PER T.R.SOOD, A.M This appeal is directed against the order dated

20.10.2011 of the ld. CIT(A)-II, Ludhiana. 2 In this appeal various grounds have been taken but at the time of hearing the ld. counsel of the assessee submitted that only following disputes are involved: (i) Reopening of assessment (ii) Charging of capital gain tax (iii) Deduction u/s 54/54F (iv) charging of interest u/s 234A, 234B and 234C of IT Act. 3 Issue No. 1,2 & 3 regarding reopening of assessment was not pressed before us, therefore, the same is dismissed. 4 Second issue from ground No. 4 to 11 is regarding charging of capita gain. 2 5 After hearing both the parties we find that the assessee is a Member of The Defence Services Coop House Building Society Ltd. The Society has transferred the land through Joint Development Agreement to Tata Housing Ltd. /Hash Builders. The assessee was holding a plot measuring 500 sqyd for which the assessee was entitled to monetary consideration of Rs. 80 lakhs and one furnished flats measuring 2250 sqft which has been valued at Rs. 4500 per sqft. W hole of the consideration amounting to Rs. 1,81,25,000/- has been subjected to charge of capital gain by the Assessing Officer and confirmed by the ld. CIT(A).. This issue has been considered by us in detail in case of Shri Charanjit Singh Atwal (supra). 6 Both the parties made identical arguments which were made in case of Shri Charanjit Singh Atwal and others in ITAs no. 448/Chd/2011 and others.

7. After considering the rival submissions we f ind that this issue has been decided by us in case of Shri Charanjit Singh Atwal and others in ITAs No. 448/Chd/2011 and others vide para 27 to 110 which are as under: 2 7 W e h a v e c o n s i d e r e d t h e r i v a l s u b m i s s i o n s a n d c a r e f u l l y g o n e t h r o u g h t h e w r i t t e n s u b m i s s i o n s f i l e d b y b o t h t h e p a r t i e s i n t h e l i g h t o f m a t e r i a l o n r e c o r d , p a p e r b o o k s a n d v a r i o u s j u d g m e n t s c i t e d b y t h e p a r t i e s . T h e m a i n i s s u e i s w h e t h e r a s s e s s e e i s l i a b l e t o c a p i t a l g a i n t a x i n t h e ye a r u n d e r c o n s i d e r a t i o n i . e a s s e s sm e n t ye a r 2 0 0 7 - 0 8 i n v i e w o f t h e J D A . F o r c h a r g i n g c a p i t a l g a i n s , t h e c h a r g i n g s e c t i o n i s 4 5 a n d t h e r e l e v a n t p o r t i o n i s a s u n d e r : - 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, [ [54D, [54E, [54EA, 54EB,] 54F [ 54G and 54H], be chargeable to income-tax under the head Capital gains, and shall be deemed to be the income of the previous year in which the transfer took place. 2 8 T h e p l a i n r e a d i n g o f t h e a b o v e p r o v i s i o n w o u l d s h o w t h a t c h a r g i n g a n i t e m o f i n c om e u n d e r t h e h e a d C a p i t a l g a i n s r e q u i r e t h r e e i n g r e d i e n t s i . e . ( i ) t h e r e s h o u l d b e s o m e p r o f i t . ( i i ) S u c h p r o f i t m u s t b e a r i s i n g o n a c c o u n t o f t r a n s f e r a n d ( i i i ) t h e r e s h o u l d b e c a p i t a l a s s e t w h i c h h a s b e e n t r a n s f e r r e d . T h e r e i s n o d i s p u t e t h a t a c a p i t a l a s s e t w a s i n v o l v e d a n d t h e r e w a s s o m e p r o f i t a l s o i . e . w h y a s s e s s e e h a s h i m s e l f r e t u r n e d i n c o m e u n d e r t h e h e a d c a p i t a l g a i n s ; . T h e d i s p u t e i s m a i n l y o n a c c o u n t o f t r a n s f e r a n d t h a t t o o w h e t h e r t h e t r a n s f e r c o u l d b e c o v e r e d u n d e r c l a u s e s ( i i ) , ( v) & ( v i ) o f s e c t i o n 3 2 ( 4 7 ) s o a s t o b r i n g i n t o p i c t u r e t h e w h o l e o f c o n s i d e r a t i o n a r i s i n g o n t r a n s f e r o f s u c h a s s e t s . W e s h a l l d e a l w i t h e a c h o f t h e a s p e c t i n d e t a i l a t a p p r o p r i a t e t i m e . 2 9 . A p a r t f r o m c h a r g i n g p r o v i s i o n s u / s 4 5 a n o t h e r i m p o r t a n t p r o v i s i o n i s s e c t i o n 4 8 w h i c h d e a l s w i t h t h e m o d e o f c o m p u t a t i o n a n d r e l e v a n t p o r t i o n r e a d s a s u n d e r : -

48. The income chargeable under the head Capital gains shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely : (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto: 3 0 A g a i n p l a i n r e a d i n g w o u l d s h o w t h a t c a p i t a l g a i n w o u l d b e c o m p u t e d b y c o n s i d e r i n g t h e f u l l v a l u e o f c o n s i d e r a t i o n w h e t h e r r e c e i v e d o r a c c r u i n g a s a r e s u l t o f t h e t r a n s f e r . T h e r e f o r e , i t i s n o t o n l y t h e c o n s i d e r a t i o n r e c e i v e d w h i c h i s r e l e v a n t b u t t h e c o n s i d e r a t i o n w h i c h h a s a c c r u e d i s a l s o r e l e v a n t . 3 1 . T h e e x p r e s s i o n t r a n s f e r h a s b e e n d e f i n e d u / s 2 ( 4 7 ) o f t h e A c t w h i c h r e a d s a s u n d e r : - 2 (47) [ transfer, in relation to a capital asset, includes, (i) the sale , exchange or relinquishment of the asset ; or (ii) the extinguishment of any rights therein ; or (iii) the compulsory acquisition thereof under any law ; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment ;] [or] [(iva) the maturity or redemption of a zero coupon bond; or] [(v) any transaction involving the allowing of 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. 4 Explanation.For the purposes of sub-clauses (v) and (vi), immovable property shall have the same meaning as in clause (d) of section 269UA;] C l a u s e s ( v ) & ( v i ) t o s e c t i o n 2 ( 4 7 ) o f t h e A c t h a v e b e e n i n s e r t e d b y F i n a n c e A c t , 1 9 8 7 w . e . f . 1 . 4 . 1 9 8 8 . T h e p u r p o s e o f t h i s i n s e r t i o n h a s b e e n e x p l a i n e d b y C B D T i n C i r c u l a r N o . 4 9 5 d a t e d 2 2 . 9 . 1 9 8 7 . T h e r e l e v a n t p a r t 1 1 . 1 a n d 1 1 . 2 o f t h e c i r c u l a r r e a d s a s u n d e r : -

11.1 The existing definition of the word " transfer " in section 2(47) does not include transfer of certain rights accruing to a purchaser, by way of becoming a member or acquiring shares in a co-operative society, company, or as way of any agreement or any arrangement whereby such any building which is either being constructed or which is to be constructed. Transactions of the nature referred to above are not required to be registered under the Registration Act, 1908. Such arrangements confer the privileges of ownership without transfer of title in the building and are a common mode of acquiring flats particularly in multi-storeyed constructions in big cites. The definition also does not cover cases where possession is allowed to be taken or retained in part performance of a contract, of the nature referred to in section 53A of Transfer of Property Act, 1882. New sub-clauses (v) & (vi) have been inserted in section2(47) to prevent avoidance of capital gains liability by recourse to transfer of rights in the manner referred to above.

11.2 The newly inserted sub-clause (vi) of section 2(47) has brought in to the ambit of transfer

, the practice of enjoyment of property rights through what is commonly known as Power of Attorney arrangements. The practice in such cases is adopted normally where transfer of ownership is legally not permitted. A person holding the power of attorney is authorized the powers of owner, including that of making construction. The legal ownership in such cases continues to be with the transferor. 3 2 B e f o r e i n s e r t i o n o f t h e c l a u s e ( v) & ( v i ) t o s e c t i o n 2 ( 4 7 ) o f t h e A c t , t h e p o s i t i o n o f l a w w a s t h a t u n l e s s a n d u n t i l a s a l e d e e d w a s e x e c u t e d f o r t r a n s f e r o f i m m o va b l e p r o p e r t y, t h e s a m e c o u l d n o t b e c o n s t r u e d a s t r a n s f e r f o r t h e p u r p o s e o f c h a r g i n g c a p i t a l g a i n t a x . T h i s w a s p a r t i c u l a r l y s o i n t h e l i g h t o f v a r i o u s j u d g m e n t s p a r t i c u l a r l y t h e j u d g m e n t o f H o n b l e A p e x C o u r t i n t h e c a s e o f A l a p a t i V e n k a t r a m i a n v C I T ( 5 7 I T R 1 8 5 ) ( S C ) . I n t h i s c a s e i t w a s h e l d t h a t i n t h e c o n t e x t o f t r a n s f e r f o r t h e p u r p o s e o f c a p i t a l g a i n t a x , w h a t i s m e a n t b y t r a n s f e r i s t h e e f f e c t i v e c o n v e ya n c e o f t h e c a p i t a l a s s e t b y a t r a n s f e r o r t o t h e t r a n s f e r e e . D e l i ve r y o f p o s s e s s i o n a n d a g r e e m e n t t o s e l l b y i t s e l f c o u l d n o t c o n s t i t u t e c o n v e ya n c e o f t h e i m m o v a b l e p r o p e r t y. I n t h e m e a n t i m e a p a r t f r o m t h i s d e c i s i o n a p r a c t i c e c a m e i n t o v o g u e b y w h i c h c e r t a i n p r o p e r t i e s w e r e b e i n g t r a n s f e r r e d w i t h o u t e x e c u t i n g t h e p r o p e r s a l e d e e d s . T h i s w a s b e i n g d o n e b e c a u s e t h e r e w a s r e s t r i c t i o n o n s a l e o f p r o p e r t i e s i n v a r i o u s t o w n s e . g . i n c a s e o f l e a s e h o l d p l o t s a n d f l a t s i n D e l h i i f t h e s am e w e r e t o b e t r a n s f e r r e d , p e r m i s s i o n w a s r e q u i r e d t o b e t a k e n f r o m t h e G o v e r n m e n t / D D A a n d 5 t r a n s f e r o r w a s r e q u i r e d t o p a y 5 0 % o f t h e m a r k e t v a l u e c o s t ( i . e . u n e a r n e d i n c r e a s e ) t o t h e G o v e r n m e n t . T o a v o i d s u c h p a ym e n t s a n d / o r a l s o t o a v o i d t h e p a ym e n t o f s t a m p d u t y o r c u m b e r s o m e p r o c e d u r e o f o b t a i n i n g p e r m i s s i o n , s o m e p r o p e r t i e s w e r e b e i n g s o l d b y w a y o f s a l e a g r e e m e n t a n d a l s o e x e c u t i o n o f G e n e r a l P o w e r O f A t t o r n e y a n d p o s s e s s i o n w a s g i v e n o n r e c e i p t o f f u l l c o n s i d e r a t i o n w i t h o u t e x e c u t i n g t h e p r o p e r s a l e d e e d s e t c . w h i c h a s m e n t i o n e d e a r l i e r w a s n o t e v e n p e r m i s s i b l e i n s o m e c a s e s . T h e s e t r a n s a c t i o n s a r e p o p u l a r l y c a l l e d

p o w e r o f a t t o r n e y

t r a n s a c t i o n s . T o a vo i d t h e s e a n d t o s t o p t h e l e a k a g e o f R e v e n u e , t h e P a r l i a m e n t h a s i n s e r t e d c l a u s e s ( v) & ( v i ) t o s e c t i o n 2 ( 4 7 ) s o a s s u c h t yp e o f t r a n s a c t i o n s a r e a l s o b e b r o u g h t i n t o t a x a t i o n n e t . H o w e v e r , i n t e r p r e t a t i o n s o f t h e s e c l a u s e s h a s l e d t o l o t o f l i t i g a t i o n a n d t h e m a i n p o i n t o f l i t i g a t i o n w a s t h a t a t w h a t p o i n t of t i m e t h e p o s s e s s i o n c a n b e s a i d t o h a v e b e e n g i v e n . I n t h e p r e s e n t c a s e , t h e R e v e n u e h a s m a i n l y r e l i e d o n t w o d e c i s i o n s n am e l y ( i ) C h a t u r b h u j D w a r k a d a s K a p a d i a v C I T 2 6 0 I T R 4 9 1 ( B o m . ) a n d ; ( i i ) A u t h o r i t y f o r A d v a n c e R u l i n g ( A A R ) N e w D e l h i i n t h e c a s e o f J a s b i r S i n g h S a r k a r i a 2 9 4 I T R 1 9 6 . 3 3 . I n t h e c a s e o f C h a t u r b h u j D w a r k a d a s K a p a d i a v C I T ( s u p r a ) , t h e f a c t s b e f o r e t h e H o n b l e B o m b a y H i g h C o u r t w e r e t h a t a s s e s s e e w h o w a s a n i n d i v i d u a l h a d 4 4 / 1 9 2 u n d i v i d e d s h a r e i n a n i m m o v a b l e p r o p e r t y i n G r e a t e r B o m b a y w h i c h c o n s i s t e d o f v a r i o u s l a n d s a n d b u i l d i n g s . B y A g r e e m e n t d a t e d A u g u s t 1 8 , 1 9 9 4 , t h e a s s e s s e e a g r e e d t o s e l l t o F l o r e a t I n v e s t m e n t L t d , ( h e r e i n r e f e r r e d t o F l o r e a t ) h i s s h a r e o f i m m o v a b l e p r o p e r t y f o r a t o t a l c o n s i d e r a t i o n o f R s . 1 , 8 5 , 6 3 , 2 2 0 / - w i t h r i g h t t o s a i d F l o r e a t t o d e v e l o p t h e p r o p e r t y i n a c c o r d a n c e w i t h t h e r u l e s / r e g u l a t i o n s f r a m e d b y l o c a l a u t h o r i t i e s . F o r t h i s p u r p o s e , t h e a s s e s s e e a l s o a g r e e d t o e x e c u t e a l i m i t e d p o w e r o f a t t o r n e y a u t h o r i zi n g F l o r e a t t o d e a l w i t h t h e p r o p e r t y a n d a l s o o b t a i n p e r m i s s i o n s a n d a p p r o v a l s f r o m v a r i o u s a u t h o r i t i e s . U n d e r c l a u s e 1 1 o f t h e a g r e e m e n t , i t w a s p r o v i d e d t h a t a f t e r F l o r e a t w a s g i v e n a n i r r e v o c a b l e l i c e n s e t o e n t e r u p o n t h e a s s e s s e e s s h a r e o f p r o p e r t y a n d a f t e r F l o r e t i n v e s t m e n t h a v e o b t a i n e d a l l n e c e s s a r y a p p r o v a l s , t h e F l o r e t w a s e n t i t l e d t o d e m o l i s h v a r i o u s b u i l d i n g s f o r s e t t l i n g t h e c l a i m s o f t h e t e n a n t s . U n d e r c l a u s e 1 4 o f t h e a g r e e m e n t , t h e a s s e s s e e w a s e n t i t l e d t o r e c e i v e p r o p o r t i o n a t e r e n t t i l l t h e p a ym e n t o f l a s t i n s t a l l m e n t s a n d t i l l t h a t t i m e a s s e s s e e w a s b o u n d t o p a y a l l o u t g o i n g s . U n d e r c l a u s e 2 0 o f t h e A g r e e m e n t , i t w a s a g r e e d t h a t s a l e s h a l l b e c o m p l e t e d b y e x e c u t i o n o f c o n v e ya n c e , h o w e v e r , t i l l t h e m a t t e r w a s a d j u d i c a t e d b y t h e H o n b l e H i g h C o u r t , n o c o n v e ya n c e w a s e x e c u t e d . P u r s u a n t t o t h i s a g r e e m e n t , F l o r e a t o b t a i n e d v a r i o u s p e r m i s s i o n s n a m e l y ( i ) c l e a r a n c e f r o m C R Z A u t h o r i t y d a t e d F e b r u a r y 7 , 1 9 9 6 ; ( i i ) l e t t e r f r o m U L C f o r r e d e v e l o pm e n t o f p r o p e r t y d a t e d A p r i l 2 6 , 1 9 9 5 . O t h er p e r m i s s i o n s w e r e a l s o o b t a i n e d d u r i n g t h e f i n a n c i a l ye a r e n d i n g 6 M a r c h 3 1 , 1 9 9 6 r e l e v a n t t o a s s e s s m e n t ye a r 1 9 9 6 - 9 7 . B y M a r c h , 3 1 , 1 9 9 6 , F l o r e a t h a d p a i d a l m o s t t h e e n t i r e c o n s i d e r a t i o n e x p e c t f o r a s m a l l s u m o f R s . 9 , 9 8 , 0 0 0 / - . H o w e v e r , t h e c om m e n c e m e n t c e r t i f i c a t e p e r m i t t i n g c o n s t r u c t i o n o f t h e b u i l d i n g w a s i s s u e d o n N o v e m b e r 1 5 , 1 9 9 6 . T h e p o w e r o f a t t o r n e y w a s e x e c u t e d o n M a r c h 1 2 , 1 9 9 9 . T h e q u e s t i o n a r o s e w h e t h e r l i a b i l i t y o f t h e a s s e s s e e f o r c a p i t a l g a i n a r o s e i n t h e a s s e s sm e n t ye a r 1 9 9 6 - 9 7 o r 1 9 9 9 - 2 0 0 0 . T h e o b s e r v a t i o n o f t h e C o u r t h a s b e e n s u m m a r i ze d i n h e a d n o t e a s u n d e r : - C l a u s e s ( v ) a n d ( v i ) w e r e i n t r o d u c e d i n s e c t i o n 2 ( 4 7 ) o f t h e I n c o m e - t a x A c t , 1 9 6 1 , w i t h e f f e c t f r o m A p r i l 1 , 1 9 8 8 . T h e y p r o v i d e t h a t t r a n s f e r i n c l u d e s ( i ) a n y t r a n s a c t i o n w h i c h a l l o w s p o s s e s s i o n t o b e t a k e n / r e t a i n e d i n p a r t p e r f o r m a n c e o f a c o n t r a c t o f t h e n a t u r e r e f e r r e d t o i n s e c t i o n 5 3 A o f t h e T r a n s f e r o f P r o p e r t y A c t , 1 8 8 2 , a n d ( i i ) a n y t r a n s a c t i o n e n t e r e d i n t o i n a n y m a n n e r w h i c h h a s t h e e f f e c t o f t r a n s f e r r i n g o r e n a b l i n g t h e e n j o y m e n t o f a n y i m m o v a b l e p r o p e r t y . T h e r e f o r e , i n t h e s e t w o c a s e s c a p i t a l g a i n s w o u l d b e t a x a b l e i n t h e y e a r i n w h i c h s u c h t r a n s a c t i o n s a r e e n t e r e d i n t o , e v e n i f t h e t r a n s f e r o f t h e i m m o v a b l e p r o p e r t y i s n o t e f f e c t i v e o r c o m p l e t e u n d e r t h e g e n e r a l l a w . U n d e r s e c t i o n 2 ( 4 7 ) ( v ) a n y t r a n s a c t i o n i n v o l v i n g a l l o w i n g o f p o s s e s s i o n t o b e t a k e n o v e r o r r e t a i n e d i n p a r t p e r f o r m a n c e o f a c o n t r a c t o f t h e n a t u r e r e f e r r e d t o i n s e c t i o n 5 3 A o f t h e T r a n s f e r o f P r o p e r t y A c t w o u l d c o m e w i t h i n t h e a m b i t o f s e c t i o n 2 ( 4 7 ) ( v ) . I n o r d e r t o a t t r a c t s e c t i o n 5 3 A , t h e f o l l o w i n g c o n d i t i o n s n e e d t o b e f u l f i l l e d . T h e r e s h o u l d b e a c o n t r a c t f o r c o n s i d e r a t i o n ; i t s h o u l d b e i n w r i t i n g ; i t s h o u l d b e s i g n e d b y t h e t r a n s f e r o r ; i t s h o u l d p e r t a i n t o t r a n s f e r o f i m m o v a b l e p r o p e r t y ; t h e t r a n s f e r e e s h o u l d h a v e t a k e n p o s s e s s i o n o f t h e p r o p e r t y ; l a s t l y , t h e t r a n s f e r e e s h o u l d b e r e a d y a n d w i l l i n g t o p e r f o r m h i s p a r t o f t h e c o n t r a c t . E v e n a r r a n g e m e n t s c o n f i r m i n g p r i v i l e g e s o f o w n e r s h i p w i t h o u t t r a n s f e r o f t i t l e c o u l d f a l l u n d e r s e c t i o n 2 ( 4 7 ) ( v ) . S e c t i o n 2 ( 4 7 ) ( v ) w a s i n t r o d u c e d i n t h e A c t f r o m t h e a s s e s s m e n t y e a r 1 9 8 8 - 8 9 b e c a u s e p r i o r t h e r e t o , i n m o s t c a s e s , i t w a s a r g u e d o n b e h a l f o f t h e a s s e s s e e t h a t n o t r a n s f e r t o o k p l a c e t i l l e x e c u t i o n o f t h e c o n v e y a n c e . A s s e s s e e s u s e d t o e n t e r i n t o a g r e e m e n t s f o r d e v e l o p i n g p r o p e r t i e s w i t h b u i l d e r s a n d u n d e r t h e a r r a n g e m e n t w i t h t h e b u i l d e r s , t h e y u s e d t o c o n f e r p r i v i l e g e s o f o w n e r s h i p w i t h o u t e x e c u t i n g c o n v e y a n c e a n d t o p l u g t h a t l o o p h o l e , s e c t i o n 2 ( 4 7 ) ( v ) c a m e t o b e i n t r o d u c e d i n t h e A c t . . H e l d , t h a t s e c t i o n 2 ( 4 7 ) ( v ) r e a d w i t h s e c t i o n 4 5 i n d i c a t e s t h a t c a p i t a l g a i n s w a s t a x a b l e i n t h e y e a r i n w h i c h s u c h t r a n s a c t i o n s w e r e e n t e r e d i n t o e v e n i f t h e t r a n s f e r o f i m m o v a b l e p r o p e r t y i s n o t e f f e c t i v e o r c o m p l e t e u n d e r t h e g e n e r a l l a w . I n t h i s c a s e , t h e t e s t h a d n o t b e e n a p p l i e d b y t h e D e p a r t m e n t . N o r e a s o n h a d b e e n g i v e n w h y t h a t t e s t h a d n o t b e e n a p p l i e d , p a r t i c u l a r l y w h e n t h e a g r e e m e n t i n q u e s t i o n , r e a d a s a w h o l e , s h o w e d t h a t i t w a s a d e v e l o p m e n t a g r e e m e n t . O n c e u n d e r c l a u s e 8 o f t h e a g r e e m e n t a l i m i t e d p o w e r o f a t t o r n e y w a s i n t e n d e d t o b e g i v e n t o t h e d e v e l o p e r t o d e a l w i t h t h e p r o p e r t y , t h e n t h e d a t e o f t h e c o n t r a c t , v i z. , A u g u s t 1 8 , 1 9 9 4 , w o u l d b e t h e r e l e v a n t d a t e t o d e c i d e t h e d a t e o f t r a n s f e r u n d e r s e c t i o n 2 ( 4 7 ) ( v ) a n d , i n w h i c h e v e n t , t h e q u e s t i o n o f s u b s t a n t i a l p e r f o r m a n c e o f t h e c o n t r a c t t h e r e a f t e r w o u l d n o t a r i s e 7 3 4 . T h e H o n b l e C o u r t r e f e r r e d t o c l a u s e s ( v ) & ( v i ) o f s e c t i o n 2 ( 4 7 ) a n d m a d e t h e f o l l o w i n g o b s e r v a t i o n s a t p a g e 4 9 9 o f t h e r e p o r t : .. T h e a b o v e t w o c l a u s e s w e r e i n t r o d u c e d w i t h e f f e c t f r o m A p r i l 1 , 1 9 8 8 . T h e y p r o v i d e t h a t t r a n s f e r i n c l u d e s ( i ) a n y t r a n s a c t i o n w h i c h a l l o w s p o s s e s s i o n t o b e t a k e n / r e t a i n e d i n p a r t p e r f o r m a n c e o f a c o n t r a c t o f t h e n a t u r e r e f e r r e d t o i n s e c t i o n 5 3 A o f t h e T r a n s f e r o f P r o p e r t y A c t , a n d ( i i ) a n y t r a n s a c t i o n e n t e r e d i n t o i n a n y m a n n e r w h i c h h a s t h e e f f e c t o f t r a n s f e r r i n g o r e n a b l i n g t h e e n j o y m e n t o f a n y i m m o v a b l e p r o p e r t y ( s e e s e c t i o n 2 6 9 U A ( d ) ) . T h e r e f o r e , i n t h e s e t w o c a s e s c a p i t a l g a i n s w o u l d b e t a x a b l e i n t h e y e a r i n w h i c h s u c h t r a n s a c t i o n s a r e e n t e r e d i n t o , e v e n i f t h e t r a n s f e r o f t h e i m m o v a b l e p r o p e r t y i s n o t e f f e c t i v e o r c o m p l e t e u n d e r t h e g e n e r a l l a w ( s e e K a n g a a n d P a l k h i v a l a s L a w a n d P r a c t i c e o f I n c o m e - t a x - V I I I e d i t i o n , p a g e 7 6 6 ) . T h i s t e s t i s i m p o r t a n t t o d e c i d e t h e y e a r o f c h a r g e a b i l i t y o f t h e c a p i t a l g a i n s . 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 1 s t 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 enjoyment of, any immovable property (s. 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 general law. 3 6 F r om t h e a b o v e , i t i s c l e a r t h a t C o u r t w a s o f t h e v i e w t h a t i n c a s e a n y t r a n s a c t i o n c o v e r e d b y c l a u s e ( v ) a n d ( v i ) t o s e c t i o n 2 ( 4 7 ) t h e l i a b i l i t y f o r c a p i t o l g a i n w o u l d a r i s e o n t h e d a t e w h e n s u c h t r a n s a c t i o n s a r e e n t e r e d i n t o . I n t h e j u d g m e n t a t s o m e o t h er p l a c e s , t h e s i m i l a r o b s e r v a t i o n s h a v e b e e n m a d e . H o w e v e r , d e s p i t e t h i s o b s e r va t i o n t h e c a s e w a s d e c i d e d i n f a v o u r o f t h e a s s e s s e e . The reason for the same have been given in the judgment itself. Firstly it is observed that provision of section 2(47)(v) of the Act were not invoked by the Revenue itself. This becomes clear from the following para:

It was argued on behalf of the assessee that there was no effective transfer till grant of irrevocable licence. In this connection, the judgment of the Honble Supreme Court were cited on behalf of the assessee, but all those judgment were prior to introduction of the concept of deemed transfer u/s 2(47)(v). In this matter, the agreement in question is a development agreement. Such development agreements do not constitute transfer in general law. They are spread over a period of time. They contemplate various stages. The Bombay High Court in various judgments has taken the view in several matters that the object of entering into a development agreement is to enable a professional builder / contractor to make profits by completing the building and selling the flats at a profit. That the aim of these professional contractors was only to make profits by completing the building and, therefore, no interest in the land stands created in their favour under such agreements. That such agreements are only a mode of remunerating the 8 builder for his services of constructing the building (see Gurudev Developers v. Kurla Konkan Niwas Co-operative Housing Society [2003] 3 Mah LJ 131). It is precisely for this reason that the Legislature has introduced section 2(47)(v) read with section 45 which indicates that capital gains is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law. In this case that test has not been applied by the Department. No reason has been given why that test has not been applied, particularly when the agreement in question, read as a whole, shows that it is a development agreement. There is a difference between the 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 i n t h e o r d e r o f t h e T r i b u n a l w h e r e c e r t a i n d o c u m e n t s w e r e m e n t i o n e d t o h a v e b e e n e x e c u t e d b e f o r e M a r c h 3 1 , 1 9 9 6 e . g . t h e f o l l o w i n g o b s e r v a t i o n o f t h e T r i b u n a l w a s n o t f o u n d c o r r e c t a s s o m e t h i n g i s d o n e o n I s t A p r i l , 1 9 9 7 t h e n t h e s a m e c a n n o t f a l l i n t h e ye a r e n d i n g 3 1 . 3 . 1 9 9 6 .

