Ita/311/2015 Of Chiranji Lal Garg v. Commissioner Of Income Tax Bathinda & Ors

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.311 of 2015 (O&M)Date of decision:2.11.2015 Chiranji Lal Garg .....- Appe Vs, Commissioner of Income tax, Bathinda and another ....AmeSsponde CORAM: HON’BLE MR. JUSTICEK AJAY KUMAR MITTAHON’BLE MR. JUSTICK RAMENDRA JAIN 1. Whether Reporters of local papers may be allowed to see the judgment?2. To be referred to the Reporters or not?3. Whether the judgment should be reported 1n the Digest? Present:Mr. Sumeet Mahajan, Sr. Advocate with Mr. Amit Kohar,Advocate for the appellant. Mr. G.S.Hooda, Advocate for the revenue. Ajay Kumar Mittal, J. CM No.18311 Cll of 2015 1.There 1s a delay of 578 days in filing the appeal. Notice of theapplication was given to the respondents. After hearing learned counsel forthe parties and for the reasons stated 1n the application, the delay in filingthe appeal 1s condoned. CM stands disposed of. ITA No.311 of 2015 ) -This appeal has been preferred by the assessee under Section260A of the Income Tax Act, 1961 (in short, “‘the Act’) against the orde dated 12.9.2013, Annexure A.|l passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (in short, “the Tribunal’’) in ITA No.46(Asr)/2013 for the assessment year 2007-08, claiming following substantialquestions of law:- “'1) Whether on the facts and in the circumstances of the casethe Tribunal erred in upholding the order of the AssessingOfficer in bringing to tax the entire consideration receivableunder the JDA dated 25.22.2007 as liable to tax under the hea“Capital gains’” 11) Whether the Tribunal erred on facts and in law in holdingthat there was “transfer” of immovable property under section 2(47)(v) of the Act read with section 53A of the TPA? li) Whether the Tribunal erred on facts and 1n law 1n holdingthat the requirement of registration of the JDA under section533A of the TPA could not be read into section 2(47)(v) of thAct? 1v) Whether the Tribunal erred on facts and 1n law in holdingthat the requirement of registration of the JDA under section353A of the TPA was not necessary once power of attorney wasregistered? Vv) Whether the Tribunal erred in law in_ construin“’possession’, as contemplated under section 2(47)(v) of the Acread with section 53A of the TPA, to have a wider connotation,to include concurrent possession and/or right to enter intopossession? v1) Whether the Tribunal erred on facts and 1n law in holdingthat “possession” as contemplated under section 2(47)(v) of theAct read with section 53A of the TPA was given by the societyto the developers, who held concurrent possession over theimmovable property? Vi1) Whether the Tribunal erred on facts and in law in holdingthat “possession” as contemplated under section 2(47)(v) of theAct read with section 53A of the TPA was given by the society to the developers since the developers had not only theauthority/right to enter into the immovable property but also todeal with the same for various purposes? vill) Whether the Tribunal erred on facts and in law in holdingthat there was “transfer” under section 2(47)(v) of the Act readwith section 53A of the TPA even though “unconditionalwillingness” on the part of the developers was absent? 1x) Whether the Tribunal erred on facts and 1n law in holdingthat in view of applicability of clause 26 dealing with “ForceMajeure’, it could not be said that “unconditional willingness”on the part of the developers was absent? x) Whether the Tribunal exceeded its jurisdiction by sitting injudgment on issues concerning civil dispute between parties tothe JDA and in inter alia holding that (a) there was no defaulton the part of the developers in complying with the terms of theJDA; (b) there was no default on the part of the developers inmaking payment; (c) the developers were making sincereefforts to obtain all approvals/permissions; and (d) cancellationof the JDA and/or revocation of power of attorney by thesociety was not proper and would not stand the test of law? 1x) Whether the Tribunal erred on facts and 1n law in holdingthat in view of applicability of clause 26 dealing with “ForceMajeure’, it could not be said that “unconditional willingness”on the part of the developers was absent? x) Whether the Tribunal exceeded its jurisdiction by sitting injudgment on issues concerning civil dispute between parties tothe JDA and in inter alia holding that (a) there was no defaulton the part of the developers in complying with the terms of theJDA; (b) there was no default on the part of the developers inmaking payment; (c) the developers were making sincereefforts to obtain all approvals/permissions; and (d) cancellationof the JDA and/or revocation of power of attorney by thesociety was not proper and would not stand the test of law? x1) Whether the Tribunal erred on facts and in law in holdingthat there was transfer within the meaning of section 2(47) ofthe Act despite the fact that the JDA was terminated/cancelledby the society? x11) Whether the Tribunal erred on facts and in law 1n holdingthat there was “transfer” even under clause (v1) of section 2(47)oft the Act xli1) Whether the Tribunal erred on facts and in law in notholding that there was no “transfer” under clause (11) of section2(47) of the Act? x1v) Whether the Tribunal erred on facts and in law in holdingthat the entire consideration receivable under the JDA wastaxable without appreciating that the same tantamount to taxation of hypothetical/notional oncome which is _ npermissible in law’ xv) Whether the Tribunal erred on facts and in law inupholding the taxation