILING WHICH THE JDA WAS LIABLE TO BE TERMINATED. ON FAILURE OF THE DEVELOPERS TO PAY THE INSTALMENT, THE SOCIETY DECIDED TO TERMINATE THE JDA, VIDE RESOLUTION DATED JUNE 13, 2011, AND CANCELLED THE SPECIAL POWER OF ATTORNEY ON OCTOBER 3 1, 2011, WHICH WAS EARLIER EXECUTED IN FAVOUR OF THE DEVELOPERS. THUS, WILLINGNESS TO PERFORM THEIR PART OF THE CONTRACT WAS ABSENT ON THE PART OF THE DEVELOPERS OR IT COULD NOT BE PERFORMED BY THEM WHICH WAS ONE OF THE CONDITION PRECEDENTS FOR APPLYING SE CTION 53A OF THE 1882 ACT. UNDER CLAUSE 26 OF THE JDA DATED FEBRUARY 25, 2007, THE PRINCIPLE OF FORCE MAJEURE HAD BEEN PROVIDED FOR, WHICH WOULD BE APPLICABLE WITH FULL VIGOUR IN THE CIRCUMSTANCES NOTICED EARLIER. HOWEVER, THE HEYDON'S RULE, IN THE FACTS A S NARRATED HEREINBEFORE, WOULD NOT BE ATTRACTED. 43. IN VIEW OF PRECEDING ANALYSIS, IT IS REITERATED THAT FROM THE CUMULATIVE EFFECT OF COVENANTS CONTAINED IN THE JDA DATED FEBRUARY 25, 2007, READ WITH THE REGISTERED SPECIAL POWER OF ATTORNEY DATED FEBRUAR Y 26, 2007, IT CANNOT BE HELD THAT THE MANDATORY REQUIREMENTS OF SECTION 53A OF THE 1882 ACT WERE COMPLIED WITH WHICH STOOD INCORPORATED IN SECTION 2(47)(V) OF THE ACT. ONCE THAT WAS SO, IT COULD NOT BE SAID THAT THE ASSESSEE - APPELLANTS WERE LIABLE TO CAPI TAL GAINS TAX IN RESPECT OF THE REMAINING LAND WHICH WAS NOT TRANSFERRED BY THEM TO THE DEVELOPER/BUILDER BECAUSE OF SUPERVENING EVENT NOT ON ACCOUNT OF ANY VOLITION ON THEIR PART. 44. VIEWED FROM ANOTHER ANGLE, IT CANNOT BE SAID THAT ANY INCOME CHARGEABLE TO CAPITAL GAINS TAX IN RESPECT OF THE REMAINING LAND HAD ACCRUED OR ARISEN TO THE APPELLANT - ASSESSEE IN THE FACTS OF THE CASE. CONSIDERING THE ISSUE OF TAXABILITY OF INCOME WITH REGARD TO ITS ACCRUAL OR RECEIPT AS THE BASIS FOR CHARGING INCOME - TAX, THE A PEX COURT IN CIT V. SHOORJI VALLABHDAS AND CO. [1962] 46 ITR 144 (SC) OBSERVED THAT INCOME - TAX IS A LEVY ON INCOME AND WHERE NO INCOME RESULTS EITHER UNDER ACCRUAL SYSTEM OR ON THE BASIS OF RECEIPT, NO INCOME - T AX IS EXIGIBLE. THE RELEVANT OBSERVATIONS READ THUS (PAGE 148) : 'INCOME - TAX IS A LEVY ON INCOME. NO DOUBT, THE INCOME - TAX ACT TAKES INTO ACCOUNT TWO POINTS OF TIME AT WHICH THE LIABILITY TO TAX IS ATTRACTED, VIZ., THE ACCRUAL OF THE INCOME OR ITS RECEIPT ; BUT THE SUB STANCE OF THE MATTER IS THE INCOME, IF INCOME DOES NOT RESULT AT ALL, THERE CANNOT BE A TAX, EVEN TOUGH IN BOOKKEEPING, AN ENTRY IS MADE ABOUT A 'HYPOTHETICAL INCOME' WHICH DOES NOT MATERIALISE. WHERE INCOME HAS, IN FACT, BEEN RECEIVED AND IS SUBSEQUENTLY GIVEN UP IN SUCH CIRCUMSTANCES THAT IT REMAINS THE INCOME OF THE RECIPIENT, EVEN THOUGH GIVEN UP, THE TAX MAY BE PAYABLE. WHERE, HOWEVER, THE INCOME CAN BE SAID NOT TO HAVE RESULTED AT ALL, THERE