F r o m t h e d a t e s i t i s e v i d e n t t h a t f r o m t h e v e r y n e x t d a y , i . e . , A p r i l 1 , 1 9 9 7 , f r o m t h e e n d o f t h e f i n a n c i a l y e a r e n d i n g o n M a r c h 3 1 , 1 9 9 6 , t h e b u i l d e r w a s u s i n g t h e w e l l w a t e r a g a i n s t p a y m e n t o f r e l e v a n t c h a r g e s t o t h e a s s e s s e e .

3 7 T h u s i t i s v e r y c l e a r t h a t i n c a s e s w h e r e a n a r r a n g e m e n t h a d b e e n e n t e r e d i n t o b y a n a s s e s s e e i n t e r m s o f c l a u s e ( v ) o f S e c t i o n 2 ( 4 7 ) w h i c h h a s e f f e c t o f h a n d i n g o v e r t h e p o s s e s s i o n t h e n t h e t r a n s f e r i s s a i d t o h a v e b e e n t a k e n p l a c e o n t h e d a t e o f e n t e r i n g i n t o s u c h a r r a n g e m e n t . 3 8 . W e d o n o t f i n d a n y f o r c e i n t h e c o n t e n t i o n o f t h e L d . C o u n s e l f o r t h e a s s e s s e e t h a t j u d g m e n t h a s t o b e r e a d i n t h e c o n t e x t o f t h e d e c i s i o n m a d e i n s u c h j u d g m e n t . I n f a c t , i t i s w e l l s e t t l e d t h a t d o c t r i n e o f p r e c e d e n t w h i c h m e a n s w h a t n e e d s t o b e f o l l o w e d l a t e r o n p a r t i c u l a r l y b y s u b o r d i n a t e T r i b u n a l s a n d C o u r t s i s t h e r a t i o o f a p a r t i c u l a r j u d g m e n t g i ve n b y t h e h i g h e r C o u r t o r F o r u m . F u r t h e r , t h e r e i s n o f o r c e i n t h e c o n t e n t i o n t h a t d e c i s i o n o f t h e H o n b l e B o m b a y H i g h C o u r t i n t h e c a s e o f C h a t u r b h u j D w a r k a d a s K a p a d i a v C I T ( s u p r a ) d o e s n o t s h o w t h a t t h e d a t e o f a g r e e m e n t i t s e l f c o n s t i t u t e t h e t r a n s f e r . A g a i n t h e r e i s n o f o r c e e v e n i n t h e c o n t e n t i o n t h a t i n t h a t c a s e i t w a s u l t i m a t e l y d e c i d e d t h a t c a p i t a l g a i n t a x e s i s c h a r g e a b l e i n A s s e s s m e n t ye a r 1 9 9 9 - 2 0 0 0 b e c a u s e o f t h e r e a s o n s g i v e n i n a b o v e n o t e d p a r a s p a r t i c u l a r l y b e c a u s e t h e R e v e n u e i t s e l f n e v e r i n v o k e d t h e 9 p r o v i s i o n s o f s e c t i o n 2 ( 4 7 ) ( v) o f t h e A c t a n d h e l d i t t o b e t a x a b l e i n A s s e s s m e n t ye a r 1 9 9 6 - 9 7 . N o d o u b t i n t h a t c a s e u l t i m a t e l y i t w a s h e l d t h a t c a p i t a l g a i n w a s i n a s s e s s m e n t ye a r 1 9 9 9 - 2 0 0 0 b u t C o u r t h a d m a d e i t ve r y c l e a r t h a t t h i s i s f i r s t t i m e t h a t l a w i s b e i n g l a i d d o w n a n d g u i d e l i n e s a r e b e i n g i s s u e d w h i c h m e a n s t h a t t h e r e w a s a c o n f u s i o n e a r l i e r . C l a u s e s ( v) & ( v i ) t o s e c t i o n 2 ( 4 7 ) w e r e i n t r o d u c e d i n t h e ye a r o n l y i n 1 9 9 8 . P e r h a p s C o u r t t o o k a l e n i e n t v i e w b e c a u s e o f t h e s e r e a s o n s a n d h e l d t h a t c a p i t a l g a i n w a s t a x a b l e i n A s s e s s m e n t ye a r 1 9 9 9 - 2 0 0 0 . I t i s q u i t e c l e a r t h a t r a t i o o f t h e a b o v e d e c i s i o n i s t h a t i n c a s e o f a n y a r r a n g e m e n t s o r t r a n s a c t i o n s w h e r e b y t h e o t h e r p a r t y b e c o m e s e n t i t l e d to e n j o y t h e p r o p e r t y t h e n t h a t d a t e o f s u c h t r a n s a c t i o n i t s e l f n e e d s t o b e c o n s t r u e d a s t h e d a t e o f t r a n s f e r . 3 9 . T h e s e c o n d r e l e v a n t d e c i s i o n c i t e d b y t h e R e v e n u e i s b y A u t h o r i t y f o r A d v a n c e R u l i n g ( A A R ) N e w D e l h i i n t h e c a s e o f J a s b i r S i n g h S a r k a r i a ( s u p r a ) . I n t h a t c a s e t h e a s s e s s e e w a s c o - o w n e r o f a g r i c u l t u r a l l a n d m e a s u r i n g a b o u t 2 7 . 7 a c r e s a n d h i s s h a r e w a s 4 / 9 . T h e c o - o w n e r d e c i d e d t o d e v e l o p t h e l a n d b y c o n s t r u c t i n g r e s i d e n t i a l c o m p l e x t h r o u g h d e v e l o p e r a n d e n t e r e d i n t o a C o l l a b o r a t i o n a g r e e m e n t o n 8 . 6 . 2 0 0 5 w i t h M / s S a n t u r D e v e l o p e r P v t L t d , N e w D e l h i ( h e r e i n a f t e r c a l l e d D e v e l o p e r ) . A c c o r d i n g t o t h e t e r m s o f a g r e e m e n t , t h e D e v e l o p e r s h o u l d o b t a i n a l e t t e r o f i n t e n t f r o m t h e c o n c e r n e d g o v e r n m e n t d e p a r t m e n t a n d o b t a i n o t h e r p e r m i s s i o n s a n d s a n c t i o n s f o r d e v e l o p i n g t h e l a n d a t i t s o w n r i s k a n d c o s t . T h e D e v e l o p e r w a s t o t a k e 8 4 % o f t h e b u i l t u p a r e a a n d b a l a n c e 1 6 % w o u l d b e l o n g t o a s s e s s e e a n d o t h e r c o - o w n e r . T h e c o n s i d e r a t i o n f o r t h e a g r e e m e n t w a s t a k e n a s t h e b u i l t u p a r e a t o b e h a n d e d o v e r t o t h e o w n e r s f r e e o f c o s t . T h e o w n e r s w e r e e n t i t l e d t o v i s i t t h e s i t e i n o r d e r t o r e v i e w t h e p r o g r e s s o f t h e p r o j e c t . I t w a s c l a r i f i e d b y c l a u s e 1 8 t h a t o w n e r s h i p w o u l d r e m a i n e x c l u s i v e l y w i t h t h e o w n e r s t i l l i t v e s t s wi t h b o t h t h e p a r t i e s a s p e r t h e i r r e s p e c t i v e s h a r e s o n t h e c o m p l e t i o n o f t h e p r o j e c t . T h e o t h e r c l a u s e s a n d t h e s t e p s i n t h e a g r e e m e n t w e r e t h a t a s u m o f R s . 1 c r o r e t o w a r d s p a ym e n t o f e a r n e s t m o n e y a t t h e t i m e o f e n t e r i n g i n t o a g r e e m e n t ; a s p e c i a l p o w e r o f a t t o r n e y w a s t o b e e x e c u t e d i n f a v o u r o f t h e D e v e l o p e r t o e n a b l e t o d e a l w i t h t h e S t a t u t o r y a u t h o r i t i e s e t c . f o r o b t a i n i n g n e c e s s a r y a p p r o v a l s / s a n c t i o n s ; l e t t e r o f i n t e n t w a s t o b e o b t a i n e d n o t l a t e r t h a n M a r c h 8 , 2 0 0 6 a n d i n c a s e o f a f a i l u r e t o d o s o , t h e a g r e e m e n t s h a l l s t a n d t e r m i n a t e d . L e t t e r o f i n t e n t i s b a s i c a l l y a l i c e n s e g r a n t e d b y t h e D i r e c t o r o f T o w n P l a n t i n g t o D e v e l o p e r o f l a n d f o r t h e p u r p o s e o f c o n s t r u c t i n g r e s i d e n t i a l f l a t s s u b j e c t t o p a ym e n t o f c e r t a i n c h a r g e s a n d c o m p l i a n c e o f o t h e r c o n d i t i o n s . I t w a s f u r t h e r s t a t e d i n t h e a g r e e m e n t t h a t o n f u l f i l lm e n t o f t h e r e q u i r e m e n t i n t h e l e t t e r o f i n t e n t , o w n e r s w i l l h a v e t o e x e c u t e i r r e v o c a b l e g e n e r a l p o w e r o f a t t o r n e y i n f a v o u r o f t h e D e v e l o p e r a u t h o r i zi n g t h e D e v e l o p e r t o t o o k a n d s e l l t h e d w e l l i n g u n i t s o u t o f d e v e l o p e r s s h a r e a n d c o l l e c t t h e m o n e y f o r t h e s a m e . H o w e v e r , f i n a l l y s a l e d e e d s c o u l d 10 b e e x e c u t e d o n l y a f t e r t h e o w n e r r e c e i v e d t h e i r s h a r e o f c o n s t r u c t e d a r e a . T h r e e m o n t h s l a t e r , a s u p p l em e n t a r y a g r e e m e n t w a s e n t e r e d o n S e p t e m b e r 1 5 , 2 0 0 5 b e t w e e n t h e a s s e s s e e a n d o t h e r c o - o w n e r s a n d D e v e l o p e r s t h r o u g h w h i c h i t w a s a g r e e d t h a t o w n e r s w i l l s e l l t h e i r 1 6 % s h a r e i n t h e b u i l t u p a r e a t o t h e D e v e l o p e r o r i t s n o m i n e e f o r c o n s i d e r a t i o n o f R s . 4 2 c r o r e s . A s u m o f R s . 2 c r o r e s w a s r e c e i v e d . T h i s c o l l a b o r a t i o n a g r e em e n t a n d b a l a n c e o f R s . 4 0 c r o r e s w a s p a ya b l e b y t h e D e v e l o p e r t o t h e o w n e r s i n s i x i n s t a l l m e n t s f r o m M a r c h 0 6 , 2 0 0 8 . T h e i n s t a l l m e n t s c o u l d b e e x t e n d e d s u b j e c t t o p a ym e n t o f i n t e r e s t a n d f u r t h e r s u b j e c t t o m a x i m u m e x t e n s i o n o f t h r e e m o n t h s . T h e r e w e r e v a r i o u s o t h e r c l a u s e s w h i c h a r e n o t r e l e v a n t f o r o u r p u r p o s e s . T h e q u e s t i o n a r o s e w h e t h e r c a p i t a l g a i n a c c r u e / a r i s e t o t h e a s s e s s e e d u r i n g t h e f i n a n c i a l ye a r 2 0 0 6 - 0 7 r e l e v a n t t o a s s e s s m e n t ye a r 2 0 0 7 - 0 8 o r d u r i n g f i n a n c i a l ye a r 2 0 0 7 - 0 8 r e l e va n t t o a s s e s s m e n t ye a r 2 0 0 8 - 0 9 . 4 0 . O n t h e a b o v e , t h e H o n b l e A u t h o r i t y a f t e r r e f e r r i n g t o t h e p r o v i s i o n s o f s e c t i o n 4 5 a n d o b s e r v e d a s u n d e r : - . The section can be analysed thus : (a) transfer of a capital asset effected in the previous year, (b) resultant profits or gains from such transfer, (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 Iyengars Commentary (10th Edition Revised by Shri S. Rajaratnam) brings out the correct legal position :

Section 45 enacts that the capital gains shall by fiction be deemed to be the income of the previous year in which the transfer took place. Since this is a statutory fiction, the actual year in which the sale price was received, whether it was one 11 year, two years, three years, four years etc. previous to the previous year of transfer, is beside the point. The entirety of the sum or sums received in any earlier year or years would be regarded as the capital gains arising in the 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.

4 1 . T h e r e a f t e r , t h e A u t h o r i t y r e f e r r e d t o s e c t i o n 2 ( 4 7 ) a n d o b j e c t s o f t h e i n t r o d u c t i o n o f c l a u s e s ( v ) & ( v i ) a n d a l s o r e f e r r e d t o p a r a s 1 1 . 1 & 1 1 . 2 o f t h e B o a r d C i r c u l a r N o . 4 9 5 ( w h i c h we h a v e a l r e a d y d i s c u s s e d e a r l i e r ) . T h e H o n b l e A u t h o r i t y h a s d i s c u s s e d v a r i o u s i m p l i c a t i o n s o f c l a u s e ( v ) o f s e c t i o n 2 ( 4 7 ) a n d a l s o i m p l i c a t i o n o f s e c t i o n 5 3 A o f t h e T r a n s f e r o f P r o p e r t y A c t a s w e l l a s o b s e r v a t i o n s o f H o n b l e B om b a y H i g h C o u r t i n t h e c a s e o f C h a t u r b h u j D w a r k a d a s K a p a d i a v C I T ( s u p r a ) . T h e A u t h o r i t y o b s e r v e d t h a t t o u n d e r s t a n d t h i s p r o vi s i o n p r o p e r l y m e a n i n g o f p o s s e s s i o n h a s t o b e u n d e r s t o o d p r o p e r l y a n d w e n t o n t o d i s c u s s t h e m e a n i n g o f t e r m p o s s e s s i o n , a n d h o w t h e s a m e i s t o b e u n d e r s t o o d i n t h e c o n t e x t o f c l a u s e ( v) . T h e s e a r e v e r y i m p o r t a n t o b s e r v a t i o n s a n d h a v e b e e n d i s c u s s e d i n m o s t e l u c i d a t e d f a s h i o n . T h e s e o b s e r v a t i o n s w i l l a n s w e r m a n y o f t h e q u e s t i o n s r a i s e d b e f o r e u s a n d , t h e r e f o r e , w e a r e e x t r a c t i n g t h e s e o b s e r v a t i o n s a s u n d e r : - Meaning of possession and how should it be understood in the context of clause (v) The next question is, in what sense we have to understand the term possession in the context of clause (v) of section 2(47). Should it only mean the right to exclusive possessionwhich the transferee can maintain in his own right to the exclusion of everyone including the transferor from whom he derived the possession Such a criterion will be satisfied only after the entire sale consideration is paid and the transferor has forfeited his right to exercise acts of possession over the land or to resume possession. In our view, there is no warrant to place such a 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, as pointed out by Salmond. The learned judge then explained the connotation of the expression possession by referring to the well known treatises on jurisprudence (page 278) : 12 Possession, implies a right and a fact : the right to enjoy annexed to the right to property and the fact of the real intention. It involves power of control and intent to control, (see Dias and Hughes) 14 . . . .

15. While recognizing that possession is not a purely legal concept but also a matter of fact, Salmond (12th Ed., 52) describes possession, in fact, as a relationship between a person and a thing. According to the learned author, the test for determining whether a person is in possession of anything is whether he is in general control of it. In Salmonds Jurisprudence, at paragraph 54, we find an illuminating discussion on immediate and mediate possession. The learned author states

in law one person may possess a thing for and on account of some one else. In such a case the latter is in possession by the agency of him who so holds the thing on his behalf. The possession thus held by one man through another may be termed mediate, while that which is acquired or retained directly or personally may be distinguished as immediate or direct.

Salmond makes reference to three types of mediate possession. In all cases of mediate possession, two persons are in possession of the same thing at the same time. An allied concept of concurrent possession has also been explained in paragraph 55 of Salmonds Jurisprudence in the following words :

It was a maxim of the civil law that two persons could not be in possession of the same thing at the same time. As a general proposition this is true : for exclusiveness is of the essence of possession. Two adverse claims of exclusive use cannot both be effectually realized at the same time. Claims, however, which are not adverse, and which are not, therefore, mutually destructive, admit of concurrent realization. Hence, there are several possible cases of duplicate possession.

1. Mediate and immediate possession co-exist in respect of the same thing as already explained.

2. Two or more persons may possess the same thing in common, just as they may owe it in common .

On a fair and reasonable interpretation and on adopting the principle of purposive construction, it must be held that possession contemplated by clause (v) need not necessarily be sole and exclusive possession. 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/developer, then, the very purpose of the amendment expanding the definition 13 of transfer for the purpose of capital gains may be defeated. The reason is this: the owner of the property can very well contend, as is being contended in the present case, that the developer will have such exclusive possession in his own right only after the entire amount is paid to the owner to the last pie. There is then a possibility of staggering the last instalment of a small amount to a distant date, may be, when the entire building complex gets ready. Even if some amount, say 10 per cent., remains to be paid and the developer/transferee fails to pay, leading to a dispute between the parties, the right to exclusive and indefeasible possession may be in jeopardy. In this state of affairs, the transaction within the meaning of clause (v) cannot be said to have been effected and the liability to pay capital gains may be indefinitely postponed. True, it may not be profitable for the developer to allow this situation to linger for long as the process of transfer of flats to the prospective purchasers will get delayed. At the same time, the other side of the picture cannot be over-looked. There is a possibility of the owner with the connivance of the transferee postponing the payment of capital gains tax on the ostensible ground that the entire consideration has not been received and some balance is left. The mischief sought to be remedied, will then perpetuate. We are, therefore of the view that possession given to the developers need not ripen itself into exclusive possession on payment of all the instalments in entirety for the purpose of determining the date of transfer. While on the point of possession, we would like to clarify one more aspect. What is spoken to in clause (v) of section 2(47) is the transaction which involves allowing the possession to be taken. By means of such transaction, a transferee like a developer is allowed to undertake development work on the land by assuming general control over the property in part performance of the contract. The date of that transaction determines the date of transfer. The actual date of taking physical possession or the instances of possessory acts exercised is not very relevant. The ascertainment of such date, if called for, leads to complicated inquiries, which may frustrate the objective of the legislative provision. It is enough if the transferee has, by virtue of that 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. 4 2 . A f t e r t h e a b o v e d i s c u s s i o n , t h e A u t h o r i t y d i s c u s s e d t h e f a c t s o f t h e c a s e b e f o r e i t . I t w a s o b s e r v e d t h a t p a r a g r a p h 1 8 o f t h e C o l l a b o r a t i o n A g r e e m e n t p r o v i d e s t h a t o n i s s u a n c e o f l e t t e r o f i n t e n t , t h e o w n e r s w i l l a l l o w a n d p e r m i t t h e D e v e l o p e r t o e n t e r u p o n a n d s u r v e y t h e l a n d , e r e c t s i t e / s a l e s o f f i c e , c a r r y o u t t h e s i t e d e v e l o pm e n t w o r k a n d d o a c t i v i t i e s f o r a d v a n c i n g & s a l e p r o m o t i o n , c o n s t r u c t i o n e t c . T h e A u t h o r i t y f u r t h e r o b s e r v e d t h a t i f t h i s c l a u s e i s r e a d i n i s o l a t i o n t h i s w o u l d s u g g e s t o n p a s s i n g o f p o s s e s s i o n b u t a c c o r d i n g t o A u t h o r i t y t h e o t h e r f a c t o r s a r e t o b e c o n s i d e r e d . C l a u s e 1 5 p r o v i d e d t h a t o n f u l f i l l m e n t o f t h e r e q u i r e m e n t s l a i d d o w n i n t h e l e t t e r o f i n t e n t w h i c h i s p r o v i s i o n a l l i c e n s e , t h e o w n e r s s h o u l d e x e c u t e a n i r r e v o c a b l e g e n e r a l p o w e r o f a t t o r n e y i n f a v o u r o f t h e d e v e l o p e r a l l o w i n g i n t e r a l i a t o b o o k 14 a n d s e l l t h e d w e l l i n g u n i t f a i l i n g u n d e r t h e i r s h a r e . T h i s w a s p o s s i b l e o n l y a f t e r d e p o s i t o f r e q u i s i t e c h a r g e s e t c . a n d p e r h a p s t h e r e w a s l i t i g a t i o n r e g a r d i n g o w n e r s h i p o f l a n d w h i c h h a s a l s o t o b e w i t h d r a w n . T h e A u t h o r i t y h a s d i s c u s s e d t h e s i g n i f i c a n c e o f g e n e r a l p o w e r o f a t t o r n e y a n d t h e t e r m s o f t h e g e n e r a l p o w e r o f a t t o r n e y a t p a r a 3 3 a n d t h e r e l e v a n t p o r t i o n o f t h e s a m e i s a s u n d e r : - A copy of the irrevocable GPA executed in terms of paragraph 15 of the agreement has been furnished by the applicant. It authorizes the developer : (i) to enter upon and survey the land, prepare the layout plan, apply for renewal/extension of licence, submit the building plans for sanction of the appropriate authority and to carry out the work of development of a multi-storied residential complex, (ii) to manage and control, look after and supervise the property in any manner as the attorney deems fit and proper, (iii) to obtain water, sewage disposal and electricity connections. The developer is also authorized to borrow money for meeting the cost of construction on the security and mortgage of land falling to the developers share. The other clauses in the GPA are not relevant for our purpose. The GPA unequivocally grants to the developer a bundle of possessory rights. The acts of management, control and supervision of property are explicitly mentioned. It is fairly clear that the GPA is not a mere licence to enter the land for doing some preliminary acts in relation to the development work. The power of control of the land which is an incidence of possession as explained supra has been conferred on the developer under this GPA. The developer armed with the GPA cannot be regarded merely as a licensee or an agent subject to the control of the owners. His possession cannot be characterized as precarious or tentative in nature. The fact that the agreement describes the GPA as irrevocable and 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 owners limited right to enter the land and oversee the development work is not incompatible with the developers right of control over the land which he derives from the GPA. Exclusive possession, as already pointed out, is not 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 allows possession to be taken in part performance of the contract for transfer of the property in question.. 4 3 T h u s , t h e a b o v e c l e a r l y s h o w s t h a t i r r e v o c a b l e g e n e r a l p o w e r o f a t t o r n e y w h i c h l e a d s t o o v e r a l l c o n t r o l o f t h e p r o p e r t y i n t h e h a n d s o f t h e D e v e l o p e r , e v e n i f t h a t m e a n s n o e x c l u s i v e p o s s e s s i o n b y t h e D e v e l o p e r w o u l d c o n s t i t u t e t r a n s f e r . I t c a n b e s a i d t h a t i t h a s t o b e c o n s t r u e d a s p o s s e s s i o n i n t e rm s o f c l a u s e ( v ) o f s e c t i o n 2 ( 4 7 ) o f t h e A c t . 44 A question may arise that why the transfer was not held to be taken place in Assessment year 2006-07 when first agreement was 15 entered into on June 8, 2005. The supplementary agreement was also entered into on Sept 15, 2005 both of which fall in Financial Year 2005- 06 relevant to Assessment year 2006-07. Then why transfer was not construed in Assessment year 2006-07 it was because the first agreement itself contained a condition that letter of intent should be procured not later than March 8, 2006. In case of failure to do so the agreement shall stand terminated. Therefore, obtaining the letter of intent was the crucial factor. It has been explained in the decision that the letter of intent basically is a license issued by the Director of Town and Country Planning, Haryana which gives permission for construction of the flats. The other crucial point was execution of irrevocable of GPA which was executed on May 8, 2006 which according to the ld. authority depicts the intention of the handing over of the possession. Therefore, it becomes very clear that it is not necessary that transfer would take place on the signing of development agreement but the same has to be inferred only when the possession has been handed over by the transferor to the developer which can be inferred from the documents e.g. Power of Attorney. After above discussion Honble authority has summarized the decision in para 41 which is as under: The following is the summary of conclusions:

1. Where the agreement for transfer of immovable property by itself does not provide for immediate transfer of possession, the date of entering into the agreement cannot be considered to be the date of transfer within the meaning of clause (v) of section 2 (47) of the Income-Tax Act.

2. To attract clause (v) of section 2(47), it is not necessary that the entire sale consideration up to the last installment should be received by the owner.

