Pankaj Kumar, Son Of Shri Suresh Prasad Sinha v. Commissioner Of Income Tax
High Court
12 May 2023 In favour of: Revenue
Forum / Bench
High Court · patnahcucisdb94
Parties
Pankaj Kumar, Son Of Shri Suresh Prasad Sinha v. Commissioner Of Income Tax
Date of order
12 May 2023
Assessment year(s)
—
Outcome
Dismissed
The order — as passed by the High Court
Case summary
In Pankaj Kumar, Son Of Shri Suresh Prasad Sinha v. Commissioner Of Income Tax, the High Court (2023) dismissed the appeal. The decision went in favour of the Revenue.
Summary auto-generated from the order below — read the full judgment for the complete reasoning.
Sections referenced in this judgment
IN THE HIGH COURT OF JUDICATURE AT PATNACivil Writ Jurisdiction Case No.20926 of 2019
======================================================
Pankaj Kumar, son of Shri Suresh Prasad Sinha, 87/78/185 Humad Gali,Patna Saheb Railway Station, Begumpur Chowk, PO and PS- Patna City,District- Patna.
... ... Petitioner/s
Versus
1.Commissioner of Income Tax having its office at Central Revenue Building,Bir Chand Patel Path, Patna.Bir Chand Patel Path, Patna.
2.Income Tax Office, Ward 6 (2), Patna.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 1774 of 2020
======================================================
Mohamid Abdul Hai, son of Dr. A. A. Hai resident of near Abdul HaiCommercial Complex, Exhibition Road, P.O. G.P.O., P.S. Kotwali, GandhiMaidan, District Patna.
... ... Petitioner/s
Versus
1.Union of India through The Secretary, Ministry of Finance, Government ofIndia, North Block, New Delhi.India, North Block, New Delhi.
2.Commissioner of Income Tax, having its office at Central Revenue Building,Bir Chand Patel Path, Patna.Bir Chand Patel Path, Patna.
3.Income Tax Officer, Ward 6(1), Patna.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 2565 of 2020
======================================================
Hashmat Hai @ Hasmat Hai, wife of Dr. A.A. Hai, resident of Abdul HaiCommercial Complex, Exhibition Road, P.O.-G.P.O., P.S. Kotwali, GandhiMaidan, District Patna.
... ... Petitioner/s
Versus
1.Union of India through The Secretary, Ministry of Finance, Government ofIndia, North Block, New Delhi.India, North Block, New Delhi.
2.Commissioner of Income Tax, having its office at Central Revenue Building,Bir Chand Patel Path, Patna.Bir Chand Patel Path, Patna.
3.Income Tax Officer, Ward 6 (1), Patna.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 2662 of 2020
======================================================
Satyam Kumar Singh, son of Surendra Prasad Singh, House no. 282, Sector-37, Faridabad, Haryana at present residing at Village Maksudpur, P.O. andP.S.- Shahjhanpur, District- Patna
... ... Petitioner/s
Versus
1.Union of India through the Secretary, Ministry of Finance, Government ofIndia, North Block, New DelhiIndia, North Block, New Delhi
2.Commissioner of Income Tax, having its office at Central Revenue Building,Bir Chand Patel Path, PatnaBir Chand Patel Path, Patna
3.Income Tax Officer, Ward 6(1), Patna
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 2766 of 2020
======================================================
Keshav Ranjan, Son of Late Ram Chandra Singh, Resident of Mohalla-Rukunpura, P.O.-B.V. College and Police Station-Rupuspur, District-Patna-800014.
... ... Petitioner/s
Versus
1.Union of India through The Finance Secretary, North Block, Department ofFinance, Govt. of India, New Delhi-110001.Finance, Govt. of India, New Delhi-110001.
2.The Principal Chief Commissioner of Income Tax, (Bihar and Jharkhand)Revenue Building, Virchand Patel Marg, Baily Road, Patna-800 001.Revenue Building, Virchand Patel Marg, Baily Road, Patna-800 001.
