ITA No. 191 of 2017 (O&M) 1 IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 191 of 2017 (O&M) Date of decision: 08.05.2017 Pr. Commissioner of Income Tax, Jalandhar-I, Jalandhar Appellant Vs. Dr. Amrik Singh Basra, Miani Road, Dasuya Respondent CORAM: HON BLE MR. JUSTICE AJAY KUMAR MITTAL HON BLE MR. JUSTICE RAMENDRA JAIN Present: Mr. Vivek Sethi, Senior Standing counsel for appellant- Revenue. Ajay Kumar Mittal,J. 1. This order shall dispose of ITA Nos.191 and 192 of 2017, as according to learned counsel for appellant-revenue, issue involved in both these appeals is identical. However, facts are being extracted from ITA No.191 of 2017. 2. appellant-revenue has filed instant appeal under Section 260A of Income Tax Act, 1961 (in short, Act ) against order dated 19.10.2016, Annexure A.3, passed by Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (in short, Tribunal ) in ITA No. 572(ASR)/2015, claiming following substantial questions of law:- (i) Whether on facts and circumstances of case, Hon ble ITAT was justified in deleting addition made by 1 of 8 ::: Downloaded on - 18-05-2017 10:19:59 ::: ITA No. 191 of 2017 (O&M) 2 AO relying upon decision of Hon ble High Court in case of C.S. Atwal Vs. CIT in ITA No. 200 of 2013, when SLP has been filed by department in case? (ii) Whether on facts and circumstances of case and in law, Hon ble ITAT erred in relying upon order of Hon ble High Court and was justified in holding that transfer of land by members of Cooperative Society by signing irremovable Power of Attorney in name of Developer and also by signing Joint Development Agreement (JDA) would constitute transfer within meaning of section 2(47)(ii) of Income Tax Act, 1961(the Act) read with Clause (v) and Clause(vi) of said section so as to attract Capital Gain within meaning of section 45 read with section 48 of Act? (iii) Whether on facts and circumstances of case and in law, Hon ble ITAT erred in relying upon order of Hon ble High Court and was justified in holding that no possession had been given by transferor to transferee of entire land in part-performance of Joint Development Agreement dated 25.02.2007 so as to fall within scope of Section 53A of Transfer of Property Act 1882 ignoring fact that combined reading of clauses of duly registered irrevocable Special Power of Attorney and JDA would clearly show that developer was handed over possession of property whereby assessee was authorized to enter upon property not only for purposes of development but other purposes also, including mortgage and sale of that property? (iv) Whether on facts and in circumstances of case and in law, Hon ble ITAT erred in relying upon order of Hon ble High Court and was justified in holding that in absence of registration of JDA dated 25.02.2007 having been executed after 24.09.2001, agreement does not fall under Section 53A of Transfer of Property Act, 1882 and consequently, section 2(47)(v) of Income Tax Act, 1961 does not apply to present case, failing to appreciate fact that this requirement of registration cannot be read into clause 2 of 8 ::: Downloaded on - 18-05-2017 10:20:01 ::: ITA No. 191 of 2017 (O&M) 3 (v) of Section 2(47) of Income Tax Act, 1961 because said provision refers only to contract of nature of section 53A of T.P. Act without going into controversy whether or not such agreement is required to be registered? (v) Whether on facts and in circumstances of case and in law, Hon ble ITAT erred in relying upon order of Hon ble High Court and was justified in holding that Society has transferred land through JDA on pro-rata basis, and that only money received against which sale deeds have also been executed could be taxed and money to be received later cannot be presently taxed ignoring fact that as per section 45 read with Section 48 of Income Tax Act, in case of capital gain, tax has to be paid on total consideration arising on transfer which include consideration which has been received as well as consideration which has arisen and became due and may be received later on? (vi) Whether on facts and in circumstances of case and in law, Hon ble ITAT erred in relying upon order of Hon ble High Court and was justified in concluding that assessee