TaxTMI 
TaxTMI 
2013 (9) TMI 229
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....- 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 Amritsar 02.11.2012 18. 37(Asr)/2013 -do- Revenue Amritsar -do- 19. 15(Asr)/2013 -do- Sh. Sewa Singh Sekhwan Amritsar 06.11.2012 20. 51(Asr)/2013 -do- Sh. Ajit Pal Singh Amritsar 21.11.2012 21. 52(Asr)/2013 -do- Sh. Simranjit Singh Amritsar ....
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....w. 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 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 ....
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....f 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. 2.6 Without prejudice, 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 computing the capital gains with respect to the actual amount received during the relevant assessment year. 2.7 Without prejudice, learned Commissioner of Income-Tax(Appeals) h....
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.... 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 aforesaid transfer under the Agreement was by the society subject to further condition/encumbrances and not by the assessee. 2.5 That without prejudice to the above, the Ld. CIT(A) erred on facts and in law in not computing the capital gains with respect to the actual amount received during the relevant assessment year, there being no transfer of any flat to the assessee which is wrongly....
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....buttal. 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. 10. That the order under appeal is wholly against law and facts of the case. 7. In I.T.A. NO. 187-ASR-2013 the assessee has raised following grounds of Appeal : 1. That in the facts and circumstances of the case, the ld. CIT(A) has grossly erred in upholding the validity of assumption of jurisdiction u/s 147/148. 2. That the led. CIT(A) misdirected himself in....
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....ance 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 applicable. 5. That both Commissioner of Income Tax(Appeals), Amritsar and the Assessing Officer have failed to appreciate that the JDA stood cancelled by the Punjabi Co-op Housing Building Society had on 11.05.2011 and the POA granted by the Society to developer was also cancelled on 31.10.2011 due to now performance of contract by developer. 6. That both learned Commissioner of Income Tax (Ap....
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.... 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) has erred in upholding that appellant has no right to revoke power of attorney in spite of the fact that developer has not performed its part of the contract for the execution of which the power of attorney was bestowed. 1.8 That Ld. CIT(A) has erred in facts and law in upholding the order of AO assessing the capital gains in the hands of assessee where in fact agreement has been cancelled by Punjab Cooperative House Building Society.  ....
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....p; 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 the owner of the same. 4. That the AO has grossly erred in disallowing deduction of Rs.45 lacs paid extra to Shri Vijay Ummat for rescinding the sale agreement to whom assessee sold one half of his plot, on the basis of uncorroborated statement without confronting the assessee. Similarly, the ld. CIT(A) has grossly erred in confirming the same. 5. That the AO has grossly erred in no appreciating the fact that assessee had sold one half share of his s....
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....e 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 house at Ranjit Avenue Amritsar and thus no capital gain is leviable on Rs.3300000/-. 6. That the Ld. CIT(A) has erred in law and facts in not accepting the submissions that the society on receipt of two instalments as per para 4-i(i) of the Agreement Deed executed the registered Deeds of land measuring 3.08 Acres and 4.62 acres only in proportion of the payments received. Thus, the Society did not hand over the possession of whole of the land measuring 21.2 acres. Thus, Capital gain is leviable on the share of land for w....
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.... 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. 3. That there is at present no agreement on which the department is taxing because the Hon'ble Punjab & Haryana High Court had already stopped construction on the said land. 4. That in view of the said cancellation of the Agreement the appellant assessee is not entitled to receive further amount and build up flat. Thus, question of taxing the same is void. 5. That a special power of attorney was also got cancelled by the Punjabi Coop. House Building....
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....p; 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 with section 45 of the Act. 18. That the case law cited in the assessment order are not relevant to the present case. 19. It is, therefore, prayed that the order of ACIT, Circle-1, Amritsar as well as CIT(A) being bad in law, may kindly be quashed and appeal accepted." 14. In ITA No. 162(Asr)/2013, the assessee has raised following grounds of appeal: "1. That Ld. CIT(A) has erred in law and on facts while passing the order u/s 250(6) of the Act.  ....
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....ures 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.1,01,25,000/- to be the alleged value of one flat measuring2250 sq. ft. @ Rs.4500/- per sq. feet relying upon an agreement entered into between third parties. 12. That in case the value of residential flat to be received is upheld to be long terms capital gains, the ld. CIT(A) has erred in law in non allowance of benefit provided u/s 54/54AF as the flat which are to be received is in the nature of residential flat only and the sale consideration should be taken as having been invested in the new residential property only. 13. That the ld. C....
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....essee'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. That initiation of penalty u/s 271(1)(c) has been wrongly confirmed. 12. That the order under appeal is wholly against law and facts of the case." 16. In ITA No.338(Asr)/2013, the assessee has raised following grounds of appeal: "1. On facts & in circumstances of the case, the Ld. CIT(A) has mistakenly pointed out presence & arguments by Sh. Anupam Gupta, Advocate whereas no notice of appearance has been served upon the AR, thus, making it an unrepresented and unheard case as the appellant is under treatment of cancer in Australia. &nb....
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....at 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 consideration is charged to tax though very nominal amount might have actually been received resulting in a situation where an assessee may not be having funds to pay the taxes. 8. That there is no provision in the act to reversed the Capital Gain Tax paid by the assessee on account of cancellation of the agreement after the time period for revision of the Income Tax Return. 9. That provision of section 2(47)(v) is ultra virus of the right provided under the Constitution of India and needs amendment to the effect that tax should be charged only to the extend the consideration received and the remaining balan....
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....iated 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 appreciated that due to termination of the agreement by the Society/allottee, the JDA had ceases to exist with regard to the remaining payments due under the JDA and the same could not be brought to Capital Gains tax at all. 8. That both the learned Commissioner of Income Tax (Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have grossly erred in not allowing deduction U/s 54F of the Income Tax Act, 1961 to the assessee as claimed in the revised return. 9. That both the learned Commissioner of Income Tax(Appeals), Amritsar has grossly erred in rejecting the alternative claim of the assessee U/s 54F of the Incom....
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....ciety 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 subject to various regulatory/statutory/other approvals/permissions, etc, required to be obtailned by the other party(ies), which were not obtained and hence there could be no 'transfer' under the said agreement. 5. That the worthy Commissioner of Income tax (Appeals) erred on facts and in law in considering that the receipt of consideration and registration of property are not relevant factors while determining the transfer of property for calculating capital gain under the Income-tax Act. 6. That the Commissioner of Income Tax(Appeals) erred on facts and in law in confirming the finding of the assessing officer that there was deemed transfer of pr....
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....; "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 addition of Rs. 44,03,389/- made by Income Tax Officer, Ward 5(4), Amritsar on account of 1/4th share of alleged Capital Gain. 4. That both the learned Commissioner of Income Tax (Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have grossly erred in not appreciating that the decision of CIT....
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....ment 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 addition of Rs. 44,03,389/- made by Income Tax Officer, Ward 5(4), Amritsar on account of 1/4th share of alleged Capital Gain. 4. That both the learned Commissioner of Income Tax (Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have grossly erred in not appreciating that the decision of CIT Vs. V.K. Julani Basha 256 ITR 282 relied upon by the Assessing Officer was in fact in favour of the assessee. 5. That both the learned Commissioner of Income Tax(Appeals), Amritsar and....
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....o 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 addition of Rs. 44,03,389/- made by Income Tax Officer, Ward 5(4), Amritsar on account of 1/4th share of alleged Capital Gain. 4. That both the learned Commissioner of Income Tax (Appeals), Amritsar and Income Tax Officer, Ward 5(4), Amritsar have grossly erred in not appreciating that the decision of CIT Vs. V.K. Julani Basha 256 ITR 282 relied upon by the Assessing Officer was in fact in favour 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. 15,00,000/- on prorate execution of registered Sale Deed....
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....mited 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, the entire addition confirmed by Learned CIT(A) is based on presumptions, surmises and conjectures and against the natural law of justice. 4. That the Learned CIT(A) has erred in confirming the Notice u/s 148 of the Income Tax Act, 1961 without having any good reason to believe and is illegal, arbitrary, uncalled for and against the natural justice as it is just based on presumption, surmises, suspicions etc. and never supported by any material document or evidence against the assessed. 5. The Assessing Officer has failed to rely on his independent observations and only rely on the Assessment order of some other assessee. 6. That the Assessing Officer failed to consider the subm....
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....p; 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 the case. 26. The Ld. Addl. CIT(DR), Mr. Mahavir Singh invited our attention that the issues in all the 24 appeals mentioned hereinabove are identical to the issues in the bunch of 30 appeals decided by the ITAT, Chandigarh Bench vide a consolidated order dated 29.07.2013 in the case of Charanjit Singh Atwal, Ludhiana vs. ITO Ward VI(1), Ludhiana in ITA No.448(Asr)/2011 and others for the assessment year 2007-08. 27. He further invited our attention that in the present appeals, the assessees are either present or Ex-MLAs of Punjab Legislative Assembly who are members of housing society. The said society consists of in total 95 present or Ex-MLAs of Punjab Legislative Assembly. The matter with respect to some MLAs and the matter with respect to the Society itself fall under the jursidction of Chandigarh ITAT and the rest under the Amritsar ITAT jurisdicti....