of value of the flat as part of theconsideration receivable under the JDA” xv1) Without preyudice, whether the Tribunal erred on facts andin law in upholding the determination of value of the flat at therate ofzy4500/- per square feet? Xvii) Without prejudice, whether the Tribunal erred on factsand in law in not adjudicating the claim of exemption undersection 54F, simply because sections 54 and 54EC wereinadvertently mentioned in the grounds of appeal and notsection S4E of the Act? Xvi) Without preyudice whether the Tribunal erred on factsand in law in holding that exemption under section 54F of theAct was not available on the value of the flat receivable underthe JDA? X1x) Whether on the facts and 1n the circumstances of the casethe findings arrived at by the Tribunal are perverse, inasmuchas no reasonable person correctly informed of the provisions oflaw would come to such a conclusion? xx) Whether demand of respondents to demand alleged incometax liability even though as per the ruling of this Hon'ble Courtrendered in ITA No.200 of 2013, no tax 1s liable to be paid? xx1) Whether the demand 1s justified once question of law thatthere 1s no capital gains has been decided in favour of theassessee?’ 3)The facts being identical as in ITA No.200 of 2013 (C.S.Atwal vs. [he Commissioner of Income Tax, Ludhiana and another),need not be noticed herein again. It was not disputed by learned counsel for theparties that the issues involved in this appeal have already been decided by this Court 1nC.§. Atwal'scase (Supra) vide order dated 22.7.2015, wherein itwas concluded as under:- 1) Perusal of the JDA dated 25.2.2007 read with sale deedsdated 2.3.007 and 25.4.2007 in respect of 3.08 acres and 4.62acres respectively would reveal that the parties had agreed forpro-rata transfer of land. 2)No possession had been given by the transferor to thetransferee of the entire land in part performance of JDAdated 25.22.2007 so as to fall within the domain of SectioS3A of 1882 Act.transferee of the entire land in part performance of JDAdated 25.22.2007 so as to fall within the domain of SectioS3A 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 atransferee.|development of the property and not in the capacity of atransferee.| 1) Perusal of the JDA dated 25.2.2007 read with sale deedsdated 2.3.007 and 25.4.2007 in respect of 3.08 acres and 4.62acres respectively would reveal that the parties had agreed forpro-rata transfer of land. 2)No possession had been given by the transferor to thetransferee of the entire land in part performance of JDAdated 25.22.2007 so as to fall within the domain of SectioS3A of 1882 Act.transferee of the entire land in part performance of JDAdated 25.22.2007 so as to fall within the domain of SectioS3A 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 atransferee.|development of the property and not in the capacity of atransferee.| 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 dated25.2.2007 having been executed after 24.9.2001, theagreement does not fall under Section 53A of 1882 Act andconsequently 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 dated25.2.2007 having been executed after 24.9.2001, theagreement does not fall under Section 53A of 1882 Act andconsequently Section 2(47)(v) of the Act does not apply, 5) It was submitted by learned counsel for the assessee-appellant that whatever amount was received from thedeveloper, capital gains tax has already been paid on that andsale deeds have also been executed. In view of cancellationof JDA dated 25.2.2007, no further amount has been receivedand no action thereon has been taken. It was urged that asand when any amount is received, capital gains tax shall bedischarged thereon in accordance with law. In view of theaforesaid stand, while disposing of the appeals, we observethat the assessee appellants shall remain bound by their saidstand.appellant that whatever amount was received from thedeveloper, capital gains tax has already been paid on that andsale deeds have also been executed. In view of cancellationof JDA dated 25.2.2007, no further amount has been receivedand no action thereon has been taken. It was urged that asand when any amount is received, capital gains tax shall bedischarged thereon in accordance with law. In view of theaforesaid stand, while disposing of the appeals, we observethat the assessee appellants shall remain bound by their saidstand. 6) The issue of exigibility to capital gains tax having been decided in favour of the assessee, the question of exemptionunder Section 54F of the Act would not survive any longerand has been rendered academic.under Section 54F of the Act would not survive any longerand has been rendered academic. 7) The Tribunal and the authorities below were not right inholding the assessee-appellant to be liable to capital gainstax in respect of remaining land measuring 13.5 acres forwhich no consideration had been received and which stoodcancelled and incapable of performance at present due tovarious orders passed by the Supreme Court and the HighCourt in PILs. Therefore, the appeals are allowed.holding the assessee-appellant to be liable to capital gainstax in respect of remaining land measuring 13.5 acres forwhich no consideration had been received and which stoodcancelled and incapable of performance at present due tovarious orders passed by the Supreme Court and the HighCourt in PILs. Therefore, the appeals are allowed. 4A In view of the above, the appeal is disposed of in the same terms as in)C.S.Atwal'scase (supra). (Ajay Kumar Mittal) Judge November 02, 2015 -%4 (Ramendra Jain)Judge