Appeal Details
Counselvise Citation
[2014] 140 COUNSELVISE.COM (IT) 73405 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
7 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
06-01-2014
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
02-01-2014
Assessment Year
2007-2008
Appeal Filed On
04-06-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 682/CHD/2013 ASSESSMENT YEAR : 2007-08 GOBIND SINGH LONGOWAL VS. I.T.O. WARD 1, SANGRUR LONGOWAL ABLPL 9908 L (APPELLANT) (RESPONDENT) APPELLANT BY NONE RESPONDENT BY: SHRI MANJIT SINGH DATE OF HEARING 2.1.2014 DATE OF PRONOUNCEMENT 6. 1.2014 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 20. 3.2013 OF THE LD CIT(A). PATIALA. 2 IN THIS APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1 THAT THE ORDER OF HONBLE COMMISSIONER OF INCOME TA X (APPEALS) PATIALA & INCOME TAX OFFICER, SANGRUR IS AGAINST LAW & FACT S. 2 THAT THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFY TO HOLD THE INITIATION OF PROCEEDING U/S. 147 AND TO ISSUE U/S. 148 BEING VALID IN THE EYES OF LAW. THERE WAS NO ESCAPEMENT OR DEFINITE RE ASONS OF ESCAPEMENT OF INCOME AND THE PROCEEDING INITIATED ARE NULL & VOID . 3. THAT THE COMMISSIONER OF INCOME TAX WAS ERRED IN LAW TO HOLD THAT CAPITAL GAIN IS BEING ASSESSED IN INDIVIDUAL CAPACI TY HOWEVER HE WAS THE MEMBER THE SOCIETY AND THE SOCIETY ENTERED INTO AGR EEMENT OR EXECUTED THE SALE PROCEEDS OF THE ENTIRE LAND. 4. WITHOUT PREJUDICE TO MY GROUND OF APPEAL NO. 2 O R 3 THE HONBLE CIT(APPEALS) WAS NOT JUSTIFIED TO SUSTAIN THE FINDI NG REGARDING ACCESSIBILITY OF LONG TERM CAPITAL GAIN AMOUNTING TO RS. 1,77,01, 755/- AND TO CONSIDER THE FULL VALUE OF CONSIDERATION OF RS. 1,83,75,000/ - MERELY ON ENTERING INTO AGREEMENT. THE APPELLANT EXECUTED THE SALE DEED OF PART OF LAND AND LATER ON FOR NON-FULFILLMENT OF TERMS & CONDITIONS OF AGR EEMENT, THE AGREEMENT WAS REVOKED & CANCELLED BY BOTH THE PARTIES. THE AG REEMENT IS OUT OF PREVIEW OF TRANSFER U/S 2(47) OF INCOME TAX ACT 196 1. THE LONG TERM CAPITAL GAIN HAS BEEN WRONGLY ASSESSED IN THE APPELLANT CAS E. 2 5. THAT THE CIT(APPEALS) WAS NOT JUSTIFIED TO SUSTA IN AND TO DISALLOW DEDUCTION U/S.54F AS THE VALUE OF RESIDENTIAL HOUSE TO BE ALLOTTED TO RS. 1,01,25,000/- HAD BEEN ASSESSED UNDER LONG TERM CAP ITAL GAIN. 6. THAT THE LD. CIT(APPEALS) & INCOME TAX OFFICER W AS NOT JUSTIFIED TO DISALLOW THE CLAIM OF INVESTMENT AMOUNTING TO RS. 6 7,28,148/- MADE FOR RESIDENTIAL PURPOSES & DEDUCTION U/S. 54F IS ALLOWA BLE AS THE INVESTMENT WAS MADE BEFORE FILING OF RETURN. 3. IN THIS APPEAL NOBODY APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE ISSUES RAISED IN THIS APPEAL ARE SQUARELY COVERED B Y THE DECISION OF THE TRIBUNAL IN CASE OF SHRI CHARANJIT SINGH ATWAL AND OTHERS IN ITAS NO. 448/CHD/2011 AND OTHERS. TH EREFORE, WE PROCEEDED TO HEAR THE APPEAL ON EX-PARTE BASIS. 4. THE LD. DR FOR THE REVENUE WAS HEARD. 5 GROUND NO. 1 IS OF GENERAL NATURE AND DOES NOT RE QUIRE ANY SEPARATE ADJUDICATION. 6 GROUND NO. 2 AFTER CONSIDERING THE SUBMISSIONS OF LD. DR FOR THE REVENUE AND THE RELEVANT MATERIAL ON REC ORD WE FIND THAT ORIGINAL RETURN WAS PROCESSED U/S 143(1). LAT ER ON A NOTICE U/S 148 WAS ISSUED. NOTICE U/S 148 WAS ISSUED BECAU SE THE ASSESSING OFFICER GOT THE INFORMATION FROM THE ENQU IRIES CONDUCTED BY THE DEPARTMENT IN THE CASE OF GROUP HO USING SOCIETIES THAT THE SOCIETY CONSISTING OF 95 MEMBERS OF PRESENT AND EX.MLAS OF PUNAJB STATE LEGISLATIVE ASSEMBLY WH O HAD FORMED A SOCIETY KNOWN AS PUNJABI COOP HOUSE BUILDI NG SOCIETY LTD. AND THAT SOCIETY HAS TRANSFERRED 21.2 ACRES OF LAND TO DEVELOPERS TATA HOUSING DEVELOPMENT COMPANY LTD. SINCE ORIGINAL RETURN WAS PROCESSED U/S 143(1) THE ASSESS ING OFFICER COULD HAVE ISSUED A NOTICE U/S 148 IN VIEW OF THE F RESH MATERIAL/INFORMATION RECEIVED IN VIEW OF THE DECISI ON OF HON'BLE 3 APEX COURT IN CASE OF ACIT V. RAJESH JHAVERI STOCK BROKER PVT LTD., 291 ITR 500. 7 FOLLOWING THE ABOVE DECISION OF HON'BLE APEX COUR T, WE DECIDE THIS ISSUE AGAINST THE ASSESSEE. 8 GROUND NO. 3 THIS ISSUE HAS ALREADY BEEN ADJUDI CATED BY US IN CASE OF SHRI CHARANJIT SINGH ATWAL AND OTH ERS IN ITA NO. 448/CHD/2011 AND OTHERS VIDE PARA NO. 113 WHICH ARE AS UNDER: 113 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AND FIND THAT THE SOCIETY WAS FORMED BY VARIOUS MEMBERS FOR THE P URPOSE OF PURCHASE OF LAND AND TO DEVELOP THE SAME AND THEY A LLOTTED THE PLOTS TO THE MEMBERS. THE SOCIETY PURCHASED 21.2 A CRES OF LAND AND ULTIMATELY PLOTS IN THE SIZES OF 500SQYD AND 10 00SQYD WERE ALLOTTED TO VARIOUS MEMBERS. WHEN THE PROPOSAL FOR DEVELOPMENT OF PROPERTY CAME IT WAS RESOLVED IN THE GENERAL BOD Y MEETING OF THE SOCIETY THAT THE MEMBERS WOULD SURRENDER THEIR RIGHTS IN FAVOUR OF THE SOCIETY SO THAT THE SOCIETY CAN ENTER INTO THE JDA. THUS IT IS CLEAR THAT THE SOCIETY HAS ENTERED INTO JDA ON B EHALF OF THE MEMBERS. IT IS THE MEMBERS WHO ARE OWNING THE PLOT S AND THE SOCIETY WAS ONLY A FACILITATOR. IT BECOMES CLEAR F ROM THE JDA THAT PAYMENT FOR CONSIDERATION WAS TO BE MADE TO AN INDI VIDUAL PLOT HOLDER AND IN FACT CONSIDERATION WAS MENTIONED IN T ERMS OF PER MEMBER. EACH MEMBER HOLDING 500SQYD PLOT WAS TO RE CEIVE A SUM OF RS. 82,50,000/- AND ONE FULLY FURNISHED FLAT MEA SURING 2250 SQFT AND THE MEMBERS HOLDING 1000SQYD PLOT WERE TO RECEI VE MONETARY CONSIDERATION OF RS. 1.65 CRORES PLUS TWO FLATS MEA SURING 2250 SQFT. IN FACT THE PAYMENT OF CHEQUES IS MADE BY HA SH BY ISSUING CHEQUES IN THE NAME OF INDIVIDUAL MEMBER AND NOT TH E SOCIETY. THIS FACT STANDS ADMITTED BECAUSE ASSESSEE HAS FILE D A RETURN DECLARING CAPITAL GAIN AGAINST PART MONEY RECEIVED AGAINST HIS PLOT. THUS IT BECOMES CLEAR THAT IT IS THE INDIVID UAL MEMBER WHO ARE LIABLE TO TAX IN RESPECT OF TRANSFER TO PLOTS A ND THE SOCIETY BEING ONLY A FACILITATOR OR POST OFFICE. SOME MORE DETAILS HAVE BEEN DISCUSSED IN THIS RESPECT WHILE ADJUDICATING T HE APPEAL OF PUNJABI COOP HOUSE BUILDING SOCIETY LTD. IN ITA NO. 310/CHD/2012 AND 556/CHD/2012 WHICH HAVE BEEN ADJUDICATED LITTLE LATER IN THIS ORDER ITSELF. ACCORDINGLY WE FIND NO FORCE IN THE SUBMISSIONS AND THIS GROUND IS REJECTED. FOLLOWING THE ABOVE WE DECIDE THIS ISSUE AGAINST TH E ASSESSEE. 9 GROUND NO. 4 AFTER CONSIDERING THE SUBMISSIONS OF LD. DR FOR THE REVENUE AND RELEVANT MATERIAL ON RECORD WE FIND THAT THE ASSESSEE IS A MEMBER OF PUNJABI COOP HOUSING BU ILDING SOCIETY LTD. HOLDING A PLOT OF 500 SQYD. THE ASSES SEE GAVE AUTHORITY TO SOCIETY TO SURRENDER THE RIGHTS OF THE PLOT FOR 4 DEVELOPMENT TO TATA HOUSING DEVELOPMENT COMPANY LTD . AND HASH BUILDERS. IN RETURN THE ASSESSEE WAS ELIGIBLE TO RECEIVE THE CASH CONSIDERATION OF RS. 82,50,000/- AND ALSO A FLAT MEASURING 2250 SQFT WHICH WAS TO BE CONSTRUCTED BY TATA HOUSING DEVELOPMENT COMPANY LTD.. THE ASSESSING OF FICER HELD THAT POSSESSION OF THE PLOT HAS BEEN GIVEN THE REFORE, WHOLE CONSIDERATION HAS TO BE ASSESSED UNDER THE HE AD CAPITAL GAINS. ACCORDINGLY HE VALUED THE FLAT @ RS. 4500 SQFT WHICH CAME TO RS. 1,01,25,000. THIS AMOUNT ALONG W ITH CASH CONSIDERATION OF RS. 82,50,000/- WHICH CAME TO RS. 1,83,75,000/- WHICH WAS TAKEN AS TOTAL CONSIDERATIO N FOR THE SALE OF THE PLOT. AFTER REDUCING THE COST OF CONST RUCTION, BALANCE AMOUNT OF RS. 1,77,01,755/-WAS CHARGED TO T AX UNDER THE HEAD CAPITAL GAINS. ACTION OF THE ASSESSING OF FICER HAS BEEN CONFIRMED BY THE LD. CIT(A). 10 THIS ISSUE HAS BEEN ADJUDICATED BY US IN CASE OF SHRI CHARANJIT SINGH ATWAL AND OTHERS IN ITAS NO. 448/CH D/2011 AND OTHERS VIDE PARA NO. 27 TO 109 WHICH IS AS UNDER: 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFULLY GONE THROUGH THE WRITTEN SUBMISSIONS FILE D BY BOTH THE PARTIES IN THE LIGHT OF MATERIAL ON RECORD, PAP ER BOOKS AND VARIOUS JUDGMENTS CITED BY THE PARTIES. THE MA IN ISSUE IS WHETHER ASSESSEE IS LIABLE TO CAPITAL GAIN TAX I N THE YEAR UNDER CONSIDERATION I.E ASSESSMENT YEAR 2007-08 IN VIEW OF THE JDA. FOR CHARGING CAPITAL GAINS, THE CHARGING SECTION IS 45 AND THE RELEVANT PORTION IS AS UNDER:- SECTION 45. [(1)] ANY PROFITS OR GAINS ARISING FRO M THE TRANSFER OF A CAPITAL ASSET EFFECTED IN THE PREVIOUS YEAR SHALL, SAVE AS OTHERWISE PROVIDED IN SECTIONS [54, 54B, [ [54D, [54E, [54EA , 54EB,] 54F [ 54G AND 54H], BE CHARGEABLE TO INCOME-TAX UNDER THE HEA D CAPITAL GAINS, AND SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOU S YEAR IN WHICH THE TRANSFER TOOK PLACE. 5 28 THE PLAIN READING OF THE ABOVE PROVISION WOULD S HOW THAT CHARGING AN ITEM OF INCOME UNDER THE HEAD CAPITAL GAINS REQUIRE THREE INGREDIENTS I.E. (I) THERE SHOULD BE SOME PROFIT. (II) SUCH PROFIT MUST BE ARISING ON ACCOUNT OF TRAN SFER AND (III) THERE SHOULD BE CAPITAL ASSET WHICH HAS BEEN TRANSFERRED. THERE IS NO DISPUTE THAT A CAPITAL ASS ET WAS INVOLVED AND THERE WAS SOME PROFIT ALSO I.E. WHY AS SESSEE HAS HIMSELF RETURNED INCOME UNDER THE HEAD CAPITAL GAINS;. THE DISPUTE IS MAINLY ON ACCOUNT OF TRANSFER AND TH AT TOO WHETHER THE TRANSFER COULD BE COVERED UNDER CLAUSES (II), (V) & (VI) OF SECTION 2(47) SO AS TO BRING INTO PICTURE THE WHOLE OF CONSIDERATION ARISING ON TRANSFER OF SUCH ASSETS . WE SHALL DEAL WITH EACH OF THE ASPECT IN DETAIL AT APPROPRIA TE TIME. 29. APART FROM CHARGING PROVISIONS U/S 45 ANOTHER IMPORTANT PROVISION IS SECTION 48 WHICH DEALS WITH THE MODE OF COMPUTATION AND RELEVANT PORTION READS AS UNDER: - 48. THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED, BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS, NAMELY : (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVEL Y IN CONNECTION WITH SUCH TRANSFER; (II) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO : 30 AGAIN PLAIN READING WOULD SHOW THAT CAPITAL GAIN WOULD BE COMPUTED BY CONSIDERING THE FULL VALUE OF CONSIDERA TION WHETHER RECEIVED OR ACCRUING AS A RESULT OF THE TRA NSFER. THEREFORE, IT IS NOT ONLY THE CONSIDERATION RECEIVE D WHICH IS RELEVANT BUT THE CONSIDERATION WHICH HAS ACCRUED IS ALSO RELEVANT. 31. THE EXPRESSION TRANSFER HAS BEEN DEFINED U/S 2(47) OF THE ACT WHICH READS AS UNDER:- 2 (47) [TRANSFER, IN RELATION TO A CAPITAL ASSE T, INCLUDES, (I) THE SALE , EXCHANGE OR RELINQUISHMENT OF THE ASSET ; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN ; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW ; OR (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK-IN-TRADE OF A BUSINESS CARRIED ON BY HIM, SUCH CONVERSION OR TREATMENT ;] [OR] [(IVA) THE MATURITY OR REDEMPTION OF A ZERO COUPON BOND; OR] [(V) ANY TRANSACTION INVOLVING THE ALLOWING OF T HE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A O F THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) ; OR 6 (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPAN Y OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT O R ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHIC H HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT O F, ANY IMMOVABLE PROPERTY. EXPLANATION.FOR THE PURPOSES OF SUB-CLAUSES (V) AND (VI), IMMOVABLE PROPERTY SHALL HAVE THE SAME MEANING AS IN CLAUSE (D) OF SECTION 269UA ;] CLAUSES (V) & (VI) TO SECTION 2(47) OF THE ACT HAVE BEEN INSERTED BY FINANCE ACT, 1987 W.E.F. 1.4.1988. THE PURPOSE OF THIS INSERTION HAS BEEN EXPLAINED BY CBD T IN CIRCULAR NO. 495 DATED 22.9.1987. THE RELEVANT PAR T 11.1 AND 11.2 OF THE CIRCULAR READS AS UNDER:- 11.1 THE EXISTING DEFINITION OF THE WORD ' TRANSF ER ' IN SECTION 2(47) DOES NOT INCLUDE TRANSFER OF CERTAIN RIGHTS ACCRUING TO A PURCHASER, BY WAY OF BECOMING A MEMB ER OR ACQUIRING SHARES IN A CO-OPERATIVE SOCIETY, COMPANY , OR AS WAY OF ANY AGREEMENT OR ANY ARRANGEMENT WHEREBY SUC H ANY BUILDING WHICH IS EITHER BEING CONSTRUCTED OR W HICH IS TO BE CONSTRUCTED. TRANSACTIONS OF THE NATURE REFE RRED TO ABOVE ARE NOT REQUIRED TO BE REGISTERED UNDER THE REGISTRATION ACT, 1908. SUCH ARRANGEMENTS CONFER TH E PRIVILEGES OF OWNERSHIP WITHOUT TRANSFER OF TITLE I N THE BUILDING AND ARE A COMMON MODE OF ACQUIRING FLATS PARTICULARLY IN MULTI-STOREYED CONSTRUCTIONS IN BIG CITES. THE DEFINITION ALSO DOES NOT COVER CASES WHERE POSSESSION IS ALLOWED TO BE TAKEN OR RETAINED IN PA RT PERFORMANCE OF A CONTRACT, OF THE NATURE REFERRED T O IN SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882. NEW SUB- CLAUSES (V) & (VI) HAVE BEEN INSERTED IN SECTION2(4 7) TO PREVENT AVOIDANCE OF CAPITAL GAINS LIABILITY BY RE COURSE TO TRANSFER OF RIGHTS IN THE MANNER REFERRED TO ABOVE. 11.2 THE NEWLY INSERTED SUB-CLAUSE (VI) OF SECTION 2(47) HAS BROUGHT IN TO THE AMBIT OF TRANSFER, THE PRACT ICE OF ENJOYMENT OF PROPERTY RIGHTS THROUGH WHAT IS COMMON LY KNOWN AS POWER OF ATTORNEY ARRANGEMENTS. THE PRACTI CE IN SUCH CASES IS ADOPTED NORMALLY WHERE TRANSFER OF OWNERSHIP IS LEGALLY NOT PERMITTED. A PERSON HOLDIN G THE POWER OF ATTORNEY IS AUTHORIZED THE POWERS OF OWNER , INCLUDING THAT OF MAKING CONSTRUCTION. THE LEGAL OWNERSHIP IN SUCH CASES CONTINUES TO BE WITH THE TRANSFEROR. 32 BEFORE INSERTION OF THE CLAUSE (V) & (VI) TO SE CTION 2(47) OF THE ACT, THE POSITION OF LAW WAS THAT UNLE SS AND UNTIL A SALE DEED WAS EXECUTED FOR TRANSFER OF IMMO VABLE PROPERTY, THE SAME COULD NOT BE CONSTRUED AS TRANSF ER FOR THE PURPOSE OF CHARGING CAPITAL GAIN TAX. THIS WAS 7 PARTICULARLY SO IN THE LIGHT OF VARIOUS JUDGMENTS PARTICULARLY THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF ALAPATI VENKATRAMIAN V CIT (57 ITR 185) (SC ). IN THIS CASE IT WAS HELD THAT IN THE CONTEXT OF TRANSF ER FOR THE PURPOSE OF CAPITAL GAIN TAX, WHAT IS MEANT BY TRANS FER IS THE EFFECTIVE CONVEYANCE OF THE CAPITAL ASSET BY A TRANSFEROR TO THE TRANSFEREE. DELIVERY OF POSSESSI ON AND AGREEMENT TO SELL BY ITSELF COULD NOT CONSTITUTE CONVEYANCE OF THE IMMOVABLE PROPERTY. IN THE MEANT IME APART FROM THIS DECISION A PRACTICE CAME INTO VOGU E BY WHICH CERTAIN PROPERTIES WERE BEING TRANSFERRED WIT HOUT EXECUTING THE PROPER SALE DEEDS. THIS WAS BEING DO NE BECAUSE THERE WAS RESTRICTION ON SALE OF PROPERTIES IN VARIOUS TOWNS E.G. IN CASE OF LEASE HOLD PLOTS AND FLATS IN DELHI IF THE SAME WERE TO BE TRANSFERRED, PERMISSIO N WAS REQUIRED TO BE TAKEN FROM THE GOVERNMENT / DDA AND TRANSFEROR WAS REQUIRED TO PAY 50% OF THE MARKET VA LUE COST (I.E. UNEARNED INCREASE) TO THE GOVERNMENT. TO AVOID SUCH PAYMENTS AND / OR ALSO TO AVOID THE PAYMENT OF STAMP DUTY OR CUMBERSOME PROCEDURE OF OBTAINING PERMISSION, SOME PROPERTIES WERE BEING SOLD BY WAY OF SALE AGREEMENT AND ALSO EXECUTION OF GENERAL POWER OF ATTORNEY AND POSSESSION WAS GIVEN ON RECEIPT OF FUL L CONSIDERATION WITHOUT EXECUTING THE PROPER SALE DEE DS ETC. WHICH AS MENTIONED EARLIER WAS NOT EVEN PERMIS SIBLE IN SOME CASES. THESE TRANSACTIONS ARE POPULARLY CA LLED POWER OF ATTORNEY TRANSACTIONS. TO AVOID THESE AND TO STOP THE LEAKAGE OF REVENUE, THE PARLIAMENT HAS INS ERTED CLAUSES (V) & (VI) TO SECTION 2(47) SO AS SUCH TYPE OF TRANSACTIONS ARE ALSO BE BROUGHT IN TO TAXATION NET . HOWEVER, INTERPRETATIONS OF THESE CLAUSES HAS LED T O LOT OF LITIGATION AND THE MAIN POINT OF LITIGATION WAS TH AT AT WHAT POINT OF TIME THE POSSESSION CAN BE SAID TO HAVE BE EN GIVEN. IN THE PRESENT CASE, THE REVENUE HAS MAINLY RELIED ON TWO DECISIONS NAMELY (I) CHATURBHUJ DWARKADAS KAPADIA V CIT 260 ITR 491 (BOM.) AND; (II) AUTHORIT Y FOR ADVANCE RULING (AAR) NEW DELHI IN THE CASE OF JASBI R SINGH SARKARIA 294 ITR 196. 33. IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V C IT (SUPRA), THE FACTS BEFORE THE HON'BLE BOMBAY HIGH COURT WERE THAT ASSESSEE WHO WAS AN INDIVIDUAL HAD 44/19 2 UNDIVIDED SHARE IN AN IMMOVABLE PROPERTY IN GREATER BOMBAY WHICH CONSISTED OF VARIOUS LANDS AND BUILDIN GS. BY AGREEMENT DATED AUGUST 18, 1994, THE ASSESSEE AGREED TO SELL TO FLOREAT INVESTMENT LTD, (HEREIN R EFERRED TO FLOREAT) HIS SHARE OF IMMOVABLE PROPERTY FOR A TOTAL CONSIDERATION OF RS. 1,85,63,220/- WITH RIGHT TO S AID FLOREAT TO DEVELOP THE PROPERTY IN ACCORDANCE WITH THE RULES / REGULATIONS FRAMED BY LOCAL AUTHORITIES. F OR THIS PURPOSE, THE ASSESSEE ALSO AGREED TO EXECUTE A LIMI TED POWER OF ATTORNEY AUTHORIZING FLOREAT TO DEAL WITH THE PROPERTY AND ALSO OBTAIN PERMISSIONS AND APPROVALS FROM VARIOUS AUTHORITIES. UNDER CLAUSE 11 OF THE AGREEM ENT, IT WAS PROVIDED THAT AFTER FLOREAT WAS GIVEN AN IRREVO CABLE LICENSE TO ENTER UPON THE ASSESSEES SHARE OF PROPE RTY AND AFTER FLORET INVESTMENT HAVE OBTAINED ALL NECES SARY 8 APPROVALS, THE FLORET WAS ENTITLED TO DEMOLISH VARI OUS BUILDINGS FOR SETTLING THE CLAIMS OF THE TENANTS. U NDER CLAUSE 14 OF THE AGREEMENT, THE ASSESSEE WAS ENTITL ED TO RECEIVE PROPORTIONATE RENT TILL THE PAYMENT OF LAST INSTALLMENTS AND TILL THAT TIME ASSESSEE WAS BOUND TO PAY ALL OUTGOINGS. UNDER CLAUSE 20 OF THE AGREEMENT, IT WAS AGREED THAT SALE SHALL BE COMPLETED BY EXECUTION OF CONVEYANCE, HOWEVER, TILL THE MATTER WAS ADJUDICATE D BY THE HON'BLE HIGH COURT, NO CONVEYANCE WAS EXECUTED. PURSUANT TO THIS AGREEMENT, FLOREAT OBTAINED VARIOU S PERMISSIONS NAMELY (I) CLEARANCE FROM CRZ AUTHORITY DATED FEBRUARY 7, 1996; (II) LETTER FROM ULC FOR REDEVELOPMENT OF PROPERTY DATED APRIL 26, 1995. OT HER PERMISSIONS WERE ALSO OBTAINED DURING THE FINANCIAL YEAR ENDING MARCH 31, 1996 RELEVANT TO ASSESSMENT YEAR 1 996- 97. BY MARCH, 31, 1996, FLOREAT HAD PAID ALMOST TH E ENTIRE CONSIDERATION EXPECT FOR A SMALL SUM OF RS. 9,98,000/-. HOWEVER, THE COMMENCEMENT CERTIFICATE PERMITTING CONSTRUCTION OF THE BUILDING WAS ISSUED ON NOVEMBER 15, 1996. THE POWER OF ATTORNEY WAS EXECU TED ON MARCH 12, 1999. THE QUESTION AROSE WHETHER LIAB ILITY OF THE ASSESSEE FOR CAPITAL GAIN AROSE IN THE ASSES SMENT YEAR 1996-97 OR 1999-2000. THE OBSERVATION OF THE COURT HAS BEEN SUMMARIZED IN HEAD NOTE AS UNDER:- CLAUSES (V) AND (VI) WERE INTRODUCED IN SECTION 2( 47) OF THE INCOME-TAX ACT, 1961, WITH EFFECT FROM APRIL 1, 1988. THEY PROVIDE THAT TRANSFER INCLUDES (I) ANY TRANSACTION WHICH ALLOWS POSSESSION TO BE TAKEN/RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER O F PROPERTY ACT, 1882, AND (II) ANY TRANSACTION ENTERE D INTO IN ANY MANNER WHICH HAS THE EFFECT OF TRANSFER RING OR ENABLING THE ENJOYMENT OF ANY IMMOVABLE PROPERTY . THEREFORE, IN THESE TWO CASES CAPITAL GAINS WOULD B E TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO, EVEN IF THE TRANSFER OF THE IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW. UNDER SECTION 2(47)(V) ANY TRANSACTION INVOLVING ALLOWING OF POSSESSION TO BE TAKEN OVER O R RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER O F PROPERTY ACT WOULD COME WITHIN THE AMBIT OF SECTION 2(47)(V). IN ORDER TO ATTRACT SECTION 53A, THE FOLL OWING CONDITIONS NEED TO BE FULFILLED. THERE SHOULD BE A CONTRACT FOR CONSIDERATION ; IT SHOULD BE IN WRITIN G ; IT SHOULD BE SIGNED BY THE TRANSFEROR ; IT SHOULD PERT AIN TO TRANSFER OF IMMOVABLE PROPERTY ; THE TRANSFEREE SHOULD HAVE TAKEN POSSESSION OF THE PROPERTY ; LAST LY, THE TRANSFEREE SHOULD BE READY AND WILLING TO PERFO RM HIS PART OF THE CONTRACT. EVEN ARRANGEMENTS CONFIRMING PRIVILEGES OF OWNERSHIP WITHOUT TRANSFER OF TITLE COULD FALL UNDER SECTION 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 WA S ARGUED ON BEHALF OF THE ASSESSEE THAT NO TRANSFER T OOK PLACE TILL EXECUTION OF THE CONVEYANCE. ASSESSEES 9 USED TO ENTER INTO AGREEMENTS FOR DEVELOPING PROPERTIES WITH BUILDERS AND UNDER THE ARRANGEMENT WITH THE BUILDERS, THEY USED TO CONFER PRIVILEGES O F OWNERSHIP WITHOUT EXECUTING CONVEYANCE AND TO PLUG THAT LOOPHOLE, SECTION 2(47)(V) CAME TO BE INTRODUC ED IN THE ACT. . HELD, THAT SECTION 2(47)(V) READ WITH SECTION 45 INDICATES THAT CAPITAL GAINS WAS TAXABLE IN THE YEA R IN WHICH SUCH TRANSACTIONS WERE ENTERED INTO EVEN IF T HE TRANSFER OF IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW. IN THIS CASE, THE T EST HAD NOT BEEN APPLIED BY THE DEPARTMENT. NO REASON HAD BEEN GIVEN WHY THAT TEST HAD NOT BEEN APPLIED, PARTICULARLY WHEN THE AGREEMENT IN QUESTION, READ A S A WHOLE, SHOWED THAT IT WAS A DEVELOPMENT AGREEMENT. ONCE UNDER CLAUSE 8 OF THE AGREEMENT A LIMITED POWER OF ATTORNEY WAS INTENDED TO BE GIVEN TO THE DEVELOPER TO DEAL WITH THE PROPERTY, THEN THE D ATE OF THE CONTRACT, VIZ., AUGUST 18, 1994, WOULD BE TH E RELEVANT DATE TO DECIDE THE DATE OF TRANSFER UNDER SECTION 2(47)(V) AND, IN WHICH EVENT, THE QUESTION OF SUBSTANTIAL PERFORMANCE OF THE CONTRACT THEREAFTER WOULD NOT ARISE 34. THE HON'BLE COURT REFERRED TO CLAUSES (V) & (VI) OF SECTION 2(47) AND MADE THE FOLLOWING OBSERVATIONS A T PAGE 499 OF THE REPORT: .. THE ABOVE TWO CLAUSES WERE INTRODUCED WITH EFFECT FROM APRIL 1,1988. THEY PROVIDE THAT TRANSF ER INCLUDES (I) ANY TRANSACTION WHICH ALLOWS POSSESSIO N TO BE TAKEN/RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, AND (I I) ANY TRANSACTION ENTERED INTO IN ANY MANNER WHICH HAS THE EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOVABLE PROPERTY (SEE SECTION 269UA(D)). THEREFORE, IN THESE TWO CASES CAPITAL GAINS WOULD BE TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO, EVEN IF THE TRANSFER OF THE IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW (SEE KANGA AND PALKHIVALAS LAW AND PRACTICE OF INCOME-TAX-VIII EDITION, PAGE 766). THIS TEST IS IMPORTANT TO DECIDE THE YEAR OF CHARGEABILITY OF THE CAPITAL GAINS. 