3. In the instant case, having regard to the terms of the two agreements and the irrevocable GPA executed pursuant to the agreement, the execution of the GPA shall be regarded as the transaction involving the allowing of the possession of land to be taken in part performance of the contract and therefore, the transfer within the meaning of 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. L e g a l p o s i t i o n h a s b e e n d i s c u s s e d i n a b o v e n o t e d p a r a s a n d n o w l e t u s d i s c u s s t h e f a c t s o f t h e c a s e i n t h e l i g h t o f a b o v e n o t e d l e g a l p o s i t i o n . 4 6 U n d i s p u t e d f a c t s o f t h e c a s e a r e t h a t t h e a s s e s s e e i s a M e m b e r o f P u n j a b i C o o p H o u s e B u i l d i n g S o c i e t y L t d . w h i c h h a d 9 6 m e m b e r s ( N u m b e r o f m e m b e r s w e r e s t a t e d a s 9 5 d u r i n g a r g u m e n t s b u t c l a u s e 1 3 o f t h e J D A r e f e r s t o n u m b e r o f m e m b e r s a s 9 6 ) . T h e S o c i e t y w a s o w n i n g 2 1 . 2 a c r e s o f l a n d i n v i l l a g e K a n s a l D i s t t . M o h a l i a d j a c e n t t o C h a n d i g a r h . T h e r e w e r e t w o t yp e s o f m e m b e rs f i r s t l y t h e m e m b e r s w h o w e r e o w n i n g p l o t o f 5 0 0 s q yd a n d 16 s e c o n d l y t h e m e m b e r s w h o a r e h o l d i n g p l o t o f 1 0 0 0 s q yd . S o m e w h e r e i n 2 0 0 6 i t w a s d e c i d e d t o d e v e l o p a G r o u p H o u s i n g c o m m e r c i a l p r o j e c t a n d d o d e v e l o p m e n t a s p e r t h e a p p l i c a b l e m u n i c i p a l b u i l d i n g b ye - l a w s i n f o r c e a n d a c c o r d i n g l y a b i d w a s i n v i t e d t h r o u g h a d ve r t i s e m e n t i n t h e T r i b u n e d a t e d 3 1 . 5 . 2 0 0 6 . H A S H a d e v e l o p e r , a p p r o a c h e d t h e S o c i e t y w i t h p r o p o s a l f o r d e v e l o p m e n t o f t h e p r o p e r t y. S i n c e H a s h d i d n o t h a v e s u f f i c i e n t m e a n s t o d e v e l o p t h e p r o p e r t y, H a s h h a d a p p r o a c h e d T H D C f o r d e v e l o p m e n t o f t h e p r o p e r t y b y c o n s t r u c t i n g t h e b u i l d i n g a n d / o r s t r u c t u r e s t o b e u s e d f o r i n t e r a l i a r e s i d e n t i a l , p u b l i c u s e a n d c o m m e r c i a l p u r p o s e s . T h i s p r o p o s a l w a s d i s c u s s e d b y t h e S o c i e t y i n i t s E x e c u t i v e C o m m i t t e e m e e t i n g o n 4 . 1 . 2 0 0 7 . M i n u t e s o f t h e m e e t i n g a r e p l a c e d a t p a g e 5 8 t o 6 5 o f t h e p a p e r b o o k . I n t h e E x e c u t i v e c o m m i t t e e i t w a s d e c i d e d t o a p p o i n t H a s h w h o w a s a c t i n g a l o n g w i t h t h e j o i n t d e v e l o p e r T H D C a s j o i n t d e v e l o p e r o n t h e t e r m s a n d c o n d i t i o n s t o b e m e n t i o n e d i n t h e J D A . I t w a s f u r t h e r r e s o l v e d t h a t m e m b e r o w i n g p l o t o f 5 0 0 s q yd w o u l d r e c e i v e a c o n s i d e r a t i o n o f R s . 8 2 , 5 0 , 0 0 0 / - e a c h t o b e p a i d i n f o u r i n s t a l l m e n t s b y H a s h d i r e c t l y i n f a v o u r o f t h e m em b e r s a n d o n e f l a t w i t h s u p e r a r e a o f 2 2 5 0 s q f t o b e c o n s t r u c t e d b y T H D C . T h e m e m b e r s w h o h e l d t h e p l o t o f 1 0 0 0 s q yd w e r e t o r e c e i v e a c o n s i d e r a t i o n o f R s . 1 , 6 5 , 0 0 , 0 0 0 / - a n d t w o f l a t s c o n s i s t i n g of 2 2 5 0 s q f t t o b e c o n s t r u c t e d b y t h e T H D C . I t w a s f u r t h e r r e s o l v e d t o e n t e r i n t o a J D A w i t h T H D C / H A S H . I t w a s a l s o r e s o l ve d t o e x e c u t e i r r e v o c a b l e P o w e r o f a t t o r n e y b y t h e S o c i e t y i n f a v o u r o f T H D C f o r t h i s p u r p o s e . T h i s r e s o l u t i o n w a s u l t i m a t e l y r a t i f i e d i n t h e G e n e r a l B o d y m e e t i n g h e l d b y t h e S o c i e t y o n 2 5 . 2 . 2 0 0 7 . P u r s u a n t t o t h e a b o v e r e s o l u t i o n , t r i p a r t i t e J D A w a s e x e c u t e d ( c o p y o f t h e s a m e i s a v a i l a b l e a t p a g e 1 5 t o 5 4 o f f i r s t p a p e r b o o k ) . T h r o u g h r e c i t a t i o n c l a u s e i t h a s b e e n m e n t i o n e d t h a t o w n e r i s i n p o s s e s s i o n o f l a n d m e a s u r i n g a b o u t 2 1 . 2 a c r e s o f l a n d w h i c h h a s c o m e i n t h e p u r v i e w o f N a g a r P a n c h a ya t , N a ya G a o n v i d e N o t i f i c a t i o n i s s u e d o n 1 8 . 1 0 . 2 0 0 6 d u l y s u b s t i t u t e d b y a n o t h e r n o t i f i c a t i o n d a t e d 2 1 . 1 1 . 2 0 0 6 a n d t h a t n o p a r t o f l a n d o f t h e p r o p e r t y f a l l s u n d e r F o r e s t A r e a u n d e r t h e P u n j a b L a n d P r e s e r v a t i o n A c t . I t h a s b e e n f u r t h e r r e c i t e d t h a t t h e S o c i e t y h a s a g r e e d t o a c c e p t t h e p r o p o s a l s o f H a s h a n d f u r t h e r e x e c u t e d t h i s a g r e e m e n t w i t h T H D C / H A S H . H a s h w a s r e s p o n s i b l e t o m a k e p a ym e n t t o t h e o w n e r a s d e s c r i b e d e a r l i e r a n d t h e f l a t s w e r e t o b e p r o v i d e d b y T H D C . I n c a s e o f H a s h f a i l s t o m a k e t h e p a ym e n t , T H D C a g r e e d t o m a k e t h e p a ym e n t s . C o p y o f t h e r e s o l u t i o n o f t h e E x e c u t i v e C o m m i t t e e o f t h e S o c i e t y d a t e d 4 . 1 . 2 0 0 7 a s w e l l a s r e s o l u t i o n o f t h e G e n e r a l B o d y M e e t i n g o f t h e S o c i e t y d a t e d 2 5 . 2 . 2 0 0 7 w e r e m a d e p a r t o f J D A b y w a y o f a n n e x u r e . T h e S o c i e t y a g r e e d t o e x e c u t e a n i r r e vo c a b l e S p e c i a l P o w e r o f A t t o r n e y i n f a v o u r o f T H D C a n d a l l o t h e r n e c e s s a r y d o c u m e n t s , a t t h e r e q u e s t o f t h e d e v e l o p e r s . 17 4 7 I n c l a u s e 1 o f J D A v a r i o u s e x p r e s s i o n s h a v e b e e n d e f i n e d . C l a u s e 2 d e s c r i b e s t h e p r o j e c t a s u n d e r :

2 . 1 T h e o w n e r h e r e b y i r r e v o c a b l y a n d u n e q u i v o c a l l y g r a n t s a n d a s s i g n s i n p e r p e t u i t y a l l i t s r i g h t s t o d e v e l o p , c o n s t r u c t , m o r t g a g e , l e a s e , l i c e n s e , s e l l a n d t r a n s f e r t h e p r o p e r t y a l o n g w i t h a n y a n d a l l t h e c o n s t r u c t i o n , p r e m i s e s , h e r e d i t a m e n t s , e a s e m e n t s , t r e e s t h e r e o n i n f a v o u r o f T H D C f o r t h e p u r p o s e o f d e v e l o p m e n t , c o n s t r u c t i o n , m o r t g a g e , s a l e , t r a n s f e r , l e a s e , l i c e n s e a n d o r e x p l o i t a t i o n f o r f u l l u t i l i z a t i o n o f t h e P r o p e r t y ( R i g h t s ) a n d t o e x e c u t e a l l t h e d o c u m e n t s n e c e s s a r y t o c a r r y o u t , f a c i l i t a t e a n d e n f o r c e t h e R i g h t s i n t h e P r o p e r t y i n c l u d i n g t o e x e c u t e L e a s e A g r e e m e n t , L i c e n s e A g r e e m e n t s , C o n s t r u c t i o n C o n t r a c t s , S u p p l i e r C o n t r a c t s , A g r e e m e n t f o r s a l e , C o n v e y a n c e , M o r t g a g e D e e d s , f i n a n c e d o c u m e n t s a n d a l l d o c u m e n t s a n d a g r e e m e n t s n e c e s s a r y t o c r e a t e a n d r e g i s t e r t h e m o r t g a g e , c o n v e y a n c e , l e a s e d e e d s , l i c e n s e a g r e e m e n t , P o w e r o f A t t o r n e y , a f f i d a v i t s , d e c l a r a t i o n , i n d e m n i t i e s a n d a l l s u c h o t h e r d o c u m e n t s , l e t t e r s a s m a y b e n e c e s s a r y t o c a r r y o u t , f a c i l i t a t e a n d e n f o r c e t h e R i g h t s a n d t o r e g i s t e r t h e s a m e w i t h t h e r e v e n u e / C o m p e t e n t a u t h o r i t y a n d t o a p p e a r o n o u r b e h a l f b e f o r e a l l a u t h o r i t i e s , s t a t u t o r y o r o t h e r w i s e , a n d b e f o r e a n y c o u r t o f l a w ( t h e D e v e l o p m e n t R i g h t s ) . T h e o w n e r h e r e b y h a n d s o v e r t h e o r i g i n a l t i t l e d e e d s o f t h e P r o p e r t y a s m e n t i o n e d i n t h e l i st A n n e x e d h e r e t o a n d m a r k e d a s A n n e x u r e I V a n d p h y s i c a l , v a c a n t p o s s e s s i o n o f t h e p r o p e r t y h a s b e e n h a n d e d o v e r t o T H D C s i m u l t a n e o u s t o t h e e x e c u t i o n a n d r e g i s t r a t i o n o f t h i s a g r e e m e n t t o d e v e l o p t h e s a m e a s s e t o u t h e r e i n . I t i s h e r e b y a g r e e d a n d c o n f i r m e d t h a t w h a t i s s t a t e d i n t h e r e c i t a l s h e r e i n a b o v e , s h a l l b e d e e m e d t o b e d e c l a r a t i o n s a n d r e p r e s e n t a t i o n s o n t h e p a r t o f t h e O w n e r a s i f t h e s a m e w e r e s e t o u t h e r e i n v e r b a t i m a n d f o r m i n g a n i n t e g r a l p a r t o f t h e a g r e e m e n t . 2 . 2 T h e P r o j e c t s h a l l c o m p r i s e o f d e v e l o p m e n t / c o n s t r u c t i o n o f t h e P r o p e r t y i n t o t h e p r e m i s e s a s p e r m i s s i b l e u n d e r P u n j a b M u n i c i p a l B u i l d i n g B y e - l a w s / P u n j a b U r b a n D e v e l o p m e n t A u t h o r i t y o r a n y o t h e r C o m p e t e n t A u t h o r i t y b y t h e D e v e l o p e r a t t h e i r o w n c o s t a n d e x p e n s e . T h e P r o j e c t s h a l l b e d e v e l o p e d a s m a y b e s a n c t i o n e d b y t h e c o n c e r n e d l o c a l a u t h o r i t y i . e . D e p a r t m e n t o f L o c a l B o d i e s , P u n j a b / P u n j a b U r b a n P l a n n i n g a n d D e v e l o p m e n t A u t h o r i t y ( P U D A ) o r a n y o t h e r C o m p e t e n t A u t h o r i t y . 2 . 3 T h e o w n e r h e r e b y i r r e v o c a b l y a n d u n e q u i v o c a l l y g r a n t s a n d a s s i g n s a l l i t s D e v e l o p m e n t R i g h t s i n t h e p r o p e r t y t o T H D C t o d e v e l o p t h e p r o p e r t y a n d u n d e r t a k e t h e p r o j e c t a t i t s o w n c o s t s , e f f o r t s a n d e x p e n s e s w h e r e u p o n t h e D e v e l o p e r s h a l l b e e n t i t l e d t o a p p l y f o r a n d o b t a i n n e c e s s a r y s a n c t i o n s , l i c e n s e s a n d p e r m i s s i o n s f r o m a l l t h e c o n c e r n e d a u t h o r i t i e s f o r t h e c o m m e n c e m e n t , d e v e l o p m e n t a n d c o m p l e t i o n o f t h e p r o j e c t o n t h e p r o p e r t y .

4 8 C l a u s e 3 d e s c r i b e s t h e o b l i g a t i o n s o f t h e d e v e l o p e r s & S o c i e t y f o r g e t t i n g t h e p l a n s , e t c . s a n c t i o n e d f r o m c o m p e t e n t a u t h o r i t y / a p p l i c a t i o n s t o b e s i g n e d b y o w n e r f o r p l a n s , d r a w i n g s e t c . , c o n s t r u c t i o n . C l a u s e 4 d e a l s w i t h c o n s i d e r a t i o n c l a u s e s 5 t o 8 d e a l s v a r i o u s a s p e c t s o f p r o j e c t a n d o b l i g a t i o n s o f S o c i e t y a n d D e v e l o p e r . C l a u s e 9 t a l k s a b o u t o w n e r s h i p a n d r i g h t s a n d r e a d a s u n d e r :

9 T r a n s f e r o f o w n e r s h i p / R i g h t s 18 9 . 1 T h e o w n e r s h a l l s i m u l t a n e o u s l y o n r e c e i p t o f P a y m e n t a s s e t o u t i n C l a u s e 4 . 1 a b o v e , e x e c u t e a n i r r e v o c a b l e S p e c i a l P o w e r o f A t t o r n e y t o T H D C f o r d e v e l o p m e n t o f t h e p r o p e r t y a u t h o r i z i n g T H D C t o d o a l l l a w f u l a c t s , d e e d s , m a t t e r s a n d t h i n g s p e r t a i n i n g t o t h e d e v e l o p m e n t o f t h e p r o p e r t y f o r t h e p r o j e c t a l o n g w i t h i n t e r a l i a r i g h t t o m o r t g a g e t h e p r o p e r t y a n d / o r p r e m i s e s , s e l l , l e a s e , l i c e n s e t h e p r e m i s e s a n d r e c e i v e / c o l l e c t m o n i e s i n i t s n a m e i n r e s p e c t o f t h e s a m e a n d a p p r o a c h i n t e r a c t , c o m m u n i c a t e w i t h t h e C o m p e t e n t a u t h o r i t i e s a n d f o r d o i n g a l l a c t s , d e e d s , m a t t e r s a n d t h i n g s t o b e d o n e o r i n c u r r e d b y T H D C i n t h a t b e h a l f a s a l s o t o s i g n a l l l e t t e r s , a p p l i c a t i o n s , a g r e e m e n t s a n d r e g i s t e r t h e s a m e i f n e c e s s a r y , d o c u m e n t s , c o u r t p r o c e e d i n g s , a f f i d a v i t s a n d s u c h o t h e r p a p e r s c o n t a i n i n g t r u e f a c t s a n d c o r r e c t p a r t i c u l a r s a s m a d e f r o m t i m e t o t i m e b e r e q u i r e d i n t h i s b e h a l f . 9 . 2 T h e o w n e r s h a l l e x e c u t e i n f a v o u r o f T H D C t h e s a l e d e e d i s i n a c c o r d a n c e w i t h t h e p r o v i s i o n s o f c l a u s e 4 . 1 ( i i ) t o C l a u s e 4 . 1 ( i v ) o f t h i s A g r e e m e n t a n d e x e c u t e a l l o t h e r n e c e s s a r y d o c u m e n t s a n d p a p e r s t o c o m p l e t e t h e a f o r e s a i d t r a n s a c t i o n . 9 . 3 T h a t a l l t h e o r i g i n a l t i t l e d e e d s p e r t a i n i n g t o p r o p e r t y a s m e n t i o n e d i n A n n e x u r e I V h a s b e e n h a n d e d o v e r t o T H D C b y t h e o w n e r a t t h e t i m e o f s i g n i n g o f t h i s A g r e e m e n t a n d i n f u r t h e r a n c e o f t h e c o m m o n i n t e r e s t o f t h e P a r t i e s f o r t h e d e v e l o p m e n t o f t h e P r o j e c t a n d e x c e p t t h e S a l e T r a n s a c t i o n m a d e b y t h e O w n e r i n f a v o u r o f T H D C a s e t o u t i n C l a u s e 4 . 1 a b o v e . T H D C h e r e b y u n d e r t a k e a n d a s s u r e t h e o w n e r t h a t t h e y s h a l l u s e t h e t i t l e d e e d s o n l y f o r t h e p u r p o s e o f f u r t h e r a n c e o f t h e P r o j e c t i n t h e m a n n e r t h a t i t d o e s n o t a d v e r s e l y e f f e c t t h e O w n e r / A l l o t t e e i n a n y m a n n e r w h a t s o e v e r .

4 9 C l a u s e 1 0 d e s c r i b e s t h e c o n s e n t g i v e n b y t h e S o c i e t y t o T H D C f o r r a i s i n g f i n a n c e f o r d e v e l o p m e n t a n d c o m p l e t i o n of p r o j e c t . C l a u s e 1 1 t a l k s a b o u t f o r m a t i o n o f m a i n t e n a n c e S o c i e t y f o r t h e p r o j e c t a f t e r i t s c o m p l e t i o n . C l a u s e 1 3 t a l k s a b o u t t r a n s f e r o f r i g h t s w h i c h r e a d s a s u n d e r :

1 3 T r a n s f e r o f R i g h t s T h e o w n e r h e r e i n i . e . T h e P u n j a b i C o o p H o u s e B u i l d i n g S o c i e t y L t d . a l o n g w i t h a l l i t s n i n e t y s i x ( 9 6 ) m e m b e r s h a v e g i v e n t h e i r e x p r e s s , f r e e a n d c l e a r c o n s e n t i n w r i t i n g i n t h e f o r m o f a n A f f i d a v i t / N o O b j e c t i o n C e r t i f i c a t e / C o n s e n t L e t t e r w h e r e b y t h e D e v e l o p e r s h a v e b e e n a l l o w e d t o d e v e l o p t h e p r o p e r t y i n a c c o r d a n c e w i t h t h e P r o j e c t a n d t h a t T H D C s h a l l b e e n t i t l e d t o t r a n s f e r t h e r i g h t s o b t a i n e d u n d e r t h i s a g r e e m e n t t o a n y t h i r d p a r t y a n d t o g e t t h e d e v e l o p m e n t / c o n s t r u c t i o n w o r k c o m p l e t e d o n s u c h t e r m s a n d c o n d i t i o n s a s T H D C m a y d e e m f i t s o l o n g a s i t d o e s n o t a d v e r s e l y e f f e c t t h e O w n e r i n t e r m s o f t h e i r r i g h t t o r e c e i v e E n t i r e c o n s i d e r a t i o n a s m e n t i o n e d i n t h i s a g r e e m e n t s u b j e c t t o a l l o t h e r c o n d i t i o n s m e n t i o n e d t h e r e i n a s w e l l . T h e o w n e r s h a l l a t a l l t i m e s p r o v i d e f u l l s u p p o r t t o t h e D e v e l o p e r s h e r e i n .

5 0 O t h e r c l a u s e s p r o v i d e f o r t e r m i n a t i o n , G e n e r a l p r o v i s i o n s , D i s c l a i m e r , P a r t i a l I n v a l i d i t y, A r b i t r a t i o n , N o t i c e s a n d F o r c e M a j e u r e & J u r i s d i c t i o n . 5 1 I n a d d i t i o n t o a b o v e a n i r r e v o c a b l e S p e c i a l P o w e r o f A t t o r n e y h a s a l s o b e e n e x e c u t e d b y t h e S o c i e t y i n f a v o u r o f t h e d e v e l o p e r s i . e . T H D C . ( C o p y o f w h i c h i s a v a i l a b l e a t p a g e s 4 0 t o 19 5 2 o f t h e p a p e r b o o k i n c a s e o f S o c i e t y i n I T A N o . 5 5 6 o f 2 0 1 2 a s d i s c u s s e d e a r l i e r i n p a r a 2 5 ( c om p l e t e c o p y o f S u p p l e m e n t a r y P o w e r o f A t t o r n e y w a s n o t a v a i l a b l e i n t h e p a p e r b o o k o f t h e a s s e s s e e , t h e r e f o r e , r e f e r e n c e w a s m a d e t o t h e p a p e r b o o k i n c a s e o f t h e S o c i e t y) . 5 2 T h e f i r s t m a j o r c o n t e n t i o n o f t h e l d . c o u n s e l o f t h e a s s e s s e e i s t h a t t h e p o s s e s s i o n w a s n o t g i v e n b y t h e S o c i e t y b e c a u s e a c c o r d i n g t o h i m a s p e r c l a u s e 2 . 1 o f t h e J D A t h e p o s s e s s i o n o f t h e p r o p e r t y w a s t o b e h a n d e d o v e r s i m u l t a n e o u s l y t o t h e e x e c u t i o n a n d r e g i s t r a t i o n o f J D A a n d s i n c e t h e J D A w a s n o t r e g i s t e r e d , t h e r e f o r e , t h e p o s s e s s i o n wa s n o t g i v e n . W e c a n n o t a c c e p t t h i s c o n t e n t i o n b e c a u s e i n

P o w e r o f A t t o r n e y

t r a n s a c t i o n s , i t i s n o t n e c e s s a r y t o r e g i s t e r t h e J D A i f a s p e c i a l P o w e r o f A t t o r n e y h a s b e e n g i v e n a n d s a m e i s r e g i s t e r e d . S e c o n d l y c l a u s e 9 . 3 o f t h e J D A a s r e p r o d u c e d a b o v e c l e a r l y s h o w t h a t o r i g i n a l t i t l e d e e d w h i c h h a v e b e e n m e n t i o n e d a l o n g w i t h t h e p o s s e s s i o n i n p a r a 2 . 1 w h i c h a c c o r d i n g t o t h e l d . c o u n s e l o f t h e a s s e s s e e w e r e t o b e h a n d e d o v e r s i m u l t a n e o u s l y t o e x e c u t i o n a n d r e g i s t r a t i o n o f t h e J D A , i s n o t c o r r e c t b e c a u s e c l a u s e 9 . 3 c l e a r l y m e n t i o n t h a t o r i g i n a l t i t l e d e e d o f t h e p r o p e r t y h a v e b e e n h a n d e d o v e r t o t h e T H D C a t t h e t i m e o f s i g n i n g o f t h i s a g r e e m e n t b e c a u s e c l a u s e 9 . 3 t h e r e i s n o m e n t i o n a b o u t r e g i s t r a t i o n o f J D A . 5 3 S p e c i a l P o w e r o f A t t o r n e y w h i c h h a s b e e n e x e c u t e d o n 2 6 . 2 . 2 0 0 7 a n d h a s b e e n r e g i s t e r e d a l s o . T h e i r r e v o c a b l e s p e c i a l P o w e r o f A t t o r n e y h a s b e e n e x e c u t e d a s p r o v i d e d i n c l a u s e 6 . 7 o f t h e J D A w h i c h r e a d s a s u n d e r :

6 . 7 T h e O w n e r s h a l l e x e c u t e a n i r r e v o c a b l e s p e c i a l P o w e r o f A t t o r n e y g r a n t i n g i t s c o m p l e t e D e v e l o p m e n t R i g h t s i n t h e P r o p e r t y i n f a v o u r o f T H D C i n t e r a l i a i n c l u d i n g t h e r i g h t t o r a i s e f i n a n c e b y m o r t g a g i n g t h e p r o p e r t y a n d r e g i s t e r t h e c h a r g e w i t h t h e C o m p e t e n t A u t h o r i t y a n d e x e c u t e r e g i s t e r e d s a l e d e e d s ) a s s e t o u t i n C l a u s e 4 . 1 ( i i ) , ( i i i ) , ( i v ) a n d ( v ) a n d t h e O w n e r c o n f i r m s , u n d e r t a k e s , d e c l a r e s a n d b i n d s i t s e l f n o t t o r e v o k e t h e s a m e f o r a n y r e a s o n w h a t s o e v e r o u t o f i t s o w n w i l l a n d d i s c r e t i o n w i t h o u t o b t a i n i n g a s p e c i f i c p r i o r w r i t t e n c o n s e n t o f T H D C o r a n y o f i t s d u l y c o n s t i t u t e d a t t o r n e y s .

