Appeal Details
Counselvise Citation
[2014] 140 COUNSELVISE.COM (IT) 73556 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
6 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-03-2014
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
18-03-2014
Assessment Year
2008-2009
Appeal Filed On
20-09-2013
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.912/CHD/2013 ASSESSMENT YEAR: 2008-09 SHRI GULZAR SINGH, V THE ITO, WARD 6(2), MOHALI MOHALI PAN NO. AAJPT8275D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAKSHIT AGGARWAL RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 18.3.2014 DATE OF PRONOUNCEMENT : 25.3.2014 ORDER PER T.R.SOOD, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 12.08.2013 OF CIT(A), CHANDIGARH. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1 THAT ON FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, THE WORTHY CIT(A) THROUGH HIS ORDER DATED 12. 08,2013 HAS ERRED IN PASSING THAT ORDER IN CONTRAVENTION OF THE PROVISIONS OF SECTION 250(6) OF THE I.T. ACT, 1961. 2 THAT THE LD. CIT(A) ERRED IN FACTS AND IN LAW IN SUSTAINING THE ADDITION OF LONG TERM CAPITAL GAINS OF RS. 1,79,06,579/- U/S 45 OF THE ACT ON ACCOUNT OF ALLE GED TRANSFER OF PROPERTY. 2.1 THAT THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE FINDING OF THE ASSESSING OFFICER THA T THERE WAS DEEMED TRANSFER OF PROPERTY ON THE DATE OF SIGNING OF TRIPARTITE JOINT DEVELOPMENT AGREEMENT (THE AGREEM ENT) ITSELF, IN TERMS OF SUB SECTION (II), (V) AND (VI) SECTION 2(47) OF THE ACT. 2.2 THAT THE LD. CIT(A) ERRED ON FACTS AND IN LAW I N OBSERVING THAT THE RECEIPT OF CONSIDERATION AND REG ISTRATION OF 2 PROPERTY ARE NOT RELEVANT FACTORS WHILE DETERMINING THE TRANSFER OF THE PROPERTY. 2.3 THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT U NDER THE PROVISIONS OF THE ACT WHAT COULD BE BROUGHT TO TAX IS ONLY THE REAL INCOME AND NOT AN AMOUNT, WHICH WAS NEITHER R ECEIVED NOR LIKELY TO BE RECEIVED BY THE ASSESSEE. BESIDES THE ASSESSEE HAS BEEN DEPRIVED FOR CLAIMING EXEMPTION U /S 54EC, 54F AND OTHER PROVISIONS OF SECTION 54, DUE TO NON- RECEIPT OF ENTIRE SALE CONSIDERATION. 2.4 THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT T HE AGREEMENT ENTERED INTO BY THE APPELLANT WAS SUBJECT TO VARIOUS REGULATORY/STATUTORY/OTHER APPROVALS/PERMIS SIONS, ETC. REQUIRED TO BE OBTAINED BY THE OTHER PARTY(IES), WH ICH WERE NOT RECEIVED AND HENCE THERE COULD BE NO TRANSFER UNDER THE SAID AGREEMENT. 2.5 THAT THE LD. CIT(A) FURTHER ERRED ON FACTS AND IN LAW IN HOLDING/OBSERVING THAT CERTAIN TERMS AND CONDITIONS OF THE AGREEMENT WHICH PROVIDED THAT THE TRANSFER OF LAND WAS SUBJECT TO FURTHER CONDITION/ENCUMBRANCES, WERE NOT RELEVANT. 2.6 THAT THE LD. CIT(A) ERRED ON FACTS AND IN LAW I N NOT APPRECIATING THAT ACTUAL PHYSICAL POSSESSION OF THE PROPERTY WAS NOT HANDED OVER BY THE APPELLANT IN PART PERFOR MANCE OF THE CONTRACT, ,IN TERMS OF SECTION 53A OF THE TRANS FER OF PROPERTY ACT AND HENCE THERE WAS NO TRANSFER IN LAW. THAT THE RELEVANT PROVISIONS OF SECTION 2(47) AS ALSO TH E PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 188 2 QUA THE FACTS OF THIS CASE, HAVE BEEN MISCONSTRUED BY THE L D. CIT(A) TO CONFIRM THE ITOS ORDER. THAT THE LD. CIT(A) FA ILED TO APPRECIATE THAT REGISTRATION OF TERMS OF AGREEMENT WAS A PRECONDITION TO THE HANDING OVER THE POSSESSION OF THE PROPERTY. 2.7 THAT THE LD. CIT(A) ERRED ON FACTS AND IN LAW I N AFFIRMING THE VALUE OF THE FLATS RECEIVABLE TOWARDS PART CONSIDERATION OF THE PROPOSED TRANSFER OF PROPERTY, @ RS. 4500 PER SQ. FEET IGNORING THE EVIDENCE OF LOWER VA LUE GIVEN DURING THE COURSE OF ASSESSMENT. THAT COMPUTATION OF CAPITAL GAIN, BY ASSUMING NOTIONAL CONSIDERATION OF TWO NON EXISTENT FLATS, NOT BEING CONSISTENT WITH THE BASIC SCHEME O F INCOME- TAX ACT, DESERVES NOT TO BE UPHELD. 2.8 WITHOUT PREJUDICE, THE LD. CIT(A) ERRED ON FACT S AND IN LAW IN NOT DIRECTING THE ASSESSING OFFICER TO COMPU TE CAPITAL GAIN WITH RESPECT TO THE ACTUAL AMOUNT RECEIVED DUR ING THE RELEVANT ASSESSMENT YEAR. 2.9 WITHOUT PREJUDICE, THAT THE LD. CIT(A) FAILED T O APPRECIATE THAT THE INCOME, IF AT ALL, COULD HAVE B EEN ASSESSED IN THE HANDS OF THE SOCIETY AND NOT THE AP PELLANT. 3 THAT ON FACTS, CIRCUMSTANCES AND LEGAL POSITION O F THE CASE, WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACT ION OF THE ASSESSING OFFICER IS NOT ALLOWING THE CLAIM OF EXEM PTION/ DEDUCTION / U/S 54F AS WELL U/S 54 OF THE ACT WHICH CLAIM WAS CLEARLY AND LEGITIMATELY ALLOWABLE TO THE APPELLANT . 4. THAT THE IMPUGNED CAPITAL GAIN WAS ALSO NOT ASSE SSABLE AS THE VERY RIGHT TO RECEIVE THE PROJECTED CONSIDER ATION HAS FALLEN INTO SERIOUS JEOPARDY FOLLOWING STAY GRANTED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT TAKING COGNIZAN CE OF A PIL FILED AGAINST THE EXECUTION OF IMPUGNED DEAL. 3 5. THAT THE LD. CIT(A) HAS REJECTED THE CONTENTION OF THE APPELLANT THAT THE ASSESSING OFFICER ERRED O FACTS AND IN LAW IN NOT APPRECIATING THE AMOUNT OF RS. 30,00,000/- ( APPROX) RECEIVED UNDER THE AGREEMENT WERE IN THE NATURE OF ADVANCE RECEIVED AND NOT THE ACTUAL SALES CONSIDERATION. 6 THAT THE ASSESSED INCOME HAVING FAR EXCEEDED RS. 5 LAKHS OF WHICH THE ITO WAS WELL AWARE BEFORE INVOKI NG HERE JURISDICTION, SHE OUGHT TO HAVE TRANSFERRED THE CAS E TO AN ASSESSING OFFICER OF COMPETENT JURISDICTION. THIS LEGAL INFIRMITY RENDERS THE ORDER IMPUGNED AS NULL AND VO ID. 7. THAT ON FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, WORTHY CIT(A) HAS ERRED IN NOT QUASHING THE I NITIATING THE PROCEEDINGS BY ISSUANCE OF NOTICE U/S 148, IN C ONTINUATION AND FINALLY COMPLETION WHICH ACTIONS WERE BAD IN LA W. 8 THAT THE ORDERS OF THE AUTHORITIES BELOW ARE HIGH LY UNJUST, ARBITRARY, AGAINST EQUITY AND NATURAL JUSTI CE AND HENCE LIABLE TO BE SET ASIDE ON THIS SCORE ALSO. 3. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSES SEE SUBMITTED THROUGH THESE GROUNDS BASICALLY FOUR ISSUES HAVE BE EN DISPUTED, WHICH ARE AS UNDER:- I) REOPENING OF ASSESSMENT. II) CHARGEABILITY OF THE CAPITAL GAIN III) DEDUCTION U/S 54F IV) CHARGING OF INTEREST U/S 234B 4. THE LD. COUNSEL FURTHER FAIRLY CONCEDED THAT ALL THE ISSUES HAVE BEEN DECIDED AGAINST THE ASSESSEE IN THE GROUP OF C ASES IN THE CASE OF SHRI CHARANJIT SINGH ATWAL AND OTHERS IN ITA NO. 44 8/CHD/2011 AND OTHERS. 5. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDER OF CIT(A). 6. ISSUE NO.1: IN THIS CASE ORIGINALLY THE ASSESSEE HAD FILED A RETURN DECLARING NIL INCOME WHICH WAS PROCESSED U/S 143(1) . LATER ON, INFORMATION WAS RECEIVED BY THE DEPARTMENT WHILE IN VESTIGATING THE AFFAIRS OF VARIOUS COOPERATIVE HOUSING SOCIETIES THAT THE D EFENSE COOPERATIVE HOUSE BUILDING SOCIETY LTD, MOHALI WAS HAVING 27.3 ACRES OF LAND IN 4 VILLAGE KANSAL AND THE ASSESSEE WAS MEMBER IN THAT SOCIETY. MEMBERS OF THE SOCIETY HAD AUTHORIZED THE DEFENCE COOPERATIVE HOUSING BUILDING SOCIETY LTD MOHALI TO TRANSFER THE POSSESSION OF LA ND OF M/S TATA HOSING DEVELOPMENT COMPANY LTD/HASH BUILDERS (PVT) LTD FOR THE PURPOSE OF DEVELOPMENT AGAINST WHICH THE ASSESSEE WHO WAS HOLD ING A PLOT MEASURING 500 SQUARE YARDS WAS ENTITLED TO RECEIVE SOME MONEY AND A FLAT. THE ASSESSEE RECEIVED A SUM OF RS. 34.36 LACS AGAINST THE TOTAL CONSIDERATION OF RS. 85,90,000/-. THE ASSESSEE WAS FURTHER ENTITLED TO A FULLY FURNISHED FLAT TO BE CONSTRUCTED BY THE TATA HOUSING DEVELOPMENT COMPANY LTD MEASURING 2250 SQUARE FEET, THEREFORE, THE INCOME OF THE ASSESSEE HAD ESCAPED AND THE SAME WAS REOPENED U/S 148 OF THE ACT. 7. ON APPEAL BEFORE CIT(A) IT WAS MAINLY SUBMITTED THAT ASSESSEE HAD RECEIVED ONLY RS. 32 LAKHS WHICH HE HAD ALREADY OFF ERED FOR TAXATION UNDER THE HEAD CAPITAL GAINS, THEREFORE, REOPENING OF THE ASSESSMENT WAS BAD. THE LD. CIT(A) DID TO FIND ANY FORCE IN THESE SUBMISSIONS AND UPHELD THE ACTION OF ASSESSING OFFICER OF RETAINING OF ASSESSMENT. 8. BEFORE US LD. COUNSEL REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A) AND ON THE OTHER HAND THE LD. DR SUPPORTED T HE ORDER OF CIT(A). 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THIS ISSUE HAVE BEEN ADJUDICATED BY LD. CIT(A) VIDE PARA 5.2 WHICH IS AS UNDER:- 5.2 THERE WAS INFORMATION AVAILABLE WITH THE ASSES SING OFFICER THAT THE APPELLANT, BEING A MEMBER OF M/S DEFENCE S ERVICES COOPERATIVE HOUSE BUILDING SOCIETY LTD., MOHALI (WH O HAD 27.3 ACRES OF LAND IN VILLAGE KANSAL AND HAD ENTERED INT O AN AGREEMENT WITH TATA AND HASH FOR SALE OF LAND), HAD RECEIVED RS. 32,00,000/- AS CONSIDERATION AND WAS LIABLE TO PAY CAPITAL GAIN TAX ON SALE OF LAND. AS THE FULL VALUE OF CONSIDERATIO N WAS AT LEAST RS. 1,87,15,000/- (RS. 85,90,000- MONETARY CONSIDERATIO N AND RS. 1,01,25,000/- AS COST OF FURNISHED FLAT OF 2250 SQ. FEET), THE ASSESSING OFFICER FORMED HIS REASONS TO BELIEVE THA T SOME INCOME HAD ESCAPED ASSESSMENT AND SO ISSUED NOTICE U/S 147 OF THE ACT. IT HAS BEEN HELD BY HON'BLE SUPREME COURT IN THE CA SE OF ACIT V RAJESH JHAVERI STOCK BROKERS PVT LTD (291 ITR 500) THAT AT THE STAGE OF ISSUE OF NOTICE U/S 148, THE ONLY QUESTION TO BE SEEN IS WHETHER THERE WAS RELEVANT MATERIAL, ON THE BASIS O F WHICH A REASONABLE PERSON COULD HAVE FORMED THE REQUISITE B ELIEF. WHETHER MATERIAL WOULD CONCLUSIVELY PROVE ESCAPEMEN T OF INCOME 5 IS NOT THE CONCERN AT THE STAGE OF ISSUE OF NOTICE U/S 148. IT IS SO BECAUSE THE FORMATION OF BELIEF IS WITHIN THE REALM OF THE SUBJECTIVE SATISFACTION OF THE ASSESSING OFFICER. IN VIEW OF THIS JUDGMENT OF THE HON'BLE SUPREME COURT AND BY RESPEC TFULLY FOLLOWING THE SAME, THE ACTION OF THE ASSESSING OFF ICER OF REOPENING THE ASSESSMENT IS UPHELD. GROUND OF APPE AL NO.2 IS DISMISSED. 10. THE ABOVE CLEARLY SHOWS THAT REVENUE GOT CLEAR CUT INFORMATION IN RESPECT OF THE TRANSACTIONS MADE BY THE ASSESSEE TH ROUGH THE SOCIETY, THEREFORE, REOPENING HAS BEEN CORRECTLY DONE PARTIC ULARLY IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF AC IT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. [2007] 291 ITR 500 (SC) . THIS ISSUE WAS CONSIDERED IN THE CASE OF SHRI CHARAJIT SINGH ATWAL VS. ITO AND OTHERS IN ITA NO. 448/CHD/2011 & OTHERS WHERE REOPENING WAS U PHELD IN MANY CASES FOLLOWING THE DECISION OF HON'BLE SUPREME COU RT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. (SU PRA) . THEREFORE, FOLLOWING THIS DECISION WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND WE CONFIRM THE SAME. 11. ISSUE NO.2: THE ISSUE OF CHARGEABILITY OF CAPI TAL GAIN AGAINST THE TOTAL CONSIDERATION TO BE RECEIVED BY THE ASSESSEE CAME UP FOR CONSIDERATION BY THE TRIBUNAL IN THE CASE OF SHRI C HARANJIT SINGH ATWAL & OTHERS VS. ITO IN ITA NO. 448/CHD/2011 & ORS. BOTH THE PARTIES TODAY ADMITTED THAT ORDER IN THE CASE OF CHARANJIT SINGH ATWAL MAY BE ADOPTED . THIS ISSUE WAS ADJUDICATED BY US VIDE PARA 27 TO 11 0 IN THE CASE OF CHARANJIT SINGH ATWAL & OTHERS V ITO WHICH ARE AS U NDER:- 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CA REFULLY GONE THROUGH THE WRITTEN SUBMISSIONS FILED BY BOTH THE PARTIES IN THE LIGHT OF MATERIAL ON RECORD, PAPER BOOKS AND VA RIOUS JUDGMENTS CITED BY THE PARTIES. THE MAIN ISSUE IS WHETHER ASSESSEE IS LIABLE TO CAPITAL GAIN TAX IN THE YEAR UNDER CONSIDERATION I.E ASSESSMENT YEAR 2007-08 IN VIEW O F 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 HEAD CAPITAL GA INS, AND SHALL BE 6 DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHI CH THE TRANSFER TOOK PLACE. 28 THE PLAIN READING OF THE ABOVE PROVISION WOULD SHOW THAT CHARGING AN ITEM OF INCOME UNDER THE HEAD CAPITAL GAINS REQUIRE THREE INGREDIENTS I.E. (I) THERE SHOULD BE SOME PRO FIT. (II) SUCH PROFIT MUST BE ARISING ON ACCOUNT OF TRANSFER AND ( III) THERE SHOULD BE CAPITAL ASSET WHICH HAS BEEN TRANSFERRED. THERE IS NO DISPUTE THAT A CAPITAL ASSET WAS INVOLVED AND THERE WAS SOM E PROFIT ALSO I.E. WHY ASSESSEE HAS HIMSELF RETURNED INCOME UNDER THE HEAD CAPITAL GAINS;. THE DISPUTE IS MAINLY ON ACCOUNT OF TRANSFER AND THAT TOO WHETHER THE TRANSFER COULD BE COVERED UNDE R CLAUSES (II), (V) & (VI) OF SECTION 2(47) SO AS TO BRING INTO PIC TURE THE WHOLE OF CONSIDERATION ARISING ON TRANSFER OF SUCH ASSETS. W E SHALL DEAL WITH EACH OF THE ASPECT IN DETAIL AT APPROPRIATE TI ME. 29. APART FROM CHARGING PROVISIONS U/S 45 ANOTHER I MPORTANT PROVISION IS SECTION 48 WHICH DEALS WITH THE MODE O F COMPUTATION AND RELEVANT PORTION READS AS UNDER:- 48. THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED, BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS, NAMELY : (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVEL Y IN CONNECTION WITH SUCH TRANSFER; (II) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO : 30 AGAIN PLAIN READING WOULD SHOW THAT CAPITAL GAIN WOULD BE COMPUTED BY CONSIDERING THE FULL VALUE OF CONSIDERA TION WHETHER RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER. THEREFORE, IT IS NOT ONLY THE CONSIDERATION RECEIVED WHICH IS RELEVA NT BUT THE CONSIDERATION WHICH HAS ACCRUED IS ALSO RELEVANT. 31. THE EXPRESSION TRANSFER HAS BEEN DEFINED U/S 2(47) OF THE ACT WHICH READS AS UNDER:- 2 (47) [TRANSFER, IN RELATION TO A CAPITAL ASSET , INCLUDES, (I) THE SALE , EXCHANGE OR RELINQUISHMENT OF THE ASSET ; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN ; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW ; OR (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK-IN-TRADE OF A BUSINESS CAR RIED 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 PERFORMANC E OF A CONTRACT OF THE 7 NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) ; OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFERRING, O R ENABLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY. EXPLANATION.FOR THE PURPOSES OF SUB-CLAUSES (V) AND (VI), IMMOVABLE PROPERTY SHALL HAVE THE SAME MEANING AS IN CLAUSE (D) OF SECTION 269UA ;] CLAUSES (V) & (VI) TO SECTION 2(47) OF THE ACT HAVE BEEN INSERTED BY FINANCE ACT, 1987 W.E.F. 1.4.1988. THE PURPOSE OF THIS INSERTION HAS BEEN EXPLAINED BY CBDT IN CIRCUL AR NO. 495 DATED 22.9.1987. THE RELEVANT PART 11.1 AND 11.2 O F THE CIRCULAR READS AS UNDER:- 11.1 THE EXISTING DEFINITION OF THE WORD ' TRANSF ER ' IN SECTION 2(47) DOES NOT INCLUDE TRANSFER OF CERTAIN RIGHTS ACCRUING TO A PURCHASER, BY WAY OF BECOMING A MEMBER OR ACQUIRING SHARES IN A CO-OPER ATIVE SOCIETY, COMPANY, OR AS WAY OF ANY AGREEMENT OR ANY ARRANGEM ENT WHEREBY SUCH ANY BUILDING WHICH IS EITHER BEING CONSTRUCTED OR W HICH IS TO BE CONSTRUCTED. TRANSACTIONS OF THE NATURE REFERRED TO ABOVE ARE NO T REQUIRED TO BE REGISTERED UNDER THE REGISTRATION ACT, 1908. SUCH A RRANGEMENTS CONFER THE PRIVILEGES OF OWNERSHIP WITHOUT TRANSFER OF TITLE I N THE BUILDING AND ARE A COMMON MODE OF ACQUIRING FLATS PARTICULARLY IN MULT I-STOREYED CONSTRUCTIONS IN BIG CITES. THE DEFINITION ALSO DOES NOT COVER CA SES WHERE POSSESSION IS ALLOWED TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT, OF THE NATURE REFERRED TO IN SECTION 53A OF TRANSFER OF PR OPERTY ACT, 1882. NEW SUB-CLAUSES (V) & (VI) HAVE BEEN INSERTED IN SECTIO N2(47) TO PREVENT AVOIDANCE OF CAPITAL GAINS LIABILITY BY RECOURSE T O TRANSFER OF RIGHTS IN THE MANNER REFERRED TO ABOVE. 11.2 THE NEWLY INSERTED SUB-CLAUSE (VI) OF SECTION 2(47) HAS BROUGHT IN TO THE AMBIT OF TRANSFER, THE PRACTICE OF ENJOYMENT O F PROPERTY RIGHTS THROUGH WHAT IS COMMONLY KNOWN AS POWER OF ATTORNEY ARRANGE MENTS. THE PRACTICE IN SUCH CASES IS ADOPTED NORMALLY WHERE TRANSFER OF OWNERSHIP IS LEGALLY NOT PERMITTED. A PERSON HOLDING THE POWER OF ATTORNEY I S AUTHORIZED THE POWERS OF OWNER, INCLUDING THAT OF MAKING CONSTRUCTION. T HE LEGAL OWNERSHIP IN SUCH CASES CONTINUES TO BE WITH THE TRANSFEROR. 32 BEFORE INSERTION OF THE CLAUSE (V) & (VI) TO SE CTION 2(47) OF THE ACT, THE POSITION OF LAW WAS THAT UNLESS AND UNTIL A SALE DEED WAS EXECUTED FOR TRANSFER OF IMMOVABLE PROPERT Y, THE SAME COULD NOT BE CONSTRUED AS TRANSFER FOR TH E PURPOSE OF 8 CHARGING CAPITAL GAIN TAX. THIS WAS PARTICULARLY S O IN THE LIGHT OF VARIOUS JUDGMENTS PARTICULARLY THE JUDGMENT OF H ON'BLE APEX COURT IN THE CASE OF ALAPATI VENKATRAMIAN V CIT (57 ITR 185) (SC). IN THIS CASE IT WAS HELD THAT IN THE CONTEXT OF TRANSFER FOR THE PURPOSE OF CAPITAL GAIN TAX, WHAT IS MEANT BY T RANSFER IS THE EFFECTIVE CONVEYANCE OF THE CAPITAL ASSET BY A TRAN SFEROR TO THE TRANSFEREE. DELIVERY OF POSSESSION AND AGREEMENT T O SELL BY ITSELF COULD NOT CONSTITUTE CONVEYANCE OF THE IMMOV ABLE PROPERTY. IN THE MEANTIME APART FROM THIS DECISIO N A PRACTICE CAME INTO VOGUE BY WHICH CERTAIN PROPERTIES WERE BE ING TRANSFERRED WITHOUT EXECUTING THE PROPER SALE DEEDS . THIS WAS BEING DONE BECAUSE THERE WAS RESTRICTION ON SALE OF PROPERTIES IN VARIOUS TOWNS E.G. IN CASE OF LEASE HOLD PLOTS A ND 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 VALUE COST (I.E. UNEARNED INCREASE) TO THE GOVERNMENT. TO AVOID SUCH PAYMENTS AND / OR ALSO TO AVOID THE PAYMENT OF STAM P 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 POSSESSI ON WAS GIVEN ON RECEIPT OF FULL CONSIDERATION WITHOUT EXEC UTING THE PROPER SALE DEEDS ETC. WHICH AS MENTIONED EARLIER W AS NOT EVEN PERMISSIBLE IN SOME CASES. THESE TRANSACTIONS ARE POPULARLY CALLED 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 TO LOT OF LITIGATION AND THE MAIN POINT OF LITIGATION WAS THAT AT WHAT POIN T OF TIME THE POSSESSION CAN BE SAID TO HAVE BEEN GIVEN. IN THE P RESENT CASE, THE REVENUE HAS MAINLY RELIED ON TWO DECISION S NAMELY (I) CHATURBHUJ DWARKADAS KAPADIA V CIT 260 ITR 491 (BOM.) AND; (II) AUTHORITY FOR ADVANCE RULING (AAR) NEW DE LHI IN THE CASE OF JASBIR SINGH SARKARIA 294 ITR 196. 33. IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V C IT (SUPRA), THE FACTS BEFORE THE HON'BLE BOMBAY HIGH COURT WERE THAT ASSESSEE WHO WAS AN INDIVIDUAL HAD 44/192 UN DIVIDED SHARE IN AN IMMOVABLE PROPERTY IN GREATER BOMBAY WH ICH CONSISTED OF VARIOUS LANDS AND BUILDINGS. BY AGREE MENT DATED AUGUST 18, 1994, THE ASSESSEE AGREED TO SELL TO FLO REAT INVESTMENT LTD, (HEREIN REFERRED TO FLOREAT) HIS SHARE OF IMMOVABLE PROPERTY FOR A TOTAL CONSIDERATION OF RS. 1,85,63,220/- WITH RIGHT TO SAID FLOREAT TO DEVELO P THE PROPERTY IN ACCORDANCE WITH THE RULES / REGULATIONS FRAMED B Y LOCAL AUTHORITIES. FOR THIS PURPOSE, THE ASSESSEE ALSO A GREED TO EXECUTE A LIMITED POWER OF ATTORNEY AUTHORIZING FLO REAT TO DEAL WITH THE PROPERTY AND ALSO OBTAIN PERMISSIONS AND A PPROVALS FROM VARIOUS AUTHORITIES. UNDER CLAUSE 11 OF THE A GREEMENT, 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 NECESSARY APPROVALS, THE FLORET WAS ENTITLED TO DEMOLISH VARIOUS BUILDIN GS FOR SETTLING THE CLAIMS OF THE TENANTS. UNDER CLAUSE 14 OF THE AGREEMENT, THE ASSESSEE WAS ENTITLED TO RECEIVE PRO PORTIONATE 9 RENT TILL THE PAYMENT OF LAST INSTALLMENTS AND TILL THAT TIME ASSESSEE WAS BOUND TO PAY ALL OUTGOINGS. UNDER CL AUSE 20 OF THE AGREEMENT, IT WAS AGREED THAT SALE SHALL BE COM PLETED BY EXECUTION OF CONVEYANCE, HOWEVER, TILL THE MATTER W AS ADJUDICATED BY THE HON'BLE HIGH COURT, NO CONVEYANC E WAS EXECUTED. PURSUANT TO THIS AGREEMENT, FLOREAT OBTA INED VARIOUS PERMISSIONS NAMELY (I) CLEARANCE FROM CRZ A UTHORITY DATED FEBRUARY 7, 1996; (II) LETTER FROM ULC FOR RE DEVELOPMENT OF PROPERTY DATED APRIL 26, 1995. OTHER PERMISSION S WERE ALSO OBTAINED DURING THE FINANCIAL YEAR ENDING MARCH 31, 1996 RELEVANT TO ASSESSMENT YEAR 1996-97. BY MARCH, 31, 1996, FLOREAT HAD PAID ALMOST THE ENTIRE CONSIDERATION EX PECT FOR A SMALL SUM OF RS. 9,98,000/-. HOWEVER, THE COMMENCE MENT CERTIFICATE PERMITTING CONSTRUCTION OF THE BUILDING WAS ISSUED ON NOVEMBER 15, 1996. THE POWER OF ATTORNEY WAS EXECU TED ON MARCH 12, 1999. THE QUESTION AROSE WHETHER LIABILI TY OF THE ASSESSEE FOR CAPITAL GAIN AROSE IN THE ASSESSMENT Y EAR 1996- 97 OR 1999-2000. THE OBSERVATION OF THE COURT HAS BEEN 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 TRANS ACTION WHICH ALLOWS POSSESSION TO BE TAKEN/RETAINED IN PAR T PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882, AND (II) ANY TRANSACTION ENTERED INTO IN ANY MANNER WHICH HA S THE EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOVABLE PROPERTY. THEREFORE, IN THESE TWO CASES C APITAL 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 UND ER 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 N ATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPE RTY ACT WOULD COME WITHIN THE AMBIT OF SECTION 2(47)(V). IN ORDER TO ATTRACT SECTION 53A, THE FOLLOWING CONDITIONS NEED TO BE FULFILLED. THERE SHOULD BE A CONTRACT FOR CONSIDERA TION ; IT SHOULD BE IN WRITING ; IT SHOULD BE SIGNED BY THE T RANSFEROR ; IT SHOULD PERTAIN TO TRANSFER OF IMMOVABLE PROPERTY ; THE TRANSFEREE SHOULD HAVE TAKEN POSSESSION OF THE PROP ERTY ; LASTLY, THE TRANSFEREE SHOULD BE READY AND WILLING TO PERFORM HIS PART OF THE CONTRACT. EVEN ARRANGEMENTS 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 WAS ARGUED ON BEHALF OF THE ASSESSEE THAT NO TRANSFER TOOK PLACE TILL EXECUTION OF THE CONVEYANCE. ASSESSEES USED TO ENTE R INTO AGREEMENTS FOR DEVELOPING PROPERTIES WITH BUILDERS AND UNDER THE ARRANGEMENT WITH THE BUILDERS, THEY USED TO CONFER PRIVILEGES OF OWNERSHIP WITHOUT EXECUTING CONVEYANCE AND TO PLUG THAT LOOPHOLE, SECTION 2(47) (V) CAME TO BE INTRODUCED IN THE ACT. . 