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....ven. 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 handed over the possession of the Society to THDC/HASH and accordingly first contention of the ld. DR was rejected. ii) Vide para 59 to 61 of the order, second contention was that JDA was executed on 25.02.2007 and if possession was given then how the assessee was having possession in terms of later sale deeds executed on 2.3.2007 and 25.4.2007. It was held after considering and arguments of rival parties and facts on record that mere recitation in the sale deed to the effect that the Society was owner of land in possession 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 possession was only concurrent as the possessory right. Accordingly the second contention was also rejected. i....
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.... 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. viii. Vide paras 89 to 96, being the eightth contention that since the society has transferred the land through JDA on a pro-rata basis, therefore, only whatever money is received against which sale deeds have also been executed can be taxed and notional income i.e. the money to be received later, cannot be taxed. It was held that there is no dispute that no notional income can be taxed, but in the case of Capital Gain section 45 read with section 48 clearly provides that it is the profit arising from the transfer of capital asset, which would be subjected to change capital gain tax and section 48 clearly provides for taking the total consideration into account while computing the capital gains, which has already been discussed in paras 64 to 68 of the order. Therefore, the whole consideration whether received or accrued which has to be taxed under the c....
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....T 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 assessee has filed a return declaring capital gain against part money received against the plot. Thus, it becomes clear that it is the individual member who are liable to tax in respect of transfer of plots and the Society being only a facilitator or post office. Accordingly, this contention was also rejected. 32 Vide paras 5 to 9 also the assessee has raised the additional evidence, which after considering the facts on record and arguments of Ld. Counsels allowed the admission of additional evidence. 33 Vide para 10 to 14, the revised return was treated as non-est and it was held that no disadvantage has occurred to the assessee because in the revised return, the assessee has included a sum of Rs.27,58,436/- on account of Capital Gain and the whole dispute in the assessment relates to Capital Gain arising out of sale of plot in the assessment relating to Capital Gain arising out of sale of plo....
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....er 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 each Member of the Society having a plot of 500 sqyd in the Society was to receive monetary consideration of Rs. 82,50,000/ - and the Member s holding plot of 1000 sqyd was to receive a sum of Rs . 1.65 crores. In addition to this Member holding a plot of 500 sqyd was to receivefully furnished flat measuring 2250 sqf t to be constructed by THDC/HASH and Members having 1000 sqyd were to get two such flats. According to the Assessing Officer total consideration to be received by al l the Member's was Rs. 1,06,42,35,000/ - and furnished flats as mentioned above. Before entering into the tripartite agreement the Society in its Executive Committee meeting held on 4.01.2007 which was approved in the General Body meeting held on 26.2.2007, passed a resolution to the effect that all the Members would surrender their all right's in the property to the Society and the Society would enter into an agreement on behalf of t....
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....n 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 letter dated 7.12.2008 was issued intimating the assessee that after consideration of the various clauses of JDA dated 25.2.2007 and the resolution passed by the Society on 26.2.2007, capital gain was to be charged in the hands of the assessee in Assessment year 2007-08 by taking full value of the construction at Rs . 3,67,50,000/ - . The assessee filed various replies which have been extracted by the Assessing Officer as under : "This has reference to your letter dated 7.12.2009, we submitted that under: "1 The agreement under reference is only in the nature of an agreement to sell and not a sale deed and therefore no capital gain can arise under the said agreement. The amounts received under the said agreement are actually the advances received and not the sale consideration and the land transferred in favour of THDC Ltd. is ....
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.... 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 agreement and in that situation, the land already transferred to THDC will be retained by them and no further land will be purchased by THDC and no further payment shall be made by them. In that event the amount received by assessee will be considered as full, and final consideration. So there is no question of considering the national value of proposed flat as the unrealized consideration for the purpose of capital gain of the assessee. The assessee is a Hon'ble citizen and regular Income Tax Payee and shall discharge his liability under Income Tax when the whole land will be transferred. 5.) While making the calculation of capital gain tax, the amount of consideration has been wrongly taken of Rs. 15 lacs Instead of Rs,12 lacs. As per the agreement, sum of Rs. 3 lacs is adjustable advance. You are requested to kindly recomputed tax liability, 6.) ....
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....ar. 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, you have written that there is grant and assignment of development rights in the property and there is transfer of property upon the surrender of allotment right. This is not a true factual position. The allotment rights have not been surrendered by the members in favour of THDC LTD or M/s Hash Builders Ltd. The factual position is that the society I.e. M/s Punjabi Co-op House Bldg. Society Ltd. has entered into an agreement with M/s THDC Lid. M/s Hash Builders Ltd. As per clause 2.1 of the agreement it is very clearly mentioned that the possession of the property has been handed over to THDC Ltd. only to develop the same. A close examination of the agreement clearly reveals that the agreement is a Joint development agreement. The Society intended to develop the land owned by it. However since the requisite expertise were not available with the society, the other two developers were involved in the project. The cost of development was to be borne by the THDC. The pa....
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....pect 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: 1. Assesses will be deprived from availing the exemption u/s 54EC since no funds are available with the assessee for investment. 2. Assessee will be deprived from availing exemption u/s 54F as no residential house has yet been constructed. This is an ironical situation where assessee is having to pay tax on the notional value of the flat to be given in the future to him as consideration but exemption under section 54F will be denied because the residential house did not exist, 3. Further as per the termination clause of the agreement various conditions have been prescribed under which the agreement can be terminated. It is very clearly mentioned in the agreement that in the event of termination of the agreement the land transferred by the members will be retained by THDC Ltd and consequently no further consideration shall be given to the members. It is evident from the facts in....
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....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 sale deed because JDA resulted in the transfer of assets. All the ingredient's of transfer i.e. consideration from schedule of payments, rights and liabilities of the parties etc. were mentioned in the JDA, Capital gain arose because of the fact that it was a case of transfer of capital as set in view of Section 2(47) (ii) , 2(47) ( v) and 2(47) ( vi ) . According to him as per clause 2.1 of the JDA owner of the land made agreement and irrevocably and unequivocal l y granted and assigned in perpetuity all of its rights to develop, construct, mortgage, lease, license, sell and transfer the property (21.2 acres of land) along with any and all constructions trees etc. in favour of THDC/HASH for the purpose of development , construction, mortgage, sell , transfer , lease, license and/or exploitation for full utilization of the property and to execute all documents necessary to carry out facilities and right s in the property. Thus transfer of property was effected through this agreement . &....
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....A. In any case as per Section 45 r .w.s . 48, its full value of consideration received or accrued which has to be considered. (vi) It was also observed that surrender of allotment letter by the Members including assessee was processed in order to enable the Society to enter into tripartite JDA with HASH and THDC. By surrendering the allotment letter, the right of the assessee in immovable property owned by him got extinguished and this extinguishment was in lieu of entire consideration which was received by the Members including the assessee. thus this case was also covered u/s 2(47) (ii) of the Act . (vii) It was observed that there is no merit in the contention that the assessee would not be covered u/s 54EC due to lac k of funds or exempt ion u/s 54 was not relevant to the issue about taxability of long term capital gains which was dependent only on transfer . (viii) It was observed that there was no force in the contention that the value of the flats was undeterminable because the value of the flat was very much determinable as pe....
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....the decision of Chaturbhuj Dwarkadas Kapadia V. CIT (supra) once the possession or part possession of the property was given by the transferor to the transferee then the transfer can be said to have taken place. He also referred to the decision of Authority for Advance Ruling in case of Jasbir Singh Sarkaria, 164 Taxman 108: 294 ITR 196. He referred to various observations of the Authority in this case and concluded that the receipt of entire consideration was not a factor to be seen for application of Section 2(47)(v). Once these two decisions were considered along with the provisions of section 45 r.w.s. 2(47)(v) then it would emerge as under: "(a) The Joint development agreement has been entered into between the Punjab Coop Housing Building Society Ltd. Mohali, of which assessee is member, and. M/s Hash Builders (P) Ltd. and M/s Tata Housing development Company Ltd. Mumbai as on 25.2.2007. (b) The members of the society surrendered their allotment rights and the society on behalf of members entered into the joint development agreement in lieu of 'entire consideration' as described in the Join....
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....0 Sq. Yards is being paid on the execution of agreement against' which the Society on behalf of members will transfer 3.08 Acres of the contiguous land out of property, It has been confirmed that against the above payment the land measuring,3.08 acres has been transferred in the name of THDC and registered vide sale deed dated 02/03/2007 i.e. in the previous year 2006-07. (g) Thus it is clear from above transactions that transferee, M/s Tata Housing development Company Ltd,, Mumbai, has performed and is willing to perform his part of contract and in this part performance of contract, the assessee and other members of the Punjab Coop Housing Building Society Ltd, Mohali have given possession of the whole of land of 21.2 acres to the THDC and have further irrevocably and unequivocally granted and assigned all rights in perpetuity to THDC in the said previous year i.e. 2006-07. (h) Hence it is established beyond doubt that transfer has taken place as envisaged as per Section 2(47)(v) of the-Income Tax Act and since it has taken place through Society of which assessee is also member so S....
