TaxTMI 
TaxTMI 
2013 (9) TMI 229
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.... -do- Sh. Sarwan Singh Phillaur Jalandhar 8.9.2011 4. 472(Asr)/2011 -do- Sh. Kanwaljit Singh Lilly Jalandhar 17.6.2011 5. 13(Asr)/2013 -do- Sh. Raghunath Sahai Amritsar 8.11.2012 6. 187(Asr)/2013 -do- Smt. Rajwinder Kaurr Bhullar Jalandhar 01.01.2013 7. 480(Asr)/2012 -do- Sh. Ranjit Singh Brahampura Amritsar 5.11.2012 8. 08(Asr)/2013 -do- Sh. Jagdish Sawhney Amritsar 29.10.2012 9. 466(Asr)/2012 -do- Sh. Jagdish Sawhney Amritsar -do- 10. 63(Asr)/2013 -do- Satya Pal Saini Amritsar 30.11.2012 11. 33(Asr)/2013 -do- Dr. Rattan Singh Amritsar 08.11.2012 12. 34(Asr)/2013 -do- Dr. Baldev Raj Chawla Amritsar 01.11.2012 13. 162(Asr)/2013 -do- Sh. Tikshan Sood Jalandhar 01.01.2013 14. 277(Asr)/2013 -do- Sh. Ajit Singh Khokhar Jalandhar 01.01.2013 15. 338(Asr)/2013 2008-09 Sh. Balwinder Singh Bathinda 07.03.2013 16. 244(Asr0/2013 2007-08 Sh. Balbir Singh Miani Jalandhar 29.03.2011 17. 485(Asr)/2012 -do- Sh. Vir Singh Lopoke Amrits....
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....s and circumstances of the case, the learned CIA(A) has grossly erred in upholding the assumption of jurisdiction by A.O. under Section 147. 2. That sans a speaking order of A.O. disposing of the legal objections taken by the assessee against reopening of case under section 147, the impugned order ought to have been held as bad in law. 3. That order of the learned CIT(A), ostensibly being a most mechanical borrowal of facts and findings of some other case, deserves to be set aside on this very premise. 4. That in the given facts and circumstances of the case, the learned CIT(A) was not justified in upholding that capital gain of Rs. 1,77,35,810.00 was liable to tax in the year under appeal, on a totally erroneous and incorrect reading of the Joint Development Agreement qua the provisions of section 2(47) of the Income Tax Act, 1961. 5. That the reliance placed by learned CIT(A) on various judicial authorities, to uphold the impugned addition on account of capital gain, is not only misplaced but also i....
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....operty is dependent on the receipt of consideration and registration of the property. 2.3 That the learned Commissioner of Income-Tax (Appeals) has rejected the contention of the appellant that the assessing officer erred on facts and in law in not appreciating that actual physical possessing of the property was not handed over of part performance of the contract, in terms of section 53A of the Transfer of Property Act. 2.4 That the learned Commissioner of Income-Tax(Appeals) has rejected the contention of the appellant that the assessing officer erred on facts and in law in not appreciating that amount of Rs. 30 lacs received under the Agreement, were in the nature of advance received and not the actual sales consideration. 2.5 That learned Commissioner of Income-Tax (Appeals) has rejected the contention of the appellant that the assessing officer erred on facts and in law in alleging that the aforesaid transfer under the Agreement was not subject to any further condition/encumbrances. &nb....
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....e of sighing of the tripartite Joint Development Agreement ("The Agreement") itself, in terms of sub-sections (ii), (v) and (vi) of section 2(47) of the Act to which the assessee is not a party. 2.1 That the Ld. CIT (A) erred on facts and in law in not appreciating that the transfer of the property is dependent on the receipt of consideration and registration of the property by the assessee, which part is missing in this case. 2.2 That Ld. CIT(A) erred on facts and in law in not appreciating that actual physical possession of the property was not handed over even in part performance of the contract, in terms of section 53A of the Transfer of Property Act by the assessee. 2.3 That the Ld. CIT(A) erred on facts and in law in not appreciating the amount of Rs. 15,00,000/- received under the Agreement, were in the nature of advance received from society and not the actual sales consideration. 2.4 That the Ld. CIT(A) erred on facts and in law in appreciating the facts that the afore....
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....er appeal, on a totally erroneous and incorrect reading of the Joint Development Agreement qua the provisions of section 2(47) of the Income Tax Act, 1961. 5. That the reliance placed by learned CIT(A) on various judicial authorities, to uphold the impugned addition on account of capital gain, is not only misplaced but also illegal and arbitrary, when no such authority was confronted to assessee for rebuttal. 6. That the assessee's claim of deduction under section 54F ought to have been allowed by the learned CIT(A). 7. That the learned CIT(A) ought to have considered and allowed the assessee's claim that the impugned capital gain, if any, could be assessed only in the hand of the Society and not the assessee member. 8. That charging of interest under sections 234A & 234B has been wrongly confirmed. 9. That initiation of penalty under section 271(1)(C) has been wrongly confirmed. &n....
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....en opened by the Assessing Officer on the distates of his superior officer. 2. That the learned Commissioner of Income tax(Appeals), Amritsar has failed to appreciate that the reasons recorded by the Assessing Officer mentioned only escapement of Income of Rs. 30 lacs whereas the Assessee had offered Capital Gain at Rs. 24 Lacs in his return for A/year 2007-08 and that the Assessing Officer during re-assessment proceedings changes his stance to increase escapement of Income at Rs. 165 Lacs plus valuation of 2 flats of 2250 Sq. Ft. each while dealing with objections of the assessee. 3. That the learned Commissioner of Income Tax (Appeals), Amritsar has grossly erred in confirming the addition of Rs. 3,36,68,666/- made by the Assessing Officer on account of alleged Capital Gains. 4. That both learned Commissioner of Income Tax (Appeals), Amritsar and the learned Assessing Officer have failed to appreciate that the developer had not performed and was not willing to perform his part of contract and Sec. 53A of TPA could not be made ....
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..../or 2(47)(vi). 1.2 That Ld. CIT(A) has erred in facts and law in upholding that section 53A of Transfer of Property Act is applicable to the transaction. 1.3 That Ld. CIT(A) has erred in making addition by way of long term capital gain consideration itself in not real and unascertainable. 1.4 That Ld. CIT(A) erred in taking into computation of capital gains the value of flats at Rs.4500/- per square feet. 1.5 That the Ld. CIT(A) erred by not treating Rs.30 lakhs as advance for A.Y.2007-08 and ignoring the amount offered for capital gains for A.Y.2008-09. 1.6 That the Ld. CIT(A) has erred in upholding that developer has not committed any default in payment of consideration while developer has failed to make payments as stipulated in the agreement which specifically provides that time is the essence in the performance of the parties' respective obligations. 1.7 That ld. CIT(A) ....
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....; 2. That the order is bad in law and on the facts of the case. 3. That the appellant prays that the addition of Rs.35352923/- on account of capital gain may kindly be deleted." 11. In ITA No.63(Asr)/2013, the assessee has raised following grounds of appeal: "1. That the assessment order as well as the order of the CIT(A) are both against the facts of the case and untenable in law. 2. That the AO has grossly erred in making the addition of Rs.3,41,91,676/- as capital gain. Furthermore, the CIT(A) has also grossly erred in confirming the same without applying his mind and as such the addition made may be deleted in as muchas there is no capital gain accrue to the assesse during the year under consideration. 3. That the authorities below did not appreciate that till now the assessee has not received anything more in this account for the simple reason that the matter is subjudice before the P & H High Court and the assessee is still not....
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.... 2. That the Ld. CIT(A) has erred in law and facts in confirming the addition of Rs.17721000 under the head Capital Gain. 3. That the Ld. CIT(A) has erred in law and facts in confirming the order of the A.O. u/s 144 of the Act because there is proper compliance to the notices issued by the A.O. u/s 148 and 142(1)/143(2) which the AO has himself mentioned in the assessment order passed u/s 144 on page of the said order. 4. That the Ld. CIT(A) has erred in accepting the order passed by the AO u/s 144 as correct because the assessment is passed under wrong section in the true facts of case. So the assessment order passed by the A.O. is wrong alenitio and deserve cancellation instead of confirmation as the assessee has shown the sale money received in the original return and thus notice u/s 148 of the Income Tax Act was invalid. 5. That the Ld. CIT(A) has erred in law and facts in not accepting the investment of Rs.3300000 received against the plot is invested in the construction of residential ho....
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....f the flat at Rs.10125000 as capital gain because if we accept the value as sale value and the same is invested in the construction of residential house on which no capital gain tax is payable u/s 54F of the Act." 13. In ITA No.34(Asr)/2013, the assessee has raised following grounds of appeal: "1. That the order of ACIT Circle-1, Amritsar and confirmed by the CIT(A), Amritsar creating additional demand of Rs.46,49,460/- by reopening the case u/s 147/148 for A.Y.2007-08 on the basis of the triplicate joint development agreement entered with M/s. Hash Builders Pvt. Ltd. Chandigarh and Tata Housing Development Company Limited (THDC Limited) Mumbai is illegal, unjust and against the facts of the case. 2. That the worthy CIT(A) while rejecting the appeal failed to appreciate that the Agreement was cancelled on 13.06.2011 by passing a Resolution in the General House Meeting of the Society which was entered on 25.02.2007 with Hash Builders Pvt. Ltd. and THDC Limited and also cancelled the power of attorney before the Assistant Registrar by the President of the Society.  ....