10 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 TEST HAD N OT BEEN APPLIED BY THE DEPARTMENT. NO REASON HAD BEEN GIVEN WHY THAT TEST HAD NOT BEEN APPLIED, PARTICULARLY WHEN T HE AGREEMENT IN QUESTION, READ AS A WHOLE, SHOWED THAT IT WAS A DEVELOPMENT AGREEMENT. ONCE UNDER CLAUSE 8 OF THE AGREEMENT A LIMITED POWER OF ATTORNEY WAS INTENDED TO BE GIVEN TO THE DEVELOPER TO DEAL WITH THE PROPERTY, T HEN THE DATE OF THE CONTRACT, VIZ., AUGUST 18, 1994, WOULD BE THE RELEVANT DATE TO DECIDE THE DATE OF TRANSFER UNDER SECTION 2(47)(V) AND, IN WHICH EVENT, THE QUESTION OF SUBST ANTIAL PERFORMANCE OF THE CONTRACT THEREAFTER WOULD NOT AR ISE 34. THE HON'BLE COURT REFERRED TO CLAUSES (V) & (VI) OF SECTION 2(47) AND MADE THE FOLLOWING OBSERVATIONS AT PAGE 4 99 OF THE REPORT: .. THE ABOVE TWO CLAUSES WERE INTRODUCED WITH EF FECT FROM APRIL 1,1988. THEY PROVIDE THAT TRANSFER INC LUDES (I) ANY TRANSACTION WHICH ALLOWS POSSESSION TO BE TAKEN/RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, AND (I I) ANY TRANSACTION ENTERED INTO IN ANY MANNER WHICH HAS TH E EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOVABLE PROPERTY (SEE SECTION 269UA(D)). THEREFOR E, IN THESE TWO CASES CAPITAL GAINS WOULD BE TAXABLE IN T HE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO, EVEN I F 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 ED ITION, PAGE 766). THIS TEST IS IMPORTANT TO DECIDE THE YEA R 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 PRACTIC E OF INCOME TAX BY KANGA AND PALKHIVALA EIGHTH EDITION AT PAGE 766. RELEVAN T OBSERVATIONS READ AS UNDER: CLS. (V) AND (VI) OF S. 2(47), INSERTED BY THE FIN ANCE ACT 1987 WITH EFFECT FROM 1 ST APRIL 1988, PROVIDE THAT TRANSFER INCLUDES (A) AN Y TRANSACTION WHICH INVOLVES THE ALLOWING OF THE POSSESSION OF AN IMMOVABLE PROPERTY (S. 269UA(D)) TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE N ATURE REFERRED TO IN S.53A OF THE TRANSFER OF PROPERTY ACT 1882, AND (B) ANY TRANSACT ION ENTERED INTO IN ANY MANNER WHICH HAS THE EFFECT OF TRANSFERRING, OR ENABLING T HE ENJOYMENT OF, ANY IMMOVABLE PROPERTY (S. 269UA(D)). THEREFORE IN THESE TWO CASE S CAPITAL GAINS WOULD BE TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO, EVEN IF THE TRANSFER OF THE IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER GENERAL LAW. 36 FROM THE ABOVE, IT IS CLEAR THAT COURT WAS OF TH E VIEW THAT IN CASE ANY TRANSACTION COVERED BY CLAUSE (V) AND ( VI) TO SECTION 2(47) THE LIABILITY FOR CAPITOL GAIN WOULD ARISE ON THE DATE WHEN SUCH TRANSACTIONS ARE ENTERED INTO. IN T HE JUDGMENT AT SOME OTHER PLACES, THE SIMILAR OBSERVATIONS HAVE BEEN MADE. HOWEVER, DESPITE THIS OBSERVATION THE CASE W AS DECIDED IN FAVOUR OF THE ASSESSEE. THE REASON FOR THE SAM E HAVE BEEN GIVEN IN THE JUDGMENT ITSELF. FIRSTLY IT IS OBSERVED THAT P ROVISION OF SECTION 2(47)(V) OF THE 11 ACT WERE NOT INVOKED BY THE REVENUE ITSELF. THIS B ECOMES CLEAR FROM THE FOLLOWING PARA: IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT THERE WAS NO EFFECTIVE TRANSFER TILL GRANT OF IRREVOCABLE LICENCE. IN THIS CONNECTION, THE JUDGMENT OF THE HON'BLE SUPREME COURT WERE CITED ON BEHALF OF THE ASSESSEE, BUT ALL THOSE JUDGMENT WERE PRIOR TO INTRODUCTION OF THE CONCEPT OF DEEMED TRANSFER U/S 2(47)(V). IN THIS MATTER, THE AGREEMENT IN QUESTION IS A DEVELOPMENT AGREEMENT. SUCH DEVELOPMENT AGREEMENTS DO NOT CONSTITUTE TRANSFER I N GENERAL LAW. THEY ARE SPREAD OVER A PERIOD OF TIME. THEY CONTEMPLATE VARI OUS STAGES. THE BOMBAY HIGH COURT IN VARIOUS JUDGMENTS HAS TAKEN THE VIEW IN SEVERAL MATTERS THAT THE OBJECT OF ENTERING INTO A DEVELOPMENT AGREEMENT IS TO ENABLE A PROFESSIONAL BUILDER / CONTRACTOR TO MAKE PROFITS BY COMPLETING THE BUILDING AND SELLING THE FLATS AT A PROFIT. THAT THE AIM OF THESE PROFESSIONAL CON TRACTORS WAS ONLY TO MAKE PROFITS BY COMPLETING THE BUILDING AND, THEREFORE, NO INTEREST IN THE LAND STANDS CREATED IN THEIR FAVOUR UNDER SUCH AGREEMENTS. THAT SUCH AGREEMENTS ARE ONLY A MODE OF REMUNERATING THE BUILDER FOR HIS SERVICES O F CONSTRUCTING THE BUILDING (SEE GURUDEV DEVELOPERS V. KURLA KONKAN NIWAS CO-OP ERATIVE HOUSING SOCIETY [2003] 3 MAH LJ 131). IT IS PRECISELY FOR THIS REAS ON THAT THE LEGISLATURE HAS INTRODUCED SECTION 2(47)(V) READ WITH SECTION 45 WH ICH INDICATES THAT CAPITAL GAINS IS TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS 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 BEEN GIVEN WHY THAT TEST HAS NOT BEEN APPLIED, PARTICULARLY WHEN THE AGREEMENT IN QUESTION, READ AS A WHOLE, SHOWS THAT IT IS A DEVELOPMENT AGREEMENT. THERE IS A DIFFERENCE BETWEEN THE CONTRA CT ON THE ONE HAND AND THE PERFORMANCE ON THE OTHER HAND. IN THIS CASE, THE TRIBUNAL AS WELL AS THE DEPARTMENT HAVE COME TO THE CONCLUSION THAT THE TRA NSFER TOOK PLACE DURING THE ACCOUNTING YEAR ENDING MARCH 31,1996, AS SUBSTANTIA L PAYMENTS WERE EFFECTED DURING THAT YEAR AND SUBSTANTIAL PERMISSIONS WERE O BTAINED. IN SUCH CASES OF DEVELOPMENT AGREEMENTS, ONE CANNOT GO BY SUBSTANTIA L PERFORMANCE OF A CONTRACT. IN SUCH CASES, THE YEAR OF CHARGEABILITY IS THE YE AR IN WHICH THE CONTRACT IS EXECUTED. THIS IS IN VIEW OF SECTION 2 (47)(V) OF THE ACT. SECONDLY IT IS MENTIONED IN THE ORDER OF THE COURT THAT LAW WAS NOT VERY CLEAR ON THIS POINT AND SINCE THE ASSESSEE HAS ADMITTED AND PAID CAPITAL GAIN IN THE ASSESSMENT YEAR 1999-2000, THEREFORE, TAX WAS HELD TO BE CHARGEABLE IN ASSESSMENT YEAR 1999-2000. THIRDLY CERTAIN SHORTCOMINGS WERE ALSO NOTED IN THE ORDER OF THE TRIBUNAL WHERE CERTAIN DOCUMENTS WERE MENTIONED TO HAVE BEEN EXECUTED BEFORE MARCH 31, 1996 E.G. THE FOLLOWING O BSERVATION OF THE TRIBUNAL WAS NOT FOUND CORRECT AS SOMETHING IS DONE ON IST APRIL, 1997 THEN THE SAME CANNOT FALL IN THE YE AR 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 E NDING ON MARCH 31, 1996, THE BUILDER WAS USING THE WELL WATE R AGAINST PAYMENT OF RELEVANT CHARGES TO THE ASSESSEE. 37 THUS IT IS VERY CLEAR THAT IN CASES WHERE AN ARR ANGEMENT HAD BEEN ENTERED INTO BY AN ASSESSEE IN TERMS OF CL AUSE (V) OF SECTION 2(47) WHICH HAS EFFECT OF HANDING OVER THE POSSESSION THEN THE TRANSFER IS SAID 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 12 CONTEXT OF THE DECISION MADE IN SUCH JUDGMENT. IN FACT, IT IS WELL SETTLED THAT DOCTRINE OF PRECEDENT WHICH MEANS WHAT NEEDS TO BE FOLLOWED LATER ON PARTICULARLY BY SUBORDINATE TRIBUNALS AND COURTS IS THE RATIO OF A PARTICULAR JUDGMENT GI VEN BY THE HIGHER COURT OR FORUM. FURTHER, THERE IS NO FORCE IN THE CONTENTION THAT DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V CIT (SUP RA) DOES NOT SHOW THAT THE DATE OF AGREEMENT ITSELF CONSTITU TE THE TRANSFER. AGAIN THERE IS NO FORCE EVEN IN THE CONT ENTION THAT IN THAT CASE IT WAS ULTIMATELY DECIDED THAT CAPITAL GA IN TAXES IS CHARGEABLE IN ASSESSMENT YEAR 1999-2000 BECAUSE OF THE REASONS GIVEN IN ABOVE NOTED PARAS PARTICULARLY BEC AUSE THE REVENUE ITSELF NEVER INVOKED THE PROVISIONS OF SECT ION 2(47)(V) OF THE ACT AND HELD IT TO BE TAXABLE IN ASSESSMENT YEAR 1996- 97. NO DOUBT IN THAT CASE ULTIMATELY IT WAS HELD T HAT CAPITAL GAIN WAS IN ASSESSMENT YEAR 1999-2000 BUT COURT HAD MADE IT VERY CLEAR THAT THIS IS FIRST TIME THAT LAW IS BEIN G LAID DOWN AND GUIDELINES ARE BEING ISSUED WHICH MEANS THAT THERE WAS A CONFUSION EARLIER. CLAUSES (V) & (VI) TO SECTION 2 (47) WERE INTRODUCED IN THE YEAR ONLY IN 1998. PERHAPS COURT TOOK A LENIENT VIEW BECAUSE OF THESE REASONS AND HELD THAT CAPITAL GAIN WAS TAXABLE IN ASSESSMENT YEAR 1999-2000. IT IS QUITE CLEAR THAT RATIO OF THE ABOVE DECISION IS THAT IN C ASE OF ANY ARRANGEMENTS OR TRANSACTIONS WHEREBY THE OTHER PART Y BECOMES ENTITLED TO ENJOY THE PROPERTY THEN THAT DA TE OF SUCH TRANSACTION ITSELF NEEDS TO BE CONSTRUED AS TH E DATE OF TRANSFER. 39. THE SECOND RELEVANT DECISION CITED BY THE REVEN UE IS BY AUTHORITY FOR ADVANCE RULING (AAR) NEW DELHI IN THE CASE OF JASBIR SINGH SARKARIA (SUPRA) . IN THAT CASE THE ASSESSEE WAS CO-OWNER OF AGRICULTURAL LAND MEASURING ABOUT 27.7 ACRES AND HIS SHARE WAS 4/9. THE CO-OWNER DECIDED TO DEVELOP THE LAND BY CONSTRUCTING RESIDENTIAL COMPLEX THROUGH DEVELOP ER AND ENTERED INTO A COLLABORATION AGREEMENT ON 8.6.2005 WITH M/S SANTUR DEVELOPER PVT LTD, NEW DELHI (HEREIN AFTER C ALLED 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 AT ITS OWN RISK A ND COST. THE DEVELOPER WAS TO TAKE 84% OF THE BUILT UP AREA AND BALANCE 16% WOULD BELONG TO ASSESSEE AND OTHER CO-OWNER. TH E CONSIDERATION FOR THE AGREEMENT WAS TAKEN AS THE BU ILT UP AREA TO BE HANDED OVER TO THE OWNERS FREE OF COST. THE OWNERS WERE ENTITLED TO VISIT THE SITE IN ORDER TO REVIEW THE P ROGRESS OF THE PROJECT. IT WAS CLARIFIED BY CLAUSE 18 THAT OWNERS HIP WOULD REMAIN EXCLUSIVELY WITH THE OWNERS TILL IT VESTS WI TH BOTH THE PARTIES AS PER THEIR RESPECTIVE SHARES ON THE COMPL ETION OF THE PROJECT. THE OTHER CLAUSES AND THE STEPS IN THE AGR EEMENT WERE THAT A SUM OF RS. 1 CRORE TOWARDS PAYMENT OF EARNES T MONEY AT THE TIME OF ENTERING INTO AGREEMENT; A SPECIAL POWE R OF ATTORNEY WAS TO BE EXECUTED IN FAVOUR OF THE DEVELO PER TO ENABLE TO DEAL WITH THE STATUTORY AUTHORITIES ETC. FOR OBTAINING NECESSARY APPROVALS / SANCTIONS; LETTER OF INTENT WAS TO BE OBTAINED NOT LATER THAN MARCH 8, 2006 AND IN CASE O F A FAILURE TO DO SO, THE AGREEMENT SHALL STAND TERMINATED. LE TTER OF INTENT IS BASICALLY A LICENSE GRANTED BY THE DIRECTOR OF T OWN PLANTING TO DEVELOPER OF LAND FOR THE PURPOSE OF CONSTRUCTIN G RESIDENTIAL FLATS SUBJECT TO PAYMENT OF CERTAIN CHARGES AND COM PLIANCE OF 13 OTHER CONDITIONS. IT WAS FURTHER STATED IN THE AGRE EMENT THAT ON FULFILLMENT OF THE REQUIREMENT IN THE LETTER OF INT ENT, OWNERS WILL HAVE TO EXECUTE IRREVOCABLE GENERAL POWER OF ATTORN EY IN FAVOUR OF THE DEVELOPER AUTHORIZING THE DEVELOPER TO TOOK AND SELL THE DWELLING UNITS OUT OF DEVELOPERS SHARE AND COLLECT THE MONEY FOR THE SAME. HOWEVER, FINALLY SALE DEEDS COULD BE EXECUTED ONLY AFTER THE OWNER RECEIVED THEIR SHARE OF CONSTR UCTED AREA. THREE MONTHS LATER, A SUPPLEMENTARY AGREEMENT WAS E NTERED ON SEPTEMBER 15, 2005 BETWEEN THE ASSESSEE AND OTHE R CO- OWNERS AND DEVELOPERS THROUGH WHICH IT WAS AGREED T HAT OWNERS WILL SELL THEIR 16% SHARE IN THE BUILT UP AR EA TO THE DEVELOPER OR ITS NOMINEE FOR CONSIDERATION OF RS. 4 2 CRORES. A SUM OF RS. 2 CRORES WAS RECEIVED. THIS COLLABORATIO N AGREEMENT AND BALANCE OF RS. 40 CRORES WAS PAYABLE BY THE DEV ELOPER 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 OF THREE M ONTHS. THERE WERE VARIOUS OTHER CLAUSES WHICH ARE NOT RELE VANT FOR OUR PURPOSES. THE QUESTION AROSE WHETHER CAPITAL GAIN ACCRUE / ARISE TO THE ASSESSEE DURING THE FINANCIAL YEAR 200 6-07 RELEVANT TO ASSESSMENT YEAR 2007-08 OR DURING FINAN CIAL YEAR 2007-08 RELEVANT TO ASSESSMENT YEAR 2008-09. 40. ON THE ABOVE, THE HON'BLE AUTHORITY AFTER REFER RING TO THE PROVISIONS OF SECTION 45 AND OBSERVED AS UNDER:- .THE SECTION CAN BE ANALYSED THUS : (A) TRANSFER OF A CAPITAL ASSET EFFECTED IN THE PRE VIOUS YEAR, (B) RESULTANT PROFITS OR GAINS FROM SUCH TRANSFER, (C) THOSE PROFITS OR GAINS WOULD CONSTITUTE THE INC OME OF THE ASSESSEE/ TRANSFEROR (D) SUCH INCOME SHALL BE DEEMED TO BE THE INCOME OF THE SAME PREVIOUS YEAR IN WHICH THE TRANSFER HAD TAKEN PLACE. TWO ASPECTS MAY BE NOTED AT THIS JUNCTURE. FIRSTLY , THE EXPRESSION USED IS ARISING WHICH IS NOT TO BE EQUATED WITH THE EXPRE SSION RECEIVED. BOTH THESE EXPRESSIONS AND IN ADDITION THERETO, THE EXPRESSION ACCRUE ARE USED IN THE INCOME-TAX ACT EITHER COLLECTIVELY OR SEPARATELY AC CORDING TO THE CONTEXT AND NATURE OF THE CHARGING PROVISION. THE SECOND POINT WHICH DESERVES NOTICE IS THAT BY A DEEMING PROVISION, THE PROFITS OR GAINS THAT H AVE ARISEN WOULD BE TREATED AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSF ER TOOK PLACE. THAT MEANS, THE INCOME ON ACCOUNT OF ARISAL OF CAPITAL GAIN SH OULD BE CHARGED TO TAX IN THE SAME PREVIOUS YEAR IN WHICH THE TRANSFER WAS EFFEC TED 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 B OOKS. THE FOLLOWING STATEMENT OF LAW IN SAMPATH IYENGARS COMMENTARY (1 0TH EDITION REVISED BY SHRI S. RAJARATNAM) BRINGS OUT THE CORRECT LEGAL PO SITION : SECTION 45 ENACTS THAT THE CAPITAL GAINS SHALL BY FICTION BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSF ER TOOK PLACE. SINCE 14 THIS IS A STATUTORY FICTION, THE ACTUAL YEAR IN WHI CH THE SALE PRICE WAS RECEIVED, WHETHER IT WAS ONE YEAR, TWO YEARS, THREE YEARS, FOUR YEARS ETC. PREVIOUS TO THE PREVIOUS YEAR OF TRANSFER, IS BESI DE 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 PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE'. SO, THE PAYMENTS OF CONSIDERATION STIPULATED TO BE PAID IN FUTURE WOULD HAVE TO BE ATTRIBUTED, BY STATUTORY MANDATE, TO THE YEAR OF TRANSFER, EVEN AS PAYMENTS MADE PRIOR TO THE YEAR OF TRANSFER. 41. THEREAFTER, THE AUTHORITY REFERRED TO SECTION 2(47) AND OBJECTS OF THE INTRODUCTION OF CLAUSES (V) & (VI) A ND ALSO REFERRED TO PARAS 11.1 & 11.2 OF THE BOARD CIRCULAR NO. 495 (WHICH WE HAVE ALREADY DISCUSSED EARLIER). THE HO N'BLE AUTHORITY HAS DISCUSSED VARIOUS IMPLICATIONS OF CLA USE (V) OF SECTION 2(47) AND ALSO IMPLICATION OF SECTION 53A O F THE TRANSFER OF PROPERTY ACT AS WELL AS OBSERVATIONS OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKAD AS KAPADIA V CIT (SUPRA). THE AUTHORITY OBSERVED THA T TO UNDERSTAND THIS PROVISION PROPERLY MEANING OF POSS ESSION HAS TO BE UNDERSTOOD PROPERLY AND WENT ON TO DISCUSS TH E MEANING OF TERM POSSESSION, AND HOW THE SAME IS TO BE UNDE RSTOOD IN THE CONTEXT OF CLAUSE (V). THESE ARE VERY IMPORTAN T 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 UND ERSTAND THE TERM POSSESSION IN THE CONTEXT OF CLAUSE (V) OF SECTIO N 2(47). SHOULD IT ONLY MEAN THE RIGHT TO EXCLUSIVE POSSESSIONWHICH THE TR ANSFEREE CAN MAINTAIN IN HIS OWN RIGHT TO THE EXCLUSION OF EVERYONE INCLU DING THE TRANSFEROR FROM WHOM HE DERIVED THE POSSESSION ? SUCH A CRITERION W ILL BE SATISFIED ONLY AFTER THE ENTIRE SALE CONSIDERATION IS PAID AND THE TRANSFEROR HAS FORFEITED HIS RIGHT TO EXERCISE ACTS OF POSSESSION OVER THE LAND OR TO RESUME POSSESSION. IN OUR VIEW, THERE IS NO WARRANT TO PLACE SUCH A RE STRICTED INTERPRETATION ON THE WORD POSSESSION OCCURRING IN CLAUSE (V) OF SE CTION 2(47). POSSESSION IS AN ABSTRACT CONCEPT. IT HAS DIFFERENT SHADES OF MEANING. IT IS VARIOUSLY DESCRIBED AS A POLYMORPHOUS TERM HAVING DIFFERENT MEANINGS IN DIFFERENT CONTEXTS (PER R. S. SARKARIA J. IN SUPERINTENDENT AND REMEMBRANCE OF LEGAL AFFAIRS, W. B. V. ANIL KUMAR BHUNJA [1979] 4 SCC 274 AND AS A WORD OF OPEN TEXTURE (SEE SALMOND ON JURISPRUDENCE, PA RAGRAPH 51, TWELFTH EDITION, INDIAN REPRINT). SALMOND OBSERVED : TO LO OK FOR A DEFINITION THAT WILL SUMMARIZE THE MEANINGS OF THE TERM POSSESSION IN ORDINARY LANGUAGE, IN ALL AREAS OF LAW AND IN ALL LEGAL SYSTEMS, IS TO AS K FOR THE IMPOSSIBLE. IN THE ABOVE CASE OF ANIL KUMAR BHUNJA [1979] 4 SCC 274, SARKARIA J. SPEAKING FOR A THREE-JUDGE BENCH ALSO REFERRED TO THE COMME NTS OF DIAS AND HUGHES IN THEIR BOOK ON JURISPRUDENCE THAT IF A TOPIC EV ER SUFFERED TOO MUCH THEORIZING IT IS THAT OF POSSESSION. MUCH OF TH E DIFFICULTY IS CAUSED BY THE FACT THAT POSSESSION IS NOT A PURE LEGAL CONCEPT, A S POINTED OUT BY SALMOND. THE LEARNED JUDGE THEN EXPLAINED THE CONNOTATION O F THE EXPRESSION POSSESSION BY REFERRING TO THE WELL KNOWN TREATI SES ON JURISPRUDENCE (PAGE 278) : 15 POSSESSION, IMPLIES A RIGHT AND A FACT : THE RIG HT TO ENJOY ANNEXED TO THE RIGHT TO PROPERTY AND THE FACT OF THE REAL I NTENTION. IT INVOLVES POWER OF CONTROL AND INTENT TO CONTROL, (SEE DIAS A ND HUGHES) 14 . . . . 15. WHILE RECOGNIZING THAT POSSESSION IS NOT A PU RELY LEGAL CONCEPT BUT ALSO A MATTER OF FACT, SALMOND (12TH ED., 52) D ESCRIBES POSSESSION, IN FACT, AS A RELATIONSHIP BETWEEN A PE RSON AND A THING. ACCORDING TO THE LEARNED AUTHOR, THE TEST FOR DETER MINING WHETHER A PERSON IS IN POSSESSION OF ANYTHING IS WHETHER HE I S IN GENERAL CONTROL OF IT. IN SALMONDS JURISPRUDENCE, AT PARAGRAPH 54, WE FI ND AN ILLUMINATING DISCUSSION ON IMMEDIATE AND MEDIATE POSSESSION. THE LEARNED AUTHOR STATES IN LAW ONE PERSON MAY POSSESS A THING FOR A ND ON ACCOUNT OF SOME ONE ELSE. IN SUCH A CASE THE LATTER IS IN POSSESSIO N BY THE AGENCY OF HIM WHO SO HOLDS THE THING ON HIS BEHALF. THE POSSESSI ON THUS HELD BY ONE MAN THROUGH ANOTHER MAY BE TERMED MEDIATE, WHILE THAT W HICH IS ACQUIRED OR RETAINED DIRECTLY OR PERSONALLY MAY BE DISTINGUISHE D AS IMMEDIATE OR DIRECT. SALMOND MAKES 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 ALLIED CONCEPT OF C ONCURRENT POSSESSION HAS ALSO BEEN EXPLAINED IN PARAGRAPH 55 OF SALMOND S JURISPRUDENCE IN THE FOLLOWING WORDS : IT WAS A MAXIM OF THE CIVIL LAW THAT TWO PERSONS C OULD NOT BE IN POSSESSION OF THE SAME THING AT THE SAME TIME. AS A GENERAL PROPOSITION THIS IS TRUE : FOR EXCLUSIVENESS IS OF THE ESSENCE OF POSSESSION. TWO ADVERSE CLAIMS OF EXCLUSIVE USE CA NNOT BOTH BE EFFECTUALLY REALIZED AT THE SAME TIME. CLAIMS, HOW EVER, WHICH ARE NOT ADVERSE, AND WHICH ARE NOT, THEREFORE, MUTUALLY DE STRUCTIVE, ADMIT OF CONCURRENT REALIZATION. HENCE, THERE ARE SEVERAL PO SSIBLE CASES OF DUPLICATE POSSESSION. 1. MEDIATE AND IMMEDIATE POSSESSION CO-EXIST IN R ESPECT OF THE SAME THING AS ALREADY EXPLAINED. 2. TWO OR MORE PERSONS MAY POSSESS THE SAME THING IN COMMON, JUST AS THEY MAY OWE IT IN COMMON . ON A FAIR AND REASONABLE INTERPRETATION AND ON ADO PTING THE PRINCIPLE OF PURPOSIVE CONSTRUCTION, IT MUST BE HELD THAT PO SSESSION CONTEMPLATED BY CLAUSE (V) NEED NOT NECESSARILY BE SOLE AND EXCLUSI VE POSSESSION. SO LONG AS THE TRANSFEREE IS, BY VIRTUE OF THE POSSESSION GIVEN, ENABLED TO EXERCISE GENERAL CONTROL OVER THE PROPERTY AND TO MAKE USE O F IT FOR THE INTENDED PURPOSE, THE MERE FACT THAT THE OWNER HAS ALSO THE RIGHT TO ENTER THE PROPERTY TO OVERSEE THE DEVELOPMENT WORK OR TO ENS URE PERFORMANCE OF THE TERMS OF AGREEMENT DOES NOT INTRODUCE ANY INCOMPAT IBILITY. THE CONCURRENT POSSESSION OF THE OWNER WHO CAN EXERCISE POSSESSORY RIGHTS TO A LIMITED EXTENT AND FOR A LIMITED PURPOSE AND THAT OF THE BU YER/DEVELOPER WHO HAS A GENERAL CONTROL AND CUSTODY OF THE LAND CAN VERY W ELL BE RECONCILED. CLAUSE (V) OF SECTION 2(47) WILL HAVE ITS FULL PLAY EVEN I N SUCH A SITUATION. THERE IS NO WARRANT TO POSTPONE THE OPERATION OF CLAUSE (V) AND THE RESULTANT ACCRUAL OF CAPITAL GAIN TO A POINT OF TIME WHEN THE CONCURRENT POSSESSION WILL BECOME EXCLUSIVE POSSESSION OF DEVELOPER/TRANSFEREE AFTER HE PAYS FULL CONSIDERATION. 