T h r o u g h t h i s P o w e r o f A t t o r n e y v a r i o u s p o w e r s h a v e b e e n g i v e n l i k e t o a s s i g n , f i l e , a m e n d e t c . v a r i o u s p l a n s , d e s i g n s t o r e p r e s e n t b e f o r e v a r i o u s a u t h o r i t i e s , t o a p p o i n t a r c h i t e c t , L a w ye r s . S o m e of t h e s p e c i f i c c l a u s e s r e l e v a n t , a r e e x t r a c t e d b e l o w : ( j ) T o n e g o t i a t e a n d a g r e e t o a n y/ o r t o e n t e r i n t o a g r e e m e n t ( s ) t o c o n s t r u c t / s e l l a n d t o u n d e r t a k e c o n s t r u c t i o n / s a l e o f t h e P r e m i s e s o n t h e P r o p e r t y o r a n y p o r t i o n t h e r e o f w i t h / t o s u c h p e r s o n s ( s ) o r b o d y a n d f o r s u c h c o n s i d e r a t i o n a n d u p o n s u c h t e r m s a n d c o n d i t i o n s a s t h e A t t o r n e y d e e m f i t . ( n ) T o e n t e r u p o n t h e P r o p e r t y e i t h e r a l o n e o r w i t h o t h e r s f o r t h e p u r p o s e o f d e v e l o p m e n t , C o o r d i n a t i o n , e x e c u t i o n , 20 i m p l e m e n t a t i o n o f t h e P r o j e c t a n d c o m m e r c i a l i za t i o n o f t h e P r o p e r t y/ P r e m i s e s . ( t ) T o a m a l g a m a t e t h e P r o p e r t y w i t h a n y o t h e r c o n t i g u o u s , a d j a c e n t a n d a d j o i n i n g l a n d s a n d p r o p e r t i e s w h e r e i n d e v e l o p m e n t a n d / o r o t h e r r i g h t , b e n e f i t s a n d i n t e r e s t s a r e a c q u i r e d a n d / o r p r o p o s e d t o b e a c q u i r e d a n d d e v e l o p e d o r p r o p o s e d t o b e d e v e l o p e d b y T H D C a n d / o r t h e i r a s s o c i a t e a n d / o r g r o u p c o n c e r n s /s a n d / o r u t i l i ze t h e F S I , F A R , D R a n d T D R o f t h e c o n t i g u o u s , a d j a c e n t a n d a d j o i n i n g l a n d s f o r t h e p u r p o s e o f c o n s t r u c t i n g b u i l d i n g s a n d / o r s t r u c t u r e s t h e r e o n a n d / o r o n t h e P r o p e r t y o r u t i l i ze s u c h l a n d s a n d p r o p e r t i e s f o r m a k i n g p r o v i s i o n o f p a r k i n g s p a c e s t h e r e o n , a n d / o r m a y u t i l i ze t h e s a m e f o r a n y o t h e r l a w f u l p u r p o s e , a s T H D C a n d / o r t h e i r a s s o c i a t e a n d / o r g r o u p c o n c e r n s m a y i n t h e i r s o l d , a b s o l u t e a n d u n f e t t e r e d d i s c r e t i o n t h i n k f i t . ( w ) T o h a n d o v e r t h e p o s s e s s i o n o f t h e P r o p e r t y o r a n y p a r t o r p o r t i o n t h e r e o f t o t h e a u t h o r i t i e s t o w h o m t h e s a m e i s r e q u i r e d t o b e h a n d e d o v e r o r o t h e r w i s e a n d t o e x e c u t e a n d d e l i ve r a n y u n d e r t a k i n g s , d e c l a r a t i o n s , a f f i d a v i t s , b o n d s , d e e d s , d o c u m e n t s , e t c . a s m a y b e r e q u i r e d b y t h e a u t h o r i t i e s c o n c e r n e d f o r ve s t i n g s u c h a p a r t o r p o r t i o n i n s u c h a u t h o r i t y a n d t o a d m i t e x e c u t i o n t h e r e o f b e f o r e t h e c o n c e r n e d C o m p e t e n t A u t h o r i t y a n d g e t t h e s a m e r e g i s t e r e d w i t h t h e c o n c e r n e d s u b - r e g i s t r a r . ( y) R e a s o n a b l e o p p o r t u n i t y o f h e a r i n g s h a l l b e g i v e n t o m o r t g a g e , e n c um b e r o r c r e a t e a c h a r g e o n t h e P r o p e r t y o r a n y p a r t o r p o r t i o n t h e r e o f a n d e x e c u t e t h e n e c e s s a r y s e c u r i t y d o c u m e n t s i n f a v o u r o f a n y b a n k / f i n a n c i a l i n s t i t u t i o n t o r a i s e f u n d s f o r t h e c o n s t r u c t i o n / d e v e l o p m e n t o f t h e P r o p e r t y a n d f o r t h e s a i d p u r p o s e t o d e p o s i t t i t l e d e e d s ( i f r e q u i r e d ) i n r e s p e c t o f t h e P r o p e r t y i n f a v o u r o f s u c h b a n k / f i n a n c i a l i n s t i t u t i o n , e x e c u t e t h e n e c e s s a r y d o c u m e n t s a n d r e g i s t e r t h e c h a r g e c r e a t e d o n t h e P r o p e r t y i f s o r e q u i r e d i n t h e r e v e n u e r e c o r d s a n d / o r d e s i r e d b y t h e A t t o r n e y. ( a a ) T o s e l l , t r a n s f e r , l e a s e , l i c e n s e t h e P r e m i s e s t h a t m a y b e c o n s t r u c t e d o n t h e P r o p e r t y o n o w n e r s h i p b a s i s , l e a s e , l i c e n s e a n d / o r i n a n y o t h e r m a n n e r f o r s u c h p r i c e a s t h e A t t o r n e ys m a y d e e m f i t a n d p r o p e r . T o c o l l e c t a n d r e c e i v e f r om t h e p u r c h a s e d , t r a n s f e r e e s , l e s s e e s , l i c e n s e e s o f t h e P r e m i s e s , m o n i e s / p r i c e a n d / o r c o n s i d e r a t i o n a n d / o r m a i n t e n a n c e c h a r g e s a n d t o s i g n a n d e x e c u t e a n d / o r g i v e p r o p e r a n d l a wf u l d i s c h a r g e f o r t h e r e c e i p t s . ( b b ) T o e x e c u t e f r o m t i m e t o t im e a l l t h e w r i t i n g , a g r e e m e n t , d e e d s e t c . i n r e s p e c t o f t h e p r e m i s e s w h i c h m a yb e c o n s t r u c t e d o n t h e P r o p e r t y a n d a l s o t o e x e c u t e a n d s i g n c o n v e ya n c e , t r a n s f e r o r s u r r e n d e r i n r e s p e c t o f t h e P r o p e r t y o r a n y p a r t t h e r e o f . ( c c ) T o s i g n , e x e c u t e a n d r e g i s t e r t h e c o n v e ya n c e s o r a s s i g n m e n t s a n d / o r P o w e r o f A t t o r n e y s a n d / o r o t h e r d o c u m e n t s a n d / o r a g r e e m e n t s a n d / o r a n y o t h e r wr i t i n g s i n r e s p e c t o f t h e P r o p e r t y i n p a r t o r f u l l a n d / o r t h e P r e m i s e s c o n s t r u c t e d t h e r e o n o r a n y p a r t t h e r e o f i n f a v o u r o f a n y p e r s o n a s t h e A t t o r n e ys m a y d e t e r m i n e i n c l u d i n g i n f a v o u r o f a n y i n d i v i d u a l a n d / o r l e g a l e n t i t l e s a n d / o r C o - o p e r a t i v e S o c i e t y a n d / o r L i m i t e d C o m p a n y a n d / o r a n y o t h e r e n t i t y t h a t m a y b e f o r m e d f o r s u c h p u r p o s e . ( d d ) T o i s s u e l e t t e r o f l i e n / N O C s a n d t o s i g n d o c u m e n t s o n b e h a l f o f t h e O w n e r a s r e q u i r e d b y t h e p r o s p e c t i v e b u ye r s / l e n d i n g i n s t r u c t i o n s t o c r e a t e a c h a r g e o n t h e a l l o t t e d p r e m i s e s . ( g g ) T o l o o k a f t e r a n d m a i n t a i n t h e P r o p e r t y a n d t h e P r e m i s e s c o n s t r u c t e d t h e r e o n t i l l i t s t r a n s f e r i n f a v o u r o f t h e C o - o p e r a t i v e S o c i e t y o r L i m i t e d C o m p a n y o r a n y o t h e r O r g a n i s a t i o n . 21 5 4 It is pertinent to note that power/authorization which have been given by the Society to the developer, were in fact were required 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 of development, mortgage etc. even after termination. Clause 8 which describes the obligation and undertaking of the THDC/HASH and provides specifically that all environmental clearance shall be obtained by THDC/HASH out of its own sources. Thus it was clearly understood by the parties that requisite environmental clearances had to be obtained before start of the project. Clause 10 again casts specific obligation on the owner Society to give consent to THDC/HASH to raise finance for the development and completion of the project on the Security of the property by way of mortgaging the property. Thus whatever power/authorization have been given through irrevocable special Power of Attorney are emanating from the terms and conditions agreed to among the parties from the JDA. 5 5 T h e c o m b i n e d r e a d i n g o f t h e a b o ve c l a u s e s o f t h e I r r e v o c a b l e S p e c i a l P o w e r o f A t t o r n e y a n d J D A c l e a r l y s h o w t h a t t h e d e v e l o p e r w a s a u t h o r i ze d t o e n t e r u p o n t h e p r o p e r t y f o r n o t o n l y f o r t h e p u r p o s e o f d e v e l o p m e n t b u t o t h e r p u r p o s e s a l s o . T H D C w a s a u t h o r i ze d t o a m a l g a m a t e t h e p r o j e c t w i t h a n y o t h e r p r o j e c t i n t h e a d j a c e n t a r e a o r a d j o i n i n g a r e a a s p e r c l a u s e ( t ) of t h e s p e c i a l P o w e r o f A t t o r n e y. I f t h e p o s s e s s i o n w a s n e v e r g i v e n t o t h e d e v e l o p e r b y t h e S o c i e t y t h e n h o w t h e d e v e l o p e r c o u l d a m a l g a m a t e t h e p r o j e c t w i t h a n o t h e r p r o j e c t w h i c h m a y b e a c q u i r e d l a t t e r i n t h e a d j o i n i n g a r e a . T h r o u g h c l a u s e ( w ) T H D C w a s a u t h o r i ze d t o h a n d o v e r t h e p o s s e s s i o n o f p r o p e r t y o r p o r t i o n t h e r e o f t o t h e a u t h o r i t y t o w h o m t h e s a m e i s r e q u i r e d . I n l a r g e H o u s i n g S o c i e t y P r o j e c t s s o m e t i m e s M u n i c i p a l a u t h o r i t i e s t a k e s s o m e p o r t i o n o f l a n d f o r t h e p u r p o s e o f r o a d s , p a r k s o r o t h e r g e n e r a l u t i l i t y p u r p o s e s l i k e i n s t a l l a t i o n o f e l e c t r i c i t y t r a n s f o r m e r s 22 a n d b e f o r e s a n c t i o n i n g t h e p l a n s t h e d e v e l o p e r i s r e q u i r e d t o u n d e r t a k e t h a t s u c h p o r t i o n s o f l a n d wo u l d b e g i v e n f o r s u c h a c o m m o n p u r p o s e . I f p o s s e s s i o n w a s n o t g i v e n t h e n h o w T H D C w a s a u t h o r i ze d t o h a n d o v e r s u c h l a n d o r p o r t i o n s t h e r e o f w h i c h h a v e n o t b e e n i d e n t i f i e d i n t h e J D A o u t o f t h e t o t a l l a n d . S i m i l a r l y t h r o u g h c l a u s e ( y) T H D C h a s b e e n a u t h o r i ze d t o m o r t g a g e , e n c u m b r a n c e o r c r e a t e c h a r g e o n t h e p r o p e r t y i n f a v o u r o f a n y b a n k o r f i n a n c i a l i n s t i t u t i o n f o r r a i s i n g t h e f u n d s f o r t h e p r o j e c t . I n t h e a b s e n c e o f p o s s e s s i o n s u c h p o w e r s c a n n o t b e g i v e n . C l a u s e ( a a ) c l e a r l y a u t h o r i ze d t h e T H D C t o s e l l , t r a n s f e r , l e a s e , l i c e n s e t h e p r e m i s e s w h i c h w e r e t o b e c o n s t r u c t e d o n o w n e r s h i p b a s i s a n d f u r t h e r t o r e c e i v e m o n e ys a g a i n s t s u c h s a l e e t c . a n d t o i s s u e f i n a l r e c e i p t . N o w h e r e i t i s m e n t i o n e d i n t h i s c l a u s e t h a t s u c h s a l e d e e d s w e r e t o b e s i n g e d b y t h e S o c i e t y a s c o n f i r m i n g p a r t y. I n t h e a b s e n c e o f p o s s e s s i o n i t i s j u s t n o t p o s s i b l e f o r t h e d e v e l o p e r t o s e l l a n d t r a n s f e r t h e p r e m i s e s w h i c h w e r e t o b e c o n s t r u c t e d . T h i s i s f u r t h e r c l a r i f i e d b y c l a u s e ( b b ) a n d ( c c ) w h i c h g i v e s t h e p o w e r o f e x e c u t i o n o f c o n v e ya n c e a n d o t h e r d o c u m e n t s i n v o l v i n g i n r e s p e c t o f t h e p r e m i s e s t o b e c o n s t r u c t e d w i t h o u t a n y i n t e r f e r e n c e o f t h e S o c i e t y b e i n g m a d e c o n f i r m i n g p a r t y. A l l t h e s e c l a u s e s c l e a r l y s h o w t h a t t h e p o s s e s s i o n w a s g i v e n b y t h e S o c i e t y a n d / o r i t s m e m b e r s t o T H D C / H A S H o n t h e e x e c u t i o n o f i r r e vo c a b l e P o w e r o f A t t o r n e y. T h r o u g h t h e s e c l a u s e s o f J D A a n d i r r e vo c a b l e P o w e r o f A t t o r n e y t h e d e v e l o p e r w a s a b l e t o c o m p l e t e l y c o n t r o l t h e p r o p e r t y a n d m a k e u s e o f i t n o t o n l y f o r t h e p u r p o s e o f d e v e l o p m e n t b u t a l s o f o r t h e p u r p o s e o f a m a l g a m a t i o n , s a l e , m o r t g a g e e t c . W h e n t h e a b o v e c l a u s e s a r e c o m p a r e d o n t o u c h s t o n e o f t h e d i s c u s s i o n o n p o s s e s s i o n i n p a r a 2 6 t o 2 8 i n t h e c a s e o f J a s b i r S i n g h S a r k a r i a ( s u p r a ) w h i c h w e h a v e r e p r o d u c e d a b o v e , i t b e c o m e s c l e a r t h a t t h e p o s s e s s i o n h a s b e e n g i v e n . 5 6 I n t h a t d i s c u s s i o n , i t h a s b e e n c l e a r l y m e n t i o n e d t h a t t h e p o s i t i o n c o n t e m p l a t e d b y c l a u s e ( v) o f s e c t i o n 2 ( 4 7 ) o f t h e A c t n e e d n o t t o b e e x c l u s i v e p o s s e s s i o n . W h a t i s r e q u i r e d i s t h a t t h e t r a n s f e r e e b y v i r t u e o f p o s s e s s i o n s h o u l d b e a b l e t o e x e r c i s e c o n t r o l f r o m o v e r a l l i n t e n d e d p u r p o s e s . W e d o n o t t h i n k i n t h e p r e s e n t c a s e t h e a s s e s s e e h a s g i v e n o n l y a l i c e n s e a s c l a i m e d b y l d . c o u n s e l o f t h e a s s e s s e e b e c a u s e o f t h e p o w e r s o f s e l l i n g , a m a l g a m a t i n g e t c . m e n t i o n e d i n t h e J D A a n d i r r e v o c a b l e S p e c i a l P o w e r o f A t t o r n e y. T h e i s s u e h a s b e e n d i s c u s s e d i n h e j u d g m e n t o f J a s b i r S i n g h S a r k a r i a ( s u p r a ) i n f u r t h e r d i s c u s s i o n w h i c h h a s b e e n m a d e i n p a r a 3 3 r e g a r d i n g P o w e r o f A t t o r n e y ( w h i c h h a s b e e n r e p r o d u c e d e a r l i e r ) . I n t h a t c a s e t h e p o w e r s w e r e g i v e n t o e n t e r u p o n a n d s u r v e y t h e l a n d , p r e p a r e l a y o u t p l a n s , s u b m i t b u i l d i n g p l a n f o r s a n c t i o n w i t h t h e a p p r o p r i a t e a u t h o r i t i e s t o c o n t r o l , m a n a g e a n d l o o k a f t e r a n d s u p e r v i s e t h e p r o p e r t y, t o o b t a i n w a t e r a n d s e w e r a g e , d i s p o s a l a n d e l e c t r i c i t y c o n n e c t i o n . I n t h a t c a s e t h e d e v e l o p e r w a s a u t h o r i ze d t o m o r t g a g e t h e p r o p e r t y 23 t o o b t a i n m o n e y f o r m e e t i n g t h e c o s t o f c o n s t r u c t i o n o n s e c u r i t y a n d m o r t g a g e o f l a n d f a l l i n g o n l y t o t h e d e v e l o p e r s s h a r e . I n t h a t c a s e i t w a s h e l d t h a t G P A w a s n o t a l i c e n s e t o e n t e r u p o n f o r d o i n g s o m e p r e l i m i n a r y a c t s i n r e l a t i o n t o d e v e l o p m e n t o f w o r k b u t t h e p o w e r t o c o n t r o l t h e l a n d h a s a l s o b e e n c o n f i r m e d . I t h a s a l s o b e e n n o t e d t h a t t h e a g r e e m e n t d e s c r i b e d t h e P o w e r o f A t t o r n e y a s i r r e v o c a b l e a n d e x t r a d e c l a r a t i o n t o t h a t e f f e c t i n t h e P o w e r o f A t t o r n e y i s n o t w i t h o u t s i g n i f i c a n c e . I n c a s e b e f o r e u s , m a n y m o r e p o w e r s h a v e b e e n g i v e n t o T H D C i n a d d i t i o n t o p o w e r s w h i c h h a v e b e e n d e s c r i b e d i n t h a t j u d g m e n t a n d P o w e r o f A t t o r n e y h a s b e e n d e s c r i b e d a s i r r e v o c a b l e i n c l a u s e 6 . 7 o f J D A . T h e r e f o r e , i t i s c l e a r t h a t t h e a s s e s s e e s p l e a t h a t t h e p o s s e s s i o n w a s t o b e g i v e n o n l y a t t h e t i m e o f r e g i s t r a t i o n o f t h e J D A , i s n o t c o r r e c t . O n c e i r r e v o c a b l e p o w e r w a s g i v e n t h e n i t c a n n o t b e s a i d t h a t t h e p o s s e s s i o n w a s n o t g i v e n . T h e i s s u e r e g a r d i n g r e v o c a t i o n o f i r r e v o c a b l e P o w e r o f A t t o r n e y a n d c a n c e l l a t i o n o f t h e J D A w o u l d b e d i s c u s s e d l a t e r o n w h i l e d e a l i n g w i t h t h a t c o n t e n t i o n . 5 7 W e f i n d f o r c e i n t h e s u b m i s s i o n s o f t h e l d . D R f o r t h e r e v e n u e t h a t i n t e r p r e t a t i o n o f c l a u s e ( v) t o s e c t i o n 2 ( 4 7 ) s h o u l d b e m a d e i n t h e l i g h t o f H e yd o n s R u l e . T h e r e i s n o f o r c e i n t h e o b j e c t i o n o f t h e l d . c o u n s e l o f t h e a s s e s s e e t h a t t h i s c l a u s e s h o u l d b e i n t e r p r e t e d o n g e n e r a l r u l e s o f i n t e r p r e t a t i o n p a r t i c u l a r l y i n t h e l i g h t o f t h e f a c t t h a t n o r e a s o n h a s b e e n g i v e n f o r t h e s a m e . H e yd o n s R u l e h a s b e e n a p p l i e d b y t h e I n d i a n C o u r t s m a n y t i m e s . T h e R u l e w a s a p p l i e d a n d i n i t i a t e d i n H e yd o n s c a s e ( 1 5 8 4 ) 3 C o . R e p 7 a . T h i s R u l e w a s u p h e l d b y t h e C o n s t i t u t i o n B e n c h o f H o n b l e A p e x C o u r t i n c a s e o f B e n g a l I m m u n i t y C o . L t d . V S t a t e o f B i h a r ( 1 9 5 5 ) 2 S C R 6 0 3 f o r c o n s i d e r a t i o n o f A r t i c l e 2 8 6 o f t h e C o n s t i t u t i o n . I t h a s b e e n h e l d i n c a s e o f D r . B a l i r a m W am a n H i r a y V . M r . J u s t i c e B . L e n t i n a n d a n o t h e r , 1 7 6 I T R 1 t h a t f o r u n d e r s t a n d i n g a m e n d m e n t i n t h e A c t , p e r h a p s H e yd o n s R u l e i s b e s t r u l e f o r i n t e r p r e t a t i o n o f s u c h a m e n d m e n t . W e f i n d t h a t w i t h o u t m e n t i o n i n g t h i s r u l e L d . A u t h o r i t y F o r A d v a n c e R u l i n g h a s d i s c u s s e d t h i s i s s u e i n p a r a 2 7 o f t h e j u d g m e n t w h i c h w e h a v e e x t r a c t e d a b o v e . I t h a s b e e n h e l d t h a t i f p o s s e s s i o n r e f e r r e d t o i n c l a u s e ( v) i s t o b e u n d e r s t o o d a s e x c l u s i v e b a s i s o f t h e t r a n s f e r e e t h e n v e r y p u r p o s e o f t h e a m e n d m e n t o r e n l a r g e m e n t of t h e d e f i n i t i o n o f t r a n s f e r w o u l d g e t d e f e a t e d . W e a r e r e p r o d u c i n g f o l l o w i n g h e a d n o t e o f t h e H o n b l e A p e x C o u r t i n c a s e o f D r . B a l i r a m W am a n H i r a y V . M r . J u s t i c e B . L e n t i n a n d a n o t h e r ( s u p r a ) :

T h e f o l l o w i n g p r i n c i p l e s e n u n c i a t e d i n H e y d o n

s c a a s e ( 1 5 8 4 ) 3 C o . R e p 7 a a n d f i r m l y e s t a b l i s h e d , a r e s t i l l i n f u l l f o r c e a n d e f f e c t :

t h a t f o r t h e s u r e a n d t r u e i n t e r p r e t a t i o n o f a l l s t a t u t e s i n g e n e r a ls ( b e t h e y p e n a l o r b e n e f i c i a l , r e s t r i c t i v e o r e n l a r g i n g o f t h e c o m m o n l a w ) , f o u r t h i n g s a r e t o b e d i s c e r n e d a n d c o n s i d e r e d : ( 1 ) w h a t w a s t h e c o m m o n l a w b e f o r e t h e m a k i n g o f t h e A c t ; ( 2 ) w h a t w a s t h e m i s c h i e f a n d d e f e c t f o r w h i c h t h e c o m m o n l a w d i d n o t p r o v i d e ; ( 3 ) 24 w h a t r e m e d y P a r l i a m e n t h a s r e s o l v e d a n d a p p o i n t e d t o c u r e t h e d i s e a s e o f t h e c o m m o n w e a l t h a n d ( 4 ) t h e t r u e r e a s o n o f t h e r e m e d y . A n d t h e n , t h e o f f i c e o f a l l t h e j u d g e s i s a l w a y s t o m a k e s u c h c o n s t r u c t i o n a s s h a l l s u p p r e s s t h e e v a s i o n s f o r t h e c o n t i n u a n c e o f t h e m i s c h i e f a n d p r o p r i v a t e c o m m a n d o a n d t o a d d f o r c e a n d l i f e t o t h e c u r e a n d r e m e d y a c c o r d i n g t o t h e t r u e i n t e n t o f t h e m a k e r s o f t h e A c t p r o b o n o p u b l i c .

T h e r e i s n o w t h e f u r t h e r a d d i t i o n t h a t r e g a r d m u s t b e h a d n o t o n l y t o t h e e x i s t i n g l a w b u t a l s o t o p r i o r l e g i s l a t i o n a n d t o t h e j u d i c i a l i n t e r p r e t a t i o n t h e r e o f . 5 8 G o i n g b y t h e H e yd o n s R u l e o f i n t e r p r e t a t i o n i f w e a n a l yze t h e p u r p o s e o f c l a u s e ( v) o f S e c t i o n 2 ( 4 7 ) t h e n i t w o u l d e m e r g e t h a t l a w b e f o r e m a k i n g t h e a m e n d m e n t w a s t h a t c a p i t a l g a i n c o u l d b e c h a r g e d o n l y i f a t r a n s f e r h a s b e e n e f f e c t e d a n d t r a n s f e r w a s i n t e r p r e t e d b y v a r i o u s C o u r t s i n c l u d i n g t h e d e c i s i o n o f H o n b l e S u p r e m e C o u r t i n c a s e o f A l a p a t i V e n k a t r a m i a n V C I T , 5 7 I T R 1 8 5 ( S C ) t h a t p r o p e r c o n v e ya n c e o f t h e p r o p e r t y h a s b e e n m a d e u n d e r t h e c o m m o n l a w . T h e m i s c h i e f w a s w i t h r e g a r d t o t r a n s f e r i n t h e s e n s e t h a t t h e r e w a s c o m m o n p r a c t i c e t h a t p r o p e r t i e s w e r e b e i n g t r a n s f e r r e d i n s u c h a m a n n e r t h a t t r a n s f e r e e c o u l d e n j o y t h e b e n e f i t o f t h e p r o p e r t y w i t h o u t e x e c u t i o n o f t h e c o n v e ya n c e d e e d . T h i r d l y w e n e e d t o e x a m i n e t h e r e m e d y w h i c h w a s i n s e r t i o n o f c l a u s e ( v ) a n d ( v i ) s o t h a t c a s e s o f g i v i n g p o s s e s s i o n o f t h e p r o p e r t y, w e r e a l s o c o v e r e d b y t h e d e f i n i t i o n o f t r a n s f e r . F o u r t h l y, t r u e r e a s o n f o r t h i s a m e n d m e n t w a s t o p l u g a l o o p h o l e i n t h e l a w . T h e r e f o r e , c o n s i d e r i n g t h e p u r p o s e o f i n s e r t i o n o f c l a u s e ( v ) a n d ( v i ) o f s e c t i o n 2 ( 4 7 ) a n d v a r i o u s c l a u s e s o f P o w e r o f A t t o r n e y a n d J D A i t b e c o m e s a b s o l u t e l y c l e a r t h a t t h e S o c i e t y h a s h a n d e d o v e r t h e p o s s e s s i o n o f t h e p r o p e r t y t o T H D C / H A S H . 5 9 S e c o n d i m p o r t a n t c o n t e n t i o n o n b e h a l f o f t h e a s s e s s e e i s t h a t J D A w a s e x e c u t e d o n 2 5 . 2 . 2 0 0 7 a n d i f p o s s e s s i o n w a s g i v e n t h e n h o w t h e a s s e s s e e w a s h a v i n g p o s s e s s i o n i n t e rm s o f l a t e r s a l e d e e d s e x e c u t e d o n 2 . 3 . 2 0 0 7 a n d 2 5 . 4 . 2 0 0 7 . T h e S o c i e t y h a s e x e c u t e d t w o s a l e d e e d s f o r c o n v e ya n c e o f p a r t s o f t h e t o t a l l a n d . F i r s t s a l e d e e d h a s b e e n e x e c u t e d o n 2 . 3 . 2 0 0 7 f o r 3 . 0 8 a c r e s a n d r e c i t a t i o n c l a u s e ( A ) r e a d s a s u n d e r : C l a u s e ( A ) - T h e v e n d o r i s t h e a b s o l u t e o w n e r a n d i n p o s s e s s i o n o f l a n d t o t a l m e a s u r i n g 1 6 9 k a n a l 7 m a r l a s e q u i v a l e n t t o a p p r o x . 2 1 . 2 a c r e s i n V i l l a g e K a n s a l , T e h s i l M o h a l i a n d m o r e p a r t i c u l a r l y d e s c r i b e d i n S c h e d u l e A h e r e u n d e r w r i t t e n a n d d e l i n e a t e d i n g r e e n c o l o u r b o u n d a r y l i n e i n t h e S h i zr a P l a n i s s u e d b y t h e P a t w a r i d a t e d 2 3 . 2 . 2 0 0 7 . 6 0 A c c o r d i n g t o t h e l d . c o u n s e l o f t h e a s s e s s e e i f S o c i e t y h a d a l r e a d y g i v e n t h e p o s s e s s i o n t h e n t h e S o c i e t y w o u l d n o t h a v e / h a d p o s s e s s i o n o n 2 . 3 . 2 0 0 7 o f t h e l a n d . A t f a c e v a l u e t h i s a r g u m e n t l o o k s a t t r a c t i v e b u t w h e n e x a m i n e d i n t e r m s o f p o s s e s s i o n w h i c h h a s b e e n e x p l a i n e d i n c a s e o f J a s b i r S i n g h S a r k a r i a ( s u p r a ) , a c t u a l r e a l i t y w i l l c o m e f o r w a r d . I n t h i s j u d g m e n t c o n c e p t o f c o n c u r r e n t p o s s e s s i o n h a s a l s o b e e n d i s c u s s e d a n d 25 f o l l o w i n g e x t r a c t o f p a r a g r a p h 5 5 o f S a l m o n d s J u r i s p r u d e n c e h a s b e e n e x t r a c t e d w h i c h r e a d s a s u n d e r :

I t w a s a m a x i m o f t h e c i v i l l a w t h a t t w o p e r s o n s c o u l d n o t b e i n p o s s e s s i o n o f t h e s a m e t h i n g a t t h e s a m e t i m e . A s a g e n e r a l p r o p o s i t i o n t h i s i s t r u e : f o r e x c l u s i v e n e s s i s o f t h e e s s e n c e o f p o s s e s s i o n . T w o a d v e r s e c l a i m s o f e x c l u s i v e u s e c a n n o t b o t h b e e f f e c t u a l l y r e a l i ze d a t t h e s a m e t i m e . C l a i m s , h o w e v e r , w h i c h a r e n o t a d v e r s e , a n d w h i c h a r e n o t , t h e r e f o r e , m u t u a l l y d e s t r u c t i v e , a d m i t o f c o n c u r r e n t r e a l i za t i o n . H e n c e t h e r e a r e s e v e r a l p o s s i b l e c a s e s o f d u p l i c a t e p o s s e s s i o n . 1 M e d i a t e a n d i m m e d i a t e p o s s e s s i o n C r o s s - o b j e c t i o n s - e x i s t i n r e s p e c t o f t h e s a m e t h i n g a s a l r e a d y e x p l a i n e d . 2 T w o o r m o r e p e r s o n s m a y p o s s e s s t h e s a m e t h i n g i n c o m m o n ; j u s t a s t h e y m a y o w e i t i n c o m m o n . T h e c o n c u r r e n t p o s s e s s i o n o f t h e o w n e r w h o c a n e x e r c i s e p o s s e s s i o n r i g h t t o a l i m i t e d e x t e n t a n d f o r a l i m i t e d p u r p o s e a n d t h a t o f t h e b u y e r / d e v e l o p e r w h o h a s a g e n e r a l c o n t r o l a n d c u s t o d y o f t h e l a n d c a n v e r y w e l l b e r e c o n c i l e d .