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....hat the agreement has not been considered properly by the A.O. and failed to understand that only part of the land was transferred. 13. That the appellant only transferred the development rights in that property and not the land itself, which the office failed to appreciate 14. That there is no occasion to tax notional amount of furnished flat for which valuation cannot be ascertained and no one can say about the future due to certain formalities of legal nature. 15. That the reply submitted by the assessee during assessment has not been considered properly because there was no transfer of property but only surrender of development rights. 16. That the assessee also deprived of the exemption u/s 54EC since no funds available. Similarly, exemption u/s 54F cannot be availed. 17. That the entire order passed is on the basis of wrong interpretation of agreement. Thus, section 2(47)(ii) and section 2(47)(vi) is not applicable read ....
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....ppreciating the registration deeds executed by Society in which it has been clearly mentioned that possession of the property has not been given and is being given only to the extent for which registration deed was being executed and thus conditions which were required to hold joint Development Agreement as Agreement for sale had never been fulfilled. 9. That the entire hypothetical addition is based on an agreement relied upon in parts by the A.O. which in fact has not been implemented till date and as such the addition made and upheld by the CIT(A) on suspicion, surmises and conjectures merits deletion. 10. That the agreement relied upon by A.O. have to be read as whole and not in parts which has been so done by the A.O. as clauses relating to transfer of ownerships, rights termination, possession have been brushed aside while only the consideration clause as such the entire addition made and upheld by the CIT(A) merits deletion. 11. That Ld. CIT(A) has not been justified in not appreciating the in upholding the addition of Rs....
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....mitted that two flats, made part of sale consideration, were non-existent, his upholding the taxation of capital gain, computed on a sale value, comprised mainly of the value of said two flats, is self contradictory. 6. That the ld. CIT(A) was not justified overlooking various judicial authorities relied upon by assessee, on a facial distinction drawn by him. 7. That the assessee's alternate claim of deduction u/s 54F ought to have been allowed by the ld. CIT(A). 8. That the Ld. CIT(A) wrongly rejected the assessee's claim that the impugned capita gain, if any, could be assessed only in the hands of the Society and not the assessee member. 9. That the assessee's claim not to tax the impugned gain on the principles of mutuality involved in the transactions, has been wrongly rejected by the CIT(A). 10. That charging of interest u/s 234A & 234B has been wrongly confirmed. 11. Th....
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....ment of consideration of Rs.15,00,000/- and Rs.18,00,000/- in February, 2007 and in April, 2007 in lieu of the agreement. These amounts were deposited in the bank under Capital Gain Scheme, renewed TDR by the bank and after withdrawing this amount invested the same in construction of residential house at Tanda. 4. That disallowance of claim u/s 54F of the Act because the said TDR was renewed under normal STDR when the initial TDR was invested under capital gain scheme and the bank renewed the said TDR under normal TDR, deduction u/s 54F cannot be denied by the fault committed by the bank. 5. That the assessee has not received the remaining consideration RS.49,50,000/- and a purposed flat till today and the ITO taxed that amount. 6. That the assessee is deprived of availing the deduction u/s 54F & 54EC of the Act by taxing amount of RS.49,50,000/- and Rs.1,01,25,000/- value of the purposed flat. 7. That the provisions of sec. 2(47)(v) is silent where full amount of agreed consid....
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....ur of the assessee. 5. That both the learned Commissioner of Income Tax(Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have grossly erred in not appreciating the fact that the Capital Gain could arise to the Society/allottee only on Sale Price of Rs. 30,00,000/- on prorate execution of registered Sale Deeds for land of equivalent value being 3.08 Acres as mentioned in Paras 4.1(1),(ii) of the Joint Development Agreement dated 25.02.2007 due to part performance of JDA. 6. That both the learned Commissioner of Income Tax(Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have failed to appreciated that since Hash Builders Pvt. Ltd. and THDC Ltd. did not make payments due under the JDA & did not carry out their part of the JDA within the time required, the society/allottee had terminated the JDA under clause 14(iv) of the JDA vide resolution dated 13.06.2011 of the Society. 7. That both the learned Commissioner of Income Tax (Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have failed to a....
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....ther that capital gain is to be worked on the basis of prorata sale and registration thereof as per the terms of the Joint agreement deed. The appellant showed the correct capital gains on the portion of sale deed executed and registered on 25.02.2007 of 72 Sq. Yds during the year under appeal out of his share of 500 Sq. Yds. 3. That the worthy commissioner of Income-tax (Appeal) further erred on facts and in law in holding that possession of immovable property given by the society to THDC is transfer within the meaning of clause (vi) of Section 2(47) read with section 53A of the transfer of property Act, 1882 ignoring the facts altogether that possessing of the property was given by the society to THDC for development purpose only. The relevant provisions of section 2(47) as also the provisions of section 53A of the Transfer of Property Act, 1882, of the facts of this case, have been misconstrued by the Learned. CIT(A) to confirm the ITO's order. 4. That the worthy Commissioner of Income Tax(Appeals) failed to appreciated that the Agreement entered into by the appellant was subj....
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....e Ld. ITO has raised the demand of Rs. 4733375/- against total amount of 3300000/- received by the appellant which is against the principle of natural justice of law as agreement has been terminated and there is no chance to get any more benefit in near future. 11. It is therefore prayed that the addition made by Ld. Assessing Officer and confirmed by worthy Commissioner of Income tax( Appeals) may kindly be deleted. 12. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal with the permission of the court. 21. In ITA No. 51(Asr)/2013, the assessee has raised following grounds of appeal: "1. That the learned Commissioner of Income Tax(Appeals), Amritsar has failed to appreciated that both the issue of notice U/s 148 by Income Tax Officer, Ward 5(4), Amritsar and subsequent reassessment order are legally untenable. 2. That the learned Commissioner of Income Tax (Appeals), Amritsar has failed to appreciate that the Incom....
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...., Amritsar has grossly erred in rejecting the alternative claim of the assessee U/s 54F of Income Tax Act, 1961 in respect of the Flats alleged to have been allotted to the assessee. 9. That both the learned Commissioner of Income Tax (Appeals), Amritsar has grossly erred in confirming the action of the Assessing Officer in charging Interest U/s 234A at 5,23,702/- and interest U/s 234-B at Rs. 5,63,227/- 22. In ITA No.52(Asr)/2013, the assessee has raised following grounds of appeal: "1. That the learned Commissioner of Income Tax(Appeals), Amritsar has failed to appreciated that both the issue of notice U/s 148 by Income Tax Officer, Ward 5(4), Amritsar and subsequent reassessment order are legally untenable. 2. That the learned Commissioner of Income Tax (Appeals), Amritsar has failed to appreciate that the Income Tax Officer, War 4(1), Amritsar had no basis to come to the conclusion that the assessee was the legal heir particularly when the payment under the alleged Joint Development Agreement (JDA) dated 25.02.2007 were r....
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....nbsp; 9. That both the learned Commissioner of Income Tax (Appeals), Amritsar has grossly erred in confirming the action of the Assessing Officer in charging Interest U/s 234A at 5,23,702/- and interest U/s 234-B at Rs. 5,63,227/-" 23. In ITA No. 56(Asr)/2013, the assessee has raised following grounds of appeal: "1. That the learned Commissioner of Income Tax(Appeals), Amritsar has failed to appreciated that both the issue of notice U/s 148 by Income Tax Officer, Ward 5(4), Amritsar and subsequent reassessment order are legally untenable. 2. That the learned Commissioner of Income Tax (Appeals), Amritsar has failed to appreciate that the Income Tax Officer, War 4(1), Amritsar had no basis to come to the conclusion that the assessee was the legal heir particularly when the payment under the alleged Joint Development Agreement (JDA) dated 25.02.2007 were received by the three grandsons of Smt. Harjit Kaur. 3. That the learned Commissioner of Income Tax(Appeals), Amritsar has grossly erred in confirming the add....
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....nd interest U/s 234-B at Rs. 5,63,227/-." 24. In ITA No.58(Asr)/2013, the assessee has raised following grounds of appeal: "1. That on the facts and in the circumstances of the case the Learned Commissioner of Income Tax(Appeals) has erred in confirming the addition made by Assessing Officer for Rs. 35343197/- as Long Term Capital Gains. 2. That the Learned CIT(A) has further erred in confirming the above addition of Rs. 35343197/-on account of Long Term Capital gains just on presumption, suspicions, surmises and conjectures and in absence of any materials or evidence found against the appellant. He was just relied on the Tripartite Sales Agreement between Punjabi Coop. House Building Society Ltd. Harh Builders Pvt. Limited and the THDC Ltd., which still need to be executed. So, the addition made needs to be deleted. 3. That the Learned CIT(A) has further erred in making the above addition of Rs. 35343197/- in Assessment Year 2007-08, in which the assessee has taken some advance only and contract was not yet completed. Thus, ....
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....g order, should not have been overlooked by the Ld. CIT(A). 4. That the Ld. CIT(A) misdirected himself in law and on facts in confirming the taxation of notional capital gain of Rs. 79,10,337/- by wrongly upholding the transfer of land on the date of execution of the Joint Development Agreement with the developers. 5. That the ld. CIT(A) ought to have read the Joint Development agreement in totality, so as not to infer the accrual of capital gain on the very date of execution of the said agreement. 6. That the Ld. CIT(A) wrongly rejected the assessee's claim that the impugned capital gain, if any, was assessable only in the hands of Society and not the assessee member. 7. That charging of interest u/s 234A & 234B has been wrongly confirmed. 8. That initiation of penalty u/s 271(1)(c) has been wrongly confirmed. 9. That the order under appeal is wholly against law and facts of....