16 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 TRANSF ER FOR THE PURPOSE OF CAPITAL GAINS MAY BE DEFEATED. THE REASON IS THIS: THE OWNER OF THE PROPERTY CAN VERY WELL CONTEND, AS IS BEING CONTENDED IN THE PRESENT CASE, THAT THE DEVELOPER WILL HAVE SUCH EXCLUSIVE POSSESSION IN HI S OWN RIGHT 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. EV EN IF SOME AMOUNT, SAY 10 PER CENT., REMAINS TO BE PAID AND THE DEVELOPER/ TRANSFEREE FAILS TO PAY, LEADING TO A DISPUTE BETWEEN THE PARTIES, THE RIGHT TO EXCLUSIVE AND INDEFEASIBLE POSSESSION MAY BE IN JEOPARDY. IN THIS STATE OF AFFAIRS, THE TRANSACTION WITHIN THE MEANING OF CLAUSE (V) CANNOT BE SAID TO HAVE BEEN EFFECTED AND THE LIABILITY TO PAY CAPITAL GAINS MAY BE INDEFINITELY POSTPONED. TRUE, IT MAY NOT BE PROFITABLE FOR THE DEVELOPER TO ALLOW THIS SITUATION TO LINGER FOR LONG AS THE PROCESS OF TRANSFER OF FLATS TO THE PROSPECTIVE PURCHASERS WILL GET DELAYED. AT THE SAME TIME, THE OTHER SIDE OF THE PICTURE CANNOT BE OVER-LOOKED. THERE IS A POSSIBILITY OF TH E OWNER WITH THE CONNIVANCE OF THE TRANSFEREE POSTPONING THE PAYMENT OF CAPITAL GAINS TAX ON THE OSTENSIBLE GROUND THAT THE ENTIRE CONSIDERATION HAS NOT BEEN RECEIVED AND SOME BALANCE IS LEFT. THE MISCHIEF SOUGHT TO BE REMEDIED, WILL THEN PERPETUATE. WE ARE, THEREFORE OF THE VIEW THAT POSS ESSION GIVEN TO THE DEVELOPERS NEED NOT RIPEN ITSELF INTO EXCLUSIVE POS SESSION ON PAYMENT OF ALL THE INSTALMENTS IN ENTIRETY FOR THE PURPOSE OF DETE RMINING THE DATE OF TRANSFER. WHILE ON THE POINT OF POSSESSION, WE WOULD LIKE TO CLARIFY ONE MORE ASPECT. WHAT IS SPOKEN TO IN CLAUSE (V) OF SECTION 2(47) IS THE TRANSACTION WHICH INVOLVES ALLOWING THE POSSESSION TO BE TAKEN. BY MEANS OF SUCH TRANSACTION, A TRANSFEREE LIKE A DEVELOPER IS ALLOW ED TO UNDERTAKE DEVELOPMENT WORK ON THE LAND BY ASSUMING GENERAL CO NTROL OVER THE PROPERTY IN PART PERFORMANCE OF THE CONTRACT. THE DATE OF THAT TRANSACTION DETERMINES THE DATE OF TRANSFER. THE ACTUAL DATE O F TAKING PHYSICAL POSSESSION OR THE INSTANCES OF POSSESSORY ACTS EXER CISED IS NOT VERY RELEVANT. THE ASCERTAINMENT OF SUCH DATE, IF CALLED FOR, LEADS TO COMPLICATED INQUIRIES, WHICH MAY FRUSTRATE THE OBJECTIVE OF THE LEGISLATIVE PROVISION. IT IS ENOUGH IF THE TRANSFEREE HAS, BY VIRTUE OF THAT TRA NSACTION, A RIGHT TO ENTER UPON AND EXERCISE ACTS OF POSSESSION EFFECTIVELY PU RSUANT TO THE COVENANTS IN THE CONTRACT. THAT TANTAMOUNTS TO LEGAL POSSESS ION. WE ARE REFERRING TO THIS ASPECT BECAUSE THE AUTHORIZED REPRESENTATIVE HAS SUBMITTED WHEN HE APPEARED BEFORE US IN THE LAST WEEK OF MAY, 2007, THAT EVEN BY THAT DATE THE DEVELOPMENT WORK COULD NOT BE COMMENCED FOR WAN T OF CERTAIN APPROVALS, AND THEREFORE, THE DEVELOPER WAS NOT W ILLING TO TAKE POSSESSION OF THE LAND. SUCH AN UNSUBSTANTIATED STATEMENT WH ICH IS NOT FOUND IN THE ORIGINAL APPLICATION OR EVEN WRITTEN SUBMISSIONS F ILED EARLIER NEED NOT BE PROBED INTO ESPECIALLY WHEN IT IS NOT HIS CASE THA T THE DEVELOPER WAS NOT ALLOWED TO TAKE POSSESSION IN TERMS OF THE AGREEME NT. 42. AFTER THE ABOVE DISCUSSION, THE AUTHORITY DISCU SSED THE FACTS OF THE CASE BEFORE IT. IT WAS OBSERVED THAT P ARAGRAPH 18 OF THE COLLABORATION AGREEMENT PROVIDES THAT ON ISS UANCE OF LETTER OF INTENT, THE OWNERS WILL ALLOW AND PERMIT THE DEVELOPER TO ENTER UPON AND SURVEY THE LAND, ERECT SITE / SAL ES OFFICE, CARRY OUT THE SITE DEVELOPMENT WORK AND DO ACTIVITI ES FOR ADVANCING & SALE PROMOTION, CONSTRUCTION ETC. THE AUTHORITY FURTHER OBSERVED THAT IF THIS CLAUSE IS READ IN ISO LATION THIS 17 WOULD SUGGEST ON PASSING OF POSSESSION BUT ACCORDIN G TO AUTHORITY THE OTHER FACTORS ARE TO BE CONSIDERED. CLAUSE 15 PROVIDED THAT ON FULFILLMENT OF THE REQUIREMENTS LA ID DOWN IN THE LETTER OF INTENT WHICH IS PROVISIONAL LICENSE, THE OWNERS SHOULD EXECUTE AN IRREVOCABLE GENERAL POWER OF ATTORNEY IN FAVOUR OF THE DEVELOPER ALLOWING INTER ALIA TO BOOK AND SELL THE DWELLING UNIT FAILING UNDER THEIR SHARE. THIS WAS POSSIBL E ONLY AFTER DEPOSIT OF REQUISITE CHARGES ETC. AND PERHAPS THERE WAS LITIGATION REGARDING OWNERSHIP OF LAND WHICH HAS AL SO TO BE WITHDRAWN. THE AUTHORITY HAS DISCUSSED THE SIGNIFI CANCE OF GENERAL POWER OF ATTORNEY AND THE TERMS OF THE GENE RAL POWER OF ATTORNEY AT PARA 33 AND THE RELEVANT PORTION OF THE SAME IS AS UNDER:- A COPY OF THE IRREVOCABLE GPA EXECUTED IN TERMS O F PARAGRAPH 15 OF THE AGREEMENT HAS BEEN FURNISHED BY THE APPLICA NT. IT AUTHORIZES THE DEVELOPER : (I) TO ENTER UPON AND SURVEY THE L AND, PREPARE THE LAYOUT PLAN, APPLY FOR RENEWAL/EXTENSION OF LICENCE, SUBM IT THE BUILDING PLANS FOR SANCTION OF THE APPROPRIATE AUTHORITY AND TO CARRY OUT THE WORK OF DEVELOPMENT OF A MULTI-STORIED RESIDENTIAL COMPLEX , (II) TO MANAGE AND CONTROL, LOOK AFTER AND SUPERVISE THE PROPERTY IN ANY MANNER AS THE ATTORNEY DEEMS FIT AND PROPER, (III) TO OBTAIN WAT ER, SEWAGE DISPOSAL AND ELECTRICITY CONNECTIONS. THE DEVELOPER IS ALSO AUT HORIZED TO BORROW MONEY FOR MEETING THE COST OF CONSTRUCTION ON THE SECURIT Y AND MORTGAGE OF LAND FALLING TO THE DEVELOPERS SHARE. THE OTHER CLAUSES IN THE GPA ARE NOT RELEVANT FOR OUR PURPOSE. THE GPA UNEQUIVOCALLY GR ANTS TO THE DEVELOPER A BUNDLE OF POSSESSORY RIGHTS. THE ACTS OF MANAGEM ENT, CONTROL AND SUPERVISION OF PROPERTY ARE EXPLICITLY MENTIONED. I T IS FAIRLY CLEAR THAT THE GPA IS NOT A MERE LICENCE TO ENTER THE LAND FOR DO ING SOME PRELIMINARY ACTS IN RELATION TO THE DEVELOPMENT WORK. THE POWE R OF CONTROL OF THE LAND WHICH IS AN INCIDENCE OF POSSESSION AS EXPLAINED SU PRA HAS BEEN CONFERRED ON THE DEVELOPER UNDER THIS GPA. THE DEVE LOPER ARMED WITH THE GPA CANNOT BE REGARDED MERELY AS A LICENSEE OR AN A GENT SUBJECT TO THE CONTROL OF THE OWNERS. HIS POSSESSION CANNOT BE CH ARACTERIZED AS PRECARIOUS OR TENTATIVE IN NATURE. THE FACT THAT TH E AGREEMENT DESCRIBES THE GPA AS IRREVOCABLE AND AN EXPRESS DECLARATION T O THAT EFFECT IS FOUND IN THE GPA ITSELF IS NOT WITHOUT SIGNIFICANCE. HAVI NG REGARD TO THE SECOND AND SUPPLEMENTAL AGREEMENT BY VIRTUE OF WHICH THE E NTIRE DEVELOPED PROPERTY INCLUDING THE OWNERS SHARE HAS BEEN AGREE D TO BE SOLD TO THE DEVELOPER OR HIS NOMINEES FOR VALUABLE MONEY CONSID ERATION, THE DEVELOPER HAS A VITAL STAKE IN THE ENTIRE PROPERTY. AS FAR AS THE QUALITY OF POSSESSION IS CONCERNED, HE IS ON A HIGHER PEDESTAL THAN A DEVELOPER WHO APPORTIONS BUILT UP AREA WITH THE OWNER. EVEN IF HE IS AN AGENT IN ONE SENSE IN THE COURSE OF DEVELOPING THE LAND, THAT AG ENCY IS COUPLED WITH INTEREST. FOR THESE REASONS, THE PREFIX IRREVOCAB LE IS DELIBERATELY CHOSEN. AS DISCUSSED EARLIER, THE OWNER'S LIMITED RIGHT TO ENTER THE LAND AND OVERSEE THE DEVELOPMENT WORK IS NOT INCOMPATIBLE WI TH THE DEVELOPERS RIGHT OF CONTROL OVER THE LAND WHICH HE DERIVES FRO M 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 T HE 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 O F THE CONTRACT FOR TRANSFER OF THE PROPERTY IN QUESTION.. 43 THUS, THE ABOVE CLEARLY SHOWS THAT IRREVOCABLE G ENERAL POWER OF ATTORNEY WHICH LEADS TO OVER ALL CONTROL OF THE PROPERTY IN THE HANDS OF THE DEVELOPER, EVEN IF THA T MEANS NO 18 EXCLUSIVE POSSESSION BY THE DEVELOPER WOULD CONSTIT UTE TRANSFER. IT CAN BE SAID THAT IT HAS TO BE CONSTRUE D AS POSSESSION IN TERMS OF CLAUSE (V) OF SECTION 2(47 ) OF THE ACT. 44 A QUESTION MAY ARISE THAT WHY THE TRANSFER WAS N OT HELD TO BE TAKEN PLACE IN ASSESSMENT YEAR 2006-07 WHEN FIRST AGREEMENT WAS ENTERED INTO ON JUNE 8, 2005. THE SUPPLEMENTARY AGREEMENT WAS ALSO ENTERED INTO ON SEPT 15, 2005 BOTH OF WHICH FALL IN FINANCIAL YEAR 2005-06 RELEVA NT TO ASSESSMENT YEAR 2006- 07. THEN WHY TRANSFER WAS NOT CONSTRUED IN ASSESSM ENT YEAR 2006-07 IT WAS BECAUSE THE FIRST AGREEMENT ITSELF CONTAINED A COND ITION 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 TERMINATED. THEREFORE, OBTA INING THE LETTER OF INTENT WAS THE CRUCIAL FACTOR. IT HAS BEEN EXPLAINED IN THE D ECISION THAT THE LETTER OF INTENT BASICALLY IS A LICENSE ISSUED BY THE DIRECTOR OF TO WN AND COUNTRY PLANNING, HARYANA WHICH GIVES PERMISSION 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 THE IN TENTION OF THE HANDING OVER OF THE POSSESSION. THEREFORE, IT BECOMES VERY CLEAR THAT IT IS NOT NECESSARY THAT TRANSFER WOULD TAKE PLACE ON THE SIGNING OF DEVELOP MENT AGREEMENT BUT THE SAME HAS TO BE INFERRED ONLY WHEN THE POSSESSION HAS BEE N HANDED OVER BY THE TRANSFEROR TO THE DEVELOPER WHICH CAN BE INFERRED F ROM THE DOCUMENTS E.G. POWER OF ATTORNEY. AFTER ABOVE DISCUSSION HON'BLE AUTHORI TY HAS SUMMARIZED THE DECISION IN PARA 41 WHICH IS AS UNDER: THE FOLLOWING IS THE SUMMARY OF CONCLUSIONS: 1. WHERE THE AGREEMENT FOR TRANSFER OF IMMOVABLE PR OPERTY BY ITSELF DOES NOT PROVIDE FOR IMMEDIATE TRANSFER OF POSSESSION, THE D ATE OF ENTERING INTO THE AGREEMENT CANNOT BE CONSIDERED TO BE THE DATE OF TR ANSFER WITHIN THE MEANING OF CLAUSE (V) OF SECTION 2 (47) OF THE INCOME-TAX A CT. 2. TO ATTRACT CLAUSE (V) OF SECTION 2(47), IT IS NO T NECESSARY THAT THE ENTIRE SALE CONSIDERATION UP TO THE LAST INSTALLMENT SHOULD BE RECEIVED BY THE OWNER. 3. IN THE INSTANT CASE, HAVING REGARD TO THE TERMS OF THE TWO AGREEMENTS AND THE IRREVOCABLE GPA EXECUTED PURSUANT TO THE AGREEMENT, THE EXECUTION OF THE GPA SHALL BE REGARDED AS THE TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF LAND TO BE TAKEN IN PART PERFORMANCE OF THE CONTRACT 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 SUC H GPA. THE IRREVOCABLE GPA WAS EXECUTED ON MAY 8, 2006, I.E., DURING THE P REVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08 AND THE CAPITAL GAINS M UST BE HELD TO HAVE ARISEN DURING THAT YEAR. INCIDENTALLY, IT MAY BE ME NTIONED THAT DURING THE SAID YEAR, I.E., FINANCIAL YEAR 2006-07, A FINAL LICENSE WAS GRANTED AND THE APPLICANT/OWNERS RECEIVED NEARLY 2/3RDS OF THE CONS IDERATION. 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 DUR ING ARGUMENTS BUT CLAUSE 13 OF THE JDA REFERS TO NUMBER OF MEMBERS AS 96). THE SOCIETY WAS OWNING 21.2 ACRES O F LAND IN VILLAGE KANSAL DISTT. MOHALI ADJACENT TO CHANDIGARH . THERE WERE TWO TYPES OF MEMBERS FIRSTLY THE MEMBERS WHO W ERE OWNING PLOT OF 500 SQYD AND SECONDLY THE MEMBERS WH O ARE HOLDING PLOT OF 1000 SQYD. SOMEWHERE IN 2006 IT WA S DECIDED TO DEVELOP A GROUP HOUSING COMMERCIAL PROJECT AND D O 19 DEVELOPMENT AS PER THE APPLICABLE MUNICIPAL BUILDIN G BYE-LAWS IN FORCE AND ACCORDINGLY A BID WAS INVITED THROUGH ADVERTISEMENT IN THE TRIBUNE DATED 31.5.2006. HASH A DEVELOPER, APPROACHED THE SOCIETY WITH PROPOSAL FOR DEVELOPMENT OF THE PROPERTY. SINCE HASH DID NOT HA VE SUFFICIENT MEANS TO DEVELOP THE PROPERTY, HASH HAD APPROACHED THDC FOR DEVELOPMENT OF THE PROPERTY BY CONSTRUCTIN G THE BUILDING AND/OR STRUCTURES TO BE USED FOR INTERALIA RESIDENTIAL, 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 PLACED AT PAGE 58 TO 65 OF THE PAPER BOOK. IN THE EXECUTIVE COMMITTEE I T WAS DECIDED TO APPOINT HASH WHO WAS ACTING ALONGWITH TH E JOINT DEVELOPER THDC AS JOINT DEVELOPER ON THE TERMS AND CONDITIONS TO BE MENTIONED IN THE JDA. IT WAS FURT HER RESOLVED THAT MEMBER OWING PLOT OF 500 SQYD WOULD RECEIVE A CONSIDERATION OF RS. 82,50,000/- EACH TO BE PAID IN FOUR INSTALLMENTS BY HASH DIRECTLY IN FAVOUR OF THE MEM BERS AND ONE FLAT WITH SUPER AREA OF 2250 SQF TO BE CONSTRUC TED BY THDC. THE MEMBERS WHO HELD THE PLOT OF 1000SQYD WE RE TO RECEIVE A CONSIDERATION OF RS. 1,65,00,000/- AND TW O FLATS CONSISTING OF 2250SQFT TO BE CONSTRUCTED BY THE TH DC. IT WAS FURTHER RESOLVED TO ENTER INTO A JDA WITH THDC/HASH . IT WAS ALSO RESOLVED TO EXECUTE IRREVOCABLE POWER OF ATTOR NEY BY THE SOCIETY IN FAVOUR OF THDC FOR THIS PURPOSE. THIS RE SOLUTION WAS ULTIMATELY RATIFIED IN THE GENERAL BODY MEETING HEL D BY THE SOCIETY ON 25.2.2007. PURSUANT TO THE ABOVE RESOLUT ION, TRIPARTITE JDA WAS EXECUTED (COPY OF THE SAME IS A VAILABLE AT PAGE 15 TO 54 OF FIRST PAPER BOOK). THROUGH RECITA TION CLAUSE IT HAS BEEN MENTIONED THAT OWNER IS IN POSSESSION OF L AND MEASURING ABOUT 21.2 ACRES OF LAND WHICH HAS COME I N THE PURVIEW OF NAGAR PANCHAYAT, NAYA GAON VIDE NOTIFICA TION ISSUED ON 18.10.2006 DULY SUBSTITUTED BY ANOTHER NO TIFICATION DATED 21.11.2006 AND THAT NO PART OF LAND OF THE PR OPERTY FALLS UNDER FOREST AREA UNDER THE PUNJAB LAND PRESERVATIO N ACT. IT HAS BEEN FURTHER RECITED THAT THE SOCIETY HAS AGREE D TO ACCEPT THE PROPOSALS OF HASH AND FURTHER EXECUTED THIS AGR EEMENT WITH THDC/HASH. HASH WAS RESPONSIBLE TO MAKE PAYMENT TO THE OWNER AS DESCRIBED EARLIER AND THE FLATS WERE TO BE PROVIDED BY THDC. IN CASE OF HASH FAILS TO MAKE THE PAYMENT, T HDC AGREED TO MAKE THE PAYMENTS. COPY OF THE RESOLUTIO N OF THE EXECUTIVE COMMITTEE OF THE SOCIETY DATED 4.1.2007 A S WELL AS RESOLUTION OF THE GENERAL BODY MEETING OF THE SOCIE TY DATED 25.2.2007 WERE MADE PART OF JDA BY WAY OF ANNEXURE. THE SOCIETY AGREED TO EXECUTE AN IRREVOCABLE SPECIAL PO WER OF ATTORNEY IN FAVOUR OF THDC AND ALL OTHER NECESSARY DOCUMENTS, AT THE REQUEST OF THE DEVELOPERS. 47 IN CLAUSE 1 OF JDA VARIOUS EXPRESSIONS HAVE BEEN DEFINED. CLAUSE 2 DESCRIBES THE PROJECT AS UNDER: 2.1 THE OWNER HEREBY IRREVOCABLY AND UNEQUIVOCALLY GRANTS AND ASSIGNS IN PERPETUITY ALL ITS RIGHTS TO DEVELOP, CONSTRUCT, MORTGAGE, LEASE, LICENSE, SELL AND TRANS FER THE PROPERTY ALONG WITH ANY AND ALL THE CONSTRUCTION, P REMISES, HEREDITAMENTS, EASEMENTS, TREES THEREON IN FAVOUR O F THDC FOR THE PURPOSE OF DEVELOPMENT, CONSTRUCTION, MORTG AGE, SALE, TRANSFER, LEASE, LICENSE AND OR EXPLOITATION FOR FULL 20 UTILIZATION OF THE PROPERTY (RIGHTS) AND TO EXECUTE ALL THE DOCUMENTS NECESSARY TO CARRY OUT, FACILITATE AND EN FORCE THE RIGHTS IN THE PROPERTY INCLUDING TO EXECUTE LEASE A GREEMENT, 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, CONV EYANCE, LEASE DEEDS, LICENSE AGREEMENT, POWER OF ATTORNEY, AFFIDAVITS, DECLARATION, INDEMNITIES AND ALL SUCH OTHER DOCUMEN TS, LETTERS AS MAY BE NECESSARY TO CARRY OUT, FACILITATE AND EN FORCE THE RIGHTS AND TO REGISTER THE SAME WITH THE REVENUE/CO MPETENT AUTHORITY AND TO APPEAR ON OUR BEHALF BEFORE ALL AU THORITIES, STATUTORY OR OTHERWISE, AND BEFORE ANY COURT OF LAW (THE DEVELOPMENT RIGHTS). THE OWNER HEREBY HANDS OVER THE ORIGINAL TITLE DEEDS OF THE PROPERTY AS MENTIONED I N THE LIST ANNEXED HERETO AND MARKED AS ANNEXURE IV AND PHYSIC AL, VACANT POSSESSION OF THE PROPERTY HAS BEEN HANDED O VER TO THDC SIMULTANEOUS TO THE EXECUTION AND REGISTRATION OF THIS AGREEMENT TO DEVELOP THE SAME AS SET OUT HEREIN. IT IS HEREBY AGREED AND CONFIRMED THAT WHAT IS STAT ED IN THE RECITALS HEREINABOVE, SHALL BE DEEMED TO BE DECLARA TIONS AND REPRESENTATIONS ON THE PART OF THE OWNER AS IF THE SAME WERE SET OUT HEREIN VERBATIM AND FORMING AN INTEGRAL PAR T OF THE AGREEMENT. 2.2 THE PROJECT SHALL COMPRISE OF DEVELOPMENT/CONST RUCTION OF THE PROPERTY INTO THE PREMISES AS PERMISSIBLE UNDER PUNJAB MUNICIPAL BUILDING BYE-LAWS/PUNJAB URBAN DEVELOPMEN T AUTHORITY OR ANY OTHER COMPETENT AUTHORITY BY THE D EVELOPER AT THEIR OWN COST AND EXPENSE. THE PROJECT SHALL BE D EVELOPED AS MAY BE SANCTIONED BY THE CONCERNED LOCAL AUTHORITY I.E. DEPARTMENT OF LOCAL BODIES, PUNJAB/PUNJAB URBAN PL ANNING AND DEVELOPMENT AUTHORITY (PUDA) OR ANY OTHER COMPE TENT AUTHORITY. 2.3 THE OWNER HEREBY IRREVOCABLY AND UNEQUIVOCALLY GRANTS AND ASSIGNS ALL ITS DEVELOPMENT RIGHTS IN THE PROPE RTY TO THDC TO DEVELOP THE PROPERTY AND UNDERTAKE THE PROJECT A T ITS OWN COSTS, EFFORTS AND EXPENSES WHEREUPON THE DEVELOPER SHALL BE ENTITLED TO APPLY FOR AND OBTAIN NECESSARY SANCTION S, LICENSES AND PERMISSIONS FROM ALL THE CONCERNED AUTHORITIES FOR THE COMMENCEMENT, DEVELOPMENT AND COMPLETION OF THE PRO JECT ON THE PROPERTY. 48 CLAUSE 3 DESCRIBES THE OBLIGATIONS OF THE DEVELO PERS & SOCIETY FOR GETTING THE PLANS, ETC. SANCTIONED FROM COMPETENT AUTHORITY / APPLICATIONS TO BE SIGNED BY OWNER FOR PLANS, DRAWINGS ETC., CONSTRUCTION. CLAUSE 4 DEALS WITH C ONSIDERATION CLAUSES 5 TO 8 DEALS VARIOUS ASPECTS OF PROJECT AND OBLIGATIONS OF SOCIETY AND DEVELOPER. CLAUSE 9 TALKS ABOUT OWNE RSHIP AND RIGHTS AND READ AS UNDER: 9 TRANSFER OF OWNERSHIP/RIGHTS 9.1 THE OWNER SHALL SIMULTANEOUSLY ON RECEIPT OF PAYMEN T AS SET OUT IN CLAUSE 4.1 ABOVE, EXECUTE AN IRREVOCA BLE 21 SPECIAL POWER OF ATTORNEY TO THDC FOR DEVELOPMENT O F THE PROPERTY AUTHORIZING THDC TO DO ALL LAWFUL ACTS, DE EDS, MATTERS AND THINGS PERTAINING TO THE DEVELOPMENT OF THE PROPERTY FOR THE PROJECT ALONG WITH INTERALIA RIGHT TO MORTGAGE THE PROPERTY AND/OR PREMISES, SELL, LEASE, LICENSE THE PREMISES AND RECEIVE/COLLECT MONIES IN ITS NAM E IN RESPECT OF THE SAME AND APPROACH INTERACT, COMMUNICATE WITH THE COMPETENT AUTHORITIES AND FOR DOING ALL AC TS, DEEDS, MATTERS AND THINGS TO BE DONE OR INCURRED BY THDC I N THAT BEHALF AS ALSO TO SIGN ALL LETTERS, APPLICATIONS, A GREEMENTS AND REGISTER THE SAME IF NECESSARY, DOCUMENTS, COURT PR OCEEDINGS, AFFIDAVITS AND SUCH OTHER PAPERS CONTAINING TRUE F ACTS AND CORRECT PARTICULARS AS MADE FROM TIME TO TIME BE RE QUIRED IN THIS BEHALF. 9.2 THE OWNER SHALL EXECUTE IN FAVOUR OF THDC THE SALE DEED IS IN ACCORDANCE WITH THE PROVISIONS OF CLAUSE 4.1( II) TO CLAUSE 4.1(IV) OF THIS AGREEMENT AND EXECUTE ALL OTHER NEC ESSARY DOCUMENTS AND PAPERS TO COMPLETE THE AFORESAID TRAN SACTION. 9.3 THAT ALL THE ORIGINAL TITLE DEEDS PERTAINING T O PROPERTY AS MENTIONED IN ANNEXURE IV HAS BEEN HANDED OVER TO THDC BY THE OWNER AT THE TIME OF SIGNING OF THIS AGREEMENT AND IN FURTHERANCE OF THE COMMON INTEREST OF THE PARTIES F OR THE DEVELOPMENT OF THE PROJECT AND EXCEPT THE SALE TRAN SACTION MADE BY THE OWNER IN FAVOUR OF THDC AS ET OUT IN CLAUSE 4.1 ABOVE. THDC HEREBY UNDERTAKE AND ASSURE THE OWNER THAT THEY SHALL USE THE TITLE DEEDS ONLY FOR THE PURPOSE OF F URTHERANCE OF THE PROJECT IN THE MANNER THAT IT DOES NOT ADVERSEL Y EFFECT THE OWNER/ALLOTTEE IN ANY MANNER WHATSOEVER. 49 CLAUSE 10 DESCRIBES THE CONSENT GIVEN BY THE SOC IETY TO THDC FOR RAISING FINANCE FOR DEVELOPMENT AND COMPLE TION OF PROJECT. CLAUSE 11 TALKS ABOUT FORMATION OF MAINTE NANCE SOCIETY FOR THE PROJECT AFTER ITS COMPLETION. CLAU SE 13 TALKS ABOUT TRANSFER OF RIGHTS WHICH READS AS UNDER: 13 TRANSFER OF RIGHTS THE OWNER HEREIN I.E. THE PUNJABI COOP HOUSE BUILDI NG SOCIETY LTD. ALONG WITH ALL ITS NINETY SIX (96) MEMBERS HAV E GIVEN THEIR EXPRESS, FREE AND CLEAR CONSENT IN WRITING IN THE F ORM OF AN AFFIDAVIT/NO OBJECTION CERTIFICATE/CONSENT LETTER W HEREBY THE DEVELOPERS HAVE BEEN ALLOWED TO DEVELOP THE PROPERT Y IN ACCORDANCE WITH THE PROJECT AND THAT THDC SHALL BE ENTITLED TO TRANSFER THE RIGHTS OBTAINED UNDER THIS AGREEMENT T O ANY THIRD PARTY AND TO GET THE DEVELOPMENT / CONSTRUCTION WOR K COMPLETED ON SUCH TERMS AND CONDITIONS AS THDC MAY DEEM FIT S O LONG AS IT DOES NOT ADVERSELY EFFECT THE OWNER IN TERMS OF THEIR RIGHT TO RECEIVE ENTIRE CONSIDERATION AS MENTIONED IN THIS A GREEMENT SUBJECT TO ALL OTHER CONDITIONS MENTIONED THEREIN A S WELL. THE OWNER SHALL AT ALL TIMES PROVIDE FULL SUPPORT TO TH E DEVELOPERS HEREIN. 50 OTHER CLAUSES PROVIDE FOR TERMINATION, GENERAL P ROVISIONS, DISCLAIMER, PARTIAL INVALIDITY, ARBITRATION, NOTICE S AND FORCE MAJEURE & JURISDICTION. 