35 THE ABOVE OBSERVATIONS WERE MADE ON THE BASIS OF OPINION EXPRESSED BY LD. AUTHOR IN THE COMMENTARY THE LAW AND PRACTICE OF INCOME TAX BY KANGA AND PALKHIV ALA EIGHTH EDITION AT PAGE 766. RELEVANT OBSERVATIONS READ AS UNDER: 10 CLS. (V) AND (VI) OF S. 2(47), INSERTED BY THE FIN ANCE ACT 1987 WITH EFFECT FROM 1 ST APRIL 1988, PROVIDE THAT TRANSFER INCLUDES (A) ANY TRANSACTION WHICH INVOLVES THE ALLOWING OF THE POSSESSION OF AN IMMOVABLE PROPERTY (S. 269UA(D)) T O BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN S.53A OF THE TRANSFER OF PROP ERTY ACT 1882, AND (B) ANY TRANSACTION ENTERED INTO IN ANY M ANNER WHICH HAS THE EFFECT OF TRANSFERRING, OR ENABLING T HE ENJOYMENT OF, ANY IMMOVABLE PROPERTY (S. 269UA(D)). THEREFORE IN THESE TWO CASES CAPITAL GAINS WOULD BE TAXABLE IN THE YEA R IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO, EVEN IF THE TRA NSFER OF THE IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UND ER GENERAL LAW. 36 FROM THE ABOVE, IT IS CLEAR THAT COURT WAS OF TH E VIEW THAT IN CASE ANY TRANSACTION COVERED BY CLAUSE (V) AND (VI) TO SECTION 2(47) THE LIABILITY FOR CAPITOL GAIN WOULD ARISE ON THE DATE WHEN SUCH TRANSACTIONS ARE ENTERE D INTO. IN THE JUDGMENT AT SOME OTHER PLACES, THE SIMILAR OBSERVATIONS HAVE BEEN MADE. HOWEVER, DESPITE THIS OBSERVATION THE CASE WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE REASON FOR THE SAME HAVE BEEN GIVEN IN THE JUDGMENT ITSELF. FIRSTLY IT IS OBSERVED THAT PROVI SION OF SECTION 2(47)(V) OF THE ACT WERE NOT INVOKED BY THE REVENUE ITSELF. THIS BECOMES CLEAR FROM THE FOLLOWING PARA: IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT THERE WAS NO EFFECTIVE TRANSFER TILL GRANT OF IRREVOCABLE LICENC E. IN THIS CONNECTION, THE JUDGMENT OF THE HON'BLE SUPREME COU RT WERE CITED ON BEHALF OF THE ASSESSEE, BUT ALL THOSE JUDG MENT WERE PRIOR TO INTRODUCTION OF THE CONCEPT OF DEEMED TRAN SFER U/S 2(47)(V). IN THIS MATTER, THE AGREEMENT IN QUESTIO N IS A DEVELOPMENT AGREEMENT. SUCH DEVELOPMENT AGREEMENTS DO NOT CONSTITUTE TRANSFER IN GENERAL LAW. THEY ARE SPREAD OVER A PERIOD OF TIME. THEY CONTEMPLATE VARIOUS STAGES. TH E BOMBAY HIGH COURT IN VARIOUS JUDGMENTS HAS TAKEN THE VIEW IN SEVERAL MATTERS THAT THE OBJECT OF ENTERING INTO A DEVELOPM ENT AGREEMENT IS TO ENABLE A PROFESSIONAL BUILDER / CON TRACTOR TO MAKE PROFITS BY COMPLETING THE BUILDING AND SELLING THE FLATS AT A PROFIT. THAT THE AIM OF THESE PROFESSIONAL CONTRA CTORS WAS ONLY TO MAKE PROFITS BY COMPLETING THE BUILDING AND , THEREFORE, NO INTEREST IN THE LAND STANDS CREATED IN THEIR FAV OUR UNDER SUCH AGREEMENTS. THAT SUCH AGREEMENTS ARE ONLY A MO DE OF REMUNERATING THE BUILDER FOR HIS SERVICES OF CONSTR UCTING THE BUILDING (SEE GURUDEV DEVELOPERS V. KURLA KONKAN NI WAS CO- OPERATIVE HOUSING SOCIETY [2003] 3 MAH LJ 131). IT IS PRECISELY FOR THIS REASON THAT THE LEGISLATURE HAS INTRODUCED SECTION 2(47)(V) READ WITH SECTION 45 WHICH INDICATES THAT CAPITAL GAINS IS TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS A RE ENTERED INTO EVEN IF THE TRANSFER OF IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW. IN THIS CASE THAT TEST HAS NOT BEEN APPLIED BY THE DEPARTMENT. NO REASON HAS B EEN GIVEN WHY THAT TEST HAS NOT BEEN APPLIED, PARTICULA RLY WHEN THE AGREEMENT IN QUESTION, READ AS A WHOLE, SHOWS T HAT IT IS A DEVELOPMENT AGREEMENT. THERE IS A DIFFERENCE B ETWEEN THE CONTRACT ON THE ONE HAND AND THE PERFORMANCE ON THE OTHER HAND. IN THIS CASE, THE TRIBUNAL AS WELL AS THE 11 DEPARTMENT HAVE COME TO THE CONCLUSION THAT THE TRA NSFER TOOK PLACE DURING THE ACCOUNTING YEAR ENDING MARCH 31,19 96, AS SUBSTANTIAL PAYMENTS WERE EFFECTED DURING THAT YEAR AND SUBSTANTIAL PERMISSIONS WERE OBTAINED. IN SUCH CASE S OF DEVELOPMENT AGREEMENTS, ONE CANNOT GO BY SUBSTANTIA L PERFORMANCE OF A CONTRACT. IN SUCH CASES, THE YEAR OF CHARGEABILITY IS THE YEAR IN WHICH THE CONTRACT IS EXECUTED. THIS IS IN VIEW OF SECTION 2 (47)(V) OF THE ACT. SECONDLY IT IS MENTIONED IN THE ORDER OF THE COURT THAT LAW WAS NOT VERY CLEAR ON THIS POINT AND SINCE THE ASSESSEE HAS ADMITTED AND PAID CAPITAL GAIN IN THE ASSESSMENT Y EAR 1999- 2000, THEREFORE, TAX WAS HELD TO BE CHARGEABLE IN ASSESSMENT YEAR 1999-2000. THIRDLY CERTAIN SHORTCOMINGS WERE ALSO NOTED IN THE ORDER OF THE TRIBUNAL WHERE CERTAIN DOCUMENTS WERE MENTIONED TO HAVE BEEN EXECUTED BEFORE MARCH 31, 1996 E.G. THE FOLLOWING OBSERVATION OF THE TRIBUNAL WAS NOT FOUND CORRECT AS SOMETHING IS DONE ON IST APRIL, 1997 THE N THE SAME CANNOT FALL IN THE YEAR ENDING 31.3.1996. FROM THE DATES IT IS EVIDENT THAT FROM THE VERY NE XT DAY, I.E., APRIL 1, 1997, FROM THE END OF THE FINANCIAL YEAR ENDING ON MARCH 31, 1996, THE BUILDER WAS USING THE WELL WATER AGAINST PAYMENT OF RELEVANT CHARGES TO THE ASSESSEE. 37 THUS IT IS VERY CLEAR THAT IN CASES WHERE AN ARRANGEMENT HAD BEEN ENTERED INTO BY AN ASSESSEE IN TERMS OF CLAUSE (V) OF SECTION 2(47) WHICH HAS EFFE CT OF HANDING OVER THE POSSESSION THEN THE TRANSFER IS SA ID TO HAVE BEEN TAKEN PLACE ON THE DATE OF ENTERING INTO SUCH ARRANGEMENT. 38. WE DO NOT FIND ANY FORCE IN THE CONTENTION OF T HE LD. COUNSEL FOR THE ASSESSEE THAT JUDGMENT HAS TO BE R EAD IN THE CONTEXT OF THE DECISION MADE IN SUCH JUDGMENT. IN FACT, IT IS WELL SETTLED THAT DOCTRINE OF PRECEDENT WHICH MEANS WHAT NEEDS TO BE FOLLOWED LATER ON PARTICULAR LY BY SUBORDINATE TRIBUNALS AND COURTS IS THE RATIO OF A PARTICULAR JUDGMENT GIVEN BY THE HIGHER COURT OR FO RUM. FURTHER, THERE IS NO FORCE IN THE CONTENTION THAT D ECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V CIT (SUPRA) DOES NOT SHOW THAT THE DATE OF AGREEMENT ITSELF CONSTITUTE T HE TRANSFER. AGAIN THERE IS NO FORCE EVEN IN THE CONT ENTION THAT IN THAT CASE IT WAS ULTIMATELY DECIDED THAT CA PITAL GAIN TAXES IS CHARGEABLE IN ASSESSMENT YEAR 1999-20 00 BECAUSE OF THE REASONS GIVEN IN ABOVE NOTED PARAS PARTICULARLY BECAUSE THE REVENUE ITSELF NEVER INVOK ED THE PROVISIONS OF SECTION 2(47)(V) OF THE ACT AND HELD IT TO BE TAXABLE IN ASSESSMENT YEAR 1996-97. NO DOUBT IN TH AT CASE ULTIMATELY IT WAS HELD THAT CAPITAL GAIN WAS I N ASSESSMENT YEAR 1999-2000 BUT COURT HAD MADE IT VER Y 12 CLEAR THAT THIS IS FIRST TIME THAT LAW IS BEING LAI D DOWN AND GUIDELINES ARE BEING ISSUED WHICH MEANS THAT THERE WAS A CONFUSION EARLIER. CLAUSES (V) & (VI) TO SECTION 2 (47) WERE INTRODUCED IN THE YEAR ONLY IN 1998. PERHAPS COURT TOOK A LENIENT VIEW BECAUSE OF THESE REASONS AND HELD THAT CAPITAL GAIN WAS TAXABLE IN ASSESSMENT YEAR 1999-20 00. IT IS QUITE CLEAR THAT RATIO OF THE ABOVE DECISION IS THAT IN CASE OF ANY ARRANGEMENTS OR TRANSACTIONS WHEREBY THE OTHER PARTY BECOMES ENTITLED TO ENJOY THE PROPE RTY THEN THAT DATE OF SUCH TRANSACTION ITSELF NEEDS TO BE CONSTRUED AS THE DATE OF TRANSFER. 39. THE SECOND RELEVANT DECISION CITED BY THE REVEN UE IS BY AUTHORITY FOR ADVANCE RULING (AAR) NEW DELHI IN THE CASE OF JASBIR SINGH SARKARIA (SUPRA) . IN THAT CASE THE ASSESSEE WAS CO-OWNER OF AGRICULTURAL LAND MEASURIN G ABOUT 27.7 ACRES AND HIS SHARE WAS 4/9. THE CO-OWN ER DECIDED TO DEVELOP THE LAND BY CONSTRUCTING RESIDEN TIAL COMPLEX THROUGH DEVELOPER AND ENTERED INTO A COLLABORATION AGREEMENT ON 8.6.2005 WITH M/S SANTUR DEVELOPER PVT LTD, NEW DELHI (HEREIN AFTER CALLED DEVELOPER). ACCORDING TO THE TERMS OF AGREEMENT, THE DEVELOPER SHOULD OBTAIN A LETTER OF INTENT FROM THE CONCERNED GOVERNMENT DEPARTMENT AND OBTAIN OTHER PERMISSIONS AND SANCTIONS FOR DEVELOPING THE LAND A T ITS OWN RISK AND COST. THE DEVELOPER WAS TO TAKE 84% O F THE BUILT UP AREA AND BALANCE 16% WOULD BELONG TO ASSES SEE AND OTHER CO-OWNER. THE CONSIDERATION FOR THE AGREE MENT WAS TAKEN AS THE BUILT UP AREA TO BE HANDED OVER TO THE OWNERS FREE OF COST. THE OWNERS WERE ENTITLED TO V ISIT THE SITE IN ORDER TO REVIEW THE PROGRESS OF THE PROJECT . IT WAS CLARIFIED BY CLAUSE 18 THAT OWNERSHIP WOULD REMAIN EXCLUSIVELY WITH THE OWNERS TILL IT VESTS WITH BOTH THE PARTIES AS PER THEIR RESPECTIVE SHARES ON THE COMPL ETION OF THE PROJECT. THE OTHER CLAUSES AND THE STEPS IN THE AGREEMENT WERE THAT A SUM OF RS. 1 CRORE TOWARDS PAYMENT OF EARNEST MONEY AT THE TIME OF ENTERING IN TO AGREEMENT; A SPECIAL POWER OF ATTORNEY WAS TO BE EXECUTED IN FAVOUR OF THE DEVELOPER TO ENABLE TO DE AL WITH THE STATUTORY AUTHORITIES ETC. FOR OBTAINING NECESS ARY APPROVALS / SANCTIONS; LETTER OF INTENT WAS TO BE OBTAINED NOT LATER THAN MARCH 8, 2006 AND IN CASE OF A FAILU RE TO DO SO, THE AGREEMENT SHALL STAND TERMINATED. LETTER O F INTENT IS BASICALLY A LICENSE GRANTED BY THE DIRECTOR OF T OWN PLANTING TO DEVELOPER OF LAND FOR THE PURPOSE OF CONSTRUCTING RESIDENTIAL FLATS SUBJECT TO PAYMENT O F CERTAIN CHARGES AND COMPLIANCE OF OTHER CONDITIONS. IT WAS FURTHER STATED IN THE AGREEMENT THAT ON FULFILLMENT OF THE REQUIREMENT IN THE LETTER OF INTENT, OWNERS WILL HA VE TO EXECUTE IRREVOCABLE GENERAL POWER OF ATTORNEY IN FA VOUR OF THE DEVELOPER AUTHORIZING THE DEVELOPER TO TOOK AND SELL THE DWELLING UNITS OUT OF DEVELOPERS SHARE AND COL LECT THE MONEY FOR THE SAME. HOWEVER, FINALLY SALE DEEDS COU LD BE EXECUTED ONLY AFTER THE OWNER RECEIVED THEIR SHARE OF CONSTRUCTED AREA. THREE MONTHS LATER, A SUPPLEMENT ARY AGREEMENT WAS ENTERED ON SEPTEMBER 15, 2005 BETWEEN THE ASSESSEE AND OTHER CO-OWNERS AND DEVELOPERS 13 THROUGH WHICH IT WAS AGREED THAT OWNERS WILL SELL T HEIR 16% SHARE IN THE BUILT UP AREA TO THE DEVELOPER OR ITS NOMINEE FOR CONSIDERATION OF RS. 42 CRORES. A SUM O F RS. 2 CRORES WAS RECEIVED. THIS COLLABORATION AGREEMENT AND BALANCE OF RS. 40 CRORES WAS PAYABLE BY THE DEVELOP ER TO THE OWNERS IN SIX INSTALLMENTS FROM MARCH 06, 2008. THE INSTALLMENTS COULD BE EXTENDED SUBJECT TO PAYMENT O F INTEREST AND FURTHER SUBJECT TO MAXIMUM EXTENSION O F THREE MONTHS. THERE WERE VARIOUS OTHER CLAUSES WHI CH ARE NOT RELEVANT FOR OUR PURPOSES. THE QUESTION AR OSE WHETHER CAPITAL GAIN ACCRUE / ARISE TO THE ASSESSEE DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT Y EAR 2007-08 OR DURING FINANCIAL YEAR 2007-08 RELEVANT T O ASSESSMENT YEAR 2008-09. 40. ON THE ABOVE, THE HON'BLE AUTHORITY AFTER REFER RING TO THE PROVISIONS OF SECTION 45 AND OBSERVED AS UNDER: - .THE SECTION CAN BE ANALYSED THUS : (A) TRANSFER OF A CAPITAL ASSET EFFECTED IN THE PRE VIOUS YEAR, (B) RESULTANT PROFITS OR GAINS FROM SUCH TRANSFER, (C) THOSE PROFITS OR GAINS WOULD CONSTITUTE THE INC OME OF THE ASSESSEE/ TRANSFEROR (D) SUCH INCOME SHALL BE DEEMED TO BE THE INCOME OF THE SAME PREVIOUS YEAR IN WHICH THE TRANSFER HAD TAKEN PLACE. TWO ASPECTS MAY BE NOTED AT THIS JUNCTURE. FIRSTLY , THE EXPRESSION USED IS ARISING WHICH IS NOT TO BE EQ UATED WITH THE EXPRESSION RECEIVED. BOTH THESE EXPRESSIONS AND IN ADDITION THERETO, THE EXPRESSION ACCRUE ARE USED IN THE INCOME-TAX ACT EITHER COLLECTIVELY OR SEPARATELY AC CORDING TO THE CONTEXT AND NATURE OF THE CHARGING PROVISION. T HE SECOND POINT WHICH DESERVES NOTICE IS THAT BY A DEEMING P ROVISION, THE PROFITS OR GAINS THAT HAVE ARISEN WOULD BE TRE ATED AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. THAT MEANS, THE INCOME ON ACCOUNT OF ARISAL OF CAPI TAL GAIN SHOULD BE CHARGED TO TAX IN THE SAME PREVIOUS YEAR IN WHICH THE TRANSFER WAS EFFECTED OR DEEMED TO HAVE TAKEN PLACE. THE EFFECT AND AMBIT OF THE DEEMING PROVISION CONT AINED IN SECTION 45 HAS BEEN CONSIDERED IN DECIDED CASES AND LEADING TEXT BOOKS. THE FOLLOWING STATEMENT OF LAW IN SAMPATH IYENGARS COMMENTARY (10TH EDITION REVISED BY SHRI S. RAJARATNAM) BRINGS OUT THE CORRECT LEGAL POSITION : 14 SECTION 45 ENACTS THAT THE CAPITAL GAINS SHALL BY FICTION BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR I N WHICH THE TRANSFER TOOK PLACE. SINCE THIS IS A ST ATUTORY FICTION, THE ACTUAL YEAR IN WHICH THE SALE PRICE W AS RECEIVED, WHETHER IT WAS ONE YEAR, TWO YEARS, THREE YEARS, FOUR YEARS ETC. PREVIOUS TO THE PREVIOUS YEA R OF TRANSFER, IS BESIDE THE POINT. THE ENTIRETY OF THE SUM OR SUMS RECEIVED IN ANY EARLIER YEAR OR YEARS WOULD BE REGARDED AS THE CAPITAL GAINS ARISING IN THE PREVI OUS YEAR OF TRANSFER. . . . . IN THE WORDS OF SECTION 45, THE CAPITAL GAI NS ARISING FROM THE TRANSFER 'SHALL BE THE INCOME OF THE PREV IOUS YEAR IN WHICH THE TRANSFER TOOK PLACE'. SO, THE PA YMENTS OF CONSIDERATION STIPULATED TO BE PAID IN FUTURE W OULD HAVE TO BE ATTRIBUTED, BY STATUTORY MANDATE, TO THE YEAR OF TRANSFER, EVEN AS PAYMENTS MADE PRIOR TO THE YEA R OF TRANSFER. 41. THEREAFTER, THE AUTHORITY REFERRED TO SECTION 2(47) AND OBJECTS OF THE INTRODUCTION OF CLAUSES (V) & (V I) AND ALSO REFERRED TO PARAS 11.1 & 11.2 OF THE BOARD CIR CULAR NO. 495 (WHICH WE HAVE ALREADY DISCUSSED EARLIER). THE HON'BLE AUTHORITY HAS DISCUSSED VARIOUS IMPLICATION S OF CLAUSE (V) OF SECTION 2(47) AND ALSO IMPLICATION OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT AS WELL AS OBSERVATIONS OF HON'BLE BOMBAY HIGH COURT IN THE CA SE OF CHATURBHUJ DWARKADAS KAPADIA V CIT (SUPRA). THE AUTHORITY OBSERVED THAT TO UNDERSTAND THIS PROVISIO N PROPERLY MEANING OF POSSESSION HAS TO BE UNDERSTO OD PROPERLY AND WENT ON TO DISCUSS THE MEANING OF TERM POSSESSION, AND HOW THE SAME IS TO BE UNDERSTOOD I N THE CONTEXT OF CLAUSE (V). THESE ARE VERY IMPORTANT OBSERVATIONS AND HAVE BEEN DISCUSSED IN MOST ELUCID ATED FASHION. THESE OBSERVATIONS WILL ANSWER MANY OF THE QUESTIONS RAISED BEFORE US AND, THEREFORE, WE ARE EXTRACTING THESE OBSERVATIONS AS UNDER:- MEANING OF POSSESSION AND HOW SHOULD IT BE UNDER STOOD IN THE CONTEXT OF CLAUSE (V) THE NEXT QUESTION IS, IN WHAT SENSE WE HAVE TO UNDERSTAND THE TERM POSSESSION IN THE CONTEXT OF CLAUSE (V) OF SECTION 2(47). SHOULD IT ONLY MEAN THE RIGH T TO EXCLUSIVE POSSESSIONWHICH THE TRANSFEREE CAN MAINT AIN IN HIS OWN RIGHT TO THE EXCLUSION OF EVERYONE INCLU DING THE TRANSFEROR FROM WHOM HE DERIVED THE POSSESSION ? SU CH A CRITERION WILL BE SATISFIED ONLY AFTER THE ENTIRE SALE CONSIDERATION IS PAID AND THE TRANSFEROR HAS FORFEI TED HIS RIGHT TO EXERCISE ACTS OF POSSESSION OVER THE LAND OR TO RESUME POSSESSION. IN OUR VIEW, THERE IS NO WARRANT TO PLACE SUCH A RESTRICTED INTERPRETATION ON THE WORD POSSESSION OCCURRING IN CLAUSE (V) OF SECTION 2(4 7). POSSESSION IS AN ABSTRACT CONCEPT. IT HAS DIFFERENT SHADES 15 OF MEANING. IT IS VARIOUSLY DESCRIBED AS A POLYMO RPHOUS TERM HAVING DIFFERENT MEANINGS IN DIFFERENT CONTEX TS (PER R. S. SARKARIA J. IN SUPERINTENDENT AND REMEMBRANCE OF LEGAL AFFAIRS, W. B. V. ANIL KUMAR BHUNJA [1979] 4 SCC 274 AND AS A WORD OF OPEN TEXTURE (SEE SALMOND O N JURISPRUDENCE, PARAGRAPH 51, TWELFTH EDITION, INDI AN REPRINT). SALMOND OBSERVED : TO LOOK FOR A DEFINI TION THAT WILL SUMMARIZE THE MEANINGS OF THE TERM POSSESSION IN ORDINARY LANGUAGE, IN ALL AREAS OF LAW AND IN ALL L EGAL SYSTEMS, IS TO ASK FOR THE IMPOSSIBLE. IN THE ABO VE CASE OF ANIL KUMAR BHUNJA [1979] 4 SCC 274, SARKARIA J. SPEAKING FOR A THREE-JUDGE BENCH ALSO REFERRED TO T HE COMMENTS OF DIAS AND HUGHES IN THEIR BOOK ON JURISPRUDENCE THAT IF A TOPIC EVER SUFFERED TOO M UCH THEORIZING IT IS THAT OF POSSESSION. MUCH OF TH E DIFFICULTY IS CAUSED BY THE FACT THAT POSSESSION IS NOT A PURE LEGAL CONCEPT, AS POINTED OUT BY SALMOND. THE LEARNED JUD GE THEN EXPLAINED THE CONNOTATION OF THE EXPRESSION POSSESSION BY REFERRING TO THE WELL KNOWN TREATI SES ON JURISPRUDENCE (PAGE 278) : POSSESSION, IMPLIES A RIGHT AND A FACT : THE RIG HT TO ENJOY ANNEXED TO THE RIGHT TO PROPERTY AND THE FAC T OF THE REAL INTENTION. IT INVOLVES POWER OF CONTRO L AND INTENT TO CONTROL, (SEE DIAS AND HUGHES) 14 . . . . 15. WHILE RECOGNIZING 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 THIN G. ACCORDING TO THE LEARNED AUTHOR, THE TEST FOR DETERMINING WHETHER A PERSON IS IN POSSESSION OF ANYTHING IS WHETHER HE IS IN GENERAL CONTROL OF IT . IN SALMONDS JURISPRUDENCE, AT PARAGRAPH 54, WE FIND AN ILLUMINATING DISCUSSION ON IMMEDIATE AND MEDIATE POSSESSION. THE LEARNED AUTHOR STATES I N LAW ONE PERSON MAY POSSESS A THING FOR AND ON ACCOUNT O F SOME ONE ELSE. IN SUCH A CASE THE LATTER IS IN POS SESSION BY THE AGENCY OF HIM WHO SO HOLDS THE THING ON HIS BEHALF. THE POSSESSION THUS HELD BY ONE MAN THROUG H ANOTHER MAY BE TERMED MEDIATE, WHILE THAT WHICH IS ACQUIRED OR RETAINED DIRECTLY OR PERSONALLY MAY BE DISTINGUISHED AS IMMEDIATE OR DIRECT. SALMOND M AKES REFERENCE TO THREE TYPES OF MEDIATE POSSESSION. IN ALL CASES OF MEDIATE POSSESSION, TWO PERSONS ARE IN POSSESSION OF THE SAME THING AT THE SAME TIME. AN A LLIED CONCEPT OF CONCURRENT POSSESSION HAS ALSO BEEN EXPLAINED IN PARAGRAPH 55 OF SALMONDS JURISPRUDENC E IN THE FOLLOWING WORDS : 16 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 PROPOSITION THIS IS TRUE : FOR EXCLUSIVENESS IS OF THE ESSENCE OF POSSESSION. TWO ADVERSE CLAIMS OF EXCLUSIVE USE CANNOT BOTH BE EFFECTUALLY REALIZED AT THE SAME TIME. CLAIMS, HOWEVER, WHICH ARE NOT ADVERSE, AND WHICH ARE NOT, THEREFORE, MUTUALLY DESTRUCTIVE, ADMIT OF CONCURREN T REALIZATION. HENCE, THERE ARE SEVERAL POSSIBLE CASE S OF DUPLICATE POSSESSION. 1. MEDIATE AND IMMEDIATE POSSESSION CO-EXIST IN RESPECT OF THE SAME THING AS ALREADY EXPLAINED. 2. TWO OR MORE PERSONS MAY POSSESS THE SAME THING IN COMMON, JUST AS THEY MAY OWE IT IN COMMON . ON A FAIR AND REASONABLE INTERPRETATION AND ON ADOPTING THE PRINCIPLE OF PURPOSIVE CONSTRUCTION, IT MUST BE HELD THAT POSSESSION CONTEMPLATED BY CLAUSE (V) NEED NOT NECESSARILY BE SOLE AND EXCLUSIVE POSSESSION. S O LONG AS THE TRANSFEREE IS, BY VIRTUE OF THE POSSESSION GIVEN, ENABLED TO EXERCISE GENERAL CONTROL OVER THE PROPE RTY AND TO MAKE USE OF IT FOR THE INTENDED PURPOSE, THE MER E FACT THAT THE OWNER HAS ALSO THE RIGHT TO ENTER THE PROP ERTY TO OVERSEE THE DEVELOPMENT WORK OR TO ENSURE PERFORMAN CE OF THE TERMS OF AGREEMENT DOES NOT INTRODUCE ANY INCOMPATIBILITY. THE CONCURRENT POSSESSION OF THE O WNER WHO CAN EXERCISE POSSESSORY RIGHTS TO A LIMITED EXT ENT AND FOR A LIMITED PURPOSE AND THAT OF THE BUYER/DEVELOP ER WHO HAS A GENERAL CONTROL AND CUSTODY OF THE LAND CAN VERY WELL BE RECONCILED. CLAUSE (V) OF SECTION 2(47) WIL L HAVE ITS FULL PLAY EVEN IN SUCH A SITUATION. THERE IS NO WAR RANT TO POSTPONE THE OPERATION OF CLAUSE (V) AND THE RESULT ANT ACCRUAL OF CAPITAL GAIN TO A POINT OF TIME WHEN THE CONCURRENT POSSESSION WILL BECOME EXCLUSIVE POSSESS ION OF DEVELOPER/TRANSFEREE AFTER HE PAYS FULL CONSIDER ATION. FURTHER, IF POSSESSION REFERRED TO IN CLAUSE (V) IS TO BE UNDERSTOOD AS EXCLUSIVE POSSESSION OF THE TRANSFEREE/DEVELOPER, THEN, THE VERY PURPOSE OF THE AMENDMENT EXPANDING THE DEFINITION OF TRANSFER FOR THE PURPOSE OF CAPITAL GAINS MAY BE DEFEATED. THE REASO N IS THIS: THE OWNER OF THE PROPERTY CAN VERY WELL CONTE ND, AS IS BEING CONTENDED IN THE PRESENT CASE, THAT THE DEVEL OPER WILL HAVE SUCH EXCLUSIVE POSSESSION IN HIS OWN RIGH T ONLY AFTER THE ENTIRE 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 I F SOME AMOUNT, SAY 10 PER CENT., REMAINS TO BE PAID AND TH E DEVELOPER/TRANSFEREE FAILS TO PAY, LEADING TO A DIS PUTE BETWEEN THE PARTIES, THE RIGHT TO EXCLUSIVE AND 17 INDEFEASIBLE POSSESSION MAY BE IN JEOPARDY. IN THIS STATE OF AFFAIRS, THE TRANSACTION WITHIN THE MEANING OF C LAUSE (V) CANNOT BE SAID TO HAVE BEEN EFFECTED AND THE LIABI LITY TO PAY CAPITAL GAINS MAY BE INDEFINITELY POSTPONED. T RUE, IT MAY NOT BE PROFITABLE FOR THE DEVELOPER TO ALLOW TH IS SITUATION TO LINGER FOR LONG AS THE PROCESS OF TRAN SFER OF FLATS TO THE PROSPECTIVE PURCHASERS WILL GET DELAYE D. AT THE SAME TIME, THE OTHER SIDE OF THE PICTURE CANNOT BE OVER- LOOKED. THERE IS A POSSIBILITY OF THE OWNER WITH TH E CONNIVANCE OF THE TRANSFEREE POSTPONING THE PAYMENT OF CAPITAL GAINS TAX ON THE OSTENSIBLE GROUND THAT TH E ENTIRE CONSIDERATION HAS NOT BEEN RECEIVED AND SOME BALAN CE IS LEFT. THE MISCHIEF SOUGHT TO BE REMEDIED, WILL THEN PERPETUATE. WE ARE, THEREFORE OF THE VIEW THAT POSS ESSION GIVEN TO THE DEVELOPERS NEED NOT RIPEN ITSELF INTO EXCLUSIVE POSSESSION ON PAYMENT OF ALL THE INSTALM ENTS IN ENTIRETY FOR THE PURPOSE OF DETERMINING THE DATE OF TRANSFER. WHILE ON THE POINT OF POSSESSION, WE WOULD LIKE TO CLARIFY ONE MORE ASPECT. WHAT IS SPOKEN TO IN CLAU SE (V) OF SECTION 2(47) IS THE TRANSACTION WHICH INVOLVE S ALLOWING THE POSSESSION TO BE TAKEN. BY MEANS OF SU CH TRANSACTION, A TRANSFEREE LIKE A DEVELOPER IS ALLOW ED TO UNDERTAKE DEVELOPMENT WORK ON THE LAND BY ASSUMING GENERAL CONTROL OVER THE PROPERTY IN PART PERFORMA NCE OF THE CONTRACT. THE DATE OF THAT TRANSACTION DETERMIN ES THE DATE OF TRANSFER. THE ACTUAL DATE OF TAKING PHYSICA L POSSESSION OR THE INSTANCES OF POSSESSORY ACTS EXER CISED IS NOT VERY RELEVANT. THE ASCERTAINMENT OF SUCH DAT E, IF CALLED FOR, LEADS TO COMPLICATED INQUIRIES, WHICH M AY FRUSTRATE THE OBJECTIVE OF THE LEGISLATIVE PROVISIO N. IT IS ENOUGH IF THE TRANSFEREE HAS, BY VIRTUE OF THAT TRA NSACTION, A RIGHT TO ENTER UPON AND EXERCISE ACTS OF POSSESSI ON EFFECTIVELY PURSUANT TO THE COVENANTS IN THE CONTRA CT. THAT TANTAMOUNTS TO LEGAL POSSESSION. WE ARE REFERRING T O THIS ASPECT BECAUSE THE AUTHORIZED REPRESENTATIVE HAS SUBMITTED WHEN HE APPEARED BEFORE US IN THE LAST W EEK OF MAY, 2007, THAT EVEN BY THAT DATE THE DEVELOPMENT W ORK COULD NOT BE COMMENCED FOR WANT OF CERTAIN APPROVAL S, AND THEREFORE, THE DEVELOPER WAS NOT WILLING TO T AKE POSSESSION OF THE LAND. SUCH AN UNSUBSTANTIATED STATEMENT WHICH IS NOT FOUND IN THE ORIGINAL APPLI CATION OR EVEN WRITTEN SUBMISSIONS FILED EARLIER NEED NOT BE PROBED INTO ESPECIALLY WHEN IT IS NOT HIS CASE THAT THE DE VELOPER WAS NOT ALLOWED TO TAKE POSSESSION IN TERMS OF THE AGREEMENT. 