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....na vs. ITO Ward VI(1), Ludhiana and in ITA No.448/CHD/2011 and others vide order dated 29.07.2013 (supra) vide para 27 to 44. The facts in the case of Charanjit Singh Atwal (supra) in the light of legal position in para 27 to 44 are discussed vide para 45 to 51. The Ld. counsel appearing for the assessee in the case of Charanjit Singh Atwal (supra) has raised mainly following contentions which have been dealt by Chandigarh Bench of ITAT in its order dated 29.07.2013 (supra) as under: i) Vide para 52 to 58 of the order, first contention was that possession was not given by the Society because according to him as per clause 2.1 of the JDA, the possession of the property was to be handed over simultaneously to the execution and registration of JDA and since the JDA was not registered, therefore, the possession was not given. It was held by considering various contentions of Ld. Counsels and Ld. DR and cases of various Courts of law relied upon that by considering the purpose of insertion of clause (v) and clause (vi) of section 2(47) and various clauses of Power of Attorney and JDA, it becomes absolutely clear that the Society has ha....
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.... vs. CIT 260 ITR 491 is not applicable. It was held that the Bench has already discussed the implication of the decision in the case of Chaturbhuj dwarkadas Kapadia (supra) in para 33 to 38 of its order and accordingly this contention was also rejected. via) Vide para 77 to 86, being the contention that it is necessary for invoking of section 2(47)(v) of the Act to comply with the provision of section 53A of the Transfer of Property Act to the extent that there should be willingness on the part of the transferee to perform his part of the contract. It was held that it cannot be said that the builders were not willing to perform their part of the contract in view of clauses 4.1(iv) read with clause 26(v) vii. Vide para 87 and 88, being the seventh contention that revenue wrongly held that even clause (vi) of section 2(47) is applicable. It was held that the developer i.e. THDC/HASH has purchased the membership of the members in the society which now lead to the enjoyment of the property and in that technical sense, clause (v) of the section 2(47) is applicable. &nbs....
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....jected. x. Vide para 108 & 109, being the tenth contention that even if the whole consideration has to be taxed then value of the flats cannot be taken at Rs.4500/- per sq. feet. In view of agreement between HASH and THDC consideration has been shown at Rs.2000/- per sq. feet for 126 flats whereas it is Rs.4500/- per sq. feet for three flats. It was held that AO has estimated the value of flats on most reasonable basis. Also vide para 110 there was contention with respect to deduction u/s 54F of the Act. It was held that no ground was raised in the appeal. Though reference was made in ground No.2.3 with reference to section 54F and 54EC which are on different facts and therefore deduction u/s 54F and 54 are not the same. Accordingly, the contention was rejected. Also the said issue has been dismissed in the case of Sh. Surinder Singh vs. DCIT in ITA No.1071/CHD/2011 vide para 166 to 169 for the reasons mentioned therein. 31. Vide para 111 to 113, it was contended that capital gain should have been taxed in the hands of Society which is legal owner of the land. It was held that the fact stands admitted by the assessee because as....
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.... Chandigarh Bench have been dismissed. For the sake of convenience, we reproduce the facts in the case of Sh. Charanjit Singh Atwal vs ITO in ITA No. 448(CHD/2011 and the findings of the ITAT, Chandigarh Bench on the issues in the appeal vide paras 17 to 115 as under: "17 Brief fact s of the case are that while making discreet enquiries in the cases of housing societies, it was gathered that housing society consisting of 95 present and Ex-MLAs of Punjab Legislative Assembly is owner of the 21.2 ac res of land in village Kansal , Distt . Mohali. The village Kansal shares its boundary with capital city of Chandigarh. On 25.2.2007 the Housing Society of MLAs entered into a tripartite Joint Development Agreement (herein aftter referred as "JDA") with HASH Builders (P) Ltd (hereinafter referred to "HASH") and M/s Tata Housing Development Company Ltd. (hereinafter referred as "THDC"). By virtue of this tripartite agreement it was agreed upon among these parties that the Society which is owner of 21.2 acres of land, shall transfer its land to THDC/HASH in lieu of monetary consideration and consideration in kind. As per the agreement e....
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....ands over the original title deeds of the Property as mentioned in the list Annexued hereto and marked as Annexure IV and physical , vacant possession of the Property has been handed over to THDC simultaneously to the execution and registration of this Agreement to develop the same as set out herein. " 18 It was further noticed that till date a Member having 500 sqyd plot in Society had received Rs . 33.00 lakhs each and a Member having 1000 sqyd plot had received Rs. 66.00 lakh. The assessee was also a Member and President of the Society and was owner of a plot measuring 1000 sqyd. Therefore, as per JDA, he was to receive Rs. 1.65 crores as monetary consideration and two furnished flats as consideration in kind and the cost of the same as per Assessing Officer was Rs. 2,02,50,000/ - and total consideration would be Rs. 3,67,50,000/ - 19 According to the Asses sing Officer since the Society has assigned all rights in 21.2 ac res of land belonging to the Society in terms of JDA to THDC/HASH and also handed over the physical vacant possesion of the property to THDC/HASH, therefore, the assessee became liable to capital gain tax on his share of consideration. Accordingly a lette....
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....t measuring 2250 sq. feet as a part of the consideration Here the following points need to be considered. 1.) The flat shall be given only after the full land i.e. 500 sq. yard, has been transferred to the buyer. 2) There is no provision in the agreement to allot proportionate flat or make equivalent proportionate payment. So for the present transaction where only a part of the land has been transferred, no consideration on account of flat is available. So no question of any tax liability arise. 3) It may kindly be appreciated that the developer has not even ' acquired the land till date and has not even obtained permission to start development. So there is no question of any construction of fiats now or near future that is to say, there is no capital asset in existence as on date for which the national value can be considered. 4) Clause No 14 is termination clause of the agreement under reference (copy enclosed), very clearly states the rights of THDC to terminate the agreemen....
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....g your observation of having accepted the position of transfer, please note that we understand that transfer of property is only to the extent of the land transferred by way of sale deed. 3. It is very clear from the agreement that no transfer of property have taken place only the development right has been transferred. Therefore, there is no transfer of property under section 53A of Transfer of property Act, 4. Clause 9.3 of the agreement is very clearly stating that the ownership has not been transferred. in view of our submission you are requested to complete the Capita! Gains Tax in accordance with our return. The assessee wants to be personally heard and make further submission. You are requested to kindly adjourn the case till 29-12-2009." 11. Vide the above said letter the assessee requested to be personally heard however on 29.12.2009 he did not appear. The counsel of the assessee filed written submission which is reproduced as under: 1. In para 6,1 of your letter dated 7.12.2009, y....
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.... agreement, it is very clearly mentioned that the owner shall execute in favour of M/s THDC Ltd: the sale-deeds to complete the aforesaid transaction. So it is evident that the execution of sale-deeds is an integral part of the transaction and the transaction shall remain incomplete. if the sale deeds are not executed. 4. The clause 13 very clearly states that the rights transferred relate to Development/construction work and M/s THDC Ltd shall not do anything which adversely affect the right of the owner to receive the entire consideration. 5. Keeping in view the conditions in the agreement and to the fact that M/s THDC Ltd: M/s Hash Builder Ltd have not done any development work on the land under consideration till date in pursuance of the agreement dated 25.2.2007 or in furtherance of the said agreement, no transfer should be considered to have been taken place in respect of the land which is not yet transferred, if the views of the department are held to be correct for the sake of discussion, the following situation will arise: &nb....
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....e reasons recorded is enclosed. It may be appreciated that the same amount can't be taxed twice". On 29,12,2009 again the counsel of the assessee filed a letter and submitted as under: "This being referred to the captioned proceedings Regarding your query about the cost of acquisition is Rs. 11 lacs which is paid as per following dates. Receipt No, 307 09-11-01 5,04,000/- Receipt No. 426 12-02-04 7,00,007/- Out of above amount Rs. 1,00.000/- was refunded to the assessee and Rs, 4000/- was towards membership charges and other funds of the society. In continuation to our earlier reply submitted, we once again reiterate that the possession given by the assessee is only to the extent of land sold by way of registered sale deed. There are certain addendums to the agreement which are not presently available with the assessee & cannot be submitted immediately." 20 The Asses sing Officer after considering the submissions did not find any force in the same and observed as under : (i) There is no force in the argument that the JDA was only an agreement to sell and not a s....
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....; (iv). There was no force in the contention that the amounts received under the said agreement were advances received and not the sale consideration because total consideration was structured in the JDA and the consideration was to be received as per clause 4(iv) of the JDA. In fact the asses see has himself shown the receipt and returned the same as capital gain which contradicts these argument s of the assessee. As per Section 45 of IT Act, income- tax was to be charged under the head "capital gain" on transfer of a capital asset and shall be deemed to be the income of the previous year in which transfer took place. The year of transfer is the crucial year and not the time of the receipt . (v). There was no force in the contention that the value of the flat should not be included because the asses see has not received such flat , because the flat was to be received by each Member of the Society was part of the entire consideration as per clause 4.2 of JDA. In any case as per Section 45 r .w.s . 48, its full value of consideration received or accrued which has to be considered. ....
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....mbay High Court in case of Chaturbhuj Dwarkadas Kapadia V. CIT, 260 ITR 491 (Bom) and extracted the following conditions which were required to be satisfied to cover the case u/s 2(47) ( v) r .w. s. 53A of T.P. Act . (a) There should be contract for consideration (b) It should be in writing (c) It should be signed by the transferor or on his behalf (d) It should pertain to transfer of immoveable property (e) Transferee has in part performance of contract has taken possession or part possesion of the property. (f) Lastly, transferee should be ready and willing to perform his part of contract. 23 If the above conditions were satisfied then the transfer can be said to have taken place for the purpose of Section 45. According to him as per the decision of Chaturbhuj Dwarkadas Kapadia V. CIT (supra) once the possession or part possession of the property was given by the transfe....