3.The Principal Commissioner of Income Tax-II, Patna, Revenue Building,Virchand Patel Marg, Baily Road, Patna-800 001.Virchand Patel Marg, Baily Road, Patna-800 001.
4.The Income Tax Officer, Ward-6(2), Patna, Lok Nayak Jai Prakash Building,New Dakbanglow Road, Patna-800001.New Dakbanglow Road, Patna-800001.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 3005 of 2020
======================================================
2.The Principal Chief Commissioner of Income Tax, (Bihar and Jharkhand)Revenue Building, Virchand Patel Marg, Baily Road, Patna-800 001.Revenue Building, Virchand Patel Marg, Baily Road, Patna-800 001.
3.The Principal Commissioner of Income Tax-II, Patna, Revenue Building,Virchand Patel Marg, Baily Road, Patna-800 001.Virchand Patel Marg, Baily Road, Patna-800 001.
4.The Income Tax Officer, Ward-6(2), Patna, Lok Nayak Jai Prakash Building,New Dakbanglow Road, Patna-800001.New Dakbanglow Road, Patna-800001.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 3005 of 2020
======================================================
Zareen Abdul Hai @ Kulsum Abdul Hai Daughter of Dr. Ahmad Abdul HaiResident of Abdul Hai Commercial Complex, Exhibition Road, P.O. G.P.O.,P.S. Kotwali, Gandhi Maidan, District Patna through her constituted attorneyDr Ahmad Abdul Hai (aged about 77 years Male) Son of Late Dr. M.A. Hai
Resident of Abdul Hai Commercial Complex, Exhibition Road, P.O. G.P.O.,P.S. Kotwali, Gandhi Maidan, Disrrict Patna.
... ... Petitioner/s
Versus
1.Union of India through the Secretary, Ministry of Finance, Government ofIndia, North Block, New Delhi.India, North Block, New Delhi.
2.Commissioner of Income Tax, having its office at Central Revenue Building,Bir Chand Patel Path, Patna.Bir Chand Patel Path, Patna.
3.Income Tax Officer, Ward 6 (1), Patna.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 3019 of 2020
======================================================
Raj Kumar, Son of Late Ram Chandra Singh, Resident of Mohalla-Rukunpura, P.O.- B.V. College, and Police Station- Rupuspur, District- Patna-800014.
... ... Petitioner/s
Versus
1.Union of India through the Finance Secretary, North Block, Department ofFinance, Govt. of India, New Delhi- 110001.Finance, Govt. of India, New Delhi- 110001.
2.The Principal Chief Commissioner of Income Tax, (Bihar and Jharkhand).
3.The Principal Commissioner of Income Tax- II, Patna.
4.The Income Tax Officer, Ward-6 (2), Patna Address of 2 and 3 are atRevenue Building, Virchand Patel Marg, Baily Road, Patna- 800001 andAddress of 4 is at Lok Nayak Jai Prakash Building, New Dakbanglow, Road,Patna- 800001.Revenue Building, Virchand Patel Marg, Baily Road, Patna- 800001 andAddress of 4 is at Lok Nayak Jai Prakash Building, New Dakbanglow, Road,Patna- 800001.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 3078 of 2020
======================================================
Baboo Rai, Son of Dr. Hit Narayan Rai, Parn Kutir, Khaitan Lane, WestBoring Canal Road, Buddha Colony, P.O. GPO, P.S. Buddha Colony, District-Patna.
... ... Petitioner/sVersus
1.Union of India through the Secretary, Ministry of Finance, Government ofIndia, North Block, New Delhi.India, North Block, New Delhi.
2.Commissioner of Income Tax-II having its Office at Central Revenue
Building, Bir Chand Patel Path, Patna.