42. AFTER THE ABOVE DISCUSSION, THE AUTHORITY DISCU SSED THE FACTS OF THE CASE BEFORE IT. IT WAS OBSERVED TH AT PARAGRAPH 18 OF THE COLLABORATION AGREEMENT PROVIDE S THAT ON ISSUANCE OF LETTER OF INTENT, THE OWNERS WI LL ALLOW AND PERMIT THE DEVELOPER TO ENTER UPON AND SURVEY T HE LAND, ERECT SITE / SALES OFFICE, CARRY OUT THE SITE DEVELOPMENT WORK AND DO ACTIVITIES FOR ADVANCING & SALE 18 PROMOTION, CONSTRUCTION ETC. THE AUTHORITY FURTHER OBSERVED THAT IF THIS CLAUSE IS READ IN ISOLATION T HIS WOULD SUGGEST ON PASSING OF POSSESSION BUT ACCORDING TO AUTHORITY THE OTHER FACTORS ARE TO BE CONSIDERED. CLAUSE 15 PROVIDED THAT ON FULFILLMENT OF THE REQUIREMENTS LAID DOWN IN THE LETTER OF INTENT WHICH IS PROVISIONAL LICENSE, THE OWNERS SHOULD EXECUTE AN IRREVOCABLE GENERAL PO WER OF ATTORNEY IN FAVOUR OF THE DEVELOPER ALLOWING INT ER ALIA TO BOOK AND SELL THE DWELLING UNIT FAILING UNDER THE IR SHARE. THIS WAS POSSIBLE ONLY AFTER DEPOSIT OF REQUISITE C HARGES ETC. AND PERHAPS THERE WAS LITIGATION REGARDING OWN ERSHIP OF LAND WHICH HAS ALSO TO BE WITHDRAWN. THE AUTHOR ITY HAS DISCUSSED THE SIGNIFICANCE OF GENERAL POWER OF ATTORNEY AND THE TERMS OF THE GENERAL POWER OF ATTO RNEY AT PARA 33 AND THE RELEVANT PORTION OF THE SAME IS AS UNDER:- A COPY OF THE IRREVOCABLE GPA EXECUTED IN TERMS OF PARAGRAPH 15 OF THE AGREEMENT HAS BEEN FURNISHE D BY THE APPLICANT. IT AUTHORIZES THE DEVELOPER : (I) TO ENTER UPON AND SURVEY THE LAND, PREPARE THE LAYOUT PLAN, APPLY FOR RENEWAL/EXTENSION OF LICENCE, SUBMIT THE BUILDING PLANS FOR SANCTION OF THE APPROPRIATE AUTH ORITY AND TO CARRY OUT THE WORK OF DEVELOPMENT OF A MULT I- STORIED RESIDENTIAL COMPLEX, (II) TO MANAGE AND CON TROL, LOOK AFTER AND SUPERVISE THE PROPERTY IN ANY MANNE R AS THE ATTORNEY DEEMS FIT AND PROPER, (III) TO OBTAIN WATER, SEWAGE DISPOSAL AND ELECTRICITY CONNECTIONS. THE DEVELOPER IS ALSO AUTHORIZED TO BORROW MONEY FOR MEETING THE COST OF CONSTRUCTION ON THE SECURITY AN D MORTGAGE OF LAND FALLING TO THE DEVELOPERS SHARE. THE OTHER CLAUSES IN THE GPA ARE NOT RELEVANT FOR OUR PURPOSE. THE GPA UNEQUIVOCALLY GRANTS TO THE DEVEL OPER A BUNDLE OF POSSESSORY RIGHTS. THE ACTS OF MANAGEM ENT, CONTROL AND SUPERVISION OF PROPERTY ARE EXPLICITLY MENTIONED. IT IS FAIRLY CLEAR THAT THE GPA IS NOT A MERE LICENCE TO ENTER THE LAND FOR DOING SOME PRELIMINA RY ACTS IN RELATION TO THE DEVELOPMENT WORK. THE POWER OF CONTROL OF THE LAND WHICH IS AN INCIDENCE OF POSSES SION AS EXPLAINED SUPRA HAS BEEN CONFERRED ON THE DEVELO PER UNDER THIS GPA. THE DEVELOPER ARMED WITH THE GPA CANNOT BE REGARDED MERELY AS A LICENSEE OR AN AGENT SUBJECT TO THE CONTROL OF THE OWNERS. HIS POSSESSIO N CANNOT BE CHARACTERIZED AS PRECARIOUS OR TENTATIVE IN NATURE. THE FACT THAT THE AGREEMENT DESCRIBES THE G PA AS IRREVOCABLE AND AN EXPRESS DECLARATION TO THAT E FFECT IS FOUND IN THE GPA ITSELF IS NOT WITHOUT SIGNIFICA NCE. HAVING REGARD TO THE SECOND AND SUPPLEMENTAL AGREEMENT BY VIRTUE OF WHICH THE ENTIRE DEVELOPED PROPERTY INCLUDING THE OWNERS SHARE HAS BEEN AGREE D TO BE SOLD TO THE DEVELOPER OR HIS NOMINEES FOR VALUA BLE MONEY CONSIDERATION, THE DEVELOPER HAS A VITAL STA KE IN THE ENTIRE PROPERTY. AS FAR AS THE QUALITY OF POSS ESSION IS CONCERNED, HE IS ON A HIGHER PEDESTAL THAN A DEVELOPER WHO APPORTIONS BUILT UP AREA WITH THE OW NER. EVEN IF HE IS AN AGENT IN ONE SENSE IN THE COURSE O F DEVELOPING THE LAND, THAT AGENCY IS COUPLED WITH IN TEREST. 19 FOR THESE REASONS, THE PREFIX IRREVOCABLE IS DELI BERATELY CHOSEN. AS DISCUSSED EARLIER, THE OWNER'S LIMITED R IGHT TO ENTER THE LAND AND OVERSEE THE DEVELOPMENT WORK IS NOT INCOMPATIBLE WITH THE DEVELOPERS RIGHT OF CONTROL OVER THE LAND WHICH HE DERIVES FROM THE GPA. EXCLUSIVE POSSESSION, AS ALREADY POINTED OUT, IS NOT NECESSAR Y FOR THE PURPOSE OF SATISFYING THE INGREDIENTS OF CLAUSE (V) OF SECTION 2(47). WE ARE THEREFORE, OF THE VIEW THAT THE IRREVOCABLE GPA EXECUTED BY THE OWNERS IN FAVOUR OF THE DEVELOPER MUST BE REGARDED AS A TRANSACTION IN THE EYE OF LAW WHICH ALLOWS POSSESSION TO BE TAKEN IN PART PERFORMANCE OF THE CONTRACT FOR TRANSFER OF THE PR OPERTY IN QUESTION.. 43 THUS, THE ABOVE CLEARLY SHOWS THAT IRREVOCABLE GENERAL POWER OF ATTORNEY WHICH LEADS TO OVER ALL CONTROL OF THE PROPERTY IN THE HANDS OF THE DEVELOPER, EVEN IF THAT MEANS NO EXCLUSIVE POSSESSION BY THE DEVELOPER WOUL D CONSTITUTE TRANSFER. IT CAN BE SAID THAT IT HAS TO BE CONSTRUED AS POSSESSION IN TERMS OF CLAUSE (V) OF SECTION 2(47) OF THE ACT. 44 A QUESTION MAY ARISE THAT WHY THE TRANSFER WAS N OT HELD TO BE TAKEN PLACE IN ASSESSMENT YEAR 2006-07 WHEN F IRST AGREEMENT WAS ENTERED INTO ON JUNE 8, 2005. THE SUPPLEMENTARY AGREEMENT WAS ALSO ENTERED INTO ON SE PT 15, 2005 BOTH OF WHICH FALL IN FINANCIAL YEAR 2005-06 R ELEVANT TO ASSESSMENT YEAR 2006-07. THEN WHY TRANSFER WAS NOT CONSTRUED IN ASSESSMENT YEAR 2006-07 IT WAS BECAUSE THE FIRST AGREEMENT ITSELF CONTAINED A CONDITION THAT LETTER OF INTENT SHOULD BE PROCURED NOT LATER THAN MARCH 8, 2006. I N CASE OF FAILURE TO DO SO THE AGREEMENT SHALL STAND TERMINAT ED. THEREFORE, OBTAINING THE LETTER OF INTENT WAS TH E CRUCIAL FACTOR. IT HAS BEEN EXPLAINED IN THE DECISION THAT THE LETTER OF INTENT BASICALLY IS A LICENSE ISSUED BY THE DIREC TOR OF TOWN AND COUNTRY PLANNING, HARYANA WHICH GIVES PERMISSIO N FOR CONSTRUCTION OF THE FLATS. THE OTHER CRUCIAL POINT WAS EXECUTION OF IRREVOCABLE OF GPA WHICH WAS EXECUTED ON MAY 8, 2006 WHICH ACCORDING TO THE LD. AUTHORITY DEPICTS T HE INTENTION OF THE HANDING OVER OF THE POSSESSION. THEREFORE, IT BECOMES VERY CLEAR THAT IT IS NOT NECESSARY THAT TRANSFER W OULD TAKE PLACE ON THE SIGNING OF DEVELOPMENT AGREEMENT BUT T HE SAME HAS TO BE INFERRED ONLY WHEN THE POSSESSION HAS BEE N HANDED OVER BY THE TRANSFEROR TO THE DEVELOPER WHICH CAN B E INFERRED FROM THE DOCUMENTS E.G. POWER OF ATTORNEY. AFTER AB OVE DISCUSSION HON'BLE AUTHORITY HAS SUMMARIZED THE DEC ISION IN PARA 41 WHICH IS AS UNDER: THE FOLLOWING IS THE SUMMARY OF CONCLUSIONS: 1. WHERE THE AGREEMENT FOR TRANSFER OF IMMOVABLE PR OPERTY BY ITSELF DOES NOT PROVIDE FOR IMMEDIATE TRANSFER OF P OSSESSION, THE DATE OF ENTERING INTO THE AGREEMENT CANNOT BE CONSIDERED TO BE THE DATE OF TRANSFER WITHIN THE ME ANING OF CLAUSE (V) OF SECTION 2 (47) OF THE INCOME-TAX ACT. 20 2. TO ATTRACT CLAUSE (V) OF SECTION 2(47), IT IS NO T NECESSARY THAT THE ENTIRE SALE CONSIDERATION UP TO THE LAST I NSTALLMENT SHOULD BE RECEIVED BY THE OWNER. 3. IN THE INSTANT CASE, HAVING REGARD TO THE TERMS OF THE TWO AGREEMENTS AND THE IRREVOCABLE GPA EXECUTED PURSUAN T TO THE AGREEMENT, THE EXECUTION OF THE GPA SHALL BE RE GARDED AS THE TRANSACTION INVOLVING THE ALLOWING OF THE P OSSESSION OF LAND TO BE TAKEN IN PART PERFORMANCE OF THE CONT RACT AND THEREFORE, THE TRANSFER WITHIN THE MEANING OF SECTI ON 2(47)(V) MUST BE DEEMED TO HAVE TAKEN PLACE ON THE DATE OF EXECUTION OF SUCH GPA. THE IRREVOCABLE GPA WAS EXEC UTED ON MAY 8, 2006, I.E., DURING THE PREVIOUS YEAR RELE VANT TO THE ASSESSMENT YEAR 2007-08 AND THE CAPITAL GAINS M UST BE HELD TO HAVE ARISEN DURING THAT YEAR. INCIDENTALLY, IT MAY BE MENTIONED THAT DURING THE SAID YEAR, I.E., FINANCIA L YEAR 2006-07, A FINAL LICENSE WAS GRANTED AND THE APPLICANT/OWNERS RECEIVED NEARLY 2/3RDS OF THE CONSIDERATION. 45. LEGAL POSITION HAS BEEN DISCUSSED IN ABOVE NOTE D PARAS AND NOW LET US DISCUSS THE FACTS OF THE CASE IN THE LIGHT OF ABOVE NOTED LEGAL POSITION. 46 UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESS EE IS A MEMBER OF PUNJABI COOP HOUSE BUILDING SOCIETY LTD. WHICH HAD 96 MEMBERS (NUMBER OF MEMBERS WERE STATED AS 95 DURING ARGUMENTS BUT CLAUSE 13 OF THE JDA REF ERS TO NUMBER OF MEMBERS AS 96). THE SOCIETY WAS OWNING 21 .2 ACRES OF LAND IN VILLAGE KANSAL DISTT. MOHALI ADJAC ENT TO CHANDIGARH. THERE WERE TWO TYPES OF MEMBERS FIRSTL Y THE MEMBERS WHO WERE OWNING PLOT OF 500 SQYD AND SECOND LY THE MEMBERS WHO ARE HOLDING PLOT OF 1000 SQYD. SOMEWHERE IN 2006 IT WAS DECIDED TO DEVELOP A GROUP HOUSING COMMERCIAL PROJECT AND DO DEVELOPMENT AS PE R THE APPLICABLE MUNICIPAL BUILDING BYE-LAWS IN FORCE AND ACCORDINGLY A BID WAS INVITED THROUGH ADVERTISEMEN T IN THE TRIBUNE DATED 31.5.2006. HASH A DEVELOPER, APPROACHED THE SOCIETY WITH PROPOSAL FOR DEVELOPMEN T OF THE PROPERTY. SINCE HASH DID NOT HAVE SUFFICIENT M EANS TO DEVELOP THE PROPERTY, HASH HAD APPROACHED THDC FOR DEVELOPMENT OF THE PROPERTY BY CONSTRUCTING THE BUI LDING AND/OR STRUCTURES TO BE USED FOR INTERALIA RESIDENT IAL, PUBLIC USE AND COMMERCIAL PURPOSES. THIS PROPOSAL WAS DISCUSSED BY THE SOCIETY IN ITS EXECUTIVE COMMITTEE MEETING ON 4.1.2007. MINUTES OF THE MEETING ARE PL ACED AT PAGE 58 TO 65 OF THE PAPER BOOK. IN THE EXECUTI VE COMMITTEE IT WAS DECIDED TO APPOINT HASH WHO WAS AC TING ALONGWITH THE JOINT DEVELOPER THDC AS JOINT DEVELO PER ON THE TERMS AND CONDITIONS TO BE MENTIONED IN THE JDA . IT WAS FURTHER RESOLVED THAT MEMBER OWING PLOT OF 500 SQYD WOULD RECEIVE A CONSIDERATION OF RS. 82,50,000/- EA CH TO BE PAID IN FOUR INSTALLMENTS BY HASH DIRECTLY IN FA VOUR OF THE MEMBERS AND ONE FLAT WITH SUPER AREA OF 2250 SQ F TO BE CONSTRUCTED BY THDC. THE MEMBERS WHO HELD THE P LOT 21 OF 1000SQYD WERE TO RECEIVE A CONSIDERATION OF RS. 1,65,00,000/- AND TWO FLATS CONSISTING OF 2250SQFT TO BE CONSTRUCTED BY THE THDC. IT WAS FURTHER RESOLVED TO ENTER INTO A JDA WITH THDC/HASH. IT WAS ALSO RESOL VED TO EXECUTE IRREVOCABLE POWER OF ATTORNEY BY THE SOC IETY IN FAVOUR OF THDC FOR THIS PURPOSE. THIS RESOLUTION WA S ULTIMATELY RATIFIED IN THE GENERAL BODY MEETING HEL D BY THE SOCIETY ON 25.2.2007. PURSUANT TO THE ABOVE RESOLUTION, TRIPARTITE JDA WAS EXECUTED (COPY OF T HE SAME IS AVAILABLE AT PAGE 15 TO 54 OF FIRST PAPER BOOK). THROUGH RECITATION CLAUSE IT HAS BEEN MENTIONED THA T OWNER IS IN POSSESSION OF LAND MEASURING ABOUT 21.2 ACRES OF LAND WHICH HAS COME IN THE PURVIEW OF NAGA R PANCHAYAT, NAYA GAON VIDE NOTIFICATION ISSUED ON 18.10.2006 DULY SUBSTITUTED BY ANOTHER NOTIFICATION DATED 21.11.2006 AND THAT NO PART OF LAND OF THE PROPERTY FALLS UNDER FOREST AREA UNDER THE PUNJAB LAND PRESERVATIO N ACT. IT HAS BEEN FURTHER RECITED THAT THE SOCIETY HAS AGREED TO ACCEPT THE PROPOSALS OF HASH AND FURTHER EXECUTED THIS AGREEMENT WITH THDC/HASH. HASH WAS RESPONSIBLE TO MAKE PAYMENT TO THE OWNER AS DESCRIB ED EARLIER AND THE FLATS WERE TO BE PROVIDED BY THDC. IN CASE OF HASH FAILS TO MAKE THE PAYMENT, THDC AGREED TO MAKE THE PAYMENTS. COPY OF THE RESOLUTION OF THE EXECUTIVE COMMITTEE OF THE SOCIETY DATED 4.1.2007 A S WELL AS RESOLUTION OF THE GENERAL BODY MEETING OF T HE SOCIETY DATED 25.2.2007 WERE MADE PART OF JDA BY WA Y OF ANNEXURE. THE SOCIETY AGREED TO EXECUTE AN IRREVOC ABLE SPECIAL POWER OF ATTORNEY IN FAVOUR OF THDC AND AL L OTHER NECESSARY DOCUMENTS, AT THE REQUEST OF THE DEVELOPERS. 47 IN CLAUSE 1 OF JDA VARIOUS EXPRESSIONS HAVE BEEN DEFINED. CLAUSE 2 DESCRIBES THE PROJECT AS UNDER: 2.1 THE OWNER HEREBY IRREVOCABLY AND UNEQUIVOCALLY GRANTS AND ASSIGNS IN PERPETUITY ALL ITS RIGHTS TO DEVELOP, CONSTRUCT, MORTGAGE, LEASE, LICENSE, SELL AND TRANSFER THE PROPERTY ALONG WITH ANY AND ALL THE CONSTRUCTION, PREMISES, HEREDITAMENTS, EASEMENTS, TREES THEREON IN FAVOUR OF THDC FOR THE PURPOSE OF DEVELOPMENT, CONSTRUCTION, MORTGAGE, SALE, TRANSFER , LEASE, LICENSE AND OR EXPLOITATION FOR FULL UTILIZA TION OF THE PROPERTY (RIGHTS) AND TO EXECUTE ALL THE DOCUMENTS NECESSARY TO CARRY OUT, FACILITATE AND ENFORCE THE RIGHTS IN THE PROPERTY INCLUDING TO EXECUTE LEASE AGREEMENT, LICENSE AGREEMENTS, CONSTRUCTION CONTRACTS, SUPPLIE R CONTRACTS, AGREEMENT FOR SALE, CONVEYANCE, MORTGAGE DEEDS, FINANCE DOCUMENTS AND ALL DOCUMENTS AND AGREEMENTS NECESSARY TO CREATE AND REGISTER THE MORTGAGE, CONVEYANCE, LEASE DEEDS, LICENSE AGREEMEN T, POWER OF ATTORNEY, AFFIDAVITS, DECLARATION, INDEMNI TIES AND ALL SUCH OTHER DOCUMENTS, LETTERS AS MAY BE NECESSA RY TO CARRY OUT, FACILITATE AND ENFORCE THE RIGHTS AND TO REGISTER THE SAME WITH THE REVENUE/COMPETENT AUTHORITY AND T O APPEAR ON OUR BEHALF BEFORE ALL AUTHORITIES, STATUT ORY OR 22 OTHERWISE, AND BEFORE ANY COURT OF LAW (THE DEVELO PMENT RIGHTS). THE OWNER HEREBY HANDS OVER THE ORIGINAL TITLE DEEDS OF THE PROPERTY AS MENTIONED IN THE LIS T ANNEXED HERETO AND MARKED AS ANNEXURE IV AND PHYSICAL, VACANT POSSESSION OF THE PROPERTY HAS BEE N HANDED OVER TO THDC SIMULTANEOUS TO THE EXECUTION AND REGISTRATION OF THIS AGREEMENT TO DEVELOP THE S AME AS SET OUT HEREIN. IT IS HEREBY AGREED AND CONFIRMED THAT WHAT IS STAT ED IN THE RECITALS HEREINABOVE, SHALL BE DEEMED TO BE DECLARATIONS AND REPRESENTATIONS ON THE PART OF THE OWNER AS IF THE SAME WERE SET OUT HEREIN VERBATIM AND FOR MING AN INTEGRAL PART OF THE AGREEMENT. 2.2 THE PROJECT SHALL COMPRISE OF DEVELOPMENT/CONSTRUCTION OF THE PROPERTY INTO THE PREMISES AS PERMISSIBLE UNDER PUNJAB MUNICIPAL BUIL DING BYE-LAWS/PUNJAB URBAN DEVELOPMENT AUTHORITY OR ANY OTHER COMPETENT AUTHORITY BY THE DEVELOPER AT THEIR OWN COST AND EXPENSE. THE PROJECT SHALL BE DEVELOPED A S MAY BE SANCTIONED BY THE CONCERNED LOCAL AUTHORITY I.E. DEPARTMENT OF LOCAL BODIES, PUNJAB/PUNJAB URBAN PLANNING AND DEVELOPMENT AUTHORITY (PUDA) OR ANY OT HER COMPETENT AUTHORITY. 2.3 THE OWNER HEREBY IRREVOCABLY AND UNEQUIVOCALLY GRANTS AND ASSIGNS ALL ITS DEVELOPMENT RIGHTS IN TH E PROPERTY TO THDC TO DEVELOP THE PROPERTY AND UNDERT AKE THE PROJECT AT ITS OWN COSTS, EFFORTS AND EXPENSES WHEREUPON THE DEVELOPER SHALL BE ENTITLED TO APPLY FOR AND OBTAIN NECESSARY SANCTIONS, LICENSES AND PERMIS SIONS FROM ALL THE CONCERNED AUTHORITIES FOR THE COMMENCE MENT, DEVELOPMENT AND COMPLETION OF THE PROJECT ON THE PROPERTY. 48 CLAUSE 3 DESCRIBES THE OBLIGATIONS OF THE DEVELO PERS & SOCIETY FOR GETTING THE PLANS, ETC. SANCTIONED FR OM COMPETENT AUTHORITY / APPLICATIONS TO BE SIGNED BY OWNER FOR PLANS, DRAWINGS ETC., CONSTRUCTION. CLAUSE 4 D EALS WITH CONSIDERATION CLAUSES 5 TO 8 DEALS VARIOUS AS PECTS OF PROJECT AND OBLIGATIONS OF SOCIETY AND DEVELOPER . CLAUSE 9 TALKS ABOUT OWNERSHIP AND RIGHTS AND READ AS UNDER: 9 TRANSFER OF OWNERSHIP/RIGHTS 9.1 THE OWNER SHALL SIMULTANEOUSLY ON RECEIPT OF PAYMENT AS SET OUT IN CLAUSE 4.1 ABOVE, EXECUTE AN IRREVOCABLE SPECIAL POWER OF ATTORNEY TO THDC FOR DEVELOPMENT OF THE PROPERTY AUTHORIZING THDC TO DO ALL LAWFUL ACTS, DEEDS, MATTERS AND THINGS PERTAINI NG TO THE DEVELOPMENT OF THE PROPERTY FOR THE PROJECT ALO NG WITH INTERALIA RIGHT TO MORTGAGE THE PROPERTY AND/O R 23 PREMISES, SELL, LEASE, LICENSE THE PREMISES AND RECEIVE/COLLECT MONIES IN ITS NAME IN RESPECT OF THE SAME AND APPROACH INTERACT, COMMUNICATE WITH THE COMPETENT AUTHORITIES AND FOR DOING ALL ACTS, DEEDS , MATTERS AND THINGS TO BE DONE OR INCURRED BY THDC I N THAT BEHALF AS ALSO TO SIGN ALL LETTERS, APPLICATIONS, A GREEMENTS AND REGISTER THE SAME IF NECESSARY, DOCUMENTS, COUR T PROCEEDINGS, AFFIDAVITS AND SUCH OTHER PAPERS CONT AINING TRUE FACTS AND CORRECT PARTICULARS AS MADE FROM TIM E TO TIME BE REQUIRED IN THIS BEHALF. 9.2 THE OWNER SHALL EXECUTE IN FAVOUR OF THDC THE SALE DEED IS IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE 4.1(II) TO CLAUSE 4.1(IV) OF THIS AGREEMENT AND EXECUTE ALL OTHER NECESSARY DOCUMENTS AND PAPERS TO COMPLETE THE AFORESAID TRANSACTION. 9.3 THAT ALL THE ORIGINAL TITLE DEEDS PERTAINING T O PROPERTY AS MENTIONED IN ANNEXURE IV HAS BEEN HANDED OVER TO THDC BY THE OWNER AT THE 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 ET OUT IN CLAUSE 4.1 ABOVE. THDC HEREBY UNDERTAKE AND ASSURE THE OWNER THAT THE Y SHALL USE THE TITLE DEEDS ONLY FOR THE PURPOSE OF FURTHERANCE OF THE PROJECT IN THE MANNER THAT IT DO ES NOT ADVERSELY EFFECT THE OWNER/ALLOTTEE IN ANY MANNER WHATSOEVER. 49 CLAUSE 10 DESCRIBES THE CONSENT GIVEN BY THE SOCIETY TO THDC FOR RAISING FINANCE FOR DEVELOPMENT AND COMPLETION OF PROJECT. CLAUSE 11 TALKS ABOUT FORMA TION OF MAINTENANCE SOCIETY FOR THE PROJECT AFTER ITS COMPL ETION. CLAUSE 13 TALKS ABOUT TRANSFER OF RIGHTS WHICH READ S AS UNDER: 13 TRANSFER OF RIGHTS THE OWNER HEREIN I.E. THE PUNJABI COOP HOUSE BUILDI NG SOCIETY LTD. ALONG WITH ALL ITS NINETY SIX (96) MEM BERS HAVE GIVEN THEIR EXPRESS, FREE AND CLEAR CONSENT IN WRITING IN THE FORM OF AN AFFIDAVIT/NO OBJECTION CERTIFICATE/CONSENT LETTER WHEREBY THE DEVELOPERS H AVE BEEN ALLOWED TO DEVELOP THE PROPERTY IN ACCORDANCE WITH THE PROJECT AND THAT THDC SHALL BE ENTITLED TO TRAN SFER THE RIGHTS OBTAINED UNDER THIS AGREEMENT TO ANY THIRD P ARTY AND TO GET THE DEVELOPMENT / CONSTRUCTION WORK COMP LETED ON SUCH TERMS AND CONDITIONS AS THDC MAY DEEM FIT S O LONG AS IT DOES NOT ADVERSELY EFFECT THE OWNER IN T ERMS OF THEIR RIGHT TO RECEIVE ENTIRE CONSIDERATION AS MENT IONED IN THIS AGREEMENT SUBJECT TO ALL OTHER CONDITIONS MENT IONED THEREIN AS WELL. THE OWNER SHALL AT ALL TIMES PROV IDE FULL SUPPORT TO THE DEVELOPERS HEREIN. 24 50 OTHER CLAUSES PROVIDE FOR TERMINATION, GENERAL PROVISIONS, DISCLAIMER, PARTIAL INVALIDITY, ARBITRA TION, NOTICES AND FORCE MAJEURE & JURISDICTION. 51 IN ADDITION TO ABOVE AN IRREVOCABLE SPECIAL POWE R OF ATTORNEY HAS ALSO BEEN EXECUTED BY THE SOCIETY IN F AVOUR OF THE DEVELOPERS I.E. THDC. (COPY OF WHICH IS AVA ILABLE AT PAGES 40 TO 52 OF THE PAPER BOOK IN CASE OF SOCI ETY IN ITA NO. 556 OF 2012 AS DISCUSSED EARLIER IN PARA 25 (COMPLETE COPY OF SUPPLEMENTARY POWER OF ATTORNEY W AS NOT AVAILABLE IN THE PAPER BOOK OF THE ASSESSEE, THEREFORE, REFERENCE WAS MADE TO THE PAPER BOOK IN CASE OF THE SOCIETY). 52 THE FIRST MAJOR CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE IS THAT THE POSSESSION WAS NOT GIVEN BY TH E SOCIETY BECAUSE ACCORDING TO HIM AS PER CLAUSE 2.1 OF THE JDA THE POSSESSION OF THE PROPERTY WAS TO BE HANDED OVER SIMULTANEOUSLY TO THE EXECUTION AND REGISTRATION OF JDA AND SINCE THE JDA WAS NOT REGISTERED, THEREFORE, T HE POSSESSION WAS NOT GIVEN. WE CAN NOT ACCEPT THIS CONTENTION BECAUSE IN POWER OF ATTORNEY TRANSACTI ONS, IT IS NOT NECESSARY TO REGISTER THE JDA IF A SPECIAL P OWER OF ATTORNEY HAS BEEN GIVEN AND SAME IS REGISTERED. SECONDLY CLAUSE 9.3 OF THE JDA AS REPRODUCED ABOVE CLEARLY SHOW THAT ORIGINAL TITLE DEED WHICH HAVE BE EN MENTIONED ALONG WITH THE POSSESSION IN PARA 2.1 WHI CH ACCORDING TO THE LD. COUNSEL OF THE ASSESSEE WERE T O BE HANDED OVER SIMULTANEOUSLY TO EXECUTION AND REGISTR ATION OF THE JDA, IS NOT CORRECT BECAUSE CLAUSE 9.3 CLEAR LY MENTION THAT ORIGINAL TITLE DEED OF THE PROPERTY HA VE BEEN HANDED OVER TO THE THDC AT THE TIME OF SIGNING OF T HIS AGREEMENT BECAUSE CLAUSE 9.3 THERE IS NO MENTION AB OUT REGISTRATION OF JDA. 53 SPECIAL POWER OF ATTORNEY WHICH HAS BEEN EXECUTE D ON 26.2.2007 AND HAS BEEN REGISTERED ALSO. THE IRREVOCABLE SPECIAL POWER OF ATTORNEY HAS BEEN EXEC UTED AS PROVIDED IN CLAUSE 6.7 OF THE JDA WHICH READS AS UNDER: 6.7 THE OWNER SHALL EXECUTE AN IRREVOCABLE SPECIAL POWER OF ATTORNEY GRANTING ITS COMPLETE DEVELOPMENT RIGHTS IN THE PROPERTY IN FAVOUR OF THDC INTERALIA INCLUDING THE RIGHT TO RAISE FINANCE BY MORTGAGING THE PROPERTY AND REGISTER THE CHARGE WITH THE COMPETENT AUTHORITY AND EXECUTE REGISTERED SALE DEEDS) AS SET OUT IN CLAUSE 4.1 (II), (III), (IV) AND (V) AND THE OWNER CONFIRMS, UNDERTAKES, DECLARES AND BINDS ITSELF NOT TO REVOKE THE SAME FOR ANY REASON WHATSOEVER OUT OF IT S OWN WILL AND DISCRETION WITHOUT OBTAINING A SPECIFI C PRIOR WRITTEN CONSENT OF THDC OR ANY OF ITS DULY CONSTITUTED ATTORNEYS. 25 THROUGH THIS POWER OF ATTORNEY VARIOUS POWERS HAVE BEEN GIVEN LIKE TO ASSIGN, FILE, AMEND ETC. VARIOUS PLAN S, DESIGNS TO REPRESENT BEFORE VARIOUS AUTHORITIES, TO APPOINT ARCHITECT, LAWYERS. SOME OF THE SPECIFIC CLAUSES RELEVANT, ARE EXTRACTED BELOW: (J) TO NEGOTIATE AND AGREE TO ANY/OR TO ENTER INTO AGREEMENT(S) TO CONSTRUCT/SELL AND TO UNDERTAKE CONSTRUCTION/SALE OF THE PREMISES ON THE PROPERTY O R ANY PORTION THEREOF WITH/TO SUCH PERSONS(S) OR BODY AND FOR SUCH CONSIDERATION AND UPON SUCH TERMS AND CONDITIO NS AS THE ATTORNEY DEEM FIT. (N) TO ENTER UPON THE PROPERTY EITHER ALONE OR WITH OTHERS FOR THE PURPOSE OF DEVELOPMENT, COORDINATION , EXECUTION, IMPLEMENTATION OF THE PROJECT AND COMMERCIALIZATION OF THE PROPERTY/PREMISES. (T) TO AMALGAMATE THE PROPERTY WITH ANY OTHER CONTIGUOUS, ADJACENT AND ADJOINING LAND SAND PROPER TIES WHEREIN DEVELOPMENT AND/OR OTHER RIGHT, BENEFITS AN D INTERESTS ARE ACQUIRED AND/OR PROPOSED TO BE ACQUIR ED AND DEVELOPED OR PROPOSED TO BE DEVELOPED BY THDC AND/O R THEIR ASSOCIATE AND/OR GROUP CONCERNS/S AND/OR UTIL IZE THE FSI, FAR, DR AND TDR OF THE CONTIGUOUS, ADJACENT AN D ADJOINING LANDS FOR THE PURPOSE OF CONSTRUCTING BUI LDINGS AND/OR STRUCTURES THEREON AND/OR ON THE PROPERTY O R UTILIZE SUCH LANDS AND PROPERTIES FOR MAKING PROVIS ION OF PARKING SPACES THEREON, AND/OR MAY UTILIZE THE SAME FOR ANY OTHER LAWFUL PURPOSE, AS THDC AND/OR THEIR ASSO CIATE AND/OR GROUP CONCERNS MAY IN THEIR SOLD, ABSOLUTE A ND UNFETTERED DISCRETION THINK FIT. (W) TO HAND OVER THE POSSESSION OF THE PROPERTY OR ANY PART OR PORTION THEREOF TO THE AUTHORITIES TO WHOM THE SAME IS REQUIRED TO BE HANDED OVER OR OTHERWISE AND TO EXECUTE AND DELIVER ANY UNDERTAKINGS, DECLARATIONS, AFFIDAVITS, BONDS, DEEDS, DOCUMENTS, ETC. AS MAY BE REQUIRED BY THE AUTHORITIES CONCERNED FOR VESTING S UCH A PART OR PORTION IN SUCH AUTHORITY AND TO ADMIT EXEC UTION THEREOF BEFORE THE CONCERNED COMPETENT AUTHORITY AN D GET THE SAME REGISTERED WITH THE CONCERNED SUB-REGISTRA R. (Y) REASONABLE OPPORTUNITY OF HEARING SHALL BE GIVE N TO MORTGAGE, ENCUMBER OR CREATE A CHARGE ON THE PROPER TY OR ANY PART OR PORTION THEREOF AND EXECUTE THE NECESSA RY SECURITY DOCUMENTS IN FAVOUR OF ANY BANK/FINANCIAL INSTITUTION TO RAISE FUNDS FOR THE CONSTRUCTION/DEV ELOPMENT OF THE PROPERTY AND FOR THE SAID PURPOSE TO DEPOSIT TITLE DEEDS (IF REQUIRED) IN RESPECT OF THE PROPERTY IN F AVOUR OF SUCH BANK/FINANCIAL INSTITUTION, EXECUTE THE NECESS ARY DOCUMENTS AND REGISTER THE CHARGE CREATED ON THE PROPERTY IF SO REQUIRED IN THE REVENUE RECORDS AND/ OR DESIRED BY THE ATTORNEY. 