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....ial year 2006-2007. The para 2.1 clearly states that " the owner hereby hands over the original title deeds of the property as mentioned in the list Annexed hereto and marked as Annexure IV and physical, vacant possession of the property has been handed over to THDC simultaneously to the execution and registration of this agreement to develop the same as set out therein". Thus possession in part performance of contract has been handed over to the transferee without any ambiguity in the previous year 2006-07 itself. (e) An irrevocable transfer has thus been made which is not dependent on any condition to be fulfilled. (f) Further coining to "consideration" part. As per Para 4,1 Rs,6,00,000 per holder of 1000 Sq,Yards has to be paid by transferee on account of earnest money , which has been paid to the assessee, Further as Per Para 4.1 (ii) clearly states that in lieu of. Rs, 12,00,000 per plot holder of 500 Sq. Yards and Rs.24,00,000 per plot holder of 1000 Sq. Yards is being paid on the execution of agreement against' which the Society on behalf of members will transfer 3.08 Acre....
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....s of society in this part performance of contract have assigned full rights in the favour of transferee in the previous year 2006-07 itself and surrendered allotment letters to enable the Society to enter into tripartite agreement with HASH and THDC. (l) Most importantly physical and vacant possession of whole of the land of 21.2 acres has been handed to M/s Tata Housing development company Ltd. in the previous year 2006-07, Same is clear from Para 2.1 of the Joint Development Agreement and discussed in detail in preceeding paragraphs. (m) Thus the "transfer" would be deemed to happen in the previous year 2006-07 itself. (n) It has already been discussed in detail that registration of conveyance deed and receipt of entire consideration is not at all important in the year in which deemed transfer u/s 2(47)(v) of IT Act has taken place. (o) Further the Agreement is clear and there is no ambiguity regarding irrevocable rights being given to the transferee. As regards certain petty....
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....l of the assessee made detailed submissions. Further writ ten submissions has also been filed. He carried us through the facts of the case by referring to various documents in paper book and also case laws as well as commentary by, "Mulla -Dinshaw Frederick Mulla" on the interpretation of Section 53A of Transfer of Property Act . The submissions can be summarized as under: IFirst of all he referred to provisions of section 2(47) (v) of IT Act and Section 53A of T.P. Act and submitted that following conditions emerged for attracting these provisional a. There must be contract of transfer for consideration for an immovable property; b. Contract must be in writing c. Terms necessary to constitute transfer should be ascertainable with reasonable certainty. d. The transferee must have in part performance taken the possession of the property or part thereof from the transferor and if already in possession, continues in the possessio....
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....which was a permissive license to develop the project and not as performance of the contract. Reference was made to Section 52 of the Indian Easement Act, 1882 which reads as under : "52. "Licence" defined "where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property all the grantor, something which would, in the absence of such right, be unlawful and such right does not amount to an easement or an interest in which the property , the right is callled a license. " It was contended that Section 2(47) (v) r .w. s. 53A of T.P Act refers to legal possession whereby the transferee has a legal right to enter upon and exercise rights of possesion i .e. control over the property. In this connection he referred to the observation of Authority for Advance Ruling in case of Jasvir Singh Sarkaria, 294 ITR 196. He particularly referred to para 26 to 28 of the judgment. He further referred to clause "F" (page 17 of the paper book) i.e, clause 2.1 of the JDA (page 24 of the paper book) and submitted that content s of these clauses will entirel y show that possession w....
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....nsferee must have performed or willing to perform his part of the contract. .It was argued that willingness of the transferee to per form his part of the contract is not an empty formality and it has to be absolute and unqualified. Thus willingness cannot be conditional or contingent on subsequent events. In the JDA following obligat ions were to be complied by the transferee - (a) As per clause "J" of the JDA the Government approvals were to be obtained by the transferee i .e. THDC/HASH. (b) As per clause 3.1 of JDA al l bui lding, plans and designs and drawings etc. for construction of the project were to be prepared by the transferee i .e. THDC/HASH. (c) Clause 4.1 and 7.10 of JDA provided regarding timely payment of consideration. (d) Clause 7.9 of the JDA provided that THDC/HASH shall obtain all approvals and commence construction within 6 months of hand over of final plans. (e) Clause 8.4 provided obl igat ion to take timely approval and clause 8.6 provided for payment of various statutory charges in respect of development charges, license fee and external default etc . Further to above obl igation, time was of essence in the contract which becomes clear fro....
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..... VI I IThe ld. counsel of the as ses see also submitted that as per clause 4.1 of the JDA transfer / sale of 21.2 acres of land was to be made in favour of THDC/HASH on a prorate basis corresponding to pro- rata payments received by the Society and respective Members of the Society from THDC/HASH by execut ing the sale deed. This clearly shows that transfer was wholly dependent on timely receipt of the consideration. As pointed out earlier only two sale deeds could be executed and whatever payments have been received, have been offered for taxation under the head "Capital gain" .However , the Assessing Officer has subjected to tax whole of the consideration under the JDA as capital gain which is totally uncalled for particularly in view of the fact that an agreement has been subsequently terminated and this action of the Assessing Officer amounts to taxation of notional sum which is not permissible under the law. Under the various provisions of the Act , only real income can be taxed which has been earned by the assessee and no notional income can be subjected to tax. In this regard, reliance was placed on the following decisions of the Hon'ble Supreme Court : Shoor j i Val ....
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....if clause (5) was referred to it can be seen that reference has been made to two prices ie. Rs. 2000/sqf t for 126 flats and Rs . 4500 per sqft for three flats. This price is notionally fixed by two developers and did not reflect the price of the flats. In any case the Developers have not been able to obtain necessary approval from the concerned authorities, therefore, construction of such flats has not commenced and no flats have been constructed and allotted to the assessee, therefore, notional value of the same could not be adopted and taxed in the hands of the assessee. At best the Assessing Officer could have taken the price of Rs . 2000 per sqft . XI It was contended that if the value of the flat was to be recognized for the purpose of computing the capital gain, the corresponding deduct ion u/s54F of the Act should have been al lowed particularly in view of Circular No. 472 dated 15.10.1986. In this regard he relied on the fol lowing decisions: CIT V. Sardarmal Kothar i and another , 302 ITR 286 (Mad) CIT V. R.L. Sood, 245 ITR 727 (Delhi ) CIT V. Mr s. Hi l la J .B. Wadia, 216 ITR 376 (Bom) Mr s. Seetha Subramanian V ACIT, 59 ITD 94 (Mad Bench) Usha Vaid v ....
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....and unequivocally granted and assigned in perpetuity all the rights to develop / construct / mortgage / lease / license, sell and transfer the property. Clause 6.7 of the JDA provides for execution of irrevocable special power of attorney through which rights of development were granted in favour of THDC/HASH and right to raise finance by mortgage in the property and to register the charge with competent authority and further power of sale etc. were also given through this power of attorney. It was agreed that the Society would not revoke such power of attorney without obtaining a specific prior written consent of THDC/HASH. The above clauses clearly show that pos ses s ion of the property was handed over to THDC/HASH and further rights to mortgage and sale of the property was also given. The combined reading of various clauses in the JDA and power of attorney show that :- (I) All the Members of the Society expressly and willingly had surrendered their respective plots in favour of the Society and the Society was authorized to sell / transfer the entire land in favour of THDC/HASH for a consideration which was set out in the clauses of JDA. The society was also authorized ....
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....case of Jasbir Singh Sarkar ia 294 ITR 196 2) Chaturbhuj Dwarkadas Kapadia v CIT 260 ITR 491 (Bom. ) 3) C.Ravi Vs DCIT in 325 ITR 417 (Ker ) 4) CIT v Dr. T.K. Dayalu 202 Taxman 531 (Kar. ) 5) D. Kasturi v CIT & Anr 323 ITR 40 (Mad. ) 6) CIT V Dhi r & Co. Colonisers (P) Lta 288 ITR 561 (P&H) (III) The Ld. CIT DR further submitted that assessee's case apart from being covered under clause ( v) of section 2(47) is also covered by clause (vi) of section 2(47) of the Act . Clause ( vi ) is appl icable in cases where any transaction is entered into which has the effect of transferring and enabling the enjoyment of immovable property. In this regard he relied on the decisions of Mumbai Bench 'D' of the Tribunal in Ms Rubab M. Kazerani v JCIT 91 ITR 429(Mum.) , ITAT Hyderabad 'A' Bench in D. Achutha Rao Vs ACIT 106 ITD 388 (Hyd) and ITAT Delhi Bench 'D' Bench in ACIT v Smt . Pushpa Devi Jain 93 ITD 289 (Delhi ) . (IV) He further submitted that clause (v) & ( vi ) of section 2(47) of the Act were inserted w.e. f . 1.4.1988 by Finance Act , 1987. Before that, passing of the title in the property was necessary condition to constitute a transfer under the Act in view of th....
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....s been done perhaps to collect Revenue. In any case, the same cannot have a impact on the clause (v) of section 2(47) . This is so because clause (v) clearly employs language by using the expression "part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act " . The Legislature intentionally not employed the expression "in part performance of contract as defined under section 53A of Transfer of Property Act " . Therefore, it is nature of contact which is similar to the nature of contract u/s 53A of the Transfer of Property Act which is relevant to section 2(47) (v) . In any case Hon'ble Supreme Court in the case of CIT Vs Podar Cement (P) Ltd 226 ITR 625 has Clearly held that 'principle of common law, the Transfer of Property Act and the Registration Act were not conclusive for interpretation of provision of Income Tax Act on the question of ownership of the property. If consequent to the amendment in section 53A of the Transfer of property Act , the registration of Agreement was considered as one of the essential ingredient then section 2(47) ( v) would become redundant. The Income Tax Act cannot ....