3.Income Tax Officer, Ward 6(5), Patna.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 3666 of 2020
======================================================
Deo Prasad Singh, Son of late Ram Chandra Singh, Resident of Mohalla-Rukunpura, P.O. B.V. College and Police Station- Rupuspur, District- 800014
... ... Petitioner/s
Versus
1.Union of India through the Finance Secretary, Room No. 6A, 3rd Floor,Department of Finance Minister , Govt. of India, North Block New Delhi-110001Department of Finance Minister , Govt. of India, North Block New Delhi-110001
2.The Principal Commissioner of Income Tax, II, Patna Revenue Building,Virchand Patel Marg, Bailey Road, Patna- 800 001Virchand Patel Marg, Bailey Road, Patna- 800 001
3.Income Tax Officer, Ward 6(5), Patna.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 3666 of 2020
======================================================
Deo Prasad Singh, Son of late Ram Chandra Singh, Resident of Mohalla-Rukunpura, P.O. B.V. College and Police Station- Rupuspur, District- 800014
... ... Petitioner/s
Versus
1.Union of India through the Finance Secretary, Room No. 6A, 3rd Floor,Department of Finance Minister , Govt. of India, North Block New Delhi-110001Department of Finance Minister , Govt. of India, North Block New Delhi-110001
2.The Principal Commissioner of Income Tax, II, Patna Revenue Building,Virchand Patel Marg, Bailey Road, Patna- 800 001Virchand Patel Marg, Bailey Road, Patna- 800 001
3.The Income Tax Officer, Ward -6(2) , Patna Lok Nayak Jai Prakash Building, New Dakbanglow, Road, Patna- 800001, New Dakbanglow, Road, Patna- 800001
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 3720 of 2020
======================================================
Arun Kumar Singh, S/o Late Ram Pukar Singh, Resident of Village-LakhniBigha, P.S.-Khagaul, PO-Danapur, Patna, Bihar.
... ... Petitioner/s
Versus
1.The Union of India through the Finance Secretary, New Delhi.
2.The Finance Secretary, Ministry of Finance, Govt. of India.
3.The Principal Chief Commissioner of Income Tax, Patna, Bihar andJharkhand.Jharkhand.
4.The principal Commissioner of Income Tax ii, Patna.
5.The Joint Commissioner of Income Tax, Range-6, Patna, Bihar.
6.The Assistant Commissioner of Income Tax, Circle-6, Patna.
7.The Income Tax Officer, Ward 6(4), Patna, Bihar.
8.The Director, Aastha Homes Pvt. Ltd, D.N. Market, near Jagdeo Path More,Bailey Road, Patna-14.Bailey Road, Patna-14.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 3790 of 2020
======================================================Vishwanath Singh, Son of Ramgati Singh, 717 Gandhi Nagar, RajnarayanDwar, Danapur, Digha Diara, P.O. Digha, P.S. Danapur, District- Patna.
... ... Petitioner/s
Versus
1.Union of India through the Secretary, Ministry of Finance, Government ofIndia, North Block, New Delhi.India, North Block, New Delhi.
2.Commissioner of Income Tax, having its office at Central Revenue Building,Bir Chand Patel Path, Patna.Bir Chand Patel Path, Patna.
3.Income Tax Officer, Ward 6(1), Patna,.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 3797 of 2020
======================================================
Sunil Kumar alias Sunil Kumar Singh S/o- Late Ram Pukar Singh resident ofVillage- Lakhni Bigha, P.S.- Khagaul, P.O.- Danapur, Patna, Bihar.
... ... Petitioner/s
Versus
1.The Union of India through the Finance Secretary, New Delhi.
2.The Finance Secretary, Ministry of Finance, Govt. of India.
3.The Principal Chief Commissioner of Income Tax, Patna, Bihar andJharkhand.Jharkhand.
4.The Principal Commissioner of Income Tax II, Patna.
5.The Joint Commissioner of Income Tax, Range- 6, Patna, Bihar.
6.The Assistant Commissioner of Income Tax, Circle- 6, Patna.
7.The Income Tax Officer, Ward 6(4), Patna, Bihar.