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....nd there is no ambiguity regarding irrevocable rights being given to the transferee. As regards certain petty conditions and provisions relating to termination of the contract, it is observed that these clauses are necessary part of such type of joint development agreement. At the same time such agreements including this agreement has the provisions of 'disclaimer' 'partial invalidity' 'indemnity' and 'arbitration'. The disputes arising, if any, shall be resolved as per the provisions and awards shall be granted, in appropriate cases by the arbitrator. These provisions are there to safeguard the interest of all the parties to the joint development agreement and parties would be indemnified by each other and shall also receive award if the terms/conditions are not fulfilled. (p) As regards applicability of Section 54F, there are-certain conditions which are attached with Section 54F also which have to be fulfilled before which exemption under that section is available to the assessee. The assessee has not even tried to make any claim by showing that he has fulfilled the said conditions to be eligible for exemption under Section 54F, ....
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....rt thereof from the transferor and if already in possession, continues in the possession in part performance of the contract . e. Transferee must have done something in furtherance of the contract. f. The transferee must have performed or willing to perform his obligations in such contract. In view of the above conditions in the present case, condition no. (d) and ( f ) have not been complied because the assessee and/or society has not handed over the possesion to THDC/HASH. In this regard he particularly referred to clause 2(1) of the JDA and pointed out that the possesion was to be handed over to THDC/HASH simultaneously with the execution and registration of the JDA. Since the JDA was not registered therefore, it is clear that the possesion was not handed over. In any case the possession if at all was granted as permissive license with right to developers i .e. THDC/HASH only for the purpose of development of the land and not as part of performance of the contract of transfer of land. The fact that possesion was not handed over to the THDC/HASH also becomes clear from the sale de....
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....ted that content s of these clauses will entirel y show that possession was given and was envisaged in the shape of license to the developers for under tak ing the development of property and legal possesion was neither handed over or intended to be handed over . III. Money which is received at the time of execution of JDA can be termed as advance payment. In any case when these amounts were adjusted as part of sale consideration for sale of part of the property and the same have been retuned by the assessee as long term capital gains through revised return in the year of receipt. IV It was emphasized that in any case Section 53A of T.P. Act has been amended by Amendment Act, 2001 whereby registration of agreement has been made mandatory for the same to be enforceable. Since JDA was never registered therefore, recourse could not be taken to Section 2(47) (v) of the Act because JDA was not registered. Pursuant to amendment in Section 53A of T.P. Act with effect from 24.9.2001 it was only the amended provision which can be read with Section 2(47) (v) of the Act. In this regard he referred to decision of Hon'ble Supreme Court in case of Surana Steels P Ltd. V. CIT, 237 ITR 777. In t....
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.... of essence in the contract which becomes clear from clause 1.2(a), 4.1 and 7.10 regarding timely payment and clause 14( i v) regarding termination of contract . In the case before us, there was no willingness on the part of developer i .e. THDC/HASH to per form the above obligation because of the fol lowing - (i) THDC/HASH failed to obtain necessar y approval and did not under take any development work on land. (ii) THDC/HASH i .e. developer has not paid timely payment in timely installments of agreed consideration. (iii) HASH has not obtained approval from various authorities and had not commenced construction within six months of handing over all final plans. (Reference was made to page 34 of the paper book ) . (iv) THDC/HASH vide let ter dated 4.2.2001 (Page 23 to 24 of the addit ional evidence) refused to make further payment as stipulated in the agreement. (v) The transferor has gone back on their representation to complete construction in the time bound manner and in handing over the flats to the Society/its Members. In this regard he also referred to para 16 of the commentary by "MULLA - Dinshaw Frederick Mulla" (copy of which has been filed at page 102 and 103 of the....
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....e Court : Shoor j i Val labhdas & Co. , 46 ITR 144 (S.C) CIT V. Raman and Co. 67 ITR 11 (S.C) Godhra Electricity Co. Ltd. V CIT, 225 ITR 746 (S.C) CIT V. Bal rampur Commer cial Enterpr ises Ltd. , 262 ITR 439 (Cal ) CIT V. K. Jeelani Basha, 256 ITR 282 FOBEOZ India (P) Ltd. V ITO, ITA No. 9231/Mum/2010 (copy filed) It was claimed that since the flats were never constructed and given to the assessee, therefore, if the value of the flat is added in the total consideration then it will be totally on notional basis and since notional income cannot be taxed, therefore, the value of these flats , in no case, should be considered in the total consideration. Further if notional receipts were taxed then the assessee would be deprived to take benefit available in the IT Act . For example if whole consideration was received the assessee could have easily taken benefit of Section 54EC and other provisions like Section 54 by investing in any specified asset or a house. Since full consideration has not been received and the assessment of the whole consideration will lead to unintended consequences like denial of deduct ion u/s 54 EC etc. IX It was contended that since JDA has already bee....
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...., 53 SOT 385 Smt . Ranj it Sandhu v DCIT, 133 TTJ 46 (Chd) 25 On the other hand, the ld. CIT DR f or the revenue made detailed submissions and have also filed written submissions. It was pointed out by the CIT-DR for the revenue that though copy of the special power of attorney has been filed at pages 153 to 165 but two of the most important crucial pages containing clause "u" to " z" and last page No. 9 are missing. He made an allegation that this has been done deliberately which was controverted by the ld. counsel of the assessee and he submitted that this is a simple mistake and he would file those papers. The ld. DR for the revenue in view of these submissions submitted that these pages can be referred in case of Punjabi Coop House Bui lding Society Ltd. in ITA No. 310& 556/Chd/2012 at page 40 to 52 of the paper book in that case. The submissions of the revenue can be summarized as under : (I) The Society passed a resolution in its executive committee on 4.01.2007 which was confirmed / ratified in the General Body Meeting on 25.2.2007. In the Society there were two types of Members holding plots of 500 sqyd and 1000 sqyd. It was resolved that members would surrender the resp....
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....al title deeds and possesion of land to THDC/ HASH. (ii) The Society handed over the possession of the land and original title deeds of the property to THDC/HASH. (iii) Society permitted THDC/HASH to mortgage, sell and create charge in the property. (iv) The Society resolved to execute an irrevocable special power of attorney which could not be revoked in any circumstances without proper consent of THDC/HASH and such power of attorney was actually executed on 26.2.2007. Through this power of attorney THDC/HASH has been authorized to mortgage or create charge by the Society. THDC/HASH was authorized to give the possession of the property or any part thereof to the authorities to whom same was required to be handed over which was not possible unless THDC/HASH was handed over the possession of the property and the rights of the ownership. Through this power of attorney the right to sell was also given which is again not possible without transfer of possession or ownership. These clauses clearly show that complete control over the property confirming all privilege of ownership was given in favour of THDC/HASH and thus such transfer of ownership satisfies the requirements of Section ....
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....he meantime it was noticed by the Government that many properties were being transferred without execution of sale deed through various documents what is popularly known as 'power of attorney' transactions. To curb the leakage of Revenue, through such transaction, clauses (v) & (vi) were added to section 2(47) which defines transfer. This has been explained by Circular No. 495 dated 22.9.1987. The Board has clarified through paras 11.1 & 11.2 that newly inserted clauses (v) & ( vi ) would enlarge the definition of transfer whereby the cases of transfer what is popularly known as 'power of attorney' transaction which allows the enjoyment of right in the property would be covered by new definition. The new clauses would also cover arrangements by which the property could be enjoyed by becoming a member of the company or such other arrangement. According to him it may not be out of place to invoke Heydon's Rule of interpretation of statutes for interpreting these clauses . The Heydon's Rule is mainly applicable wherever the true meaning of amended provisions is to be understood. If the amendments are seen through prism of Heydon's Rul....
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....becomes redundant. In any case it has been held by Mumbai Bench of the Tribunal in the case of Suresh Chand Aggarwal Vs ITO (48 SOT 2010) that amendment made in section 53A of the Transfer of Property Act by which requirement of registration of transfer has been brought on statute need not be applicable for construing the meaning of the ' transfer " with reference to section 2(47) of the Act . Similar view has been taken by the ITAT Cochin Bench in the case of G. Sreeni vasan Vs DCIT 140 ITD 235 and Pune Bench of the Tribunal in the case of Mahesh Memichandra Ganeshwade 51 SOT 155. (VI ) It was contended that there is no force in the submissions of the Ld. Counsel for the assessee that THDC/HASH were not willing to perform their part of the contract. It was pointed out that developers i.e. THDC/HASH have made payments as per clause 4(i) (ii) &(iii) of the JDA. The developers have also approached the concerned authorities for permissions and approvals as per the obligation agreed in the JDA. However , a PIL was filed against the developers against TATA Camelot Project (this is the name of the project which was to be developed by THDC on the land acquired from the Society). The PIL ....