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....r of sanction of the project at different levels vigorously. The copy of the order of Hon'ble Punjab & Haryana High Court and Hon'ble Supreme Court fild at pages 172 to 174 of the paper book are on the issue of land falling within catchment area of Sukhna lake and litigation in this case is being vigorously followed by developers . The assessee has not led any evidence to show that either the HASH or THDC have shown reluctance to take the various steps required for execution of project. The Ld. CIT DR also contended that it was argued on behalf of the assessee that developer have not made the payments as agreed in the JDA, which is not correct . In this connection, he referred to clause 4 (iv) which clearly states that payment of Rs. 31,92,75,000/ - was to be made to the owner and or respective members of the owner within six months from the date of execution of this agreement or within two months from the date of approval of plan / design and the grant and drawings of final license to develop whereupon the construction can commence whichever is later . This clearly shows that payments was to be made on happening of two events and the time limit was to be applied on the event takin....
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....08, then a subsequent event taking place in 2011 will not have any effect on such transfer . It has been contended through written submis ions that total consideration of the property was 2,37,03,75,000/ - which was cal culated 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/ - The above total consideration would be enhanced figure because total consideration received and or agreed against the sale of property by the Members is required to consider the value of flats which were contracted to be received by the Members. On the basis of above calculation, the consideration per acre of land would come to about Rs. 11.18 c rores whereas Society had registered a sale deed for land measuring 3.08 acres for only Rs. 15.48 crores whereas the actual consideration should be Rs. 34.43 crores. This only shows that value of the flats to be received was not reflected in such sale deed. Now, if it is believed that contract was cancelled and Developer was allowed to retain the land which has already been registered in the name ....
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....he possession, therefore, there is no question of executing the documents at the time of cancellation of the agreement for reversing the possession. As no possession was given, therefore, there is no question of taking the back possession. He further submitted: (a) that normal rules of interpretation should be applied to understand the meaning of clause (v) and (vi) of Section 2(47) and this is not a fit case for invocation of Heydon's Rule. He submitted that lot of emphasis has been laid by the ld. DR for the revenue on para 2.1 of JDA to prove that the possession was handed over. However, a careful reading of this para would show that what was contemplated through this para, was to hand over the possession on the execution and registration of the agreement. When an agreement is read it has to be read in whole and therefore, it may not be proper to ignore the word "Registered". (b) He also contended that lot of emphasis was given on the irrevocability clause in respect of special Power of Attorney which is not correct because once the JDA is terminated, irrevocable Power of Attorney would come to an end automatically. (c) He contended that simply saying that the cancellat....
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.... of computat ion 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 exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto: 30 Again plain reading would show that capital gain would be computed by considering the full value of consideration whether received or accruing as a result of the transfer . Therefore, it is not only the consideration received which is relevant but the consideration which has accrued is also relevant . 31. The expression 'transfer' has been defined u/ s 2(47) of the Act which reads as under : - 2 (47) ["transfer", in relation to a capital asset, includes,- (i) the sale , exchange or relinquishment of the asset ; or (ii) the extinguishment of any rights therein ; or (iii) the compulsory acquisition thereof under any law ; or (iv) in a case where the asset is converted ....
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....nt of property rights through what is commonly known as Power of Attorney arrangements. The practice in such cases is adopted normally where transfer of ownership is legally not permitted. A person holding the power of attorney is authorized the powers of owner, including that of making construction. The legal ownership in such cases continues to be with the transferor." 32 Before insertion of the clause ( v) & ( vi ) to section 2(47) of the Act , the position of law was that unless and until a sale deed was executed for transfer of immovable property, the same could not be construed as transfer for the purpose of charging capital gain tax. This was particularly so in the light of various judgments particularly the judgment of Hon'ble Apex Court in the case of Alapati Venkat ramian 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 transfer is the effective conveyance of the capital asset by a transferor to the transferee. Delivery of possession and agreement to sell by itself could not constitute conveyance of the immovable property. In the meantime apart from this decision a practice came into....
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....er Floreat was given an irrevocable license to enter upon the assessee's share of property and after Floret investment have obtainedall necessary approvals, the Floret was entitled to demolish various buildings for settling the claims of the tenants . Under clause 14 of the agreement , the assessee was ent it led to receive proportionate rent till the payment of last installments and till that time assessee was bound to pay all outgoings . Under clause 20 of the Agreement , it was agreed that sale shall be completed by execut ion of conveyance, however , till the mat ter was adjudicated by the Hon'ble High Court , no conveyance was executed. Pursuant to this agreement , Floreat obtained various permis sions namely ( i ) clearance from CRZ Authority dated February 7, 1996; (ii) letter from ULC for redevelopment of property dated April 26, 1995. Other permis sions were also obtained during the financial year ending March 31, 1996 relevant to assessment year 1996- 97. By Mar ch, 31, 1996, Floreat had paid almos t the entire consideration expect for a small sum of Rs. 9,98,000/ - . However, the commencement certificate permitting construction of the building was issued on November 15, ....
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....at capital gains was taxable in the year in which such transactions were entered into even if the transfer of immovable property is not effective or complete under the general law. In this case, the test had not been applied by the Department . No reason had been given why that test had not been applied, particularly when the agreement in question, read as a whole, showed that it was a development agreement . Once under clause 8 of the agreement a limited power of attorney was intended to be given to the developer to deal with the property, then 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 ques t ion of substantial performance of the contract thereafter would not arise......" 34. The Hon'ble Court referred to clauses ( v) & ( vi ) of section 2(47) and made the fol lowing observations at page 499 of the repor t : "........ The above two clauses were introduced with effect from April 1,1988. They provide that " transfer " includes ( i ) any transaction which allows possession to be taken/ retained in part per formance of a contract of the nature referred to in s....
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....nnection, 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 in general law. They are spread over a period of time. They contemplate various stages. The Bombay High Court in various judgments has taken the view in several matters that the object of entering into a development agreement is to enable a professional builder / contractor to make profits by completing the building and selling the flats at a profit. That the aim of these professional contractors was only to make profits by completing the building and, therefore, no interest in the land stands created in their favour under such agreements. That such agreements are only a mode of remunerating the builder for his services of constructing the building (see Gurudev Developers v. Kurla Konkan Niwas Cooperative Housing Society [2003] 3 Mah LJ 131). It is precisely for this reason that the Legislature has introduced section 2(47)(v) read with section 45 which indicates that capital....
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.... on particularly by subordinate Tribunal s and Courts is the ratio of a particular judgment given 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 ( supra) does not show that the date of agreement itself constitute the transfer. Again there is no force even in the contention that in that case it was ultimately decided that capital gain taxes is chargeable in Assessment year 1999-2000 because of the reasons given in above noted paras particularly because the Revenue itself never invoked the provisions of section 2(47) ( v) of the Act and held it to be taxable in As sessment year 1996-97. No doubt in that case ultimately it was held that capital gain was in assessment year 1999-2000 but Court had made it very clear that this is first time that law is being laid down and guidelines are being issued which means that there was a confusion earlier . Clauses (v) & (vi) to section 2(47) were introduced in the year only in 1998. Perhaps Court took a lenient view because of these reasons and held that capital gain was taxable in Assessment year 1999-2000. It is quite cl....
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.... took and sell the dwelling units out of developer's share and collect the money for the same. However , finally sale deeds could be executed only after the owner received their share of constructed area. Three months later, a supplementary agreement was entered on September 15, 2005 between the assessee and other co-owner s and Developers through which it was agreed that owners will sell their 16% share in the built up area to the Developer or its nominee for consideration of Rs. 42 crores. A sum of Rs. 2 crores was received. This collaboration agreement and balance of Rs. 40 crores was payable by the Developer to the owners in six installments from March 06, 2008. The installments could be extended subject to payment of interest and fur ther subject to maximum extension of three months. There were various other clauses whi ch are not relevant for our purposes . The quest ion arose whether capital gain accrue / arise to the assessee during the financial year 2006-07 relevant to assessment year 2007-08 or during financial year 2007-08 relevant to assessment year 2008-09. 40. On the above, the Hon'ble Authority after refer r ing to the provisions of section 45 and obser ved as un....
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....oduction of clauses ( v) & ( vi ) and also referred to paras 11.1 & 11.2 of the Board Circular No. 495 (which we have already discussed earlier). The Hon'ble Authority has discussed various implications of clause ( v) of section 2(47) and also implication of section 53A of the Transfer of Property Act as well as observations of Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia v CIT ( supra) . The Authority observed that to understand this provision properly meaning of 'possession' has to be understood properly and went on to discuss the meaning of term 'possession, and how the same is to be understood in the context of clause ( v) . These are very important observations and have been discussed in most elucidated 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 understood in the context of clause (v) The next question is, in what sense we have to understand the term "possession" in the context of clause (v) of section 2(47). Should it only mean the right to exclusive possession-which the transferee can maintain in hi....
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....thing for and on account of someone else. In such a case the latter is in possession by the agency of him who so holds the thing on his behalf. The possession thus held by one man through another may be termed mediate, while that which is acquired or retained directly or personally may be distinguished 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 concurrent 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 could not be in possession of the same thing at the same time. As a general proposition this is true : for exclusiveness is of the essence of possession. Two adverse claims of exclusive use cannot both be effectually realized at the same time. Claims, however, which are not adverse, and which are not, therefore, mutually destructive, admit of concurrent realization. Hence, there are several possible cases of duplicate possession. 1. Mediate and immediate poss....
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....llow this situation to linger for long as the process of transfer of flats to the prospective purchasers will get delayed. At the same time, the other side of the picture cannot be over-looked. There is a possibility of the owner with the connivance of the transferee postponing the payment of capital gains tax on the ostensible ground that the entire consideration has not been received and some balance is left. The mischief sought to be remedied, will then perpetuate. We are, therefore of the view that possession given to the developers need not ripen itself into exclusive possession on payment of all the instalments in entirety for the purpose of determining the date of transfer. While on the point of possession, we would like to clarify one more aspect. What is spoken to in clause (v) of section 2(47) is the "transaction" which involves allowing the possession to be taken. By means of such transaction, a transferee like a developer is allowed to undertake development work on the land by assuming general control over the property in part performance of the contract. The date of that transaction determines the date of transfer. The actual date of taking physical possession or th....