IS OBVIOUSLY NEITHER ACCRUAL NOR RECEIPT OF INCOME, 43 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 EVEN THOUGH AN ENTRY TO THAT, EFFECT MIGHT, IN CERTAIN CIRC UMSTANCES, HAVE BEEN MADE IN THE BOOKS OF ACCOUNT.' THIS PRONOUNCEMENT WAS APPLIED BY THE SUPREME COURT IN GODHRA ELEC TRICITY CO. LTD. V. CIT [1997] 225 ITR 746 (SC) AND FOLLOWED BY THE CAL CUTTA HIGH COURT IN CIT V. BALARAMPUR COMMERCIAL ENTERPRISES LTD. [2003] 262 ITR 439 (CAL). 45. RELYING UPON THE DECISION IN SHOORJI VALLABHDAS AND CO.'S CASE (SUPRA), THE SUPREME COURT IN CIT V. EXCEL INDUSTRIES LTD. [2013] 358 ITR 295 (SC) HELD THAT INCOME - TAX CANNOT BE LEVIED ON HYPOTHETICAL INCOME. INCOME ACCRUES WHEN IT BECOMES DUE BUT IT MUST ALSO BE ACCOMPANIED BY A CORRESPONDING LIABILITY OF THE OTHER PARTY TO PAY THE AMOUNT. O NLY THEN CAN IT BE SAID THAT FOR THE PURPOSES OF TAXABILITY, THE INCOME IS NOT HYPOTHETICAL AND IT HAS REALLY ACCRUED TO THE ASSESSEE. IT WAS OBSERVED AS UNDER (PAGE 301) : FIRST OF ALL, IT IS NOW WELL - SETTLED THAT INCOME - TAX CANNOT BE LEVIED ON HYPOTHETIC AL INCOME. IN CIT V. SHOORJI VALLABHDAS AND CO. [1962] 46 ITR 144 (SC), IT WAS HELD AS FOLLOWS (PAGE 148) : 'INCOME - TAX IS A LEVY ON INCOME. NO DOUBT, THE INCOME - TAX ACT TAKES INTO ACCOUNT TWO POINTS OF TIME A T WHICH THE LIABILITY TO TAX IS ATTRACTED, VIZ., THE ACCRUAL OF THE INCOME OR ITS RECEIPT ; BUT THE SUB STANCE OF THE MATTER IS THE INCOME. IF INCOME DOES NOT RESULT AT ALL, THERE CANNOT BE A TAX, EVEN T HOUGH IN BOOK - KEEPING, AN ENTRY IS MADE ABOUT A 'HYPOTHETICAL INCOME', WHICH DOES NOT MATERIALISE. WHERE INCOME HAS, IN FACT, BEEN RECEIVED AND IS SUBSEQUENTLY GIVEN UP IN SUCH CIRCUMSTANCES THAT IT REMAINS THE INCOME OF THE RECIPIENT, EVEN THOUGH GIVEN UP, THE TAX MAY BE PAYABLE. WHERE, HOWEVER, THE IN COME CAN BE SAID NOT TO HAVE RESULTED AT ALL, THERE IS OBVIOUSLY NEITHER ACCRUAL NOR RECEIPT OF INCOME, EVEN THOUGH AN ENTRY TO THAT EFFECT MIGHT, IN CERTAIN CIRCUMSTANCES, HAVE BEEN MADE IN THE BOOKS OF ACCOUNT.' THE ABOVE PASSAGE WAS CITED WITH APPROVAL IN MORVI INDUSTRIES LTD. V. CIT [1971] 82 ITR 835 (SC) IN WHICH THIS COURT ALSO CONSIDERED THE DICTIONARY MEANING OF THE WORD 'ACCRUE' AND HELD THAT INCOME CAN BE SAID TO ACCRUE WHEN IT BECOMES DUE. IT WAS THEN OBSERVED THAT (PAGE 840) : '. . . THE DATE OF PAYMENT . . . DOES NOT AFFECT THE ACCRUAL OF INCOME. THE MOMENT THE INCOME ACCRUES, THE ASSESSEE GETS VESTED WITH THE RIGHT TO CLAIM THAT AMOUNT EVEN THOUGH IT MAY NOT BE IMMEDIATELY'. THIS COURT FURTHER HELD, AND, IN OUR OPINION, MORE IMPORTANTLY, THAT INCOME ACCRUES WHEN THERE 'ARISES A CORRESPONDING LIABILITY OF THE OTHER PARTY FROM WHOM THE INCOME BECOMES DUE TO PAY THAT AMOUNT'. IT FOLLOWS FROM THESE DECISIONS THAT INCOME ACCRUES WHEN IT BECOMES DUE BUT IT MUST ALSO BE ACCOMPANIED BY A CORRESPONDING LIABILITY OF THE OTHER PARTY TO PAY THE AMOUNT. ONLY THEN CAN IT BE SAID THAT FOR THE PURPOSES OF TAXABILITY THAT THE INCOME IS NOT HYPOTHETICAL AND IT HAS REALLY ACCRUED TO THE ASSESSEE. 