has already terminated agreement and has revoked irrevocable Power of Attorney, ignoring vital fact that said irrevocable Power of Attorney could not be revoked for any reasons without obtaining specific prior written consent of THDC/HASH and no document showing consent of THDC for revocation of this irrevocable Power of Attorney was ever been produced by assessee? (vii) Whether on facts and in circumstances of case and in law, Hon ble ITAT erred in relying upon order of Hon ble High Court and was justified in holding that clause (vi) of Section 2(47) of Income Tax Act, 1961 would not be applicable in this case, ignoring fact that developer i.e. THDC/HASH has purchased membership of members of society which would lead to its enjoyment of property and in that sense, clause (vi) of Section 2(47) would apply to present case? 3 of 8 ::: Downloaded on - 18-05-2017 10:20:01 ::: ITA No. 191 of 2017 (O&M) 4 3. few facts relevant for decision of controversy involved as narrated in ITA No.191 of 2017 may be noticed. respondent-assessee, individual, filed his return of income for assessment year 2008-09 on 31.03.2009 declaring total income of ` 5,37,247/-. It was processed under Section 143(1) of Act. assessee also filed revised return on 29.12.2009 declaring total income of ` 31,24,460/-. Proceedings under Section 147/148 of Act were initiated by issuing notice under Section 148 of Act on 01.01.2013 as assessee had not declared entire long term capital gain arising out of transfer of capital assets i.e. land. assessment was completed by Assessing Officer on 28.03.2014 at total income of ` 1,54,72,350/-. While completing assessment, Assessing Officer computed long term capital gain amounting to ` 1,49,25,000/- and added it to declared income of assessee. assessee was one of members of Punjabi Cooperative Housing Building Society Limited. Society consisting of 207 members was owner of 27.3 acres of land in village Kansal. It had allotted plots measuring 500 square yards to its 65 members, 1000 square yards to its 30 members and 4 plots of 500 square yards each were retained by it. It entered into tripartite Joint Development Agreement (JDA) dated 27.07.2007 with Hash Builders Private Limited, Chandigarh (HASH) and Tata Housing Development Company Limited, Mumbai (THDC). Under JDA, it was agreed that HASH and THDC shall undertake development of 27.3 acres of land owned and registered in name of society in respect of which it would give development rights in lieu of consideration. agreed consideration was to be disbursed by THDC through HASH to each individual member of society having plot size of 500 square yards partly in monetary and balance in terms of built up property. Clause 4 of JDA 4 of 8 ::: Downloaded on - 18-05-2017 10:20:01 ::: ITA No. 191 of 2017 (O&M) 5 provided details of payments. assessee had been allotted 500 square yards plot in society. As per JDA, she was entitled to receive monetary consideration of ` 80,00,000/- and one furnished flat of 2250 square feet. assessee actually received proportionate amount of ` 32,00,000/- received during year under consideration. Assessing Officer vide his order dated 28.03.2014, Annexure A.1, passed under Section 143(3) of Act held that since as per JDA, there was grant and assignment of various rights in property by assessee in favour of THDC along with handing over physical and vacant position, same tantamount to transfer. Assessing Officer applied provisions of Section 2(47)(v) of Act read with Section 53A of Transfer of Property Act, 1882 (in short, 1882 Act ) which provides that any transaction involving allowing possession of immovable property to be taken or retained in part performance of contract of nature referred to in Section 53A of Act of 1882 Act shall be treated as transfer for purposes of Act. Since JDA was signed on 27.04.2007 i.e. during previous year relevant to assessment year 2008-09, Assessing Officer computed chargeable capital gains in that year. It was also held that there was transfer within meaning of sub sections (ii) and (vi) of Section 2(47) of Act. Assessing Officer concluded that assessee was liable to tax during assessment year under consideration on entire amount received/receivable