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....shed by the applicant. It authorizes the developer : (i) to enter upon and survey the land, prepare the layout plan, apply for renewal/extension of licence, submit the building plans for sanction of the appropriate 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 water, sewage disposal and electricity connections. The developer is also authorized to borrow money for meeting the cost of construction on the security and mortgage of land falling to the developer's share. The other clauses in the GPA are not relevant for our purpose. The GPA unequivocally grants to the developer a bundle of possessory rights. The acts of management, control and supervision of property are explicitly mentioned. It is fairly clear that the GPA is not a mere licence to enter the land for doing some preliminary acts in relation to the development work. The power of control of the land which is an incidence of possession as explained supra has been conferred on the developer under this GPA. The developer armed with the GPA cannot be r....
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.... 2006. In case of failure to do so the agreement shall stand terminated. Therefore, obtaining the "letter of intent" was the crucial factor. It has been explained in the decision that the "letter of intent" basically is a license issued by the Director of Town and Country Planning, Haryana which gives 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 intention 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 development agreement but the same has to be inferred only when the possession has been handed over by the transferor to the developer which can be inferred from the documents e.g. Power of Attorney. After above discussion Hon'ble authority has summarized the decision in para 41 which is as under: "The following is the summary of conclusions: 1. Where the agreement for transfer of immovable property by itself does not provide for immediate transfer of possession, the date of entering into the agreement cannot be considered to be the date of tra....
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....laced at page 58 to 65 of the paper book. In the Executive committee it was decided to appoint Hash who was Acting alongwith the joint developer THDC as joint developer on the terms and conditions to be mentioned in the JDA. It was further resolved that member owing plot of 500 sqyd would receive a consideration of Rs . 82,50,000/ - each to be paid in four installments by Hash directly in favour of the members and one flat with super area of 2250 sqf to be constructed by THDC. The members who held the plot of 1000sqyd were to receive a consideration of Rs . 1,65,00,000/ - and two flats consisting of 2250sqft to be constructed by the THDC. It was further resolved to enter into a JDA with THDC/HASH. It was also resolved to execute irrevocable Power of attorney by the Society in favour of THDC f or this purpose. This resolution was ultimateyy ratified in the General Body meeting held by the Society on 25.2.2007. Pursuant to the above resolution, tripartite JDA was executed (copy of the same is available at page 15 to 54 of first paper book). Through recitation clause it has been mentioned that owner is in possession of land measuring about 21.2 acres of land which has come in the purv....
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....he list Annexed hereto and marked as Annexure IV and physical, vacant possession of the property has been handed over to THDC simul taneous to the execution and registrat ion of this agreement to develop the same as set out herein. It is hereby agreed and confirmed that what is stated in the recitals hereinabove, shall be deemed to be declarations and representations on the part of the Owner as if the same were set out herein verbatim and forming an integral part of the agreement . 2.2 The Project shall comprise of development / construction of the Property into the premises as permis sible under Punjab Municipal Bui lding Bye- laws/Punjab Urban Development Authority or any other Competent Authority by the Developer at their own cost and expense. The Project shall be developed as may be sanctioned by the concerned local authority i .e. Depar tment of Local Bodies, Punjab/Punjab Urban Planning and Development Author ity (PUDA) or any other Competent Authority. 2.3 The owner hereby irrevocably and unequivocally grants and as signs all its Development Rights in the property to THDC to develop the property and under take the pro....
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....ereby under take and assure the owner that they shall use the title deeds only for the purpose of furtherance of the Project in the manner that it does not adversely effect the Owner /Allottee in any manner what soever . " 49 Clause 10 describes the consent given by the Society to THDC for raising finance for development and completion of project . Clause 11 talk s about formation of maintenance Society for the project after its completion. Clause 13 talks about transfer of rights which reads as under : "13 Transfer of Rights The owner herein i .e. The Punjabi Coop House Building Society Ltd. along with all its ninety six (96) members have given their express, free and clear consent in writing in the form of an Affidadit /No Objection Certificate/Consent Letter whereby the Developers have been allowed to develop the property in accordance with the Project and that THDC shall be ent it led to transfer the rights obtained under this agreement to any third party and to get the development / construction work completed on such terms and conditions as THDC may deem ....
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....luding the right to raise finance by mor tgaging the property and regis ter the charge with the Competent Author ity and execute registered sale deeds ) as set out in Clause 4.1 (ii) , (iii) , ( iv) and (v) and the Owner confirms, under takes, declares and binds itsel f not to revoke the same for any reason whatsoever out of its own will and discretion without obtaining a specific prior written consent of THDC or any of its duly const ituted attorneys. " Through this Power of Attorney various powers have been given like to assign, file, amend etc. various plans, designs to represent before various authorities , to appoint architect, Lawyers . Some of the specific clauses relevant , are extracted below: (j) To negot iate and agree to any/or to enter into agreement (s) to construct / sell and to under take construct ion/sale of the Premises on the Property or any portion thereof with/ to such persons( s) or body and for such consideration and upon such terms and conditions as the Attorney deem f it . (n) To enter upon the Property either alone or with others for the purpose of development ,....
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....nsferees, lessees, licensees of the Premises, monies/price and/or consideration and/or maintenance charges and to sign and execute and/or give proper and lawful discharge for the receipts. (bb) To execute from time to time all the writing, agreement, deeds etc . in respect of the premises which maybe constructed on the Property and also to execute and sign conveyance, transfer or surrender in respect of the Property or any part thereof . (cc) To sign, execute and register the conveyances or assignments and/or Power of Attorney's and/or other documents and/or agreements and/or any other writings in respect of the Property in part or full and/or the Premises constructed thereon or any part thereof in favour of any person as the Attorneys may determine including in favour of any individual and/or legal entitles and/or Cooperative Society and/or Limited Company and/or any other entity that may be formed for such purpose. (dd) To issue letter of lien/NOC' s and to sign documents on behalf of the Owner as required by the prospective buyers/ lending ins t ruc t ions to create a charge on the allotted premises . (gg) To look afte....
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....that the developer was authorized to enter upon the property for not only for the purpose of development but other purposes al so. THDC was author i zed to amalgamate the projec t with any other project in the adjacent area or adjoining area as per clause (t) of the special Power of Attorney. If the possession was never given to the developer by the Soc iet y then how the developer could amalgamate the projec t with another projec t which may be acqui red lat ter in the adjoining area. Through clause (w) THDC was authorized to hand over the possesion of property or portion thereof to the authority to whom the same is required. In large Housing Societ y Projec ts sometimes Munic ipal authorities takes some portion of land for the purpose of roads, park s or other general ut i l it y purposes l i ke instal lat ion of electricity t ransformers and before sanct ioning the plans the developer is required to under take that such por t ions of land would be given for such a common purpose. If possesion was not given then how THDC was author i zed to hand over such land or por t ions thereof which have not been ident if ied in the JDA out of the total land. Simi lar l y through clause ( y)....
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....urvey the land, prepare layout plans, submit building plan for sanction with the appropriate authorities to control, manage and look after and supervise the property, to obtain water and sewerage, disposal and electricity connection. In that case the developer was authorized to mortgage the property to obtain money for meeting the cost of construction on security and mortgage of land falling only to the developer's share. In that case it was held that GPA was not a l icense to enter upon for doing some preliminary Acts in relat ion to development of work but the power to cont rol the land has also been conf i rmed. It has also been noted that the agreement described the Power of Attorney as irrevocable and extra declaration to that effect in the Power of Attorney is not without significance. In case before us, many more powers have been given to THDC in addition to powers which have been described in that judgment and Power of Attorney has been described as irrevocable in clause 6.7 of JDA. Therefore, it is clear that the assessee's plea that the possession was to be given only at the time of registration of the JDA, is not correct. Once irrevocable power was given then it cannot b....
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....suppress the evasions for the continuance of the mischief and pro private commando and to add force and life to the cure and remedy according to the t rue intent of the makers of the Act pro bono public. " There is now the further addition that regard must be had not only to the existing law but also to prior legislation and to the judicial interpretat ion thereof. " 58 Going by the Heydon's Rule of interpretation if we analyze the purpose of clause ( v) of Section 2(47) then it would emerge that law before mak ing the amendment was that capital gain could be charged only if a transfer has been effected and transfer was interpreted by various Courts including the decision of Hon'ble Supreme Court in case of Alapati Venkat ramian V CIT, 57 ITR 185 (SC) that proper conveyance of the property has been made under the common law. The mis chief was with regard to transfer in the sense that there was common pr Actice that properties were being transferred in such a manner that transferee could enjoy the benefit of the property without execut ion of the conveyance deed. Thirdly we need to examine the remedy which was insertion of clause (v) and (vi) so that cases of giving possesion ....
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.... in common; just as they may owe it in common. The concurrent possession of the owner who can exercise possession right to a limited extent and for a limited purpose and that of the buyer /developer who has a general control and custody of the land can very well be reconciled. " 61 In fur ther discussion in para 26 to 28 of the above 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 concurrent possession. Mere recitation in the sale deed to the effect that the Society was owner of and in possesion of land measuring 21.2 acres, does not show that the Society was having Actual possession. What the Society was having is only ownership right and the possesion was only concurrent as the possessary right. Further it is a standard clause in the conveyance deed and it does not prove or indicate anything except that a portion of land measur ing 3.08 acres, has been sold /conveyed to the developer. In the light of this position, this contention is rejected. 62 W....