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....ired to take permission from competent authority and the competent authority has been defined in JDA as Punjab Urban Planning and Development Authority (PUDA) , Department of Town and Country Planning, Nagar Panchyat , Nayagon, Department of Local Bodies (Punjab) and any other Authority under Municipal Authority. It also includes Department of Environment , Electricity Board etc. Since permission from Department of Environment etc. was not available because of ongoing litigation which was filed through a PIL, therefore, it cannot be said that Developer was not wiling to make the payment. As per the JDA, the payment would become due only when such permission were granted by various authorities . In fact M/s Hash Builder wrote a letter on 04.02.2011 through which it was stated that since High Court has stayed the construction, therefore, payment could not be made. Further, as PIL was filed in the Hon'ble High Court and the matter had gone even to the Hon'ble Supreme Court and THDC/HASH has vigorously defended the same. This fact clearly shows that developer i .e. THDC/HASH was willing to perform in all respect s to the JDA. (VII) It was also contended that the society has already te....
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....he various Member s of the Society. No legal action was taken against the Developer for recovery of balance of consideration in the form of flats. This only goes to prove that cancellation is only a make believe story and actually no cancellation has been done. (VIII) It was contended that there is no force in the submissions that the value of the flats which has not been constructed, cannot be included in the total consideration because that would be a case of taxing the notional income. He referred to clause 4 of the JDA which deals with the consideration and pointed out that al lotment of flat was part of the considerat ion. As per the resolution of the Executive Body of the Society which was latter ratified by the General Body as well as the terms of the JDA very clearly show that in addition to monetary consideration each Member having 500sqyd plot was entitled to receive one fully furnished flat measuring 2250 sqft. and the Members holding 1000 sqyd plot were entitled to two such flats . This clearly shows that upon entering the JDA, the Members got vested rights to receive such flats and therefore, as per the definition of capital gain in Section 45 such flat has also arose....
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....can not sit in the judgment when the assessee should cancel the agreement or not. Clause 14 of the JDA specifically provided for termination of the agreement only in the event of default and the assessee was required to give notice of 30 days in terms of clause 14(iv) and such notice has already been given. JDA was entered in 2007 and ended in 2011 and that is why the assessee was forced to cancel this agreement. In any case THDC/HASH are not related to the assessee, therefore, it was not possible to create self serving documents. 27. We have considered the rival submissions and carefully gone through the written submissions filed by both the parties in the light of material on record, paper books and various judgments cited by the parties. The main issue is whether assessee is liable to capital gain tax in the year under consideration i.e assessment year 2007-08 in view of the JDA. For charging capital gains, the charging section is 45 and the relevant portion is as under : - Section 45. [(1)] Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections [54, 54B,....
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....treatment ;] [or] [(iva) the maturity or redemption of a zero coupon bond; or] [(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ; or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. Explanation.-For the purposes of sub-clauses (v) and (vi), "immovable property" shall have the same meaning as in clause (d) of section 269UA;] Clauses (v) & ( vi ) to section 2(47) of the Act have been inserted by Finance Act , 1987 w.e. f . 1.4.1988. The purpose of this insertion has been explained by CBDT in Circular No. 495 dated 22.9.1987. The relevant part 11.1 and 11.2 of the Circular reads as under:- "11.1 The existing definition of the word " transfer " in section 2(47) does not include transfer of ce....
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....e was restriction on sale of properties in various towns e.g. in case of lease hold plots and flats in Delhi if the same were to be transferred, permission was required to be taken from the Government / DDA and transferor was required to pay 50% of the market value -cost (i .e. unearned inc rease) to the Government . To avoid such payments and / or also to avoid the payment of stamp duty or cumber some procedure of obtaining permis sion, some proper t ies were being sold by way of sale agreement and also execut ion of General Power Of Attorney and possession was given on receipt of full consideration without executing the proper sale deeds etc. which as mentioned earlier was not even permissible in some cases. These transactions are popularly called "power of attorney" transactions. To avoid these and to stop the leakage of Revenue, the Parliament has inserted clauses ( v) & ( vi) to section 2(47) so as such type of transactions are also be brought in to taxation net . However , interpretat ions of these clauses has led to lot of litigation and the main point of litigation was that at what point of time the possession can be said to have been given. In the present case, the Revenu....
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....e in the assessment year 1996-97 or 1999-2000. The observation of the Court has been summarized in head note as under:- "Clauses (v ) and ( vi) were introduced in section 2(47) of the Income- tax Act , 1961, with effect from April 1, 1988. They provide that "transfer " includes (i ) any transaction which allows possession to be taken/ retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act , 1882, and (ii) any transaction entered into in any manner which has the effect of transferring or enabl ing the enjoyment of any immovable property . Therefore, in these two cases capital gains would be taxable in the year in which such transactions are entered into, even if the transfer of the immovable property is not effective or complete under the general law. Under section 2(47) (v ) any transaction involving allowing of possession to be taken over or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act would come within the ambit of section 2(47) (v ) . In order to attract section 53A, the fol ....
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....the enjoyment of any immovable property ( see section 269UA(d) ). Therefore, in these two cases capital gains would be taxable in the year in which such transactions are entered into, even if the transfer of the immovable property is not effective or complete under the general law (see Kanga and Palkhi vala's Law and Practice of Income- tax -VIII edition, page 766) . This test is important to decide the year of chargeability of the capital gains. " 35 The above observations were made on the basis of opinion expressed by Ld. author in the commentary - "The Law and Practice of Income Tax by Kanga and Palkhivala Eighth Edition at page 766. Relevant observations read as under: "Cls. (v) and (vi) of s. 2(47), inserted by the Finance Act 1987 with effect from 1st April 1988, provide that "transfer" includes (a) any transaction which involves the allowing of the possession of an immovable property (s. 269UA(d)) to be taken or retained in part performance of a contract of the nature referred to in s.53A of the transfer of Property Act 1882, and (b) any transaction entered into in any manner which has the effect of transferring, or enabling the enjoyme....
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....eneral law. In this case that test has not been applied by the Department. No reason has been given why that test has not been applied, particularly when the agreement in question, read as a whole, shows that it is a development agreement. There is a difference between the contract on the one hand and the performance on the other hand. In this case, the Tribunal as well as the Department have come to the conclusion that the transfer took place during the accounting year ending March 31,1996, as substantial payments were effected during that year and substantial permissions were obtained. In such cases of development agreements, one cannot go by substantial performance of a contract. In such cases, the year of chargeability is the year in which the contract is executed. This is in view of section 2 (47) (v) of the Act." Secondly it is mentioned in the order of the Court that law was not very clear on this point and since the assessee has admitted and paid capital gain in the Assessment year 1999-2000, therefore, tax was held to be chargeable in Assessment year 1999-2000. Thirdly certain shortcomings were also noted in the order of the Tribunal where cer tain document s were mentio....
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....of such transaction itself needs to be const rued as the date of transfer. 39. The second relevant decis ion cited by the Revenue is by Authority for Advance Ruling (AAR) New Delhi in the case of Jasbir Singh Sarkaria (supra) . In that case the assessee was co-owner of agricul tural land measur ing about 27.7 acres and his share was 4/9. The co-owner decided to develop the land by constructing resident ial complex through developer and entered into a Collaboration agreement on 8.6.2005 with M/s Santur Developer Pvt Ltd, New Delhi (herein after called 'Developer'). According to the terms of agreement , the Developer should obtain a let ter of intent from the concerned government depar tment and obtain other permissions and sanctions for developing the land at its own risk and cost . The Developer was to take 84% of the bui lt up area and balance 16% would belong to assessee and other co-owner. The consideration for the agreement was taken as the bui l t up area to be handed over to the owners free of cost. The owners were entitled to visit the site in order to review the progress of the project. It was clarified by clause 18 that owner ship would remain exclusively with the owners ....
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....(c) those profits or gains would constitute the income of the assessee/ transferor (d) such income shall be deemed to be the income of the same previous year in which the transfer had taken place. Two aspects may be noted at this juncture. Firstly, the expression used is "arising" which is not to be equated with the expression "received". Both these expressions and in addition thereto, the expression"accrue" are used in the Income-tax Act either collectively or separately according to the context and nature of 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 (10th Edition- Revised by Shris. Rajaratnam) brings out the correct legal position: "Secti....
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....ransferor has forfeited his right to exercise acts of possession over the land or to resume possession. In our view, there is no warrant to place such a restricted interpretation on the word "possession" occurring in clause (v) of section 2(47). Possession is an abstract concept. It has different shades of meaning. It is variously described as "a polymorphous term having different meanings in different contexts" (per R. S. Sarkaria J. in Superintendent and Remembrance of Legal Affairs, W. B. v. Anil Kumar Bhunja [1979] 4 SCC 274 and as a word of "open texture" (see Salmond on Jurisprudence, paragraph 51, Twelfth Edition, Indian reprint). Salmond observed : "to look for a definition that will summarize the meanings of the term "possession" in ordinary language, in all areas of law and in all legal systems, is to ask for the impossible". In the above case of Anil Kumar Bhunja [1979] 4 SCC 274, Sarkaria J. speaking for a three-judge Bench also referred to the comments of Dias and Hughes in their book on Jurisprudence that "if a topic ever suffered too much theorizing it is that of 'possession'". Much of the difficulty is caused by the fact that possession is not a pure legal concept, ....
