Ita/161/2014 Of Bikramjit Singh Gill v. Commissioner Of Income Tax Bathinda

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.161 of 2014 (O&M)Date of decision: July 31, 2015 Bikramyjit Singh Gil Vs, .....- Appe Commissioner of Income Tax, Bathinda ....mesponden CORAM: HON BLE MR. JUSTICK AJAY KUMAR MITTALHON BLE MR. JUSTICE FATEH DEEP SINGH Present: —§ Mr. Divya Suri, Advocate and Mr. Madhur Sharma, Advocate for the appellant. Mr. G.S.Hooda, Advocate andMs. Urvashi Dhugga, Advocate for the revenue. Ajay Kumar Mittal,J, inThis order shall dispose of ITA Nos.161 and 322 of 2014 as theissue involved in both the appeals is common. However, the facts are being extracted from [TA No.161 of 2014. ? ITA No.161 of 2014 has been filed by the assessee-appellantunder Section 260A of the Income Tax Act, 1961 (in short, “the Act’)against the order dated 11.9.2013, Annexure A.3 passed by the Income TaxAppellate Tribunal, Amritsar Bench Amritsar (in short, “the Tribunal) in ITA No.406(ASR)/2013 for the assessment year 2008-09. ITA No. 161 of 201 3)Briefly, the facts as narrated in ITA No.161 of 2014 necessaryfor the decision of the controversy involved may be noticed. The appellant,an individual is a member of M/s Defence Services Cooperative HouseBuilding Society Limited (in short, “the Society’), Mohali consisting ofvarious members. The society 1s owner of 27.3 acres of land in VillageKansal in District Mohali. The members of the society had been allottedplots measuring 500 and 1000 square yards. The appellant is having a plotmeasuring 500 square yards. A resolution was passed by the ExecutiveCommittee of the society that all the members would surrender their rightsin the property to the society and the society would enter into an agreementon behalf of the members with M/s Tata Housing Development CompanyLimited (THDC) and HASH Builders (P) Limited (HASH) to develop 27.3acres of land owned by the society. On 27.4.2007, the society entered intotripartite Joint development Agreement (JDA) with HASH and THDC todevelop the land and it was agreed that in lieu of grant of developmentrights, the developers will pay a monetary consideration of =a80 lacs to bepaid in installments as per time schedule prescribed in clause 4 of the JDAand additionally one built up flat measuring 2250 square feet in the projectto be given to each individual member of the society having plot size of500 square yards in the land owned by the society. On 25.2.2007, theappellant member having plot of 500 square yards received part of the entireconsideration. The members of the society issued an irrevocable power ofattorney in favour of the developers to undertake various acts in furtheranceof JDA. First sale deed was executed for registration of 3.08 acres of landby the society in favour of THDC. On 25.4.2007, second sale deed for ITA No. 161 of 201 ITA No. 161 of 201 transfer of 4.62 acres of land was registered by the society in favour ofTHDC against payment of second installment of “a18 lacs received by eachmember having plot size of 500 square yards. Original return of income wasfiled by the appellant on 26.9.2008 for the assessment year 2008-09declaring income ofLT2,/2,496/- which was processed under section 143(1)of the Act. The sources of income were shown as salary and businessincome. On 7.1.2010, revised computation of income was filed by theappellant during the assessment proceedings declaring income of =22,50,/730/- which included capital gains on the consideration of advanceand part payment under the JDA. On 17.2.2010, notice under Section 148of the Act was issued to the appellant. The appellant filed written reply tolthe notice on 26.3.2010 stating therein that revised return already filed on1.1.2010 be treated in response to the notice. On 5.5.2010, the appellantfiled computation of income before the Assessing Officer declaring incomeotLv22,50,/30/- from salary, business income and long term capital gain,On 27.12.2010, Annexure A.l, assessment order was passed for theassessment year 2008-09 under Section 143(3) of the Act at an amount of=1,78,09,240/- wherein the Assessing Officer brought the followingconsideration receivable by the appellant under the JDA to tax under thehead ‘capital gains’:- 1) Monetary consideration ofa80 lacs (though only|Ly32,00,000/- actuallyreceived till date)received till date)11)One furnished flat measuring 2250 square feet at the rate ofLy4500/- persquare feet worth amounting to v1,01,25,000/-. —square feet worth amounting to v1,01,25,000/-. — Agerieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) (CIT(A) on 9.6.2011. Pursuant to a Public InterestLitigation, this court in CWP No.20425 of 2010 © stayed ITA No. 161 of 201Aconstruction/development of the project. On 28.1.2011, the society issuedletter to HASH for payment of third installment in accordance with clause4.lav) of the JDA. On 4.2.2011, HASH stated that the third installmentwould become due only after obtaining permission to commenceconstruction. On 11.5.2011, the society sent legal notice stating that timewas the essence of the JDA and delay was attributable to the developers inobtaining necessary approval from the competent authority. The societygave 30 days time to the developers to make the payment of the thirdinstallment. On non receipt of the payment on 13.6.2011, the society passeda resolution to terminate the attorney issued in favour of the developers,On 31.10.2011, the society cancelled the power of attorney issued in favourof the developers. Vide order dated 26.3.2012, this court in CWP No.20425of 2010 directed the developers to obtain additional permission under thePunjab New Capital (Periphery) Control Act, 1952. Vide order dated14.5.2012, this Court in CWP No.18253 of 2009 ordered stay ofconstruction in the entire catchment area of Sukhna Lake as per survey ofIndia record which also covered the project under consideration. The courtalso ordered for demolition of any structure after 11.3.2011. Status quo was|granted by the Apex Court vide order dated 22.5.2012 wherein the courtdirected that no construction should be undertaken in the area in question,Vide order dated 7.3.2013, Annexure A.2, the CIT(A) dismissed the appealfiled by the appellant relying upon the order passed in the appeal of ShriNirmal Singh Kahlon, another member of the society. Not satisfied with theorder, the appellant filed appeal before the Tribunal. Vide order dated11.9.2013, Annexure A.3, the Tribunal dismissed the appeal upholding the order passed by the Assessing Officer and affirmed by the CIT(A) bringingthe entire consideration receivable to tax under the JDA. Hence the instantappeals. 