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.... be the income of the same previous year in which the transfer had taken place. Two aspects may be noted at this juncture. Firstly, the expression used is "arising" which is not to be equated with the expression "received". Both these expressions and in addition thereto, the expression "accrue" are used in the Income-tax Act either collectively or separately according to the context and nature of the charging provision. The second point which deserves notice is that by a deeming provision, the profits or gains that have arisen would be treated as the income of the previous year in which the transfer took place. That means, the income on account of arisal of capital gain should be charged to tax in the same previous year in which the transfer was effected or deemed to have taken place. The effect and ambit of the deeming provision contained in section 45 has been considered in decided cases and leading text books. The following statement of law in Sampath Iyengar's Commentary (10^th Edition- Revised by Shris. Rajaratnam) brings out the correct legal position : "Section 45 enacts that the capital gains shall by fiction 'be deemed to be the income of the previous year in which the ....
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....f "transfer" is not necessary for the purpose of computing capital gains." Further the expression arising has been defined in the Advanced Law Lexicon by P. Ramanatha Aiyer edited by Y.V. Chandrachud, Former Chief Justice of India: "The words "Arising or accruing" describe a right to 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 Development Trust Ltd. AIR 1986 S.C 1805, 1807." The expression "accrual of income" has been defined in the same Lexicon as under: "Accrual of income. E.D Jassoon & C. Ltd. V Ld. Commissioner of Income Tax, AIR 1954 S.C 470 quoted - Income may accrue to an assessee without the actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. Bhogilal V Income Tax Ld. Commissioner, AIR 1956 Bom 411, 414 (Income Tax Act (11 of 1992) Ss....
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....an be read. We find no force in this content ion. It is well known that section 53A of the Transfer of Property Act was passed on equitable doctrine so as to protect the taking over or retention of the possesion by the transferee. It was not a source by which title of immovable property could be acquired. Section 53A of TP Act read as under : - 53A. Part performance.- Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable 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 part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that the contract, [***] where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in forc....
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....f MAT provision what is the meaning of past losses or unabsorbed depreciation. It was found that in explanation to section 115J clause (iv) , the following expression was used: - " (iv) the amount of the loss or the amount of 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 sub section (i) of section 205 of the Companies Act , 1956 (1 of 1956) are applicable. 71 The Hon'ble Apex Court referred to the Principles of Statutory Interpretation by Shri G.P.Singh and extracted following piece: "Section 115J, Explanation clause (iv) , is a piece of legislation by incorporat ion. Deal ing with the subject, Justice G.P. Singh states in Principles of Statutory Interpretat ion (7th edition, 1999) . Incorporat ion of an earlier Act into a later Act is a legislative device adopted for the sake of convenience in order to avoid verbat imreproduction of the provisions of the earlier Act into the lat....
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.... the Act would become redundant in the sense that registration of agreement would again be made compulsory but since properties were being sold in the market on "power of attorney" basis through unregistered agreements which would make this provision redundant. This position we have already discussed earlier while discussing the Heydon's Rule in the interpretat ions of this clause. Further the issue of interpretation of clause (v) and amendment to section 53A of the Transfer of Property Act came for consideration before the Mumbai Bench of the Tribunal in the case of Suresh Chander Aggarwal vs ITO 48 SOT 2010. The Tribunal discussed this issue at page 7 and after quoting the provisions of section 2(47) and also section 53A before and after amendment as wall as para Nos . 11.1 to 11.2 of the Board's Circular No. 495 dated 22.9.1987 obser ved as under : - "The above clearly shows that there was certain situation where properties were being transferred without registration of transfer instruments and people were escaping tax liabilities on transfer of such properties because the same could not be brought in the definition of "transfe....
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.... of these four flats, two were purchased directly from the Builders, Malabar Industries Pvt. Ltd., and two were purchased by its sister concerns which were later purchased by the assessee. The possession of the flats was taken after full payment of consideration. The flats were let out. The assessee contended that the rental income from these flats was assessable as "income from other sources" because the assessee was not the legal owner because the title of the property had not been conveyed to the Co-operative 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 performance of the nature referred to in section 53A, such person shall be deemed to be the owner. It was further observed that for all practicable purposes the assessee was the owner and possibly there cannot be two owners of same property at the same time. In fact, the amendments to section 27 were made later on but were taken into cognizance on the basis of above principle and ultimately it was held as under: &....
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....to be recognized and if all the ingredients of transfer have been completed, then such transfer has to be recognized. Merely because the particular instrument of transfer has not been registered will not alter the situation. This position is further strengthened by the fact that legislature itself has inserted clause (v) to section 2(47) and while referring to the provisions of section 53A, reference has been made by stating that contracts in the nature of section 53A should also be covered by the definition of "transfer". Therefore, in our humble view, the amendment to sec. 53A of the Transfer of Property Act, whereby the requirement of the documents not being registered has been omitted, will not alter the situation for holding the transaction to be a transfer u/s.2(47)(v) if all other ingredients have been satisfied." 74 Thus, it is clear that non registration of agreement cannot lead to the conclusion that provision of section 2(47) ( v) is not applicable. Similar view has been taken by ITAT Cochin Bench of the Tribunal in case of G.Sreeni vasan Vs DCIT 28 Taxmann. com 200 (Coch. ) and ITAT Pune Bench in the case of Mahesh Nemi chandra Ganeshwade v ITO 21 Taxmann.com 136 (Pu....
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....de, though it is not pointed out in what respect the transferee has failed to perform his part but it has been observed that the facts of the case shows that transferee has not per formed his par t of the contract . 80 The third judgment relied upon by the Ld. Counsel for the assessee is in the case of DCIT v Tej Singh (supra) . In that case land was acquired by the government and the matter went for litigation. Dur ing the pendenc y of litigation, the assessee entered into a Development agreement with a Developer 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 take clearance from the government in the matter of de notification of the land. It was held that since the land was under compulsory acquisition and no compensation has been received, therefore, there could not be anycapital gain tax u/ s 2(47) (iii) which deals with the compulsory acquisition. It was further observed that assessee could not have given possession unless and until the land was de notified. Since Acts of the case are different than the case in hand and therefore, same are not r....
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....like conditions, blockades, embargoes, insurrection, Governmental directions, riots , strikes, acts ofter rorism, civil commotion, lock-outs, sabotage, plagues or other epidemic s, acts of God including fire, floods, volcaniceruptions, typhoons, hurricanes, storms, tidal waves, earthquake, landslides, lightning, explosins and other natural calamities , prolonged failure of energy, Court orders / injunctions, charge of laws , action and / or order by statutory and / or government authority, third party actions affecting the development of the Project , acquisition / requisition of the Property or any par t thereof by the government or any other statutory authority and such circumstances affecting the development of the project (Event of For ce Majeure) . iii) Any Party claiming restriction on the performance of any of its obligations under this agreement due to the happening or arising of an Event of Force Majeure hereof shall notify the other Party of the happening or arising and the ending of ceas ing of such event or circumstance with three (3) days of determining that an Event of Force Majeure has occurred. In the event any Party anticipates the happening of an Event of Force....
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.... matter has been passed by the competent authority, perhaps, because of the interim order passed in the PIL which has been clarified by the Hon'ble Supreme Court by order dated 31.1.2012 permitting the concerned authority under the different statutes governing the matter to exercise theirrespective jurisdictions in accordance with law. Insofar as the Wild Life (Protection) Act is concerned, it appears that the rejection has been made by the Chief Wild Life Warden who, the respondents claim, is merely a recommending authority and is required to forward his recommendation to the Central Government . As the rejection under the Wild Life (Protection) Act has been made by an authority not competent to do, the promoters of the project have sought a review of the order which is still pending for the same reason(s) as noticed above. 4. On these facts we are of the view that it would be prudent on our par t to take the view that the issue with regard to clearance/ sanction under the two enactments i .e. Environment (Protection) Act and Wi ld Life (Protection) Act is presently pending and as the promoters of the project have submit ted themselves to the jurisdiction of the authorities und....
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....(Protection) Act and Envi ronment (Protection) Act is not a contentious issue, and as we have already held that the process of grant of such clearances is pending before the appropr iate authorities under the respective Acts, the same will now have to be brought to its logical conclusion keeping in mind our observat ions and directions contained hereinabove. 83 The combined reading of the above paras in the order of Hon'ble High Court clear ly shows that Developer THDC/ HASH i .e. transferee have made theirs sincere ef for ts for obtaining the necessar y permiss ions /sanctions which were required under the JDA. However, some of the sanctions could not be taken in time because of the litigation by way of PIL but since none of the party was liable to the other party in view of the clause 26 dealing with FORCE MAJEURE it cannot be said that Developer was not willing to per form his par t of contract . In any case no specific evidence has been shown us to prove that THDC / HASH were declining to perform particular obligation provided in JDA. In view of this discussion, it cannot be said that transferee i .e. Developer THDC/HASH is not willing to perform his part of contract. ....
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....e in view of the pending litigation. The clauses of force majeure came into operation and therefore, it cannot be said that the developer is not willing to perform its part of the contract . In any case there is no defaul t on the part of the developer as payment was not yet due as per clause 4( i ) (iv) of JDA. 86. This position was informed to the Society by letter dated 4.2.2011 by HASH Builder, copy of which has been filed at pages 23 & 24 of the paper book dealing with the additional evidence. Through this letter it has been clearly stated that since permission is pending from the Ministry of Environment and Forest Department and therefore constructions could not commence. These permissions were pending because of the PIL filed by Shri Aalok Jagga before the Hon'ble Punjab & 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 it cannot be said that they were not willing to perform their part of the contract on this aspect . Therefore, this contention is rejected. 87 Seventh contention is that revenue wrongly held that even clause (vi) of Section 2(47) i....
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....deration which is arising on such transfer, has to be taxed. Section 48 clearly talks about full consideration received or accruing as result of transfer. This aspect we have already discussed in detail at paras 64 to 68. 90 Second aspect of this contention was that if consideration which has not been received was to be taxed then the assessee would be deprived for claiming exempt ion u/s 54 and 54EC. As obser ved 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 person is supposed to know the consequences of the denial of such benefits. However, if the section is interpreted in the manner suggested by the ld. counsel of the assessee then no person would pay capital gain tax on transfer of a property. This will be clear from a simple example. Let us assume if "A" sells the property to "B" for a consideration of Rs. 100 crores and receive only a consideration of 1.00 c rore and it is mentioned in the transfer instrument that balance of consider....