22 51 IN ADDITION TO ABOVE AN IRREVOCABLE SPECIAL POWE R OF ATTORNEY HAS ALSO BEEN EXECUTED BY THE SOCIETY IN F AVOUR OF THE DEVELOPERS I.E. THDC. (COPY OF WHICH IS AVAILABLE AT PAGES 40 TO 52 OF THE PAPER BOOK IN CASE OF SOCIETY IN ITA N O. 556 OF 2012 AS DISCUSSED EARLIER IN PARA 25 (COMPLETE COPY OF SUPPLEMENTARY POWER OF ATTORNEY WAS NOT AVAILABLE I N THE PAPER BOOK OF THE ASSESSEE, THEREFORE, REFERENCE W AS 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 J DA THE POSSESSION OF THE PROPERTY WAS TO BE HANDED OVER SIMULTANEOUSLY TO THE EXECUTION AND REGISTRATION OF JDA AND SINCE THE JDA WAS NOT REGISTERED, THEREFORE, THE P OSSESSION WAS NOT GIVEN. WE CAN NOT ACCEPT THIS CONTENTION B ECAUSE IN POWER OF ATTORNEY TRANSACTIONS, IT IS NOT NECESSA RY TO REGISTER THE JDA IF A SPECIAL POWER OF ATTORNEY HAS BEEN GIV EN AND SAME IS REGISTERED. SECONDLY CLAUSE 9.3 OF THE JDA AS REPRODUCED ABOVE CLEARLY SHOW THAT ORIGINAL TITLE D EED WHICH HAVE BEEN MENTIONED ALONG WITH THE POSSESSION IN PA RA 2.1 WHICH ACCORDING TO THE LD. COUNSEL OF THE ASSESSEE WERE TO BE HANDED OVER SIMULTANEOUSLY TO EXECUTION AND REGISTR ATION OF THE JDA, IS NOT CORRECT BECAUSE CLAUSE 9.3 CLEARLY MENT ION THAT ORIGINAL TITLE DEED OF THE PROPERTY HAVE BEEN HANDE D OVER TO THE THDC AT THE TIME OF SIGNING OF THIS AGREEMENT BECAU SE CLAUSE 9.3 THERE IS NO MENTION ABOUT REGISTRATION OF JDA. 53 SPECIAL POWER OF ATTORNEY WHICH HAS BEEN EXECUTE D ON 26.2.2007 AND HAS BEEN REGISTERED ALSO. THE IRREVOC ABLE SPECIAL POWER OF ATTORNEY HAS BEEN EXECUTED AS PROV IDED IN CLAUSE 6.7 OF THE JDA WHICH READS AS UNDER: 6.7 THE OWNER SHALL EXECUTE AN IRREVOCABLE SPECIAL POWER OF ATTORNEY GRANTING ITS COMPLETE DEVELOPMENT RIGHTS I N THE PROPERTY IN FAVOUR OF THDC INTERALIA INCLUDING THE RIGHT TO RAISE FINANCE BY MORTGAGING THE PROPERTY AND REGIST ER THE CHARGE WITH THE COMPETENT AUTHORITY AND EXECUTE REG ISTERED 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 OU T OF ITS OWN WILL AND DISCRETION WITHOUT OBTAINING A SPECIFI C PRIOR WRITTEN CONSENT OF THDC OR ANY OF ITS DULY CONSTITU TED ATTORNEYS. 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 AR CHITECT, LAWYERS. SOME OF THE SPECIFIC CLAUSES RELEVANT, AR E 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 CONDITIONS AS THE ATTORNEY DEEM FIT. 23 (N) TO ENTER UPON THE PROPERTY EITHER ALONE OR WITH OTHERS FOR THE PURPOSE OF DEVELOPMENT, COORDINATION, EXECUTION , IMPLEMENTATION OF THE PROJECT AND COMMERCIALIZATION OF THE PROPERTY/PREMISES. (T) TO AMALGAMATE THE PROPERTY WITH ANY OTHER CONTI GUOUS, ADJACENT AND ADJOINING LAND SAND PROPERTIES WHEREIN DEVELOPMENT AND/OR OTHER RIGHT, BENEFITS AND INTERE STS ARE ACQUIRED AND/OR PROPOSED TO BE ACQUIRED AND DEVELOP ED OR PROPOSED TO BE DEVELOPED BY THDC AND/OR THEIR ASSOC IATE AND/OR GROUP CONCERNS/S AND/OR UTILIZE THE FSI, FAR , DR AND TDR OF THE CONTIGUOUS, ADJACENT AND ADJOINING LANDS FOR THE PURPOSE OF CONSTRUCTING BUILDINGS AND/OR STRUCTURES THEREON AND/OR ON THE PROPERTY OR UTILIZE SUCH LANDS AND P ROPERTIES FOR MAKING PROVISION OF PARKING SPACES THEREON, AND/OR MAY UTILIZE THE SAME FOR ANY OTHER LAWFUL PURPOSE, AS THDC AND/ OR THEIR ASSOCIATE AND/OR GROUP CONCERNS MAY IN THEIR SOLD, ABSOLUTE AND UNFETTERED DISCRETION THINK FIT. (W) TO HAND OVER THE POSSESSION OF THE PROPERTY OR ANY PART OR PORTION THEREOF TO THE AUTHORITIES TO WHOM THE S AME IS REQUIRED TO BE HANDED OVER OR OTHERWISE AND TO EXEC UTE AND DELIVER ANY UNDERTAKINGS, DECLARATIONS, AFFIDAVITS, BONDS, DEEDS, DOCUMENTS, ETC. AS MAY BE REQUIRED BY THE AU THORITIES CONCERNED FOR VESTING SUCH A PART OR PORTION IN SUC H AUTHORITY AND TO ADMIT EXECUTION THEREOF BEFORE THE CONCERNED COMPETENT AUTHORITY AND GET THE SAME REGISTERED WITH THE CONC ERNED SUB- REGISTRAR. (Y) REASONABLE OPPORTUNITY OF HEARING SHALL BE GIVE N TO MORTGAGE, ENCUMBER OR CREATE A CHARGE ON THE PROPER TY OR ANY PART OR PORTION THEREOF AND EXECUTE THE NECESSARY S ECURITY DOCUMENTS IN FAVOUR OF ANY BANK/FINANCIAL INSTITUT ION TO RAISE FUNDS FOR THE CONSTRUCTION/DEVELOPMENT OF THE PROPE RTY AND FOR THE SAID PURPOSE TO DEPOSIT TITLE DEEDS (IF REQUIRE D) IN RESPECT OF THE PROPERTY IN FAVOUR OF SUCH BANK/FINANCIAL I NSTITUTION, EXECUTE THE NECESSARY DOCUMENTS AND REGISTER THE CH ARGE CREATED ON THE PROPERTY IF SO REQUIRED IN THE REVEN UE RECORDS AND/OR DESIRED BY THE ATTORNEY. (AA) TO SELL, TRANSFER, LEASE, LICENSE THE PREMISE S THAT MAY BE CONSTRUCTED ON THE PROPERTY ON OWNERSHIP BASIS, LEA SE, LICENSE AND/OR IN ANY OTHER MANNER FOR SUCH PRICE AS THE AT TORNEYS MAY DEEM FIT AND PROPER. TO COLLECT AND RECEIVE FROM T HE PURCHASED, TRANSFEREES, LESSEES, LICENSEES OF THE P REMISES, MONIES/PRICE AND/OR CONSIDERATION AND/OR MAINTENANC E CHARGES AND TO SIGN AND EXECUTE AND/OR GIVE PROPER AND LAWF UL DISCHARGE FOR THE RECEIPTS. (BB) TO EXECUTE FROM TIME TO TIME ALL THE WRITING, AGREEMENT, DEEDS ETC. IN RESPECT OF THE PREMISES WHICH MAYBE C ONSTRUCTED ON THE PROPERTY AND ALSO TO EXECUTE AND SIGN CONVEY ANCE, TRANSFER OR SURRENDER IN RESPECT OF THE PROPERTY O R ANY PART THEREOF. (CC) TO SIGN, EXECUTE AND REGISTER THE CONVEYANCES OR ASSIGNMENTS AND/OR POWER OF ATTORNEYS AND/OR OTHER 24 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-OPER ATIVE SOCIETY AND/OR LIMITED COMPANY AND/OR ANY OTHER ENTITY THAT MAY BE FORMED FOR SUCH PURPOSE. (DD) TO ISSUE LETTER OF LIEN/NOCS AND TO SIGN DOCU MENTS ON BEHALF OF THE OWNER AS REQUIRED BY THE PROSPECTIVE BUYERS/LENDING INSTRUCTIONS TO CREATE A CHARGE ON T HE ALLOTTED PREMISES. (GG) TO LOOK AFTER AND MAINTAIN THE PROPERTY AND TH E PREMISES CONSTRUCTED THEREON TILL ITS TRANSFER IN FAVOUR OF THE CO- OPERATIVE SOCIETY OR LIMITED COMPANY OR ANY OTHER ORGANISATION. 54 IT IS PERTINENT TO NOTE THAT POWER/AUTHORIZATION WHICH HAVE BEEN GIVEN BY THE SOCIETY TO THE DEVELOPER, WERE IN FACT WERE REQ UIRED TO BE GIVEN IN TERMS OF VARIOUS CLAUSES 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 REQUIR ED TO BE GIVEN. FURTHER THROUGH CLAUSE 6.15 IT WAS AGREED THAT DOCUMENTS OF ORIGINAL TITLE DEEDS OF THE PROPERTY WOULD BE HANDED OVER TO THE DEVELOPER I.E. THDC/HASH SO THAT SAME CAN BE USED IN FURTHERANCE OF DEVELOPMENT OF THE PR OJECT AS WELL AS SECURITY FOR THE MONEY PAID BY THE OWNER. THROUGH CLAUSE 6.24 I T WAS AGREED THAT DEVELOPER THDC/HASH WAS ALWAYS PERMITTED BY OWNER TO AMALGAMA TE THE PROPERTY WITH ANY OTHER CONTIGUOUS, ADJACENT AND ADJOINING LAND A ND THE PROPERTIES WHEREIN DEVELOPMENTAL AND OR OTHER RIGHTS, BENEFITS AND IN TEREST WERE ACQUIRED BY THE DEVELOPER OR WOULD BE ACQUIRED IN FUTURE. THIS CLE ARLY SHOWS THAT THE SOCIETY WAS UNDER OBLIGATION IN TERMS OF AGREEMENT ITSELF T O ALLOW THE DEVELOPER TO AMALGAMATE THE PROJECT. TOWARDS THE END OF CLAUSE 6.24 IT HAS BEEN CLEARLY STATED THAT IN THE EVENT OF TERMINATION OF JDA, PRO VISION OF CLAUSE 6 WOULD BE SURVIVING WHICH CLEARLY SHOWS THAT DEVELOPER CONTIN UES TO BE IN POSSESSION FOR THE PURPOSE OF DEVELOPMENT, MORTGAGE ETC. EVEN AFTE R TERMINATION. CLAUSE 8 WHICH DESCRIBES THE OBLIGATION AND UNDERTAKING OF T HE THDC/HASH AND PROVIDES SPECIFICALLY THAT ALL ENVIRONMENTAL CLEARANCE SHALL BE OBTAINED BY THDC/HASH OUT OF ITS OWN SOURCES. THUS IT WAS CLEARLY UNDERS TOOD BY THE PARTIES THAT REQUISITE ENVIRONMENTAL CLEARANCES HAD TO BE OBTAIN ED BEFORE START OF THE PROJECT. CLAUSE 10 AGAIN CASTS SPECIFIC OBLIGATION ON THE OW NER SOCIETY TO GIVE CONSENT TO THDC/HASH TO RAISE FINANCE FOR THE DEVELOPMENT AND COMPLETION OF THE PROJECT ON THE SECURITY OF THE PROPERTY BY WAY OF MORTGAGIN G THE PROPERTY. THUS 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 FROM 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 UPON THE PROPERTY FOR NOT ONLY FOR THE PURPOSE OF DEVELOPMENT BUT OTH ER PURPOSES ALSO. THDC WAS AUTHORIZED TO AMALGAMATE THE PROJEC T WITH ANY OTHER PROJECT IN THE ADJACENT AREA OR ADJOINING ARE A AS PER CLAUSE (T) OF THE SPECIAL POWER OF ATTORNEY. IF TH E POSSESSION WAS NEVER GIVEN TO THE DEVELOPER BY THE SOCIETY THE N HOW THE DEVELOPER COULD AMALGAMATE THE PROJECT WITH ANOTHE R PROJECT 25 WHICH MAY BE ACQUIRED LATTER IN THE ADJOINING AREA. THROUGH CLAUSE (W) THDC WAS AUTHORIZED TO HAND OVER THE POS SESSION OF PROPERTY OR PORTION THEREOF TO THE AUTHORITY TO WHOM THE SAME IS REQUIRED. IN LARGE HOUSING SOCIETY PROJECT S SOMETIMES MUNICIPAL AUTHORITIES TAKES SOME PORTION OF LAND FO R THE PURPOSE OF ROADS, PARKS OR OTHER GENERAL UTILITY PU RPOSES LIKE INSTALLATION OF ELECTRICITY TRANSFORMERS AND BEFORE SANCTIONING THE PLANS THE DEVELOPER IS REQUIRED TO UNDERTAKE TH AT SUCH PORTIONS OF LAND WOULD BE GIVEN FOR SUCH A COMMON P URPOSE. IF POSSESSION WAS NOT GIVEN THEN HOW THDC WAS AUTHORIZ ED TO HAND OVER SUCH LAND OR PORTIONS THEREOF WHICH HAVE NOT BEEN IDENTIFIED IN THE JDA OUT OF THE TOTAL LAND. SIMIL ARLY THROUGH CLAUSE (Y) THDC HAS BEEN AUTHORIZED TO MORTGAGE, ENCUMBRANCE OR CREATE CHARGE ON THE PROPERTY IN FAV OUR OF ANY BANK OR FINANCIAL INSTITUTION FOR RAISING THE FUNDS FOR THE PROJECT. IN THE ABSENCE OF POSSESSION SUCH POWERS CANNOT BE GIVEN. CLAUSE (AA) CLEARLY AUTHORIZED THE THDC TO SELL, TRANSFER, LEASE, LICENSE THE PREMISES WHICH WERE TO BE CONSTRUCTED ON OWNERSHIP BASIS AND FURTHER TO RECEI VE MONEYS AGAINST SUCH SALE ETC. AND TO ISSUE FINAL RECEIPT. NOWHERE IT IS MENTIONED IN THIS CLAUSE THAT SUCH SALE DEEDS WERE TO BE SINGED BY THE SOCIETY AS CONFIRMING PARTY. IN THE ABSENCE OF POSSESSION IT IS JUST NOT POSSIBLE FOR THE DEVELOPE R TO SELL AND TRANSFER THE PREMISES WHICH WERE TO BE CONSTRUCTED. THIS IS FURTHER CLARIFIED BY CLAUSE (BB) AND (CC) WHICH GIV ES THE POWER OF EXECUTION OF CONVEYANCE AND OTHER DOCUMENTS INVO LVING IN RESPECT OF THE PREMISES TO BE CONSTRUCTED WITHOUT A NY INTERFERENCE OF THE SOCIETY BEING MADE CONFIRMING P ARTY. ALL THESE CLAUSES CLEARLY SHOW THAT THE POSSESSION WAS GIVEN BY THE SOCIETY AND/OR ITS MEMBERS TO THDC/HASH ON THE EXECUTION OF IRREVOCABLE POWER OF ATTORNEY. THROUG H THESE CLAUSES OF JDA AND IRREVOCABLE POWER OF ATTORNEY TH E DEVELOPER WAS ABLE TO COMPLETELY CONTROL THE PROPER TY AND MAKE USE OF IT NOT ONLY FOR THE PURPOSE OF DEVELOPM ENT BUT ALSO FOR THE PURPOSE OF AMALGAMATION, SALE, MORTGAGE ETC . WHEN THE ABOVE CLAUSES ARE COMPARED ON TOUCH STONE OF THE DI SCUSSION ON POSSESSION IN PARA 26 TO 28 IN THE CASE OF JASBI R SINGH SARKARIA (SUPRA) WHICH WE HAVE REPRODUCED ABOVE, IT BECOMES CLEAR THAT THE POSSESSION HAS BEEN GIVEN. 56 IN THAT DISCUSSION, IT HAS BEEN CLEARLY MENTIONE D THAT THE POSITION CONTEMPLATED BY CLAUSE (V) OF SECTION 2(47 ) OF THE ACT NEED NOT TO BE EXCLUSIVE POSSESSION. WHAT IS REQUI RED IS THAT THE TRANSFEREE BY VIRTUE OF POSSESSION SHOULD BE AB LE TO EXERCISE CONTROL FROM OVERALL INTENDED PURPOSES. W E DO NOT THINK IN THE PRESENT CASE THE ASSESSEE HAS GIVEN ON LY A LICENSE AS CLAIMED BY LD. COUNSEL OF THE ASSESSEE BECAUSE O F THE POWERS OF SELLING, AMALGAMATING ETC. MENTIONED IN T HE JDA AND IRREVOCABLE SPECIAL POWER OF ATTORNEY. THE ISSUE H AS BEEN DISCUSSED IN HE JUDGMENT OF JASBIR SINGH SARKARIA ( SUPRA) IN FURTHER DISCUSSION WHICH HAS BEEN MADE IN PARA 33 R EGARDING POWER OF ATTORNEY (WHICH HAS BEEN REPRODUCED EARLIE R). IN THAT CASE THE POWERS WERE GIVEN TO ENTER UPON AND SURVEY THE LAND, PREPARE LAY OUT PLANS, SUBMIT BUILDING PLAN FOR SAN CTION WITH THE APPROPRIATE AUTHORITIES TO CONTROL, MANAGE AND LOOK AFTER AND SUPERVISE THE PROPERTY, TO OBTAIN WATER AND SEW ERAGE, DISPOSAL AND ELECTRICITY CONNECTION. IN THAT CASE THE DEVELOPER WAS AUTHORIZED TO MORTGAGE THE PROPERTY TO OBTAIN M ONEY FOR 26 MEETING THE COST OF CONSTRUCTION ON SECURITY AND MO RTGAGE OF LAND FALLING ONLY TO THE DEVELOPERS SHARE. IN THAT CASE IT WAS HELD THAT GPA WAS NOT A LICENSE TO ENTER UPON FOR D OING SOME PRELIMINARY ACTS IN RELATION TO DEVELOPMENT OF WORK BUT THE POWER TO CONTROL THE LAND HAS ALSO BEEN CONFIRMED. IT HAS ALSO BEEN NOTED THAT THE AGREEMENT DESCRIBED THE POWER O F ATTORNEY AS IRREVOCABLE AND EXTRA DECLARATION TO THAT EFFECT IN THE POWER OF ATTORNEY IS NOT WITHOUT SIGNIFICANCE. IN CASE B EFORE US, MANY MORE POWERS HAVE BEEN GIVEN TO THDC IN ADDITIO N TO POWERS WHICH HAVE BEEN DESCRIBED IN THAT JUDGMENT A ND POWER OF ATTORNEY HAS BEEN DESCRIBED AS IRREVOCABLE IN CL AUSE 6.7 OF JDA. THEREFORE, IT IS CLEAR THAT THE ASSESSEES P LEA THAT THE POSSESSION WAS TO BE GIVEN ONLY AT THE TIME OF REGI STRATION OF THE JDA, IS NOT CORRECT. ONCE IRREVOCABLE POWER WA S 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 LATE R ON WHILE DEALING WITH THAT CONTENTION. 57 WE FIND FORCE IN THE SUBMISSIONS OF THE LD. DR F OR THE REVENUE THAT INTERPRETATION OF CLAUSE (V) TO SECTIO N 2(47) SHOULD BE MADE IN THE LIGHT OF HEYDONS RULE. THERE IS NO FORCE IN THE OBJECTION OF THE LD. COUNSEL OF THE ASSESSEE THAT T HIS CLAUSE SHOULD BE INTERPRETED ON GENERAL RULES OF INTERPRET ATION PARTICULARLY IN THE LIGHT OF THE FACT THAT NO REASO N 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 WA S UPHELD BY THE CONSTITUTION BENCH OF HON'BLE APEX COURT IN CASE OF BENGAL IMMUNITY CO. LTD. V STATE OF BIHAR (1955) 2 SCR 603 FOR CONSIDERATION OF ARTICLE 286 OF THE CONSTITUTIO N. IT HAS BEEN HELD IN CASE OF DR. BALIRAM WAMAN HIRAY V. MR. JUST ICE B. LENTIN AND ANOTHER, 176 ITR 1 THAT FOR UNDERSTANDIN G AMENDMENT IN THE ACT, PERHAPS HEYDONS RULE IS BEST RULE FOR INTERPRETATION OF SUCH AMENDMENT. WE FIND THAT WITH OUT MENTIONING THIS RULE LD. AUTHORITY FOR ADVANCE RULI NG HAS DISCUSSED THIS ISSUE IN PARA 27 OF THE JUDGMENT WHI CH WE HAVE EXTRACTED ABOVE. IT HAS BEEN HELD THAT IF POSSESS ION REFERRED TO IN CLAUSE (V) IS TO BE UNDERSTOOD AS EXCLUSIVE B ASIS OF THE TRANSFEREE THEN VERY PURPOSE OF THE AMENDMENT OR EN LARGEMENT OF THE DEFINITION OF TRANSFER WOULD GET DEFEATED. WE ARE REPRODUCING FOLLOWING HEAD NOTE OF THE HON'BLE APEX COURT IN CASE OF DR. BALIRAM WAMAN HIRAY V. MR. JUSTICE B. LENTIN AND ANOTHER (SUPRA): THE FOLLOWING PRINCIPLES ENUNCIATED IN HEYDONS CA ASE (1584) 3 CO. REP 7A AND FIRMLY ESTABLISHED, ARE STILL IN F ULL FORCE AND EFFECT: THAT FOR THE SURE AND TRUE INTERPRETATION OF ALL STATUTES IN GENERALS (BE THEY PENAL OR BENEFICIAL, RESTRICTI VE OR ENLARGING OF THE COMMON LAW), FOUR THINGS ARE TO BE DISCERNED AND CONSIDERED: (1) WHAT WAS THE COMMON LAW BEFORE THE MAKING OF THE ACT; (2) WHAT WAS THE MISCHIEF AND DEFECT FOR W HICH THE COMMON LAW DID NOT PROVIDE; (3) WHAT REMEDY PARLIAM ENT HAS RESOLVED AND APPOINTED TO CURE THE DISEASE OF THE C OMMON WEALTH AND (4) THE TRUE REASON OF THE REMEDY. AND THEN, THE OFFICE OF ALL THE JUDGES IS ALWAYS TO MAKE SUCH CON STRUCTION AS SHALL SUPPRESS THE EVASIONS FOR THE CONTINUANCE OF THE MISCHIEF AND PRO PRIVATE COMMANDO AND TO ADD FORCE AND LIFE TO THE CURE 27 AND REMEDY ACCORDING TO THE TRUE INTENT OF THE MAKE RS OF THE ACT PRO BONO PUBLIC. THERE IS NOW THE FURTHER ADDI TION THAT REGARD MUST BE HAD NOT ONLY TO THE EXISTING LAW BUT ALSO TO PRIOR LEGISLATION AND TO THE JUDICIAL INTERPRETATION THER EOF. 58 GOING BY THE HEYDONS RULE OF INTERPRETATION IF WE ANALYZE THE PURPOSE OF CLAUSE (V) OF SECTION 2(47) THEN IT WOULD EMERGE THAT LAW BEFORE MAKING THE AMENDMENT WAS THAT CAPIT AL GAIN COULD BE CHARGED ONLY IF A TRANSFER HAS BEEN EFFECT ED AND TRANSFER WAS INTERPRETED BY VARIOUS COURTS INCLUDIN G THE DECISION OF HON'BLE SUPREME COURT IN CASE OF ALAPA TI VENKATRAMIAN V CIT, 57 ITR 185 (SC) THAT PROPER CON VEYANCE OF THE PROPERTY HAS BEEN MADE UNDER THE COMMON LAW. THE MISCHIEF WAS WITH REGARD TO TRANSFER IN THE SENSE T HAT THERE WAS COMMON PRACTICE THAT PROPERTIES WERE BEING TRANSFER RED IN SUCH A MANNER THAT TRANSFEREE COULD ENJOY THE BENEFIT OF THE PROPERTY WITHOUT EXECUTION OF THE CONVEYANCE DEED. THIRDLY W E NEED TO EXAMINE THE REMEDY WHICH WAS INSERTION OF CLAUSE (V ) AND (VI) SO THAT CASES OF GIVING POSSESSION OF THE PROPERTY, WERE ALSO COVERED BY THE DEFINITION OF TRANSFER. FOURTHLY, T RUE REASON FOR THIS AMENDMENT WAS TO PLUG A LOOP HOLE IN THE LAW. THEREFORE, CONSIDERING THE PURPOSE OF INSERTION OF CLAUSE (V) AND (VI) OF SECTION 2(47) AND VARIOUS CLAUSES OF POWER OF ATTOR NEY AND JDA IT BECOMES ABSOLUTELY CLEAR THAT THE SOCIETY HA S HANDED OVER THE POSSESSION OF THE PROPERTY TO THDC/HASH. 59 SECOND IMPORTANT CONTENTION ON BEHALF OF THE ASS ESSEE IS THAT JDA WAS EXECUTED ON 25.2.2007 AND IF POSSESSIO N WAS GIVEN THEN HOW THE ASSESSEE WAS HAVING POSSESSION I N TERMS OF LATER SALE DEEDS EXECUTED ON 2.3.2007 AND 25.4.2 007. THE SOCIETY HAS EXECUTED TWO SALE DEEDS FOR CONVEYANCE OF PARTS OF THE TOTAL LAND. FIRST SALE DEED HAS BEEN EXECUTED ON 2.3.2007 FOR 3.08 ACRES AND RECITATION CLAUSE (A) READS AS U NDER: 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 BO UNDARY LINE IN THE SHIZRA PLAN ISSUED BY THE PATWARI DATED 23.2 .2007. 60 ACCORDING TO THE LD. COUNSEL OF THE ASSESSEE IF SOCIETY HAD ALREADY GIVEN THE POSSESSION THEN THE SOCIETY W OULD NOT HAVE / HAD POSSESSION ON 2.3.2007 OF THE LAND. AT FACE VALUE THIS ARGUMENT LOOKS ATTRACTIVE BUT WHEN EXAMINED IN TERMS OF POSSESSION WHICH HAS BEEN EXPLAINED IN CASE OF JASB IR SINGH SARKARIA (SUPRA), ACTUAL REALITY WILL COME FORWARD. IN THIS JUDGMENT CONCEPT OF CONCURRENT POSSESSION HAS ALSO BEEN DISCUSSED AND FOLLOWING EXTRACT OF PARAGRAPH 55 OF 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 EXCLUSIVENESS IS OF THE ESSENCE OF POSSESSION. TWO ADVERSE CLAIMS OF EXCLU SIVE USE CANNOT BOTH BE EFFECTUALLY REALIZED AT THE SAME TIM E. CLAIMS, HOWEVER, WHICH ARE NOT ADVERSE, AND WHICH ARE NOT, THEREFORE, 28 MUTUALLY DESTRUCTIVE, ADMIT OF CONCURRENT REALIZATI ON. HENCE THERE ARE SEVERAL POSSIBLE CASES OF DUPLICATE POSS ESSION. 1 MEDIATE AND IMMEDIATE POSSESSION CROSS-OBJECTIONS - EXIST IN RESPECT OF THE SAME THING AS ALREADY EXPL AINED. 2 TWO OR MORE PERSONS MAY POSSESS THE SAME THING IN COMMON; JUST AS THEY MAY OWE IT IN COMMON. THE CONCURRENT POSSESSION OF THE OWNER WHO CAN EXER CISE POSSESSION RIGHT TO A LIMITED EXTENT AND FOR A LIMI TED PURPOSE AND THAT OF THE BUYER/DEVELOPER WHO HAS A GENERAL C ONTROL AND CUSTODY OF THE LAND CAN VERY WELL BE RECONCILED. 61 IN FURTHER DISCUSSION IN PARA 26 TO 28 OF THE AB OVE DECISION IT HAS BEEN HELD THAT IT IS NOT NECESSARY IN TERMS OF CLAUSE (V) THAT THE DEVELOPER SHOULD HAVE EXCLUSIVE POSSESSION. 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 HOLD CONC URRENT POSSESSION. MERE RECITATION IN THE SALE DEED TO TH E EFFECT THAT THE SOCIETY WAS OWNER OF AND IN POSSESSION OF LAND MEASURING 21.2 ACRES, DOES NOT SHOW THAT THE SOCIETY WAS HAVI NG ACTUAL POSSESSION. WHAT THE SOCIETY WAS HAVING IS ONLY OW NERSHIP RIGHT AND THE POSSESSION WAS ONLY CONCURRENT AS THE POSSESSARY RIGHT. FURTHER IT IS A STANDARD CLAUSE IN THE CONVEYANCE DEED AND IT DOES NOT PROVE OR INDICATE A NYTHING EXCEPT THAT A PORTION OF LAND MEASURING 3.08 ACRES, HAS BEEN SOLD / CONVEYED TO THE DEVELOPER. IN THE LIGHT OF T HIS POSITION, THIS CONTENTION IS REJECTED. 62 WE FIND NO FORCE IN THE NEXT CONTENTION OF THE L D. COUNSEL OF THE ASSESSEE THAT POSSESSION IF AT ALL WAS GIVEN SHOULD BE HELD TO BE ONLY A LICENSE AS DEFINED IN SECTION 52 OF INDIAN EASEMENT ACT BECAUSE CLEARLY AS PER SECTION 52 OF T HIS ACT, WHERE ONE PERSON GRANTS TO ANOTHER OR MANY OTHER PE RSONS TO DO SOMETHING UPON IMMOVEABLE PROPERTY WHICH IN THE ABSENCE OF SUCH RIGHT WOULD BE UNLAWFUL. 63 HERE IN CASE BEFORE US, THE RIGHT HAS NOT BEEN G IVEN FOR THE PURPOSE OF DOING SOMETHING BUT ALL THE POSSIBLE RIGHTS IN PROPERTY INCLUDING RIGHT TO SELL, RIGHT TO AMALGAMA TE THE PROJECT WITH ANOTHER PROJECT IN THE ADJOINING AREA WHICH MA Y BE ACQUIRED LATER, RIGHT TO MORTGAGE ETC. CLEARLY SHOW THAT RIGHTS GIVEN BY THE SOCIETY ARE MUCH MORE LARGER THAN WHAT IS COVERED IN THE TERM LICENSE. 