8.The Director, Aastha Homes Pvt. Ltd, D.N. Market, near Jagdeo Path More,Bailey Road, Patna- 14.Bailey Road, Patna- 14.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 4796 of 2020
======================================================Ajit Kumar, Son of Vishwanath Singh, Gandhi Nagar, Gavtal, RajnarayanDwar, Tribhuvan Park, Danapur, Digha Diara, PO-Digha, PS-Danapur,District Patna.
... ... Petitioner/s
Versus
1.Union of India through The Secretary, Ministry of Finance, Government of
India, North Block, New Delhi.
5.The Joint Commissioner of Income Tax, Range- 6, Patna, Bihar.
6.The Assistant Commissioner of Income Tax, Circle- 6, Patna.
7.The Income Tax Officer, Ward 6(4), Patna, Bihar.
8.The Director, Aastha Homes Pvt. Ltd, D.N. Market, near Jagdeo Path More,Bailey Road, Patna- 14.Bailey Road, Patna- 14.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 4796 of 2020
======================================================Ajit Kumar, Son of Vishwanath Singh, Gandhi Nagar, Gavtal, RajnarayanDwar, Tribhuvan Park, Danapur, Digha Diara, PO-Digha, PS-Danapur,District Patna.
... ... Petitioner/s
Versus
1.Union of India through The Secretary, Ministry of Finance, Government of
India, North Block, New Delhi.
2.Commissioner of Income Tax, having its Office at Central RevenueBuilding, Bir Chand Patel Path, Patna.Building, Bir Chand Patel Path, Patna.
3.Income Tax Officer, Ward 6(4), Patna.
... ... Respondent/s
======================================================with
Civil Writ Jurisdiction Case No. 4977 of 2020
======================================================
Avinash Kumar alias Vinay Singh S/o- Late Ram Pukar Singh resident ofVillage- Lakhni Bigha, P.S.- Khagaul, PO- Danapur, Patna, Bihar.
... ... Petitioner/s
Versus
1.The Union of India through the Finance Secretary, New Delhi.
2.The Finance Secretary, Ministry of Finance, Govt. of India.3.The Principal Chief Commissioner of Income Tax, Patna, Bihar andJharkhand.3.The Principal Chief Commissioner of Income Tax, Patna, Bihar andJharkhand.
4.The Principal Commissioner of Income Tax-II, Patna.
5.The Joint Commissioner of Income Tax, Range- 6, Patna, Bihar.
6.The Assistant Commissioner of Income Tax, Circle-6, Patna.
7.The Income Tax Officer, Ward 6 (4), Patna, Bihar.
8.The Director, Aastha Homes Pvt. Ltd, D.N. Market, near Jagdeo Path More,Bailey Road, Patna- 14.Bailey Road, Patna- 14.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 5027 of 2020
======================================================
Chandra Kishor Varma S/o Late Ram Pukar Singh, resident of Village -Lakhni Bigha, P.S.- Khagaul, P.O.- Danapur, Patna, Bihar.
... ... Petitioner/s
Versus
1.The Union of India through the Finance Secretary, New Delhi.
2.The Finance Secretary, Ministry of Finance, Govt. of India.
3.The Principal Chief Commissioner of Income Tax, Patna, Bihar andJharkhand.Jharkhand.
4.The Principal Commissioner of Income Tax ii, Patna.
5.The Joint Commissioner of Income Tax, Range- 6, Patna, Bihar.
6.The Assistant Commissioner of Income Tax, Circle- 6, Patna.
7.The Income Tax Officer Ward 6 (4), Patna, Bihar.
8.The Director, Aastha Homes Pvt. Ltd, D.N. Market, near Jagdeo Path More,Bailey Road, Patna - 14.Bailey Road, Patna - 14.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 5065 of 2020
======================================================
Bijendra Prasad alias Birendra Kumar, Son of late Ram Pukar Singh, Residentof Village- Lakhni Bigha, P.S. Khagaul, P.O.- Danapur, Patna, Bihar.