26 (AA) TO SELL, TRANSFER, LEASE, LICENSE THE PREMISE S THAT MAY BE CONSTRUCTED ON THE PROPERTY ON OWNERSHIP BAS IS, LEASE, LICENSE AND/OR IN ANY OTHER MANNER FOR SUCH PRICE AS THE ATTORNEYS MAY DEEM FIT AND PROPER. TO COLLE CT AND RECEIVE FROM THE PURCHASED, TRANSFEREES, LESSEES, LICENSEES OF THE PREMISES, MONIES/PRICE AND/OR CONSIDERATION AND/OR MAINTENANCE CHARGES AND TO SIG N AND EXECUTE AND/OR GIVE PROPER AND LAWFUL DISCHARGE FOR THE RECEIPTS. (BB) TO EXECUTE FROM TIME TO TIME ALL THE WRITING, AGREEMENT, DEEDS ETC. IN RESPECT OF THE PREMISES WH ICH MAYBE CONSTRUCTED ON THE PROPERTY AND ALSO TO EXECU TE AND SIGN CONVEYANCE, TRANSFER OR SURRENDER IN RESPE CT OF THE PROPERTY OR ANY PART THEREOF. (CC) TO SIGN, EXECUTE AND REGISTER THE CONVEYANCES OR ASSIGNMENTS AND/OR POWER OF ATTORNEYS AND/OR OTHER DOCUMENTS AND/OR AGREEMENTS AND/OR ANY OTHER WRITIN GS IN RESPECT OF THE PROPERTY IN PART OR FULL AND/OR THE PREMISES CONSTRUCTED THEREON OR ANY PART THEREOF IN FAVOUR O F ANY PERSON AS THE ATTORNEYS MAY DETERMINE INCLUDING IN FAVOUR OF ANY INDIVIDUAL AND/OR LEGAL ENTITLES AND/OR CO- OPERATIVE SOCIETY AND/OR LIMITED COMPANY AND/OR ANY OTHER ENTITY THAT MAY BE FORMED FOR SUCH PURPOSE. (DD) TO ISSUE LETTER OF LIEN/NOCS AND TO SIGN DOCU MENTS ON BEHALF OF THE OWNER AS REQUIRED BY THE PROSPECTI VE BUYERS/LENDING INSTRUCTIONS TO CREATE A CHARGE ON T HE ALLOTTED PREMISES. (GG) TO LOOK AFTER AND MAINTAIN THE PROPERTY AND TH E PREMISES CONSTRUCTED THEREON TILL ITS TRANSFER IN F AVOUR OF THE CO-OPERATIVE SOCIETY OR LIMITED COMPANY OR ANY OTHER ORGANISATION. 54 IT IS PERTINENT TO NOTE THAT POWER/AUTHORIZATION WHICH HAVE BEEN GIVEN BY THE SOCIETY TO THE DEVELOPER, WE RE IN FACT WERE REQUIRED TO BE GIVEN IN TERMS OF VARIOUS CLAUS ES OF THE JDA. CLAUSE 6.7 REPRODUCED ABOVE ITSELF SHOWS THAT THE SOCIETY WAS REQUIRED TO GIVE POWERS TO RAISE FINANC E TO MORTGAGE THE PROPERTY AND EVEN THE REGISTRATION OF CHARGE WAS ALSO REQUIRED TO BE GIVEN. FURTHER THROUGH CLAUSE 6.15 IT WAS AGREED THAT DOCUMENTS OF ORIGINAL TITLE DEEDS OF TH E PROPERTY WOULD BE HANDED OVER TO THE DEVELOPER I.E. THDC/HAS H SO THAT SAME CAN BE USED IN FURTHERANCE OF DEVELOPMENT OF THE PROJECT AS WELL AS SECURITY FOR THE MONEY PAID BY T HE OWNER. THROUGH CLAUSE 6.24 IT WAS AGREED THAT DEVELOPER TH DC/HASH WAS ALWAYS PERMITTED BY OWNER TO AMALGAMATE THE PRO PERTY WITH ANY OTHER CONTIGUOUS, ADJACENT AND ADJOINING L AND AND THE PROPERTIES WHEREIN DEVELOPMENTAL AND OR OTHER RIGH TS, BENEFITS AND INTEREST WERE ACQUIRED BY THE DEVELOPER OR WOUL D BE ACQUIRED IN FUTURE. THIS CLEARLY SHOWS THAT THE SO CIETY WAS UNDER OBLIGATION IN TERMS OF AGREEMENT ITSELF TO AL LOW THE DEVELOPER TO AMALGAMATE THE PROJECT. TOWARDS THE E ND OF 27 CLAUSE 6.24 IT HAS BEEN CLEARLY STATED THAT IN THE EVENT OF TERMINATION OF JDA, PROVISION OF CLAUSE 6 WOULD BE SURVIVING WHICH CLEARLY SHOWS THAT DEVELOPER CONTINUES TO BE IN POSSESSION FOR THE PURPOSE OF DEVELOPMENT, MORTGAGE ETC. EVEN AFTER TERMINATION. CLAUSE 8 WHICH DESCRIBES T HE OBLIGATION AND UNDERTAKING OF THE THDC/HASH AND PRO VIDES SPECIFICALLY THAT ALL ENVIRONMENTAL CLEARANCE SHALL BE OBTAINED BY THDC/HASH OUT OF ITS OWN SOURCES. THUS IT WAS C LEARLY UNDERSTOOD BY THE PARTIES THAT REQUISITE ENVIRONMEN TAL CLEARANCES HAD TO BE OBTAINED BEFORE START OF THE P ROJECT. CLAUSE 10 AGAIN CASTS SPECIFIC OBLIGATION ON THE OW NER SOCIETY TO GIVE CONSENT TO THDC/HASH TO RAISE FINANCE FOR T HE DEVELOPMENT AND COMPLETION OF THE PROJECT ON THE SE CURITY OF THE PROPERTY BY WAY OF MORTGAGING THE PROPERTY. TH US WHATEVER POWER/AUTHORIZATION HAVE BEEN GIVEN THROUG H IRREVOCABLE SPECIAL POWER OF ATTORNEY ARE EMANATING FROM THE TERMS AND CONDITIONS AGREED TO AMONG THE PARTIES FR OM THE JDA. 55 THE COMBINED READING OF THE ABOVE CLAUSES OF THE IRREVOCABLE SPECIAL POWER OF ATTORNEY AND JDA CLEAR LY SHOW THAT THE DEVELOPER WAS AUTHORIZED TO ENTER UPO N THE PROPERTY FOR NOT ONLY FOR THE PURPOSE OF DEVELOPMEN T BUT OTHER PURPOSES ALSO. THDC WAS AUTHORIZED TO AMALGAMATE THE PROJECT WITH ANY OTHER PROJECT IN TH E ADJACENT AREA OR ADJOINING AREA AS PER CLAUSE (T) O F THE SPECIAL POWER OF ATTORNEY. IF THE POSSESSION WAS N EVER GIVEN TO THE DEVELOPER BY THE SOCIETY THEN HOW THE DEVELOPER COULD AMALGAMATE THE PROJECT WITH ANOTHE R PROJECT WHICH MAY BE ACQUIRED LATTER IN THE ADJOINI NG AREA. THROUGH CLAUSE (W) THDC WAS AUTHORIZED TO HAND OVER THE POSSESSION OF PROPERTY OR PORTION THEREOF TO THE AU THORITY TO WHOM THE SAME IS REQUIRED. IN LARGE HOUSING SOC IETY PROJECTS SOMETIMES MUNICIPAL AUTHORITIES TAKES SOME PORTION OF LAND FOR THE PURPOSE OF ROADS, PARKS OR OTHER GENERAL UTILITY PURPOSES LIKE INSTALLATION OF ELECT RICITY TRANSFORMERS AND BEFORE SANCTIONING THE PLANS THE DEVELOPER IS REQUIRED TO UNDERTAKE THAT SUCH PORTIO NS OF LAND WOULD BE GIVEN FOR SUCH A COMMON PURPOSE. IF POSSESSION WAS NOT GIVEN THEN HOW THDC WAS AUTHORIZ ED TO HAND OVER SUCH LAND OR PORTIONS THEREOF WHICH HA VE NOT BEEN IDENTIFIED IN THE JDA OUT OF THE TOTAL LAND. SIMILARLY THROUGH CLAUSE (Y) THDC HAS BEEN AUTHORIZED TO MORTGAGE, ENCUMBRANCE OR CREATE CHARGE ON THE PROPE RTY IN FAVOUR OF ANY BANK OR FINANCIAL INSTITUTION FOR RAISING THE FUNDS FOR THE PROJECT. IN THE ABSENCE OF POSSE SSION SUCH POWERS CANNOT BE GIVEN. CLAUSE (AA) CLEARLY AUTHORIZED THE THDC TO SELL, TRANSFER, LEASE, LICEN SE THE PREMISES WHICH WERE TO BE CONSTRUCTED ON OWNERSHIP BASIS AND FURTHER TO RECEIVE MONEYS AGAINST SUCH SA LE ETC. AND TO ISSUE FINAL RECEIPT. NOWHERE IT IS MENTIONE D IN THIS CLAUSE THAT SUCH SALE DEEDS WERE TO BE SINGED BY TH E SOCIETY AS CONFIRMING PARTY. IN THE ABSENCE OF POSSESSION IT IS JUST NOT POSSIBLE FOR THE DEVELOPE R TO SELL AND TRANSFER THE PREMISES WHICH WERE TO BE CONSTRUC TED. THIS IS FURTHER CLARIFIED BY CLAUSE (BB) AND (CC) W HICH 28 GIVES THE POWER OF EXECUTION OF CONVEYANCE AND OTHE R DOCUMENTS INVOLVING IN RESPECT OF THE PREMISES TO B E CONSTRUCTED WITHOUT ANY INTERFERENCE OF THE SOCIETY BEING MADE CONFIRMING PARTY. ALL THESE CLAUSES CLEARLY S HOW THAT THE POSSESSION WAS GIVEN BY THE SOCIETY AND/OR ITS MEMBERS TO THDC/HASH ON THE EXECUTION OF IRREVOCABL E POWER OF ATTORNEY. THROUGH THESE CLAUSES OF JDA AN D IRREVOCABLE POWER OF ATTORNEY THE DEVELOPER WAS AB LE TO COMPLETELY CONTROL THE PROPERTY AND MAKE USE OF IT NOT ONLY FOR THE PURPOSE OF DEVELOPMENT BUT ALSO FOR TH E PURPOSE OF AMALGAMATION, SALE, MORTGAGE ETC. WHEN T HE ABOVE CLAUSES ARE COMPARED ON TOUCH STONE OF THE DISCUSSION ON POSSESSION IN PARA 26 TO 28 IN THE CA SE OF JASBIR SINGH SARKARIA (SUPRA) WHICH WE HAVE REPRODU CED ABOVE, IT BECOMES CLEAR THAT THE POSSESSION HAS BEE N GIVEN. 56 IN THAT DISCUSSION, IT HAS BEEN CLEARLY MENTIONE D THAT THE POSITION CONTEMPLATED BY CLAUSE (V) OF SECTION 2(47) OF THE ACT NEED NOT TO BE EXCLUSIVE POSSESSION. WHAT IS REQUIRED IS THAT THE TRANSFEREE BY VIRTUE OF POSSES SION SHOULD BE ABLE TO EXERCISE CONTROL FROM OVERALL INT ENDED PURPOSES. WE DO NOT THINK IN THE PRESENT CASE THE ASSESSEE HAS GIVEN ONLY A LICENSE AS CLAIMED BY LD. COUNSEL OF THE ASSESSEE BECAUSE OF THE POWERS OF SE LLING, AMALGAMATING ETC. MENTIONED IN THE JDA AND IRREVOC ABLE SPECIAL POWER OF ATTORNEY. THE ISSUE HAS BEEN DISC USSED IN HE JUDGMENT OF JASBIR SINGH SARKARIA (SUPRA) IN FURTHER DISCUSSION WHICH HAS BEEN MADE IN PARA 33 REGARDING POWER OF ATTORNEY (WHICH HAS BEEN REPRODUCED EARLIE R). IN THAT CASE THE POWERS WERE GIVEN TO ENTER UPON AN D SURVEY THE LAND, PREPARE LAY OUT PLANS, SUBMIT BUIL DING PLAN FOR SANCTION WITH THE APPROPRIATE AUTHORITIES TO CONTROL, MANAGE AND LOOK AFTER AND SUPERVISE THE PROPERTY, TO OBTAIN WATER AND SEWERAGE, DISPOSAL AN D ELECTRICITY CONNECTION. IN THAT CASE THE DEVELOPER WAS AUTHORIZED TO MORTGAGE THE PROPERTY TO OBTAIN MONEY FOR MEETING THE COST OF CONSTRUCTION ON SECURITY AND MO RTGAGE OF LAND FALLING ONLY TO THE DEVELOPERS SHARE. IN T HAT CASE IT WAS HELD THAT GPA WAS NOT A LICENSE TO ENTER UPO N FOR DOING SOME PRELIMINARY ACTS IN RELATION TO DEVELOPM ENT OF WORK BUT THE POWER TO CONTROL THE LAND HAS ALSO BEE N CONFIRMED. IT HAS ALSO BEEN NOTED THAT THE AGREEME NT DESCRIBED THE POWER OF ATTORNEY AS IRREVOCABLE AND EXTRA DECLARATION TO THAT EFFECT IN THE POWER OF ATTORNEY IS NOT WITHOUT SIGNIFICANCE. IN CASE BEFORE US, MANY MORE POWERS HAVE BEEN GIVEN TO THDC IN ADDITION TO POWER S WHICH HAVE BEEN DESCRIBED IN THAT JUDGMENT AND POWE R OF ATTORNEY HAS BEEN DESCRIBED AS IRREVOCABLE IN CLAUS E 6.7 OF JDA. THEREFORE, IT IS CLEAR THAT THE ASSESSEE S PLEA THAT THE POSSESSION WAS TO BE GIVEN ONLY AT THE TIM E OF REGISTRATION OF THE JDA, IS NOT CORRECT. ONCE IRRE VOCABLE POWER WAS GIVEN THEN IT CANNOT BE SAID THAT THE POSSESSION WAS NOT GIVEN. THE ISSUE REGARDING REVOCATION OF IRREVOCABLE POWER OF ATTORNEY AND CANCELLATION OF THE JDA WOULD BE DISCUSSED LATER ON WHILE DEALING WITH THAT CONTENTION. 29 57 WE FIND FORCE IN THE SUBMISSIONS OF THE LD. DR F OR THE REVENUE THAT INTERPRETATION OF CLAUSE (V) TO SE CTION 2(47) SHOULD BE MADE IN THE LIGHT OF HEYDONS RULE. THERE IS NO FORCE IN THE OBJECTION OF THE LD. COUNS EL OF THE ASSESSEE THAT THIS CLAUSE SHOULD BE INTERPRETED ON GENERAL RULES OF INTERPRETATION PARTICULARLY IN THE LIGHT OF THE FACT THAT NO REASON HAS BEEN GIVEN FOR THE SAME . HEYDONS RULE HAS BEEN APPLIED BY THE INDIAN COURTS MANY TIMES. THE RULE WAS APPLIED AND INITIATED IN HEYDONS CASE (1584) 3 CO. REP 7A. THIS RULE WAS UPHELD BY THE CONSTITUTION BENCH OF HON'BLE APEX CO URT IN CASE OF BENGAL IMMUNITY CO. LTD. V STATE OF BIHAR (1955) 2 SCR 603 FOR CONSIDERATION OF ARTICLE 286 OF THE CONSTITUTION. IT HAS BEEN HELD IN CASE OF DR. BALI RAM WAMAN HIRAY V. MR. JUSTICE B. LENTIN AND ANOTHER, 176 ITR 1 THAT FOR UNDERSTANDING AMENDMENT IN THE ACT, PERHAPS HEYDONS RULE IS BEST RULE FOR INTERPRETATI ON OF SUCH AMENDMENT. WE FIND THAT WITHOUT MENTIONING THI S RULE LD. AUTHORITY FOR ADVANCE RULING HAS DISCUSSED THIS ISSUE IN PARA 27 OF THE JUDGMENT WHICH WE HAVE EXTR ACTED ABOVE. IT HAS BEEN HELD THAT IF POSSESSION REFER RED TO IN CLAUSE (V) IS TO BE UNDERSTOOD AS EXCLUSIVE BASIS O F THE TRANSFEREE THEN VERY PURPOSE OF THE AMENDMENT OR ENLARGEMENT OF THE DEFINITION OF TRANSFER WOULD GET DEFEATED. WE ARE REPRODUCING FOLLOWING HEAD NOTE O F THE HON'BLE APEX COURT IN CASE OF DR. BALIRAM WAMAN HIR AY V. MR. JUSTICE B. LENTIN AND ANOTHER (SUPRA): THE FOLLOWING PRINCIPLES ENUNCIATED IN HEYDONS CA ASE (1584) 3 CO. REP 7A AND FIRMLY ESTABLISHED, ARE STI LL IN FULL FORCE AND EFFECT: THAT FOR THE SURE AND TRUE INTER PRETATION OF ALL STATUTES IN GENERALS (BE THEY PENAL OR BENEF ICIAL, RESTRICTIVE OR ENLARGING OF THE COMMON LAW), FOUR T HINGS ARE TO BE DISCERNED AND CONSIDERED: (1) WHAT WAS TH E COMMON LAW BEFORE THE MAKING OF THE ACT; (2) WHAT W AS THE MISCHIEF AND DEFECT FOR WHICH THE COMMON LAW DI D NOT PROVIDE; (3) WHAT REMEDY PARLIAMENT HAS RESOLVED AN D APPOINTED TO CURE THE DISEASE OF THE COMMON WEALTH AND (4) THE TRUE REASON OF THE REMEDY. AND THEN, THE O FFICE OF ALL THE JUDGES IS ALWAYS TO MAKE SUCH CONSTRUCTION AS SHALL SUPPRESS THE EVASIONS FOR THE CONTINUANCE OF THE MISCHIEF AND PRO PRIVATE COMMANDO AND TO ADD FORCE AND LIFE TO THE CURE AND REMEDY ACCORDING TO THE TRUE I NTENT OF THE MAKERS OF THE ACT PRO BONO PUBLIC. THERE IS NO W THE FURTHER ADDITION THAT REGARD MUST BE HAD NOT ONLY T O THE EXISTING LAW BUT ALSO TO PRIOR LEGISLATION AND TO T HE JUDICIAL INTERPRETATION THEREOF. 58 GOING BY THE HEYDONS RULE OF INTERPRETATION IF WE ANALYZE THE PURPOSE OF CLAUSE (V) OF SECTION 2(47) THEN IT WOULD EMERGE THAT LAW BEFORE MAKING THE AMENDMENT W AS THAT CAPITAL GAIN COULD BE CHARGED ONLY IF A TRANSF ER HAS BEEN EFFECTED AND TRANSFER WAS INTERPRETED BY VARIO US COURTS INCLUDING THE DECISION OF HON'BLE SUPREME CO URT IN CASE OF ALAPATI VENKATRAMIAN V CIT, 57 ITR 185 ( SC) THAT PROPER CONVEYANCE OF THE PROPERTY HAS BEEN MAD E 30 UNDER THE COMMON LAW. THE MISCHIEF WAS WITH REGARD TO TRANSFER IN THE SENSE THAT THERE WAS COMMON PRACTIC E THAT PROPERTIES WERE BEING TRANSFERRED IN SUCH A MANNER THAT TRANSFEREE COULD ENJOY THE BENEFIT OF THE PROPERTY WITHOUT EXECUTION OF THE CONVEYANCE DEED. THIRDLY WE NEED T O EXAMINE THE REMEDY WHICH WAS INSERTION OF CLAUSE (V ) AND (VI) SO THAT CASES OF GIVING POSSESSION OF THE PROP ERTY, WERE ALSO COVERED BY THE DEFINITION OF TRANSFER. F OURTHLY, TRUE REASON FOR THIS AMENDMENT WAS TO PLUG A LOOP H OLE IN THE LAW. THEREFORE, CONSIDERING THE PURPOSE OF IN SERTION OF CLAUSE (V) AND (VI) OF SECTION 2(47) AND VARIOUS CLAUSES OF POWER OF ATTORNEY AND JDA IT BECOMES ABSOLUTELY CLEAR THAT THE SOCIETY HAS HANDED OVER THE POSSESSION OF THE PROPERTY TO THDC/HASH. 59 SECOND IMPORTANT CONTENTION ON BEHALF OF THE ASSESSEE IS THAT JDA WAS EXECUTED ON 25.2.2007 AND IF POSSESSION WAS GIVEN THEN HOW THE ASSESSEE WAS HAVI NG POSSESSION IN TERMS OF LATER SALE DEEDS EXECUTED ON 2.3.2007 AND 25.4.2007. THE SOCIETY HAS EXECUTED T WO SALE DEEDS FOR CONVEYANCE OF PARTS OF THE TOTAL LA ND. FIRST SALE DEED HAS BEEN EXECUTED ON 2.3.2007 FOR 3 .08 ACRES AND RECITATION CLAUSE (A) READS AS UNDER: CLAUSE (A) - THE VENDOR IS THE ABSOLUTE OWNER AND I N POSSESSION OF LAND TOTAL MEASURING 169 KANAL 7 MARL AS EQUIVALENT TO APPROX. 21.2 ACRES IN VILLAGE KANSAL, TEHSIL MOHALI AND MORE PARTICULARLY DESCRIBED IN SCHEDULE A HEREUNDER WRITTEN AND DELINEATED IN GREEN COLOUR BOUNDARY LINE IN THE SHIZRA PLAN ISSUED BY THE PATW ARI DATED 23.2.2007. 60 ACCORDING TO THE LD. COUNSEL OF THE ASSESSEE IF SOCIETY HAD ALREADY GIVEN THE POSSESSION THEN THE S OCIETY WOULD NOT HAVE / HAD POSSESSION ON 2.3.2007 OF THE LAND. AT FACE VALUE THIS ARGUMENT LOOKS ATTRACTIVE BUT WH EN EXAMINED IN TERMS OF POSSESSION WHICH HAS BEEN EXPLAINED IN CASE OF JASBIR SINGH SARKARIA (SUPRA), ACTUAL REALITY WILL COME FORWARD. IN THIS JUDGMENT CONCEP T OF CONCURRENT POSSESSION HAS ALSO BEEN DISCUSSED AND FOLLOWING EXTRACT OF PARAGRAPH 55 OF SALMONDS JURISPRUDENCE HAS BEEN EXTRACTED WHICH READS AS UN DER: IT WAS A MAXIM OF THE CIVIL LAW THAT TWO PERSONS C OULD NOT BE IN POSSESSION OF THE SAME THING AT THE SAME TIME . AS A GENERAL PROPOSITION THIS IS TRUE: FOR EXCLUSIVENE SS IS OF THE ESSENCE OF POSSESSION. TWO ADVERSE CLAIMS OF EXCLUSIVE USE CANNOT BOTH BE EFFECTUALLY REALIZED A T THE SAME TIME. CLAIMS, HOWEVER, WHICH ARE NOT ADVERSE, AND WHICH ARE NOT, THEREFORE, MUTUALLY DESTRUCTIVE, ADM IT OF CONCURRENT REALIZATION. HENCE THERE ARE SEVERAL PO SSIBLE CASES OF DUPLICATE POSSESSION. 31 1 MEDIATE AND IMMEDIATE POSSESSION CROSS- OBJECTIONS-EXIST IN RESPECT OF THE SAME THING AS ALREADY EXPLAINED. 2 TWO OR MORE PERSONS MAY POSSESS THE SAME THING IN COMMON; JUST AS THEY MAY OWE IT IN COMMON. THE CONCURRENT POSSESSION OF THE OWNER WHO CAN EXER CISE POSSESSION RIGHT TO A LIMITED EXTENT AND FOR A LIMI TED PURPOSE AND THAT OF THE BUYER/DEVELOPER WHO HAS A GENERAL CONTROL AND CUSTODY OF THE LAND CAN VERY WE LL BE RECONCILED. 61 IN FURTHER DISCUSSION IN PARA 26 TO 28 OF THE AB OVE DECISION IT HAS BEEN HELD THAT IT IS NOT NECESSARY IN TERMS OF CLAUSE (V) THAT THE DEVELOPER SHOULD HAVE EXCLUS IVE POSSESSION. THE CONCURRENT POSSESSION OF THE OWNER IS POSSIBLE WHICH GIVES RIGHTS TO A LIMITED EXTENT FOR A LIMITED PURPOSE. THUS IT IS VERY MUCH POSSIBLE TO H OLD CONCURRENT POSSESSION. MERE RECITATION IN THE SALE DEED TO THE EFFECT THAT THE SOCIETY WAS OWNER OF AND IN POSSESSION OF LAND MEASURING 21.2 ACRES, DOES NOT S HOW THAT THE SOCIETY WAS HAVING ACTUAL POSSESSION. WHA T THE SOCIETY WAS HAVING IS ONLY OWNERSHIP RIGHT AND THE POSSESSION WAS ONLY CONCURRENT AS THE POSSESSARY RI GHT. FURTHER IT IS A STANDARD CLAUSE IN THE CONVEYANCE D EED AND IT DOES NOT PROVE OR INDICATE ANYTHING EXCEPT T HAT A PORTION OF LAND MEASURING 3.08 ACRES, HAS BEEN SOLD / CONVEYED TO THE DEVELOPER. IN THE LIGHT OF THIS POS ITION, THIS CONTENTION IS REJECTED. 62 WE FIND NO FORCE IN THE NEXT CONTENTION OF THE L D. COUNSEL OF THE ASSESSEE THAT POSSESSION IF AT ALL W AS GIVEN SHOULD BE HELD TO BE ONLY A LICENSE AS DEFINE D IN SECTION 52 OF INDIAN EASEMENT ACT BECAUSE CLEARLY A S PER SECTION 52 OF THIS ACT, WHERE ONE PERSON GRANTS TO ANOTHER OR MANY OTHER PERSONS TO DO SOMETHING UPON IMMOVEABLE PROPERTY WHICH IN THE ABSENCE OF SUCH RI GHT WOULD BE UNLAWFUL. 63 HERE IN CASE BEFORE US, THE RIGHT HAS NOT BEEN G IVEN FOR THE PURPOSE OF DOING SOMETHING BUT ALL THE POSS IBLE RIGHTS IN PROPERTY INCLUDING RIGHT TO SELL, RIGHT T O AMALGAMATE THE PROJECT WITH ANOTHER PROJECT IN THE ADJOINING AREA WHICH MAY BE ACQUIRED LATER, RIGHT T O MORTGAGE ETC. CLEARLY SHOW THAT RIGHTS GIVEN BY THE SOCIETY ARE MUCH MORE LARGER THAN WHAT IS COVERED I N THE TERM LICENSE. 64 FOURTH CONTENTION IS THAT THE MONEY RECEIVED AT THE TIME OF EXECUTION OF JDA CAN BE TERMED AS ADVANCE AND W HATEVER MONEY HAS BEEN RECEIVED HAS ALREADY BEEN SHOWN AS C APITAL GAIN. WE FIND NO FORCE IN THIS SUBMISSION BECAUSE SECTION 45 WHICH HAS BEEN EXTRACTED ABOVE CLEARLY PROVIDE FOR TAXING OF PROFITS AND GAINS ARISING FROM THE TRANSFER. WE HAV E ALREADY 32 DISCUSSED THE IMPLICATION OF SECTION 45 R.W.S. 48 W HILE DISCUSSING THE LEGAL POSITION. WE HAD ALSO DISCUSS ED THIS ISSUE IN THE LIGHT OF THE DECISION IN CASE OF JASBI R SINGH SARKARIA (SUPRA) AND POINTED OUT THAT WHEN SECTION 45 IS READ ALONG WITH SECTION 48 IT BECOMES CLEAR THAT WHOLE O F THE CONSIDERATION WHICH IS RECEIVED OR ACCRUED IS TO BE TAXED ONCE CAPITAL ASSET IS TRANSFERRED IN A PARTICULAR YEAR. 65 WE WOULD LIKE TO DISCUSS THIS ASPECT OF THE ISSU E IN LITTLE MORE DETAIL AND TRY TO UNDERSTAND WHY THE WHOLE OF THE CONSIDERATION IS REQUIRED TO BE TAXED. AT THE COST OF REPETITION LET US AGAIN REPRODUCE THE OBSERVATIONS OF THE LD. AUTHORITY IN CASE OF JASBIR SINGH SARKARIA (SUPRA) WHICH WE HAVE EARLIER EXTRACTED AT PARA 40 AND THE RELEVANT PORTION IS AS UNDER: 40. ON THE ABOVE, THE HON'BLE AUTHORITY AFTER REFE RRING TO THE PROVISIONS OF SECTION 45 AND OBSERVED AS UNDER: - .THE SECTION CAN BE ANALYSED THUS : (A) TRANSFER OF A CAPITAL ASSET EFFECTED IN THE PRE VIOUS YEAR, (B) RESULTANT PROFITS OR GAINS FROM SUCH TRANSFER, (C) THOSE PROFITS OR GAINS WOULD CONSTITUTE THE INC OME OF THE ASSESSEE/ TRANSFEROR (D) SUCH INCOME SHALL BE DEEMED TO BE THE INCOME OF THE SAME PREVIOUS YEAR IN WHICH THE TRANSFER HAD TAKEN PLACE. TWO ASPECTS MAY BE NOTED AT THIS JUNCTURE. FIRSTLY , THE EXPRESSION USED IS ARISING WHICH IS NOT TO BE EQ UATED WITH THE EXPRESSION RECEIVED. BOTH THESE EXPRESSIONS AND IN ADDITION THERETO, THE EXPRESSION ACCRUE ARE USED IN THE INCOME-TAX ACT EITHER COLLECTIVELY OR SEPARATELY AC CORDING TO THE CONTEXT AND NATURE OF THE CHARGING PROVISION. T HE SECOND POINT WHICH DESERVES NOTICE IS THAT BY A DEEMING P ROVISION, THE PROFITS OR GAINS THAT HAVE ARISEN WOULD BE TRE ATED AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. THAT MEANS, THE INCOME ON ACCOUNT OF ARISAL OF CAPI TAL GAIN SHOULD BE CHARGED TO TAX IN THE SAME PREVIOUS YEAR IN WHICH THE TRANSFER WAS EFFECTED OR DEEMED TO HAVE TAKEN PLACE. THE EFFECT AND AMBIT OF THE DEEMING PROVISION CONT AINED IN SECTION 45 HAS BEEN CONSIDERED IN DECIDED CASES AND LEADING TEXT BOOKS. THE FOLLOWING STATEMENT OF LAW IN SAMPATH IYENGARS COMMENTARY (10TH EDITION REVISED BY SHRI S. RAJARATNAM) BRINGS OUT THE CORRECT LEGAL POSITION : SECTION 45 ENACTS THAT THE CAPITAL GAINS SHALL BY FICTION BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR I N WHICH THE TRANSFER TOOK PLACE. SINCE THIS IS A ST ATUTORY FICTION, THE ACTUAL YEAR IN WHICH THE SALE PRICE W AS 33 RECEIVED, WHETHER IT WAS ONE YEAR, TWO YEARS, THREE YEARS, FOUR YEARS ETC. PREVIOUS TO THE PREVIOUS YEA R OF TRANSFER, IS BESIDE THE POINT. THE ENTIRETY OF THE SUM OR SUMS RECEIVED IN ANY EARLIER YEAR OR YEARS WOULD BE REGARDED AS THE CAPITAL GAINS ARISING IN THE PREVI OUS YEAR OF TRANSFER. . . . . IN THE WORDS OF SECTION 45, THE CAPITAL GAI NS ARISING FROM THE TRANSFER 'SHALL BE THE INCOME OF THE PREV IOUS YEAR IN WHICH THE TRANSFER TOOK PLACE'. SO, THE PA YMENTS OF CONSIDERATION STIPULATED TO BE PAID IN FUTURE W OULD HAVE TO BE ATTRIBUTED, BY STATUTORY MANDATE, TO THE YEAR OF TRANSFER, EVEN AS PAYMENTS MADE PRIOR TO THE YEA R OF TRANSFER. 