6 1 I n f u r t h e r d i s c u s s i o n i n p a r a 2 6 t o 2 8 o f t h e a b o v e d e c i s i o n i t h a s b e e n h e l d t h a t i t i s n o t n e c e s s a r y i n t e r m s o f c l a u s e ( v ) t h a t t h e d e v e l o p e r s h o u l d h a v e e x c l u s i v e p o s s e s s i o n . T h e c o n c u r r e n t p o s s e s s i o n o f t h e o w n e r i s p o s s i b l e w h i c h g i v e s r i g h t s t o a l i m i t e d e x t e n t f o r a l i m i t e d p u r p o s e . T h u s i t i s v e r y m u c h p o s s i b l e t o h o l d c o n c u r r e n t p o s s e s s i o n . M e r e r e c i t a t i o n i n t h e s a l e d e e d t o t h e e f f e c t t h a t t h e S o c i e t y w a s o w n e r o f a n d i n p o s s e s s i o n o f l a n d m e a s u r i n g 2 1 . 2 a c r e s , d o e s n o t s h o w t h a t t h e S o c i e t y w a s h a v i n g a c t u a l p o s s e s s i o n . W h a t t h e S o c i e t y w a s h a v i n g i s o n l y o w n e r s h i p r i g h t a n d t h e p o s s e s s i o n w a s o n l y c o n c u r r e n t a s t h e p o s s e s s a r y r i g h t . F u r t h e r i t i s a s t a n d a r d c l a u s e i n t h e c o n v e ya n c e d e e d a n d i t d o e s n o t p r o v e o r i n d i c a t e a n yt h i n g e x c e p t t h a t a p o r t i o n o f l a n d m e a s u r i n g 3 . 0 8 a c r e s , h a s b e e n s o l d / c o n v e ye d t o t h e d e v e l o p e r . I n t h e l i g h t o f t h i s p o s i t i o n , t h i s c o n t e n t i o n i s r e j e c t e d . 6 2 W e f i n d n o f o r c e i n t h e n e x t c o n t e n t i o n o f t h e l d . c o u n s e l o f t h e a s s e s s e e t h a t p o s s e s s i o n i f a t a l l w a s g i v e n s h o u l d b e h e l d t o b e o n l y a l i c e n s e a s d e f i n e d i n S e c t i o n 5 2 o f I n d i a n E a s em e n t A c t b e c a u s e c l e a r l y a s p e r S e c t i o n 5 2 o f t h i s A c t , w h e r e o n e p e r s o n g r a n t s t o a n o t h e r o r m a n y o t h e r p e r s o n s t o d o s o m e t h i n g u p o n i m m o v e a b l e p r o p e r t y w h i c h i n t h e a b s e n c e o f s u c h r i g h t w o u l d b e u n l a w f u l . 6 3 H e r e i n c a s e b e f o r e u s , t h e r i g h t h a s n o t b e e n g i v e n f o r t h e p u r p o s e o f d o i n g s o m e t h i n g b u t a l l t h e p o s s i b l e r i g h t s i n p r o p e r t y i n c l u d i n g r i g h t t o s e l l , r i g h t t o a m a l g a m a t e t h e p r o j e c t w i t h a n o t h e r p r o j e c t i n t h e a d j o i n i n g a r e a w h i c h m a y b e a c q u i r e d l a t e r , r i g h t t o m o r t g a g e e t c . c l e a r l y s h o w t h a t r i g h t s g i v e n b y t h e S o c i e t y a r e m u c h m o r e l a r g e r t h a n w h a t i s c o v e r e d i n t h e t e r m l i c e n s e . 26 6 4 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. W e 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. W e have already discussed the implication of Section 45 r.w.s. 48 while discussing the legal position. W e 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 transferred in a particular year. 65 W e would like to discuss this aspect of the issue in little more detail and try to understand why the whole of the consideration is required to be taxed. At the cost of repetition let us again reproduce the observations of the Ld. authority in case of Jasbir Singh Sarkaria (supra) which we have earlier extracted at para 40 and the relevant portion is as under: 4 0 . O n t h e a b o v e , t h e H o n b l e A u t h o r i t y a f t e r r e f e r r i n g t o t h e p r o v i s i o n s o f s e c t i o n 4 5 a n d o b s e r v e d a s u n d e r : - . The section can be analysed thus : (a) transfer of a capital asset effected in the previous year, (b) resultant profits or gains from such transfer, (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 Iyengars Commentary (10th Edition Revised by Shri S. Rajaratnam) brings out the correct legal position :

Section 45 enacts that the capital gains shall by fiction be deemed to be the income of the previous year in which the transfer took place. Since this is a statutory fiction, the actual year in which the sale price was received, whether it was one year, two years, three years, four years etc. previous to the previous year of transfer, is beside the point. The entirety of the sum or sums received in any earlier year or years would be 27 regarded as the capital gains arising 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 Honble 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 they have arisen. Throughout the Income-tax Act the words

accrue and arise are used in contradistinction to the word receive and indicate a right to receive. This was explained by Fry L.J., in Colquhoun v. Brooks. The learned judge observed: I think, therefore, that the words arise or accruing are general words descriptive of a right to receive profits. See also CIT v. Anamallais Timber Trust Ltd. To attract the operation of section 12B it is therefore sufficient if the profits arose. They need not have been actually received.

14. Thus the criterion of right to receive the profits / gains was applied in that case.

15. The legal position does not therefore admit of any doubt that the actual receipt of the entire sale consideration during the year of transfer is not necessary for the purpose of computing capital gains. Further the expression arising has been defined in the Advanced Law Lexicon by P. Ramanatha Aiyer edited by Y.V. Chandrachud, Former Chief Justice of India: The words Arising or accruing describe a right to receive profits, and that there must be a debt owed by somebody. Ld. Commissioner of Income Tax, West Bengal-II, Calcutta V. Hindustan Housing and Land Development Trust Ltd. AIR 1986 S.C 1805, 1807. The expression accrual of income has been defined in the same Lexicon as under:

Accrual of income. E.D Jassoon & C. Ltd. V Ld. Commissioner of Income Tax, AIR 1954 S.C 470 quoted Income may accrue to an assessee without the actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. Bhogilal V Income Tax Ld. Commissioner, AIR 1956 Bom 411 , 414 (Income Tax Act (11 of 1992) Ss. 16(1) and (3)}

28 67 The combined reading of these two definitions show that it (i.e. accrual) is not equal to the receipt of income. In fact it is a stage before the point of time when the income becomes receivable. In other words, once the vested rights come to a person then it can be said that such right or income has accrued to such person. The concept of accrual or arousal of income has also been discussed by the ld. author S. Rajaratnam in the 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 when the income becomes receivable and connote a character of the income, which is more or less inchoate and which is something less than a receipt. An unenforceable claim to receive an undetermined or undefined sum does not give rise to accrual.

68 Therefore, it is not only the money which has been received by the assessee which is required to be taxed but the consideration which has accrued to the assessee is also required to be taxed. In view of this, this contention is rejected. 6 9 T h e f i f t h c o n t e n t i o n m a d e b y t h e L d . C o u n s e l f o r t h e a s s e s s e e w a s t h a t s i n c e s e c t i o n 5 3 A o f t h e T r a n s f e r o f P r o p e r t y A c t i t s e l f h a s u n d e r g o n e a m e n d m e n t w . e . f . 2 4 . 9 . 2 0 0 1 b y w h i c h t h e a g r e e m e n t r e f e r r e d t o i n t h a t s e c t i o n i s r e q u i r e d t o b e r e g i s t e r e d a n d t h e r e f o r e , n o w i n s e c t i o n 2 ( 4 7 ) ( v ) o n l y t h e a m e n d e d p r o v i s i o n s c a n b e r e a d . W e f i n d n o f o r c e i n t h i s c o n t e n t i o n . I t i s w e l l k n o w n t h a t s e c t i o n 5 3 A o f t h e T r a n s f e r o f P r o p e r t y A c t w a s p a s s e d o n e q u i t a b l e d o c t r i n e s o a s t o p r o t e c t t h e t a k i n g o v e r o r r e t e n t i o n of t h e p o s s e s s i o n b y t h e t r a n s f e r e e . I t w a s n o t a s o u r c e b y w h i c h t i t l e o f i m m o v a b l e p r o p e r t y c o u l d b e a c q u i r e d . S e c t i o n 5 3 A o f T P A c t r e a d a s u n d e r : - 53A. Part performance.- Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, 29 and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that the contract, [***]where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract 7 0 A p l a i n r e a d i n g o f t h e a b o v e p r o v i s i o n s h o w s t h a t i t p r o v i d e s a s a f e t y m e a s u r e o r a s h i e l d i n t h e h a n d s o f t h e t r a n s f e r e e t o p r o t e c t t h e p o s s e s s i o n o f a n y p r o p e r t y w h i c h h a s b e e n g i v e n b y t h e t r a n s f e r o r a s l a w f u l p o s s e s s i o n u n d e r a p a r t i c u l a r a g r e e m e n t o f s a l e . T h i s p o s i t i o n o f l a w w a s i n c o r p o r a t e d i n t h e d e f i n i t i o n o f t r a n s f e r b y i n s e r t i o n o f c l a u s e s ( v) & ( v i ) i n s e c t i o n 2 ( 4 7 ) o f t h e A c t . I t i s i m p o r t a n t t o n o t e t h a t c l a u s e ( v ) u s e s t h e e x p r e s s i o n c o n t r a c t o f t h e n a t u r e r e f e r r e d t o i n s e c t i o n 5 3 A o f T . P . A c t , t h e r e f o r e , c l e a r l y t h e i d e a i s t h a t a n a g r e e m e n t w h i c h p r o v i d e s s o m e d e f e n s e i n t h e h a n d s o f t r a n s f e r e e w a s i n c o r p o r a t e d u n d e r t h e d e f i n i t i o n o f t r a n s f e r i n t h e I n c o m e T a x A c t . N o w o r i g i n a l l y s e c t i o n 5 3 A o f T . P . A c t p r o v i d e d t h a t e ve n i f

t h e c o n t r a c t t h o u g h r e q u i r e d t o b e r e g i s t e r e d h a s n o t b e e n r e g i s t e r e d

, w h i c h m e a n s t h e r i g h t o f d e f e n d i n g t h e p o s s e s s i o n w a s a v a i l a b l e e v e n i f t h e c o n t r a c t w a s n o t r e g i s t e r e d b u t b y A m e n d m e n t A c t 4 8 o f 2 0 0 1 , t h e e x p r e s s i o n

t h o u g h r e q u i r e d t o b e r e g i s t e r e d h a s n o t b e e n r e g i s t e r e d

, h a s b e e n o m i t t e d w h i c h m e a n s f o r t h e p u r p o s e o f p o s s e s s i o n u / s 5 3 A o f T . P . A c t , a p e r s o n h a s t o p r o v e t h a t p o s s e s s i o n h a s b e e n g i v e n u n d e r a r e g i s t e r e d a g r e e m e n t . I n o t h er w o r d s , n o w u / s 5 3 A o f T . P . A c t , t h e a g r e e m e n t r e f e r r e d i s r e q u i r e d t o b e r e g i s t e r e d . T h i s r e q u i r e m e n t c a n n o t b e r e a d i n c l a u s e ( v ) of s e c t i o n 2 ( 4 7 ) b e c a u s e t h a t r e f e r s o n l y t o t h e c o n t r a c t o f t h e n a t u r e o f s e c t i o n 5 3 A o f T . P . A c t w i t h o u t g o i n g i n t o t h e c o n t r o v e r s y w h e t h e r s u c h a g r e e m e n t i s r e q u i r e d t o b e r e g i s t e r e d o r n o t . T h e L d . C o u n s e l f o r t h e a s s e s s e e h a d r e f e r r e d t o t h e d e c i s i o n o f H o n b l e S u p r e m e C o u r t i n t h e c a s e o f S u r a n a S t e e l s v D C I T 2 3 7 I T R 7 7 7 ( S C ) f o r t h e p r o p o s i t i o n t h a t w h e n a s e c t i o n o f a p a r t i c u l a r s t a t u t e i s i n t r o d u c e d i n t o a n o t h e r A c t i t m u s t b e r e a d i n t h e s a m e s e n s e a s i t b o r e i n t h e o r i g i n a l A c t . T h e c a r e f u l p e r u s a l o f t h a t j u d g m e n t w o u l d s h o w t h a t s i t u a t i o n i s a p p l i c a b l e o n l y w h e n a p a r t i c u l a r p r o v i s i o n o f a n A c t h a s b e e n i n c o r p o r a t e d i n t h e l a t e r A c t . I n t h a t c a s e a q u e s t i o n a r o s e t h a t f o r t h e p u r p o s e o f M A T p r o v i s i o n w h a t i s t h e m e a n i n g o f p a s t l o s s e s o r u n a b s o r b e d d e p r e c i a t i o n . I t w a s f o u n d t h a t i n e x p l a n a t i o n t o s e c t i o n 1 1 5 J c l a u s e ( i v) , t h e f o l l o w i n g e x p r e s s i o n w a s u s e d : - ( i v ) t h e a m o u n t o f t h e l o s s o r t h e a m o u n t o f d e p r e c i a t i o n w h i c h w o u l d b e r e q u i r e d t o b e s e t o f f a g a i n s t t h e p r o f i t o f t h e r e l e v a n t p r e v i o u s y e a r a s i f t h e p r o v i s i o n s o f c l a u s e ( b ) o f t h e f i r s t p r o v i s o t o s u b s e c t i o n ( i ) o f s e c t i o n 2 0 5 o f t h e C o m p a n i e s A c t , 1 9 5 6 ( 1 o f 1 9 5 6 ) a r e a p p l i c a b l e . 30 7 1 T h e H o n b l e A p e x C o u r t r e f e r r e d t o t h e P r i n c i p l e s o f S t a t u t o r y I n t e r p r e t a t i o n b y S h r i G . P . S i n g h a n d e x t r a c t e d f o l l o w i n g p i e c e : S e c t i o n 1 1 5 J , E x p l a n a t i o n c l a u s e ( i v ) , i s a p i e c e o f l e g i s l a t i o n b y i n c o r p o r a t i o n . D e a l i n g w i t h t h e s u b j e c t , J u s t i c e G . P . S i n g h s t a t e s i n P r i n c i p l e s o f S t a t u t o r y I n t e r p r e t a t i o n ( 7 t h e d i t i o n , 1 9 9 9 ) . I n c o r p o r a t i o n o f a n e a r l i e r A c t i n t o a l a t e r A c t i s a l e g i s l a t i v e d e v i c e a d o p t e d f o r t h e s a k e o f c o n v e n i e n c e i n o r d e r t o a v o i d v e r b a t i m r e p r o d u c t i o n o f t h e p r o v i s i o n s o f t h e e a r l i e r A c t i n t o t h e l a t e r . W h e n a n e a r l i e r A c t o r c e r t a i n o f i t s p r o v i s i o n s a r e i n c o r p o r a t e d b y r e f e r e n c e i n t o a l a t e r A c t , t h e p r o v i s i o n s s o i n c o r p o r a t e d b e c om e p a r t a n d p a r c e l o f t h e l a t e r A c t a s i f t h e y h a d b e e n " b o d i l y t r a n s p o s e d i n t o i t " . T h e e f f e c t o f i n c o r p o r a t i o n i s a d m i r a b l y s t a t e d b y L O R D E S H E R , M . R . : " I f a s u b s e q u e n t A c t b r i n g s i n t o i t s e l f b y r e f e r e n c e s o m e o f t h e c l a u s e s o f a f o r m e r A c t , t h e l e g a l e f f e c t o f t h a t , a s h a s o f t e n b e e n h e l d , i s t o w r i t e t h o s e S e c t i o n s i n t o t h e n e w A c t a s i f t h e y h a d b e e n a c t u a l l y w r i t t e n i n i t w i t h t h e p e n , o r p r i n t e d i n i t . ( p . 2 3 3 ) E v e n t h o u g h o n l y p a r t i c u l a r S e c t i o n s o f a n e a r l i e r A c t a r e i n c o r p o r a t e d i n t o l a t e r , i n c o n s t r u i n g t h e i n c o r p o r a t e d S e c t i o n s i t m a y b e a t t i m e s n e c e s s a r y a n d p e r m i s s i b l e t o r e f e r t o o t h e r p a r t s o f t h e e a r l i e r s t a t u t e w h i c h a r e n o t i n c o r p o r a t e d . A s w a s s t a t e d b y L O R D B L A C K B U R N : "W h e n a s i n g l e S e c t i o n o f a n A c t o f P a r l i a m e n t i s i n t r o d u c e d i n t o a n o t h e r A c t , I t h i n k i t m u s t b e r e a d i n t h e s e n s e i t b o r e i n t h e o r i g i n a l A c t f r o m w h i c h i t w a s t a k e n , a n d t h a t c o n s e q u e n t l y i t i s p e r f e c t l y l e g i t i m a t e t o r e f e r t o a l l t h e r e s t o f t h a t A c t i n o r d e r t o a s c e r t a i n w h a t t h e S e c t i o n s m e a n t , t h o u g h t h o s e o t h e r S e c t i o n s a r e n o t i n c o r p o r a t e d i n t h e n e w A c t . ( p . 2 4 4 ) 7 2 O n t h e b a s i s o f a b o v e o b s e r v a t i o n , i t wa s h e l d t h a t m e a n i n g o f p a s t l o s s e s o r u n a b s o r b e d d e p r e c i a t i o n h a s t o b e t a k e n s a m e a s w a s d e f i n e d i n t h e C o m p a n i e s A c t . I n t h i s c a s e i t i s c l e a r t h a t p r o v i s i o n i t s e l f r e f e r s t o c l a u s e ( b ) o f s u b s e c t i o n ( 1 ) o f s e c t i o n 2 0 5 o f C o m p a n y s A c t 1 9 5 6 a n d t h e r e f o r e , s a m e m e a n i n g w a s g i v e n t o p a s t l o s s e s o r u n a b s o r b e d d e p r e c i a t i o n a s i s g i v e n u n d e r t h e C om p a n i e s A c t , 1 9 5 6 . 7 3 I n c a s e o f c l a u s e ( v) t o s e c t i o n 2 ( 4 7 ) , c l e a r l y t h e e x p r e s s i o n u s e d i s

c o n t r a c t o f t h e n a t u r e r e f e r r e d t o i n s e c t i o n 5 3 A o f T . P . A c t

, w h i c h m e a n s i t i s n o t a c a s e o f i n c o r p o r a t i o n o f o n e p i e c e o f l e g i s l a t i o n i n t o a n o t h e r p i e c e o f l e g i s l a t i o n . I f t h a t w a s t h e i n t e n t i o n o f t h e P a r l i a m e n t , o b v i o u s l y c l a u s e ( v) w o u l d c o n t a i n t h e e x p r e s s i o n

c o n t r a c t a s d e f i n e d u n d e r s e c t i o n 5 3 A o f T r a n s f e r o f P r o p e r t y A c t , 1 8 8 2

. F u r t h e r , i t i s s e t t l e d p o s i t i o n o f l a w t h a t a n y i n t e r p r e t a t i o n w h i c h c o u l d r e n d e r a p a r t i c u l a r p r o v i s i o n r e d u n d a n t s h o u l d b e a v o i d e d . I f t h e c o n t e n t i o n o f t h e L d . c o u n s e l w a s t o b e a c c e p t e d , o b v i o u s l y t h e p r o v i s i o n s o f c l a u s e ( v ) o f s e c t i o n 2 ( 4 7 ) o f t h e A c t w o u l d b e c o m e r e d u n d a n t i n t h e s e n s e t h a t r e g i s t r a t i o n o f a g r e e m e n t w o u l d a g a i n b e m a d e c o m p u l s o r y b u t s i n c e p r o p e r t i e s 31 w e r e b e i n g s o l d i n t h e m a r k e t o n

p o w e r o f a t t o r n e y

b a s i s t h r o u g h u n r e g i s t e r e d a g r e e m e n t s w h i c h w o u l d m a k e t h i s p r o v i s i o n r e d u n d a n t . T h i s p o s i t i o n w e h a v e a l r e a d y d i s c u s s e d e a r l i e r w h i l e d i s c u s s i n g t h e H e yd o n s R u l e i n t h e i n t e r p r e t a t i o n s o f t h i s c l a u s e . F u r t h e r t h e i s s u e o f i n t e r p r e t a t i o n o f c l a u s e ( v) a n d a m e n d m e n t t o s e c t i o n 5 3 A o f t h e T r a n s f e r o f P r o p e r t y A c t c a m e f o r c o n s i d e r a t i o n b e f o r e t h e M u m b a i B e n c h o f t h e T r i b u n a l i n t h e c a s e o f S u r e s h C h a n d e r A g g a r w a l vs I T O 4 8 S O T 2 0 1 0 . T h e T r i b u n a l d i s c u s s e d t h i s i s s u e a t p a g e 7 a n d a f t e r q u o t i n g t h e p r o v i s i o n s o f s e c t i o n 2 ( 4 7 ) a n d a l s o s e c t i o n 5 3 A b e f o r e a n d a f t e r a m e n d m e n t a s w a l l a s p a r a N o s . 1 1 . 1 t o 1 1 . 2 o f t h e B o a r d s C i r c u l a r N o . 4 9 5 d a t e d 2 2 . 9 . 1 9 8 7 o b s e r v e d a s u n d e r : -

The above clearly shows that there was certain situation where properties were being transferred without registration of transfer instruments and people were escaping tax liabilities on transfer of such properties because the same could not be brought in the definition of "transfer" particularly in many States of the country properties were being held by various people as leased properties which were allotted by the various Govt. Departments and transfers of such lease were not permissible. People were transferring such properties by executing agreement to sell and general power of attorney as well as Will and receiving full consideration, but since the agreement to sell was not registered and though full consideration was received and even possession was given, still the same transactions could not be 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 properties were being transferred by way of giving possession and receiving full consideration. Therefore, in our humble opinion, in the case of a transfer where possession has been given and full consideration has been received, then such transaction needs to be construed as "transfer". Therefore, the amendment made in section 53A by which the requirement of registration has been indirectly brought on the statute need not be applied while construing the meaning of "transfer" with reference to the Income-tax Act.

8. The above situation further becomes clear if we refer to the celebrated decision of Honble Supreme Court in the case of Podar Cement (P.) Ltd. (supra}. In that case, the assessee was owner of four flats in a building called "Silver Arch"/on Nepean Sea Road, Bombay. Out of these four flats, two were purchased directly from the Builders, Malabar Industries Pvt. Ltd., and two were purchased by its sister concerns which were later purchased by the assessee. The possession of the flats was taken after full payment of consideration. The flats were let out. The assessee contended that the rental income from these flats was assessable as "income from other sources" because the assessee was not the legal owner because the title of the property had not been conveyed to the Co- operative Society which was formed by the purchasers of the flats. 32 The Honble Court noted that section 27 had been amended vide clause 3(a) wherein when a person was allowed to take possession of the building in part performance of the nature referred to in section 53A, such person shall be deemed to be the owner. It was further observed that for all practicable purposes the assessee was the owner and possibly there cannot be two owners of same property at the same time. In fact, the amendments to section 27 were made later on but were taken into cognizance on the basis of above principle and ultimately it was held as under: "Hence, though under the common law "owner" means a person who has got valid title legally conveyed to him after comply with the requirements of law such as the Transfer of Property Act, the Registration Act, etc., in the context section 22 of the Income-tax Act, 1961, having regard to the ground realities and further having regard to the object of the Income-tax Act, namely, to tax the income, "owner" is a person who is entitled to receive income from the property in his own right. The requirement of registration of the sale deed in the context of section 22 is not warranted." Thus, from the above, it is clear that it is not 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 that though a document of title was not executed by the Housing Board in favour of the assessee, the houses were allotted to the assessee by the Housing Board, part payment received and possession delivered so as to confer dominion over the property on the assessee whereafter the assessee had in its own right allotted the quarters to the staff and they were being actually used by the staff of the assessee. The assessee was entitled to depreciation in respect of the seven houses in respect of which the assessee had not obtained a deed of conveyance from the vendor although it had taken possession and made part payment of the consideration". Thus, from the above two decisions, it becomes absolutely clear that for the purpose of the Income-tax Act the ground reality has to be recognized and if all the ingredients of transfer have been completed, then such transfer has to be recognized. Merely because the particular instrument of transfer has not been registered will not alter the situation. This position is further strengthened by the fact that legislature itself has inserted clause (v) to section 2(47) and while referring to the provisions of section 53A, reference has been made by stating that contracts in the nature of section 53A should also be covered by the definition of "transfer". Therefore, in our humble view, the amendment to sec. 53A of the Transfer of Property Act, whereby the requirement of the documents not being registered has been omitted, will not alter the situation for holding the transaction to be a transfer u/s.2(47)(v) if all other ingredients have been satisfied.