64 FOURTH CONTENTION IS THAT THE MONEY RECEIVED AT THE TIME OF EXECUTION OF JDA CAN BE TERMED AS ADVANCE AND WHATEVER MONEY HA S BEEN RECEIVED HAS ALREADY BEEN SHOWN AS CAPITAL GAIN. WE FIND NO FOR CE IN THIS SUBMISSION BECAUSE SECTION 45 WHICH HAS BEEN EXTRACTED ABOVE CLEARLY P ROVIDE FOR TAXING OF PROFITS AND GAINS ARISING FROM THE TRANSFER. WE HAVE ALREAD Y DISCUSSED THE IMPLICATION OF SECTION 45 R.W.S. 48 WHILE DISCUSSING THE LEGAL POS ITION. WE HAD ALSO DISCUSSED THIS ISSUE IN THE LIGHT OF THE DECISION IN CASE OF JASBIR SINGH SARKARIA (SUPRA) AND POINTED OUT THAT WHEN SECTION 45 IS READ ALONG WITH SECTION 48 IT BECOMES CLEAR 29 THAT WHOLE OF THE CONSIDERATION WHICH IS RECEIVED O R 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 CONSIDERATIO N IS REQUIRED TO BE TAXED. AT THE COST OF REPETITION LET US AGAIN REPRODUCE THE O BSERVATIONS OF THE LD. AUTHORITY IN CASE OF JASBIR SINGH SARKARIA (SUPRA) WHICH WE H AVE 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 EQUATED WITH THE EXPRE SSION RECEIVED. BOTH THESE EXPRESSIONS AND IN ADDITION THERETO, THE EXPRESSION ACCRUE ARE USED IN THE INCOME-TAX ACT EITHER COLLECTIVELY OR SEPARATELY AC CORDING TO THE CONTEXT AND NATURE OF THE CHARGING PROVISION. THE SECOND POINT WHICH DESERVES NOTICE IS THAT BY A DEEMING PROVISION, THE PROFITS OR GAINS THAT H AVE ARISEN WOULD BE TREATED AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSF ER TOOK PLACE. THAT MEANS, THE INCOME ON ACCOUNT OF ARISAL OF CAPITAL GAIN SH OULD BE CHARGED TO TAX IN THE SAME PREVIOUS YEAR IN WHICH THE TRANSFER WAS EFFEC TED 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 B OOKS. THE FOLLOWING STATEMENT OF LAW IN SAMPATH IYENGARS COMMENTARY (1 0TH EDITION REVISED BY SHRI S. RAJARATNAM) BRINGS OUT THE CORRECT LEGAL PO SITION : SECTION 45 ENACTS THAT THE CAPITAL GAINS SHALL BY FICTION BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSF ER TOOK PLACE. SINCE THIS IS A STATUTORY FICTION, THE ACTUAL YEAR IN WHI CH THE SALE PRICE WAS RECEIVED, WHETHER IT WAS ONE YEAR, TWO YEARS, THREE YEARS, FOUR YEARS ETC. PREVIOUS TO THE PREVIOUS YEAR OF TRANSFER, IS BESI DE 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 PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE'. SO, THE PAYMENTS OF CONSIDERATION STIPULATED TO BE PAID IN FUTURE WOULD HAVE TO BE ATTRIBUTED, BY STATUTORY MANDATE, TO THE YEAR OF TRANSFER, EVEN AS PAYMENTS MADE PRIOR TO THE YEAR OF TRANSFER. 66 THE ABOVE CLEARLY SHOWS THAT IT IS BECAUSE OF EX PRESSION USED IN SECTION 45 THAT IS ARISING WHICH CANNOT BE EQUATED WITH RECEIPT. IN THIS RESPECT THE LD. AUTHORITY HAS QUOTED A VERY OLD DECISION OF HON'BLE MADRAS HIGH COURT IN CASE OF T.V. SUNDARAM IYENGAAR AND SONS LTD. V. CIT, 37 ITR 26 (MAD). AT PARA 13 OF THE SAID DECISION IS EXTRACTED IN THE FOLLOWING MAN NER: 30 13. IN T.V. SUNDARAM IYENGAR AND SONS LTD. V. CIT [ 1959] 37 ITR 26, A DIVISION BENCH OF THE MADRAS HIGH COURT WHILE CONST RUING SECTION 12 B OF THE INDIAN INCOME-TAX ACT, 1922 CLARIFIED THE IMPORT OF THE EXPRESSION ARISE AS FOLLOWS SECTION 12B DOES NOT REQUIRE THAT PROFITS SHOULD HAVE BEEN ACTUALLY RECEIVED. IT IS SUFFICIENT IF THEY HAVE ARISEN. THROUGHOUT THE I NCOME-TAX ACT THE WORDS ACCRUE AND ARISE ARE USED IN CONTRADISTINCTION TO THE WORD RECEIVE AND INDICATE A RIGHT TO RECEIVE. THIS WAS EXPLAINED BY FRY L.J., IN COLQUHOUN V. BROOKS. THE LEARNED JUDGE OBSERVED: I THINK, THEREFORE, THAT THE WORDS ARISE OR ACCR UING ARE GENERAL WORDS DESCRIPTIVE OF A RIGHT TO RECEIVE PROFITS. SEE ALSO CIT V. ANAMALLAIS TIMBER TRUST LTD. TO ATT RACT THE OPERATION OF SECTION 12B IT IS THEREFORE SUFFICIENT IF THE PROFITS AROSE . THEY NEED NOT HAVE BEEN ACTUALLY RECEIVED. 14. THUS THE CRITERION OF RIGHT TO RECEIVE THE PROF ITS / GAINS WAS APPLIED IN THAT CASE. 15. THE LEGAL POSITION DOES NOT THEREFORE ADMIT OF ANY DOUBT THAT THE ACTUAL RECEIPT OF THE ENTIRE SALE CONSIDERATION DURING THE YEAR OF TRANSFER IS NOT NECESSARY FOR THE PURPOSE OF COMPUTING CAPITAL GAIN S. FURTHER THE EXPRESSION ARISING HAS BEEN DEFINED IN THE ADVANCED LAW LEXICON BY P. RAMANATHA AIYER EDITED BY Y.V. CHANDRACHUD, FORM ER CHIEF JUSTICE OF INDIA: THE WORDS ARISING OR ACCRUING DESCRIBE A RIGHT T O RECEIVE PROFITS, AND THAT THERE MUST BE A DEBT OWED BY SOMEBODY. LD. COMMISSIONER OF INCOME TAX, WEST BENGAL-II, CALCUTTA V. HINDUSTAN HOUSING AND LAND D EVELOPMENT TRUST LTD. AIR 1986 S.C 1805, 1807. THE EXPRESSION ACCRUAL OF INCOME HAS BEEN DEFINED IN THE SAME LEXICON AS UNDER: ACCRUAL OF INCOME. E.D JASSOON & C. LTD. V LD. COM MISSIONER OF INCOME TAX, AIR 1954 S.C 470 QUOTED INCOME MAY ACCRUE TO AN A SSESSEE WITHOUT THE ACTUAL RECEIPT OF THE SAME. IF THE ASSESSEE ACQUIR ES A RIGHT TO RECEIVE THE INCOME, THE INCOME CAN BE SAID TO HAVE ACCRUED TO H IM THOUGH IT MAY BE RECEIVED LATER ON ITS BEING ASCERTAINED. THE BASIC CONCEPTION IS THAT HE MUST HAVE ACQUIRED A RIGHT TO RECEIVE THE INCOME. BHOG ILAL 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 INCOME. 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 RIGH T OR INCOME 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 CO MMENTARY OF LAW OF INCOME TAX BY SAMPATH IYENGAR XITH EDITION BY DISCUSSING THE MEANING OF ACCRUED AND ARISE AT PAGE 1300 IT HAS BEEN OBSERVE AS UNDER: (1) IMPORTANT PRINCIPLES.- (A) MEANING ACCRUE MEANS TO ARISE OR SPRING AS A NATURAL GROWTH OR RESULT, TO COME BY WAY OF INCREA SE. ARISING MEANS COMING INTO EXISTENCE OR NOTICE OR PRESENTING ITSELF. AC CRUE CONNOTES GROWTH OR ACCUMULATION WITH A TANGIBLE SHAPE SO AS TO BE RECE IVABLE. IN A SECONDARY SENSE, THE TWO WORDS TOGETHER MEAN TO BECOME A PRESENT AN D ENFORCEABLE RIGHT AND TO 31 BECOME A PRESENT RIGHT OF DEMAND. IN THE ACT, THE TWO WORDS ARE USED SYNONYMOUSLY WITH EACH OTHER TO DENOTE THE SAME IDE A OR IDEAS VERY SIMILAR, AND THE DIFFERENCE LIES ONLY IN THIS THAT ONE IS MORE A PPROPRIATE THAN THE OTHER, WHEN APPLIED, TO A PARTICULAR CASE. IT WILL INDEED BE DI FFICULT TO DISTINGUISH BETWEEN THE TWO WORDS, BUT IT IS CLEAR THAT BOTH THE WORDS ARE USED IN CONTRADISTINCTION TO THE WORD RECEIVE AND INDICATE A RIGHT TO RECEIVE. THE Y REPRESENT A STAGE ANTERIOR TO THE POINT OF TIME WHEN THE INCOME BECOMES RECEIVABL E AND CONNOTE A CHARACTER OF THE INCOME, WHICH IS MORE OR LESS INCHOATE AND W HICH IS SOMETHING LESS THAN 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 TAXED BUT THE CONS IDERATION WHICH HAS ACCRUED TO THE ASSESSEE IS ALSO REQUIRED TO BE TAXED. IN VIEW OF THIS, THIS CONTENTION IS REJECTED. 69 THE FIFTH CONTENTION MADE BY THE LD. COUNSEL FO R THE ASSESSEE WAS THAT SINCE SECTION 53A OF THE TRANSFER OF PROPERTY ACT ITSELF HAS UNDERGONE AMENDMENT W.E.F. 24.9.2001 BY WHICH THE AGREEMENT REFERRED TO IN THAT SECTION IS REQUIRED TO BE REGISTERED AND THEREFORE, NOW IN SECTION 2(47 )(V) ONLY THE AMENDED PROVISIONS CAN BE READ. WE FIND NO FORCE I N THIS CONTENTION. IT IS WELL KNOWN THAT SECTION 53A OF T HE TRANSFER OF PROPERTY ACT WAS PASSED ON EQUITABLE DOCTRINE SO AS TO PROTECT THE TAKING OVER OR RETENTION OF THE POSSESSION BY T HE 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 CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREOF, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CONTINUES IN POSSESSION IN P ART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE OF TH E CONTRACT, AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO P ERFORM HIS PART OF THE CONTRACT, THEN, NOTWITHSTANDING THAT THE CONTRACT, [***]WHERE THERE IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSFER HAS NOT B EEN COMPLETED IN THE MANNER PRESCRIBED THEREFOR BY THE LAW FOR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL B E DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMI NG UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSSESSION, OTHER THAN A RIGHT EXPRESSLY PROVIDED B Y 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 POSSESSION U NDER A PARTICULAR AGREEMENT OF SALE. THIS POSITION OF LAW WAS INCORPORATED IN THE DEFINITION OF TRANSFER BY INS ERTION OF CLAUSES (V) & (VI) IN SECTION 2(47) OF THE ACT. IT IS IMPORTANT TO NOTE THAT CLAUSE (V) USES THE EXPRESSION CONTRACT OF THE NATURE 32 REFERRED TO IN SECTION 53A OF T.P. ACT, THEREFORE, CLEARLY THE IDEA IS THAT AN AGREEMENT WHICH PROVIDES SOME DEFEN SE IN THE HANDS OF TRANSFEREE WAS INCORPORATED UNDER THE DEFI NITION OF TRANSFER IN THE INCOME TAX ACT. NOW ORIGINALLY S ECTION 53A OF T.P. ACT PROVIDED THAT EVEN IF THE CONTRACT THOUGH REQUIRED TO BE REGISTERED HAS NOT BEEN REGISTERED, WHICH MEANS THE RIGHT OF DEFENDING THE POSSESSION WAS AVAILABLE EVEN IF T HE CONTRACT WAS NOT REGISTERED BUT BY AMENDMENT ACT 48 OF 2001, THE EXPRESSION THOUGH REQUIRED TO BE REGISTERED HAS NO T BEEN REGISTERED, HAS BEEN OMITTED WHICH MEANS FOR THE P URPOSE OF POSSESSION U/S 53A OF T.P. ACT, A PERSON HAS TO PRO VE THAT POSSESSION HAS BEEN GIVEN UNDER A REGISTERED AGREEM ENT. IN OTHER WORDS, NOW U/S 53A OF T.P. ACT, THE AGREEMENT REFERRED IS REQUIRED TO BE REGISTERED. THIS REQUIREMENT CANNOT BE READ IN CLAUSE (V) OF SECTION 2(47) BECAUSE THAT REFERS ON LY TO THE CONTRACT OF THE NATURE OF SECTION 53A OF T.P. ACT W ITHOUT GOING INTO THE CONTROVERSY WHETHER SUCH AGREEMENT IS REQU IRED 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 P ROPOSITION THAT WHEN A SECTION OF A PARTICULAR STATUTE IS INTR ODUCED INTO ANOTHER ACT IT MUST BE READ IN THE SAME SENSE AS I T BORE IN THE ORIGINAL ACT. THE CAREFUL PERUSAL OF THAT JUDGMENT WOULD SHOW THAT SITUATION IS APPLICABLE ONLY WHEN A PARTICULAR PROVISION OF AN ACT HAS BEEN INCORPORATED IN THE LATER ACT. IN THAT CASE A QUESTION AROSE THAT FOR THE PURPOSE OF MAT PROVISI ON WHAT IS THE MEANING OF PAST LOSSES OR UNABSORBED DEPRECIATI ON. IT WAS FOUND THAT IN EXPLANATION TO SECTION 115J CLAUSE (I V), 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 TO SU B SECTION (I) OF SECTION 205 OF THE COMPANIES ACT, 19 56 (1 OF 1956) ARE APPLICABLE. 71 THE HON'BLE APEX COURT REFERRED TO THE PRINCIPLE S OF STATUTORY INTERPRETATION BY SHRI G.P.SINGH AND EXTR ACTED FOLLOWING PIECE: SECTION 115J, EXPLANATION CLAUSE (IV), IS A PIECE OF LEGISLATION BY INCORPORATION. DEALING WITH THE SUBJ ECT, JUSTICE G.P. SINGH STATES IN PRINCIPLES OF STATUTOR Y INTERPRETATION (7TH EDITION, 1999). INCORPORATION OF AN EARLIER ACT INTO A LATER ACT IS A LEGISLATIVE DEVICE ADOPTED FOR THE SAKE OF CONVENIE NCE IN ORDER TO AVOID VERBATIM REPRODUCTION OF THE PROVISI ONS OF THE EARLIER ACT INTO THE LATER. WHEN AN EARLIER ACT OR CERTAIN OF ITS PROVISIONS ARE INCORPORATED BY REFER ENCE INTO A LATER ACT, THE PROVISIONS SO INCORPORATED BECOME PART AND PARCEL OF THE LATER ACT AS IF THEY HAD BEEN 'BO DILY TRANSPOSED INTO IT'. THE EFFECT OF INCORPORATION IS ADMIRABLY STATED BY LORD ESHER, M.R. : 'IF A SUBSEQUENT ACT BRINGS INTO ITSELF BY REFERENCE SOME OF THE CLAUSES OF A FORMER ACT, THE LEGAL EFFECT OF THAT, AS HAS OFTEN BEEN HELD, IS TO WRITE THOSE SECTIONS INTO TH E NEW 33 ACT AS IF THEY HAD BEEN ACTUALLY WRITTEN IN IT WITH THE PEN, OR PRINTED IN IT.(P.233) EVEN THOUGH ONLY PARTICULAR SECTIONS OF AN EARLIER ACT ARE INCORPORATED INTO LATER, IN CONSTRUING THE INCORPOR ATED SECTIONS IT MAY BE AT TIMES NECESSARY AND PERMISSIB LE TO REFER TO OTHER PARTS OF THE EARLIER STATUTE WHICH A RE NOT INCORPORATED. AS WAS STATED BY LORD BLACKBURN: 'WHEN A SINGLE SECTION OF AN ACT OF PARLIAMENT IS INTRODUCED INTO ANOTHER ACT, I THINK IT MUST BE REA D 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 AN D THEREFORE, SAME MEANING WAS GIVEN TO PAST LOSSES O R UNABSORBED DEPRECIATION AS IS GIVEN UNDER THE COMPA NIES ACT, 1956. 73 IN CASE OF CLAUSE (V) TO SECTION 2(47), CLEARLY THE EXPRESSION USED IS CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF T.P. ACT, WHICH MEANS IT IS NOT A CASE OF I NCORPORATION OF ONE PIECE OF LEGISLATION INTO ANOTHER PIECE OF L EGISLATION. IF THAT WAS THE INTENTION OF THE PARLIAMENT, OBVIOUSLY CLAUSE (V) WOULD CONTAIN THE EXPRESSION CONTRACT AS DEFINED U NDER SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882. FU RTHER, IT IS SETTLED POSITION OF LAW THAT ANY INTERPRETATION WHI CH COULD RENDER A PARTICULAR PROVISION REDUNDANT SHOULD BE A VOIDED. IF THE CONTENTION OF THE LD. COUNSEL WAS TO BE ACCEPTE D, OBVIOUSLY THE PROVISIONS OF CLAUSE (V) OF SECTION 2(47) OF TH E 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 BAS IS THROUGH UNREGISTERED AGREEMENTS WHICH WOULD MAKE THIS PROVI SION REDUNDANT. THIS POSITION WE HAVE ALREADY DISCUSSED EARLIER WHILE DISCUSSING THE HEYDONS RULE IN THE INTERPRET ATIONS OF THIS CLAUSE. FURTHER THE ISSUE OF INTERPRETATION O F CLAUSE (V) AND AMENDMENT TO SECTION 53A OF THE TRANSFER OF PRO PERTY ACT CAME FOR CONSIDERATION BEFORE THE MUMBAI BENCH OF T HE TRIBUNAL IN THE CASE OF SURESH CHANDER AGGARWAL VS ITO 48 SOT 2010. THE TRIBUNAL DISCUSSED THIS ISSUE AT PAG E 7 AND AFTER QUOTING THE PROVISIONS OF SECTION 2(47) AND A LSO SECTION 53A BEFORE AND AFTER AMENDMENT AS WALL AS PARA NOS. 11.1 TO 11.2 OF THE BOARDS CIRCULAR NO. 495 DATED 22.9.198 7 OBSERVED AS UNDER:- THE ABOVE CLEARLY SHOWS THAT THERE WAS CERTAIN SIT UATION WHERE PROPERTIES WERE BEING TRANSFERRED WITHOUT REGISTRATION OF TRAN SFER INSTRUMENTS AND PEOPLE WERE ESCAPING TAX LIABILITIES ON TRANSFER OF SUCH PROPERTIES BECAUSE THE SAME COULD NOT BE BROUGHT IN THE DEFINITION OF 'TRANSFER' PARTICULARLY IN 34 MANY STATES OF THE COUNTRY PROPERTIES WERE BEING HE LD BY VARIOUS PEOPLE AS LEASED PROPERTIES WHICH WERE ALLOTTED BY THE VARIOU S GOVT. DEPARTMENTS AND TRANSFERS OF SUCH LEASE WERE NOT PERMISSIBLE. PEOPL E WERE TRANSFERRING SUCH PROPERTIES BY EXECUTING AGREEMENT TO SELL AND GENER AL POWER OF ATTORNEY AS WELL AS WILL AND RECEIVING FULL CONSIDERATION, BUT SINCE THE AGREEMENT TO SELL WAS NOT REGISTERED AND THOUGH FULL CONSIDERATION WA S RECEIVED AND EVEN POSSESSION WAS GIVEN, STILL THE SAME TRANSACTIONS C OULD NOT BE SUBJECTED TO TAX BECAUSE THE SAME COULD NOT COVERED BY THE DEFIN ITION OF 'TRANSFER'. TO BRING SUCH TRANSACTIONS WITHIN THE TAX NET, THIS AM ENDMENT WAS MADE. IT HAS TO BE APPRECIATED THAT CLAUSE (V) IN SECTION 2(47) DOES NOT LIFT THE DEFINITION OF PART PERFORMANCE FROM SECTION 53A OF THE TRANSFE R OF PROPERTY ACT, 1882. RATHER, IT DEFINES ANY TRANSACTION INVOLVING ALLOWI NG 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 O F THE TRANSFER OF PROPERTY ACT. THIS MEANS SUCH TRANSFER IS HOT REQUIRED TO BE EXACTLY SIMILAR TO THE ONE DEFINED U/S.53A OF THE TRANSFER OF PROPERTY ACT, OT HERWISE LEGISLATURE WOULD HAVE SIMPLY STATED THAT TRANSFER WOULD INCLUDE TRAN SACTIONS DEFINED IN SEC. 53A OF THE TRANSFER OF PROPERTY ACT. BUT THE LEGISL ATURE IN ITS WISDOM HAS USED THE WORDS 'OF A CONTRACT, OF THE NATURE REFERR ED IN SECTION 53A'. THEREFORE, IT IS ONLY THE NATURE WHICH HAS TO BE SE EN. AS DISCUSSED ABOVE, THE PURPOSE OF INSERTION OF CLAUSE (V) WAS TO TAX T HOSE TRANSACTIONS WHERE PROPERTIES WERE BEING TRANSFERRED BY WAY OF GIVING POSSESSION AND RECEIVING FULL CONSIDERATION. THEREFORE, IN OUR HUMBLE OPINIO N, IN THE CASE OF A TRANSFER WHERE POSSESSION HAS BEEN GIVEN AND FULL CONSIDERAT ION HAS BEEN RECEIVED, THEN SUCH TRANSACTION NEEDS TO BE CONSTRUED AS 'TRA NSFER'. THEREFORE, THE AMENDMENT MADE IN SECTION 53A BY WHICH THE REQUIREM ENT OF REGISTRATION HAS BEEN INDIRECTLY BROUGHT ON THE STATUTE NEED NOT BE APPLIED WHILE CONSTRUING THE MEANING OF 'TRANSFER' WITH REFERENCE TO THE INCOME-TAX ACT. 8. THE ABOVE SITUATION FURTHER BECOMES CLEAR IF WE REFER TO THE CELEBRATED DECISION OF HON'BLE SUPREME COURT IN THE CASE OF PO DAR CEMENT (P.) LTD. (SUPRA}. IN THAT CASE, THE ASSESSEE WAS OWNER OF FO UR FLATS IN A BUILDING CALLED 'SILVER ARCH'/ON NEPEAN SEA ROAD, BOMBAY. OU T OF THESE FOUR FLATS, TWO WERE PURCHASED DIRECTLY FROM THE BUILDERS, MALA BAR INDUSTRIES PVT. LTD., AND TWO WERE PURCHASED BY ITS SISTER CONCERNS WHICH WERE LATER PURCHASED BY THE ASSESSEE. THE POSSESSION OF THE FLATS WAS TA KEN AFTER FULL PAYMENT OF CONSIDERATION. THE FLATS WERE LET OUT. THE ASSESSEE CONTENDED THAT THE RENTAL INCOME FROM THESE FLATS WAS ASSESSABLE AS 'I NCOME FROM OTHER SOURCES' BECAUSE THE ASSESSEE WAS NOT THE LEGAL OWN ER BECAUSE THE TITLE OF THE PROPERTY HAD NOT BEEN CONVEYED TO THE CO-OPERAT IVE SOCIETY WHICH WAS FORMED BY THE PURCHASERS 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 PART PERFORMA NCE OF THE NATURE REFERRED TO IN SECTION 53A, SUCH PERSON SHALL BE DEEMED TO B E THE OWNER. IT WAS FURTHER OBSERVED THAT FOR ALL PRACTICABLE PURPOSES THE ASSESSEE WAS THE OWNER AND POSSIBLY THERE CANNOT BE TWO OWNERS OF SA ME PROPERTY AT THE SAME TIME. IN FACT, THE AMENDMENTS TO SECTION 27 WE RE MADE LATER ON BUT WERE TAKEN INTO COGNIZANCE ON THE BASIS OF ABOVE PR INCIPLE AND ULTIMATELY IT WAS HELD AS UNDER: 'HENCE, THOUGH UNDER THE COMMON LAW 'OWNER' MEANS A PERSON WHO HAS GOT VALID TITLE LEGALLY CONVEYED TO HIM AFTER C OMPLY WITH THE REQUIREMENTS OF LAW SUCH AS THE TRANSFER OF PROPERT Y ACT, THE REGISTRATION ACT, ETC., IN THE CONTEXT SECTION 22 OF THE INCOME-TAX ACT, 1961, HAVING REGARD TO THE GROUND REALITIES AN D 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 INCO ME FROM THE PROPERTY IN HIS OWN RIGHT. THE REQUIREMENT OF REGIS TRATION OF THE SALE 35 DEED IN THE CONTEXT OF SECTION 22 IS NOT WARRANTED. ' THUS, FROM THE ABOVE, IT IS CLEAR THAT IT IS NOT NE CESSARY TO GET THE INSTRUMENT OF TRANSFER REGISTERED FOR THE PURPOSE OF INCOME-TA X ACT WHEN A PERSON HAS GOT A VALID LEGALLY CONVEYED AFTER COMPLYING WITH T HE REQUIREMENTS OF THE LAW. 9. SIMILARLY, IN THE CASE OF MYSORE MINERALS LTD. V. CIT [1999] 239 ITR 775/106 TAXMAN 166 (SC), THE ASSESSEE HAD PURCHASED FOR THE USE OF ITS STAFF SEVEN LOW INCOME GROUP HOUSES FRO M A HOUSING BOARD. THE PAYMENT HAD BEEN MADE AND IN TURN POSSESSION OF THE HOUSES WAS TAKEN OVER BY THE ASSESSEE. THE ACTUAL CONVEYANCE DEED WA S NOT EXECUTED. THE ASSESSEE CLAIMED DEPRECIATION WHICH WAS DENIED BY T HE DEPARTMENT. AFTER GREAT DISCUSSION, IT WAS OBSERVED THAT FOR ALL PRAC TICABLE PURPOSES AND FOR THE PURPOSE OF INCOME-TAX ACT, THE ASSESSEE SHALL B E CONSTRUED AS OWNER OF THE PROPERTY. IN FACT, IT WAS HELD AS UNDER: - 'HELD, REVERSING THE JUDGMENT OF THE HIGH COURT, TH AT THE FINDING OF FACT ARRIVED AT IN THE CASE AT HAND WAS THAT THOUGH A DOCUMENT OF TITLE WAS NOT EXECUTED BY THE HOUSING BOARD IN FAVOUR OF THE ASSESSEE, THE HOUSES WERE ALLOTTED TO THE ASSESSEE BY THE HO USING BOARD, PART PAYMENT RECEIVED AND POSSESSION DELIVERED SO A S TO CONFER DOMINION OVER THE PROPERTY ON THE ASSESSEE WHEREAFT ER THE ASSESSEE HAD IN ITS OWN RIGHT ALLOTTED THE QUARTERS TO THE S TAFF AND THEY WERE BEING ACTUALLY USED BY THE STAFF OF THE ASSESSEE. T HE ASSESSEE WAS ENTITLED TO DEPRECIATION IN RESPECT OF THE SEVEN HO USES IN RESPECT OF WHICH THE ASSESSEE HAD NOT OBTAINED A DEED OF CONVE YANCE FROM THE VENDOR ALTHOUGH IT HAD TAKEN POSSESSION AND MADE PA RT PAYMENT OF THE CONSIDERATION'. THUS, FROM THE ABOVE TWO DECISIONS, IT BECOMES ABSO LUTELY CLEAR THAT FOR THE PURPOSE OF THE INCOME-TAX ACT THE GROUND REALITY HA S TO BE RECOGNIZED AND IF ALL THE INGREDIENTS OF TRANSFER HAVE BEEN COMPLE TED, THEN SUCH TRANSFER HAS TO BE RECOGNIZED. MERELY BECAUSE THE PARTICULAR INSTRUMENT OF TRANSFER HAS NOT BEEN REGISTERED WILL NOT ALTER THE SITUATIO N. THIS POSITION IS FURTHER 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 NAT URE OF SECTION 53A SHOULD ALSO BE COVERED BY THE DEFINITION OF 'TRANSFER'. TH EREFORE, IN OUR HUMBLE VIEW, THE AMENDMENT TO SEC. 53A OF THE TRANSFER OF PROPERTY ACT, WHEREBY THE REQUIREMENT OF THE DOCUMENTS NOT BEING REGISTER ED HAS BEEN OMITTED, WILL NOT ALTER THE SITUATION FOR HOLDING THE TRANSA CTION TO BE A TRANSFER U/S.2(47)(V) IF ALL OTHER INGREDIENTS HAVE BEEN SAT ISFIED. 