66 THE ABOVE CLEARLY SHOWS THAT IT IS BECAUSE OF EX PRESSION USED IN SECTION 45 THAT IS ARISING WHICH CANNOT B E EQUATED WITH RECEIPT. IN THIS RESPECT THE LD. AUTHORITY HAS QUOTED A VERY OLD DECISION OF HON'BLE MADRAS HIGH COURT IN C ASE OF T.V. SUNDARAM IYENGAAR AND SONS LTD. V. CIT, 37 ITR 26 ( MAD). AT PARA 13 OF THE SAID DECISION IS EXTRACTED IN THE FO LLOWING MANNER: 13. IN T.V. SUNDARAM IYENGAR AND SONS LTD. V. CIT [ 1959] 37 ITR 26, A DIVISION BENCH OF THE MADRAS HIGH COUR T WHILE CONSTRUING SECTION 12 B OF THE INDIAN INCOME-TAX AC T, 1922 CLARIFIED THE IMPORT OF THE EXPRESSION ARISE AS F OLLOWS SECTION 12B DOES NOT REQUIRE THAT PROFITS SHOULD HAVE BEEN ACTUALLY RECEIVED. IT IS SUFFICIENT IF THEY HAVE AR ISEN. THROUGHOUT THE INCOME-TAX ACT THE WORDS ACCRUE AN D ARISE ARE USED IN CONTRADISTINCTION TO THE WORD RECEIVE AND INDICATE A RIGHT TO RECEIVE. THIS WAS EXPLAINED BY FRY L.J., IN COLQUHOUN V. BROOKS. THE LEARNED JUDGE OBSERVED: I THINK, THEREFORE, THAT THE WORDS ARISE OR ACCR UING ARE GENERAL WORDS DESCRIPTIVE OF A RIGHT TO RECEIVE PRO FITS. SEE ALSO CIT V. ANAMALLAIS TIMBER TRUST LTD. TO ATT RACT THE OPERATION OF SECTION 12B IT IS THEREFORE SUFFICIENT IF THE PROFITS AROSE. THEY NEED NOT HAVE BEEN ACTUALLY RECEIVED. 14. THUS THE CRITERION OF RIGHT TO RECEIVE THE PROF ITS / GAINS WAS APPLIED IN THAT CASE. 15. THE LEGAL POSITION DOES NOT THEREFORE ADMIT OF ANY DOUBT THAT THE ACTUAL RECEIPT OF THE ENTIRE SALE CONSIDER ATION DURING THE YEAR OF TRANSFER IS NOT NECESSARY FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. FURTHER THE EXPRESSION ARISING HAS BEEN DEFINED IN THE ADVANCED LAW LEXICON BY P. RAMANATHA AIYER EDITED B Y Y.V. CHANDRACHUD, FORMER CHIEF JUSTICE OF INDIA: 34 THE WORDS ARISING OR ACCRUING DESCRIBE A RIGHT T O RECEIVE PROFITS, AND THAT THERE MUST BE A DEBT OWED BY SOME BODY. LD. COMMISSIONER OF INCOME TAX, WEST BENGAL-II, CALCUTT A V. HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD. A IR 1986 S.C 1805, 1807. THE EXPRESSION ACCRUAL OF INCOME HAS BEEN DEFINED IN THE SAME LEXICON AS UNDER: ACCRUAL OF INCOME. E.D JASSOON & C. LTD. V LD. COM MISSIONER OF INCOME TAX, AIR 1954 S.C 470 QUOTED INCOME MAY ACCRUE TO AN ASSESSEE WITHOUT THE ACTUAL RECEIPT OF THE SA ME. IF THE ASSESSEE ACQUIRES A RIGHT TO RECEIVE THE INCOME, TH E INCOME CAN BE SAID TO HAVE ACCRUED TO HIM THOUGH IT MAY BE RECEIVED LATER ON ITS BEING ASCERTAINED. THE BASIC CONCEPTI ON IS THAT HE MUST HAVE ACQUIRED A RIGHT TO RECEIVE THE INCOME. BHOGILAL V INCOME TAX LD. COMMISSIONER, AIR 1956 BOM 411, 414 (INCOME TAX ACT (11 OF 1992) SS. 16(1) AND (3)} 67 THE COMBINED READING OF THESE TWO DEFINITIONS SH OW THAT IT (I.E. ACCRUAL) IS NOT EQUAL TO THE RECEIPT OF IN COME. IN FACT IT IS A STAGE BEFORE THE POINT OF TIME WHEN THE INCOME BECOMES RECEIVABLE. IN OTHER WORDS, ONCE THE VESTED RIGHTS COME TO A PERSON THEN IT CAN BE SAID THAT SUCH RIGHT OR INCOM E HAS ACCRUED TO SUCH PERSON. THE CONCEPT OF ACCRUAL OR AROUSAL OF INCOME HAS ALSO BEEN DISCUSSED BY THE LD. AUTHOR S. RAJARATNAM IN THE COMMENTARY OF LAW OF INCOME TAX B Y SAMPATH IYENGAR XITH EDITION BY DISCUSSING THE MEA NING OF ACCRUED AND ARISE AT PAGE 1300 IT HAS BEEN OBSERV E AS UNDER: (1) IMPORTANT PRINCIPLES.- (A) MEANING ACCRUE MEANS TO ARISE OR SPRING AS A NATURAL GROWTH OR RESULT, TO COME BY WAY OF INCREASE. ARISING MEANS COMING INTO EXISTENC E OR NOTICE OR PRESENTING ITSELF. ACCRUE CONNOTES GROWTH OR ACCUMULATION WITH A TANGIBLE SHAPE SO AS TO BE RECEIVABLE. IN A SECONDARY SENSE, THE TWO WORDS TOGETHER MEAN TO BECOME A PRE SENT AND ENFORCEABLE RIGHT AND TO BECOME A PRESENT RIGHT OF DEMAND. IN THE ACT, THE TWO WORDS ARE USED SYNONYMOUSLY WIT H EACH OTHER TO DENOTE THE SAME IDEA OR IDEAS VERY SIMILAR , AND THE DIFFERENCE LIES ONLY IN THIS THAT ONE IS MORE APPRO PRIATE THAN THE OTHER, WHEN APPLIED, TO A PARTICULAR CASE. IT W ILL INDEED BE DIFFICULT TO DISTINGUISH BETWEEN THE TWO WORDS, BUT IT IS CLEAR THAT BOTH THE WORDS ARE USED IN CONTRADISTINCTION T O THE WORD RECEIVE AND INDICATE A RIGHT TO RECEIVE. THEY REP RESENT A STAGE ANTERIOR TO THE POINT OF TIME WHEN THE INCOME BECOMES RECEIVABLE AND CONNOTE A CHARACTER OF THE INCOME, W HICH IS MORE OR LESS INCHOATE AND WHICH IS SOMETHING LESS T HAN A RECEIPT. AN UNENFORCEABLE CLAIM TO RECEIVE AN UNDET ERMINED OR UNDEFINED SUM DOES NOT GIVE RISE TO ACCRUAL. 68 THEREFORE, IT IS NOT ONLY THE MONEY WHICH HAS B EEN RECEIVED BY THE ASSESSEE WHICH IS REQUIRED TO BE TA XED BUT THE CONSIDERATION WHICH HAS ACCRUED TO THE ASSESSEE IS ALSO REQUIRED TO BE TAXED. IN VIEW OF THIS, THIS CONTE NTION IS REJECTED. 35 69 THE FIFTH CONTENTION MADE BY THE LD. COUNSEL FO R THE ASSESSEE WAS THAT SINCE SECTION 53A OF THE TRANSFER OF PROPERTY ACT ITSELF HAS UNDERGONE AMENDMENT W.E.F. 24.9.2001 BY WHICH THE AGREEMENT REFERRED TO IN THA T SECTION IS REQUIRED TO BE REGISTERED AND THEREFORE, NOW IN SECTION 2(47)(V) ONLY THE AMENDED PROVISIONS CAN BE READ. WE FIND NO FORCE IN THIS CONTENTION. IT IS WELL KN OWN THAT SECTION 53A OF THE TRANSFER OF PROPERTY ACT WAS PAS SED ON EQUITABLE DOCTRINE SO AS TO PROTECT THE TAKING OVER OR RETENTION OF THE POSSESSION BY THE TRANSFEREE. IT WAS NOT A SOURCE BY WHICH TITLE OF IMMOVABLE PROPERTY COULD BE ACQUIRED. SECTION 53A OF TP ACT READ AS UNDER:- 53A. PART PERFORMANCE.- WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVEABLE PROPERTY BY WRITING SI GNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CON STITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAIN TY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREOF, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CONTINUES IN POSSESSIO N IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT I N FURTHERANCE OF THE CONTRACT, AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO P ERFORM HIS PART OF THE CONTRACT, THEN, NOTWITHSTANDING THAT THE CONTR ACT, [***]WHERE THERE IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSF ER HAS NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFOR BY THE LAW FOR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON CLAIMI NG UNDER HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE A ND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROP ERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSSESSION, OT HER THAN A RIGHT EXPRESSLY PROVIDED BY THE TERMS OF THE CONTRACT 70 A PLAIN READING OF THE ABOVE PROVISION SHOWS THAT IT PROVIDES A SAFETY MEASURE OR A SHIELD IN THE HANDS OF THE TRANSFEREE TO PROTECT THE POSSESSION OF ANY PROPERT Y WHICH HAS BEEN GIVEN BY THE TRANSFEROR AS LAWFUL POSSESSI ON UNDER A PARTICULAR AGREEMENT OF SALE. THIS POSITIO N OF LAW WAS INCORPORATED IN THE DEFINITION OF TRANSFER BY INSERTION OF CLAUSES (V) & (VI) IN SECTION 2(47) OF THE ACT. IT IS IMPORTANT TO NOTE THAT CLAUSE (V) USES THE EXPRESSI ON CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF T.P. ACT, THEREFORE, CLEARLY THE IDEA IS THAT AN AGREEME NT WHICH PROVIDES SOME DEFENSE IN THE HANDS OF TRANSFEREE WA S 36 INCORPORATED UNDER THE DEFINITION OF TRANSFER IN THE INCOME TAX ACT. NOW ORIGINALLY SECTION 53A OF T.P. ACT PROVIDED THAT EVEN IF THE CONTRACT THOUGH REQUIRED TO BE REGISTERED HAS NOT BEEN REGISTERED, WHICH MEANS TH E RIGHT OF DEFENDING THE POSSESSION WAS AVAILABLE EVE N IF THE CONTRACT WAS NOT REGISTERED BUT BY AMENDMENT AC T 48 OF 2001, THE EXPRESSION THOUGH REQUIRED TO BE REGI STERED HAS NOT BEEN REGISTERED, HAS BEEN OMITTED WHICH ME ANS FOR THE PURPOSE OF POSSESSION U/S 53A OF T.P. ACT, A PERSON HAS TO PROVE THAT POSSESSION HAS BEEN GIVEN UNDER A REGISTERED AGREEMENT. IN OTHER WORDS, NOW U/S 53A OF T.P. ACT, THE AGREEMENT REFERRED IS REQUIRED TO BE REGISTERED. THIS REQUIREMENT CANNOT BE READ IN CLAU SE (V) OF SECTION 2(47) BECAUSE THAT REFERS ONLY TO THE C ONTRACT OF THE NATURE OF SECTION 53A OF T.P. ACT WITHOUT GO ING INTO THE CONTROVERSY WHETHER SUCH AGREEMENT IS REQUIRED TO BE REGISTERED OR NOT. THE LD. COUNSEL FOR THE ASSESSE E HAD REFERRED TO THE DECISION OF HON'BLE SUPREME COURT I N THE CASE OF SURANA STEELS V DCIT 237 ITR 777 (SC) FOR THE PROPOSITION THAT WHEN A SECTION OF A PARTICULAR STA TUTE IS INTRODUCED INTO ANOTHER ACT IT MUST BE READ IN THE SAME SENSE AS IT BORE IN THE ORIGINAL ACT. THE CAREFUL PERUSAL OF THAT JUDGMENT WOULD SHOW THAT SITUATION IS APPLI CABLE ONLY WHEN A PARTICULAR PROVISION OF AN ACT HAS BEEN INCORPORATED IN THE LATER ACT. IN THAT CASE A QUES TION AROSE THAT FOR THE PURPOSE OF MAT PROVISION WHAT I S THE MEANING OF PAST LOSSES OR UNABSORBED DEPRECIATION. IT WAS FOUND THAT IN EXPLANATION TO SECTION 115J CLAUS E (IV), THE FOLLOWING EXPRESSION WAS USED:- (IV) 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 (B) OF THE FIRST PROVISO T O SUB SECTION (I) OF SECTION 205 OF THE COMPANIES ACT, 1956 (1 OF 1956) ARE APPLICABLE. 71 THE HON'BLE APEX COURT REFERRED TO THE PRINCIPLE S OF STATUTORY INTERPRETATION BY SHRI G.P.SINGH AND EXTR ACTED FOLLOWING PIECE: SECTION 115J, EXPLANATION CLAUSE (IV), IS A PIECE OF LEGISLATION BY INCORPORATION. DEALING WITH THE 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 AR E INCORPORATED BY REFERENCE INTO A LATER ACT, THE PROVISIONS SO INCORPORATED BECOME PART AND PARCEL 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. : 'IF A 37 SUBSEQUENT ACT BRINGS INTO ITSELF BY REFERENCE SOME OF THE CLAUSES OF A FORMER ACT, THE LEGAL EFFECT OF THAT, AS HAS OFTEN BEEN HELD, IS TO WRITE THOSE SECTIONS INTO THE NEW ACT AS IF THEY HAD BEEN ACTUALLY WRITTEN IN IT WITH THE PEN, OR PRINTED IN IT.(P.233) EVEN THOUGH ONLY PARTICULAR SECTIONS OF AN EARLIER ACT ARE INCORPORATED INTO LATER, IN CONSTRUING THE INCORPORATED SECTIONS IT MAY BE AT TIMES NECESSARY AND PERMISSIBLE TO REFER TO OTHER PARTS OF THE EARL IER STATUTE WHICH ARE NOT INCORPORATED. AS WAS STATED B Y 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. (P.244) 72 ON THE BASIS OF ABOVE OBSERVATION, IT WAS HELD T HAT MEANING OF PAST LOSSES OR UNABSORBED DEPRECIATION H AS TO BE TAKEN SAME AS WAS DEFINED IN THE COMPANIES ACT. IN THIS CASE IT IS CLEAR THAT PROVISION ITSELF REFERS TO CLAUSE (B) OF SUB SECTION (1) OF SECTION 205 OF COMPANYS ACT 1956 AND THEREFORE, SAME MEANING WAS GIVEN TO PAST LOSSES OR UNABSORBED DEPRECIATION AS IS GIVEN UNDER THE COMPANIES ACT, 1956. 73 IN CASE OF CLAUSE (V) TO SECTION 2(47), CLEARLY THE EXPRESSION USED IS CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF T.P. ACT, WHICH MEANS IT IS NOT A C ASE OF INCORPORATION OF ONE PIECE OF LEGISLATION INTO ANOT HER PIECE OF LEGISLATION. IF THAT WAS THE INTENTION OF THE PARLIAMENT, OBVIOUSLY CLAUSE (V) WOULD CONTAIN THE EXPRESSION CONTRACT AS DEFINED UNDER SECTION 53A O F TRANSFER OF PROPERTY ACT, 1882. FURTHER, IT IS SE TTLED POSITION OF LAW THAT ANY INTERPRETATION WHICH COULD RENDER A PARTICULAR PROVISION REDUNDANT SHOULD BE AVOIDED. IF THE CONTENTION OF THE LD. COUNSEL WAS TO BE ACCEPTED, OBVIOUSLY THE PROVISIONS OF CLAUSE (V) OF SECTION 2 (47) OF THE ACT WOULD BECOME REDUNDANT IN THE SENSE THAT REGISTRATION OF AGREEMENT WOULD AGAIN BE MADE COMPULSORY BUT SINCE PROPERTIES WERE BEING SOLD IN THE MARKET ON POWER OF ATTORNEY BASIS THROUGH UNREGIS TERED AGREEMENTS WHICH WOULD MAKE THIS PROVISION REDUNDAN T. THIS POSITION WE HAVE ALREADY DISCUSSED EARLIER WHI LE DISCUSSING THE HEYDONS RULE IN THE INTERPRETATIONS OF THIS CLAUSE. FURTHER THE ISSUE OF INTERPRETATION OF CLA USE (V) AND AMENDMENT TO SECTION 53A OF THE TRANSFER OF PRO PERTY ACT CAME FOR CONSIDERATION BEFORE THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SURESH CHANDER AGGARWAL VS ITO 48 SOT 2010. THE TRIBUNAL DISCUSSED THIS ISSUE AT 38 PAGE 7 AND AFTER QUOTING THE PROVISIONS OF SECTION 2(47) AND ALSO SECTION 53A BEFORE AND AFTER AMENDMENT AS WALL AS PARA NOS. 11.1 TO 11.2 OF THE BOARDS CIRCULAR N O. 495 DATED 22.9.1987 OBSERVED AS UNDER:- THE ABOVE CLEARLY SHOWS THAT THERE WAS CERTAIN SIT UATION WHERE PROPERTIES WERE BEING TRANSFERRED WITHOUT REGISTRATION OF TRANSFER INSTRUMENTS AND PEOPLE WER E ESCAPING TAX LIABILITIES ON TRANSFER OF SUCH PROPER TIES BECAUSE THE SAME COULD NOT BE BROUGHT IN THE DEFINI TION OF 'TRANSFER' PARTICULARLY IN MANY STATES OF THE COUNT RY PROPERTIES WERE BEING HELD BY VARIOUS PEOPLE AS LEA SED PROPERTIES WHICH WERE ALLOTTED BY THE VARIOUS GOVT. DEPARTMENTS AND TRANSFERS OF SUCH LEASE WERE NOT PERMISSIBLE. PEOPLE WERE TRANSFERRING SUCH PROPERTI ES BY EXECUTING AGREEMENT TO SELL AND GENERAL POWER OF AT TORNEY AS WELL AS WILL AND RECEIVING FULL CONSIDERATION, B UT SINCE THE AGREEMENT TO SELL WAS NOT REGISTERED AND THOUGH FULL CONSIDERATION WAS RECEIVED AND EVEN POSSESSION WAS GIVEN, STILL THE SAME TRANSACTIONS COULD NOT BE SUB JECTED TO TAX BECAUSE THE SAME COULD NOT COVERED BY THE DEFINITION OF 'TRANSFER'. TO BRING SUCH TRANSACTION S WITHIN THE TAX NET, THIS AMENDMENT WAS MADE. IT HAS TO BE APPRECIATED THAT CLAUSE (V) IN SECTION 2(47) DOES N OT LIFT THE DEFINITION OF PART PERFORMANCE FROM SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. RATHER, IT DEFINES ANY TRANSACTION INVOLVING ALLOWING OF POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THIS M EANS SUCH TRANSFER IS HOT REQUIRED TO BE EXACTLY SIMILAR TO THE ONE DEFINED U/S.53A OF THE TRANSFER OF PROPERTY ACT , OTHERWISE LEGISLATURE WOULD HAVE SIMPLY STATED THAT TRANSFER WOULD INCLUDE TRANSACTIONS DEFINED IN SEC. 53A OF THE TRANSFER OF PROPERTY ACT. BUT THE LEGISLATURE I N ITS WISDOM HAS USED THE WORDS 'OF A CONTRACT, OF THE NA TURE REFERRED IN SECTION 53A'. THEREFORE, IT IS ONLY THE NATURE WHICH HAS TO BE SEEN. AS DISCUSSED ABOVE, THE PURPO SE OF INSERTION OF CLAUSE (V) WAS TO TAX THOSE TRANSACTIO NS WHERE PROPERTIES WERE BEING TRANSFERRED BY WAY OF GIVING POSSESSION AND RECEIVING FULL CONSIDERATION. THEREF ORE, IN OUR HUMBLE OPINION, IN THE CASE OF A TRANSFER WHERE POSSESSION HAS BEEN GIVEN AND FULL CONSIDERATION HA S BEEN RECEIVED, THEN SUCH TRANSACTION NEEDS TO BE CONSTRUED AS 'TRANSFER'. THEREFORE, THE AMENDMENT M ADE IN SECTION 53A BY WHICH THE REQUIREMENT OF REGISTRA TION HAS BEEN INDIRECTLY BROUGHT ON THE STATUTE NEED NOT BE APPLIED WHILE CONSTRUING THE MEANING OF 'TRANSFER' WITH REFERENCE TO THE INCOME-TAX ACT. 8. THE ABOVE SITUATION FURTHER BECOMES CLEAR IF WE REFER TO THE CELEBRATED DECISION OF HON'BLE SUPREME COURT IN THE CASE OF PODAR CEMENT (P.) LTD. (SUPRA}. IN THAT CASE, THE ASSESSEE WAS OWNER OF FOUR FLATS IN A BUILDING CALLED 'SILVER ARCH'/ON NEPEAN SEA ROAD, BOMBAY. OUT OF TH ESE FOUR FLATS, TWO WERE PURCHASED DIRECTLY FROM THE BU ILDERS, 39 MALABAR INDUSTRIES PVT. LTD., AND TWO WERE PURCHASE D BY ITS SISTER CONCERNS WHICH WERE LATER PURCHASED BY T HE ASSESSEE. THE POSSESSION OF THE FLATS WAS TAKEN AFT ER FULL PAYMENT OF CONSIDERATION. THE FLATS WERE LET OUT. T HE ASSESSEE CONTENDED THAT THE RENTAL INCOME FROM THES E FLATS WAS ASSESSABLE AS 'INCOME FROM OTHER SOURCES' BECAUSE THE ASSESSEE WAS NOT THE LEGAL OWNER BECAUS E THE TITLE OF THE PROPERTY HAD NOT BEEN CONVEYED TO THE CO- OPERATIVE SOCIETY WHICH WAS FORMED BY THE PURCHASER S OF THE FLATS. THE HON'BLE COURT NOTED THAT SECTION 27 HAD BEEN AMENDED VIDE CLAUSE 3(A) WHEREIN WHEN A PERSON WAS ALLOWED TO TAKE POSSESSION OF THE BUILDING IN P ART PERFORMANCE OF THE NATURE REFERRED TO IN SECTION 53 A, SUCH PERSON SHALL BE DEEMED TO BE THE OWNER. IT WAS FURT HER OBSERVED THAT FOR ALL PRACTICABLE PURPOSES THE ASSE SSEE WAS THE OWNER AND POSSIBLY THERE CANNOT BE TWO OWNE RS OF SAME PROPERTY AT THE SAME TIME. IN FACT, THE AMENDM ENTS TO SECTION 27 WERE MADE LATER ON BUT WERE TAKEN INT O COGNIZANCE ON THE BASIS OF ABOVE PRINCIPLE AND ULTI MATELY IT WAS HELD AS UNDER: 'HENCE, THOUGH UNDER THE COMMON LAW 'OWNER' MEANS A PERSON WHO HAS GOT VALID TITLE LEGALLY CONVEYED TO HIM AFTER COMPLY WITH THE REQUIREMENTS OF LAW SUCH AS THE TRANSFER OF PROPERTY ACT, THE REGISTRATION ACT, ETC., IN THE CONTEXT SECTION 22 OF THE INCOME-TAX ACT, 1961, HAVING REGARD TO THE GROUND REALITIES AND FURTHER HAVING REGARD TO THE OBJECT OF THE INCOME-TAX ACT, NAMELY, TO TAX THE INCOME, 'OWNER' IS A PERSON WHO IS ENTITLED TO RECEIVE INCOME FROM THE PROPERTY IN HIS OWN RIGHT. THE REQUIREMENT OF REGISTRATION OF THE SALE DEED IN THE CONTEXT OF SECTION 22 IS NOT WARRANTED.' THUS, FROM THE ABOVE, IT IS CLEAR THAT IT IS NOT NE CESSARY TO GET THE INSTRUMENT OF TRANSFER REGISTERED FOR THE P URPOSE OF INCOME-TAX ACT WHEN A PERSON HAS GOT A VALID LEGALL Y CONVEYED AFTER COMPLYING WITH THE REQUIREMENTS OF T HE LAW. 9. SIMILARLY, IN THE CASE OF MYSORE MINERALS LTD. V. CIT [1999] 239 ITR 775/106 TAXMAN 166 (SC), THE ASSESSE E HAD PURCHASED FOR THE USE OF ITS STAFF SEVEN LOW INCOME GROUP HOUSES FROM A HOUSING BOARD. THE PAYME NT HAD BEEN MADE AND IN TURN POSSESSION OF THE HOUSES WAS TAKEN OVER BY THE ASSESSEE. THE ACTUAL CONVEYANCE D EED WAS NOT EXECUTED. THE ASSESSEE CLAIMED DEPRECIATION WHICH WAS DENIED BY THE DEPARTMENT. AFTER GREAT DISCUSSION, IT WAS OBSERVED THAT FOR ALL PRACTICABL E PURPOSES AND FOR THE PURPOSE OF INCOME-TAX ACT, THE ASSESSEE SHALL BE CONSTRUED AS OWNER OF THE PROPERT Y. IN FACT, IT WAS HELD AS UNDER: - 'HELD, REVERSING THE JUDGMENT OF THE HIGH COURT, TH AT THE FINDING OF FACT ARRIVED AT IN THE CASE AT HAND WAS 40 THAT THOUGH A DOCUMENT OF TITLE WAS NOT EXECUTED BY THE HOUSING BOARD IN FAVOUR OF THE ASSESSEE, THE HOUSES WERE ALLOTTED TO THE ASSESSEE BY THE HOUSING BOARD, PART PAYMENT RECEIVED AND POSSESSION DELIVERED SO AS TO CONFER DOMINION OVER THE PROPERTY ON THE ASSESSEE WHEREAFTER THE ASSESSEE HAD IN ITS OWN RIGHT ALLOTTED THE QUARTERS TO THE STAFF AND THEY WERE BEING ACTUALLY USED BY THE STAFF OF THE ASSESSEE. THE ASSESSEE WAS ENTITLED TO DEPRECIATION IN RESPECT OF THE SEVEN HOUSES IN RESPECT OF WHICH THE ASSESSEE HAD NOT OBTAINED A DEED OF CONVEYANCE FROM THE VENDOR ALTHOUGH IT HAD TAKEN POSSESSION AND MADE PART PAYMENT OF THE CONSIDERATION'. THUS, FROM THE ABOVE TWO DECISIONS, IT BECOMES ABSO LUTELY CLEAR THAT FOR THE PURPOSE OF THE INCOME-TAX ACT TH E GROUND REALITY HAS TO BE RECOGNIZED AND IF ALL THE INGREDIENTS OF TRANSFER HAVE BEEN COMPLETED, TH EN SUCH TRANSFER HAS TO BE RECOGNIZED. MERELY BECAUSE THE PARTICULAR INSTRUMENT OF TRANSFER HAS NOT BEEN REGI STERED WILL NOT ALTER THE SITUATION. THIS POSITION IS FURT HER STRENGTHENED BY THE FACT THAT LEGISLATURE ITSELF HA S INSERTED CLAUSE (V) TO SECTION 2(47) AND WHILE REFERRING TO THE PROVISIONS OF SECTION 53A, REFERENCE HAS BEEN MADE BY STATING THAT CONTRACTS IN THE NATURE OF SECTION 53 A SHOULD ALSO BE COVERED BY THE DEFINITION OF 'TRANSFER'. TH EREFORE, IN OUR HUMBLE VIEW, THE AMENDMENT TO SEC. 53A OF TH E TRANSFER OF PROPERTY ACT, WHEREBY THE REQUIREMENT O F THE DOCUMENTS NOT BEING REGISTERED HAS BEEN OMITTED, WI LL NOT ALTER THE SITUATION FOR HOLDING THE TRANSACTION TO BE A TRANSFER U/S.2(47)(V) IF ALL OTHER INGREDIENTS HAVE BEEN SATISFIED. 74 THUS, IT IS CLEAR THAT NON REGISTRATION OF AGREE MENT CANNOT LEAD TO THE CONCLUSION THAT PROVISION OF SEC TION 2(47) (V) IS NOT APPLICABLE. SIMILAR VIEW HAS BEEN TAKEN BY ITAT COCHIN BENCH OF THE TRIBUNAL IN CASE OF G.SREENIVASAN VS DCIT 28 TXMANN.COM 200 (COCH.) AND ITAT PUNE BENCH IN THE CASE OF MAHESH NEMICHANDRA GANESHWADE V ITO 21 TAXMANN.COM 136 (PUNE). IN VIE W OF THIS LEGAL POSITION, THIS CONTENTION IS REJECTED . 75 THE NEXT CONTENTION WAS THAT THE DECISION OF HON 'BLE BOMBAY HIGH COURT IN CASE OF CHATURBHUJ DWARKADAS K APADIA (SUPRA) IS NOT APPLICABLE PARTICULARLY BECAUSE ULTI MATELY IN THAT CASE IT WAS HELD THAT CAPITAL GAIN TAX SHOULD BE CH ARGED IN ASSESSMENT YEAR 1999-2000 WHEREAS AGREEMENT WAS EXE CUTED IN AUGUST, 1994. 76 WE HAVE ALREADY DISCUSSED THE IMPLICATIONS OF TH E DECISION IN CASE OF CHATURBHUJ DWARKADAS KAPADIA (S UPRA) IN PARA 33 TO 38. WE HAD ALSO EXAMINED WHY IN THAT CA SE CAPITAL GAIN WAS NOT HELD TO BE CHARGEABLE IN ASSESSMENT YE AR 1995- 41 96.THERE IS NO NEED TO REPEAT THE SAME AND IN VIEW OF THE SAID OBSERVATIONS, WE REJECT THIS CONTENTION. 77 THE NEXT CONTENTION IS THAT IT IS NECESSARY FOR INVOKING OF SECTION 2(47)(V) OF THE ACT TO COMPLY W ITH THE PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPER TY ACT TO THE EXTENT THAT THERE SHOULD BE WILLINGNESS ON T HE PART OF THE TRANSFEREE TO PERFORM HIS PART OF THE CONTRA CT. 78 IN THIS ASPECT WE HAVE NO QUARREL WITH THE PROPOSITION THAT FOR INVOKING SECTION 53A PF T.P. ACT READ WITH CLAUSE (V) OF SECTION 2(47), THE TRANSFEREE HA S TO PERFORM OR IS WILLING TO PERFORM HIS PART OF THE CO NTRACT. IN THIS RESPECT AS REFERRED TO BY LD. COUNSEL FOR T HE ASSESSEE, THE COMMENTS OF THE LD. AUTHOR IN THE COMMENTARY BY MULLA DINSHAN FREDERICK MULLA VIDE PARA 16 ARE CLEAR AND SHOWS THAT THIS REQUIREMENT HAS TO BE ABSOLUTE AND UNCONDITIONAL. SOME OBSERVATIONS HAV E BEEN MADE IN THE CASE OF GENERAL GLASS COMPANY PVT LTD VS DCIT (SUPRA). IN THAT CASE IT WAS HELD THAT WIL LINGNESS TO PERFORM FOR THE PURPOSE OF SECTION 53A IS SOMETH ING MORE THAN A STATEMENT OF INTENT AND IT IS UNQUALIFI ED AND UNCONDITIONAL WILLINGNESS ON THE PART OF THE TRANSF EREE TO PERFORM HIS OBLIGATION. IN THAT CASE THE TRANSFERE E HAS AGREED TO MAKE CERTAIN PAYMENTS IN INSTALLMENTS IN CONSIDERATION OF THE DEVELOPMENT AGREEMENT BUT SUCH PAYMENTS WERE NOT MADE. LATER ON, THE AGREEMENT WA S MODIFIED AND MORE TIME WAS GIVEN TO THE TRANSFEREE FOR PAYMENT OF SUCH INSTALLMENTS. HOWEVER, THE INSTALL MENTS WERE NOT PAID EVEN UNDER THE MODIFIED TERMS AND TH AT IS WHY IT WAS ULTIMATELY HELD THAT SUCH AGREEMENT CANN OT BE CONSTRUED AS TRANSFER. 