... ... Petitioner/s
Versus
1.The Union of India through the Finance Secretary, New Delhi.
2.The Finance Department, Ministry of Finance, Govt. of India,
3.The Principal Chief Commissioner of Income Tax, Patna, Bihar andJharkhand.Jharkhand.
4.The Principal Commissioner of Income Tax ii, Patna.
5.The Joint Commissioner of Income Tax, Range-6, Patna, Bihar.
6.The Assistant Commissioner of Income Tax, Circle-6, Patna.
7.The Income Tax Officer, Ward 6(4), Patna, Bihar.
8.The Director, Aastha Home Pvt. Ltd. D.N. Market, Near Jagdeo Path More,Bailey Road, Patna-14Bailey Road, Patna-14
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 5275 of 2020
======================================================
... ... Petitioner/s
Versus
1.The Union of India through the Finance Secretary, New Delhi.
2.The Finance Department, Ministry of Finance, Govt. of India,
3.The Principal Chief Commissioner of Income Tax, Patna, Bihar andJharkhand.Jharkhand.
4.The Principal Commissioner of Income Tax ii, Patna.
5.The Joint Commissioner of Income Tax, Range-6, Patna, Bihar.
6.The Assistant Commissioner of Income Tax, Circle-6, Patna.
7.The Income Tax Officer, Ward 6(4), Patna, Bihar.
8.The Director, Aastha Home Pvt. Ltd. D.N. Market, Near Jagdeo Path More,Bailey Road, Patna-14Bailey Road, Patna-14
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 5275 of 2020
======================================================
Sharda Kumari, Wife of Rohit Kumar, Ara Garden, Near Anandi Apartment,Tapeshwar Nagar, B.V. College, P.O.- Vetenary College, P.S.- Airport PoliceStation, District- Patna.
... ... Petitioner/sVersus
1.Union of India through the Secretary, Ministry of Finance, Government ofIndia, North Block, New Delhi.India, North Block, New Delhi.
2.Commissioner of Income Tax, having its office at Central Revenue Building,Bir Chand Patel Path, Patna.Bir Chand Patel Path, Patna.
3.Income Tax Officer, Ward 6 (2), Patna.
... ... Respondent/s
======================================================
Civil Writ Jurisdiction Case No. 5295 of 2020
======================================================
Pravin Kumar, Son of Bishwanath Singh, 717 Gandhi Nagar, RajnarayanDwar, Danapur, Digha Diara, P.O.-Digha, PS-Danapur, District-Patna.
... ... Petitioner/s
Versus
1.Union of India through the Secretary, Ministry of Finance, Government ofIndia, North Block, New Delhi.India, North Block, New Delhi.
2.Commissioner of Income Tax, having its office at Central Revenue Building,Bir Chand Patel Path, Patna.Bir Chand Patel Path, Patna.
3.Income Tax Officer, Ward 6(4), Patna.
... ... Respondent/s
======================================================
with
Civil Writ Jurisdiction Case No. 6041 of 2020
======================================================
Manish Kumar, Son of Late Raj Murari Singh, Resident of Sohagi,Gaurichak, Sona Gopalpur, P.o.- Sona Gopalpur, P.s.- Gaurichak, District-Patna residing at Sheikhpura, Durga Asthan Ke Gali, Rukanpura, B.V.College, P.o.- Vetenary College, P.s.- Airport, Police Station, Dist.- Patna
... ... Petitioner/s
Versus
1.Commissioner of Income Tax having its office at Central Revenue Building,Bir Chand Patel Path, Patna.Bir Chand Patel Path, Patna.
2.Income Tax Officer, Ward 6(2), Patna.
... ... Respondent/s
======================================================
withCivil Writ Jurisdiction Case No. 15459 of 2021
======================================================
Jagat Prasad Singh, Son of Late Ram Chandra Singh, Resident of Mohalla-Rukunpura, P.O.- B.V. College and Police Station- Rupuspur, District- Patna-800014.