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....house property". Sector 23 prescribes the method for determining the annual value. Section 23(1) (a) reads as under : - 23. (1) For the purposes of section 22, the annual value of any property shall be deemed to be - (a) the sum for which the property might reasonably be expected to let from year to year; or (b) where the property or any part of the property is let 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 recei vable; or.......... 92 On this aspect the settled position of the law is that the annual value has to be determined even if the property is not let out. This position has been discussed by the Ld. author Chaturvedi & 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 shall 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' o....
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....g subjected to charge under the head " income from business and profession". A busines sman may have income of Rs . 100/ - but because of higher depreciation allowable under the Income-tax Act or some other weighted deductions say for example in case of expenditure on scientific research, the taxable income as per the provisions of the Act may be zero but still because of the Mat provisions, tax has to be charged on book profits. Similarly in the case of presumptive tax provisions e.g. u/s 44AD if a person is civil contractor and does not maintain books of account and his turnover is less than Rs. 60 lakhs then the profit would be presumed to be 8% of turnover even if he has suffered a loss. Another example of Section 2(22) (e) can be taken. Under this provision a loan or advance given by cer tain companies to a substantial share holder is to be treated as deemed di vidend. 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 person recei ving such loans. 95 The above position of law makes it absolutely clear that the....
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....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 resolution 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 Owner (as the case may be) a total amount of Rs. 106,42,50,000/- (Rupees One Hundred Six Crores Forty Two Lacs Fifty Thousands Only) calculated @ Rs. 82,50,000/- (Rupees Eighty Two Lacs Fifty Thousands Only) payable to 65 members having plot of 500 sq. yards each, Rs. 1,65,00,000/- (Rupees One Crore Sixty Five Lacs Only) payable to 30 members having plot of 1000 sq. yards each and Rs. 3,30,00,000/- (Rupees Three Crores Thirty Lacs Only) payable to the Owner for the 4 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 the case may be) in a manner set out herein below ('Payment'). Further, the transfer, sale and convey....
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....e Owner and/or to the respective members of the Owner (as the case may be) and the Flats to be allotted to the Allottees as set out in this Clause 4.2 shall hereinafter be collectively referred to as the 'Entire Consideration' 98 From this clause it becomes absolutely clear that each Member having 500 sqyd of plot was entitled to receive one furnished flat measuring 2250sqft and Members having 1000 sqyd flat were entitled to receive two furnished flats. Thus upon execution of the JDA vested right came to such Members to receive such flats. Once this vested right arises out of the above contract it can easily be said that this right has also accrued to the assessee. Clause 4.2 makes it absolutel y 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 letter has not been given because of sanctions/permissions could not be obtained because of Public Interest Litigation before the Hon'ble Punjab & Haryana High Court, it cannot be said that such right has not accrued. Though it may be hard on the assessee but it is well s....
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....rovisions 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 same was relevant to accrual of interest. The Bench followed the decision of Kalptaru 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 that the consideration of Rs. 1.00 crore has to be accepted. 102. From the above decision it is not clear whether in case of Kalaptaru Construction Oversees Pvt Ltd. (supra) which has been followed in above case, was concerning capital gain or not. Secondly it is not clear that whether the 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 absolutely 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 purpose of taxation in the year in which ....
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.... such termination. In the event of failure of the Owner to refund the said amount, the Owner hereby agrees to execute a registered sale deed for land of equivalent value in favour of THDC. (iii) In the event THDC is unable to develop the Property 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 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 Agreement shall not be transferred by the Owner in favour of THDC. Upon the termination, the Owner shall refund to THDC the Adjustable Advance/Earnest Money mentioned in clause 4.1(i) above within one month of such termination. In the event of failure of the Owner to refund the said amount, the Owner hereby agrees to execute a registered sale deed for land of equivalent value in favour of THDC. (iv) The owner shall have the right to terminate the Agreement only in the event of default....
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....ts in the Property in favour of THDC interalia including the right to raise finance by mortgaging the property and register the charge with the Competent Authority and execute registered sale deeds ) as set out in Clause 4.1 (ii), (iii), (iv) and (v) and the Owner confirms, under takes, declares and binds itself not to revoke the same for any reason whatsoever out of its own will and discretion without obtaining a specific prior written consent of THDC or any of its duly constituted attorneys. " 104 The above clearly shows that this Power of Attorney could not be revoked for any reason without obtaining specific prior writ ten consent of THDC/HASH. No document showing the consent of THDC for revocation of this irrevocable Power of Attorney has been produced before us. We fail to understand that in the absence of such document how the assessee can claim that this Power of Attorney has been revoked. As discussed earlier while considering the legal position, we would again recall the words of Hon'ble Authority for Advance 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 ....
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....n case of Jasbir Singh Kataria (supra) which has been relied on by both the parties for various aspects. In that case it was observed at para 39 as under: "We have to advert to one aspect which has caused some 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 such as refusal of permissions, the developer facing financial crunch etc. By that time, the owner would have received only a part of the agreed consideration, but he is obliged to file the return showing the entire capital gain based 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 construction of the relevant provision should not be controlled by giving undue importance to such hypothetical situations. Normally, the owner executes a Power of Attorney or does similar act to left the transferee take pos....
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....ne cases the difficulties may arise but it was for the Parliament or the Government to provide remedy in such cases and judicial forums cannot do anything. Therefore, in view of the provisions of Section 45 r.w.s. 48 we are of the opinion that subsequent events, if at all any will not make any difference because total 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 shows that in the eyes of law special Power of Attorney could not have been revoked. In view of this analysis, we are of the opinion that either the JDA has not been cancelled or in any case the same cannot be considered for determining the taxation of capital gain. Accordingly this contention is rejected. 108 The next contention of the asses see is that even if the whole consideration has to be taxed then value of the flats cannot be taken at Rs. 4,500/ - per sq. feet. It is also pointed out that in view of the agreement between the HASH & THDC consideration has been shown at Rs. 2,000/ - per sq. feet for 126 flats whereas it is Rs . 4,500/ - per sq. feet for three fl....
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....e cost of constructions to be incurred by THDC which was debited to the account of HASH. Further, HASH has agreed to purchase three Flat s @ 4,500/ - per square feet. Some news reports were quoted before us in one of the cases to show that various brokers had issued various advertisements for sale of these flats and these flats were ultimately to be sold at Rs. 7,000/ - to Rs. 10,000/ - per square feet. This also becomes clear from the addendum of agreement in terms of total 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 society is also to be added to the cost of the flat because this portion of consideration in any case was received or to be received later by the society in cash. Considering the present market value of the flats in and around Chandigarh area which is Rs . 4,000/ - to 12,000/ - per square feet we are of the opinion that value of the flat at Rs . 4,500/ - per square feet is absolutel y fair. In any case M/s HASH has agreed to purchase the flats at this rate from M/s THDC. It may be noted as pointed out by the ld. DR for the revenue some of the News report clippings filed by various assess....
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....lots in the sizes of 500sqyd and 1000sqyd were allotted to various Members. When the proposal for development of property came it was resolved in the General Body Meeting of the Society that the Members would surrender their rights in favour of the Society so that the Society can enter into the JDA. Thus it is clear that the Society has entered into JDA on behalf of the Members. It is the members who are owning the plots and the Society was only a facilitator. It becomes clear from the JDA that payment for consideration was to be made to an individual plot holder and in fact consideration was mentioned in terms of per Member. Each Member holding 500sqyd plot was to receive a sum of Rs. 82,50,000/ - and one fully furnished flat measuring 2250 sqft and the Members holding 1000sqyd plot were to receive monetary consideration of Rs . 1.65 crores plus two flats measuring 2250 sqft. In fact the payment of cheques is made by Hash by issuing cheques in the name of individual Member and not the Society. This fact stands admitted because assessee has filed a return declaring capital gain against part money received against his plot. Thus it becomes clear that it is the individual member who ....
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....ase are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No.475(Asr)/2012 are dismissed. 3. ITA No.564(Asr)/2011 - Sh.Sarwan Singh Phillaur The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the present case are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No.564(Asr)/2011 are dismissed. 4. ITA No.472(Asr)/2011 - Sh. Kanwaljit Singh Lally The ....
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....resent issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the present case are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No.480 (Asr)/2012 are dismissed. 8. ITA No.08(Asr)/2013 - Sh. Jagdish Sawhney The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the present case are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circ....
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....esent appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the present case are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No. 34(Asr)/2013 are dismissed. 13. ITA No.162(Asr)/2013 - Sh. Tikshan Sud The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the present case are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of....
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....in ITA No. 244(Asr)/2011 are dismissed. 17. ITA No.485(Asr)/2012(Assessee) and ITA No.37(Asr)/2013 (Revenue) - Sh. Vir Singh Lopoke The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the present case are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No. 485(Asr)/2012 are dismissed and that of the revenue are allowed. 18. - ITO Vs. Sh.Vir Sigh Lopoke The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the pre....
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....ave been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No.52(Asr)/2013 are dismissed. 22. ITA No.56(Asr)/2013 - Smt. Satinder Kaur The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thoroughly been discussed and ITAT Chandigarh Bench has passed a detailed order in the said case. Since the facts in the present case are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), therefore, the order therein is identically applicable to the grounds which have been discussed in the order of Sh.Charanjit Singh Atwal vs. ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No.56(Asr)/2013 are dismissed. 23. ITA No.58(Asr)/2013 - Capt. Balbir Singh Bath The facts in the grounds taken in the present appeal are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra), where all the present issues have thorough....