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.... and on adopting the principle of purposive construction, it must be held that possession contemplated by clause (v) need not necessarily be sole and exclusive possession. So long as the transferee is, by virtue of the possession given, enabled to exercise general control over the property and to make use of it for the intended purpose, the mere fact that the owner has also the right to enter the property to oversee the development work or to ensure performance of the terms of agreement does not introduce any incompatibility. The concurrent possession of the owner who can exercise possessory rights to a limited extent and for a limited purpose and that of the buyer/developer who has a general control and custody of the land can very well be reconciled. Clause (v) of section 2(47) will have its full play even in such a situation. There is no warrant to postpone the operation of clause (v) and the resultant accrual of capital gain to a point of time when the concurrent possession will become exclusive possession of developer/transferee after he pays full consideration. Further, if "possession" referred to in clause (v) is to be understood as exclusive possession of the transferee/de....
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....h if the transferee has, by virtue of that transaction, a right to enter upon and exercise acts of possession effectively pursuant to the covenants in the contract. That tantamounts to legal possession. We are referring to this aspect because the authorized representative has submitted when he appeared before us in the last week of May, 2007, that even by that date the development work could not be commenced for want of certain approvals, and therefore, the developer was "not willing to take possession of the land". Such an unsubstantiated statement which is not found in the original application or even written submissions filed earlier need not be probed into especially when it is not his case that the developer was not allowed to take possession in terms of the agreement." 42. After the above discussion, the Authority discussed the facts of the case before it . It was observed that paragraph 18 of the Collaboration Agreement provides that on issuance of letter of intent , the owners will allow and permit the Developer to enter upon and survey the land, erect site / sales office, carry out the site development work and do Activities for advancing & sale promotion, construction et....
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....an express declaration to that effect is found in the GPA itself is not without significance. Having regard to the second and supplemental agreement by virtue of which the entire developed property including the owners' share has been agreed to be sold to the developer or his nominees for valuable money consideration, the developer has a vital stake in the entire property. As far as the quality of possession is concerned, he is on a higher pedestal than a developer who apportions built up area with the owner. Even if he is an agent in one sense in the course of developing the land, that agency is coupled with interest. For these reasons, the prefix "irrevocable" is deliberately chosen. As discussed earlier, the owner's limited right to enter the land and oversee the development work is not incompatible with the developer's right of control over the land which he derives from the GPA. Exclusive possession, as already pointed out, is not necessary for the purpose of satisfying the ingredients of clause (v) of section 2(47). We are therefore, of the view that the irrevocable GPA executed by the owners in favour of the developer must be regarded as a transaction in the eye of law which....
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....he owner. 3. In the instant case, having regard to the terms of the two agreements and the irrevocable GPA executed pursuant to the agreement, the execution of the GPA shall be regarded as the "transaction involving the allowing of the possession" of land to be taken in part performance of the contract and therefore, the transfer within the meaning of section 2(47)(v) must be deemed to have taken place on the date of execution of such GPA. The irrevocable GPA was executed on May 8, 2006, i.e., during the previous year relevant to the assessment year 2007-08 and the capital gains must be held to have arisen during that year. Incidentally, it may be mentioned that during the said year, i.e., financial year 2006-07, a final license was granted and the applicant/owners received nearly 2/3rds of the consideration. " 45. Legal position has been discussed in above noted paras and now let us discuss the facts of the case in the light of above noted legal position. 46 Undisputed facts of the case are that the assessee is a Member of Punjabi Coop House Building Society Ltd. which had 96 members (Number of members were stated as 95 during arguments but clause 13 of the JDA refers to number....
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..... It has been further recited that the Society has agreed to accept the proposals of Hash and further executed this agreement with THDC/HASH. Hash was responsible to make payment to the owner as described earlier and the flats were to be provided by THDC. In case of Hash fails to make the payment , THDC agreed to make the payments. Copy of the resolution of the Executive Committee of the Society dated 4.1.2007 as well as resolution of the General Body Meeting of the Society dated 25.2.2007 were made part of JDA by way of annexure. The Society agreed to execute an irrevocable Special Power of Attorney in favour of THDC and all other necessary documents , at the request of the developers. 47 In clause 1 of JDA various expres s ions have been def ined. Clause 2 describes the projec t as under : "2.1 The owner hereby irrevocably and unequivocally grants and assigns in perpetuity all its rights to develop, construct, mortgage, lease, license, sell and transfer the property along with any and all the construction, premises, hereditaments, easements, trees thereon in favour of THDC for the purpose of development , construction....
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.... project on the property. " 48 Clause 3 describes the obligations of the developers & Society for getting the plans, etc . sanctioned from competent authority / applications to be signed by owner for plans, drawings etc., construction. Clause 4 deals with consideration clauses 5 to 8 deals various aspects of project and obligations of Society and Developer . Clause 9 tal ks about ownership and rights and read as under : "9 Transfer of ownership/Rights 9.1 The owner shall simultaneously on receipt of Payment as set out in Clause 4.1 above, execute an irrevocable Special Power of Attorney to THDC for development of the property authorizing THDC to do all lawful acts, deeds, matters and things per taining to the development of the property for the project along with interalia right to mortgage the property and/or premises, sell , lease, license the premises and receive/collect monies in it's name in respect of the same and approach interact , communicate with the Competent authorities and for doing all acts, deeds, matters and things to be done or incurred by THDC in that behalf as al....
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....s herein. " 50 Other clauses provide for terminat ion, General provisions , Disc laimer , Partial Invalidity, Arbitration, Notices and Force Majeure & Jurisdiction. 51 In addit ion to above an irrevocable Special Power of Attorney has also been executed by the Society in favour of the developers i .e. THDC. (Copy of which is available at pages 40 to 52 of the paper book in case of Society in ITA No. 556 of 2012 as discussed earlier in para 25 ( complete copy of Supplementar y Power of Attorney was not avai lable in the paper book of the as ses see, therefore, reference was made to the paper book in case of the Soc iet y) . 52 The first major contention of the ld. counsel of the assessee is that the possession was not given by the Society because according to him as per clause 2.1 of the JDA the 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 possesion was not given. We can not accept this contention because in "Power of Attorney" transactions, it is not necessary to register the JDA if a special Power of Attorney has been given and same is registered. Secondly clause 9.3....
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.... otherright , benef its and interests are acquired and/or proposed to be acquired and developed or proposed to be developed by THDC and/or their associate and/or group concerns/s and/or utilize the FSI , FAR, DR and TDR of the contiguous, adjacent and adjoininglands for the purpose of constructing buildings and/or structures thereon and/or on the Property or utilize such lands and properties for making provision of parking spaces thereon, and/or may utilize the same for any other lawful purpose, as THDC and/or their associate and/or group concerns may in their sold, absolute and unfettered discretion think fit . (w) To hand over the possession of the Property or any part or portion thereof to the authorities to whom the same is required to be handed over or otherwise and to execute and deliver any under takings , declarations , affidavits, bonds, deeds, documents, etc. as may be required by the authorities concerned for vesting such a part or portion in such authority and to admit execution thereof before the concerned Competent Authority and get the same registered with the concerned sub-registrar. &n....
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....uired to be given in terms of various clauses of the JDA. Clause 6.7 reproduced above itself shows that the Society was required to give powers to raise finance to mortgage the property and even the registration of charge was also required to be given. Further through clause 6.15 it was agreed that documents of original title deeds of the property would be handed over to the developer i.e. THDC/HASH so that same can be used in furtherance of development of the Project as well as security for the money paid by the owner. Through clause 6.24 it was agreed that developer THDC/HASH was always permitted by owner to amalgamate the property with any other contiguous, adjacent and adjoining land and the properties wherein developmental and or other rights, benefits and interest were acquired by the developer or would be acquired in future. This clearly shows that the Society was under obligation in terms of agreement itself to allow the developer to amalgamate the project. Towards the end of clause 6.24 it has been clearly stated that in the event of termination of JDA, provision of clause 6 would be surviving which clearly shows that developer continues to be in possession for the purpose....
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....e, license the premises which were to be cons t ruc ted on ownership basis and fur ther to recei ve moneys against such sale etc. and to issue final receipt . Nowhere it is mentioned in this clause that such sale deeds were to be singed by the Soc iet y as confirming party. In the absence of possesion it is just not poss ible for the developer to sell and transfer the premises which were to be constructed. This is fur ther clar if ied by clause (bb) and ( cc ) whi ch gives the power of execut ion of conveyance and other document s invol ving in respect of the premises to be cons t ructed without any inter ference of the Soc iet y being made conf i rming par t y. All these clauses clearly show that the possession was given by the Society and/or its members to THDC/HASH on the execut ion of irrevocable Power of Attorney. Through these clauses of JDA and irrevocable Power of Attorney the developer was able to completel y cont rol the property and make use of it not only for the purpose of development but also for the purpose of amalgamat ion, sale, mor tgage et c. When the above clauses are compared on touch stone of the dis cus s ion on possession in para 26 to 28 in the case of Jasb....