... ... Petitioner/sVersus
1.Union of India through the Finance Secretary, Room No. 6A, 3rd Floor,Department of Finance Minister, Govt. of India, North Block New Delhi-110001.Department of Finance Minister, Govt. of India, North Block New Delhi-110001.
2.The Principal Commissioner of Income Tax-II, Patna, Revenue Building,Virchand Patel Marg, Baily Road, Patna- 800001.Virchand Patel Marg, Baily Road, Patna- 800001.
3.The Income Tax Officer, Ward- 6(2), Patna, Lok Nayak Jai Prakash
Building, New Dakbanglow Road, Patna- 800001.
... ... Respondent/s
======================================================withCivil Writ Jurisdiction Case No. 15554 of 2021
======================================================
Nawal Kishore Singh, Son of Late Ram Chandra Singh, Resident of Mohalla- Rukunpura, P.O. - B.V. College and Police Station - Rupuspur, District -Patna - 800014
... ... Petitioner/s
Versus
2.The Principal Commissioner of Income Tax-II, Patna, Revenue Building,Virchand Patel Marg, Baily Road, Patna- 800001.Virchand Patel Marg, Baily Road, Patna- 800001.
3.The Income Tax Officer, Ward- 6(2), Patna, Lok Nayak Jai Prakash
Building, New Dakbanglow Road, Patna- 800001.
... ... Respondent/s
======================================================withCivil Writ Jurisdiction Case No. 15554 of 2021
======================================================
Nawal Kishore Singh, Son of Late Ram Chandra Singh, Resident of Mohalla- Rukunpura, P.O. - B.V. College and Police Station - Rupuspur, District -Patna - 800014
... ... Petitioner/s
Versus
1.Union of India through The Finance Secretary, Room No. 6A, 3rd Floor,Department of Finance Minister, Govt. of India, North Block, New Delhi -110001.Department of Finance Minister, Govt. of India, North Block, New Delhi -110001.
2.The Principal Commissioner of Income Tax-II, Patna.
3.The Income Tax Officer, Ward -6(2), Patna, Lok Nayak Jai PrakashBuilding, New Dakbanglow Road, Patna - 800001.Building, New Dakbanglow Road, Patna - 800001.
... ... Respondent/s
======================================================
CORAM: HONOURABLE THE CHIEF JUSTICE and
HONOURABLE MR. JUSTICE MADHURESH PRASADORAL JUDGMENT(Per: HONOURABLE THE CHIEF JUSTICE)
Date : 12-05-2023
The batch of writ petitions challenge notices issuedunder Section 148 of the Income Tax Act, 1961 (hereinafterreferred to as the ‘Act’) and some of them also challenge theorder issued under Section 144 read with Section 147 of the Actand the notice of demand issued pursuant to the assessmentorders.
2. The question of law raised in the writ petitions,filed under Article 226 of the Constitution of India, is as towhether sub-section (5A) of Section 45 of the Act; inserted by
the Finance Act, 2017, with effect from 01.04.2018, applyretrospectively. The petitioners also contend that if it is held tobe prospective, as is the consequence of the express wordsemployed in the Finance Act, then it would violate Article 14 ofthe Constitution of India on the ground of invidiousdiscrimination between the same class of persons. It is alsoargued that sub-section (5A) has been brought into the IncomeTax Act to remove unintendedconsequences of the earlierprovision for computation of capital gains on a conjoint readingof Sections 2(47)(v), 45 & 48. In such circumstances, the sameshould be considered as retrospective, despite the recitals in theFinance Act indicating it to be prospective. Insofar as the orderspassed, which were also challenged in some of the writpetitions, the challenge made is to the very jurisdictionexercised by the Assessing Officer; relying on the judgment ofthe Hon’ble Supreme Court in Commissioner of Income Taxvs. Balbir Singh Maini; (2018) 12 SCC 354.
3.We heard Shri D.V.Pathy, learned counsel for thewrit petitioners and Dr. K.N.Singh, learned Additional SolicitorGeneral, instructed by Smt. Archana Sinha, learned seniorstanding counsel for the Income Tax Department.