33 7 4 T h u s , i t i s c l e a r t h a t n o n r e g i s t r a t i o n o f a g r e e m e n t c a n n o t l e a d t o t h e c o n c l u s i o n t h a t p r o v i s i o n o f s e c t i o n 2 ( 4 7 ) ( v ) i s n o t a p p l i c a b l e . S i m i l a r v i e w h a s b e e n t a k e n b y I T A T C o c h i n B e n c h o f t h e T r i b u n a l i n c a s e o f G . S r e e n i v a s a n V s D C I T 2 8 T x m a n n . c o m 2 0 0 ( C o c h . ) a n d I T A T P u n e B e n c h i n t h e c a s e o f M a h e s h N e m i c h a n d r a G a n e s h w a d e v I T O 2 1 T a x m a n n . c o m 1 3 6 ( P u n e ) . I n v i e w o f t h i s l e g a l p o s i t i o n , t h i s c o n t e n t i o n i s r e j e c t e d . 75 The next contention was that the decision of Honble Bombay High Court in case of Chaturbhuj Dwarkadas Kapadia (supra) is not applicable particularly because ultimately in that case it was held that capital gain tax should be charged in Assessment year 1999-2000 whereas agreement was executed in August, 1994. 76 W e have already discussed the implications 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. 7 7 T h e n e x t c o n t e n t i o n i s t h a t i t i s n e c e s s a r y f o r i n v o k i n g o f s e c t i o n 2 ( 4 7 ) ( v) o f t h e A c t t o c o m p l y w i t h t h e p r o v i s i o n s o f s e c t i o n 5 3 A o f t h e T r a n s f e r o f P r o p e r t y A c t t o t h e e x t e n t t h a t t h e r e s h o u l d b e w i l l i n g n e s s o n t h e p a r t o f t h e t r a n s f e r e e t o p e r f o r m h i s p a r t o f t h e c o n t r a c t . 7 8 I n t h i s a s p e c t w e h a v e n o q u a r r e l w i t h t h e p r o p o s i t i o n t h a t f o r i n v o k i n g s e c t i o n 5 3 A p f T . P . A c t r e a d w i t h c l a u s e ( v ) o f s e c t i o n 2 ( 4 7 ) , t h e t r a n s f e r e e h a s t o p e r f o r m o r i s w i l l i n g t o p e r f o r m h i s p a r t o f t h e c o n t r a c t . I n t h i s r e s p e c t a s r e f e r r e d t o b y L d . C o u n s e l f o r t h e a s s e s s e e , t h e c o m m e n t s o f t h e L d . A u t h o r i n t h e c o m m e n t a r y b y M u l l a D i n s h a n F r e d e r i c k M u l l a v i d e p a r a 1 6 a r e c l e a r a n d s h o ws t h a t t h i s r e q u i r e m e n t h a s t o b e a b s o l u t e a n d u n c o n d i t i o n a l . S o m e o b s e r v a t i o n s h a v e b e e n m a d e i n t h e c a s e o f G e n e r a l G l a s s C o m p a n y P v t L t d V s D C I T ( s u p r a ) . I n t h a t c a s e i t w a s h e l d t h a t w i l l i n g n e s s t o p e r f o r m f o r t h e p u r p o s e o f s e c t i o n 5 3 A i s s o m e t h i n g m o r e t h a n a s t a t e m e n t o f i n t e n t a n d i t i s u n q u a l i f i e d a n d u n c o n d i t i o n a l w i l l i n g n e s s o n t h e p a r t o f t h e t r a n s f e r e e t o p e r f o r m h i s o b l i g a t i o n . I n t h a t c a s e t h e t r a n s f e r e e h a s a g r e e d t o m a k e c e r t a i n p a ym e n t s i n i n s t a l l m e n t s i n c o n s i d e r a t i o n o f t h e d e v e l o p m e n t a g r e e m e n t b u t s u c h p a ym e n t s w e r e n o t m a d e . L a t e r o n , t h e a g r e e m e n t w a s m o d i f i e d a n d m o r e t i m e w a s g i v e n t o t h e t r a n s f e r e e f o r p a ym e n t o f s u c h i n s t a l l m e n t s . H o w e v e r , t h e i n s t a l l m e n t s w e r e n o t p a i d e v e n u n d e r t h e m o d i f i e d t e rm s a n d t h a t i s w h y i t w a s u l t i m a t e l y h e l d t h a t s u c h a g r e e m e n t c a n n o t b e c o n s t r u e d a s t r a n s f e r . 34 7 9 T h e s e c o n d d e c i s i o n r e f e r r e d t o b y L d . C o u n s e l f o r t h e a s s e s s e e i s K . R a d i k a v D C I T ( s u p r a ) . I n t h i s c a s e , s i m i l a r o b s e r v a t i o n s w e r e m a d e , t h o u g h i t i s n o t p o i n t e d o u t i n w h a t r e s p e c t t h e t r a n s f e r e e h a s f a i l e d t o p e r f o r m h i s p a r t b u t i t h a s b e e n o b s e r v e d t h a t t h e f a c t s o f t h e c a s e s h o w s t h a t t r a n s f e r e e h a s n o t p e r f o r m e d h i s p a r t o f t h e c o n t r a c t . 8 0 T h e t h i r d j u d gm e n t r e l i e d u p o n b y t h e L d . C o u n s e l f o r t h e a s s e s s e e i s i n t h e c a s e o f D C I T v T e j S i n g h ( s u p r a ) . I n t h a t c a s e l a n d w a s a c q u i r e d b y t h e g o v e r n m e n t a n d t h e m a t t e r w e n t f o r l i t i g a t i o n . D u r i n g t h e p e n d e n c y o f l i t i g a t i o n , t h e a s s e s s e e e n t e r e d i n t o a D e v e l o p m e n t a g r e e m e n t w i t h a D e v e l o p e r f o r t h e p u r p o s e of d e v e l o p m e n t o f t h e p r o p e r t y, h o w e v e r , i t w a s c l a r i f i e d i n t h e a g r e e m e n t t h a t t h e r e i s l i t i g a t i o n i n r e s p e c t o f a c q u i s i t i o n o f p r o p e r t y a n d t h e d e v e l o p e r h a s t o t a k e c l e a r a n c e f r o m t h e g o v e r n m e n t i n t h e m a t t e r o f d e n o t i f i c a t i o n o f t h e l a n d . I t w a s h e l d t h a t s i n c e t h e l a n d w a s u n d e r c o m pu l s o r y a c q u i s i t i o n a n d n o c o m p e n s a t i o n h a s b e e n r e c e i v e d , t h e r e f o r e , t h e r e c o u l d n o t b e a n y c a p i t a l g a i n t a x u / s 2 ( 4 7 ) ( i i i ) w h i c h d e a l s w i t h t h e c o m p u l s o r y a c q u i s i t i o n . I t w a s f u r t h e r o b s e r v e d t h a t a s s e s s e e c o u l d n o t h a v e g i v e n p o s s e s s i o n u n l e s s a n d u n t i l t h e l a n d w a s d e n o t i f i e d . S i n c e f a c t s o f t h e c a s e a r e d i f f e r e n t t h a n t h e c a s e i n h a n d a n d t h e r e f o r e , s a m e a r e n o t r e l e v a n t f o r o u r p u r p o s e . 8 1 N o w c o m i n g t o t h e f a c t s , f i r s t l y i t w a s c o n t e n d e d t h a t D e v e l o p e r i . e t r a n s f e r e e h a s n o t o b t a i n e d v a r i o u s p e r m i s s i o n s w h i c h w e r e r e q u i r e d t o b e t a k e n b y t h e D e v e l o p e r a s p e r c l a u s es 3 . 1 , 7 . 9 , 8 . 4 a n d 8 . 6 o f t h e J D A . T h i s i s n o t c o r r e c t a s p o i n t e d o u t b y t h e L d . C I T D R t h a t a s s e s s e e h a d a l r e a d y g o t t h e m u n i c i p a l p l a n s a n c t i o n e d b u t i n t h e m e a n t i m e P I L w a s f i l e d b e f o r e t h e H o n b l e P u n j a b & H a r ya n a H i g h C o u r t a g a i n s t t h e i m p l e m e n t a t i o n o f t h e p r o j e c t . I n i t i a l l y, t h e c o n s t r u c t i o n w a s b a n n e d b y t h e H o n b l e H i g h C o u r t . H o w e v e r , l a t e r o n i t w a s o b s e r v e d i n t h e CW P N o . 2 0 4 2 5 o f 2 0 1 0 a n d a s c l a r i f i e d b y t h e o r d e r o f t h e H o n b l e S u p r e m e C o u r t t h a t r e f u s a l o f s a n c t i o n u n d e r t h e E n v i r o n m e n t ( P r o t e c t i o n ) A c t , t h e s o c i e t y h a v e s o u g h t a r e v i e w o f t h e o r d e r b e c a u s e t h e f i n d i n g s a r r i v e d w e r e e x . p a r t e . N o o r d e r i n t h e m a t t e r h a s b e e n p a s s e d b y t h e c o m p e t e n t a u t h o r i t y p e r h a ps b e c a u s e o f t h e o r d e r o f H i g h C o u r t . I n t h e i n t e r im o r d e r p a s s e d i n t h e P I L i t h a s b e e n c l a r i f i e d b y t h e H o n b l e S u p r em e C o u r t v i d e o r d e r d a t e d 3 1 . 1 . 2 0 1 2 p e r m i t t i n g t h e c o n c e r n e d a u t h o r i t y u n d e r t h e d i f f e r e n t s t a t u t e s g o v e r n i n g t h e m a t t e r t o t h e i r r e s p e c t i v e j u r i s d i c t i o n t o b e d e c i d e d i n a c c o r d a n c e w i t h l a w . T h u s , i t b e c o m e s c l e a r t h a t d e v e l o p e r i . e . T H D C h a s a p p l i e d f o r v a r i o u s p e r m i s s i o ns b e f o r e t h e r e l e v a n t a u t h o r i t i e s a n d i n s o m e c a s e s p e rm i s s i o n w e r e d e c l i n e d o n e x . p a r t e b a s i s a n d i n s o m e c a s e s t h e s a m e w e r e d e c l i n e d i n v i e w o f t h e H i g h C o u r t o r d e r b a n n i n g t h e c o n s t r u c t i o n . A f t e r t h e c l a r i f i c a t i o n o f t h e o r d e r o f t h e H i g h C o u r t b y H o n b l e 35 S u p r e m e C o u r t b y o r d e r d a t e d 3 1 . 1 . 2 0 1 2 , t h e a u t h o r i t i e s h a v e a l r e a d y b e e n p e r m i t t e d t o e x a m i n e t h e i s s u e o n m e r i t s u n d e r v a r i o u s l a w s . F u r t h e r i n t h e J D A t h e r e i s a c l a u s e 2 6 w h i c h d e a l s w i t h t h e F o r c e M a j e u r e c l a u s e s . T h e c l a u s e 2 6 ( i ) t o ( v) r e a d s a s u n d e r : - F O R C E M A J E U R E i ) N o n e o f t h e p a r t i e s s h a l l b e l i a b l e t o t h e o t h e r P a r t y o r b e d e e m e d t o b e i n b r e a c h o f t h i s A g r e e m e n t b y r e a s o n s o f a n y d e l a y i n p e r f o r m i n g o r a n y f a i l u r e t o p e r f o r m , a n y o f i t s o w n o b l i g a t i o n s i n r e l a t i o n t o t h e A g r e e m e n t , i f t h e d e l a y o r f a i l u r e i s d u e t o a n y E v e n t o f F o r c e M e j e u r e . E v e n t o f F o r c e M a j e u r e i s a n y e v e n t c a u s e d b e yo n d t h e p a r t i e s r e a s o n a b l e c o n t r o l . T h e f o l l o w i n g s h a l l b e r e g a r d e d a s i s s u e s b e yo n d t h e P a r t i e s r e a s o n a b l e c o n t r o l . i i ) F o r t h e p u r p o s e s o f t h i s C l a u s e , a n E v e n t o f F o r c e M a j e u r e s h a l l m e a n e v e n t s o f w a r , w a r l i k e c o n d i t i o n s , b l o c k a d e s , e m b a r g o e s , i n s u r r e c t i o n , G o v e r n m e n t a l d i r e c t i o n s , r i o t s , s t r i k e s , a c t s o f t e r r o r i s m , c i v i l c o m m o t i o n , l o c k - o u t s , s a b o t a g e , p l a g u e s o r o t h e r e p i d e m i c s , a c t s o f G o d i n c l u d i n g f i r e , f l o o d s , v o l c a n i c e r u p t i o n s , t yp h o o n s , h u r r i c a n e s , s t o r m s , t i d a l w a v e s , e a r t h q u a k e , l a n d s l i d e s , l i g h t n i n g , e x p l o s i o n s a n d o t h e r n a t u r a l c a l a m i t i e s , p r o l o n g e d f a i l u r e o f e n e r g y, c o u r t o r d e r s / i n j u n c t i o n s , c h a r g e o f l a w s , a c t i o n a n d / o r o r d e r b y s t a t u t o r y a n d / o r g o v e r n m e n t a u t h o r i t y, t h i r d p a r t y a c t i o n s a f f e c t i n g t h e d e v e l o p m e n t o f t h e P r o j e c t , a c q u i s i t i o n / r e q u i s i t i o n o f t h e P r o p e r t y o r a n y p a r t t h e r e o f b y t h e g o v e r n m e n t o r a n y o t h e r s t a t u t o r y a u t h o r i t y a n d s u c h c i r c u m s t a n c e s a f f e c t i n g t h e d e v e l o p m e n t o f t h e p r o j e c t ( E v e n t o f F o r c e M a j e u r e ) . i i i ) A n y P a r t y c l a i m i n g r e s t r i c t i o n o n t h e p e r f o r m a n c e o f a n y o f i t s o b l i g a t i o n s u n d e r t h i s a g r e em e n t d u e t o t h e h a p p e n i n g o r a r i s i n g o f a n E v e n t o f F o r c e M a j e u r e h e r e o f s h a l l n o t i f y t h e o t h e r P a r t y o f t h e h a p p e n i n g o r a r i s i n g a n d t h e e n d i n g o f c e a s i n g o f s u c h e ve n t o r c i r c um s t a n c e w i t h t h r e e ( 3 ) d a ys o f d e t e r m i n i n g t h a t a n E v e n t o f F o r c e M a j e u r e h a s o c c u r r e d . I n t h e e v e n t a n y P a r t y a n t i c i p a t e s t h e h a p p e n i n g o f a n E v e n t o f F o r c e M a j e u r e , s u c h P a r t y s h a l l p r o m p t l y n o t i f y t h e o t h e r p a r t y. i v ) T h e P a r t y c l a i m i n g E v e n t o f F o r c e M a j e u r e c o n d i t i o n s s h a l l , i n a l l i n s t a n c e s a n d t o t h e e x t e n t i t i s c a p a b l e o f d o i n g s o , u s e i t s b e s t e f f o r t s t o r e m o v e o r r e m e d y t h e c a u s e t h e r e o f a n d m i n i m i ze t h e e c o n o m i c d a m a g e a r i s i n g t h e r e o f . v ) E i t h e r P a r t y m a y t e r m i n a t e t h i s A g r e e m e n t a f t e r g i v i n g t h e o t h e r P a r t y a p r i o r n o t i c e o f f i f t e e n ( 1 5 ) d a ys i n w r i t i n g o f t h e E v e n t o f F o r c e M a j e u r e c o n t i n u e s f o r p e r i o d o f n i n e t y ( 9 0 ) d a ys . I n t h e e v e n t o f t e r m i n a t i o n o f t h i s A g r e e m e n t a l l o b l i g a t i o n s o f t h e P a r t i e s u n t i l s u c h d a t e s h a l l b e f u l f i l l e d . 8 2 T h e c o m b i n e d r e a d i n g o f t h e s e c l a u s e s s h o w t h a t i f a n y o f t h e p a r t y c o u l d n o t p e r f o r m i t s p a r t o f t h e o b l i g a t i o n b e c a u s e o f t h e u n f o r e s e e n c i r c u m s t a n c e s w h i c h i n c l u d e d g o v e r n m e n t d i r e c t i o n s , c o u r t o r d e r s , i n j u n c t i o n s e t c . s u c h p a r t y w o u l d n o t b e l i a b l e t o o t h e r p a r t y. I n v i e w o f F o r c e M a j e u r e c l a u s e w h i c h i n c l u d e d C o u r t I n j u n c t i o n i t c a n n o t b e s a i d t h a t T H D C i s n o t w i l l i n g t o p e r f o r m i t s o b l i g a t i o n . I n f a c t D e v e l p e r s i . e . T H D C / H A S H w e r e p e r u s i n g t h e i s s u e o f p e r m i s s i o n s / s a n c t i o n s 36 v i g o r o u s l y. T h e s e a s p e c t s b e c o m e f u r t h e r c l e a r i f t h e j u d g m e n t o f t h e H o n b l e P u n j a b & H a r ya n a H i g h C o u r t i n CW P N o . 2 0 4 2 5 o f 2 0 1 0 v i d e o r d e r d a t e d M a r c h 2 6 , 2 0 1 2 i s p e r u s e d . P a r a s 3 , 4 , 2 2 , 2 5 & 2 6 o f t h e j u d g m e n t r e a d a s u n d e r : - 3 . T h e b r o a d c o n t o u r s o f t h e p r e s e n t p r o c e e d i n g h a v i n g b e e n o u t l i n e d , w e m a y n o w p r o c e e d t o t a k e n o t e o f t h e s p e c i f i c c o n t e n t i o n s o f t h e c o n t e s t i n g p a r t i e s a s m a d e b e f o r e u s . H o w e v e r , b e f o r e w e d o s o , i t m a y b e a p p r o p r i a t e t o m e n t i o n t h e s o m e wh a t c o n f l i c t i n g s t a n d o f t h e p a r t i e s w i t h r e g a r d t o t h e p r e s e n t s t a g e o f t h e a p p l i c a t i o n s f i l e d u n d e r t h e p r o v i s i o n s o f t h e E n v i r o n m e n t ( P r o t e c t i o n ) A c t a s w e l l a s t h e W i l d L i f e ( P r o t e c t i o n ) A c t . W h i l e t h e p e t i t i o n e r , w h o i s s u p p o r t e d b y t h e r e s p o n d e n t N o . 6 - C h a n d i g a r h A d m i n i s t r a t i o n , a s s e r t s t h a t n e c e s s a r y s a n c t i o n / p e rm i s s i o n u n d e r b o t h t h e A c t s h a v e b e e n r e f u s e d b y o r d e r s p a s s e d b y t h e c om p e t e n t a u t h o r i t i e s , t h e p r o m o t e r s o f t h e p r o j e c t c o n t e n d t o t h e c o n t r a r y. T h e f a c t s , a s u n f o l d e d b e f o r e u s , i n d i c a t e t h a t a g a i n s t t h e r e f u s a l o f s a n c t i o n u n d e r t h e E n v i r o n m e n t ( P r o t e c t i o n ) A c t , t h e r e s p o n d e n t s h a v e s o u g h t a r e v i e w o f t h e o r d e r o n t h e g r o u n d t h a t t h e f i n d i n g s a r r i v e d a t , w h i c h h a v e f o r m e d t h e b a s i s o f t h e r e f u s a l , a r e e x - p a r t e . N o o r d e r i n t h e r e v i e w m a t t e r h a s b e e n p a s s e d b y t h e c o m p e t e n t a u t h o r i t y, p e r h a p s , b e c a u s e o f t h e i n t e r i m o r d e r p a s s e d i n t h e P I L w h i c h h a s b e e n c l a r i f i e d b y t h e H o n b l e S u p r e m e C o u r t b y o r d e r d a t e d 3 1 . 1 . 2 0 1 2 p e r m i t t i n g t h e c o n c e r n e d a u t h o r i t y u n d e r t h e d i f f e r e n t s t a t u t e s g o v e r n i n g t h e m a t t e r t o e x e r c i s e t h e i r r e s p e c t i v e j u r i s d i c t i o n s i n a c c o r d a n c e w i t h l a w . I n s o f a r a s t h e W i l d L i f e ( P r o t e c t i o n ) A c t i s c o n c e r n e d , i t a p p e a r s t h a t t h e r e j e c t i o n h a s b e e n m a d e b y t h e C h i e f W i l d L i f e W a r d e n w h o , t h e r e s p o n d e n t s c l a i m , i s m e r e l y a r e c o m m e n d i n g a u t h o r i t y a n d i s r e q u i r e d t o f o r w a r d h i s r e c o m m e n d a t i o n t o t h e C e n t r a l G o v e r n m e n t . A s t h e r e j e c t i o n u n d e r t h e W i l d L i f e ( P r o t e c t i o n ) A c t h a s b e e n m a d e b y a n a u t h o r i t y n o t c o m p e t e n t t o d o , t h e p r o m o t e r s o f t h e p r o j e c t h a v e s o u g h t a r e v i e w o f t h e o r d e r w h i c h i s s t i l l p e n d i n g f o r t h e s a m e r e a s o n ( s ) a s n o t i c e d a b o v e . 4 . O n t h e s e f a c t s w e a r e o f t h e v i e w t h a t i t w o u l d b e p r u d e n t o n o u r p a r t t o t a k e t h e v i e w t h a t t h e i s s u e w i t h r e g a r d t o c l e a r a n c e / s a n c t i o n u n d e r t h e t w o e n a c t m e n t s i . e . E n v i r o n m e n t ( P r o t e c t i o n ) A c t a n d W i l d L i f e ( P r o t e c t i o n ) A c t i s p r e s e n t l y p e n d i n g a n d a s t h e p r o m o t e r s o f t h e p r o j e c t h a v e s u b m i t t e d t h e m s e l v e s t o t h e j u r i s d i c t i o n o f t h e a u t h o r i t i e s u n d e r t h e s a i d e n a c t m e n t s w e s h o u l d r e f r a i n f r om a d d r e s s i n g o u r s e l v e s o n a n y o f t h e i s s u e s c o n n e c t e d w i t h e i t h e r o f t h e t w o s t a t u t o r y e n a c t m e n t s a s a n y s u c h e x e r c i s e , e v e n t h o u g h m a y b e u n i n t e n d e d , m a y h a v e t h e e f f e c t o f f e t t e r i n g t h e j u r i s d i c t i o n o f s t a t u t o r y a u t h o r i t i e s f u n c t i o n i n g u n d e r t h e t w o r e l e v a n t s t a t u t e s . 2 2 . I n s o f a r a s t h e p r o v i s i o n s o f t h e E n v i r o n m e n t ( P r o t e c t i o n ) A c t a n d t h e W i l d L i f e ( P r o t e c t i o n ) A c t a r e c o n c e r n e d , i t n e e d n o t b e em p h a s i s e d t h a t e v e r y p r o j e c t a t t r a c t i n g t h e p r o v i s i o n s o f t h e P e r i p h e r y C o n t r o l A c t a n d / o r t h e p r o v i s i o n s o f t h e 1 9 9 5 A c t m u s t s a t i s f y t h e e c o l o g i c a l c o n c e r n s o f t h e a r e a i n t h e l i g h t o f t h e p r o v i s i o n s o f t h e t w o s t a t u e s i n q u e s t i o n . A s a l r e a d y h e l d b y u s , a p u b l i c t r u s t h a s b e e n b e s t o w e d o n t h e a u t h o r i t i e s b y p r o v i s i o n s o f t h e s a i d A c t s w h i c h c a s t o n s u c h a u t h o r i t i e s a d u t y t o i n t e r d i c t a n y p r o j e c t o r a c t i v i t y w h i c h e v e n r e m o t e l y s e e m s t o c r e a t e a n i m b a l a n c e i n t h e p r i s t i n e e c o l o g y a n d e n v i r o n m e n t o f t h e a r e a o n w h i c h t h e c i t y o f C h a n d i g a r h i s s i t u a t e d o r f o r t h a t m a t t e r i n t h e i m m e d i a t e v i c i n i t y t h e r e o f . A s a l r e a d y o b s e r v e d , n e c e s s a r y c l e a r a n c e s u n d e r t h e a f o r e s a i d t w o e n a c t m e n t s , i n s o f a r a s t h e r e s p o n d e n t s a r e c o n c e r n e d , a r e p r e s e n t l y p e n d i n g b e f o r e t h e c o n c e r n e d a u t h o r i t i e s a n d , t h e r e f o r e , i t w o u l d b e h i g h l y i n c o r r e c t o n o u r p a r t t o e n t e r 37 i n t o a n y f u r t h e r d i s c u s s i o n o n t h e a f o r e s a i d a s p e c t o f t h e c a s e . 2 5 . W e a l s o h a s t e n t o e m p h a s i s e t h a t a m o r e r i g o r o u s r e g u l a t e d d e v e l o p m e n t i n w h a t a r e n o w t h e r e m n a n t s o f t h e p e r i p h e r y a n d t h e a r e a s a d j o i n i n g t o i t i s t h e n e e d o f t h e h o u r f o r w h i c h t h e s t a k e h o l d e r s i . e . t h e A d m i n i s t r a t i o n o f C h a n d i g a r h , t h e S t a t e s o f P u n j a b a n d H a r ya n a a s a l s o t h e a u t h o r i t i e s u n d e r t h e E n v i r o nm e n t ( P r o t e c t i o n ) A c t a n d t h e W i l d L i f e P r o t e c t i o n A c t h a v e t o d e m o n s t r a t e t h e n e e d t o e n g a g e t h e m s e l v e s i n t e n s i v e l y a n d n o t a c q u i r e a p l a c i d a p p r o a c h i n d i c a t i n g a n e l o q u e n t a c q u i e s c e n c e t o t h e v i o l a t i o n o f t h e 1 9 9 5 A c t , P e r i p h e r y C o n t r o l A c t a n d t h e P e r i p h e r y P o l i c y. 2 6 . W e t h u s c o n c l u d e o n t h e a f o r e s a i d n o t e b y h o l d i n g a n d o b s e r v i n g t h a t t h e p r o v i s i o n s o f t h e P e r i p h e r y C o n t r o l A c t a n d t h e 1 9 9 5 A c t a r e c o m p l e m e n t a r y t o e a c h o t h e r a n d t h e p r o v i s i o n s o f t h e t w o s t a t u t e s w o u l d a p p l y t o t h e h o u s i n g p r o j e c t i n q u e s t i o n . T h e r e s p o n d e n t s , t h e r e f o r e , w i l l h a v e t o c o m p l y w i t h a l l t h e r e q u i r em e n t s s p e l t o u t b y b o t h t h e a f o r e s a i d s t a t u t e s . A s t h e r e q u i r e m e n t o f c l e a r a n c e s u n d e r t h e W i l d L i f e ( P r o t e c t i o n ) A c t a n d E n v i r o n m e n t ( P r o t e c t i o n ) A c t i s n o t a c o n t e n t i o u s i s s u e , a n d a s w e h a v e a l r e a d y h e l d t h a t t h e p r o c e s s o f g r a n t o f s u c h c l e a r a n c e s i s p e n d i n g b e f o r e t h e a p p r o p r i a t e a u t h o r i t i e s u n d e r t h e r e s p e c t i v e A c t s , t h e s a m e w i l l n o w h a v e t o b e b r o u g h t t o i t s l o g i c a l c o n c l u s i o n k e e p i n g i n m i n d o u r o b s e r v a t i o n s a n d d i r e c t i o n s c o n t a i n e d h e r e i n a b o v e . 8 3 T h e c o m b i n e d r e a d i n g o f t h e a b o v e p a r a s i n t h e o r d e r o f H o n b l e H i g h C o u r t c l e a r l y s h o w s t h a t D e v e l o p e r T H D C / H A S H i . e . t r a n s f e r e e h a v e m a d e t h e i r s i n c e r e e f f o r t s f o r o b t a i n i n g t h e n e c e s s a r y p e r m i s s i o n s / s a n c t i o n s w h i c h w e r e r e q u i r e d u n d e r t h e J D A . H o w e v e r , s o m e o f t h e s a n c t i o n s c o u l d n o t b e t a k e n i n t i m e b e c a u s e o f t h e l i t i g a t i o n b y w a y o f P I L b u t s i n c e n o n e o f t h e p a r t y w a s l i a b l e t o t h e o t h e r p a r t y i n v i e w o f t h e c l a u s e 2 6 d e a l i n g w i t h F O R C E M A J E U R E i t c a n n o t b e s a i d t h a t D e v e l o p e r w a s n o t w i l l i n g t o p e r f o r m h i s p a r t o f c o n t r a c t . I n a n y c a s e n o s p e c i f i c e v i d e n c e h a s b e e n s h o w n u s t o p r o v e t h a t T H D C / H A S H w e r e d e c l i n i n g t o p e r f o r m p a r t i c u l a r o b l i g a t i o n p r o v i d e d i n J D A . I n v i e w o f t h is d i s c u s s i o n , i t c a n n o t b e s a i d t h a t t r a n s f e r e e i . e . D e ve l o p e r T H D C / H A S H i s n o t w i l l i n g t o p e r f o r m h i s p a r t o f c o n t r a c t . 8 4 S e c o n d l y, i t w a s c o n t e n d e d t h a t p a ym e n t s h a v e n o t b e e n m a d e a s p e r t h e J D A . H o w e v e r , a g a i n t h i s i s n o t c o r r e c t . A s p e r c l a u s e 4 ( i v) o f t h e J D A , t h e i n s t a l l m e n t f o r R s . 3 1 , 9 2 , 7 5 , 0 0 0 / - w a s r e q u i r e d t o b e p a i d . T h e c l a u s e 4 ( i v ) r e a d a s u n d e r : -