74 THUS, IT IS CLEAR THAT NON REGISTRATION OF AGREE MENT CANNOT LEAD TO THE CONCLUSION THAT PROVISION OF SECTION 2( 47) (V) IS NOT APPLICABLE. SIMILAR VIEW HAS BEEN TAKEN BY ITAT CO CHIN BENCH OF THE TRIBUNAL IN CASE OF G.SREENIVASAN VS DCIT 28 TXMANN.COM 200 (COCH.) AND ITAT PUNE BENCH IN THE C ASE OF MAHESH NEMICHANDRA GANESHWADE V ITO 21 TAXMANN.COM 136 (PUNE). IN VIEW OF THIS LEGAL POSITION, THIS CONTE NTION IS REJECTED. 75 THE NEXT CONTENTION WAS THAT THE DECISION OF HON 'BLE BOMBAY HIGH COURT IN CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA) IS NOT APPLICABLE PARTICULARLY BECAUSE ULTIMATELY IN THAT CASE IT WAS HELD THAT CA PITAL GAIN TAX SHOULD BE 36 CHARGED IN ASSESSMENT YEAR 1999-2000 WHEREAS AGREEM ENT WAS EXECUTED IN AUGUST, 1994. 76 WE HAVE ALREADY DISCUSSED THE IMPLICATIONS OF TH E DECISION IN CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA) IN PARA 33 TO 38. WE HAD ALSO EXAMINED WHY IN THAT CASE CAPITAL GAIN WAS NOT HELD TO BE CH ARGEABLE IN ASSESSMENT YEAR 1995-96.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 WITH THE PROV ISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT TO THE EXTENT THAT THERE SHOULD BE WILLINGNESS ON THE PART OF THE TRAN SFEREE TO PERFORM HIS PART OF THE CONTRACT. 78 IN THIS ASPECT WE HAVE NO QUARREL WITH THE PROPOSITION THAT FOR INVOKING SECTION 53A PF T.P. ACT READ WITH CLAUSE (V) OF SECTION 2(47), THE TRANSFEREE HAS TO PERFORM OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT. IN THIS RESPECT AS REFERRED TO BY LD. COUNSEL FOR THE ASSESSEE, THE COMMENTS OF TH E LD. AUTHOR IN THE COMMENTARY BY MULLA DINSHAN FREDERI CK MULLA VIDE PARA 16 ARE CLEAR AND SHOWS THAT THIS REQUIREM ENT HAS TO BE ABSOLUTE AND UNCONDITIONAL. SOME OBSERVATIONS HAVE BEEN MADE IN THE CASE OF GENERAL GLASS COMPANY PVT LTD V S DCIT (SUPRA). IN THAT CASE IT WAS HELD THAT WILLINGNESS TO PERFORM FOR THE PURPOSE OF SECTION 53A IS SOMETHING MORE THAN A STATEMENT OF INTENT AND IT IS UNQUALIFIED AND UNCONDITIONAL W ILLINGNESS ON THE PART OF THE TRANSFEREE TO PERFORM HIS OBLIGATIO N. IN THAT CASE THE TRANSFEREE HAS AGREED TO MAKE CERTAIN PAYM ENTS IN INSTALLMENTS IN CONSIDERATION OF THE DEVELOPMENT AG REEMENT BUT SUCH PAYMENTS WERE NOT MADE. LATER ON, THE AGREEME NT WAS 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 THAT IS WHY IT WAS ULTIMATELY HELD THAT SUCH AGREEMENT CANNOT BE CONST RUED 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 POINTED OU T IN WHAT RESPECT THE TRANSFEREE HAS FAILED TO PERFORM HIS PA RT BUT IT HAS BEEN OBSERVED THAT THE FACTS OF THE CASE SHOWS THAT TRANSFEREE HAS NOT PERFORMED HIS PART OF THE CONTRACT. 80 THE THIRD JUDGMENT RELIED UPON BY THE LD. COUNSE L FOR THE ASSESSEE IS IN THE CASE OF DCIT V TEJ SINGH (SUPRA) . IN THAT CASE LAND WAS ACQUIRED BY THE GOVERNMENT AND THE MA TTER WENT FOR LITIGATION. DURING THE PENDENCY OF LITIGATION, THE ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT WITH A DEVELOP ER FOR THE PURPOSE OF DEVELOPMENT OF THE PROPERTY, HOWEVER, IT WAS CLARIFIED IN THE AGREEMENT THAT THERE IS LITIGATION IN RESPECT OF ACQUISITION OF PROPERTY AND THE DEVELOPER HAS TO TA KE CLEARANCE FROM THE GOVERNMENT IN THE MATTER OF DENOTIFICATIO N OF THE LAND. IT WAS HELD THAT SINCE THE LAND WAS UNDER COMPULSOR Y ACQUISITION AND NO COMPENSATION HAS BEEN RECEIVED, THEREFORE, THERE COULD NOT BE ANY CAPITAL GAIN TAX U/S 2(47) ( III) WHICH 37 DEALS WITH THE COMPULSORY ACQUISITION. IT WAS FURT HER OBSERVED THAT ASSESSEE COULD NOT HAVE GIVEN POSSESSION UNLES S AND UNTIL THE LAND WAS DENOTIFIED. SINCE FACTS OF THE CASE A RE DIFFERENT THAN THE CASE IN HAND AND THEREFORE, SAME ARE NOT RELEVANT FOR OUR PURPOSE. 81 NOW COMING TO THE FACTS, FIRSTLY IT WAS CONTENDE D THAT DEVELOPER I.E TRANSFEREE HAS NOT OBTAINED VARIOUS PERMISSIONS WHICH WERE REQUIRED TO BE TAKEN BY THE DEVELOPER AS PER CLAUSES 3.1, 7.9, 8.4 AND 8.6 OF THE JDA. THIS IS NOT CORR ECT AS POINTED OUT BY THE LD. CIT DR THAT ASSESSEE HAD ALREADY GOT THE MUNICIPAL PLAN SANCTIONED BUT IN THE MEANTIME PIL W AS FILED BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT AGA INST THE IMPLEMENTATION OF THE PROJECT. INITIALLY, THE CONS TRUCTION WAS BANNED BY THE HON'BLE HIGH COURT. HOWEVER, LATER O N IT WAS OBSERVED IN THE CWP NO. 20425 OF 2010 AND AS CLARIF IED BY THE ORDER OF THE HON'BLE SUPREME COURT THAT REFUSAL OF SANCTION UNDER THE ENVIRONMENT (PROTECTION) ACT, THE SOCIETY HAVE SOUGHT A REVIEW OF THE ORDER BECAUSE THE FINDINGS ARRIVED WE RE EX.PARTE. NO ORDER IN THE MATTER HAS BEEN PASSED BY THE COMPE TENT AUTHORITY PERHAPS BECAUSE OF THE ORDER OF HIGH COUR T. IN THE INTERIM ORDER PASSED IN THE PIL IT HAS BEEN CLARI FIED BY THE HON'BLE SUPREME COURT VIDE ORDER DATED 31.1.2012 PE RMITTING THE CONCERNED AUTHORITY UNDER THE DIFFERENT STATUTES GO VERNING THE MATTER TO THEIR RESPECTIVE JURISDICTION TO BE DECID ED IN ACCORDANCE WITH LAW. THUS, IT BECOMES CLEAR THAT DEVELOPER I.E . THDC HAS APPLIED FOR VARIOUS PERMISSIONS BEFORE THE RELEVANT AUTHORITIES AND IN SOME CASES PERMISSION WERE DECLINED ON EX.PA RTE BASIS AND IN SOME CASES THE SAME WERE DECLINED IN VIEW OF THE HIGH COURT ORDER BANNING THE CONSTRUCTION. AFTER THE CLA RIFICATION OF THE ORDER OF THE HIGH COURT BY HON'BLE SUPREME COURT BY ORDER DATED 31.1.2012, THE AUTHORITIES HAVE ALREADY BEEN PERMIT TED TO EXAMINE THE ISSUE ON MERITS UNDER VARIOUS LAWS. FUR THER IN THE JDA THERE IS A CLAUSE 26 WHICH DEALS WITH THE FORCE MAJEURE CLAUSES. THE CLAUSE 26 (I) TO (V) READS AS UNDER:- FORCE MAJEURE I) NONE OF THE PARTIES SHALL BE LIABLE TO THE OTHER PARTY OR BE DEEMED TO BE IN BREACH OF THIS AGREEMENT BY REASONS OF ANY DELAY IN PERFORMING OR ANY FAILURE TO PERFORM, ANY OF ITS OWN OBLIGATIONS IN RELATION TO THE AGREEMENT, IF THE DE LAY OR FAILURE IS DUE TO ANY EVENT OF FORCE MEJEURE. EVEN T OF FORCE MAJEURE IS ANY EVENT CAUSED BEYOND THE PARTIES REAS ONABLE 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 CONDITIONS, BLOC KADES, EMBARGOES, INSURRECTION, GOVERNMENTAL DIRECTIONS, R IOTS, STRIKES, ACTS OF TERRORISM, CIVIL COMMOTION, LOCK-O UTS, SABOTAGE, PLAGUES OR OTHER EPIDEMICS, ACTS OF GOD I NCLUDING FIRE, FLOODS, VOLCANIC ERUPTIONS, TYPHOONS, HURRICA NES, STORMS, TIDAL WAVES, EARTHQUAKE, LANDSLIDES, LIGHTN ING, EXPLOSIONS AND OTHER NATURAL CALAMITIES, PROLONGED FAILURE OF ENERGY, COURT ORDERS / INJUNCTIONS, CHARGE OF LAWS, ACTION AND / OR ORDER BY STATUTORY AND / OR GOVERNMENT AUTHORI TY, THIRD 38 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 PROJ ECT (EVENT OF FORCE MAJEURE). III) ANY PARTY CLAIMING RESTRICTION ON THE PERFORMA NCE OF ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT DUE TO THE HAP PENING OR ARISING OF AN EVENT OF FORCE MAJEURE HEREOF SHALL N OTIFY THE OTHER PARTY OF THE HAPPENING OR ARISING AND THE END ING OF CEASING OF SUCH EVENT OR CIRCUMSTANCE WITH THREE (3 ) DAYS OF DETERMINING THAT AN EVENT OF FORCE MAJEURE HAS OCCU RRED. IN THE EVENT ANY PARTY ANTICIPATES THE HAPPENING OF AN EVENT OF FORCE MAJEURE, SUCH PARTY SHALL PROMPTLY NOTIFY THE OTHER PARTY. IV) THE PARTY CLAIMING EVENT OF FORCE MAJEURE CONDI TIONS SHALL, IN ALL INSTANCES AND TO THE EXTENT IT IS CAPABLE OF DOING SO, USE ITS BEST EFFORTS TO REMOVE OR REMEDY THE CAUSE THEREOF AND MINIMIZE THE ECONOMIC DAMAGE ARISING THEREOF. V) EITHER PARTY MAY TERMINATE THIS AGREEMENT AFTER GIVING THE OTHER PARTY A PRIOR NOTICE OF FIFTEEN (15) DAYS IN WRITING OF THE EVENT OF FORCE MAJEURE CONTINUES FOR PERIOD OF NINETY (90) DAYS. IN THE EVENT OF TERMINATION OF THIS AGR EEMENT ALL OBLIGATIONS OF THE PARTIES UNTIL SUCH DATE SHALL BE FULFILLED. 82 THE COMBINED READING OF THESE CLAUSES SHOW THAT IF ANY OF THE PARTY COULD NOT PERFORM ITS PART OF THE OBLIGATION BECAUSE OF THE UNFORESEEN CIRCUMSTANCES WHICH INCLUDED GOVERNMENT DIRECTIONS, COURT ORDERS, INJUNCTIONS ETC. SUCH PARTY WOULD NOT BE LIABLE TO OTHER PARTY. IN VIEW OF FORCE MAJEURE CLAUSE WHICH INCLUDED COURT INJUNCTION IT CAN NOT BE SAID THAT THDC IS NOT WILL ING TO PERFORM ITS OBLIGATION. IN FACT DEVELPERS I.E. THDC/HASH W ERE PERUSING THE ISSUE OF PERMISSIONS/SANCTIONS VIGOROUSLY. THES E ASPECTS BECOME FURTHER CLEAR IF THE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CWP NO. 20425 OF 2010 VIDE OR DER DATED MARCH 26, 2012 IS PERUSED. PARAS 3, 4, 22, 25 & 26 OF THE JUDGMENT READ AS UNDER:- 3. THE BROAD CONTOURS OF THE PRESENT PROCEEDING HA VING BEEN OUTLINED, WE MAY NOW PROCEED TO TAKE NOTE OF T HE SPECIFIC CONTENTIONS OF THE CONTESTING PARTIES AS M ADE BEFORE US. HOWEVER, BEFORE WE DO SO, IT MAY BE APPROPRIATE TO MENTION THE SOMEWHAT CONFLICTING STA ND OF THE PARTIES WITH REGARD TO THE PRESENT STAGE OF THE APPLICATIONS FILED UNDER THE PROVISIONS OF THE ENVI RONMENT (PROTECTION) ACT AS WELL AS THE WILD LIFE (PROTECTI ON) ACT. WHILE THE PETITIONER, WHO IS SUPPORTED BY THE RESPO NDENT NO.6-CHANDIGARH ADMINISTRATION, ASSERTS THAT NECESS ARY SANCTION/PERMISSION UNDER BOTH THE ACTS HAVE BEEN REFUSED BY ORDERS PASSED BY THE COMPETENT AUTHORITI ES, THE PROMOTERS OF THE PROJECT CONTEND TO THE CONTRAR Y. THE FACTS, AS UNFOLDED BEFORE US, INDICATE THAT AGAINST THE REFUSAL OF SANCTION UNDER THE ENVIRONMENT (PROTECTI ON) ACT, THE RESPONDENTS HAVE SOUGHT A REVIEW OF THE OR DER ON THE GROUND THAT THE FINDINGS ARRIVED AT, WHICH HAVE FORMED 39 THE BASIS OF THE REFUSAL, ARE EX-PARTE. NO ORDER IN THE REVIEW MATTER HAS BEEN PASSED BY THE COMPETENT AUTHORITY, PERHAPS, BECAUSE OF THE INTERIM ORDER PA SSED IN THE PIL WHICH HAS BEEN CLARIFIED BY THE HON'BLE SUP REME COURT BY ORDER DATED 31.1.2012 PERMITTING THE CONCE RNED AUTHORITY UNDER THE DIFFERENT STATUTES GOVERNING TH E MATTER TO EXERCISE THEIR RESPECTIVE JURISDICTIONS IN ACCOR DANCE WITH LAW. INSOFAR AS THE WILD LIFE (PROTECTION) ACT IS CONCERNED, IT APPEARS THAT THE REJECTION HAS BEEN M ADE BY THE CHIEF WILD LIFE WARDEN WHO, THE RESPONDENTS CLA IM, IS MERELY A RECOMMENDING AUTHORITY AND IS REQUIRED TO FORWARD HIS RECOMMENDATION TO THE CENTRAL GOVERNMEN T. AS THE REJECTION UNDER THE WILD LIFE (PROTECTION) A CT 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 NO TICED 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 ENACTMEN TS 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 ENAC TMENTS 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 U NDER 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 PRO JECT ATTRACTING THE PROVISIONS OF THE PERIPHERY CONTROL ACT AND/OR THE PROVISIONS OF THE 1995 ACT MUST SATISFY THE ECOLOGICAL CONCERNS OF THE AREA IN THE LIGHT OF THE PROVISIONS OF THE TWO STATUES IN QUESTION. AS ALREA DY HELD BY US, A PUBLIC TRUST HAS BEEN BESTOWED ON THE AUTH ORITIES BY PROVISIONS OF THE SAID ACTS WHICH CAST ON SUCH AUTHORITIES A DUTY TO INTERDICT ANY PROJECT OR ACTI VITY WHICH EVEN REMOTELY SEEMS TO CREATE AN IMBALANCE IN THE PRISTINE ECOLOGY AND ENVIRONMENT OF THE AREA ON WHI CH THE CITY OF CHANDIGARH IS SITUATED OR FOR THAT MATTER I N THE IMMEDIATE VICINITY THEREOF. AS ALREADY OBSERVED, NECESSARY CLEARANCES UNDER THE AFORESAID TWO ENACTMENTS, INSOFAR AS THE RESPONDENTS ARE CONCERNE D, ARE PRESENTLY PENDING BEFORE THE CONCERNED AUTHORIT IES AND, THEREFORE, IT WOULD BE HIGHLY INCORRECT ON OUR PART TO ENTER INTO ANY FURTHER DISCUSSION ON THE AFORESAID ASPECT OF THE CASE. 25. WE ALSO HASTEN TO EMPHASISE THAT A MORE RIGOROU S REGULATED DEVELOPMENT IN WHAT ARE NOW THE REMNANTS OF THE PERIPHERY AND THE AREAS ADJOINING TO IT IS THE NEED OF THE HOUR FOR WHICH THE STAKEHOLDERS I.E. THE ADMINI STRATION OF CHANDIGARH, THE STATES OF PUNJAB AND HARYANA AS ALSO 40 THE AUTHORITIES UNDER THE ENVIRONMENT (PROTECTION) ACT AND THE WILD LIFE PROTECTION ACT HAVE TO DEMONSTRAT E THE NEED TO ENGAGE THEMSELVES INTENSIVELY AND NOT ACQUI RE A PLACID APPROACH INDICATING AN ELOQUENT ACQUIESCENCE TO THE VIOLATION OF THE 1995 ACT, PERIPHERY CONTROL AC T AND THE PERIPHERY POLICY. 26. WE THUS CONCLUDE ON THE AFORESAID NOTE BY HOLDI NG AND OBSERVING THAT THE PROVISIONS OF THE PERIPHERY CONTROL ACT AND THE 1995 ACT ARE COMPLEMENTARY TO EACH OTHE R AND THE PROVISIONS OF THE TWO STATUTES WOULD APPLY TO THE HOUSING PROJECT IN QUESTION. THE RESPONDENTS, THERE FORE, 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 I SSUE, AND AS WE HAVE ALREADY HELD THAT THE PROCESS OF GRA NT OF SUCH CLEARANCES IS PENDING BEFORE THE APPROPRIATE AUTHORITIES UNDER THE RESPECTIVE ACTS, THE SAME WIL L NOW HAVE TO BE BROUGHT TO ITS LOGICAL CONCLUSION KEEPIN G IN MIND OUR OBSERVATIONS AND DIRECTIONS CONTAINED HEREINABOVE. 83 THE COMBINED READING OF THE ABOVE PARAS IN THE O RDER OF HON'BLE HIGH COURT CLEARLY SHOWS THAT DEVELOPER THD C/ HASH I.E. TRANSFEREE HAVE MADE THEIR SINCERE EFFORTS FOR OBTAINING THE NECESSARY PERMISSIONS / SANCTIONS WHICH WERE REQUIR ED UNDER THE JDA. HOWEVER, SOME OF THE SANCTIONS COULD NOT BE TAKEN IN TIME BECAUSE OF THE LITIGATION BY WAY OF PIL BUT SI NCE NONE OF THE PARTY WAS LIABLE TO THE OTHER PARTY IN VIEW OF THE CLAUSE 26 DEALING WITH FORCE MAJEURE IT CANNOT BE SAID THAT D EVELOPER WAS NOT WILLING TO PERFORM HIS PART OF CONTRACT. I N ANY CASE NO SPECIFIC EVIDENCE HAS BEEN SHOWN US TO PROVE THAT T HDC / HASH WERE DECLINING TO PERFORM PARTICULAR OBLIGATIO N PROVIDED IN JDA. IN VIEW OF THIS DISCUSSION, IT CANNOT BE S AID THAT TRANSFEREE I.E. DEVELOPER THDC/HASH IS NOT WILLING TO PERFORM HIS PART OF CONTRACT. 84 SECONDLY, IT WAS CONTENDED THAT PAYMENTS HAVE N OT BEEN MADE AS PER THE JDA. HOWEVER, AGAIN THIS IS NOT COR RECT. AS PER CLAUSE 4(IV) OF THE JDA, THE INSTALLMENT FOR RS . 31,92,75,000/- WAS REQUIRED TO BE PAID. THE CLAUSE 4(IV) READ AS UNDER:- IV) PAYMENT BEING RS. 31,92,75,000/- (RUPEES ONE C RORE NINETY TWO LACS SEVENTY FIVE THOUSAND ONLY) CALCULA TED @ RS. 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 ONL Y) 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) MONTH S FROM THE DATE OF APPROVAL OF THE PLANS / DESIGN AND DRAW INGS AND GRANT OF THE FINAL LICENCE TO DEVELOP WHERE UPO N THE CONSTRUCTION CAN COMMENCE, WHICHEVER IS LATER, AGAI NST WHICH THE OWNER SHALL EXECUTE A REGISTERED SALE DEE D FOR 41 LAND OF EQUIVALENT VALUE BEING 6.36 ACRES OUT OF TH E PROPERTY AS DEMARCATED IN GREEN COLOUR (ALSO HATCHE D IN GREEN COLOUR) IN THE DEMARCATION PLAN ANNEXED HERET O AS ANNEXURE V AND BEARING KHASRA NOS. 123/15, 123/6, 1 23/7 (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 (P ART) 85 THE CAREFUL READING OF THE SAID CLAUSE OF THE JD A WOULD SHOW THIS PAYMENT WAS REQUIRED TO BE MADE WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF EXECUTION OF THIS AGREE MENT OR WITHIN TWO MONTHS FROM THE DATE OF APPROVAL OF PLAN / SANCTION AND DRAWING GRANT OF FINAL LICENSE TO DEVELOP WHERE UPON THE CONSTRUCTION CAN COMMENCE, WHICHEVER IS LATER. THUS , THIS INSTALLMENT WAS DEPENDENT ON TWO CONTINGENCIES FIRS T THE EXPIRATION OF A PERIOD OF SIX MONTHS FROM THE DATE OF AGREEMENT OR ALTERNATIVELY ON THE EXPIRATION OF A PERIOD OF T WO MONTHS FROM THE DATE OF APPROVAL OF PLANS / DESIGNS DRAWI NG ETC. LEADING TO GRANT OF FINAL LICENSES WHICH CAN LEAD T O COMMENCEMENT OF CONSTRUCTION, WHICHEVER IS LATER. THE MATTER WAS TAKEN UP BY WAY OF PIL BY CERTAIN CITIZENS AND ADMINISTRATION OF THE UNION TERRITORY BEFORE THE HO N'BLE HIGH COURT WHICH INITIALLY STAYED THE SANCTION OF SUCH P LAN ETC. THIS LED TO SITUATION WHERE CONSTRUCTION COULD NOT BE CO MMENCED AND HENCE PAYMENT WAS NOT REQUIRED TO BE MADE IN VI EW OF THE PENDING LITIGATION. THE CLAUSES OF FORCE MAJEURE C AME INTO OPERATION AND THEREFORE, IT CANNOT BE SAID THAT TH E DEVELOPER IS NOT WILLING TO PERFORM ITS PART OF THE CONTRACT. I N ANY CASE THERE IS NO DEFAULT ON THE PART OF THE DEVELOPER AS PAYME NT 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 BEEN FI LED AT PAGES 23 & 24 OF THE PAPER BOOK DEALING WITH THE AD DITIONAL EVIDENCE. THROUGH THIS LETTER IT HAS BEEN CLEARLY STATED THAT SINCE PERMISSION IS PENDING FROM THE MINISTRY OF EN VIRONMENT AND FOREST DEPARTMENT AND THEREFORE CONSTRUCTIONS C OULD NOT COMMENCE. THESE PERMISSIONS WERE PENDING BECAUSE O F THE PIL FILED BY SHRI AALOK JAGGA BEFORE THE HON'BLE PU NJAB & HARYANA HIGH COURT. ALL THESE FACTS CLEARLY SHOWS THAT IN VIEW OF CLAUSE 4.1(IV) READ WITH CLAUSE 26(V) OF THE JDA , HASH BUILDER WERE NOT REQUIRED TO MAKE THE PAYMENT AND I T 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 CONT ENTION. CLAUSE (VI) TO SECTION 2(47) READS AS UNDER: ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMB ER OF, OR ACCRUING SHARES IN, A COOPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN AN Y OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFERRING, O R ENABLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY. 88 THE PLAIN READING OF THE PROVISION SHOWS THAT AN Y TRANSACTION BY WAY OF BECOMING A MEMBER OR ACQUIRING SHARES IN THE COOPER ATIVE SOCIETY OR SHARES IN THE COMPANY WHICH HAS THE EFFECT OF TRANSFERRING OR EN ABLING THE ENJOYMENT OF ANY IMMOVEABLE PROPERTY WOULD BE COVERED BY THE DEFINIT ION OF TRANSFER. IN THE CASE 42 BEFORE US, INITIALLY THE MEMBERS OF THE SOCIETY WER E HOLDING SHARES IN THE SOCIETY FOR OWNERSHIP OF PLOT OF 500 SQYD OR 1000 SQYD. THIS M EMBERSHIP WAS SURRENDERED TO THE SOCIETY VIDE RESOLUTION OF THE SOCIETY PASSED I N THE EXECUTIVE COMMITTEE ON 4.1.2007 WHICH WAS LATER RATIFIED IN THE GENERAL BO DY MEETING OF THE SOCIETY ON 25.1.2007, SO THAT THE SOCIETY COULD ENTER INTO JDA . IN THE JDA THE SOCIETY HAS AGREED TO TRANSFER THE LAND. THEREFORE, TECHNICAL LY 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 APPLICABLE. 89 EIGHTH CONTENTION IS THAT SINCE THE SOCIETY HAS TRANSFERRED THE LAND THROUGH JDA ON A PRO-RATA BASIS, THEREFORE, ONLY WHATEVER MONE Y 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. IN THIS REGAR D RELIANCE WAS PLACED ON CERTAIN SUPREME COURT DECISIONS AND OTHER CASES FOR THE PRO POSITION THAT NOTIONAL INCOME CANNOT BE TAXED. THERE IS NO NEED TO DISCUSS THE C ASES RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE BECAUSE IT IS SETTLED POSITION OF L AW THAT NO NOTIONAL INCOME CAN BE TAXED. THOUGH THERE IS NO QUARREL THAT IT IS A SETT LED PRINCIPLE OF LAW THAT NOTIONAL INCOME CAN NOT BE TAXED BUT IN CASE OF CAPITAL GAIN , SECTION 45 WHICH IS CHARGING SECTION AND SECTION 48 WHICH IS COMPUTATION SECTION , MAKES IT ABSOLUTELY CLEAR THAT RIGOR OF TAX IN CASE OF CAPITAL GAIN WOULD COME INT O PLAY ON THE TRANSFER OF CAPITAL ASSET AND TOTAL CONSIDERATION WHICH IS ARISING ON S UCH TRANSFER, HAS TO BE TAXED. SECTION 48 CLEARLY TALKS ABOUT FULL CONSIDERATION R ECEIVED OR ACCRUING AS RESULT OF TRANSFER. THIS ASPECT WE HAVE ALREADY DISCUSSED IN DETAIL AT PARAS 64 TO 68. 