79 THE SECOND DECISION REFERRED TO BY LD. COUNSEL F OR THE ASSESSEE IS K. RADIKA V DCIT (SUPRA). IN THIS CASE, SIMILAR OBSERVATIONS WERE MADE, THOUGH IT IS NOT PO INTED OUT IN WHAT RESPECT THE TRANSFEREE HAS FAILED TO PE RFORM HIS PART BUT IT HAS BEEN OBSERVED THAT THE FACTS OF THE CASE SHOWS THAT TRANSFEREE HAS NOT PERFORMED HIS PA RT OF THE CONTRACT. 80 THE THIRD JUDGMENT RELIED UPON BY THE LD. COUNSE L FOR THE ASSESSEE IS IN THE CASE OF DCIT V TEJ SINGH (SUPRA). IN THAT CASE LAND WAS ACQUIRED BY THE GOVERNMENT AND THE MATTER WENT FOR LITIGATION. DURI NG THE PENDENCY OF LITIGATION, THE ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT WITH A DEVELOPER FOR THE PURP OSE OF DEVELOPMENT OF THE PROPERTY, HOWEVER, IT WAS CLA RIFIED IN THE AGREEMENT THAT THERE IS LITIGATION IN RESPEC T OF ACQUISITION OF PROPERTY AND THE DEVELOPER HAS TO TA KE CLEARANCE FROM THE GOVERNMENT IN THE MATTER OF DENOTIFICATION OF THE LAND. IT WAS HELD THAT SINCE THE LAND WAS UNDER COMPULSORY ACQUISITION AND NO COMPENSATIO N HAS BEEN RECEIVED, THEREFORE, THERE COULD NOT BE AN Y 42 CAPITAL GAIN TAX U/S 2(47) (III) WHICH DEALS WITH T HE COMPULSORY ACQUISITION. IT WAS FURTHER OBSERVED TH AT ASSESSEE COULD NOT HAVE GIVEN POSSESSION UNLESS AND UNTIL THE LAND WAS DENOTIFIED. SINCE FACTS OF THE CASE ARE DIFFERENT THAN THE CASE IN HAND AND THEREFORE, SAM E ARE NOT RELEVANT FOR OUR PURPOSE. 81 NOW COMING TO THE FACTS, FIRSTLY IT WAS CONTENDE D THAT DEVELOPER I.E TRANSFEREE HAS NOT OBTAINED VARI OUS PERMISSIONS WHICH WERE REQUIRED TO BE TAKEN BY THE DEVELOPER AS PER CLAUSES 3.1, 7.9, 8.4 AND 8.6 OF T HE JDA. THIS IS NOT CORRECT AS POINTED OUT BY THE LD. CIT D R THAT ASSESSEE HAD ALREADY GOT THE MUNICIPAL PLAN SANCTIO NED BUT IN THE MEANTIME PIL WAS FILED BEFORE THE HON'BL E PUNJAB & HARYANA HIGH COURT AGAINST THE IMPLEMENTAT ION OF THE PROJECT. INITIALLY, THE CONSTRUCTION WAS BA NNED BY THE HON'BLE HIGH COURT. HOWEVER, LATER ON IT WAS OBSERVED IN THE CWP NO. 20425 OF 2010 AND AS CLARIF IED BY THE ORDER OF THE HON'BLE SUPREME COURT THAT REFU SAL OF SANCTION UNDER THE ENVIRONMENT (PROTECTION) ACT, TH E SOCIETY HAVE SOUGHT A REVIEW OF THE ORDER BECAUSE T HE FINDINGS ARRIVED WERE EX.PARTE. NO ORDER IN THE M ATTER HAS BEEN PASSED BY THE COMPETENT AUTHORITY PERHAPS BECAUSE OF THE ORDER OF HIGH COURT. IN THE INTERIM ORDER PASSED IN THE PIL IT HAS BEEN CLARIFIED BY THE HON 'BLE SUPREME COURT VIDE ORDER DATED 31.1.2012 PERMITTING THE CONCERNED AUTHORITY UNDER THE DIFFERENT STATUTES GO VERNING THE MATTER TO THEIR RESPECTIVE JURISDICTION TO BE D ECIDED IN ACCORDANCE WITH LAW. THUS, IT BECOMES CLEAR THAT DEVELOPER I.E. THDC HAS APPLIED FOR VARIOUS PERMISS IONS BEFORE THE RELEVANT AUTHORITIES AND IN SOME CASES PERMISSION WERE DECLINED ON EX.PARTE BASIS AND IN S OME CASES THE SAME WERE DECLINED IN VIEW OF THE HIGH CO URT ORDER BANNING THE CONSTRUCTION. AFTER THE CLARIFICA TION OF THE ORDER OF THE HIGH COURT BY HON'BLE SUPREME COUR T BY ORDER DATED 31.1.2012, THE AUTHORITIES HAVE ALREADY BEEN PERMITTED TO EXAMINE THE ISSUE ON MERITS UNDER VARI OUS LAWS. FURTHER IN THE JDA THERE IS A CLAUSE 26 WHICH DEALS WITH THE FORCE MAJEURE CLAUSES. THE CLAUSE 26 (I) TO (V) READS AS UNDER:- FORCE MAJEURE I) NONE OF THE PARTIES SHALL BE LIABLE TO THE OTHER PARTY OR BE DEEMED TO BE IN BREACH OF THIS AGREEMENT BY REASONS OF ANY DELAY IN PERFORMING OR ANY FAILURE T O PERFORM, ANY OF ITS OWN OBLIGATIONS IN RELATION TO THE AGREEMENT, IF THE DELAY OR FAILURE IS DUE TO ANY EV ENT OF FORCE MEJEURE. EVENT OF FORCE MAJEURE IS ANY EVENT CAUSED BEYOND THE PARTIES REASONABLE CONTROL. THE FOLLOWING SHALL BE REGARDED AS ISSUES BEYOND THE PARTIES REASONABLE CONTROL. II) FOR THE PURPOSES OF THIS CLAUSE, AN EVENT OF FO RCE MAJEURE SHALL MEAN EVENTS OF WAR, WAR LIKE CONDITIO NS, 43 BLOCKADES, EMBARGOES, INSURRECTION, GOVERNMENTAL DIRECTIONS, RIOTS, STRIKES, ACTS OF TERRORISM, CIVI L COMMOTION, LOCK-OUTS, SABOTAGE, PLAGUES OR OTHER EPIDEMICS, ACTS OF GOD INCLUDING FIRE, FLOODS, VOLC ANIC ERUPTIONS, TYPHOONS, HURRICANES, STORMS, TIDAL WAVE S, EARTHQUAKE, LANDSLIDES, LIGHTNING, EXPLOSIONS AND O THER NATURAL CALAMITIES, PROLONGED FAILURE OF ENERGY, CO URT ORDERS / INJUNCTIONS, CHARGE OF LAWS, ACTION AND / OR ORDER BY STATUTORY AND / OR GOVERNMENT AUTHORITY, T HIRD PARTY ACTIONS AFFECTING THE DEVELOPMENT OF THE PROJ ECT, ACQUISITION / REQUISITION OF THE PROPERTY OR ANY PA RT THEREOF BY THE GOVERNMENT OR ANY OTHER STATUTORY AUTHORITY AND SUCH CIRCUMSTANCES AFFECTING THE DEVELOPMENT OF THE PROJECT (EVENT OF FORCE MAJEURE) . III) ANY PARTY CLAIMING RESTRICTION ON THE PERFORMA NCE OF ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT DUE TO THE HAPPENING OR ARISING OF AN EVENT OF FORCE MAJEURE HEREOF SHALL NOTIFY THE OTHER PARTY OF THE HAPPENIN G OR ARISING AND THE ENDING OF CEASING OF SUCH EVENT OR CIRCUMSTANCE WITH THREE (3) DAYS OF DETERMINING THA T AN EVENT OF FORCE MAJEURE HAS OCCURRED. IN THE EVENT ANY PARTY ANTICIPATES THE HAPPENING OF AN EVENT OF FORC E MAJEURE, SUCH PARTY SHALL PROMPTLY NOTIFY THE OTHER PARTY. IV) THE PARTY CLAIMING EVENT OF FORCE MAJEURE CONDI TIONS SHALL, IN ALL INSTANCES AND TO THE EXTENT IT IS CAP ABLE OF DOING SO, USE ITS BEST EFFORTS TO REMOVE OR REMEDY THE CAUSE THEREOF AND MINIMIZE THE ECONOMIC DAMAGE ARISING THEREOF. V) EITHER PARTY MAY TERMINATE THIS AGREEMENT AFTER GIVING THE OTHER PARTY A PRIOR NOTICE OF FIFTEEN (15) DAYS IN WRITING OF THE EVENT OF FORCE MAJEURE CONTINUES FOR PERIOD OF NINETY (90) DAYS. IN THE EVENT OF TERMIN ATION OF THIS AGREEMENT ALL OBLIGATIONS OF THE PARTIES UN TIL SUCH DATE SHALL BE FULFILLED. 82 THE COMBINED READING OF THESE CLAUSES SHOW THAT IF ANY OF THE PARTY COULD NOT PERFORM ITS PART OF THE OBLIGATION BECAUSE OF THE UNFORESEEN CIRCUMSTANCES WHICH INCLUDED GOVERNMENT DIRECTIONS, COURT ORDERS, INJUN CTIONS ETC. SUCH PARTY WOULD NOT BE LIABLE TO OTHER PARTY. IN VIEW OF FORCE MAJEURE CLAUSE WHICH INCLUDED COURT INJUNC TION IT CAN NOT BE SAID THAT THDC IS NOT WILLING TO PERFORM ITS OBLIGATION. IN FACT DEVELPERS I.E. THDC/HASH WERE PERUSING THE ISSUE OF PERMISSIONS/SANCTIONS VIGOROU SLY. THESE ASPECTS BECOME FURTHER CLEAR IF THE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CWP NO. 204 25 OF 2010 VIDE ORDER DATED MARCH 26, 2012 IS PERUSED. PARAS 3, 4, 22, 25 & 26 OF THE JUDGMENT READ AS UND ER:- 3. THE BROAD CONTOURS OF THE PRESENT PROCEEDING HAVING BEEN OUTLINED, WE MAY NOW PROCEED TO TAKE 44 NOTE OF THE SPECIFIC CONTENTIONS OF THE CONTESTING PARTIES AS MADE BEFORE US. HOWEVER, BEFORE WE DO SO, IT MAY BE APPROPRIATE TO MENTION THE SOMEWHAT CONFLICTING STAND OF THE PARTIES WITH REGARD TO THE PRESENT STAGE OF THE APPLICATIONS FILED UNDER THE PROVISIONS OF THE ENVIRONMENT (PROTECTION) ACT AS WELL AS THE WILD LIFE (PROTECTION) ACT. WHILE THE PETITIONER, WHO IS SUPPORTED BY THE RESPONDENT NO.6 - CHANDIGARH ADMINISTRATION, ASSERTS THAT NECESSARY SANCTION/PERMISSION UNDER BOTH THE ACTS HAVE BEEN REFUSED BY ORDERS PASSED BY THE COMPETENT AUTHORITIES, THE PROMOTERS OF THE PROJECT CONTEND T O THE CONTRARY. THE FACTS, AS UNFOLDED BEFORE US, INDICATE THAT AGAINST THE REFUSAL OF SANCTION UNDER THE ENVIRONMENT (PROTECTION) ACT, THE RESPONDENTS HAVE SOUGHT A REVIEW OF THE ORDER ON THE GROUND THA T THE FINDINGS ARRIVED AT, WHICH HAVE FORMED THE BASI S OF THE REFUSAL, ARE EX-PARTE. NO ORDER IN THE REVIE W MATTER HAS BEEN PASSED BY THE COMPETENT AUTHORITY, PERHAPS, BECAUSE OF THE INTERIM ORDER PASSED IN THE PIL WHICH HAS BEEN CLARIFIED BY THE HON'BLE SUPREME COURT BY ORDER DATED 31.1.2012 PERMITTING THE CONCERNED AUTHORITY UNDER THE DIFFERENT STATUTES GOVERNING THE MATTER TO EXERCISE THEIR RESPECTIVE JURISDICTIONS IN ACCORDANCE WITH LAW. INSOFAR AS TH E WILD LIFE (PROTECTION) ACT IS CONCERNED, IT APPEARS THAT THE REJECTION HAS BEEN MADE BY THE CHIEF WILD LIFE WARDEN WHO, THE RESPONDENTS CLAIM, IS MERELY A RECOMMENDING AUTHORITY AND IS REQUIRED TO FORWARD HIS RECOMMENDATION TO THE CENTRAL GOVERNMENT. AS THE REJECTION UNDER THE WILD LIFE (PROTECTION) ACT HAS BEEN MADE BY AN AUTHORITY NOT COMPETENT TO DO, THE PROMOTERS OF THE PROJECT HAVE SOUGHT A REVIEW OF TH E ORDER WHICH IS STILL PENDING FOR THE SAME REASON(S) AS NOTICED ABOVE. 4. ON THESE FACTS WE ARE OF THE VIEW THAT IT WOULD BE PRUDENT ON OUR PART TO TAKE THE VIEW THAT THE ISSUE WITH REGARD TO CLEARANCE/SANCTION UNDER THE TWO ENACTMENTS I.E. ENVIRONMENT (PROTECTION) ACT AND WILD LIFE (PROTECTION) ACT IS PRESENTLY PENDING AND AS THE PROMOTERS OF THE PROJECT HAVE SUBMITTED THEMSELVES TO THE JURISDICTION OF THE AUTHORITIES UNDER THE SAID ENACTMENTS WE SHOULD REFRAIN FROM ADDRESSING OURSELVES ON ANY OF THE ISSUES CONNECTED WITH EITHER OF THE TWO STATUTORY ENACTMENTS AS ANY SUCH EXERCISE, EVEN THOUGH MAY BE UNINTENDED, MAY HAVE THE EFFECT OF FETTERING THE JURISDICTION OF STATUTORY AUTHORITIES FUNCTIONING UNDER THE TWO RELEVANT STATUTES. 22. INSOFAR AS THE PROVISIONS OF THE ENVIRONMENT (PROTECTION) ACT AND THE WILD LIFE (PROTECTION) ACT ARE CONCERNED, IT NEED NOT BE EMPHASISED THAT EVERY PROJECT ATTRACTING THE PROVISIONS OF THE PERIPHERY CONTROL ACT AND/OR THE PROVISIONS OF THE 1995 ACT MUST SATISFY THE ECOLOGICAL CONCERNS OF THE AREA IN 45 THE LIGHT OF THE PROVISIONS OF THE TWO STATUES IN QUESTION. AS ALREADY HELD BY US, A PUBLIC TRUST HAS BEEN BESTOWED ON THE AUTHORITIES BY PROVISIONS OF THE SAID ACTS WHICH CAST ON SUCH AUTHORITIES A DUTY TO INTERDICT ANY PROJECT OR ACTIVITY WHICH EVEN REMOTELY SEEMS TO CREATE AN IMBALANCE IN THE PRISTINE ECOLOGY AND ENVIRONMENT OF THE AREA ON WHICH THE CITY OF CHANDIGARH IS SITUATED OR FOR THA T MATTER IN THE IMMEDIATE VICINITY THEREOF. AS ALREAD Y OBSERVED, NECESSARY CLEARANCES UNDER THE AFORESAID TWO ENACTMENTS, INSOFAR AS THE RESPONDENTS ARE CONCERNED, ARE PRESENTLY PENDING BEFORE THE CONCERNED AUTHORITIES AND, THEREFORE, IT WOULD BE HIGHLY INCORRECT ON OUR PART TO ENTER INTO ANY FURT HER DISCUSSION ON THE AFORESAID ASPECT OF THE CASE. 25. WE ALSO HASTEN TO EMPHASISE THAT A MORE RIGOROUS REGULATED DEVELOPMENT IN WHAT ARE NOW THE REMNANTS OF THE PERIPHERY AND THE AREAS ADJOINING T O IT IS THE NEED OF THE HOUR FOR WHICH THE STAKEHOLDE RS I.E. THE ADMINISTRATION OF CHANDIGARH, THE STATES O F PUNJAB AND HARYANA AS ALSO THE AUTHORITIES UNDER THE ENVIRONMENT (PROTECTION) ACT AND THE WILD LIFE PROTECTION ACT HAVE TO DEMONSTRATE THE NEED TO ENGAGE THEMSELVES INTENSIVELY AND NOT ACQUIRE A PLACID APPROACH INDICATING AN ELOQUENT ACQUIESCENCE TO THE VIOLATION OF THE 1995 ACT, PERIPHERY CONTROL ACT AND THE PERIPHERY POLICY. 26. WE THUS CONCLUDE ON THE AFORESAID NOTE BY HOLDING AND OBSERVING THAT THE PROVISIONS OF THE PERIPHERY CONTROL ACT AND THE 1995 ACT ARE COMPLEMENTARY TO EACH OTHER AND THE PROVISIONS OF THE TWO STATUTES WOULD APPLY TO THE HOUSING PROJECT IN QUESTION. THE RESPONDENTS, THEREFORE, WILL HAVE TO COMPLY WITH ALL THE REQUIREMENTS SPELT OUT BY BOTH THE AFORESAID STATUTES. AS THE REQUIREMENT OF CLEARANCES UNDER THE WILD LIFE (PROTECTION) ACT AND ENVIRONMENT (PROTECTION) ACT IS NOT A CONTENTIOUS ISSUE, AND AS WE HAVE ALREADY HELD THAT THE PROCESS OF GRANT OF SUCH CLEARANCES IS PENDING BEFORE THE APPROPRIATE AUTHORITIES UNDER THE RESPECTIVE ACTS, THE SAME WILL NOW HAVE TO BE BROUGHT TO ITS LOGICAL CONCLUSION KEEPING IN MIND OUR OBSERVATIONS AND DIRECTIONS CONTAINED HEREINABOVE. 83 THE COMBINED READING OF THE ABOVE PARAS IN THE ORDER OF HON'BLE HIGH COURT CLEARLY SHOWS THAT DEVE LOPER THDC/ HASH I.E. TRANSFEREE HAVE MADE THEIR SINCERE EFFORTS FOR OBTAINING THE NECESSARY PERMISSIONS / SANCTIONS WHICH WERE REQUIRED UNDER THE JDA. HOWEV ER, SOME OF THE SANCTIONS COULD NOT BE TAKEN IN TIME BE CAUSE OF THE LITIGATION BY WAY OF PIL BUT SINCE NONE OF T HE PARTY WAS LIABLE TO THE OTHER PARTY IN VIEW OF THE CLAUSE 26 DEALING WITH FORCE MAJEURE IT CANNOT BE SAID THAT DEVELOPER WAS NOT WILLING TO PERFORM HIS PART OF CO NTRACT. 46 IN ANY CASE NO SPECIFIC EVIDENCE HAS BEEN SHOWN US TO PROVE THAT THDC / HASH WERE DECLINING TO PERFORM PARTICULAR OBLIGATION PROVIDED IN JDA. IN VIEW OF THIS DISCUSSION, IT CANNOT BE SAID THAT TRANSFEREE I.E. DEVELOPER THDC/HASH IS NOT WILLING TO PERFORM HIS P ART OF CONTRACT. 84 SECONDLY, IT WAS CONTENDED THAT PAYMENTS HAVE N OT BEEN MADE AS PER THE JDA. HOWEVER, AGAIN THIS IS NO T CORRECT. AS PER CLAUSE 4(IV) OF THE JDA, THE INSTA LLMENT FOR RS. 31,92,75,000/- WAS REQUIRED TO BE PAID. THE CLAUSE 4(IV) READ AS UNDER:- IV) PAYMENT BEING RS. 31,92,75,000/- (RUPEES ONE CRORE NINETY TWO LACS SEVENTY FIVE THOUSAND ONLY) CALCULATED @ RS. 24,75,000/- (RS. TWENTY FOUR LACS SEVENTY FIVE THOUSAND ONLY) PER PLOT HOLDER OF 500 SQ. YARDS AND (RS. 49,50,000/- (RS. FORTY NINE LACS FIFTY THOUSAND ONLY) AS PER PLOT HOLDER OF 1000 SQUARE YARDS TO BE MADE TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) WITHIN SIX(6) MONTHS FROM THE DATE OF EXECUTION OF THIS AGREEMENT OR WITHIN TWO (2) MONTHS FROM TH E DATE OF APPROVAL OF THE PLANS / DESIGN AND DRAWINGS AND GRANT OF THE FINAL LICENCE TO DEVELOP WHERE UPO N THE CONSTRUCTION CAN COMMENCE, WHICHEVER IS LATER, AGAINST WHICH THE OWNER SHALL EXECUTE A REGISTERED SALE DEED FOR LAND OF EQUIVALENT VALUE BEING 6.36 ACRES OUT OF THE PROPERTY AS DEMARCATED IN GREEN COLOUR (ALSO HATCHED IN GREEN COLOUR) IN THE DEMARCATION PLAN ANNEXED HERETO AS ANNEXURE V AND BEARING KHASRA NOS. 123/15, 123/6, 123/7 (BALANCE PART), 123/3 (PART), 123//4//1, 123///4//1 /2, 123//4/2, 123/5/1, 123//5/2, 123//5/3, 112/24/24 (PART) 85 THE CAREFUL READING OF THE SAID CLAUSE OF THE JD A WOULD SHOW THIS PAYMENT WAS REQUIRED TO BE MADE WIT HIN A PERIOD OF SIX MONTHS FROM THE DATE OF EXECUTION O F THIS AGREEMENT OR WITHIN TWO MONTHS FROM THE DATE OF APP ROVAL OF PLAN / SANCTION AND DRAWING GRANT OF FINAL LICEN SE TO DEVELOP WHERE UPON THE CONSTRUCTION CAN COMMENCE, WHICHEVER IS LATER. THUS, THIS INSTALLMENT WAS DEPE NDENT ON TWO CONTINGENCIES FIRST THE EXPIRATION OF A PERI OD OF SIX MONTHS FROM THE DATE OF AGREEMENT OR ALTERNATIVELY ON THE EXPIRATION OF A PERIOD OF TWO MONTHS FROM THE DATE OF APPROVAL OF PLANS / DESIGNS DRAWING ETC. LEADING TO GRANT OF FINAL LICENSES WHICH CAN LEAD TO COMMENCEMENT O F CONSTRUCTION, WHICHEVER IS LATER. THE MATTER WAS TA KEN UP BY WAY OF PIL BY CERTAIN CITIZENS AND ADMINISTRATIO N OF THE UNION TERRITORY BEFORE THE HON'BLE HIGH COURT WHICH INITIALLY STAYED THE SANCTION OF SUCH PLAN ETC. TH IS LED TO SITUATION WHERE CONSTRUCTION COULD NOT BE COMMENCED AND HENCE PAYMENT WAS NOT REQUIRED TO BE MADE IN VIEW O F THE PENDING LITIGATION. THE CLAUSES OF FORCE MAJEURE C AME INTO OPERATION AND THEREFORE, IT CANNOT BE SAID TH AT THE 47 DEVELOPER IS NOT WILLING TO PERFORM ITS PART OF THE CONTRACT. IN ANY CASE THERE IS NO DEFAULT ON THE PART OF THE DEVELOPER AS PAYMENT WAS NOT YET DUE AS PER CLAUSE 4(I)(IV) OF JDA. 86 THIS POSITION WAS INFORMED TO THE SOCIETY BY LET TER DATED 4.2.2011 BY HASH BUILDER, COPY OF WHICH HAS B EEN FILED AT PAGES 23 & 24 OF THE PAPER BOOK DEALING WI TH THE ADDITIONAL EVIDENCE. THROUGH THIS LETTER IT HAS BE EN CLEARLY STATED THAT SINCE PERMISSION IS PENDING FRO M THE MINISTRY OF ENVIRONMENT AND FOREST DEPARTMENT AND THEREFORE CONSTRUCTIONS COULD NOT COMMENCE. THESE PERMISSIONS WERE PENDING BECAUSE OF THE PIL FILED B Y SHRI AALOK JAGGA BEFORE THE HON'BLE PUNJAB & HARYANA HIG H COURT. ALL THESE FACTS CLEARLY SHOWS THAT IN VIEW OF CLAUSE 4.1(IV) READ WITH CLAUSE 26(V) OF THE JDA, HASH BUI LDER WERE NOT REQUIRED TO MAKE THE PAYMENT AND IT CANNOT BE SAID THAT THEY WERE NOT WILLING TO PERFORM THEIR PA RT OF THE CONTRACT ON THIS ASPECT. THEREFORE, THIS CONTENTIO N IS REJECTED. 87 SEVENTH CONTENTION IS THAT REVENUE WRONGLY HELD THAT EVEN ` CLAUSE (VI) OF SECTION 2(47) IS APPLICABLE. WE FIND NO FORCE IN THIS CONTENTION. CLAUSE (VI) TO SECTIO N 2(47) READS AS UNDER: ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMB ER OF, OR ACCRUING SHARES IN, A COOPERATIVE SOCIETY, COMPA NY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREE MENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJ OYMENT OF, ANY IMMOVABLE PROPERTY. 88 THE PLAIN READING OF THE PROVISION SHOWS THAT AN Y TRANSACTION BY WAY OF BECOMING A MEMBER OR ACQUIRIN G SHARES IN THE COOPERATIVE SOCIETY OR SHARES IN THE COMPANY WHICH HAS THE EFFECT OF TRANSFERRING OR ENABLING THE ENJO YMENT OF ANY IMMOVEABLE PROPERTY WOULD BE COVERED BY THE DEFINIT ION OF TRANSFER. IN THE CASE BEFORE US, INITIALLY THE MEM BERS OF THE SOCIETY WERE HOLDING SHARES IN THE SOCIETY FOR OWNE RSHIP OF PLOT OF 500 SQYD OR 1000 SQYD. THIS MEMBERSHIP WAS SURRENDERED TO THE SOCIETY VIDE RESOLUTION OF THE S OCIETY PASSED IN THE EXECUTIVE COMMITTEE ON 4.1.2007 WHICH WAS LATER RATIFIED IN THE GENERAL BODY MEETING OF THE S OCIETY ON 25.1.2007, SO THAT THE SOCIETY COULD ENTER INTO JDA . IN THE JDA THE SOCIETY HAS AGREED TO TRANSFER THE LAND. T HEREFORE, TECHNICALLY IT CAN BE SAID THAT THE DEVELOPER I.E. THDC/HASH HAS PURCHASED THE MEMBERSHIP OF THE MEMBERS IN THE SOCIETY WHICH WOULD LEAD TO ENJOYMENT OF THE PROPERTY AND I N THAT TECHNICAL SENSE, CLAUSE (VI) OF SECTION 2(47) IS AP PLICABLE. 89 EIGHTH CONTENTION IS THAT SINCE THE SOCIETY HAS TRANSFERRED THE LAND THROUGH JDA ON A PRO-RATA BASI S, THEREFORE, ONLY WHATEVER MONEY IS RECEIVED AGAINST WHICH SALE DEEDS HAVE ALSO BEEN EXECUTED, CAN BE TAXED AND NOT IONAL INCOME I.E. THE MONEY TO BE RECEIVED LATER, CAN NOT BE TAXED. 48 IN THIS REGARD RELIANCE WAS PLACED ON CERTAIN SUPRE ME COURT DECISIONS AND OTHER CASES FOR THE PROPOSITION THAT NOTIONAL INCOME CANNOT BE TAXED. THERE IS NO NEED TO DISCUS S THE CASES RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE BECAUSE IT IS SETTLED POSITION OF LAW THAT NO NOTIONAL INCOME CAN BE TAXED. THOUGH THERE IS NO QUARREL THAT IT IS A SETTLED PRI NCIPLE OF LAW THAT NOTIONAL INCOME CAN NOT BE TAXED BUT IN CASE O F CAPITAL GAIN, SECTION 45 WHICH IS CHARGING SECTION AND SECT ION 48 WHICH IS COMPUTATION SECTION, MAKES IT ABSOLUTELY C LEAR THAT RIGOR OF TAX IN CASE OF CAPITAL GAIN WOULD COME INT O PLAY ON THE TRANSFER OF CAPITAL ASSET AND TOTAL CONSIDERATION W HICH IS ARISING ON SUCH TRANSFER, HAS TO BE TAXED. SECTION 48 CLEARLY TALKS ABOUT FULL CONSIDERATION RECEIVED OR ACCRUING AS RESULT OF TRANSFER. THIS ASPECT WE HAVE ALREADY DISCUSSED IN DETAIL AT PARAS 64 TO 68. 90 SECOND ASPECT OF THIS CONTENTION WAS THAT IF CONSIDERATION WHICH HAS NOT BEEN RECEIVED WAS TO BE TAXED THEN THE ASSESSEE WOULD BE DEPRIVED FOR CLAIM ING EXEMPTION U/S 54 AND 54EC. AS OBSERVED ABOVE AS PE R SECTION 45 R.W.S 48 WHOLE OF THE CONSIDERATION, REC EIVED OR ACCRUED HAS TO BE TAXED. EVERY PERSON IS SUPPOS ED TO KNOW THE LAW AND IF THE TRANSACTION IS STRUCTURED I N SUCH A WAY FOR THE TRANSFER OF CAPITAL ASSET THAT SOME OF THE CONSIDERATION WOULD BE RECEIVED LATER THEN SUCH PER SON IS SUPPOSED TO KNOW THE CONSEQUENCES OF THE DENIAL OF SUCH BENEFITS. HOWEVER, IF THE SECTION IS INTERPRETED IN THE MANNER SUGGESTED BY THE LD. COUNSEL OF THE ASSESSEE THEN NO PERSON WOULD PAY CAPITAL GAIN TAX ON TRANSFER O F A PROPERTY. THIS WILL BE CLEAR FROM A SIMPLE EXAMPLE . LET US ASSUME IF A SELLS THE PROPERTY TO B FOR A CONSI DERATION OF RS. 100 CRORES AND RECEIVE ONLY A CONSIDERATION OF 1.00 CRORE AND IT IS MENTIONED IN THE TRANSFER INSTRUMEN T THAT BALANCE OF CONSIDERATION WOULD BE PAID AFTER 20 YEA RS THEN NO TAX CAN BE LEVIED ON SUCH BALANCE CONSIDERA TION OF RS. 99.00 CRORES WHICH HAS NOT BEEN RECEIVED AS PER THE CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE . BUT IN THAT CASE NO TAXES CAN BE LEVIED EVEN AFTER 20 YEAR S BECAUSE NO TRANSFER CAN BE SAID TO HAVE TAKEN PLACE AFTER 20 YEARS AND REVENUE CANNOT DO ANY THING BECAUSE CAPITAL GAIN CAN BE CHARGED U/S 45 ONLY ON TRANSFER OF CAPITAL ASSET. WE DO NOT THINK THAT THIS KIND OF INTERPRETATION CAN BE MADE WHILE INTERPRETING SECTI ON 45 R.W.S. 48 BY INVOKING THE RULE THAT THERE CAN NOT B E ANY TAX ON NOTIONAL RECEIPT. GENERALLY SPEAKING IT IS O NLY THE REAL INCOME WHICH CAN BE TAXED BUT THIS HAS TO BE UNDERS TOOD SUBJECT TO LIMITATIONS. COMMENTING ON THESE LIMITA TIONS, THE LD. AUTHOR SHRI S. RAJARATNAM IN THE COMMENTARY OF LAW OF INCOME TAX BY SAMPAT IYENGARS VOLUME 1, (11 TH EDITION) HAS OBSERVED AT PAGE 343 AS UNDER:- 5. RESERVATIONS ON REAL INCOME THEORY. - WHETHER ACCRUAL OF INCOME HAS TAKEN PLACE OR NOT, MUST BE JUDGED ON TH E PRINCIPLE OF THE REAL INCOME THEORY. AFTER ACCRUAL, NON-CHARGING OF TAX ON THE SAME BECAUSE OF CERTAIN CONDUCT BASED ON THE IPSE D IXIT OF A PARTICULAR ASSESSEE CANNOT BE ACCEPTED. IN DETERMIN ING THE QUESTION WHETHER IT IS HYPOTHETICAL INCOME OR WHETH ER REAL INCOME HAS MATERIALIZED OR NOT, VARIOUS FACTORS WILL HAVE TO BE TAKEN INTO 49 ACCOUNT. IT WOULD BE DIFFICULT AND IMPROPER TO EXTEND THE CONCEPT OF REAL INCOME TO ALL CASES DEPENDING UPON THE SELF- SERVING STATEMENT OF THE ASSESSEE. WHAT HAS REALLY ACCRUED TO THE ASSESSEE HAS TO BE FOUND OUT AND WHAT HAS ACCRU ED MUST BE CONSIDERED FROM THE POINT OF VIEW OR REAL INCOME TA KING THE PROBABILITY OR IMPROBABILITY OF REALIZATION IN A RE ALISTIC MANNER, BUT ONCE ACCRUAL TAKES PLACE, ON THE CONDUCT OF THE PARTIES SUBSEQUENT TO THE YEAR OF CLOSING, AN INCOME WHICH HAS BEEN ACCRUED CANNOT BE MADE NO INCOME. 