i v ) P a y m e n t b e i n g R s . 3 1 , 9 2 , 7 5 , 0 0 0 / - ( R u p e e s O n e C r o r e n i n e t y t w o l a c s s e v e n t y f i v e t h o u s a n d o n l y ) c a l c u l a t e d @ R s . 2 4 , 7 5 , 0 0 0 / - ( R s . T w e n t y F o u r l a c s s e v e n t y f i v e t h o u s a n d o n l y ) p e r p l o t h o l d e r o f 5 0 0 S q . y a r d s a n d ( R s . 4 9 , 5 0 , 0 0 0 / - ( R s . F o r t y n i n e l a c s f i f t y t h o u s a n d o n l y ) a s p e r p l o t h o l d e r o f 1 0 0 0 s q u a r e y a r d s t o b e m a d e t o t h e O w n e r a n d / o r t h e r e s p e c t i v e m e m b e r s o f t h e O w n e r ( a s t h e c a s e m a y b e ) w i t h i n s i x ( 6 ) m o n t h s f r o m t h e d a t e o f e x e c u t i o n o f t h i s a g r e e m e n t o r w i t h i n t w o ( 2 ) m o n t h s f r o m t h e d a t e o f a p p r o v a l o f t h e p l a n s / D e s i g n a n d D r a w i n g s a n d g r a n t o f t h e f i n a l l i c e n c e t o d e v e l o p w h e r e u p o n t h e c o n s t r u c t i o n c a n 38 c o m m e n c e , w h i c h e v e r i s l a t e r , a g a i n s t w h i c h t h e O w n e r s h a l l e x e c u t e a r e g i s t e r e d s a l e d e e d f o r l a n d o f e q u i v a l e n t v a l u e b e i n g 6 . 3 6 a c r e s o u t o f t h e P r o p e r t y a s d e m a r c a t e d i n g r e e n c o l o u r ( a l s o h a t c h e d i n g r e e n c o l o u r ) i n t h e D e m a r c a t i o n P l a n a n n e x e d h e r e t o a s A n n e x u r e V a n d b e a r i n g K h a s r a n o s . 1 2 3 / 1 5 , 1 2 3 / 6 , 1 2 3 / 7 ( b a l a n c e p a r t ) , 1 2 3 / 3 ( p a r t ) , 1 2 3 / / 4 / / 1 , 1 2 3 / / / 4 / / 1 / 2 , 1 2 3 / / 4 / 2 , 1 2 3 / 5 / 1 , 1 2 3 / / 5 / 2 , 1 2 3 / / 5 / 3 , 1 1 2 / 2 4 / 2 4 ( p a r t )

8 5 T h e c a r e f u l r e a d i n g o f t h e s a i d c l a u s e o f t h e J D A w o u l d s h o w t h i s p a ym e n t w a s r e q u i r e d t o b e m a d e w i t h i n a p e r i o d o f s i x m o n t h s f r o m t h e d a t e o f e x e c u t i o n o f t h i s a g r e e m e n t o r w i t h i n t w o m o n t h s f r o m t h e d a t e o f a p p r o v a l o f p l a n / s a n c t i o n a n d d r a w i n g g r a n t o f f i n a l l i c e n s e t o d e v e l o p w h e r e u p o n t h e c o n s t r u c t i o n c a n c o m m e n c e , w h i c h e v e r i s l a t e r . T h u s , t h i s i n s t a l l m e n t w a s d e p e n d e n t o n t w o c o n t i n g e n c i e s f i r s t t h e e x p i r a t i o n o f a p e r i o d o f s i x m o n t h s f r o m t h e d a t e o f a g r e e m e n t o r a l t e r n a t i v e l y o n t h e e x p i r a t i o n o f a p e r i o d o f t w o m o n t h s f r o m t h e d a t e o f a p p r o v a l o f p l a n s / d e s i g n s d r a w i n g e t c . l e a d i n g t o g r a n t o f f i n a l l i c e n s e s w h i c h c a n l e a d t o c o m m e n c e m e n t o f c o n s t r u c t i o n , w h i c h e v e r i s l a t e r . T h e m a t t e r w a s t a k e n u p b y w a y o f P I L b y c e r t a i n c i t i ze n s a n d A d m i n i s t r a t i o n o f t h e U n i o n T e r r i t o r y b e f o r e t h e H o n b l e H i g h C o u r t w h i c h i n i t i a l l y s t a ye d t h e s a n c t i o n o f s u c h p l a n e t c . T h i s l e d t o s i t u a t i o n w h e r e c o n s t r u c t i o n c o u l d n o t b e c o m m e n c e d a n d h e n c e p a ym e n t w a s n o t r e q u i r e d t o b e m a d e i n v i e w o f t h e p e n d i n g l i t i g a t i o n . T h e c l a u s e s o f f o r c e m a j e u r e c am e i n t o o p e r a t i o n a n d t h e r e f o r e , i t c a n n o t b e s a i d t h a t t h e d e v e l o p e r i s n o t w i l l i n g t o p e r f o r m i t s p a r t o f t h e c o n t r a c t . I n a n y c a s e t h e r e i s n o d e f a u l t o n t h e p a r t o f t h e d e v e l o p e r a s p a ym e n t w a s n o t ye t d u e a s p er c l a u s e 4 ( i ) ( i v ) o f J D A . 8 6 T h i s p o s i t i o n w a s i n f o r m e d t o t h e S o c i e t y b y l e t t e r d a t e d 4 . 2 . 2 0 1 1 b y H A S H B u i l d e r , c o p y o f w h i c h h a s b e e n f i l e d a t p a g e s 2 3 & 2 4 o f t h e p a p e r b o o k d e a l i n g w i t h t h e a d d i t i o n a l e v i d e n c e . T h r o u g h t h i s l e t t e r i t h a s b e e n c l e a r l y s t a t e d t h a t s i n c e p e r m i s s i o n i s p e n d i n g f r o m t h e M i n i s t r y o f E n v i r o n m e n t a n d F o r e s t D e p a r t m e n t a n d t h e r e f o r e c o n s t r u c t i o n s c o u l d n o t c o m m e n c e . T h e s e p e r m i s s i o n s w e r e p e n d i n g b e c a u s e o f t h e P I L f i l e d b y S h r i A a l o k J a g g a b e f o r e t h e H o n b l e P u n j a b & H a r ya n a H i g h C o u r t . A l l t h e s e f a c t s c l e a r l y s h o w s t h a t i n v i e w o f c l a u s e 4 . 1 ( i v) r e a d w i t h c l a u s e 2 6 ( v) o f t h e J D A , H A S H B u i l d e r w e r e n o t r e q u i r e d t o m a k e t h e p a ym e n t a n d i t c a n n o t b e s a i d t h a t t h e y w e r e n o t w i l l i n g t o p e r f o r m t h e i r p a r t o f t h e c o n t r a c t o n t h i s a s p e c t . T h e r e f o r e , t h i s c o n t e n t i o n i s r e j e c t e d . 87 Seventh contention is that revenue wrongly held that even clause (vi) of Section 2(47) is applicable. W e find no force in this contention. Clause (vi) to Section 2(47) reads as under:

any transaction (whether by way of becoming a member of, or accruing shares in, a cooperative society, company or other association of persons or by way of any agreement or any 39 arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property

. 88 The plain reading 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 notional income i.e. the money to be received later, can not be taxed. In this regard reliance was placed on certain Supreme Court decisions and other cases for the proposition that notional income cannot be taxed. There is no need to discuss the cases relied on by the ld. counsel of the assessee because it is settled position of law that no notional income can be taxed. Though there is no quarrel that it is a settled principle of law that notional income can not be taxed but in case of capital gain, Section 45 which is charging Section and Section 48 which is computation section, makes it absolutely clear that rigor of tax in case of capital gain would come into play on the transfer of capital asset and total consideration which is arising on such transfer, has to be taxed. Section 48 clearly talks about full consideration received or accruing as result of transfer. This aspect we have already discussed in detail at paras 64 to 68. 9 0 S e c o n d a s p e c t o f t h i s c o n t e n t i o n w a s t h a t i f c o n s i d e r a t i o n w h i c h h a s n o t b e e n r e c e i v e d w a s t o b e t a x e d t h e n t h e a s s e s s e e w o u l d b e d e p r i v e d f o r c l a i m i n g e x e m p t i o n u / s 5 4 a n d 5 4 E C . A s o b s e r v e d a b o v e a s p e r S e c t i o n 4 5 r . w . s 4 8 w h o l e o f t h e c o n s i d e r a t i o n , r e c e i v e d o r a c c r u e d h a s t o b e t a x e d . E v e r y p e r s o n i s s u p p o s e d t o k n o w t h e l a w a n d i f t h e t r a n s a c t i o n i s s t r u c t u r e d i n s u c h a w a y f o r t h e t r a n s f e r o f c a p i t a l a s s e t t h a t s o m e o f t h e c o n s i d e r a t i o n w o u l d b e r e c e i v e d l a t e r t h e n s u c h p e r s o n i s s u p p o s e d t o k n o w t h e c o n s e q u e n c e s o f t h e d e n i a l o f s u c h b e n e f i t s . H o w e v e r , i f t h e s e c t i o n i s i n t e r p r e t e d i n t h e m a n n e r s u g g e s t e d b y t h e l d . c o u n s e l o f t h e a s s e s s e e t h e n n o p e r s o n w o u l d p a y c a p i t a l g a i n t a x o n t r a n s f e r o f a p r o p e r t y. T h i s w i l l b e c l e a r f r o m a s i m p l e e x a m p l e . L e t u s a s s u m e i f A s e l l s t h e p r o p e r t y t o B f o r a c o n s i d e r a t i o n o f R s . 1 0 0 c r o r e s a n d r e c e i v e o n l y a 40 c o n s i d e r a t i o n o f 1 . 0 0 c r o r e a n d i t i s m e n t i o n e d i n t h e t r a n s f e r i n s t r u m e n t t h a t b a l a n c e o f c o n s i d e r a t i o n w o u l d b e p a i d a f t e r 2 0 ye a r s t h e n n o t a x c a n b e l e v i e d o n s u c h b a l a n c e c o n s i d e r a t i o n o f R s . 9 9 . 0 0 c r o r e s w h i c h h a s n o t b e e n r e c e i v e d a s p e r t h e c o n t e n t i o n o f t h e l d . c o u n s e l o f t h e a s s e s s e e . B u t i n t h a t c a s e n o t a x e s c a n b e l e v i e d e v e n a f t e r 2 0 ye a r s b e c a u s e n o t r a n s f e r c a n b e s a i d t o h a v e t a k e n p l a c e a f t e r 2 0 ye a r s a n d R e v e n u e c a n n o t d o a n y t h i n g b e c a u s e c a p i t a l g a i n c a n b e c h a r g e d u / s 4 5 o n l y o n t r a n s f e r o f c a p i t a l a s s e t . W e d o n o t t h i n k t h a t t h i s k i n d o f i n t e r p r e t a t i o n c a n b e m a d e w h i l e i n t e r p r e t i n g S e c t i o n 4 5 r . w . s . 4 8 b y i n v o k i n g t h e r u l e t h a t t h e r e c a n n o t b e a n y t a x o n n o t i o n a l r e c e i p t . 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 Iyengars Volume 1, (11 t h Edition) has observed at page 343 as under:- 5. Reservations on real income theory. - Whether accrual of inco me 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 inco me 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 from the point of view or real inco me taking the probability or improbability of realization in a realistic manner, but once accrual takes place, on the conduct of the parties subsequent to the year of closing, an inco me which has been accrued cannot be made no income. 9 1 T h e a b o v e p o s i t i o n c a n b e u n d e r s t o o d b y e x a m i n i n g s o m e o f t h e p r o v i s i o n s o f t h e A c t w h i c h w o u l d s h o w t h a t c o n c e p t o f n o t i o n a l i n c o m e c a n n o t b e e x t e n d e d i f s p e c i f i c p r o v i s i o n i s a v a i l a b l e i n t h e A c t . F o r e x a m p l e i n c a s e o f i n c o m e f r o m h o u s e p r o p e r t y, t h e i n c o m e h a s t o b e d e t e r m i n e d a s p e r s e c t i o n 2 3 . S e c t i o n 2 2 o f t h e I n c o m e T a x A c t p r o vi d e s t h a t i t i s t h e a n n u a l v a l u e o f t h e p r o p e r t y w h i c h c a n b e t a x e d u n d e r t h e h e a d

i n c o m e f r o m h o u s e p r o p e r t y

. S e c t o r 2 3 p r e s c r i b e s t h e m e t h o d f o r d e t e r m i n i n g t h e a n n u a l v a l u e . S e c t i o n 2 3 ( 1 ) ( a ) r e a d s a s u n d e r : -

23. (1) For the purposes of section 22, the annual value of any property shall be deemed to be (a) the sum for which the property might reasonably be expected to let from year to year; or ( b ) w h e r e t h e p r o p e r t y o r a n y p a r t o f t h e p r o p e r t y i s l e t a n d t h e a c t u a l r e n t r e c e i v e d o r r e c e i v a b l e b y t h e o w n e r i n r e s p e c t t h e r e o f i s i n e x c e s s o f t h e s u m r e f e r r e d t o i n c l a u s e ( a ) , t h e a m o u n t s o r e c e i v e d o r r e c e i v a b l e ; o r . 92 On this aspect the settled position of the law is that the annual value has to be determined even if the property is not let out. This 41 position has been discussed by the Ld. author Chaturvedi & Pithisarias in Commentary of Income Tax Law (fifth edition) Volume 1 in this respect at pages 1275 & 1276 observed as under:

Annual value- determination of Section 23(1)(a) provides that for the purposes of section 22, the annual value of any property shall be deemed to be the sum for which the property might reasonably be expected to let from year to year. The word used is might and not can or is. It is thus a notional income to be gathered from what a hypothetical tenant would pay which is to be objectively ascertained on a reasonable basis irrespective of the fact whether the property is let out or not [Sultan Bros. Pr. Ltd. v. CIT, (1964) 51 ITR 353 (SC); Jamnadas Prabhudas v. CIT, (1951)20 ITR 160 (Bom); D.M. Vakil v. CIT, (1946) 14 ITR 298 , 302(Bom); CIT v. Biman Behari Shaw, Shebait, (1968) 68 ITR 815 (Cal) ; Sri Sri Radha Govinda Jew v. CIT, (1972) 84 ITR 150 , 156 (Cal); CIT 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 Palkhivalas observation at pages 22 & 23. Again even Shri S. Rajaratnam in the Commentary of Law of Income Tax by Sampat Iyengars Volume 2, (11 t h edition) expressed identical views in his commentary at page 2738. 9 4 I n a l l t h e l e a d i n g c o m m e n t a r i e s c i t e d a b o v e , i t h a s b e e n o b s e r v e d t h a t a n n u a l v a l u e i s t o b e c o m p u t e d w h e t h e r p r o p e r t y h a s b e e n l e t o u t o r n o t . T h i s m e a n s t h a t n o t i o n a l v a l u e o f t h e p r o p e r t y h a s t o b e c h a r g e d t o t h e I n c o m e T a x u n d e r t h e h e a d

i n c o m e f r o m h o u s e p r o p e r t y

. F r o m t h e a b o v e , i t b e c o m e s c l e a r t h a t t h o u g h t h e r e i s n o r e a l i n c o m e f r o m l e t t i n g o u t o f t h e p r o p e r t y, s t i l l t h e n o t i o n a l a n n u a l v a l u e i s s u b j e c t e d t o t a x u n d e r t h e h e a d

i n c o m e f r o m h o u s e p r o p e r t y

. H o w e v e r , w e m a y m e n t i o n t h a t u / s 2 3 ( 1 ) ( c ) o f t h e A c t i f t h e p r o p e r t y i s l e t o u t a n d t h e n r e m a i n e d v a c a n t f o r s o m e p a r t o f t h e ye a r o r f o r w h o l e o f t h e ye a r t h e n v a c a n c y a l l o w a n c e c a n b e c l a im e d . H e r e , i t i s i m p o r t a n t t o n o t e t h a t i f p r o p e r t y i s n o t l e t o u t , t h e n n o t i o n a l i n c o m e b e c o m e s c h a r g e a b l e t o t h e t a x b e c a u s e o f p r o v i s i o n s o f s e c t i o n s 2 2 a n d 2 3 ( 1 ) ( a ) o f t h e A c t . S i m i l a r l y, u n d e r t h e M a t p r o v i s i o n s , i t i s b a s i c a l l y t h e n o t i o n a l i n c o m e w h i c h i s b e i n g s u b j e c t e d t o c h a r g e u n d e r t h e h e a d

i n c o m e f r o m b u s i n e s s a n d p r o f e s s i o n

. A b u s i n e s s m a n m a y h a v e i n c o m e o f R s . 1 0 0 / - b u t b e c a u s e o f h i g h e r d e p r e c i a t i o n a l l o w a b l e u n d e r t h e I n c o m e - t a x A c t o r s o m e o t h e r w e i g h t e d d e d u c t i o n s s a y f o r e x a m p l e i n c a s e o f e x p e n d i t u r e o n s c i e n t i f i c r e s e a r c h , t h e t a x a b l e i n c o m e a s p e r t h e p r o v i s i o n s o f t h e A c t m a y b e ze r o b u t s t i l l b e c a u s e o f t h e M a t p r o v i s i o n s , t a x h a s t o b e c h a r g e d o n b o o k p r o f i t s . S i m i l a r l y i n t h e c a s e o f p r e s u m p t i v e t a x p r o v i s i o n s e . g . u / s 4 4 A D i f a p e r s o n i s c i v i l c o n t r a c t o r a n d 42 d o e s n o t m a i n t a i n b o o k s o f a c c o u n t a n d h i s t u r n o v e r i s l e s s t h a n R s . 6 0 l a k h s t h e n t h e p r o f i t w o u l d b e p r e s u m e d t o b e 8 % of t u r n o v e r e v e n i f h e h a s s u f f e r e d a l o s s . A n o t h e r e x a m p l e o f S e c t i o n 2 ( 2 2 ) ( e ) c a n b e t a k e n . U n d e r t h i s p r o v i s i o n a l o a n o r a d v a n c e g i v e n b y c e r t a i n c o m p a n i e s t o a s u b s t a n t i a l s h a r e h o l d e r i s t o b e t r e a t e d a s d e e m e d d i v i d e n d . S u c h l o a n u n d e r t h e n o r m a l a c c o u n t i n g p r i n c i p l e o r o n c o m m e r c i a l p r i n c i p l e s c a n n o t b e r e g a r d e d a s i n c o m e b u t b e c a u s e o f t h i s s p e c i f i c p r o v i s i o n r e g a r d i n g d e e m e d d i v i d e n d s u c h a m o u n t h a s t o b e t r e a t e d a s i n c o m e o f t h e p e r s o n r e c e i v i n g s u c h l o a n s . 9 5 T h e a b o v e p o s i t i o n o f l a w m a k e s i t a b s o l u t e l y c l e a r t h a t t h e o r y o f r e a l i n c o m e i s s u b j e c t t o t h e p r o v i s i o n s o f t h e A c t a n d w h e n e v e r a n y s p e c i f i c p r o v i s i o n s o f t h e A c t i s t h e r e f o r c h a r g i n g o f a p a r t i c u l a r i t e m o f i n c om e , t h e n t h e s a m e h a s t o b e c h a r g e d a c c o r d i n g l y. I t m a y b e s o m e t im e s h a r d t o t h e a s s e s s e e s b u t a g a i n i t h a s b e e n h e l d i n n u m e r o u s d e c i s i o n s t h a t F i s c a l s t a t u e s h a v e t o b e i n t e r p r e t e d o n t h e b a s i s o f l a n g u a g e u s e d a n d t h e r e i s n o s c o p e f o r e q u i t y o r i n t e n t . L d . A u t h o r S h r i S . R a j a r a t n a m i n t h e C o m m e n t a r y o f L a w o f I n c o m e T a x b y S a m p a t I ye n g a r s V o l u m e 1 , p a g e 2 3 6 i n t h i s r e g a r d h a s o b s e r v e d a s u n d e r : - 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. 9 6 T h e r e f o r e , i t c a n b e s a i d t h a t g e n e r a l l y s p e a k i n g n o t i o n a l i n c o m e c o u l d n o t b e s u b j e c t e d t o t a x b u t w h e n e v e r t h e r e i s a s p e c i f i c p r o v i s i o n , t h e s a m e h a s t o b e t a x e d . N o w , i n c a s e o f c a p i t a l g a i n , s e c t i o n 4 5 r e a d w i t h s e c t i o n 4 8 v e r y c l e a r l y p r o v i d e s t h a t i t i s t h e p r o f i t a r i s i n g f r o m t h e t r a n s f e r o f a c a p i t a l a s s e t w h i c h w o u l d b e s u b j e c t e d t o c h a r g e o f c a p i t a l g a i n t a x a n d s e c t i o n 4 8 c l e a r l y p r o v i d e s f o r t a k i n g t h e t o t a l c o n s i d e r a t i o n i n t o a c c o u n t w h i l e c o m p u t i n g t h e c a p i t a l g a i n s . T h i s a s p e c t w e h a v e a l r e a d y d i s c u s s e d i n d e t a i l a t p a r a N o . 6 4 t o 6 8 f r o m w h i c h i t b e c o m e s c l e a r t h a t i t i s t h e w h o l e c o n s i d e r a t i o n w h e t h e r r e c e i ve d o r a c c r u e d , w h i c h h a s t o b e t a x e d u n d e r t h e c a p i t a l g a i n o n c e t r a n s f e r o f t h e c a p i t a l a s s e t t a k e s p l a c e . A c c o r d i n g l y, t h e r e i s n o f o r c e i n t h i s p a r t o f t h e c o n t e n t i o n . 9 7 N o w l e t u s e x a m i n e t h e i s s u e o f t a x a b i l i t y o f f l a t o n t h e b a s i s o f a b o v e p r i n c i p l e s . R e l e v a n t p o r t i o n o f c l a u s e 4 o f t h e J D A w h i c h d e a l s w i t h c o n s i d e r a t i o n a r e a s u n d e r : 43 4 . C O N S I D E R A T I O N

4.1 It is specifically understood and agreed amongst the Parties that THDC shall use its expertise and its Brand name and / or any other brand name at its discretion to develop the Property into the Premises as per applicable building bye-laws of the Competent Authority and the Owner shall have no objection to the same in whatsoever manner. In consideration of the Owner granting and assigning, its Development Rights in the Property, irrevocably and in perpetuity, to THDC to develop the Property and for transfer of the Property upon the surrender of allotment rights of 500 sq. yards and/or 1000 sq. yards (as the case may be) by its members to the Owner, vide resolution dated 04.01.2007 and

25.02.2007 (copy attached as per Annexure I & II), HASH is committed to pay to the Owner and / or the respective members of the Owner (as the case may be) a total amount of Rs. 106,42,50,000/- (Rupees One Hundred Six Crores Forty Two Lacs Fifty Thousands Only) calculated @ Rs. 82,50,000/- (Rupees Eighty Two Lacs Fifty Thousands Only) payable to 65 members having plot of 500 sq. yards each, Rs. 1,65,00,000/- (Rupees One Crore Sixty Five Lacs Only) payable to 30 members having plot of 1000 sq. yards each and Rs. 3,30,00,000/- (Rupees Three Crores Thirty Lacs Only) payable to the Owner for the 4 plots of 500 sq. yards each, which shall tantamount to the full and final payment to the Owner and / or the respective members of the Owner (as the case may be) in a manner set out herein below (Payment). Further, the transfer, sale and conveyance of 21.2 acres of land of the Property shall be made by the Owner in favour of THDC pro rata to the Payment received by the Owner and/or the respective members of the Owner (as the case may be) from HASH by executing sale deeds and registering the same. It is expressly provided that as resolved by the Owner, the total amount payable by HASH to the Owner and / or the respective members of the Owner (as the case may be) for assignment of the Development Rights and for transfer and sale of 21.2 acres of land of 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 the flats would be provided by the Developers to the Owner and more particularly described in the Schedule C attached herein (hereinafter referred to as the Specifications). The Allotment letters shall be issued to the Allottees (members of the Owner) within forty-five (45) days from the date of sanction of the building plans / Design and Drawing and on obtaining final license/permission for the development of the Project from the Competent Authority. Thereafter, the possession of the flats shall be handed over to the Allottees within thirty(30) months form the date of issuance of the Allotment Letter. 44 I t i s e x p r e s s l y p r o v i d e d t h a t t h e P a y m e n t t o b e m a d e b y H A S H t o t h e O w n e r a n d / o r t o t h e r e s p e c t i v e m e m b e r s o f t h e O w n e r ( a s t h e c a s e m a y b e ) a n d t h e F l a t s t o b e a l l o t t e d t o t h e A l l o t t e e s a s s e t o u t i n t h i s C l a u s e 4 . 2 s h a l l h e r e i n a f t e r b e c o l l e c t i v e l y r e f e r r e d t o a s t h e E n t i r e C o n s i d e r a t i o n 9 8 F r om t h i s c l a u s e i t b e c o m e s a b s o l u t e l y c l e a r t h a t e a c h M e m b e r h a v i n g 5 0 0 s q yd o f p l o t w a s e n t i t l e d t o r e c e i v e o n e f u r n i s h e d f l a t m e a s u r i n g 2 2 5 0 s q f t a n d M e m b e r s h a v i n g 1 0 0 0 s q yd f l a t w e r e e n t i t l e d t o r e c e i v e t w o f u r n i s h e d f l a t s . T h u s u p o n e x e c u t i o n o f t h e J D A v e s t e d r i g h t c a m e t o s u c h M e m b e r s t o r e c e i v e s u c h f l a t s . O n c e t h i s v e s t e d r i g h t a r i s e s o u t o f t h e a b o v e c o n t r a c t i t c a n e a s i l y b e s a i d t h a t t h i s r i g h t h a s a l s o a c c r u e d t o t h e a s s e s s e e . C l a u s e 4 . 2 m a k e s i t a b s o l u t e l y c l e a r t h a t d e v e l o p e r i . e . T H D C / H A S H w a s t o a l l o t t h e l e t t e r s o f a l l o t m e n t w i t h i n 4 5 d a ys f r o m f i n a l s a n c t i o n f r o m t h e c o m p e t e n t a u t h o r i t y a n d s u c h f l a t s w e r e p a r t o f e n t i r e c o n s i d e r a t i o n . M e r e l y b e c a u s e s u c h a l l o t m e n t l e t t e r h a s n o t b e e n g i v e n b e c a u s e o f s a n c t i o n s / p e r m i s s i o n s c o u l d n o t b e o b t a i n e d b e c a u s e o f P u b l i c I n t e r e s t L i t i g a t i o n b e f o r e t h e H o n b l e P u n j a b & H a r ya n a H i g h C o u r t , i t c a n n o t b e s a i d t h a t s u c h r i g h t h a s n o t a c c r u e d . T h o u g h i t m a y b e h a r d o n t h e a s s e s s e e b u t i t i s w e l l s e t t l e d t h a t t a x a t i o n a n d e q u i t y a r e s t r a n g e r s . F u r t h e r c o m m e n t i n g o n t h i s a s p e c t S h r i R a j a r a t h n a m i n h i s c o m m e n t a r y h a s o b s e r v e d a t p a g e 5 1 6 4 a s u n d e r :

I t i s h a r d o n t h e o w n e r s w h e n r e q u i r e d t o p a y t a x , w h e n h a n d i n g o v e r t h e p o s s e s s i o n f o r p u r p o s e s o f c o n s t r u c t i o n w i t h o u t b e i n g a b l e t o e n j o y t h e c o n s t r u c t i o n , w h i c h i s y e t t o c o m m e r c e o r i n t h e p r o c e s s o f c o n s t r u c t i o n b e i n g p u t u p b y t h e d e v e l o p e r , b u t t h e s o l u t i o n l i e s i n s t a t u t o r y c l a r i f i c a t i o n i n s u c h c a s e s . I n v i e w o f t h e i n c r e a s i n g s c a l e o f s u c h d e v e l o p m e n t a g r e e m e n t s t o s o l v e t h e h o u s i n g p r o b l e m i n t h e c i t i e s , a s t a t u t o r y c l a r i f i c a t i o n o r c i r c u l a r i s o v e r d u e .