90 SECOND ASPECT OF THIS CONTENTION WAS THAT IF CON SIDERATION WHICH HAS NOT BEEN RECEIVED WAS TO BE TAXED THEN TH E ASSESSEE WOULD BE DEPRIVED FOR CLAIMING EXEMPTION U/S 54 AND 54EC. AS OBSERVED ABOVE AS PER SECTION 45 R.W.S 48 WHOLE OF THE CONSIDERATION, RECEIVED OR ACCRUED HAS TO BE TAXED. EVERY PERSON IS SUPPOSED TO KNOW THE LAW AND IF THE TRANSACTION IS STRUCTURED IN SUCH A WAY FOR THE TRANSFER OF CAPITAL ASSET THAT SOME OF THE CONSIDERATION WOULD BE RECEIVED LATER THEN SUCH 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 N O PERSON WOULD PAY CAPITAL GAIN TAX ON TRANSFER OF A PROPER TY. THIS WILL BE CLEAR FROM A SIMPLE EXAMPLE. LET US ASSUME IF A S ELLS THE PROPERTY TO B FOR A CONSIDERATION OF RS. 100 CROR ES AND RECEIVE ONLY A CONSIDERATION OF 1.00 CRORE AND IT IS MENTIO NED IN THE TRANSFER INSTRUMENT THAT BALANCE OF CONSIDERATION W OULD BE PAID AFTER 20 YEARS THEN NO TAX CAN BE LEVIED ON SUCH BA LANCE CONSIDERATION OF RS. 99.00 CRORES WHICH HAS NOT BEE N RECEIVED AS PER THE CONTENTION OF THE LD. COUNSEL OF THE ASSESS EE . BUT IN THAT CASE NO TAXES CAN BE LEVIED EVEN AFTER 20 YEARS BEC AUSE NO TRANSFER CAN BE SAID TO HAVE TAKEN PLACE AFTER 20 Y EARS AND REVENUE CANNOT DO ANY THING BECAUSE CAPITAL GAIN CA N BE CHARGED U/S 45 ONLY ON TRANSFER OF CAPITAL ASSET. WE DO NOT THINK THAT THIS KIND OF INTERPRETATION CAN BE MADE WHILE INTERPRETI NG SECTION 45 R.W.S. 48 BY INVOKING THE RULE THAT THERE CAN NOT B E ANY TAX ON NOTIONAL RECEIPT. GENERALLY SPEAKING IT IS ONLY THE REAL INCOME WHICH CAN BE TAXED BUT THIS HAS TO BE UNDERSTOOD SUBJECT TO LIMITATIONS. COMMENTING ON THESE LIMITATIONS, THE LD. AUTHOR SHR I S. RAJARATNAM IN THE COMMENTARY OF LAW OF INCOME TAX BY SAMPAT IYENG ARS VOLUME 1, (11 TH EDITION) HAS OBSERVED AT PAGE 343 AS UNDER:- 5. RESERVATIONS ON REAL INCOME THEORY. - WHETHER ACCRUAL OF INCOME HAS TAKEN PLACE OR NOT, MUST BE JUDGED ON THE PRINCIPLE OF TH E REAL INCOME THEORY. AFTER 43 ACCRUAL, NON-CHARGING OF TAX ON THE SAME BECAUSE OF CERTAIN CONDUCT BASED ON THE IPSE DIXIT OF A PARTICULAR ASSESSEE CANNOT BE ACCEP TED. IN DETERMINING THE QUESTION WHETHER IT IS HYPOTHETICAL INCOME OR WHETHER REAL I NCOME HAS MATERIALIZED OR NOT, VARIOUS FACTORS WILL HAVE TO BE TAKEN INTO ACCOUNT. IT WOULD BE DIFFICULT AND IMPROPER TO EXTEND THE CONCEPT OF REAL INCOME TO AL L CASES DEPENDING UPON THE SELF-SERVING STATEMENT OF THE ASSESSEE. WHAT HAS RE ALLY ACCRUED TO THE ASSESSEE HAS TO BE FOUND OUT AND WHAT HAS ACCRUED MUST BE CO NSIDERED FROM THE POINT OF VIEW OR REAL INCOME TAKING THE PROBABILITY OR IMPRO BABILITY OF REALIZATION IN A REALISTIC 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 SPECIFIC PRO VISION IS AVAILABLE IN THE ACT. FOR EXAMPLE IN CASE OF INCOM E FROM HOUSE PROPERTY, THE INCOME HAS TO BE DETERMINED AS PER SE CTION 23. SECTION 22 OF THE INCOME TAX ACT PROVIDES THAT IT I S THE ANNUAL VALUE OF THE PROPERTY WHICH CAN BE TAXED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. SECTOR 23 PRES CRIBES THE METHOD FOR DETERMINING THE ANNUAL VALUE. SECTION 2 3(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 OR RECEIVABLE; OR. 92 ON THIS ASPECT THE SETTLED POSITION OF THE LAW I S THAT THE ANNUAL VALUE HAS TO BE DETERMINED EVEN IF THE PROPERTY IS NOT LET O UT. THIS POSITION HAS BEEN DISCUSSED BY THE LD. AUTHOR CHATURVEDI & PITHISARIA S IN COMMENTARY OF INCOME TAX LAW (FIFTH EDITION) VOLUME 1 IN THIS RESPECT AT PAGES 1275 & 1276 OBSERVED AS UNDER: ANNUAL VALUE- DETERMINATION OF SECTION 23(1)(A) PROVIDES THAT FOR THE PURPOSES OF SECTION 22, THE ANNUAL VALUE OF ANY PROPERTY SHA LL BE DEEMED TO BE THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR. THE WORD USED IS MIGHT AND NOT CAN OR IS. IT IS T HUS A NOTIONAL INCOME TO BE GATHERED FROM WHAT A HYPOTHETICAL TENANT WOULD PAY WHICH IS TO BE OBJECTIVELY ASCERTAINED ON A REASONABLE BASIS IRRESPECTIVE OF T HE FACT WHETHER THE PROPERTY IS LET OUT OR NOT [SULTAN BROS. PR. LTD. V. CIT, (1964 ) 51 ITR 353 (SC); JAMNADAS PRABHUDAS V. CIT, (1951)20 ITR 160(BOM); D.M. VAKIL V. CIT, (1946) 14 ITR 298, 302(BOM); CIT V. BIMAN BEHARI SHAW, SHEBAIT, (1968) 68 ITR 815 (CAL); SRI SRI RADHA GOVINDA JEW V. CIT, (1972) 84 ITR 150, 156 (C AL); CIT V. GANGA PROPERTIES LTD., (1970) 77 ITR 637, 647 (CAL); LIQU IDATOR, MAHMUDABAD PROPERTIES LTD. V. CIT, (1972) 83 ITR 470 (CAL), AF FIRMED, (1980) 124 ITR 31 (SC); CIT V. ZOROSTRIAN BUILDING SOCIETY LTD., (197 6) 102 ITR 499 (BOM); C.J. GEORGE V. CIT, (1973) 92 ITR 137 (KER); D.C. ANAND & SONS V. CIT, (1981) 131 44 ITR 77 (DEL). ALSO SEE, CIT V. PARBUTTY CHURN LAW, (1965) 57 ITR 609, 619 (CAL); IN THE MATTER OF KRISHNA LAL SEAL, AIR 1932 CAL 836 ; LALLA MAL SAMGHAM LAL V. CIT, (1936) 4 ITR 250 (LAH); NEW DELHI MUNICIPAL CO MMITTEE V. NAND KUMAR BUSSI, (1977) TAX LR 2130 (DEL)] 93 SIMILAR VIEW HAS BEEN EXPRESSED BY SHRI N.A. PAL KHIVALA IN HIS COMMENTARY ON THE LAW LAND PRACTICE OF INCOME TAX, VOLUME 2 (EIGHTH EDITION) BY KANGA AND PALKHIVALAS OBSERVATION AT PAGES 22 & 23. AGAIN EVEN SHRI S. RAJARATNAM IN THE COMMENTARY OF LAW OF INCOME TAX B Y SAMPAT IYENGARS VOLUME 2, (11 TH EDITION) EXPRESSED IDENTICAL VIEWS IN HIS COMMENTA RY AT PAGE 2738. 94 IN ALL THE LEADING COMMENTARIES CITED ABOVE, IT HAS BEEN OBSERVED THAT ANNUAL VALUE IS TO BE COMPUTED WHETHE R PROPERTY HAS BEEN LET OUT OR NOT. THIS MEANS THAT NOTIONAL VALUE OF THE PROPERTY HAS TO BE CHARGED TO THE INCOME TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. FROM THE ABOVE, IT B ECOMES CLEAR THAT THOUGH THERE IS NO REAL INCOME FROM LETT ING OUT OF THE PROPERTY, STILL THE NOTIONAL ANNUAL VALUE IS SUBJEC TED TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. HOWEV ER, WE MAY MENTION THAT U/S 23(1)(C) OF THE ACT IF THE PRO PERTY IS LET OUT AND THEN REMAINED VACANT FOR SOME PART OF THE Y EAR OR FOR 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 BECAU SE OF PROVISIONS OF SECTIONS 22 AND 23 (1)(A) OF THE ACT. SIMILARLY, UNDER THE MAT PROVISIONS, IT IS BASICALLY THE NOTI ONAL INCOME WHICH IS BEING SUBJECTED TO CHARGE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION. A BUSINESSMAN MAY H AVE INCOME OF RS. 100/- BUT BECAUSE OF HIGHER DEPRECIAT ION ALLOWABLE UNDER THE INCOME-TAX ACT OR SOME OTHER WE IGHTED DEDUCTIONS SAY FOR EXAMPLE IN CASE OF EXPENDITURE ON SCIENTIFIC RESEARCH, THE TAXABLE INCOME AS PER THE PROVISIONS OF THE ACT MAY BE ZERO BUT STILL BECAUSE OF THE MAT PR OVISIONS, TAX HAS TO BE CHARGED ON BOOK PROFITS. SIMILARLY IN TH E CASE OF PRESUMPTIVE TAX PROVISIONS E.G. U/S 44AD IF A PERSO N IS CIVIL CONTRACTOR AND DOES NOT MAINTAIN BOOKS OF ACCOUNT A ND HIS TURNOVER IS LESS THAN RS. 60 LAKHS THEN THE PROFIT WOULD BE PRESUMED TO BE 8% OF TURNOVER EVEN IF HE HAS SUFFER ED A LOSS. ANOTHER EXAMPLE OF SECTION 2(22)(E) CAN BE TAKEN. U NDER THIS PROVISION A LOAN OR ADVANCE GIVEN BY CERTAIN COMPAN IES TO A SUBSTANTIAL SHARE HOLDER IS TO BE TREATED AS DEEMED DIVIDEND. SUCH LOAN UNDER THE NORMAL ACCOUNTING PRINCIPLE OR ON COMMERCIAL PRINCIPLES CANNOT BE REGARDED AS INCOME BUT BECAUSE OF THIS SPECIFIC PROVISION REGARDING DEEMED DIVIDEND SUCH AMOUNT HAS TO BE TREATED AS INCOME OF THE PERS ON RECEIVING SUCH LOANS. 95 THE ABOVE POSITION OF LAW MAKES IT ABSOLUTELY CL EAR THAT THEORY OF REAL INCOME IS SUBJECT TO THE PROVISIONS OF THE ACT AND WHENEVER ANY SPECIFIC PROVISIONS OF THE ACT IS THER E FOR CHARGING OF A PARTICULAR ITEM OF INCOME, THEN THE S AME HAS TO BE CHARGED ACCORDINGLY. IT MAY BE SOMETIMES HARD T O THE ASSESSEES BUT AGAIN IT HAS BEEN HELD IN NUMEROUS D ECISIONS THAT FISCAL STATUES HAVE TO BE INTERPRETED ON THE B ASIS OF LANGUAGE USED AND THERE IS NO SCOPE FOR EQUITY OR I NTENT. LD. AUTHOR SHRI S. RAJARATNAM IN THE COMMENTARY OF LAW OF INCOME 45 TAX BY SAMPAT IYENGARS VOLUME 1, PAGE 236 IN THIS REGARD HAS OBSERVED AS UNDER:- ONCE IT IS SHOWN THAT THE CASE OF THE ASSESSEE COM ES WITHIN THE LETTER OF THE LAW, HE MUST BE TAXED, HOWEVER, GREAT THE HA RDSHIP MAY APPEAR TO THE JUDICIAL MIND. CONSIDERATIONS OF HARDSHIP, INJU STICE OR ANOMALIES DO NOT PLAY ANY USEFUL ROLE IN CONSTRUING TAXING STATU TES UNLESS THERE BE SOME REAL AMBIGUITY. THUS, ANY BENEVOLENT CONSTRUCT ION IN FAVOUR OF THE ASSESSEE HAS BEEN HELD TO BE UNCALLED FOR. 96 THEREFORE, IT CAN BE SAID THAT GENERALLY SPEAKIN G NOTIONAL INCOME COULD NOT BE SUBJECTED TO TAX BUT WHENEVER T HERE IS A SPECIFIC PROVISION, THE SAME HAS TO BE TAXED. NOW, IN CASE OF CAPITAL GAIN, SECTION 45 READ WITH SECTION 48 VERY CLEARLY PROVIDES THAT IT IS THE PROFIT ARISING FROM THE TRANSFER OF A CAPITAL ASSET WHICH WOULD BE SUBJECTED TO CHARGE OF CAPITAL GAIN TAX AND SECTION 48 CLEARLY PROVIDES FOR TAKING THE TOTAL CONSIDERATION INTO ACCOUNT WHILE COMPUTING THE CAPI TAL GAINS. THIS ASPECT WE HAVE ALREADY DISCUSSED IN DETAIL AT PARA NO. 64 TO 68 FROM WHICH IT BECOMES CLEAR THAT IT IS THE WH OLE CONSIDERATION WHETHER RECEIVED OR ACCRUED, WHICH HA S TO BE TAXED UNDER THE CAPITAL GAIN ONCE TRANSFER OF THE C APITAL ASSET TAKES PLACE. ACCORDINGLY, THERE IS NO FORCE IN THI S PART OF THE CONTENTION. 97 NOW LET US EXAMINE THE ISSUE OF TAXABILITY OF FL AT ON THE BASIS OF ABOVE PRINCIPLES. RELEVANT PORTION OF CL AUSE 4 OF THE JDA WHICH DEALS WITH CONSIDERATION ARE AS UNDER: 4. CONSIDERATION 4.1 IT IS SPECIFICALLY UNDERSTOOD AND AGREED AMONGS T THE PARTIES THAT THDC SHALL USE ITS EXPERTISE AND ITS BRAND NAME AND / OR ANY OTHER BRAND NAME AT ITS DISCRETION TO DEVELOP THE PROPERTY INTO THE PREMISE S AS PER APPLICABLE BUILDING BYE-LAWS OF THE COMPETENT AUTHORITY AND THE OWNER S HALL HAVE NO OBJECTION TO THE SAME IN WHATSOEVER MANNER. IN CONSIDERATION OF THE OWNER GRANTING AND ASSIGNING, ITS DEVELOPMENT RIGHTS IN THE PROPERTY, IRREVOCABLY AND IN PERPETUITY, TO THDC TO DEVELOP THE PROPERTY AND FOR TRANSFER OF THE PROPERTY UPON THE SURRENDER OF ALLOTMENT RIGHTS OF 500 SQ. YARDS AND/ OR 1000 SQ. YARDS (AS THE CASE MAY BE) BY ITS MEMBERS TO THE OWNER, VIDE RESOLUTIO N DATED 04.01.2007 AND 25.02.2007 (COPY ATTACHED AS PER ANNEXURE I & II), HASH IS COMMITTED TO PAY TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OW NER (AS THE CASE MAY BE) A TOTAL AMOUNT OF RS. 106,42,50,000/- (RUPEES ONE HUN DRED SIX CRORES FORTY TWO LACS FIFTY THOUSANDS ONLY) CALCULATED @ RS. 82,50,0 00/- (RUPEES EIGHTY TWO LACS FIFTY THOUSANDS ONLY) PAYABLE TO 65 MEMBERS HA VING PLOT OF 500 SQ. YARDS EACH, RS. 1,65,00,000/- (RUPEES ONE CRORE SIXTY FIV E LACS ONLY) PAYABLE TO 30 MEMBERS HAVING PLOT OF 1000 SQ. YARDS EACH AND RS. 3,30,00,000/- (RUPEES THREE CRORES THIRTY LACS ONLY) PAYABLE TO THE OWNER FOR THE 4 PLOTS OF 500 SQ. YARDS EACH, WHICH SHALL TANTAMOUNT TO THE FULL AND FINAL PAYMENT TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS TH E CASE MAY BE) IN A MANNER SET OUT HEREIN BELOW (PAYMENT). FURTHER, THE TRAN SFER, SALE AND CONVEYANCE 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/O R THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) FROM HASH BY EXECUTI NG SALE DEEDS AND REGISTERING THE SAME. IT IS EXPRESSLY PROVIDED THAT AS RESOLVED BY THE OWNER, THE 46 TOTAL AMOUNT PAYABLE BY HASH TO THE OWNER AND / OR THE RESPECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) FOR ASSIGNMENT OF TH E DEVELOPMENT RIGHTS AND FOR TRANSFER AND SALE OF 21.2 ACRES OF LAND OF THE PROPERTY SHALL BE RS. 106,42,50,000/- (RUPEES ONE HUNDRED SIX CRORES FORT Y TWO LACS FIFTY THOUSAND ONLY) AND ONE HUNDRED AND TWENTY NINE (129 ) FLATS CONSISTING OF SUPER AREA OF 2250 SQ. FEET (FLATS); ONE FLAT EACH FOR SIXTY FIVE MEMBERS HAVING A PLOT OF 500 SQ. YARDS, TWO FLATS FOR THE (THIRTY) 30 MEM BERS HAVING A PLOT OF 1000 SQ. YARDS AND 4 FLATS TO THE OWNER FOR THE 4 PLOTS OF 5 00 SQ. YARDS EACH AS PER LIST ANNEXED WITH THIS AGREEMENT AS SCHEDULE B (SALE TR ANSACTION) IT IS EXPRESSLY AGREED BETWEEN THE DEVELOPERS THAT HASH SHALL BE RESPONSIBLE FOR MAKING ALL PAYMENTS TO THE OWNER AND/OR THE RES PECTIVE MEMBERS OF THE OWNER (AS THE CASE MAY BE) AS PER THE NEGOTIATED AN D AGREED TERMS BETWEEN THE OWNER AND HASH, HASH EXPRESSLY UNDERTAKES TO MA KE TIMELY PAYMENTS OF THE PAYMENT TO THE OWNER AND / OR THE RESPECTIVE ME MBERS OF THE OWNER (AS THE CASE MAY BE) AS UNDER: 4.2 AS RESOLVED BY THE OWNER, THDC EITHER BY ITSELF OR ALONG WITH HASH SHALL ALLOT THE FLATS IN THE NAME OF MEMBERS OF THE OWNER AS PER LIST ANNEXED WITH THIS AGREEMENT AS SCHEDULE B ATTACHED HEREIN (HEREINAFTE R REFERRED TO AS THE ALLOTTEES). THE SPECIFICATIONS OF THE FLATS WOULD BE PROVIDED BY THE DEVELOPERS TO THE OWNER AND MORE PARTICULARLY DESCRIBED IN THE SC HEDULE C ATTACHED HEREIN (HEREINAFTER REFERRED TO AS THE SPECIFICATIONS). THE ALLOTMENT LETTERS SHALL BE ISSUED TO THE ALLOTTEES (MEMBERS OF THE OWNER) WITH IN FORTY-FIVE (45) DAYS FROM THE DATE OF SANCTION OF THE BUILDING PLANS / DESIGN AND DRAWING AND ON OBTAINING FINAL LICENSE/PERMISSION FOR THE DEVELOPMENT OF THE PROJECT FROM THE COMPETENT AUTHORITY. THEREAFTER, THE POSSESSION OF THE FLATS SHALL BE HANDED OVER TO THE ALLOTTEES WITHIN THIRTY(30) MONTHS FORM THE DATE O F 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 TH E OWNER (AS THE CASE MAY BE) AND THE FLATS TO BE ALLOTTED T O THE ALLOTTEES AS SET OUT IN THIS CLAUSE 4.2 SHALL HEREI NAFTER BE COLLECTIVELY REFERRED TO AS THE ENTIRE CONSIDERATI ON 98 FROM THIS CLAUSE IT BECOMES ABSOLUTELY CLEAR THA T EACH MEMBER HAVING 500 SQYD OF PLOT WAS ENTITLED TO RECE IVE ONE FURNISHED FLAT MEASURING 2250SQFT AND MEMBERS HAVIN G 1000SQYD FLAT WERE ENTITLED TO RECEIVE TWO FURNISHE D FLATS. THUS UPON EXECUTION OF THE JDA VESTED RIGHT CAME TO SUCH MEMBERS TO RECEIVE SUCH FLATS. ONCE THIS VESTED RI GHT ARISES OUT OF THE ABOVE CONTRACT IT CAN EASILY BE SAID THA T THIS RIGHT HAS ALSO ACCRUED TO THE ASSESSEE. CLAUSE 4.2 MAKES IT ABSOLUTELY CLEAR THAT DEVELOPER I.E. THDC/HASH WAS TO ALLOT THE LETTERS OF ALLOTMENT WITHIN 45 DAYS FROM FINAL SANCTION FROM THE COMPETENT AUTHORITY AND SUCH FLATS WERE PART OF ENTIRE CONSIDERATION. MERELY BECAUSE SUCH ALLOTMENT LETTE R HAS NOT 47 BEEN GIVEN BECAUSE OF SANCTIONS / PERMISSIONS COULD NOT BE OBTAINED BECAUSE OF PUBLIC INTEREST LITIGATION BEFO RE THE HON'BLE PUNJAB & HARYANA HIGH COURT, IT CANNOT BE S AID THAT SUCH RIGHT HAS NOT ACCRUED. THOUGH IT MAY BE HARD ON THE ASSESSEE BUT IT IS WELL SETTLED THAT TAXATION AND E QUITY ARE STRANGERS. FURTHER COMMENTING 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 PU T UP BY THE DEVELOPER, BUT THE SOLUTION LIES IN STATUTORY CLARI FICATION IN SUCH CASES. IN VIEW OF THE INCREASING SCALE OF SUCH DEV ELOPMENT AGREEMENTS TO SOLVE THE HOUSING PROBLEM IN THE CITI ES, A STATUTORY CLARIFICATION OR CIRCULAR IS OVERDUE. 99 THESE COMMENTS AND THE OTHER DETAILED DISCUSSION ON THIS ASPECT CLEARLY SHOW THAT CAPITAL GAIN TAX HAS TO BE PAID ON THE TOTAL CONSIDERATION ARISING ON TRANSFER WHICH WOULD INCLUDE THE CONSIDERATION WHICH HAS BEEN RECEIVED AS WELL AS TH E CONSIDERATION WHICH HAS AROSEN AND BECOME DUE AND M AY BE RECEIVED LATER ON. IN VIEW OF THIS DISCUSSION THIS CONTENTION IS REJECTED. 100 NINTH CONTENTION IS THAT THE ASSESSEE HAS ALREA DY TERMINATED THE AGREEMENT AND HAS REVOKED THE POWER OF ATTORNEY. WE FIND NO FORCE IN THIS SUBMISSIONS. 101 IN THIS REGARD LD. COUNSEL OF THE ASSESSEE HAS RELIED ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN CASE OF CHEMOSYN LT D. V ACIT (SUPRA). IN THAT CASE THE ASSESSEE-COMPANY WAS OWNER OF TWO PLOTS BE ARING 256 & 257 IN GUNDABALI ANDHERI MUMBAI. THE ASSESSEE-COMPANY ENT ERED INTO A DEVELOPMENT AGREEMENT WITH DIPITI BUILDERS FOR 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 BUILDERS COULD START THE DEVELOPMENT /CONSTR UCTION WORK, ENTIRE PROPERTY COMPRISING OF PLOT NO. 256 & 257 WAS SOLD TO A THIR D PARTY M/S FINANCIAL TECHNOLOGY LTD. BY A TRIPARTITE CONVEYANCE DEED EXE CUTED ON 5.7.2007 FOR RS. 29.11 CRORES AND THEREFORE, ADDITIONAL CONSIDERATI ON OF RS. 13 CRORES HAS BEEN OFFERED TO TAX IN ASSESSMENT YEAR 2008-09. THIS EX PLANATION WAS REJECTED BY THE ASSESSING OFFICER BECAUSE ACCORDING TO HIM IT WAS A CASE OF TRANSFER U/S 2(47)(V) AND TOTAL CONSIDERATION HAS TO BE CHARGED IN THE Y EAR OF TRANSFER. THE TRIBUNAL AFTER CONSIDERING THE PROVISIONS OF SECTION 45 & 48 POSED A QUESTION TO ITSELF THAT WHAT SHOULD BE THE CONSIDERATION IN THE CASE BEFORE THE BENCH. THE CASE LAW RELIED ON BY THE DEPARTMENT WAS REJECTED BECAUSE SA ME WAS RELEVANT TO ACCRUAL OF INTEREST. THE BENCH FOLLOWED THE DECISION OF KA LPTARU CONSTRUCTION OVERSEES PVT LTD. 13 SOT 194. IN THAT CASE THE ASSESSEE HAD AGREED TO SELL TO ITS SUBSIDIARY EQUITY SHARES FOR A CONSIDERATION OF RS . 1.25 CRORES WHICH WAS FINALLY SETTLED AT RS. 1.00 CRORE AND THE TRIBUNAL HELD THA T THE CONSIDERATION OF RS. 1.00 CRORE HAS TO BE ACCEPTED. 102. FROM THE ABOVE DECISION IT IS NOT CLEAR WHETHE R IN CASE OF KALAPTARU CONSTRUCTION OVERSEES PVT LTD. (SUPRA) WHICH HAS BE EN FOLLOWED IN ABOVE CASE, WAS CONCERNING CAPITAL GAIN OR NOT? SECONDLY IT IS NOT CLEAR THAT WHETHER THE 48 AMENDED CONSIDERATION I.E. SETTLEMENT FOR RS. 1.00 CRORE WAS MADE IN THE SAME YEAR OR NOT? AS OBSERVED EARLIER WHILE DISCUSSING THE ISSUE OF NOTIONAL INCOME THAT PROVISIONS OF SECTION 45 R.W.S. 48, ARE ABSOLU TELY CLEAR AND THERE IS NO AMBIGUITY THAT ONCE A CAPITAL ASSET IS TRANSFERRED THEN WHOLE OF THE CONSIDERATION RECEIVED OR ACCRUING HAS TO BE CONSIDERED FOR THE P URPOSE OF TAXATION IN THE YEAR IN WHICH THE TRANSFER HAS TAKEN PLACE. WE FURTHER FIND THAT IN THE JDA THERE IS A CLAUSE FOR TERMINATION OF THE AGREEMENT. RELEVANT CLAUSE 14 READS AS UNDER: TERMINATION 14(I) SAVE AND EXCEPT THE PROVISION OF CLAUSE 26, THDC SHALL AT ALL TIMES HAVE THE RIGHT TO TERMINATE THIS AGREEMENT IN THE EVENT THERE IS ANY MATERIAL BREACH OF THE REPRESENTATIONS, WARRANTIES, UNDERTAKINGS, DECL ARATIONS, COVENANTS AND/OR OBLIGATIONS GIVEN BY THE OWNER UNDER THIS AGREEMENT AFTER GIVING THIRTY (30) DAYS WRITTEN NOTICE FOR RECTIFICATION OF SUCH BREACH. I N THE EVENT THE AGREEMENT IS TERMINATION BY THDC, ALL THE LANDS REGISTERED IN TH E 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 TRANSFERRED TO THDC AS PER THE TERMS OF THIS AGREEMENT SHALL NOT BE TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL REFUND TO THDC THE ADJ USTABLE ADVANCE/EARNEST MONEY MENTIONED IN CLAUSE 4.1(I) ABOVE WITHIN ONE M ONTH OF SUCH TERMINATION. IN THE EVENT OF FAILURE OF THE OWNER TO REFUND THE SAI D AMOUNT, THE OWNER HEREBY AGREES TO EXECUTE A REGISTERED SALE DEED FOR LAND O F EQUIVALENT VALUE IN FAVOUR OF THDC. (II) IN THE EVENT ALL THE REQUISITE GOVERNMENT AND STATUTORY APPROVALS, AUTHORIZATIONS, CONSENTS, LICENSES, APPROVALS OF AL L THE PLANS/DESIGNS AND DRAWINGS AS MAY BE REQUIRED FOR THE DEVELOPMENT OF THIS PROPERTY IN RELATION TO THE PROJECT AND TO UNDERTAKE THE PROJECT ARE NOT GR ANTED 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 ITS SOLE DI SCRETION EITHER DECIDE THAT IT DOES NOT DESIRE TO UNDERTAKE AND COMPLETE THE PROJE CT AND HENCE TERMINATE THIS AGREEMENT AFTER GIVING THIRTY (30) DAYS WRITTEN NOT ICE IN THIS REGARD OR DECIDE TO WAIT FOR ANY FURTHER TIMES DEEMED FIT BY THDC FOR T HE GRANT OF THE AFORESAID APPROVALS AND LICENSES. IN THE EVENT THE AGREEMENT IS TERMINATED BY THDC, ALL THE LANDS REGISTERED IN THE NAME OF THDC AS PER THE TERMS OF THIS AGREEMENT UPTO THE DATE OF THE TERMINATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSFERRED TO THDC AS PER THE TERMS OF THIS AGR EEMENT SHALL NOT BE TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON T HE TERMINATION, THE OWNER SHALL REFUND 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 SAID AMOUNT, THE OWNER H EREBY AGREES TO EXECUTE A REGISTERED SALE DEED FOR LAND OF EQUIVALENT VALUE I N FAVOUR OF THDC. (III) IN THE EVENT THDC IS UNABLE TO DEVELOP THE PR OPERTY DUE TO REFUSAL/NON GRANT OF APPROVALS, CONSENTS, PERMISSION, LICENSES OR REVOCATION OF THE SAME BY THE APPROPRIATE STATUTORY AUTHORITY, THEN THDC MAY AT ITS SALE DISCRETION TERMINATE THIS AGREEMENT. IN THE EVENT THE AGREEME NT IS TERMINATED BY THDC, ALL THE LANDS REGISTERED IN THE NAME OF THDC AS PER THE TERMS OF THIS AGREEMENT UPTO THE DATE OF THE TERMINATION SHALL REMAIN WITH THDC AND THE BALANCE LANDS TO BE TRANSFERRED TO THDC AS PER THE TERMS OF THIS AGR EEMENT SHALL NOT BE TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL REFUND TO THDC THE ADJUSTABLE ADVANCE/EARNEST MONEY MENTIONED IN 49 CLAUSE 4.1(I) ABOVE WITHIN ONE MONTH OF SUCH TERMIN ATION. IN THE EVENT OF FAILURE OF THE OWNER TO REFUND THE SAID AMOUNT, THE OWNER H EREBY AGREES TO EXECUTE A REGISTERED SALE DEED FOR LAND OF EQUIVALENT VALUE I N FAVOUR OF THDC. (IV) THE OWNER SHALL HAVE THE RIGHT TO TERMINATE TH E AGREEMENT ONLY IN THE EVENT OF DEFAULT BY THE DEVELOPERS FOR MAKING THE P AYMENT IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT AND THE ALLOTMENT OF FL ATS WITHIN THE TIME 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 REGISTERED IN THE NAME OF THDC AS PER THE TERMS OF THIS AGREEMENT UPT O 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 B E TRANSFERRED BY THE OWNER IN FAVOUR OF THDC. UPON THE TERMINATION, THE OWNER SHALL FORFEIT THE ADJUSTABLE ADVANCE/EARNEST MONEY MENTIONED IN CLAUSE 4(I). 