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....ection 2(47) should be made in the light of Heydon's Rule. There is no force in the objection of the ld. counsel of the assessee that this clause should be interpreted on general rules of interpretat ion particularly in the light of the fact that no reason has been given for the same. Heydon' s Rule has been applied by the Indian Courts many times. The Rule was applied and initiated in Heydon's case (1584) 3 Co. Rep 7a. This Rule was upheld by the Constitution Bench of Hon'ble Apex Court in case of Bengal Immunity Co. Ltd. V State of Bihar (1955) 2 SCR 603 for consideration of Article 286 of the Constitution. It has been held in case of Dr. Baliram Waman Hi ray V. Mr. Justice B. Lent in and another , 176 ITR 1 that for understanding amendment in the Act, perhaps Heydon's Rule is best rule for interpretation of such amendment . We find that without mentioning this rule Ld. Authority For Advance Ruling has discussed this issue in para 27 of the judgment which we have extracted above. It has been held that if 'possession' referred to in clause ( v) is to be under stood as exclusive basis of the transferee then very purpose of the amendment or enlargement of the def init ion of transfe....
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....hat the Society has handed over the possession of the property to THDC/HASH. 59 Second important contention on behal f of the assessee is that JDA was executed on 25.2.2007 and if possesion was given then how the assessee was having possesion in terms of later sale deeds executed on 2.3.2007 and 25.4.2007. The Society has executed two sale deeds for conveyance of parts of the total land. First sale deed has been executed on 2.3.2007 for 3.08 acres and recitation clause (A) reads as under : Clause (A) - The vendor is the absolute owner and in possesion of land total measuring 169 kanal 7 marlas equivalent to approx . 21.2 acres in Village Kansal , Tehsil Mohali and more particularly described in Schedule A hereunder written and delineated in green colour boundary line in the Shizra Plan issued by the PatwarI dated 23.2.2007. " 60 According to the ld. counsel of the assessee if Society had already given the possession then the Society would not have / had possession on 2.3.2007 of the land. At face value this argument looks attractive but when examined in terms of possession which has been explained in case of Jasbir Singh Sarkaria (supra) , actual reality will come forward. In t....
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....property which in the absence of such right would be unlawful . 63 Here in case before us , the right has not been given for the purpose of doing something but all the possible rights in property including right to sell , right to amalgamate the project with another project in the adjoining area which may be acqui red later , right to mortgage et c. clear l y show that right s given by the Soc iet y are much more larger than what is covered in the term "license" 64 Fourth contention is that the money received at the time of execution of JDA can be termed as advance and whatever money has been received has already been shown as capital gain. We find no force in this submission because Section 45 which has been extracted above clearly provide for taxing of profits and gains arising from the transfer. We have already discussed the implication of Section 45 r.w.s. 48 while discussing the legal position. We had also discussed this issue in the light of the decision in case of Jasbir Singh Sarkaria (supra) and pointed out that when Section 45 is read along with Section 48 it becomes clear that whole of the consideration which is received or accrued is to be taxed once capital asset is....
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....ng in the previous year of transfer. . . . . In the words of section 45, the capital gains arising from the transfer 'shall be the income of the previous year in which the transfer took place'. So, the payments of consideration stipulated to be paid in future would have to be attributed, by statutory mandate, to the year of transfer, even as payments made prior to the year of transfer." 66 The above clearly shows that it is because of expression used in Section 45 that is "arising" which cannot be equated with "receipt". In this respect the ld. authority has quoted a very old decision of Hon'ble Madras High Court in case of T.V. Sundaram Iyengaar and Sons Ltd. V. CIT, 37 ITR 26 (Mad). At para 13 of the said decision is extracted in the following manner: "13. In T.V. Sundaram Iyengar and Sons Ltd. V. CIT [1959] 37 ITR 26, a Division Bench of the Madras High Court while construing section 12 B of the Indian Income-tax Act, 1922 clarified the import of the expression "arise" as follows: "Section 12B does not require that profits should have been actually received. It is sufficient if ....
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....ousal of income has also been discussed by the ld. author S. Rajaratnam in the commentary of Law of Income Tax by Sampath Iyengar XIth Edition by discussing the meaning of "accrued and arise" at page 1300 it has been observe as under: "(1) Important principles.- (a) Meaning - 'Accrue' means 'to arise or spring as a natural growth or result', to come by way of increase'. 'Arising' means 'coming into existence or notice or presenting itself'. 'Accrue' connotes growth or accumulation with a tangible shape so as to be receivable. In a secondary sense, the two words together mean 'to become a present and enforceable right' and 'to become a present right of demand'. In the Act, the two words are used synonymously with each other to denote the same idea or ideas very similar, and the difference lies only in this that one is more appropriate than the other, when applied, to a particular case. It will indeed be difficult to distinguish between the two words, but it is clear that both the words are used in contradistinction to the word 'receive' and indicate a right to receive. They represent a stage anterior to the point of time ....
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.... or a shield in the hands of the transferee to protect the possession of any property which has been given by the transferor as lawful possession under a particular agreement of sale. This position of law was incorporated in the definition of ' transfer ' by insertion of clauses ( v) & ( vi ) in section 2(47) of the Act . It is important to note that clause ( v) uses the expression " contract of the nature referred to in section 53A of T.P. Act , therefore, c lear l y the idea is that an agreement which provides some defense in the hands of transferee was incorporated under the definition of ' transfer ' in the Income Tax Act . Now or iginal l y section 53A of T.P. Act provided that even if " the contract though required to be regis tered has not been registered" , which means the right of defending the possesion was avai lable even if the contract was not registered but by Amendment Act of 2001, the expression " though required to be registered has not been registered" , has been omit ted which means for the purpose of possession u/s 53A of T.P. Act , a person has to prove that possession has been given under a registered agreement . In other words , now u/s 53A of T.P. Act , the ....
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.... brings into it self by reference some of the clauses of a former Act , the legal effect of that , as has of ten been held, is to write those Sections into the new Act as if they had been actually written in it with the pen, or printed in it . (p.233) Even though only particular Sections of an earlier Act are incorporated into later, in construing the ncorporated Sections it may be at times necessary and permissible to refer to other parts of the earlier statute which are not incorporated. As was stated by LORD BLACKBURN: "When a single Section of an Act of Parliament is introduced into another Act, Ithink it must be read in the sense it bore in the original Act from which it was taken, and that consequently it is perfectly legitimate to refer to all the rest of that Act in order to as certain what the Sections meant , though those other Sections are not incorporated in the new Act . (p.244) 72 On the bas is of above observation, it was held that meaning of past losses or unabsorbed depreciation has to be taken same as was defined in the Companies Act. In this case it is clear that provision itself refers to clause (b) of sub section (1) of section 205 of Company's Act 1956 and t....
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.... registered and though full consideration was received and even possession was given, still the same transactions could not be subjected to tax because the same could not covered by the definition of "transfer". To bring such transactions within the tax net, this amendment was made. It has to be appreciated that clause (v) in section 2(47) does not lift the definition of part performance from section 53A of the Transfer of Property Act, 1882. Rather, it defines any transaction involving allowing of possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act. This means such transfer is hot required to be exactly similar to the one defined u/s.53A of the Transfer of Property Act, otherwise legislature would have simply stated that transfer would include transactions defined in sec. 53A of the Transfer of Property Act. But the legislature in its wisdom has used the words "of a contract, of the nature referred in section 53A". Therefore, it is only the nature which has to be seen. As discussed above, the purpose of insertion of clause (v) was to tax those transactions where pro....
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....s a person who is entitled to receive income from the property in his own right. The requirement of registration of the sale deed in the context of section 22 is not warranted." Thus, from the above, it is clear that it is not necessary to get the instrument of transfer registered for the purpose of Income-tax Act when a person has got a valid legally conveyed after complying with the requirements of the law. 9. Similarly, in the case of Mysore Minerals Ltd. v. CIT [1999] 239 ITR 775/106 Taxman 166 (SC), the assessee had purchased for the use of its staff seven low income group houses from a Housing Board. The payment had been made and in turn possession of the houses was taken over by the assessee. The actual conveyance deed was not executed. The assessee claimed depreciation which was denied by the department. After great discussion, it was observed that for all practicable purposes and for the purpose of Income-tax Act, the assessee shall be construed as owner of the property. In fact, it was held as under: - "Held, reversing the judgment of the High Court, that the finding of fact arrived at in the case at hand was....
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....ications of the decision in case of Chaturbhuj Dwarkadas Kapadia (supra) in para 33 to 38. We had also examined why in that case capital gain was not held to be chargeable in Assessment year 1995-96.There is no need to repeat the same and in view of the said observations, we reject this contention. 77 The next contention is that it is necessary for invok ing of section 2(47) (v) of the Act to compl y with the provisions of section 53A of the Transfer of Property Act to the extent that there should be willingness on the part of the transferee to per form his part of the contract . 78 In this aspect we have no quarrel with the proposition that for invoking section 53A pf T.P. Act read with clause ( v) of section 2(47) , the transferee has to per form or is willing to perform his part of the contract. In this respect as referred to by Ld. Counsel for the assessee, the comments of the Ld. Author in the commentar y by Mulla - Dinshan Frederick Mulla vide para 16 are clear and shows that this requirement has to be absolute and unconditional . Some observations have been made in the case of General Glass Company Pvt Ltd Vs DCIT (supra) . In that case it was held that willingness to perf....