91 THE ABOVE POSITION CAN BE UNDERSTOOD BY EXAMININ G SOME OF THE PROVISIONS OF THE ACT WHICH WOULD SHOW THAT CONCEPT OF NOTIONAL INCOME CAN NOT BE EXTENDED IF S PECIFIC PROVISION IS AVAILABLE IN THE ACT. FOR EXAMPLE IN CASE OF INCOME FROM HOUSE PROPERTY, THE INCOME HAS TO BE DETERMINED AS PER SECTION 23. SECTION 22 OF THE INC OME TAX ACT PROVIDES THAT IT IS THE ANNUAL VALUE OF THE PROPERTY WHICH CAN BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. SECTOR 23 PRESCRIBES TH E METHOD FOR DETERMINING THE ANNUAL VALUE. SECTION 23(1)(A) READS AS UNDER:- 23. (1) FOR THE PURPOSES OF SECTION 22 , THE ANNUAL VALUE OF ANY PROPERTY SHALL BE DEEMED TO BE (A) THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR; OR (B) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS L ET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT THEREOF IS IN EXCESS OF THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED O R RECEIVABLE; OR. 92 ON THIS ASPECT THE SETTLED POSITION OF THE LAW I S THAT THE ANNUAL VALUE HAS TO BE DETERMINED EVEN IF THE PROP ERTY IS NOT LET OUT. THIS POSITION HAS BEEN DISCUSSED BY THE L D. AUTHOR CHATURVEDI & PITHISARIAS IN COMMENTARY OF INCOME T AX LAW (FIFTH EDITION) VOLUME 1 IN THIS RESPECT AT PAGES 1 275 & 1276 OBSERVED AS UNDER: ANNUAL VALUE- DETERMINATION OF SECTION 23(1)(A) PROVIDES THAT FOR THE PURPOSES OF SECTION 22, THE ANNUAL VAL UE OF ANY PROPERTY SHALL BE DEEMED TO BE THE SUM FOR WHICH TH E PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YE AR. THE WORD USED IS MIGHT AND NOT CAN OR IS. IT IS T HUS A NOTIONAL INCOME TO BE GATHERED FROM WHAT A HYPOTHETICAL TENA NT WOULD PAY WHICH IS TO BE OBJECTIVELY ASCERTAINED ON A REA SONABLE BASIS IRRESPECTIVE OF THE FACT WHETHER THE PROPERTY IS LET OUT OR NOT [SULTAN BROS. PR. LTD. V. CIT, (1964) 51 ITR 35 3 (SC); JAMNADAS PRABHUDAS V. CIT, (1951)20 ITR 160(BOM); D .M. VAKIL V. CIT, (1946) 14 ITR 298, 302(BOM); CIT V. B IMAN BEHARI SHAW, SHEBAIT, (1968) 68 ITR 815 (CAL); SRI SRI RADHA GOVINDA JEW V. CIT, (1972) 84 ITR 150, 156 (CAL); C IT V. GANGA PROPERTIES LTD., (1970) 77 ITR 637, 647 (CAL) ; 50 LIQUIDATOR, MAHMUDABAD PROPERTIES LTD. V. CIT, (197 2) 83 ITR 470 (CAL), AFFIRMED, (1980) 124 ITR 31 (SC); CIT V. ZOROSTRIAN BUILDING SOCIETY LTD., (1976) 102 ITR 499 (BOM); C. J. GEORGE V. CIT, (1973) 92 ITR 137 (KER); D.C. ANAND & SONS V. CIT, (1981) 131 ITR 77 (DEL). ALSO SEE, CIT V. PARBUTTY CHURN LAW, (1965) 57 ITR 609, 619 (CAL); IN THE MATTER OF KRIS HNA LAL SEAL, AIR 1932 CAL 836; LALLA MAL SAMGHAM LAL V. CI T, (1936) 4 ITR 250 (LAH); NEW DELHI MUNICIPAL COMMITTEE V. N AND KUMAR BUSSI, (1977) TAX LR 2130 (DEL)] 93 SIMILAR VIEW HAS BEEN EXPRESSED BY SHRI N.A. PAL KHIVALA IN HIS COMMENTARY ON THE LAW LAND PRACTICE OF INCOM E TAX, VOLUME 2 (EIGHTH EDITION) BY KANGA AND PALKHIVALAS OBSERVATION AT PAGES 22 & 23. AGAIN EVEN SHRI S. R AJARATNAM IN THE COMMENTARY OF LAW OF INCOME TAX BY SAMPAT IY ENGARS VOLUME 2, (11 TH EDITION) EXPRESSED IDENTICAL VIEWS IN HIS COMMENTARY AT PAGE 2738. 94 IN ALL THE LEADING COMMENTARIES CITED ABOVE, IT HAS BEEN OBSERVED THAT ANNUAL VALUE IS TO BE COMPUTED WHETHER PROPERTY HAS BEEN LET OUT OR NOT. THIS MEA NS THAT NOTIONAL VALUE OF THE PROPERTY HAS TO BE CHARGED TO THE INCOME TAX UNDER THE HEAD INCOME FROM HOUSE PROPER TY. FROM THE ABOVE, IT BECOMES CLEAR THAT THOUGH THERE IS NO REAL INCOME FROM LETTING OUT OF THE PROPERTY, STILL THE NOTIONAL ANNUAL VALUE IS SUBJECTED TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HOWEVER, WE MAY MENT ION THAT U/S 23(1)(C) OF THE ACT IF THE PROPERTY IS LET OUT AND THEN REMAINED VACANT FOR SOME PART OF THE YEAR OR F OR WHOLE OF THE YEAR THEN VACANCY ALLOWANCE CAN BE CLA IMED. HERE, IT IS IMPORTANT TO NOTE THAT IF PROPERTY IS N OT LET OUT, THEN NOTIONAL INCOME BECOMES CHARGEABLE TO THE TAX BECAUSE OF PROVISIONS OF SECTIONS 22 AND 23 (1)(A) OF THE ACT. SIMILARLY, UNDER THE MAT PROVISIONS, IT IS BASICALLY THE NOTIONAL INCOME WHICH IS BEING SUBJECTED TO CHA RGE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION . A BUSINESSMAN MAY HAVE INCOME OF RS. 100/- BUT BECAUS E OF HIGHER DEPRECIATION ALLOWABLE UNDER THE INCOME-T AX ACT OR SOME OTHER WEIGHTED DEDUCTIONS SAY FOR EXAMPLE I N CASE OF EXPENDITURE ON SCIENTIFIC RESEARCH, THE TA XABLE INCOME AS PER THE PROVISIONS OF THE ACT MAY BE ZERO BUT STILL BECAUSE OF THE MAT PROVISIONS, TAX HAS TO BE CHARGED ON BOOK PROFITS. SIMILARLY IN THE CASE OF PRESUMPT IVE TAX PROVISIONS E.G. U/S 44AD IF A PERSON IS CIVIL CONTR ACTOR AND DOES NOT MAINTAIN BOOKS OF ACCOUNT AND HIS TURNOVER IS LESS THAN RS. 60 LAKHS THEN THE PROFIT WOULD BE PRE SUMED TO BE 8% OF TURNOVER EVEN IF HE HAS SUFFERED A LOSS . ANOTHER EXAMPLE OF SECTION 2(22)(E) CAN BE TAKEN. U NDER THIS PROVISION A LOAN OR ADVANCE GIVEN BY CERTAIN COMPANIES TO A SUBSTANTIAL SHARE HOLDER IS TO BE TR EATED AS DEEMED DIVIDEND. SUCH LOAN UNDER THE NORMAL ACCOUNTING PRINCIPLE OR ON COMMERCIAL PRINCIPLES CA NNOT BE REGARDED AS INCOME BUT BECAUSE OF THIS SPECIFIC PROVISION REGARDING DEEMED DIVIDEND SUCH AMOUNT HAS TO BE TREATED AS INCOME OF THE PERSON RECEIVING SUCH L OANS. 51 95 THE ABOVE POSITION OF LAW MAKES IT ABSOLUTELY CL EAR THAT THEORY OF REAL INCOME IS SUBJECT TO THE PROVIS IONS OF THE ACT AND WHENEVER ANY SPECIFIC PROVISIONS OF THE ACT IS THERE FOR CHARGING OF A PARTICULAR ITEM OF INCOME, THEN THE SAME HAS TO BE CHARGED ACCORDINGLY. IT MAY BE SOMETIMES HARD TO THE ASSESSEES BUT AGAIN IT HAS B EEN HELD IN NUMEROUS DECISIONS THAT FISCAL STATUES HAVE TO BE INTERPRETED ON THE BASIS OF LANGUAGE USED AND THERE IS NO SCOPE FOR EQUITY OR INTENT. LD. AUTHOR SHRI S. RAJ ARATNAM IN THE COMMENTARY OF LAW OF INCOME TAX BY SAMPAT IYENGARS VOLUME 1, PAGE 236 IN THIS REGARD HAS OBS ERVED AS UNDER:- ONCE IT IS SHOWN THAT THE CASE OF THE ASSESSEE COM ES WITHIN THE LETTER OF THE LAW, HE MUST BE TAXED, HOW EVER, GREAT THE HARDSHIP MAY APPEAR TO THE JUDICIAL MIND. CONSIDERATIONS OF HARDSHIP, INJUSTICE OR ANOMALIES DO NOT PLAY ANY USEFUL ROLE IN CONSTRUING TAXING STATU TES UNLESS THERE BE SOME REAL AMBIGUITY. THUS, ANY BENEVOLENT CONSTRUCTION IN FAVOUR OF THE ASSESSEE H AS BEEN HELD TO BE UNCALLED FOR. 96 THEREFORE, IT CAN BE SAID THAT GENERALLY SPEAKIN G NOTIONAL INCOME COULD NOT BE SUBJECTED TO TAX BUT WHENEVER THERE IS A SPECIFIC PROVISION, THE SAME HA S TO BE TAXED. NOW, IN CASE OF CAPITAL GAIN, SECTION 45 RE AD WITH SECTION 48 VERY CLEARLY PROVIDES THAT IT IS THE PRO FIT ARISING FROM THE TRANSFER OF A CAPITAL ASSET WHI CH WOULD BE SUBJECTED TO CHARGE OF CAPITAL GAIN TAX AND SECT ION 48 CLEARLY PROVIDES FOR TAKING THE TOTAL CONSIDERATION INTO ACCOUNT WHILE COMPUTING THE CAPITAL GAINS. THIS AS PECT WE HAVE ALREADY DISCUSSED IN DETAIL AT PARA NO. 64 TO 68 FROM WHICH IT BECOMES CLEAR THAT IT IS THE WHOLE CONSIDERATION WHETHER RECEIVED OR ACCRUED, WHICH HA S TO BE TAXED UNDER THE CAPITAL GAIN ONCE TRANSFER OF TH E CAPITAL ASSET TAKES PLACE. ACCORDINGLY, THERE IS N O FORCE IN THIS PART OF THE CONTENTION. 97 NOW LET US EXAMINE THE ISSUE OF TAXABILITY OF FL AT ON THE BASIS OF ABOVE PRINCIPLES. RELEVANT PORTION O F CLAUSE 4 OF THE JDA WHICH DEALS WITH CONSIDERATION ARE AS UNDER: 4. CONSIDERATION 4.1 IT IS SPECIFICALLY UNDERSTOOD AND AGREED AMONGS T THE PARTIES THAT THDC SHALL USE ITS EXPERTISE AND ITS B RAND NAME AND / OR ANY OTHER BRAND NAME AT ITS DISCRETION TO DEVELOP THE PROPERTY INTO THE PREMISES AS PER APPLICABLE BUILDI NG BYE-LAWS OF THE COMPETENT AUTHORITY AND THE OWNER SHALL HAVE NO OBJECTION TO THE SAME IN WHATSOEVER MANNER. IN CONS IDERATION OF THE OWNER GRANTING AND ASSIGNING, ITS DEVELOPMEN T RIGHTS IN THE PROPERTY, IRREVOCABLY AND IN PERPETUITY, TO THDC TO DEVELOP THE PROPERTY AND FOR TRANSFER OF THE PROPER TY UPON THE 52 SURRENDER OF ALLOTMENT RIGHTS OF 500 SQ. YARDS AND/ OR 1000 SQ. YARDS (AS THE CASE MAY BE) BY ITS MEMBERS TO THE OW NER, VIDE RESOLUTION DATED 04.01.2007 AND 25.02.2007 (COPY AT TACHED AS PER ANNEXURE I & II), HASH IS COMMITTED TO PAY TO T HE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS TH E CASE MAY BE) A TOTAL AMOUNT OF RS. 106,42,50,000/- (RUPE ES ONE HUNDRED SIX CRORES FORTY TWO LACS FIFTY THOUSANDS O NLY) CALCULATED @ RS. 82,50,000/- (RUPEES EIGHTY TWO LAC S FIFTY THOUSANDS ONLY) PAYABLE TO 65 MEMBERS HAVING PLOT O F 500 SQ. YARDS EACH, RS. 1,65,00,000/- (RUPEES ONE CRORE SIXTY FIVE LACS ONLY) PAYABLE TO 30 MEMBERS HAVING PLOT O F 1000 SQ. YARDS EACH AND RS. 3,30,00,000/- (RUPEES THREE CRORES THIRTY LACS ONLY) PAYABLE TO THE OWNER FOR THE 4 PL OTS OF 500 SQ. YARDS EACH, WHICH SHALL TANTAMOUNT TO THE FULL AND FINAL PAYMENT TO THE OWNER AND / OR THE RESPECTIVE MEMBER S OF THE OWNER (AS THE CASE MAY BE) IN A MANNER SET OUT HERE IN 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 PRO RATA TO THE PAYMENT RECEIVED BY THE OWNER AND/OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) FROM HASH BY EXECUTING SALE DEEDS AND REGISTERI NG THE SAME. IT IS EXPRESSLY PROVIDED THAT AS RESOLVED BY THE OWNER, THE TOTAL AMOUNT PAYABLE BY HASH TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE ) FOR ASSIGNMENT OF THE DEVELOPMENT RIGHTS AND FOR TRANSF ER AND SALE OF 21.2 ACRES OF LAND OF THE PROPERTY SHALL BE RS. 106,42,50,000/- (RUPEES ONE HUNDRED SIX CRORES FORT Y TWO LACS FIFTY THOUSAND ONLY) AND ONE HUNDRED AND TWENT Y NINE (129) FLATS CONSISTING OF SUPER AREA OF 2250 SQ. FE ET (FLATS); ONE FLAT EACH FOR SIXTY FIVE MEMBERS HAVING A PLOT OF 500 SQ. YARDS, TWO FLATS FOR THE (THIRTY) 30 MEMBERS HAVING A PLOT OF 1000 SQ. YARDS AND 4 FLATS TO THE OWNER FOR THE 4 P LOTS OF 500 SQ. YARDS EACH AS PER LIST ANNEXED WITH THIS AGREEM ENT AS SCHEDULE B (SALE TRANSACTION) IT IS EXPRESSLY AGREED BETWEEN THE DEVELOPERS THAT HASH SHALL BE RESPONSIBLE FOR MAKING ALL PAYMENTS TO THE OWNER AND/OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MA Y BE) AS PER THE NEGOTIATED AND AGREED TERMS BETWEEN THE OWN ER AND HASH, HASH EXPRESSLY UNDERTAKES TO MAKE TIMELY PAYM ENTS OF THE PAYMENT TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) AS UNDER: 4.2 AS RESOLVED BY THE OWNER, THDC EITHER BY ITSELF OR ALONG WITH HASH SHALL ALLOT THE FLATS IN THE NAME OF MEMB ERS OF THE OWNER AS PER LIST ANNEXED WITH THIS AGREEMENT AS SC HEDULE B ATTACHED HEREIN (HEREINAFTER REFERRED TO AS THE AL LOTTEES). THE SPECIFICATIONS OF THE FLATS WOULD BE PROVIDED BY TH E DEVELOPERS TO THE OWNER AND MORE PARTICULARLY DESCRIBED IN THE SCHEDULE C ATTACHED HEREIN (HEREINAFTER REFERRED TO AS THE SPECIFICATIONS). THE ALLOTMENT LETTERS SHALL BE I SSUED TO THE 53 ALLOTTEES (MEMBERS OF THE OWNER) WITHIN FORTY-FIVE (45) DAYS FROM THE DATE OF SANCTION OF THE BUILDING PLANS / D ESIGN AND DRAWING AND ON OBTAINING FINAL LICENSE/PERMISSION F OR THE DEVELOPMENT OF THE PROJECT FROM THE COMPETENT AUTHO RITY. THEREAFTER, THE POSSESSION OF THE FLATS SHALL BE HA NDED OVER TO THE ALLOTTEES WITHIN THIRTY(30) MONTHS FORM THE DA TE OF ISSUANCE OF THE ALLOTMENT LETTER. IT IS EXPRESSLY PROVIDED THAT THE PAYMENT TO BE MAD E BY HASH TO THE OWNER AND/OR TO THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) AND THE FLATS TO BE ALLOTTED TO THE ALLOTTEES AS SET OUT IN THIS CLAUSE 4.2 SHALL HEREINAFTER BE COLLECTIVELY REFERRED TO AS THE ENT IRE CONSIDERATION 98 FROM THIS CLAUSE IT BECOMES ABSOLUTELY CLEAR THA T EACH MEMBER HAVING 500 SQYD OF PLOT WAS ENTITLED TO RECEIVE ONE FURNISHED FLAT MEASURING 2250SQFT AND MEMBERS HAVING 1000SQYD FLAT WERE ENTITLED TO RECEI VE TWO FURNISHED FLATS. THUS UPON EXECUTION OF THE JD A VESTED RIGHT CAME TO SUCH MEMBERS TO RECEIVE SUCH F LATS. ONCE THIS VESTED RIGHT ARISES OUT OF THE ABOVE CONT RACT IT CAN EASILY BE SAID THAT THIS RIGHT HAS ALSO ACCRUED TO THE ASSESSEE. CLAUSE 4.2 MAKES IT ABSOLUTELY CLEAR THA T DEVELOPER I.E. THDC/HASH WAS TO ALLOT THE LETTERS O F ALLOTMENT WITHIN 45 DAYS FROM FINAL SANCTION FROM T HE COMPETENT AUTHORITY AND SUCH FLATS WERE PART OF ENT IRE CONSIDERATION. MERELY BECAUSE SUCH ALLOTMENT LETTE R HAS NOT BEEN GIVEN BECAUSE OF SANCTIONS / PERMISSIONS C OULD NOT BE OBTAINED BECAUSE OF PUBLIC INTEREST LITIGATI ON BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT, IT CANNOT BE SAID THAT SUCH RIGHT HAS NOT ACCRUED. TH OUGH IT MAY BE HARD ON THE ASSESSEE BUT IT IS WELL SETTLED THAT TAXATION AND EQUITY ARE STRANGERS. FURTHER COMMENT ING ON THIS ASPECT SHRI RAJARATHNAM IN HIS COMMENTARY HAS OBSERVED AT PAGE 5164 AS UNDER: IT IS HARD ON THE OWNERS WHEN REQUIRED TO PAY TAX, WHEN HANDING OVER THE POSSESSION FOR PURPOSES OF CONSTRU CTION WITHOUT BEING ABLE TO ENJOY THE CONSTRUCTION, WHICH IS YET TO COMMERCE OR IN THE PROCESS OF CONSTRUCTION BEING PUT UP BY THE DEVELOPER, BUT THE SOLUTION LIES IN STATU TORY CLARIFICATION IN SUCH CASES. IN VIEW OF THE INCREA SING SCALE OF SUCH DEVELOPMENT AGREEMENTS TO SOLVE THE HOUSING PROBLEM IN THE CITIES, A STATUTORY CLARIFIC ATION OR CIRCULAR IS OVERDUE. 99 THESE COMMENTS AND THE OTHER DETAILED DISCUSSION ON THIS ASPECT CLEARLY SHOW THAT CAPITAL GAIN TAX H AS TO BE PAID ON THE TOTAL CONSIDERATION ARISING ON TRANSFER WHICH WOULD INCLUDE THE CONSIDERATION WHICH HAS BEEN RECE IVED 54 AS WELL AS THE CONSIDERATION WHICH HAS AROSEN AND BECOME DUE AND MAY BE RECEIVED LATER ON. IN VIEW O F THIS DISCUSSION THIS CONTENTION IS REJECTED. 100 NINTH CONTENTION IS THAT THE ASSESSEE HAS ALREA DY TERMINATED THE AGREEMENT AND HAS REVOKED THE POWER OF ATTORNEY. WE FIND NO FORCE IN THIS SUBMISSIONS. 101 IN THIS REGARD LD. COUNSEL OF THE ASSESSEE HAS RELIED ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN CAS E OF CHEMOSYN LTD. V ACIT (SUPRA). IN THAT CASE THE ASS ESSEE- COMPANY WAS OWNER OF TWO PLOTS BEARING 256 & 257 IN GUNDABALI ANDHERI MUMBAI. THE ASSESSEE-COMPANY ENT ERED INTO A DEVELOPMENT AGREEMENT WITH DIPITI BUILDERS F OR THE DEVELOPMENT RIGHTS FOR A CONSIDERATION OF RS. 16.11 CRORES. DIPITI BUILDERS HAD ALSO AGREED TO CONSTRUCT 18000 SQFT CARPET AREA FOR THE BENEFIT OF ASSESSEE ON PLOT NO. 256. IN THE RETURN OF INCOME TOTAL CONSIDERATION WAS SHOWN ONLY AT RS . 16.11 CRORES. IT WAS EXPLAINED THAT BEFORE DIPITI BUILDE RS COULD START THE DEVELOPMENT /CONSTRUCTION WORK, ENTIRE PROPERTY COMPRISING OF PLOT NO. 256 & 257 WAS SOLD TO A THIR D PARTY M/S FINANCIAL TECHNOLOGY LTD. BY A TRIPARTITE CONVEYANC E DEED EXECUTED ON 5.7.2007 FOR RS. 29.11 CRORES AND THERE FORE, ADDITIONAL CONSIDERATION OF RS. 13 CRORES HAS BEEN OFFERED TO TAX IN ASSESSMENT YEAR 2008-09. THIS EXPLANATION W AS REJECTED BY THE ASSESSING OFFICER BECAUSE ACCORDING TO HIM IT WAS A CASE OF TRANSFER U/S 2(47)(V) AND TOTAL CONSI DERATION HAS TO BE CHARGED IN THE YEAR OF TRANSFER. THE TRI BUNAL AFTER CONSIDERING THE PROVISIONS OF SECTION 45 & 48 POSED A QUESTION TO ITSELF THAT WHAT SHOULD BE THE CONSIDERATION IN THE CASE BEFORE THE BENCH. THE CASE LAW RELIED ON BY THE DE PARTMENT WAS REJECTED BECAUSE SAME WAS RELEVANT TO ACCRUAL O F INTEREST. THE BENCH FOLLOWED THE DECISION OF KALPT ARU CONSTRUCTION OVERSEES PVT LTD. 13 SOT 194. IN THAT CASE THE ASSESSEE HAD AGREED TO SELL TO ITS SUBSIDIARY EQUIT Y SHARES FOR A CONSIDERATION OF RS. 1.25 CRORES WHICH WAS FINALL Y SETTLED AT RS. 1.00 CRORE AND THE TRIBUNAL HELD THAT THE CONSI DERATION OF RS. 1.00 CRORE HAS TO BE ACCEPTED. 102. FROM THE ABOVE DECISION IT IS NOT CLEAR WHETHE R IN CASE OF KALAPTARU CONSTRUCTION OVERSEES PVT LTD. (SUPRA) WHICH HAS BEEN FOLLOWED IN ABOVE CASE, WAS CONCERNING CAPITAL GAIN OR NOT? SECONDLY IT IS NOT CLEAR THAT WHETHER THE AME NDED CONSIDERATION I.E. SETTLEMENT FOR RS. 1.00 CRORE WA S MADE IN THE SAME YEAR OR NOT? AS OBSERVED EARLIER WHILE DI SCUSSING THE ISSUE OF NOTIONAL INCOME THAT PROVISIONS OF SEC TION 45 R.W.S. 48, ARE ABSOLUTELY CLEAR AND THERE IS NO AMB IGUITY THAT ONCE A CAPITAL ASSET IS TRANSFERRED THEN WHOLE OF T HE CONSIDERATION RECEIVED OR ACCRUING HAS TO BE CONSID ERED FOR THE PURPOSE OF TAXATION IN THE YEAR IN WHICH THE TR ANSFER HAS TAKEN PLACE. WE FURTHER FIND THAT IN THE JDA THERE IS A CLAUSE FOR TERMINATION OF THE AGREEMENT. RELEVANT CLAUSE 14 READS AS UNDER: TERMINATION 55 14(I) SAVE AND EXCEPT THE PROVISION OF CLAUSE 26, THDC SHALL AT ALL TIMES HAVE THE RIGHT TO TERMINATE THIS AGREE MENT IN THE EVENT THERE IS ANY MATERIAL BREACH OF THE REPRESENT ATIONS, WARRANTIES, UNDERTAKINGS, DECLARATIONS, COVENANTS A ND/OR OBLIGATIONS GIVEN BY THE OWNER UNDER THIS AGREEMENT AFTER GIVING THIRTY (30) DAYS WRITTEN NOTICE FOR RECTIFIC ATION OF SUCH BREACH. IN THE EVENT THE AGREEMENT IS TERMINATION BY THDC, ALL THE LANDS REGISTERED IN THE NAME OF THDC AS PER THE TERMS OF THIS AGREEMENT UPTO THE DATE OF THE TERMINATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSFERRED T O THDC AS PER THE TERMS OF THIS AGREEMENT SHALL NOT BE TRA NSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL REFUND TO THDC THE ADJUSTABLE ADVANCE/E ARNEST MONEY MENTIONED IN CLAUSE 4.1(I) ABOVE WITHIN ONE M ONTH OF SUCH TERMINATION. IN THE EVENT OF FAILURE OF THE O WNER TO REFUND THE SAID AMOUNT, THE OWNER HEREBY AGREES TO EXECUTE A REGISTERED SALE DEED FOR LAND OF EQUIVALENT VALUE I N FAVOUR OF THDC. (II) IN THE EVENT ALL THE REQUISITE GOVERNMENT AND STATUTORY APPROVALS, AUTHORIZATIONS, CONSENTS, LICENSES, APPR OVALS OF ALL THE PLANS/DESIGNS AND DRAWINGS AS MAY BE REQUIRED F OR THE DEVELOPMENT OF THIS PROPERTY IN RELATION TO THE PRO JECT AND TO UNDERTAKE THE PROJECT ARE NOT GRANTED WITHIN NINE ( 9) MONTHS OF THE SUBMISSION OF THE FINAL PLANS/DESIGNS AND DRAWI NGS TO THE COMPETENT AUTHORITY FOR APPROVAL THEN THDC MAY AS I TS SOLE DISCRETION EITHER DECIDE THAT IT DOES NOT DESIRE TO UNDERTAKE AND COMPLETE THE PROJECT AND HENCE TERMINATE THIS A GREEMENT AFTER GIVING THIRTY (30) DAYS WRITTEN NOTICE IN THI S REGARD OR DECIDE TO WAIT FOR ANY FURTHER TIMES DEEMED FIT BY THDC FOR THE GRANT OF THE AFORESAID APPROVALS AND LICENSES. IN THE EVENT THE AGREEMENT IS TERMINATED BY THDC, ALL THE LANDS REGI STERED IN THE NAME OF THDC AS PER THE TERMS OF THIS AGREEMENT UPTO THE DATE OF THE TERMINATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSFERRED TO THDC AS PER THE TERMS OF THIS AGREEMENT SHALL NOT BE TRANSFERRED BY THE OWNE R IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL REF UND TO THDC THE ADJUSTABLE ADVANCE/EARNEST MONEY MENTIONED IN CLAUSE 4.1(I) ABOVE WITHIN ONE MONTH OF SUCH TERMIN ATION. IN THE EVENT OF FAILURE OF THE OWNER TO REFUND THE SAI D AMOUNT, THE OWNER HEREBY AGREES TO EXECUTE A REGISTERED SAL E DEED FOR LAND OF EQUIVALENT VALUE IN FAVOUR OF THDC. (III) IN THE EVENT THDC IS UNABLE TO DEVELOP THE PR OPERTY DUE TO REFUSAL/NON GRANT OF APPROVALS, CONSENTS, PERMIS SION, LICENSES OR REVOCATION OF THE SAME BY THE APPROPRIA TE STATUTORY AUTHORITY, THEN THDC MAY AT ITS SALE DISCRETION TER MINATE THIS AGREEMENT. IN THE EVENT THE AGREEMENT IS TERMINATE D BY THDC, ALL THE LANDS REGISTERED IN THE NAME OF THDC AS PER THE TERMS OF THIS AGREEMENT UPTO THE DATE OF THE TERMIN ATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSF ERRED TO THDC AS PER THE TERMS OF THIS AGREEMENT SHALL NOT B E 56 TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL REFUND TO THDC THE ADJ USTABLE ADVANCE/EARNEST MONEY MENTIONED IN CLAUSE 4.1(I) AB OVE WITHIN ONE MONTH OF SUCH TERMINATION. IN THE EVENT OF FAILURE OF THE OWNER TO REFUND THE SAID AMOUNT, THE OWNER HERE BY AGREES TO EXECUTE A REGISTERED SALE DEED FOR LAND O F EQUIVALENT VALUE IN FAVOUR OF THDC. (IV) THE OWNER SHALL HAVE THE RIGHT TO TERMINATE TH E AGREEMENT ONLY IN THE EVENT OF DEFAULT BY THE DEVEL OPERS FOR MAKING THE PAYMENT IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT AND THE ALLOTMENT OF FLATS WITHIN THE TIM E PERIOD AS MENTIONED IN THIS AGREEMENT AFTER GIVING THIRTY (30 ) DAYS WRITTEN NOTICE FOR RECTIFICATION OF SUCH BREACH OR ANY FURTHER TIME AS MAY BE DESIRED BY THE OWNER. IN THE EVENT THE AGREEMENT IS TERMINATED BY OWNER, ALL THE LANDS REG ISTERED IN THE NAME OF THDC AS PER THE TERMS OF THIS AGREEMENT UPTO THE DATE OF THE TERMINATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSFERRED TO THDC AS PER THE TERMS OF THIS AGREEMENT SHALL NOT BE TRANSFERRED BY THE OWNE R IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL FOR FEIT THE ADJUSTABLE ADVANCE/EARNEST MONEY MENTIONED IN CLAUS E 4(I). 