103 THE READING OF THE ABOVE CLAUSE WOULD SHOW THAT POWER OF TERMINATION HAS BEEN GIVEN IN MANY CIRCUMSTANCES TO THDC VIDE C LAUSE 14(I), (II) AND (III). THE POWER FOR TERMINATION BY THE OWNER HAS BEEN MEN TIONED IN CLAUSE 14(IV) ONLY. READING OF THIS CLAUSE WOULD SHOW THAT RIGHT TO TERMINATE WITH THE OWNER I.E. THE SOCIETY WAS AVAILABLE ONLY IN CASE OF DEFA ULT IN MAKING THE PAYMENT. THE ISSUE REGARDING DEFAULT FOR MAKING PAYMENT HAS ALRE ADY BEEN DISCUSSED BY US IN PARAS 84 TO 86 ABOVE WHILE DISCUSSING THE ISSUE OF WILLINGNESS ON THE PART OF THE TRANSFEREE TO PERFORM ITS PART OF THE CONTRACT WE HAVE ALREADY HELD THAT THERE WAS NO DEFAULT ON THE PART OF DEVELOPER I.E. THDC/H ASH IN MAKING THE PAYMENT, THEREFORE, THE ASSESSEE HAD NO RIGHT TO TERMINATE THE CONTRACT. IN ANY CASE WE FURTHER FIND THAT CLAUSE 20 OF THE JDA REFERS TO AR BITRATION AND IT IS CLEARLY PROVIDED THAT ALL THE DISPUTES UNDER IT SHOULD BE R EFERRED TO THE ARBITRATION. THEREFORE, IF THE SOCIETY HAD SOME GRIEVANCE IT WA S DUTY BOUND TO GIVE A NOTICE FOR APPOINTMENT OF AN ARBITRATOR TO THE DEVELOPER. IN THE ABSENCE OF SUCH NOTICE THE TERMINATION WILL NOT STAND SCRUTINY OF LAW. HER E IT IS ALSO PERTINENT TO NOTE THAT THOUGH IT WAS STATED THAT IRREVOCABLE POWER OF ATTO RNEY HAS BEEN REVOKED AND SOME DOCUMENTS HAVE BEEN FILED BEFORE US FOR REVOCA TION BUT CLAUSE 6.7 OF THE JDA WHICH WE HAVE REPRODUCED EARLIER CLEARLY PROVID ES THAT SUCH POWER OF ATTORNEY CANNOT BE REVOKED. WE REPRODUCE CLAUSE 6. 7 AGAIN WHICH IS AS UNDER: 6.7 THE OWNER SHALL EXECUTE AN IRREVOCABLE SPECIAL POWER OF ATTORNEY GRANTING ITS COMPLETE DEVELOPMENT RIGHTS I N THE PROPERTY IN FAVOUR OF THDC INTERALIA INCLUDING THE RIGHT TO RAISE FINANCE BY MORTGAGING THE PROPERTY AND REGIST ER THE CHARGE WITH THE COMPETENT AUTHORITY AND EXECUTE REG ISTERED 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 OU T OF ITS OWN WILL AND DISCRETION WITHOUT OBTAINING A SPECIFI C PRIOR WRITTEN CONSENT OF THDC OR ANY OF ITS DULY CONSTITU TED ATTORNEYS. 104 THE ABOVE CLEARLY SHOWS THAT THIS POWER OF ATTO RNEY COULD NOT BE REVOKED FOR ANY REASON WITHOUT OBTAINING SPE CIFIC PRIOR 50 WRITTEN CONSENT OF THDC/HASH. NO DOCUMENT SHOWING THE CONSENT OF THDC FOR REVOCATION OF THIS IRREVOCABLE POWER OF ATTORNEY HAS BEEN PRODUCED BEFORE US. WE FAIL TO U NDERSTAND THAT IN THE ABSENCE OF SUCH DOCUMENT HOW THE ASSESS EE CAN CLAIM THAT THIS POWER OF ATTORNEY HAS BEEN REVOKED. AS DISCUSSED EARLIER WHILE CONSIDERING THE LEGAL POSIT ION, WE WOULD AGAIN RECALL THE WORDS OF HON'BLE AUTHORITY FOR ADV ANCE RULING IN CASE OF JASBIR SINGH SARKARIA (SUPRA) WHEREIN AT PARA 33 OF THE DECISION WHILE DISCUSSING THE ISSUE IN RESPECT OF POWER OF ATTORNEY, IT WAS HIGHLIGHTED THAT EXECUTION OF IRRE VOCABLE POWER OF ATTORNEY IS OF SIGNIFICANT NATURE AND THE WORDS IRREVOCABLE ARE VERY IMPORTANT. THE EXPRESSION IRREVOCABLE I TSELF SHOWS THAT NORMALLY SUCH ATTORNEY CANNOT BE REVOKED. THE REFORE, 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) IT IS CLAIMED ON BEHALF OF THE ASSESSEE THAT JDA HA S BEEN CANCELLED AND THE DEVELOPER HAS BEEN ALLOWED TO RETAIN THE PROPERTY W HICH HAS ALSO BEEN CONVEYED TO DEVELOPER THROUGH TWO SALE DEEDS. IF THAT IS S O THEN WHAT WOULD HAPPEN TO THE BALANCE CONSIDERATION BECAUSE IN SUCH SITUATION THE ASSESSEE HAS RECEIVED CONSIDERATION OF ONLY ABOUT RS. 5 CRORESS PER ACRE BECAUSE THE ASSESSEE HAS REGISTERED LAND MEASURING 3.08 ACRES FOR RS. 15.48 CRORES THROUGH FIRST CONVEYANCE DEED, WHEREAS CONSIDERATION AS PER ORIGI NAL 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 S HOWN ANY EVIDENCE THAT IT HAS MADE THE CLAIM FOR RECEIPT OF BALANCE CONSIDERATION . THIS LEADS TO THE CONCLUSION THAT THERE WAS NO CANCELLATION OF THE JDA. 106 SOME ARGUMENTS WERE MADE BY BOTH THE PARTIES TH AT IF THE CONTRACT IS FINALLY STAND ABANDONED THEN WHAT WOULD HAPPEN. TH E CONTENTION ON BEHALF OF THE ASSESSEE IS THAT IF THE CONTRACT IS ABANDONED T HEN THE ASSESSEE WOULD HAVE PAID TAX IN THE YEAR OF TRANSFER AND WOULD BE LEFT WITH NO RECOURSE FOR RELIEF. THE CONTENTION ON BEHALF OF THE DEPARTMENT WAS THAT THE ASSESSEE COULD ALWAYS FILE REVISED RETURN OR MAKE A PETITION U/S 264 AND SOME RELIEF WAS POSSIBLE IN CASE OF THE ASSESSEE. HOWEVER, IF REVENUE FAILS TO TAX THE TOTAL CONSIDERATION IN THE YEAR OF TRANSFER THEN SAME CANNOT BE SUBJECTED TO TAX IN ANY OTHER YEAR. WE FIND THAT THIS QUESTION WAS SERIOUSLY CONSIDERED BY THE LD. A UTHORITY FOR ADVANCE RULING IN CASE OF JASBIR SINGH KATARIA (SUPRA) WHICH HAS BEEN RELIED ON BY BOTH THE PARTIES FOR VARIOUS ASPECTS. IN THAT CASE IT WAS OBSERVED AT PARA 39 AS UNDER: 51 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, THE PROPOSED VENTURE COLLAPSES FOR REASONS S UCH AS REFUSAL OF PERMISSIONS, THE DEVELOPER FACING FINANCIAL CRUNCH ETC. BY THAT TIME, THE OWNER WOULD HAVE RECEIVED ONLY A PART OF THE AGREED CONSI DERATION, BUT HE IS OBLIGED TO FILE THE RETURN SHOWING THE ENTIRE CAPITAL GAIN BAS ED ON THE FULL SALE PRICE WHETHER OR NOT RECEIVED DURING THE YEAR OF DEEMED TRANSFER. IN SUCH AN EVENTUALITY, HARDSHIP MAY BE CAUSED TO THE OWNER WHO WOULD HAVE PAID FULL TAX. NO DOUBT, SUCH A SITUATION COULD BE AVOIDED IF THE CONTENTION OF THE APPLICANT IS ACCEPTED. ON DEEP CONSIDERATION, HOWEVER, WE FIND THAT THE CO NSTRUCTION OF THE RELEVANT PROVISION SHOULD NOT BE CONTROLLED BY GIVING UNDUE IMPORTANCE TO SUCH HYPOTHETICAL SITUATIONS. NORMALLY, THE OWNER EXECU TES A POWER OF ATTORNEY OR DOES SIMILAR ACT TO LEFT THE TRANSFEREE TAKE POSSES SION 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/TRANSFEROR WILL NOT BE WITHOU T REMEDY. HE CAN FILE A REVISED RETURN AND MAKE OUT A CASE FOR EXCLUSION OR REDUCTI ON OF INCOME. HOWEVER, IF THE TIME-LIMIT FOR FILING A REVISED RETURN EXPIRES, THE DIFFICULTY WILL ARISE. IT IS FOR PARLIAMENT OR THE CENTRAL GOVERNMENT TO PROVIDE A R EMEDY TO THE ASSESSEE IN SUCH CASES. MOREOVER, THE OTHER SIDE OF THE PICTUR E AS DEPICTED IN PARAGRAPH 27 (SUPRA) SHOULD ALSO BE KEPT IN VIEW. HERE THE COMMENTS OF SHRI RAJARATNAM QUOTED AT PARA 5164 ABOVE ARE ALSO RELEVANT AGAIN: IT IS HARD ON THE OWNERS WHEN REQUIRED TO PAY TAX, WHEN HANDING OVER THE POSSESSION FOR PURPOSES OF CONSTRU CTION WITHOUT BEING ABLE TO ENJOY THE CONSTRUCTION, WHICH IS YET TO COMMERCE OR IN THE PROCESS OF CONSTRUCTION BEING PU T UP BY THE DEVELOPER, BUT THE SOLUTION LIES IN STATUTORY CLARI FICATION IN SUCH CASES. IN VIEW OF THE INCREASING SCALE OF SUCH DEV ELOPMENT AGREEMENTS TO SOLVE THE HOUSING PROBLEM IN THE CITI ES, A STATUTORY CLARIFICATION OR CIRCULAR IS OVERDUE. WE MAY MENTION HERE THAT NO DOUBT SOMETIMES AN ASSE SSEE MAY BE PUT IN A DIFFICULT SITUATION AND AS MENTIONED BY HON'BLE AUT HORITY IN CASE OF JASBIR SINGH SARKARIA (SUPRA) AS WELL AS LD. AUTHOR SHRI RAJARAT NAM IT IS FOR THE LEGISLATURE TO TAKE CORRECTIVE STEPS. HOWEVER, IT MAY NOT BE OUT OF PLACE THAT IF CONSIDERING THE DIFFICULTY THE INTERPRETATION GIVEN BY THE LD. COUN SEL OF THE ASSESSEE IS ACCEPTED THEN THE REVENUE MAY NOT BE ABLE TO TAX SUCH ASSESS EES WHEN THESE DIFFICULTIES ARE REMOVED. FOR EXAMPLE IN THE PRESENT CASE IF TO MORROW WHEN ALL PERMISSIONS ARE OBTAINED AND CONSTRUCTION IS COMPLETED AND IF N O TAXES ARE HELD TO BE PAYABLE THEN LATER ON ALSO THE ASSESSEE MAY NOT BE SUBJECTED TO ANY TAX UNDER THE HEAD CAPITAL GAIN BECAUSE THEN IT CAN BE EASI LY CONTENDED ON BEHALF OF THE ASSESSEE THAT THE TRANSFER HAS ALREADY TAKEN PLACE ON THE DATE WHEN IRREVOCABLE POWER OF ATTORNEY 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 DIFFICULTIE S MAY ARISE BUT IT WAS FOR THE PARLIAMENT OR THE GOVERNMENT TO PROVIDE REMEDY IN S UCH CASES AND JUDICIAL FORUMS CANNOT DO ANYTHING. THEREFORE, IN VIEW OF THE PROVISIONS OF SECTION 45 R.W.S. 48 WE ARE OF THE OPINION THAT SUBSEQUENT EVE NTS, IF AT ALL ANY WILL NOT MAKE ANY DIFFERENCE BECAUSE TOTAL CONSIDERATION RECEIVED OR ACCRUED HAS TO BE ASSESSED IN THE YEAR OF TRANSFER. WE MAY ALSO NOTE THAT IT WAS STATED THAT IRREVOCABLE POWER OF ATTORNEY HAS BEEN REVOKED BUT THE WORD IRREVOCABLE ITSELF 52 SHOWS THAT IN THE EYES OF LAW SPECIAL POWER OF ATTO RNEY COULD NOT HAVE BEEN REVOKED. IN VIEW OF THIS ANALYSIS, WE ARE OF THE O PINION THAT EITHER THE JDA HAS NOT BEEN CANCELLED OR IN ANY CASE THE SAME CANNOT B E CONSIDERED FOR DETERMINING THE TAXATION OF CAPITAL GAIN. ACCORDING LY THIS CONTENTION IS REJECTED. 108 THE NEXT CONTENTION OF THE ASSESSEE IS THAT EVE N IF THE WHOLE CONSIDERATION HAS TO BE TAXED THEN VALUE OF T HE 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 FO R THREE FLATS. WE FIND NO FORCE IN THESE SUBMISSIONS. THE ASSESSEE HAS FILED ALONG WITH THE WRITTEN SUBMISSIONS COPY OF THE ADDE NDUM OF AGREEMENT BETWEEN THDC AND HASH BY JOINT DEVELOPER (AT PAGE 265 & 266) AND THIS ISSUE IS DISCUSSED IN CLA USE 5 WHICH IS AS UNDER:- 5. CLAUSES 4.1, 4.2, 4.3 AND 4.4 ON THE PAGE NOS. 18 AND 19 OF THE AGREEMENT SHALL STAND AMENDED, MODIFIED AND SUBSTITUTED BY THE FOLLOWING:- 4.1 IT IS EXPRESSLY AGREED AND UNDERSTOOD BY AND BE TWEEN THE PARTIES HERETO (A) IN THE RATIO OF 72,28 BETWEEN THDC AND HASH I N CASE GROSS SALES PROCEEDS DOES NOT EXCEED RS. 1272 CRORE S; (B) IN THE RATIO OF 70: 30 BETWEEN THDC AND HASH IN CASE GROSS SALES PROCEEDS IS EQUAL TO RS. 1272 CROR ES; (C) IN ADDITION (B), IN THE RATIO OF 60: 40 BETWE EN THDC AND HASH IN RESPECT OF GROSS SALES PROCEEDS IN EXCESS OF RS. 1272 CRORES. IT IS AGREED THAT THE MINIMUM GUARANTEED AMOUNT FR OM THE GROSS SALES PROCEEDS FOR THDC AND HASH IS RS. 890.4 0 CRORES AND RS. 225.76 CRORES RESPECTIVELY. THE MINIMUM GUA RANTEED AMOUNT OF RS. 225.76 CRORES TO HASH INCLUDES RS. 58 .88 CRORES THAT SHALL BE EXPENDED BY THDC TOWARDS CONSTRUCTION OF 126 FLATS EQUIVALENT TO 2,83,500 SQ. FT,, WHICH FLATS A RE TO BE ALLOTTED IN THE NAMES OF THE MEMBERS OF THE SOCIETY OR OTHERWISE, AS THE CASE MAY BE, CALCULATED AS RS. 20 00 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/- P ER SQ. FT. SHOULD THE APPLICATION OF THE RATIO STIPULATED IN ( A) ABOVE RESULT IN HASH BEING ENTITLED TO A SUM GREATER THAN THE MI NIMUM GUARANTEED AMOUNT AND THDC BEING ENTITLED TO A SUM LESS THAN THE MINIMUM GUARANTEED AMOUNT, THDC SHALL-BE ENTITL ED TO THE ENTITLEMENT OF HASH WHICH IS IN EXCESS OF ITS MINI MUM, GUARANTEED AMOUNT UNTIL THDC ACHIEVES ITS MINIMUM GUARANTEED AMOUNT.-THE SAME IS ILLUSTRATED IN ANNEX URE I HERETO. 53 109 THE ABOVE CLEARLY SHOWS THAT HASH WAS ENTITLED TO TOTAL PROCEEDS OF RS. 225.76 CRORES OUT OF TOTAL PROCEEDS OF THE PROJECT WHICH WERE AGREED TO BE SHARED BY THDC AND HASH BUT THE PORTION OF HASH INCLUDES A SUM OF RS. 58.88 CRO RES WHICH WAS REQUIRED TO BE SPENT TOWARDS CONSTRUCTION OF 12 6 FLATS EQUIVALENT TO 283500 SQUARE FEET AREA WHICH WERE 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 REPORTS WERE QUOTED BEFORE US IN ONE OF THE CASES TO SHOW THAT V ARIOUS 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 CLE AR FROM THE ADDENDUM OF AGREEMENT IN TERMS OF TOTAL PROCEEDS OF 1272 CRORES. IN ANY CASE IF THE COST OF CONSTRUCTION IS RS. 2,000/-, THEN COST OF LAND WHICH HAS BEEN PAID TO THE SOCIE TY IS ALSO TO BE ADDED TO THE COST OF THE FLAT BECAUSE THIS PORTI ON OF CONSIDERATION IN ANY CASE WAS RECEIVED OR TO BE REC EIVED LATER BY THE SOCIETY IN CASH. CONSIDERING THE PRESENT MA RKET VALUE OF THE FLATS IN AND AROUND CHANDIGARH AREA WHICH IS RS. 4,000/- TO 12,000/- PER SQUARE FEET WE ARE OF THE OPINION T HAT VALUE OF THE FLAT AT RS. 4,500/- PER SQUARE FEET IS ABSOLUTE LY FAIR. IN ANY CASE M/S HASH HAS AGREED TO PURCHASE THE FLATS AT T HIS RATE FROM M/S THDC. IT MAY BE NOTED AS POINTED OUT BY T HE LD. DR FOR THE REVENUE SOME OF THE NEWS REPORT CLIPPINGS F ILED BY VARIOUS ASSESSEES CLEARLY SHOWS THAT FLATS WERE BO OKED IN THE TATA CAMLEOT (THIS WAS THE NAME WHICH WAS GIVEN T O THE PROJECT WHICH WAS TO BE DEVELOPED ON THE LAND OF TW O SOCIETIES) IN THE PRE LAUNCH OFFER IN THE RANGE OF RS. 7500 TO 8000 PER SQFT. IT IS A COMMON KNOWLEDGE THAT RATES IN PRE L AUNCH 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 FLATS ON MOS T REASONABLE BASIS. IN VIEW OF THESE OBSERVATIONS THIS CONTENTI ON IS REJECTED. 110 THE LD. COUNSEL FOR THE ASSESSEE HAD MADE SOME SUBMISSIONS ON THE ISSUE OF DEDUCTION U/S 54F. HE HAS POINTED OUT THAT THIS ISSUE HAS BEEN REJECTED WRONGLY BY CI T(A). HOWEVER, CAREFULLY PERUSAL OF THE GROUNDS OF APPEAL SHOW THAT NO GROUND IN RESPECT OF DEDUCTION U/S 54F HAS BEEN RAISED BEFORE US AND, THEREFORE, WE DECLINE TO ADJUDICATE THIS ISSUE AND ALL THE ARGUMENTS MADE IN THIS BEHALF ARE REJEC TED. THOUGH REFERENCE WAS MADE TO GROUND NO. 2.3 IN THIS REGARD . THE PERUSAL OF GROUNDS NO. 2.3 WOULD SHOW THAT REFEREN CE HAS BEEN MADE ONLY TO SECTION 54 AND SECTION 54EC. SECT ION 54 DEALS WITH DEDUCTION IN CASE THE ASSESSEE BEING AN INDIVIDUAL OR HUF, TRANSFERS THE RESIDENTIAL HOUSE AND IN CASE BEFORE US, THE ASSESSEE HAS TRANSFERRED THE PLOT. THEREFORE, IT CANNOT BE SAID THAT DEDUCTION U/S 54F AND 54 IS SAME. SINCE NO GROUND HAS BEEN RAISED FOR DEDUCTION U/S 54F, WE REJECT TH IS CONTENTION. 54 THEREFORE, FOLLOWING THE ABOVE, WE DECIDE THIS ISSU E AGAINST THE ASSESSEE. 12. THE THIRD ISSUE IS REGARDING EXEMPTION U/S 54F . THE ASSESSEE HAS CLAIMED THE DEDUCTION U/S 54 WHICH HAS BEEN SUMMAR IZED BY THE LD. CIT(A) IN DETAIL IN PARA 7.3 WHICH IS AS UNDER:- DEDUCTION U/S 54 RS. 23,91,579/- INVESTMENT IN HOUSE PROPERTY U/S 54 RS. 34,80,450/ - 13. BEFORE US, LD. COUNSEL FOR THE ASSESSEE TODAY S UBMITTED THAT DEDUCTION IN RESPECT OF THE SO CALLED FLAT WHICH WA S TO BE RECEIVED BY THE ASSESSEE SHOULD HE GIVEN. HOWEVER, HE CONCEDED THA T THIS ISSUE IS ALSO COVERED AGAIN THE ASSESSEE BY ORDER OF TRIBUNAL IN THE EARLIER GROUP OF CASES KNOWN AS CHARANJIT SINGH ATWAL & OTHERS IN IT A NO. 448/CHD/2011 (SUPRA). 14. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF CIT(A). 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT THIS ISSUE HAS BEEN ADJUDICATED BY LD. CIT(A) VIDE PARA 7.3.2 SAND 7..3.3. WHICH IS AS UNDER:- 7.3.2 THE RELEVANT PORTION OF QUESTION NO.3 OF QUESTIONNAIRE DATED 19.09,2011 WAS ALSO IT IS BROUGHT TO YOUR NOTICE THAT DEDUCTION U/S 54 IS NOT AVAILABLE AS CLAIMED AT RS. 23,91,579/- AS A RESULT OF SALE OF A PLOT. PLEASE EXPLAIN. THUS, THE ASSESSI NG OFFICER HAD NEVER ASKED ABOUT THE DETAILS OF THE INVESTMENT IN THE HOUSE OF RS. 34,80,450/-, DEDUCTI ON IN RESPECT OF WHICH WAS CLAIMED BY THE APPELLANT. THI S WAS PARTICULARLY REQUIRED TO BE DONE BY THE ASSESSI NG OFFICER BECAUSE HE HAS MADE ADDITION ON ACCOUNT OF CAPITAL GAIN IN THE HANDS OF THE APPELLANT. 7.3.3. THE APPELLANT HAS SUBMITTED DOCUMENTS REGARDING INVESTMENT IN THE SAID HOUSE, DEDUCTION I N RESPECT OF WHICH WAS CLAIMED U/S 54(ACTUALLY IS SHO ULD BE 54F AND THE SAME HAS BEEN CORRECTED SUBSEQUENTLY BY THE APPELLANT). THE ASSESSING OFFICER HAS NOT VERIFIED THE DETAILS OF INVESTMENT AND HAS MERELY S TATED THAT THE ADDITIONAL EVIDENCES SHOULD NOT BE ADMITTE D BECAUSE THE APPELLANT HAD NOT FILED THE SAME BEFORE THE ASSESSING OFFICER, BUT AS DISCUSSED ABOVE, THE 55 ASSESSING OFFICER HAD NEVER ASKED FOR THE DETAILS O F INVESTMENT IN THE SAID HOUSE PROPERTY. IN VIEW OF T HIS DISCUSSION, THE ADDITIONAL EVIDENCES PRODUCED BY TH E APPELLANT ARE NOW ADMITTED. AS PER THE DOCUMENTS F ILED BEFORE ME, THE APPELLANT IS PRIMA FACIE ELIGIBLE FO R DEDUCTION U/S 54F REGARDING INVESTMENT IN THE HOUSE . HOWEVER, THE ASSESSING OFFICER IS DIRECTED TO VERIF Y THE INVESTMENT IN PURCHASE OF THE HOUSE AND ALLOW DEDUCTION U/S 54F TO THE APPELLANT. GROUND OF APPE AL NO.4 IS ALLOWED. 16. FROM THE ABOVE IT IS CLEAR THAT WHOSOEVER DEDUC TION WAS CLAIMED WAS ALREADY ALLOWED BY THE CIT(A). AS FAR AS THE D EDUCTION IN RESPECT OF A FLAT WHICH WAS TO BE ALLOTTED BY M/S TATA HOUSING DEVELOPMENT COMPANY LTD, THIS ISSUE WAS EARLIER ADJUDICATED BY THE TRIBUNAL IN THE CASE OF CHARANJIT SINGH ATWAL & OTHERS VS. ITO (SUP RA) VIDE PARA 166 TO 169, WHICH ARE AS UNDER:- 166 GROUND NO. 13 READS AS UNDER: THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN UPHOLDING THE NON ALLOWANCE OF BENEFIT PROVIDED UNDER SECTION 54/54 F OF THE ACT AND CLAIMED ON THE AMOUNT RECEIVED WHI CH IS ARBITRARY AND UNJUSTIFIED. 167 AFTER HEARING BOTH PARTIES WE FIND THIS ISSUE H AS 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 AR GUED THAT THE APPELLANT IS ENTITLED TO DEDUCTION U/S 54F TO THE E XTENT OF INVESTMENT IN THE NEW ASSET, AS REINVESTMENT IN FLAT. FOR THE SAK E OF CONVENIENCE, 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), W HERE, IN THE CASE OF AN APPELLANT BEING AN INDIVIDUAL OR A HINDU UNDI VIDED FAMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY L ONG-TERM CAPITAL ASSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE APPELLA NT HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DA TE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WITHIN A PERI OD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HO USE (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAP ITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISI ONS OF THIS SECTION, THAT IS TO SAY,- 56 (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 CA PITAL 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 CAPIT AL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PRO PORTION AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDER ATION, 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 T HE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSE T; OR II) PURCHASE ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANS FER OF THE ORIGINAL ASSET; OR III) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE N EW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TR ANSFER OF THE ORIGINAL ASSET; AND B) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER TH AN THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHARGEABLE UNDER THE HEAD INCOME FROM HO USE 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 RE DUCED BY ANY EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION 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 ASSET 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 INS TANT 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 HA S BEEN INVESTED IN A NEW RESIDENTIAL HOUSE FOR ALLOWING BENEFIT U/S 54 F OF THE ACT. HENCE, 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 RE JECTION OF DEDUCTION UNDER 57 SZSECTION 54 / 54 F. THEREFORE, WE FIND NOTHING WRO NG 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 T HE ASSESSEE. 17. THE FOURTH ISSUE IS REGARDING CHARGEABILITY OF INTEREST U/S 234 B OF THE ACT AND WITHDRAWAL OF INTEREST U/S 244A(3). TH ESE ISSUES ARE CONSEQUENTIAL IN NATURE AND, THEREFORE, THE ASSESSI NG OFFICER IS DIRECTED TO CHARGE THE INTEREST AND / OR WITHDRAW THE INTERE ST IN ACCORDANCE WITH LAW. 18. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25/03/20 14. SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 25 TH MARCH, 2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR
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