9 9 T h e s e c o m m e n t s a n d t h e o t h e r d e t a i l e d d i s c u s s i o n o n t h i s a s p e c t c l e a r l y s h o w t h a t c a p i t a l g a i n t a x h a s t o b e p a i d o n t h e t o t a l c o n s i d e r a t i o n a r i s i n g o n t r a n s f e r w h i c h w o u l d i n c l u d e t h e c o n s i d e r a t i o n w h i c h h a s b e e n r e c e i v e d a s w e l l a s t h e c o n s i d e r a t i o n w h i c h h a s a r o s e n a n d b e c o m e d u e a n d m a y b e r e c e i v e d l a t e r o n . I n v i e w o f t h i s d i s c u s s i o n t h i s c o n t e n t i o n i s r e j e c t e d . 100 Ninth contention is that the assessee has already terminated the agreement and has revoked the Power of Attorney. W e 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 assessee- 45 company 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 income total consideration was shown only at Rs. 16.11 crores. It was explained that before Dipiti Builders could start the development /construction work, entire property comprising of plot no. 256 & 257 was sold to a third party M/s Financial Technology Ltd. by a tripartite conveyance deed executed on 5.7.2007 for Rs. 29.11 crores and therefore, additional consideration of Rs. 13 crores has been offered to tax in Assessment year 2008-09. This explanation was rejected by the Assessing Officer because according to him it was a case of transfer u/s 2(47)(v) and total consideration has to be charged in the year of transfer. The Tribunal after considering the provisions of section 45 & 48 posed a question to itself that what should be the consideration in the case before the Bench. The case law relied on by the Department was rejected because same was relevant to accrual of interest. The Bench followed the decision of Kalptaru Construction Oversees Pvt Ltd. 13 SOT 194. In that case the assessee had agreed to sell to its subsidiary equity shares for a consideration of Rs. 1.25 crores which was finally settled at Rs. 1.00 crore and the Tribunal held that the consideration of Rs. 1.00 crore has to be accepted.

102. From the above decision it is not clear whether in case of Kalaptaru Construction Oversees Pvt Ltd. (supra) which has been followed in above case, was concerning capital gain or not Secondly it is not clear that whether the amended consideration i.e. settlement for Rs. 1.00 crore was made in the same year or not As observed earlier while discussing the issue of notional income that provisions of section 45 r.w.s. 48, are absolutely clear and there is no ambiguity that once a capital asset is transferred then whole of the consideration received or accruing has to be considered for the purpose of taxation in the year in which the transfer has taken place. W e further find that in the JDA there is a clause for termination of the agreement. Relevant clause 14 reads as under: Termination

14(i) Save and except the provision of clause 26, THDC shall at all times have the right to terminate this Agreement in the event there is any material breach of the representations, warranties, undertakings, declarations, covenants and/or obligations given by the Owner under this Agreement after giving thirty (30) days written notice for rectification of such breach. In the event the Agreement is termination by THDC, all the lands registered in the name of THDC as per the terms of this Agreement upto the date of the termination shall remain with THDC and the balance lands to be transferred 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 46 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 this Agreement after giving thirty (30) days written notice in this regard or decide to wait for any further times deemed fit by THDC for the grant of the aforesaid approvals and licenses. In the event the Agreement is terminated by THDC, all the lands 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. (iii) In the event THDC is unable to develop the Property due to refusal/non grant of approvals, consents, permission, licenses or revocation of the same by the appropriate statutory authority, then THDC may at its sale discretion terminate this Agreement. In the event the Agreement is terminated by THDC, all the lands registered in the name of THDC as per the terms of this Agreement upto the date of the termination shall remain with THDC and the balance lands to be transferred to THDC as per the terms of this Agreement shall not be transferred by the Owner in favour of THDC. Upon the termination, the Owner shall refund to THDC the Adjustable Advance/Earnest Money mentioned in clause 4.1(i) above within one month of such termination. In the event of failure of the Owner to refund the said amount, the Owner hereby agrees to execute a registered sale deed for land of equivalent value in favour of THDC. (iv) The owner shall have the right to terminate the Agreement only in the event of default by the Developers for making the Payment in accordance with the terms of this Agreement and the allotment of Flats within the time period as mentioned in this Agreement after giving Thirty (30) days written notice for rectification of such breach or any further time as may be desired by the Owner. In the event the Agreement is terminated by Owner, all the lands registered in the name of THDC as per the terms of this Agreement 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 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 47 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 W e 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 to give a notice for appointment of an Arbitrator to the developer. In the absence of such notice the termination will not stand scrutiny of law. Here it is also pertinent to note that though it was stated that irrevocable Power of Attorney has been revoked and some documents have been filed before us for revocation but clause 6.7 of the JDA which we have reproduced earlier clearly provides that such Power of Attorney cannot be revoked. W e reproduce clause 6.7 again which is as under:

6 . 7 T h e O w n e r s h a l l e x e c u t e a n i r r e v o c a b l e s p e c i a l P o w e r o f A t t o r n e y g r a n t i n g i t s c o m p l e t e D e v e l o p m e n t R i g h t s i n t h e P r o p e r t y i n f a v o u r o f T H D C i n t e r a l i a i n c l u d i n g t h e r i g h t t o r a i s e f i n a n c e b y m o r t g a g i n g t h e p r o p e r t y a n d r e g i s t e r t h e c h a r g e w i t h t h e C o m p e t e n t A u t h o r i t y a n d e x e c u t e r e g i s t e r e d s a l e d e e d s ) a s s e t o u t i n C l a u s e 4 . 1 ( i i ) , ( i i i ) , ( i v ) a n d ( v ) a n d t h e O w n e r c o n f i r m s , u n d e r t a k e s , d e c l a r e s a n d b i n d s i t s e l f n o t t o r e v o k e t h e s a m e f o r a n y r e a s o n w h a t s o e v e r o u t o f i t s o w n w i l l a n d d i s c r e t i o n w i t h o u t o b t a i n i n g a s p e c i f i c p r i o r w r i t t e n c o n s e n t o f T H D C o r a n y o f i t s d u l y c o n s t i t u t e d a t t o r n e y s .

1 0 4 T h e a b o v e c l e a r l y s h o w s t h a t t h i s P o w e r o f A t t o r n e y c o u l d n o t b e r e v o k e d f o r a n y r e a s o n w i t h o u t o b t a i n i n g s p e c i f i c p r i o r w r i t t e n c o n s e n t o f T H D C / H A S H . N o d o c u m e n t s h o w i n g t h e c o n s e n t o f T H D C f o r r e v o c a t i o n o f t h i s i r r e v o c a b l e P o w e r o f A t t o r n e y h a s b e e n p r o d u c e d b e f o r e u s . W e f a i l t o u n d e r s t a n d t h a t i n t h e a b s e n c e o f s u c h d o c u m e n t h o w t h e a s s e s s e e c a n c l a i m t h a t t h i s P o w e r o f A t t o r n e y h a s b e e n r e v o k e d . A s d i s c u s s e d e a r l i e r w h i l e c o n s i d e r i n g t h e l e g a l p o s i t i o n , w e w o u l d a g a i n r e c a l l t h e w o r d s o f H o n b l e A u t h o r i t y f o r A d v a n c e R u l i n g i n c a s e o f J a s b i r S i n g h S a r k a r i a ( s u p r a ) w h e r e i n a t p a r a 3 3 o f t h e d e c i s i o n w h i l e d i s c u s s i n g t h e i s s u e i n r e s p e c t o f P o w e r o f A t t o r n e y, i t w a s h i g h l i g h t e d t h a t e x e c u t i o n o f i r r e v o c a b l e P o w e r o f A t t o r n e y i s o f s i g n i f i c a n t n a t u r e a n d t h e w o r d s

i r r e v o c a b l e

a r e v e r y i m p o r t a n t . T h e e x p r e s s i o n

i r r e v o c a b l e

i t s e l f s h o w s t h a t n o r m a l l y s u c h a t t o r n e y c a n n o t b e r e v o k e d . T h e r e f o r e , n o c o g n i za n c e c a n b e t a k e n i n r e s p e c t o f r e v o c a t i o n o f t h e i r r e v o c a b l e P o w e r of A t t o r n e y. I n t h e a b s e n c e o f s p e c i f i c c o n s e n t a s p r o v i d e d i n c l a u s e 6 . 7 o f t h e J D A f r om T H D C . 48 105 W e may also note that CIT D.R has pointed out that total consideration was to be determined as under: ( i ) C o n s i d e r a t i o n i n c a s h ( R s . 8 2 , 5 0 , 0 0 0 x 1 2 9 p l o t s ) R s . 1 0 6 , 4 2 , 5 0 , 0 0 0 / - ( i i ) C o n s i d e r a t i o n i n k i n d ( R s . 1 0 1 , 2 5 , 0 0 0 / - x 1 2 9 p l o t s ) R s . 1 3 0 , 6 1 , 2 5 , 0 0 0 / - T o t a l R s . 2 3 7 , 0 3 , 7 5 , 0 0 0 / - 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 abandoned then what would happen. The contention on behalf of the assessee is that if the contract is abandoned then the assessee would have paid tax in the year of transfer and would be left with no recourse for relief. The contention on behalf of the Department was that the assessee could always file revised return or make a petition u/s 264 and some relief was possible in case of the assessee. However, if revenue fails to tax the total consideration in the year of transfer then same cannot be subjected to tax in any other year. W e find that this question was seriously considered by the Ld. Authority for Advance Ruling in case of Jasbir Singh Kataria (supra) which has been relied on by both the parties for various aspects. In that case it was observed at para 39 as under:

W e have to advert to one aspect which has caused some concern to us. W hat will happen if during the year following the one in which the deemed transfer took place, the proposed venture collapses for reasons such as refusal of permissions, the developer facing financial crunch etc. By that time, the owner would have received only a part of the agreed consideration, but he is obliged to file the return showing the entire capital gain based on the full sale price whether or not received during the year of deemed transfer. In such an eventuality, hardship may be caused to the owner who would have paid full tax. No doubt, such a situation could be avoided if the contention of the applicant is accepted. 49 On deep consideration, however, we find that the construction of the relevant provision should not be controlled by giving undue importance to such hypothetical situations. Normally, the owner executes a Power of Attorney or does similar act to left the transferee take possession only after the basic permissions are granted and he is satisfied about the ability of transferee/developer to fulfil the contract. In spite of that, if such rate situations take place, the owner/transferor will not be without remedy. He can file a revised return and make out a case for exclusion or reduction of income. However, if the time-limit for filing a revised return expires, the difficulty will arise. It is for Parliament or the Central Government to provide a remedy to the assessee in such cases. Moreover, the other side of the picture as depicted in paragraph 27 (supra) should also be kept in view.

Here the comments of Shri Rajaratnam quoted at para 5164 above are also relevant again:

I t i s h a r d o n t h e o w n e r s w h e n r e q u i r e d t o p a y t a x , w h e n h a n d i n g o v e r t h e p o s s e s s i o n f o r p u r p o s e s o f c o n s t r u c t i o n w i t h o u t b e i n g a b l e t o e n j o y t h e c o n s t r u c t i o n , w h i c h i s y e t t o c o m m e r c e o r i n t h e p r o c e s s o f c o n s t r u c t i o n b e i n g p u t u p b y t h e d e v e l o p e r , b u t t h e s o l u t i o n l i e s i n s t a t u t o r y c l a r i f i c a t i o n i n s u c h c a s e s . I n v i e w o f t h e i n c r e a s i n g s c a l e o f s u c h d e v e l o p m e n t a g r e e m e n t s t o s o l v e t h e h o u s i n g p r o b l e m i n t h e c i t i e s , a s t a t u t o r y c l a r i f i c a t i o n o r c i r c u l a r i s o v e r d u e .

W e may mention here that no doubt sometimes an assessee may be put in a difficult situation and as mentioned by Honble 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 if tomorrow when all permissions are obtained and construction is completed and if no taxes are held to be payable then later on also the assessee may not be subjected to any tax under the head capital gain because then it can be easily contended on behalf of the assessee that the transfer has already taken place on the date when irrevocable Power of Attorney was executed. In that situation the Revenue will have no remedy. 107 The above clearly shows that such hypothetical consideration cannot be considered for giving true meaning to a particular provision. It has also been observed that in some genuine cases the difficulties may arise but it was for the Parliament or the Government to provide remedy in such cases and judicial forums cannot do anything. Therefore, in view of the provisions of Section 45 r.w.s. 48 we are of the opinion that subsequent events, if at all any will not make any difference because total consideration received or accrued has to be assessed in the year of transfer. W e may also note that it was stated that irrevocable Power of Attorney has been revoked but the word irrevocable itself shows that in the eyes of law special Power of Attorney could not have been revoked. In view of this analysis, we are of the opinion that either the JDA has not been cancelled or in any case the same cannot be considered for 50 determining the taxation of capital gain. Accordingly this contention is rejected. 1 0 8 T h e n e x t c o n t e n t i o n o f t h e a s s e s s e e i s t h a t e v e n i f t h e w h o l e c o n s i d e r a t i o n h a s t o b e t a x e d t h e n v a l u e o f t h e f l a t s c a n n o t b e t a k e n a t R s . 4 , 5 0 0 / - p e r s q . f e e t . I t i s a l s o p o i n t e d o u t t h a t i n v i e w o f t h e a g r e e m e n t b e t w e e n t h e H A S H & T H D C c o n s i d e r a t i o n h a s b e e n s h o w n a t R s . 2 , 0 0 0 / - p e r s q . f e e t f o r 1 2 6 f l a t s w h e r e a s i t i s R s . 4 , 5 0 0 / - p e r s q . f e e t f o r t h r e e f l a t s . W e f i n d n o f o r c e i n t h e s e s u b m i s s i o n s . T h e a s s e s s e e h a s f i l e d a l o n g w i t h t h e w r i t t e n s u b m i s s i o n s c o p y o f t h e a d d e n d u m o f a g r e e m e n t b e t w e e n T H D C a n d H A S H b y J o i n t D e v e l o p e r ( a t p a g e 2 6 5 & 2 6 6 ) a n d t h i s i s s u e i s d i s c u s s e d i n c l a u s e 5 w h i c h i s a s u n d e r : - 5 . C l a u s e s 4 . 1 , 4 . 2 , 4 . 3 a n d 4 . 4 o n t h e p a g e n o s . 1 8 a n d 1 9 o f t h e A g r e e m e n t s h a l l s t a n d a m e n d e d , m o d i f i e d a n d s u b s t i t u t e d b y t h e f o l l o w i n g : - 4 . 1 I t i s e x p r e s s l y a g r e e d a n d u n d e r s t o o d b y a n d b e t w e e n t h e P a r t i e s h e r e t o ( a ) i n t h e r a t i o o f 7 2 , 2 8 b e t w e e n T H D C a n d H A S H i n c a s e G r o s s S a l e s P r o c e e d s d o e s n o t e x c e e d R s . 1 2 7 2 c r o r e s ; ( b ) i n t h e r a t i o o f 7 0 : 3 0 b e t w e e n T H D C a n d H A S H i n c a s e G r o s s S a l e s P r o c e e d s i s e q u a l t o R s . 1 2 7 2 c r o r e s ; ( c ) i n a d d i t i o n ( b ) , i n t h e r a t i o o f 6 0 : 4 0 b e t w e e n T H D C a n d H A S H i n r e s p e c t o f g r o s s s a l e s P r o c e e d s i n e x c e s s o f R s . 1 2 7 2 c r o r e s .

I t i s a g r e e d t h a t t h e m i n i m u m g u a r a n t e e d a m o u n t f r o m t h e G r o s s S a l e s P r o c e e d s f o r T H D C a n d H A S H i s R s . 8 9 0 . 4 0 c r o r e s a n d R s . 2 2 5 . 7 6 c r o r e s r e s p e c t i v e l y . T h e m i n i m u m g u a r a n t e e d a m o u n t o f R s . 2 2 5 . 7 6 c r o r e s t o H A S H i n c l u d e s R s . 5 8 . 8 8 c r o r e s t h a t s h a l l b e e x p e n d e d b y T H D C t o w a r d s c o n s t r u c t i o n o f 1 2 6 f l a t s e q u i v a l e n t t o 2 , 8 3 , 5 0 0 s q . f t , , w h i c h f l a t s a r e t o b e a l l o t t e d i n t h e n a m e s o f t h e m e m b e r s o f t h e S o c i e t y o r o t h e r w i s e , a s t h e c a s e m a y b e , c a l c u l a t e d a s R s . 2 0 0 0 p e r s q . f t . f o r t h e a r e a 2 , 8 3 , 5 0 0 s q . f t . a n d t h e 7 2 % s h a r e o f 3 f l a t s o f 2 2 5 0 S q . f t . t o b e p u r c h a s e d b y H A S H @ R s , 4 5 0 0 / - p e r s q . f t . S h o u l d t h e a p p l i c a t i o n o f t h e r a t i o s t i p u l a t e d i n ( a ) a b o v e r e s u l t i n H A S H b e i n g e n t i t l e d t o a s u m g r e a t e r t h a n t h e m i n i m u m g u a r a n t e e d a m o u n t a n d T H D C b e i n g e n t i t l e d t o a s u m l e s s t h a n t h e m i n i m u m g u a r a n t e e d a m o u n t , T H D C s h a l l - b e e n t i t l e d t o t h e e n t i t l e m e n t o f H A S H w h i c h i s i n e x c e s s o f i t s m i n i m u m , g u a r a n t e e d a m o u n t u n t i l T H D C a c h i e v e s i t s m i n i m u m g u a r a n t e e d a m o u n t . - T h e s a m e i s i l l u s t r a t e d i n A n n e x u r e I h e r e t o .

1 0 9 T h e a b o v e c l e a r l y s h o w s t h a t H A S H w a s e n t i t l e d t o t o t a l p r o c e e d s o f R s . 2 2 5 . 7 6 c r o r e s o u t o f t o t a l p r o c e e d s o f t h e p r o j e c t w h i c h w e r e a g r e e d t o b e s h a r e d b y T H D C a n d H A S H b u t t h e p o r t i o n o f H A S H i n c l u d e s a s u m o f R s . 5 8 . 8 8 c r o r e s w h i c h w a s r e q u i r e d t o b e s p e n t t o w a r d s c o n s t r u c t i o n o f 1 2 6 f l a t s e q u i v a l e n t t o 2 8 3 5 0 0 s q u a r e f e e t a r e a w h i c h we r e t o b e a l l o t t e d t o t h e m e m b e r s o f t h e s o c i e t y. T h u s , i t i s c l e a r t h a t f i g u r e o f R s . 2 , 0 0 0 / - p e r s q . f e e t r e p r e s e n t s o n l y t h e c o s t o f c o n s t r u c t i o n s t o b e 51 i n c u r r e d b y T H D C w h i c h w a s d e b i t e d t o t h e a c c o u n t o f H A S H . F u r t h e r , H A S H h a s a g r e e d t o p u r c h a s e t h r e e F l a t s @ 4 , 5 0 0 / - p e r s q u a r e f e e t . S o m e n e w s r e p o r t s w e r e q u o t e d b e f o r e u s i n o n e o f t h e c a s e s t o s h o w t h a t v a r i o u s b r o k e r s h a d i s s u e d v a r i o u s a d v e r t i s e m e n t s f o r s a l e o f t h e s e f l a t s a n d t h e s e f l a t s w e r e u l t i m a t e l y t o b e s o l d a t R s . 7 , 0 0 0 / - t o R s . 1 0 , 0 0 0 / - p e r s q u a r e f e e t . T h i s a l s o b e c o m e s c l e a r f r o m t h e a d d e n d u m o f a g r e e m e n t i n t e r m s o f t o t a l p r o c e e d s o f 1 2 7 2 c r o r e s . I n a n y c a s e i f t h e c o s t of c o n s t r u c t i o n i s R s . 2 , 0 0 0 / - , t h e n c o s t o f l a n d w h i c h h a s b e e n p a i d t o t h e s o c i e t y i s a l s o t o b e a d d e d t o t h e c o s t o f t h e f l a t b e c a u s e t h i s p o r t i o n o f c o n s i d e r a t i o n i n a n y c a s e w a s r e c e i v e d o r t o b e r e c e i v e d l a t e r b y t h e s o c i e t y i n c a s h . C o n s i d e r i n g t h e p r e s e n t m a r k e t v a l u e o f t h e f l a t s i n a n d a r o u n d C h a n d i g a r h a r e a w h i c h i s R s . 4 , 0 0 0 / - t o 1 2 , 0 0 0 / - p e r s q u a r e f e e t w e a r e o f t h e o p i n i o n t h a t v a l u e o f t h e f l a t a t R s . 4 , 5 0 0 / - p e r s q u a r e f e e t i s a b s o l u t e l y f a i r . I n a n y c a s e M / s H A S H h a s a g r e e d t o p u r c h a s e t h e f l a t s a t t h i s r a t e f r o m M / s T H D C . I t m a y b e n o t e d a s p o i n t e d o u t b y t h e l d . D R f o r t h e r e v e n u e s o m e o f t h e N e w s r e p o r t c l i p p i n g s f i l e d b y v a r i o u s a s s e s s e e s c l e a r l y s h o w s t h a t f l a t s w e r e b o o k e d i n t h e

T a t a C a m l e o t

( t h i s w a s t h e n a m e w h i c h w a s g i v e n t o t h e P r o j e c t w h i c h w a s t o b e d e v e l o p e d o n t h e l a n d o f t w o s o c i e t i e s ) i n t h e P r e L a u n c h o f f e r i n t h e r a n g e o f R s . 7 5 0 0 t o 8 0 0 0 p e r s q f t . I t i s a c o m m o n k n o w l e d g e t h a t r a t e s i n P r e L a u n c h o f f e r a r e l o w e r t h a n t h e r a t e s w h e n b o o k i n g s o p e n f o r t h e P u b l i c . C o n s i d e r i n g t h e s e f a c t s w e a r e o f t h e o p i n i o n t h a t A s s e s s i n g O f f i c e r h a s e s t i m a t e d t h e v a l u e o f t h e f l a t s o n m o s t r e a s o n a b l e b a s i s . I n v i e w o f t h e s e o b s e r v a t i o n s t h i s c o n t e n t i o n i s r e j e c t e d . 110 The Ld. Counsel for the assessee had made some submissions on the issue of deduction u/s 54F. He has pointed out that this issue has been rejected wrongly by CIT(A). Ho wever, carefully perusal of the grounds of appeal sho w 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 sho w 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 residential house and in case before us, the assessee has transferred the plot. Therefore, it cannot be said that deduction u/s 54F and 54 is same. Since no ground has been raised for deduction u/s 54F, we reject this contention. Following the above we decide this issue against the assessee. 8 Third issue After hearing both the parties we find that careful perusal of the record shows that this issue was not raised before the ld. CIT(A) and accordingly the same has not been rightly adjudicated by the ld. CIT(A). Therefore, it is clear that this issue 52 is not emanating from the impugned order and therefore, we decline to entertain this issue at this stage. 8 Last issue is in respect of interest u/s 234A, 234B and 234C of IT Act. This issue is of consequently nature and the Assessing Officer is directed to charge the interest as per law. 9 In the result, appeal of the assessee is dismissed. Order pronounced in the open court on .2013 (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : .2013 SURESH Copy to: The Appellant/The Respondent/The CIT/The CIT(A)/The DR