in future under head capital gains and thus made net addition of ` 1,49,25,000/- on account of long term capital gains taxable in hands of assessee. Aggrieved by order, assessee filed appeal before Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 27.08.2015, Annexure A.2, CIT(A) deleted addition of ` 1,49,25,000/- relying upon judgment of this Court in case of 5 of 8 ::: Downloaded on - 18-05-2017 10:20:01 ::: ITA No. 191 of 2017 (O&M) 6 C.S. Atwal and others Vs. Commissioner of Income Tax, Ludhiana and another, ITA No. 200 of 2013 decided on 22.07.2015. Not satisfied with order, revenue filed appeal before Tribunal. Vide order dated 19.10.2016, Annexure A.3, Tribunal dismissed appeal filed by revenue holding that case of assessee was clearly covered by decision of this Court in C.S. Atwal case s (supra). Hence, instant appeals by appellant-revenue. 4. We have heard learned counsel for appellant-revenue. 5. matter is no longer res integra. In C.S. Atwal s case (supra) issue involved in this appeal stands decided by this Court. In said case, following issues emerged for consideration:- (i) Scope and legislative intent of Section 2(47)(ii), (v) and (vi) of Act; (ii) essential ingredients for applicability of Section 53A of 1882 Act; (iii) Meaning to be assigned to term possession ? (iv) Whether in facts and circumstances, any taxable capital gains arises from transaction entered by assessee? After considering relevant statutory provisions and case law, following conclusions were drawn:- (1) Perusal of JDA dated 25.02.2007 read with sale deeds dated 2.03.2007 and 25.04.2007 in respect of 3.08 acres and 4.62 acres respectively would reveal that parties had agreed for pro-rata transfer of land. (2) No possession had been given by transferor to transferee of entire land in part performance of JDA dated 25.02.2007 so as to fall within domain of Section 53A of 1882 Act. 6 of 8 ::: Downloaded on - 18-05-2017 10:20:01 ::: ITA No. 191 of 2017 (O&M) 7 (3) possession delivered, if at all, was as licencee for development of property and not in capacity of transferee. (4) Further Section 53A of 1882 Act, by incorporation, stood embodied in section 2(47)(v) of Act and all essential ingredients of Section 53A of 1882 Act were required to be fulfilled. In absence of registration of JDA dated 25.02.2007 having been executed after 24.09.2001, agreement does not fall under Section 53A of 1882 Act and consequently Section 2(47)(v) of Act does not apply. (5) It was submitted by learned counsel for assessee-appellant that whatever amount was received from developer, capital gains tax has already been paid on that and sale deeds have also been executed. In view of cancellation of JDA dated 25.02.2007, no further amount has been received and no action thereon has been taken. It was urged that as and when any amount is received capital gains tax shall be discharged thereon in accordance with law. In view of aforesaid stand, while disposing of appeals, we observe that assessee appellants shall remain bound by their said stand. (6) issue of exigibility to capital gains tax having been decided in favour of assessee, question of exemption under Section 54F of Act would not survive any longer and has been rendered academic. (7) Tribunal and authorities below were not right in holding assessee-appellant to be liable to capital gains tax in respect of remaining land measuring 13.5 acres for which no consideration had been received and which stood cancelled and incapable of performance at present due to various orders passed by Supreme Court and High Court in PILs. Therefore, appeals are allowed. 6. Learned counsel for appellant-revenue has not been able to controvert applicability of decision rendered in C.S. Atwal s case 7 of 8 ::: Downloaded on - 18-05-2017 10:20:01 ::: ITA No. 191 of 2017 (O&M) 8 (supra). substantial questions of law claimed in these appeals are answered accordingly. Consequently, both appeals stand dismissed. (Ajay Kumar Mittal) Judge May 08, 2017 (Ramendra Jain) gs Judge Whether speaking/reasoned Yes/No Whether reportable Yes/No 8 of 8 ::: Downloaded on - 18-05-2017 10:20:01 ::: Pr. Commissioner of Income-tax, Jalandhar-I, Jalandhar v. Amrik Singh Basra