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....Court against the implementat ion of the project. Initially, the construction was banned by the Hon'ble High Court. However, later on it was observed in the CWP No. 20425 of 2010 and as clarified by the order of the Hon'ble Supreme Court that refusal of sanction under the Envi ronment (Protection) Act , the society have sought a review of the order because the findings arrived were ex.parte. No order in the matter has been passed by the competent authority perhaps because of the order of High Court . In the interim order pas sed in the PIL it has been clarified by the Hon'ble Supreme Court vide order dated 31.1.2012 permitting the concerned authority under the different statutes governing the matter to their respective jurisdiction to be decided in accordance with law. Thus, it becomes clear that developer i .e. THDC has applied for various permissions before the relevant authorities and in some cases permission were declined on ex.parte basis and in some cases the same were declined in view of the High Court order banning the construction. After the clarification of the order of the High Court by Hon'ble Supreme Court by order dated 31.1.2012, the authorities have already been per....
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....eure continues for period of ninety (90) days. In the event of termination of this Agreement all obligations of the Parties until such date shall be fulfilled. 82 The combined reading of these clauses show that if any of the party could not perform its part of the obligation because of the unforeseen circumstances which included government directions, Court orders, injunctions etc. such party would not be liable to other party. In view of Force Majeure clause which included Court Injunction it can not be said that THDC is not willing to perform its obligation. In fact Develpers i .e. THDC/HASH were perusing the issue of permissions /sanct ions vigorousl y. These aspects become further clear if the judgment of the Hon'ble Punjab & Haryana High Court in CWP No. 20425 of 2010 vide order dated March 26, 2012 is perused. Paras 3, 4, 22, 25 & 26 of the judgment read as under : - 3. The broad contours of the present proceeding having been outlined, we may now proceed to take note of the specific contentions of the contesting parties as made before us. However , before we do so, it may be appropriate to mention the somewhat conflicting sta....
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....asised that every project attracting the provisions of the Periphery Control Act and/or the provisions of the 1995 Act must satisfy the ecological concerns of the area in the light of the provisions of the two statues in question. As already held by us, a public trust has been bestowed on the authorities by provisions of the said Acts which cast on such authorities a duty to interdic t any project or activit y which even remotely seems to create an imbalance in the pr ist ine ecology and environment of the area on which the city of Chandigarh is situated or for that matter in the immediate vicinity thereof . As already observed, necessary clearances under the aforesaid two enactments, insofar as the respondents are concerned, are presently pending before the concerned authorities and, therefore, it would be highl y incor rect on our part to enter into any further discussion on the aforesaid aspect of the case. 25. We also has ten to emphasise that a more rigorous regulated development in what are now the remnants of the periphery and the areas adjoining to it is the need of the hour for which the stakeholders i .e. the Administ ration of Chandigarh, the States of Punjab and Haryan....
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.... seventy f i ve thousand only ) per plot holder of 500 Sq. yards and (Rs . 49,50,000/ - (Rs . Forty nine lacs fifty thousand only ) as per plot holder of 1000 square yards to be made to the Owner and / or the respective members of the Owner (as the case may be) within six (6) months from the date of execution of this agreement or within two (2) months from the date of approval of the plans / Design and Drawings and grant of the final licence to develop where upon the construction can commence, whichever is later, against which the Owner shall execute a registered sale deed for land of equivalent value being 6.36 acres out of the Property as demarcated in green colour (also hatched in green colour ) in the Demarcation Plan annexed hereto as Annexure V and bear ing Khasra nos. 123/15, 123/6, 123/7 (balance par t ) , 123/3 (part ) , 123/ /4/ /1, 123/ / /4/ /1/2, 123/ /4/2, 123/5/1, 123/ /5/2, 123/ /5/3, 112/24/24 (part) " 85 The careful reading of the said clause of the JDA would show this payment was required to be made within a period of six months from the date of execution of this agreement or within two months from the date of approval of plan /sanction and drawing grant of fina....
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....of the provision shows that any transaction by way of becoming a Member or acquiring shares in the Cooperative Society or shares in the company which has the effect of transferring or enabling the enjoyment of any immoveable property would be covered by the definition of transfer. In the case before us, initially the Members of the Society were holding shares in the Society for ownership of plot of 500 sqyd or 1000 sqyd. This membership was surrendered to the Society vide resolution of the Society passed in the Executive Committee on 4.1.2007 which was later ratified in the General Body Meeting of the Society on 25.1.2007, so that the society could enter into JDA. In the JDA the Society has agreed to transfer the land. Therefore, technically it can be said that the developer i.e. THDC/HASH has purchased the membership of the Members in the society which would lead to enjoyment of the property and in that technical sense, clause (vi) of Section 2(47) is applicable. 89 Eighth contention is that since the Society has transferred the land through JDA on a pro-rata basis, therefore, only whatever money is received against which sale deeds have also been executed, can be taxed and notio....
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....can be made whi le interpreting Section 45 r .w. s. 48 by invok ing the rule that there cannot be any tax on notional receipt. Generally speaking it is only the real income which can be taxed but this has to be understood subject to limitations. Commenting on these limitations, the Ld. Author Shri. S. Rajaratnam in the Commentary of Law of Income Tax by Sampat Iyengar's Volume 1, (11th Edit ion) has observed at page 343 as under: - "5. Reservations on real income theory. - Whether accrual of income has taken place or not, must be judged on the principle of the real income theory. After accrual, non-charging of tax on the same because of certain conduct based on the ipse dixit of a particular assessee cannot be accepted. In determining the question whether it is hypothetical income or whether real income has materialized or not, various factors will have to be taken into account. It would be difficult and improper to extend the concept of real income to all cases depending upon the self-serving statement of the assessee. What has really accrued to the assessee has to be found out and what has accrued must be considered fr....
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....T v. Ganga Properties Ltd., (1970) 77 ITR 637, 647 (Cal); Liquidator, Mahmudabad Properties Ltd. v. CIT, (1972) 83 ITR 470 (Cal), affirmed, (1980) 124 ITR 31 (SC); CIT v. Zorostrian Building Society Ltd., (1976) 102 ITR 499 (Bom); C.J. George V. CIT, (1973) 92 ITR 137 (Ker); D.C. Anand & Sons v. CIT, (1981) 131 ITR 77 (Del). Also see, CIT v. Parbutty Churn Law, (1965) 57 ITR 609, 619 (Cal); In the matter of Krishna Lal Seal, AIR 1932 Cal 836; Lalla Mal Samgham Lal v. CIT, (1936) 4 ITR 250 (Lah); New Delhi Municipal Committee v. Nand Kumar Bussi, (1977) Tax LR 2130 (Del)]" 93 Similar view has been expressed by Shri N.A. Palkhivala in his commentary on the Law land Practice of Income Tax, Volume 2 (Eighth edition) by Kanga and Palkhivala's observation at pages 22 & 23. Again even Shri. S. Rajaratnam in the Commentary of Law of Income Tax by Sampat Iyengar's Volume 2, (11th edition) expressed identical views in his commentary at page 2738. 94 In al l the leading commentar ies c ited above, it has been obser ved that annual value is to be computed whether property has been let out or not . This means that notional value of the property has to be charged to the Income Tax under the he....
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.... Volume 1, page 236 in this regard has obser ved as under : - "Once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however, great the hardship may appear to the judicial mind. Considerations of hardship, injustice or anomalies do not play any useful role in construing taxing statutes unless there be some real ambiguity. Thus, any benevolent construction in favour of the assessee has been held to be uncalled for. 96 Therefore, it can be said that generally speak ing notional income could not be subjected to tax but whenever there is a specific provision, the same has to be taxed. Now, in case of capital gain, section 45 read with section 48 very clearly provides that it is the profit "arising" from the transfer of a capital as set which would be subjected to charge of capital gain tax and section 48 clearly provides for tak ing the total consideration into account whi le comput ing the capital gains . This aspec t we have already discussed in detai l at para No. 64 to 68 from which it becomes clear that it is the whole consideration whether received or accrued, which has t....
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....f the Property shall be Rs. 106,42,50,000/- (Rupees One Hundred Six Crores Forty Two Lacs Fifty Thousand only) and one hundred and twenty nine (129) flats consisting of Super Area of 2250 Sq. feet ('Flats'); one flat each for sixty five members having a plot of 500 sq. yards, two flats for the (thirty) 30 members having a plot of 1000 sq. yards and 4 flats to the Owner for the 4 plots of 500 sq. yards each as per list annexed with this Agreement as Schedule B ('Sale Transaction') It is expressly agreed between the Developers that HASH shall be responsible for making all payments to the Owner and/or the respective members of the Owner (as the case may be) as per the negotiated and agreed terms between the Owner and HASH, HASH expressly undertakes to make timely payments of the Payment to the Owner and / or the respective members of the Owner (as the case may be) as under: 4.2 As resolved by the Owner, THDC either by itself or along with HASH shall allot the Flats in the name of members of the Owner as per list annexed with this Agreement as Schedule B attached herein (hereinafter referred to as the 'Allottees'). The specifications of....