13, THEREAFTER, THE H ONBLE HIGH COURT IN PARA 46 HAS HELD UNDER: 44 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 46. WE SUMMARISE OUR CONCLUSIONS AS UNDER : 1. PERUSAL OF THE JDA DATED FEBRUARY 25, 2007, READ WITH SALE DEEDS DATED MARCH 2, 2007, AND APRIL 25, 2007, IN RESPECT OF 3.08 ACRES AND 4.62 ACRES, RESPECTIVELY, WO ULD REVEAL THAT THE PARTIES HAD AGREED FOR PRO RATA TRANSFER OF LAND. 2. NO POSSESSION HAD BEEN GIVEN BY THE TRANSFEROR TO THE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE OF THE JDA DATED FEBRUARY 25, 2007, SO AS TO FALL WITHIN THE DOMAIN OF SECTION 53A OF THE 1882 ACT. 3. THE POSSESSION DELIVERED, IF AT ALL, WAS AS A LICENSEE FOR THE DEVE LOPMENT OF THE PROPERTY AND NOT IN THE CAPACITY OF A TRANSFEREE. 4. FURTHER, SECTION 53A OF THE 1882 ACT, BY INCORPORATION, STOOD EMBODIED IN SECTION 2(47)(V) OF THE ACT AND ALL THE ESSENTIAL INGREDIENTS OF SECTION 53A OF THE 1882 ACT WERE REQUIRED TO BE JUSTIFIED. IN THE ABSENCE OF REGISTRATION OF THE JDA DATED FEBRUARY 25, 2007, HAVING BEEN EXECUTED AFTER SEPTEMBER 4, 2001, THE AGREEMENT DOES NOT FALL UNDER SECT ION 53A OF THE 1882 ACT AND, CONSEQUENTLY, SECTION 2(47) (V) OF THE ACT DOES NOT APPLY. 14 . WE FIND THAT IT IS NOT IN DISPUTE IN THE INSTANT CASE THAT THE JOINT DEVELOPMENT AGREEMENT DATED 9.9.2008 ENTERED BY THE ASSESSEE WITH SHRI JITENDRA HANS IS NOT R EGISTERED. IN VIEW OF THE ABOVE DECISION OF HONBLE P&H HIGH COURT, IN ABSENCE OF REGISTERED JOINT DEVELOPMENT AGREEMENT, THE AGREEMENT DOES NOT FALL UNDER SECTION 53A OF THE 1882 ACT AND CONSEQUENTLY, SECTION 2(47)(V) DOES NOT APPLY. HENCE, THERE IS NO TRANSFER OF LAND BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND CONSEQUENTLY, THE ASSESSEE IS NOT LIABLE TO CAPITAL GAINS TAX. HENCE, WE SET ASIDE THE ORDERS OF LOWER AUTHORITIES AN DELETE THE ADDITION OF RS.4,05,87,159/ - UNDER THE HEAD LONG TE RM CAPITAL GAI NS AND ALLOW THE APPEAL OF THE ASSESSEE. 45 ITA NO. 501/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 16 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT ON 22 /09 /2017. SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 22 /09 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : SRI LAXMIDHAR PANDA, PLOT NO.560, PATIA, BHUBANESWAR 2. THE RESPONDENT. ACIT, RANGE - 2, BHUBANESWAR. 3. THE CIT(A) - BHUBANESWAR 4. PR.CIT - BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//
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