103 THE READING OF THE ABOVE CLAUSE WOULD SHOW THAT POWER OF TERMINATION HAS BEEN GIVEN IN MANY CIRCUMSTANCE S TO THDC VIDE CLAUSE 14(I), (II) AND (III). THE POWER FOR TERMINATION BY THE OWNER HAS BEEN MENTIONED IN CLAU SE 14(IV) ONLY. READING OF THIS CLAUSE WOULD SHOW THAT RIGHT TO TERMINATE WITH THE OWNER I.E. THE SOCIETY WAS AVAIL ABLE ONLY IN CASE OF DEFAULT IN MAKING THE PAYMENT. THE ISSUE R EGARDING DEFAULT FOR MAKING PAYMENT HAS ALREADY BEEN DISCUSS ED BY US IN PARAS 84 TO 86 ABOVE WHILE DISCUSSING THE ISSUE OF WILLINGNESS ON THE PART OF THE TRANSFEREE TO PERFOR M ITS PART OF THE CONTRACT WE HAVE ALREADY HELD THAT THERE WAS N O DEFAULT ON THE PART OF DEVELOPER I.E. THDC/HASH IN MAKING T HE PAYMENT, THEREFORE, THE ASSESSEE HAD NO RIGHT TO T ERMINATE THE CONTRACT. IN ANY CASE WE FURTHER FIND THAT CLA USE 20 OF THE JDA REFERS TO ARBITRATION AND IT IS CLEARLY PROVIDE D THAT ALL THE DISPUTES UNDER IT SHOULD BE REFERRED TO THE ARBITRA TION. THEREFORE, IF THE SOCIETY HAD SOME GRIEVANCE IT WA S DUTY BOUND TO GIVE A NOTICE FOR APPOINTMENT OF AN ARBITR ATOR TO THE DEVELOPER. IN THE ABSENCE OF SUCH NOTICE THE TERMI NATION WILL NOT STAND SCRUTINY OF LAW. HERE IT IS ALSO PERTINEN T TO NOTE THAT THOUGH IT WAS STATED THAT IRREVOCABLE POWER OF ATTO RNEY HAS BEEN REVOKED AND SOME DOCUMENTS HAVE BEEN FILED BEF ORE US FOR REVOCATION BUT CLAUSE 6.7 OF THE JDA WHICH WE H AVE REPRODUCED EARLIER CLEARLY PROVIDES THAT SUCH POWER OF ATTORNEY CANNOT BE REVOKED. WE REPRODUCE CLAUSE 6. 7 AGAIN WHICH IS AS UNDER: 57 6.7 THE OWNER SHALL EXECUTE AN IRREVOCABLE SPECIAL POWER OF ATTORNEY GRANTING ITS COMPLETE DEVELOPMENT RIGHTS IN THE PROPERTY IN FAVOUR OF THDC INTERALIA INCLUDING THE RIGHT TO RAISE FINANCE BY MORTGAGING THE PROPERTY AND REGISTER THE CHARGE WITH THE COMPETENT AUTHORITY AND EXECUTE REGISTERED SALE DEEDS) AS SET OUT IN CLAUSE 4.1 (II), (III), (IV) AND (V) AND THE OWNER CONFIRMS, UNDERTAKES, DECLARES AND BINDS ITSELF NOT TO REVOKE THE SAME FOR ANY REASON WHATSOEVER OUT OF IT S OWN WILL AND DISCRETION WITHOUT OBTAINING A SPECIFI C PRIOR WRITTEN CONSENT OF THDC OR ANY OF ITS DULY CONSTITUTED ATTORNEYS. 104 THE ABOVE CLEARLY SHOWS THAT THIS POWER OF ATTO RNEY COULD NOT BE REVOKED FOR ANY REASON WITHOUT OBTAINI NG SPECIFIC PRIOR WRITTEN CONSENT OF THDC/HASH. NO DOCUMENT SHOWING THE CONSENT OF THDC FOR REVOCATION OF THIS IRREVOCABLE POWER OF ATTORNEY HAS BEEN PRODUCE D BEFORE US. WE FAIL TO UNDERSTAND THAT IN THE ABSEN CE OF SUCH DOCUMENT HOW THE ASSESSEE CAN CLAIM THAT THIS POWER OF ATTORNEY HAS BEEN REVOKED. AS DISCUSSED EARLIER WHILE CONSIDERING THE LEGAL POSITION, WE WO ULD AGAIN RECALL THE WORDS OF HON'BLE AUTHORITY FOR ADV ANCE RULING IN CASE OF JASBIR SINGH SARKARIA (SUPRA) WHE REIN AT PARA 33 OF THE DECISION WHILE DISCUSSING THE ISSUE IN RESPECT OF POWER OF ATTORNEY, IT WAS HIGHLIGHTED T HAT EXECUTION OF IRREVOCABLE POWER OF ATTORNEY IS OF SIGNIFICANT NATURE AND THE WORDS IRREVOCABLE ARE VERY IMPORTANT. THE EXPRESSION IRREVOCABLE ITSELF SHO WS THAT NORMALLY SUCH ATTORNEY CANNOT BE REVOKED. THEREFOR E, NO COGNIZANCE CAN BE TAKEN IN RESPECT OF REVOCATION O F THE IRREVOCABLE POWER OF ATTORNEY. IN THE ABSENCE OF S PECIFIC CONSENT AS PROVIDED IN CLAUSE 6.7 OF THE JDA FROM T HDC. 105 WE MAY ALSO NOTE THAT CIT D.R HAS POINTED OUT T HAT TOTAL CONSIDERATION WAS TO BE DETERMINED AS UNDER: (I) CONSIDERATION IN CASH (RS. 82,50,000 X 129 PLOTS) RS. 106,42,50,000/- (II) CONSIDERATION IN KIND (RS. 101,25,000/- X 129 PLOTS) RS. 130,61,25,000/- TOTAL RS. 237,03,75,000/- AVERAGE COST OF CONSIDERATION RS. 11.18 CRORES PER ACRE (TOTAL CONSIDERATION OF RS. 237.03 CRORES DIVIDED B Y 21.2 ACRES OF LAND) 58 IT IS CLAIMED ON BEHALF OF THE ASSESSEE THAT JDA HA S BEEN CANCELLED AND THE DEVELOPER HAS BEEN ALLOWED TO RET AIN THE PROPERTY WHICH HAS ALSO BEEN CONVEYED TO DEVELOPER THROUGH TWO SALE DEEDS. IF THAT IS SO THEN WHAT WOULD HAPP EN TO THE BALANCE CONSIDERATION BECAUSE IN SUCH SITUATION THE ASSESSEE HAS RECEIVED CONSIDERATION OF ONLY ABOUT RS. 5 CRO RESS PER ACRE BECAUSE THE ASSESSEE HAS REGISTERED LAND MEASU RING 3.08 ACRES FOR RS. 15.48 CRORES THROUGH FIRST CONVE YANCE DEED, WHEREAS CONSIDERATION AS PER ORIGINAL AGREEMENT WAS RS. 11.18 CRORES PER ACRE AS SHOWN ABOVE. THE DIFFEREN CE IS BECAUSE OF NON RECEIPT OF CONSIDERATION IN KIND AND THE ASSESSEE HAS NOT SHOWN ANY EVIDENCE THAT IT HAS MAD E THE CLAIM FOR RECEIPT OF BALANCE CONSIDERATION. THIS L EADS TO THE CONCLUSION THAT THERE WAS NO CANCELLATION OF THE JD A. 106 SOME ARGUMENTS WERE MADE BY BOTH THE PARTIES TH AT IF THE CONTRACT IS FINALLY STAND ABANDONED THEN WHAT W OULD HAPPEN. THE CONTENTION ON BEHALF OF THE ASSESSEE I S THAT IF THE CONTRACT IS ABANDONED THEN THE ASSESSEE WOULD H AVE PAID TAX IN THE YEAR OF TRANSFER AND WOULD BE LEFT WITH NO RECOURSE FOR RELIEF. THE CONTENTION ON BEHALF OF THE DEPART MENT WAS THAT THE ASSESSEE COULD ALWAYS FILE REVISED RETURN OR MAKE A PETITION U/S 264 AND SOME RELIEF WAS POSSIBLE IN CA SE OF THE ASSESSEE. HOWEVER, IF REVENUE FAILS TO TAX THE TOT AL CONSIDERATION IN THE YEAR OF TRANSFER THEN SAME CA NNOT BE SUBJECTED TO TAX IN ANY OTHER YEAR. WE FIND THAT T HIS QUESTION WAS SERIOUSLY CONSIDERED BY THE LD. AUTHORITY FOR A DVANCE RULING IN CASE OF JASBIR SINGH KATARIA (SUPRA) WHIC H HAS BEEN RELIED ON BY BOTH THE PARTIES FOR VARIOUS ASPECTS. IN THAT CASE IT WAS OBSERVED AT PARA 39 AS UNDER: WE HAVE TO ADVERT TO ONE ASPECT WHICH HAS CAUSED S OME CONCERN TO US. WHAT WILL HAPPEN IF DURING THE YEAR FOLLOWING THE ONE IN WHICH THE DEEMED TRANSFER TOOK PLACE, TH E PROPOSED VENTURE COLLAPSES FOR REASONS SUCH AS REFUSAL OF PE RMISSIONS, THE DEVELOPER FACING FINANCIAL CRUNCH ETC. BY THAT TIME, THE OWNER WOULD HAVE RECEIVED ONLY A PART OF THE AGREED CONSIDERATION, BUT HE IS OBLIGED TO FILE THE RETURN SHOWING THE ENTIRE CAPITAL GAIN BASED ON THE FULL SALE PRICE WH ETHER OR NOT RECEIVED DURING THE YEAR OF DEEMED TRANSFER. IN SU CH AN EVENTUALITY, HARDSHIP MAY BE CAUSED TO THE OWNER WH O WOULD HAVE PAID FULL TAX. NO DOUBT, SUCH A SITUATION COU LD BE AVOIDED IF THE CONTENTION OF THE APPLICANT IS ACCEP TED. ON DEEP CONSIDERATION, HOWEVER, WE FIND THAT THE CONST RUCTION OF THE RELEVANT PROVISION SHOULD NOT BE CONTROLLED BY GIVING UNDUE IMPORTANCE TO SUCH HYPOTHETICAL SITUATIONS. NORMAL LY, THE OWNER EXECUTES A POWER OF ATTORNEY OR DOES SIMILAR ACT TO LEFT THE TRANSFEREE TAKE POSSESSION ONLY AFTER THE BASIC PERMISSIONS ARE GRANTED AND HE IS SATISFIED ABOUT T HE ABILITY OF TRANSFEREE/DEVELOPER TO FULFIL THE CONTRACT. IN SP ITE OF THAT, IF SUCH RATE SITUATIONS TAKE PLACE, THE OWNER/TRANSFER OR WILL NOT BE WITHOUT REMEDY. HE CAN FILE A REVISED RETURN AN D MAKE OUT A CASE FOR EXCLUSION OR REDUCTION OF INCOME. HOWEV ER, IF THE TIME-LIMIT FOR FILING A REVISED RETURN EXPIRES, THE DIFFICULTY WILL 59 ARISE. IT IS FOR PARLIAMENT OR THE CENTRAL GOVERNM ENT TO PROVIDE A REMEDY TO THE ASSESSEE IN SUCH CASES. MO REOVER, THE OTHER SIDE OF THE PICTURE AS DEPICTED IN PARAGR APH 27 (SUPRA) SHOULD ALSO BE KEPT IN VIEW. HERE THE COMMENTS OF SHRI RAJARATNAM QUOTED AT PARA 5164 ABOVE ARE ALSO RELEVANT AGAIN: IT IS HARD ON THE OWNERS WHEN REQUIRED TO PAY TAX, WHEN HANDING OVER THE POSSESSION FOR PURPOSES OF CONSTRU CTION WITHOUT BEING ABLE TO ENJOY THE CONSTRUCTION, WHICH IS YET TO COMMERCE OR IN THE PROCESS OF CONSTRUCTION BEING PUT UP BY THE DEVELOPER, BUT THE SOLUTION LIES IN STATU TORY CLARIFICATION IN SUCH CASES. IN VIEW OF THE INCREA SING SCALE OF SUCH DEVELOPMENT AGREEMENTS TO SOLVE THE HOUSING PROBLEM IN THE CITIES, A STATUTORY CLARIFIC ATION OR CIRCULAR IS OVERDUE. WE MAY MENTION HERE THAT NO DOUBT SOMETIMES AN ASSE SSEE MAY BE PUT IN A DIFFICULT SITUATION AND AS MENTIONE D BY HON'BLE AUTHORITY IN CASE OF JASBIR SINGH SARKARIA (SUPRA) AS WELL AS LD. AUTHOR SHRI RAJARATNAM IT IS FOR THE LEGISLATUR E TO TAKE CORRECTIVE STEPS. HOWEVER, IT MAY NOT BE OUT OF PL ACE THAT IF CONSIDERING THE DIFFICULTY THE INTERPRETATION GIVEN BY THE LD. COUNSEL OF THE ASSESSEE IS ACCEPTED THEN THE REVENU E MAY NOT BE ABLE TO TAX SUCH ASSESSEES WHEN THESE DIFFIC ULTIES ARE REMOVED. FOR EXAMPLE IN THE PRESENT CASE IF TOMORR OW WHEN ALL PERMISSIONS ARE OBTAINED AND CONSTRUCTION IS CO MPLETED AND IF NO TAXES ARE HELD TO BE PAYABLE THEN LATER O N ALSO THE ASSESSEE MAY NOT BE SUBJECTED TO ANY TAX UNDER THE HEAD CAPITAL GAIN BECAUSE THEN IT CAN BE EASILY CONTEN DED ON BEHALF OF THE ASSESSEE THAT THE TRANSFER HAS ALREAD Y TAKEN PLACE ON THE DATE WHEN IRREVOCABLE POWER OF ATTORNE Y WAS EXECUTED. IN THAT SITUATION THE REVENUE WILL HAVE NO REMEDY. 107 THE ABOVE CLEARLY SHOWS THAT SUCH HYPOTHETICAL CONSIDERATION CANNOT BE CONSIDERED FOR GIVING TRUE MEANING TO A PARTICULAR PROVISION. IT HAS ALSO BEEN OBSERVED THAT IN SOME GENUINE CASES THE DIFFICULTIES MAY ARISE BUT IT WAS FOR THE PARLIAMENT OR THE GOVERNMENT TO PROVIDE REMEDY IN S UCH CASES AND JUDICIAL FORUMS CANNOT DO ANYTHING. THER EFORE, IN VIEW OF THE PROVISIONS OF SECTION 45 R.W.S. 48 WE A RE OF THE OPINION THAT SUBSEQUENT EVENTS, IF AT ALL ANY WILL NOT MAKE ANY DIFFERENCE BECAUSE TOTAL CONSIDERATION RECEIVED OR ACCRUED HAS TO BE ASSESSED IN THE YEAR OF TRANSFER. WE MAY ALSO NOTE THAT IT WAS STATED THAT IRREVOCABLE POWER OF ATTORNEY HA S BEEN REVOKED BUT THE WORD IRREVOCABLE ITSELF SHOWS THA T IN THE EYES OF LAW SPECIAL POWER OF ATTORNEY COULD NOT HAV E BEEN REVOKED. IN VIEW OF THIS ANALYSIS, WE ARE OF THE O PINION THAT EITHER THE JDA HAS NOT BEEN CANCELLED OR IN ANY CAS E THE SAME CANNOT BE CONSIDERED FOR DETERMINING THE TAXATION O F CAPITAL GAIN. ACCORDINGLY THIS CONTENTION IS REJECTED. 108 THE NEXT CONTENTION OF THE ASSESSEE IS THAT EVE N IF THE WHOLE CONSIDERATION HAS TO BE TAXED THEN VALUE OF THE 60 FLATS CANNOT BE TAKEN AT RS. 4,500/- PER SQ. FEET. IT IS ALSO POINTED OUT THAT IN VIEW OF THE AGREEMENT BETWEEN THE HASH & THDC CONSIDERATION HAS BEEN SHOWN AT RS. 2,000/- PER SQ. FEET FOR 126 FLATS WHEREAS IT IS RS . 4,500/- PER SQ. FEET FOR THREE FLATS. WE FIND NO FORCE IN T HESE SUBMISSIONS. THE ASSESSEE HAS FILED ALONG WITH THE WRITTEN SUBMISSIONS COPY OF THE ADDENDUM OF AGREEME NT BETWEEN THDC AND HASH BY JOINT DEVELOPER (AT PAGE 2 65 & 266) AND THIS ISSUE IS DISCUSSED IN CLAUSE 5 WHI CH IS AS UNDER:- 5. CLAUSES 4.1, 4.2, 4.3 AND 4.4 ON THE PAGE NOS. 18 AND 19 OF THE AGREEMENT SHALL STAND AMENDED, MODIFIED AND SUBSTITUTED BY THE FOLLOWING:- 4.1 IT IS EXPRESSLY AGREED AND UNDERSTOOD BY AND BETWEEN THE PARTIES HERETO (A) IN THE RATIO OF 72,28 BETWEEN THDC AND HASH I N CASE GROSS SALES PROCEEDS DOES NOT EXCEED RS. 1272 CRORES; (B) IN THE RATIO OF 70: 30 BETWEEN THDC AND HASH IN CASE GROSS SALES PROCEEDS IS EQUAL TO RS. 1272 CRORES; (C) IN ADDITION (B), IN THE RATIO OF 60: 40 BETWE EN THDC AND HASH IN RESPECT OF GROSS SALES PROCEEDS IN EXCESS OF RS. 1272 CRORES. IT IS AGREED THAT THE MINIMUM GUARANTEED AMOUNT FR OM THE GROSS SALES PROCEEDS FOR THDC AND HASH IS RS. 890.40 CRORES AND RS. 225.76 CRORES RESPECTIVELY. T HE MINIMUM GUARANTEED AMOUNT OF RS. 225.76 CRORES TO HASH INCLUDES RS. 58.88 CRORES THAT SHALL BE EXPEND ED BY THDC TOWARDS CONSTRUCTION OF 126 FLATS EQUIVALEN T TO 2,83,500 SQ. FT,, WHICH FLATS ARE TO BE ALLOTTED IN THE NAMES OF THE MEMBERS OF THE SOCIETY OR OTHERWISE, A S THE CASE MAY BE, CALCULATED AS RS. 2000 PER SQ. FT. FOR THE AREA 2,83,500 SQ. FT. AND THE 72% SHARE OF 3 FLATS OF 2250 SQ. FT. TO BE PURCHASED BY HASH @ RS, 4500/- PER SQ . FT. SHOULD THE APPLICATION OF THE RATIO STIPULATED IN ( A) ABOVE RESULT IN HASH BEING ENTITLED TO A SUM GREATER THAN THE MINIMUM GUARANTEED AMOUNT AND THDC BEING ENTITLED T O A SUM LESS THAN THE MINIMUM GUARANTEED AMOUNT, THDC SHALL-BE ENTITLED TO THE ENTITLEMENT OF HASH WHICH IS IN EXCESS OF ITS MINIMUM, GUARANTEED AMOUNT UNTIL THD C ACHIEVES ITS MINIMUM GUARANTEED AMOUNT.-THE SAME IS ILLUSTRATED IN ANNEXURE I HERETO. 109 THE ABOVE CLEARLY SHOWS THAT HASH WAS ENTITLED TO TOTAL PROCEEDS OF RS. 225.76 CRORES OUT OF TOTAL PROCEEDS OF THE PROJECT WHICH WERE AGREED TO BE SHARED BY THDC AND HASH 61 BUT THE PORTION OF HASH INCLUDES A SUM OF RS. 58.88 CRORES WHICH WAS REQUIRED TO BE SPENT TOWARDS CONSTRUCTION OF 126 FLATS EQUIVALENT TO 283500 SQUARE FEET AREA WHICH W ERE TO BE ALLOTTED TO THE MEMBERS OF THE SOCIETY. THUS, IT I S CLEAR THAT FIGURE OF RS. 2,000/- PER SQ. FEET REPRESENTS ONLY THE COST OF CONSTRUCTIONS TO BE INCURRED BY THDC WHICH WAS DEBI TED TO THE ACCOUNT OF HASH. FURTHER, HASH HAS AGREED TO PURCH ASE THREE FLATS @ 4,500/- PER SQUARE FEET. SOME NEWS R EPORTS WERE QUOTED BEFORE US IN ONE OF THE CASES TO SHOW T HAT VARIOUS BROKERS HAD ISSUED VARIOUS ADVERTISEMENTS FOR SALE OF THESE FLATS AND THESE FLATS WERE ULTIMATELY TO BE SOLD AT RS. 7,000/- TO RS. 10,000/- PER SQUARE FEET. THIS ALSO BECOMES CLEAR FROM THE ADDENDUM OF AGREEMENT IN TERMS OF TOTAL PROCE EDS OF 1272 CRORES. IN ANY CASE IF THE COST OF CONSTRUCTI ON IS RS. 2,000/-, THEN COST OF LAND WHICH HAS BEEN PAID TO THE SOCIETY IS ALSO TO BE ADDED TO THE COST OF THE FLAT BECAUSE THIS PORTION OF CONSIDERATION IN ANY CASE WAS RECEIVED OR TO BE RECEIVED LATER BY THE SOCIETY IN CASH. CONSIDERING THE PRES ENT MARKET VALUE OF THE FLATS IN AND AROUND CHANDIGARH AREA WH ICH IS RS. 4,000/- TO 12,000/- PER SQUARE FEET WE ARE OF THE O PINION THAT VALUE OF THE FLAT AT RS. 4,500/- PER SQUARE FEET IS ABSOLUTELY FAIR. IN ANY CASE M/S HASH HAS AGREED TO PURCHASE THE FLATS AT THIS RATE FROM M/S THDC. IT MAY BE NOTED AS POI NTED OUT BY THE LD. DR FOR THE REVENUE SOME OF THE NEWS REPORT CLIPPINGS FILED BY VARIOUS ASSESSEES CLEARLY SHOWS THAT FLATS WERE BOOKED IN THE TATA CAMLEOT (THIS WAS THE NAME WHI CH WAS GIVEN TO THE PROJECT WHICH WAS TO BE DEVELOPED ON T HE LAND OF TWO SOCIETIES) IN THE PRE LAUNCH OFFER IN THE RANGE OF RS. 7500 TO 8000 PER SQFT. IT IS A COMMON KNOWLEDGE THAT RA TES IN PRE LAUNCH OFFER ARE LOWER THAN THE RATES WHEN BOOKINGS OPEN FOR THE PUBLIC. CONSIDERING THESE FACTS WE ARE OF THE OPINION THAT ASSESSING OFFICER HAS ESTIMATED THE VALUE OF THE FL ATS ON MOST REASONABLE BASIS. IN VIEW OF THESE OBSERVATIONS TH IS CONTENTION IS REJECTED. FOLLOWING THE ABOVE WE DECIDE THIS ISSUE AGAINST TH E ASSESSEE. 11 GROUND NO. 5 - AFTER CONSIDERING THE SUBMISSIO NS OF LD. DR FOR THE REVENUE WE FIND THAT IDENTICAL ISSUE WAS CONSIDERED IN CASE OF SHRI CHARANJIT SINGH ATWAL AN D OTHERS IN ITAS NO. 448/CHD/2011 AND OTHERS AND SAME WAS DECID ED AGAINST THE ASSESSEE VIDE PARA 167 TO 169 WHICH ARE AS UNDER: 167 AFTER HEARING BOTH PARTIES WE FIND THIS ISSUE HAS BEEN ADJUDICATED BY LD. CIT (APPEALS) VIDE PARA 6.13 TO 6.14, WHICH ARE AS UNDER:- 6.13 THE LD. COUNSEL FOR THE APPELLANT HAS ALSO ARGUED THAT THE APPELLANT IS ENTITLED TO DEDUCTION U/S 54F TO THE EXTENT OF INVESTMENT IN THE NEW ASSET, A S REINVESTMENT IN FLAT. FOR THE SAKE OF CONVENIENCE, 62 PROVISIONS OF SECTION 54 F OF THE ACT ARE REPRODUCE D BELOW: 54F. CAPITAL GAIN ON TRANSFER OF CERTAIN CAPITAL ASSETS NOT TO BE CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE. (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE OF AN APPELLANT BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE APPELLANT HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS T O SAY,- (A) IF THE COST OF THE ASSET IS NOT LESS THAN THE N ET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE N ET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 45; PROVIDED THAT NOTHING CONTAINED IN THIS SUB- SECTION SHALL APPLY WHERE- A) THE APPELLANT- I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR II) PURCHASE ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE 63 YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET; AND B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER THAN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. EXPLANATION FOR THE PURPOSES OF THIS SECTION, NET CONSIDERATION, IN RELATION TO THE TRANSFER OF A CAPITAL ASSET, MEANS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AS REDUCED BY ANY EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER. 6.14 SUB SECTION (1) OF SECTION 54 F ALLOWS EXEMPTI ON OF LONG TERM CAPITAL GAINS FROM TAX, IF THE NET CONSIDERATION ON TRANSFER OF LONG TERM CAPITAL ASSE T IS INVESTED IN THE PURCHASE OF A NEW RESIDENTIAL HOUSE WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFT ER OR IN CONSTRUCTION OF A NEW RESIDENTIAL HOUSE WITHIN A PERIOD OF 3 YEARS FROM THE DATE OF THE TRANSFER OF THE LONG TERM CAPITAL ASSET. IN THE INSTANT CASE, THE CONSTRUCTION OF THE FLAT, WHICH THE APPELLANT IS TO BE GIVEN, HAS NOT YET STARTED AND SO IT CANNOT BE SAID THAT THE AMOUNT HAS BEEN INVESTED IN A NEW RESIDENTIAL HOUSE FOR ALLOWING BENEFIT U/S 54 F OF THE ACT. HEN CE, THE APPELLANT IS NOT ELIGIBLE FOR DEDUCTION U/S 54 F 168 BOTH PARTIES ADOPTED SIMILAR ARGUMENTS BEFORE U S AS IN CASE OF SHRI CHARANJIT SINGH ATWAL. 169 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIN D LD. CIT(A) HAS ADJUDICATED THE ISSUE CORRECTLY AND HAS GIVEN THE REASON FOR REJECTION OF DEDUCTION UNDER SECTION 54 / 54 F. THEREFORE, WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND CONFIRM THE SAME. HENCE THIS GROUND IS REJECT ED. FOLLOWING THE ABOVE WE DECIDE THIS ISSUE AGAINST TH E ASSESSEE. 12 GROUND NO. 6 - AFTER HEARING BOTH THE PARTIES W E FIND THAT DURING ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 54F TO THE TUNE OF RS. 64 67,28,148/-. THE ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM AND IN RESPONSE IT WAS STATED AS UNDER: THAT THE ASSESSEE IN PREVIOUS LETTER STATED THAT TH E PLOT AT MOHALI WAS PURCHASED IN THE YEAR 2001 ON INSTALLMENTS. TH E TOTAL INVESTMENT UPTO TO 15.11.2006 IS AMOUNTING TO RS. 1 6051010/- AND STARTED THE CONSTRUCTION IN JAN 2007. THE CONSTRUC TION CARRIED OUT UP TO 31.3.2008 AND EXPENDITURE INCURRED UPTO TO 31 .7.2007 WAS AMOUNTING TO RS. 39,35,400/-OUT OF THE TOTAL INCURR ED UP TO 31.3.2008 OF RS. 44,30,000/-. THE DEDUCTION IS ALL OWABLE AMOUNTING TO RS. 39,35,400/- AS THE ASSESSEE HAS AL READY INCURRED THE EXPENDITURE BEFORE FILING OF RETURN FOR THE ASS ESSMENT YEAR 2007-08 THE ASSESSEE HAS NOT MADE ANY PAYMENT IN CA PITAL GAINS SAVINGS ACCOUNT. HOWEVER, THE AMOUNT OF RS. 39,,35 ,400/- WAS INCURRED FOR CONSTRUCTION OF RESIDENTIAL HOUSE BEF ORE DUE DATE OF FILING OF RETURN AND THE EXPENDITURE INCURRED IS AL LOWABLE DEDUCTION U/S 54F OF THE INCOME TAX ACT, 1961. THE INVESTMEN T ON THE PLOT ALLOWABLE U/S 54F IS AMOUNTING TO RS. 22,97,898/- A ND MAY KINDLY BE ALLOWED. THAT THE SOURCE OF INVESTMENT ON RESIDENTIAL HOUSE WAS THAT THE ASSESSEE RECEIVED RS. 33,00,000/- I.E. RS. 15,00,00 0/- ON 25.2.2007 AND RS. 18,00,000/- ON 25.4.2007 AND THE BALANCE AMOUNT OF INVESTMENT IS OUT OF SOURCE OF ANCESTRAL AGRICULTURAL LAND AND THE SALARY/REMUNERATION RECEIVED AS MLA FR OM PUNJAB GOVERNMENT THAT THE ASSESSEE OWNS ANCESTRAL AGRICUL TURAL LAND AT LONGOWAL MEASURING ABOUT 150 BIGHAS AND THE INVESTM ENT ON THE CONSTRUCTION OF RESIDENTIAL HOUSE AND PURCHASE OF P LOT IS EITHER AMOUNT RECEIVED AS ADVANCE AGAINST PLOT SITUATED AT VILLAGE KANSAL OR THE INCOME FROM ANCESTRAL AGRICULTURAL LAND. TH E PHOTOSTAT COPY OF THE VALUATION OF CONSTRUCTION OF RESIDENTIAL HOU SE HAS ALREADY SUBMITTED. THE ASSESSING OFFICER DID NOT FIND FORCE IN THE SUB MISSIONS AND OBSERVED AS UNDER: THE CONTENTION/DOCUMENTARY EVIDENCE OF THE ASSESSE E HAS BEEN CONSIDERED. AS PER REPLY, THE ASSESSEE HAS STATED THAT UPTO 31.3.2007 HE HAS INCURRED RS. 39,,35,400/- FOR CONS TRUCTION OF HOUSE AND RS. 44,30,000/- INCURRED UPTO 31.3.2008. THE ASSESSEE HAS ALSO FURNISHED VALUATION REPORT OF APPROVED VAL UER VIDE WHICH HE HAS VALUED THE CONSTRUCTION OF RS. 44,30,000/- D URING THE YEAR 2007 TO 31.3.2009. PERUSAL OF COPY OF THE BANK ACCOUNT FURNISHED BY TH E ASSESSEE REVEALS THAT ON 1.3.2007 THE ASSESSEE HAS DEPOSITED AN AMOUNT OF RS. 15,00,000/- AND THE ASSESSEE HAS MADE CASH WITH DRAWAL RS. 8,62,000/- ON 2.3.2007, RS. 2,00,000/- ON 17..4.200 7 AND RS. 11,00,000/- ON 10.5.2007. HENCE THE DEDUCTION U/S 54F IS ALLOWABLE TO THE TUNE OF RS. 21,62,000/- ONLY. AS FAR AS, AGRICULTURAL INCOME IS CONCERNED IN THE RETURN OF I NCOME THE ASSESSEE HAS NOT SHOWN ANY INCOME UNDER THE HEAD A GRICULTURAL INCOME. HENCE THE QUESTION OF AGRICULTURAL INCOME DOES NOT ARISE AND THE CLAIM OF THE ASSESSEE THAT THE BALANCE AMOU NT SPENT ON CONSTRUCTION OF HOUSE OUT OF A GRIN IS NOT ALLOWAB LE. IN VIEW OF ABOVE OBSERVATIONS, CLAIM FOR DEDUCTION U/S 54F WAS RESTRICTED TO RS. 21,62,000/-. 65 13 ON APPEAL BEFORE THE LD. CIT(A), THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER WERE REITERATED. 14 THE LD. CIT(A) AFTER EXAMINING THE SUBMISSIONS O BSERVED THAT STAND OF THE ASSESSING OFFICER IS CORRECT. EV EN BEFORE US, NO MATERIAL IS AVAILABLE TO SHOW THAT THE ASSESSEE HAS REALLY SPENT RS. 67,28,148/- TOWARDS CONSTRUCTION OF RESID ENTIAL HOUSE. THEREFORE, THE ASSESSING OFFICER HAS CORRE CTLY ALLOWED THE CLAIM TO THE TUNE THE SOURCES OF WHICH WERE AVA ILABLE WITH THE ASSESSEE SINCE THERE IS NO EXPLANATION FOR THE BALANCE OF SOURCES, THE SAME HAS BEEN CORRECTLY REJECTED. THER EFORE, WE FIND NOTHING WRONG WITH THE ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. 15 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 6.1.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 6.1.2014 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR
Other Referred Cases
-
Laws Referred To
-
1:1 Consultation on Business Valuations
₹1
1:1 Consultation on Startup Compliance
₹1
1:1 Consultation on SME Listing
₹0
Non-Compete Agreement
₹0
CRM Implementation Plan
₹0
Residency Rules: Income Tax Act, 1961 vs Income Tax Bill, 2025 — A Subtle Yet Significant Shift!
Team Counselvise - February 18, 2026
Why Meesho got ₹1,500 Crore Tax Demand ?
Team Counselvise - March 09, 2026
Budget 2026: 5 Major Personal Tax Changes Every Taxpayer Must Know
Team Counselvise - February 05, 2026