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....creasing scale of such development agreements to solve the housing problem in the cities, a statutory clarification or circular is overdue. " 99 These comments and the other detailed discussion on this aspect clearly show that capital gain tax has to be paid on the total consideration arising on transfer which would include the consideration which has been received as well as the consideration which has arosen and become due and may be received later on. In view of this discussion this contention is rejected. 100 Ninth contention is that the assessee has already terminated the agreement and has revoked the Power of Attorney. We find no force in this submissions. 101 In this regard ld. counsel of the assessee has relied on the decision of Mumbai Bench of the Tribunal in case of Chemosyn Ltd. V ACIT (supra). In that case the assessee-Company was owner of two plots bearing 256 & 257 in Gundabali Andheri Mumbai. The assesseecompany entered into a development agreement with Dipiti Builders for the development rights for a consideration of Rs. 16.11 crores. Dipiti Builders had also agreed to construct 18000 sqft carpet area for the benefit of assessee on plot No. 256. In the return of....
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..... In the event the Agreement is termination by THDC, all the lands registered in the name of THDC as per the terms of this Agreement upto the date of the termination shall remain with THDC and the balance lands to be transferred 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. (ii) In the event all the requisite government and statutory approvals, authorizations, consents, licenses, approvals of all the plans/designs and Drawings as may be required for the development of this Property in relation to the Project and to undertake the Project are not granted within nine (9) months of the submission of the final plans/Designs and Drawings to the Competent Authority for approval then THDC may as its sole discretion either decide that it does not desire to undertake and complete the Project and hence terminate t....
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....terms of this Agreement shall not be transferred by the Owner in favour of THDC. Upon the termination, the Owner shall forfeit the Adjustable Advance/Earnest Money mentioned in clause 4(i)." 103 The reading of the above clause would show that power of termination has been given in many circumstances to THDC vide clause 14(i), (ii) and (iii). The power for termination by the owner has been mentioned in clause 14(iv) only. Reading of this clause would show that right to terminate with the owner i.e. the Society was available only in case of default in making the payment. The issue regarding default for making payment has already been discussed by us in Paras 84 to 86 above while discussing the issue of willingness on the part of the transferee to perform its part of the contract We have already held that there was no default on the part of developer i.e. THDC/HASH in making the payment, therefore, the assessee had no right to terminate the contract. In any case we further find that clause 20 of the JDA refers to Arbitration and it is clearly provided that all the disputes under it should be referred to the arbitration. Therefore, if the Society had some grievance it was duty bound t....
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.... ) Rs . 106,42,50,000/ - (ii) Consideration in kind (Rs . 101,25,000/ - x 129 plot s ) Rs . 130,61,25,000/ - Total Rs . 237,03,75,000/- Average cost of consideration Rs. 11.18 crores per acre (Total consideration of Rs. 237.03 crores divided by 21.2 acres of land) It is claimed on behalf of the assessee that JDA has been cancelled and the developer has been allowed to retain the property which has also been conveyed to developer through two sale deeds. If that is so then what would happen to the balance consideration because in such situation the assessee has received consideration of only about Rs. 5 croress per acre because the assessee has registered land measuring 3.08 acres for Rs. 15.48 crores through first conveyance deed, whereas consideration as per original agreement was Rs. 11.18 crores per acre as shown above. The difference is because of non receipt of consideration in kind and the assessee has not shown any evidence that it has made the claim for receipt of balance consideration. This leads to the conclusion that there was no cancellation of the JDA. 106 Some arguments were made by both the parties that if the contract is finally stand abandone....
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....ph 27 (supra) should also be kept in view." Here the comments of Shri Rajaratnam quoted at para 5164 above are also relevant again: " " It is hard on the owners when required to pay tax , when handing over the possession for purposes of construction without being able to enjoy the construction, which is yet to commerce or in the process of construction being put up by the developer, but the solution lies in statutory clarification in such cases. In view of the increasing scale of such development agreements to solve the housing problem in the cities, a statutory clarification or circular is overdue. " We may mention here that no doubt sometimes an assessee may be put in a difficult situation and as mentioned by Hon'ble Authority in case of Jasbir Singh Sarkaria (supra) as well as Ld. Author Shri Rajaratnam it is for the legislature to take corrective steps. However, it may not be out of place that if considering the difficulty the interpretation given by the ld. counsel of the assessee is accepted then the Revenue may not be able to tax such assessees when these difficulties are removed. For example in the present case....
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....2 crores; (b) in the ratio of 70: 30 between THDC and HASH in case Gros s Sales Proceeds is equal to Rs. 1272 crores; (c ) in addition (b) , in the ratio of 60: 40 between THDC and HASH in respect of gross sales Proceeds in excess of Rs. 1272 crores. "It is agreed that the minimum guaranteed amount from the Gross Sales Proceeds for THDC and HASH is Rs. 890.40 crores and Rs. 225.76 crores respectively. The minimum guaranteed amount of Rs . 225.76 c rores to HASH includes Rs . 58.88 c rores that shal l be expended by THDC towards construction of 126 flats equivalent to 2,83,500 sqft , which flats are to be allotted in the names of the members of the Society or otherwise, as the case may be, calculated as Rs. 2000 per sqft. for the area 2,83,500 sqft. and the 72% share of 3 flats of 2250 Sqft. to be purchased by HASH @ Rs , 4500/ - per sqft . Should the application of the ratio stipulated in (a) above result in HASH being entitled to a sum greater than the minimum guaranteed amount and THDC being entitled to a sum less than the minimum guaranteed amount, THDC shall be entitled to the entitlement of HASH which is in excess of its mini....
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....ns on the issue of deduction u/s 54F. He has pointed out that this issue has been rejected wrongly by CIT (A). However, carefully perusal of the grounds of appeal show that no ground in respect of deduction u/s 54F has been raised before us and, therefore, we decline to adjudicate this issue and all the arguments made in this behalf are rejected. Though reference was made to ground No. 2.3 in this regard. The perusal of grounds No. 2.3 would show that reference has been made only to Section 54 and Section 54EC. Section 54 deals with deduction in case the assessee being an individual or HUF, transfers the res identical house and in case before us, the assessee has transferred the plot. Therefore, it cannot be said that deduc t ion u/s 54F and 54 is same. Since no ground has been raised for deduction u/ s 54F, we reject this contention. 111 Ground No. 3 - The ld. counsel of the assessee submitted that without prejudice to the issues raised in grounds No. 2, 5 & 6, capital gain should have been taxed in the hands of the Society which is legal owner of the land. 112 On the other hand, the ld. DR for the revenue submitted that the Society was acting on behalf of the Members and the M....
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....Act in accordance with law. Withdrawal of interest u/s 244A (3) should also be done in accordance with law. 115 In the result, appeal of the assessee is partly allowed." 38. Now, we take up the 24 appeals before this Bench one by one as under: 1) ITA No.180(Asr)/2011 - Shrisatnam Singh Kainth vs ITO i) Grounds No. 1 & 2 relate to reopening of assessment under section 147 of the Act. The facts of these grounds are identical to the facts as in the case of Sh. Avtar Singh Brar (supra)and other 30 appeals decided by the ITAT Chandigarh Bench in ITA No. 448(Asr)/2011 and others vide order dated 29.07.2013 (supra) and decision therein is, therefore, identically applicable in the present case. Accordingly, we find no infirmity in the order of the ld. CIT (A), who has rightly upheld the action of the A.O. in reopening the assessment. Thus, grounds No.1 & 2 of the assessee are dismissed. ii) As regards grounds No. 3 to 6, the facts are identical to the facts in the case of Sh.Charanjit Singh Atwal vs. ITO (supra) hereinabove on the taxability of the capital gain. Therefore, the decision in the case of Sh.Charanjit Singh Atwal vs. ITO (supra) is identically applicable in the present ca....
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....ssee in ITA No. 472(Asr)/2011 are dismissed. 5. ITA No.13(Asr)/2013 - Sh. Raghunath Puri (Decd.) 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.13(Asr)/2013 are dismissed. 6. ITA No.187(Asr)/2012 - Smt. Rajwinder Kaur Bhullar 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.Char....
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..... ITO (supra) and also in our order hereinabove. Therefore, in the facts and circumstances, all the grounds of the assessee in ITA No.466 (Asr)/2012 are dismissed. 10. ITA No.63(Asr)/2013 - Sh. Satya Pal Saini 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.63(Asr)/2013 are dismissed. 11. ITA No.33(Asr)/2013 - Dr.Rattan Singh 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....
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....pplicable 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.277(Asr)/2013 are dismissed. 15. ITA No.338(Asr)/2013 - Sh. Balwinder Singh Dhillon 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. 338(Asr)/2013 are dismissed. 16. ITA No.244(Asr)/2011 - Sh. Balbir Singh Miani 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....
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....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. 5(Asr)/2013 are dismissed. 20. ITA No.51(Asr)/2013 - Sh. Ajit Pal Singh 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. 51(Asr)/2013 are dismissed. 21. ITA No.52(Asr)/201....