4We have heard learned counsel for the parties. order passed by the Assessing Officer and affirmed by the CIT(A) bringingthe entire consideration receivable to tax under the JDA. Hence the instantappeals. 4We have heard learned counsel for the parties. 4.|The Tribunal had adjudicated the appeals of the assessees relyingupon the order dated 29.7.2013 passed by it 1n the case ofCharanyjit SingAtwal vs. ITO,Ward No.VI() Ludhianain ITA No.448/CHD/2011 againstwhich ITA No.200 of 2013 was filed in this Court. In the said appealalongwith connected appeals, the following issues emerged forconsideration and adjudication:- (1) scope and legislative intent of Section 2(47)(11), (v) and (v1) ofthe Act;the Act; (11) the essential ingredients for applicability of Section 53A of1882 Act;1882 Act; (111) meaning to be assigned to the term “possession’’ (1v) whether in the facts and circumstances, any taxable capital gains arises from the transaction entered by the assessee? After considering the relevant statutory provisions and the case law, theconclusions arrived at by this Court 1n the said appeals vide judgment dated2) 72015 read thus:- 1. Perusal of the JDA dated 25.22.2007 read with sale deeds dat2.3.007 and 25.4.2007 in respect of 3.08 acres and 4.62 acresrespectively would reveal that the parties had agreed for pro-ratatransfer of land.2.3.007 and 25.4.2007 in respect of 3.08 acres and 4.62 acresrespectively would reveal that the parties had agreed for pro-ratatransfer of land. 2. No possession had been given by the transferor to the transfereeof the entire land 1n part performance of JDA dated 25.2.2007 soas to fall within the domain of Section 53A of 1882 Act.of the entire land 1n part performance of JDA dated 25.2.2007 soas to fall within the domain of Section 53A of 1882 Act. 3. The possession delivered, 1f at all, was as a licencee for thedevelopment of the property and not in the capacity of adevelopment of the property and not in the capacity of a transferee. 4. Further Section 53A of 1882 Act, by incorporation, stoodembodied in section 2(47)(v) of the Act and all the essentialingredients of Section 53A of 1882 Act were required to befulfilled. In the absence of registration of JDA dated 25.2.2007having been executed after 24.9.2001, the agreement does notfall under Section 53A of 1882 Act and consequently Section 2(47)(v) of the Act does not apply,embodied in section 2(47)(v) of the Act and all the essentialingredients of Section 53A of 1882 Act were required to befulfilled. In the absence of registration of JDA dated 25.2.2007having been executed after 24.9.2001, the agreement does notfall under Section 53A of 1882 Act and consequently Section 2(47)(v) of the Act does not apply, 5. It was submitted by learned counsel for the assessee-appellantthat whatever amount was received from the developer, capitalgains tax has already been paid on that and sale deeds have alsobeen executed. In view of cancellation of JDA dated 25.2.2007,no further amount has been received and no action thereon hasbeen taken. It was urged that as and when any amount 1sreceived, capital gains tax shall be discharged thereon inaccordance with law. In view of the aforesaid stand, whiledisposing of the appeals, we observe that the assessee appellantsShall remain bound by their said stand.that whatever amount was received from the developer, capitalgains tax has already been paid on that and sale deeds have alsobeen executed. In view of cancellation of JDA dated 25.2.2007,no further amount has been received and no action thereon hasbeen taken. It was urged that as and when any amount 1sreceived, capital gains tax shall be discharged thereon inaccordance with law. In view of the aforesaid stand, whiledisposing of the appeals, we observe that the assessee appellantsShall remain bound by their said stand. 6. The issue of exigibility to capital gains tax having been decidedin favour of the assessee, the question of exemption underSection 54F of the Act would not survive any longer and hasbeen rendered academic.in favour of the assessee, the question of exemption underSection 54F of the Act would not survive any longer and hasbeen rendered academic. 7. The Tribunal and the authorities below were not right inholding the assessee-appellant to be hable to capital gains tax inrespect of remaining land measuring 13.5 acres for which noconsideration had been received and which stood cancelled andincapable of performance at present due to various orderspassed by the Supreme Court and the High Court in PILs.Therefore, the appeals are allowed.”holding the assessee-appellant to be hable to capital gains tax inrespect of remaining land measuring 13.5 acres for which noconsideration had been received and which stood cancelled andincapable of performance at present due to various orderspassed by the Supreme Court and the High Court in PILs.Therefore, the appeals are allowed.” The substantial questions of law were answered and appeals disposed of accordingly. 6.|It was not disputed between the learned counsel for the parties| ITA No. 161 of 201 that the issue involved herein 1s squarely covered by the aforesaid judgment.Accordingly, the present appeals are disposed of 1n the same terms. July 31, 2015<3%< (Ajay Kumar Mittal)Judge(Fateh Deep Singh)Judge