4. In the case of Balbir Singh Maini (supra) at
paragraph-3 the following questions of law were framed, whichare extracted hereinbelow:
“i) Whether the transactions in handenvisage a “transfer” exigible to tax byreference to Section 2(47)(v) of the IncomeTax Act, 1961 read with Section 53-A of theTransfer of Property Act, 1882?
ii) Whether the Income Tax AppellateTribunal, has ignored rights emanating fromthe JDA, legal effect of non-registration of
JDA, its alleged repudiation, etc.?
iii) Whether “possession” as envisaged by
Section 2(47)(v) and Section 53-A of the
Transfer of Property Act, 1982 was
delivered, and if so, its nature and legaleffect?
iv) Whether there was any default on the partof the developers, and if so, its effect on thetransactions and on exigibility of tax?
v) Whether amount yet to be received can betaxed on a hypothetical assumption arisingfrom the amount to be received?”
“i) Whether the transactions in handenvisage a “transfer” exigible to tax byreference to Section 2(47)(v) of the IncomeTax Act, 1961 read with Section 53-A of theTransfer of Property Act, 1882?
ii) Whether the Income Tax AppellateTribunal, has ignored rights emanating fromthe JDA, legal effect of non-registration of
JDA, its alleged repudiation, etc.?
iii) Whether “possession” as envisaged by
Section 2(47)(v) and Section 53-A of the
Transfer of Property Act, 1982 was
delivered, and if so, its nature and legaleffect?
iv) Whether there was any default on the partof the developers, and if so, its effect on thetransactions and on exigibility of tax?
v) Whether amount yet to be received can betaxed on a hypothetical assumption arisingfrom the amount to be received?”
5. The Hon’ble Supreme Court in paragraph 30 and
31, answered the aspect relevant to this case as follows :-
“30. In the facts of the present case, it isclear that the income from capital gain on atransaction which never materialised is, at
best, a hypothetical income. It is admittedthat for want of permissions, the entiretransaction of development envisaged in theJDA fell through. In point of fact, income didnot result at all for the aforesaid reason. Thisbeing the case, it is clear that there is noprofit or gain which arises from the transferof a capital asset, which could be brought totax under Section 45 read with Section 48 ofthe Income Tax Act.
31. In the present case, the assessee did notacquire any right to receive income,inasmuch as such alleged right wasdependent upon the necessary permissionsbeing obtained. This being the case, in thecircumstances, there was no debt owed to theassessees by the developers and therefore,the assessees have not acquired any right toreceive income under the JDA. This beingso, no profits or gains "arose" from thetransfer of a capital asset so as to attractSections 45 and 48 of the Income Tax Act.”
6. The binding declaration of the above decision is
insofar as, unless the income from capital gains of a transactionhas actually materialized; there is no question of any assessmentin the year in which a transfer occurred. This did not happen inthe captioned case, wherein the Joint Development Agreement
(JDA) fell through and for that reason income did notmaterialize. It is to be noticed that this issue turns purely on thefacts of the case, which it may not be proper for us to dwell into,especially in a proceeding under Article 226 of the Constitutionof India. Insofar as the challenge against the notices, theassessee can place the facts before the Assessing Officer and if itis identical or similar to the one decided in Balbir Singh Maini(supra), the Assessing Officer would necessarily have to followthe said decision under Article 141 of the Constitution of India.Insofar as the orders passed under Section 144 read with Section147 of the Act, there is an appeal provided, to which remedy thepetitioners would have to be relegated.
7. Be that as it may, we are called upon to answer thequestion regarding the retrospectivity claimed of an amendmentbrought into the Income Tax Act by the Finance Act, 2017which inserted sub-section (5A) under Section 45 after sub-section (5) and the explanation thereto; which was specificallystated to be inserted with effect from 1[st] day of April, 2018,making the amendment prospective in operation.
8. In support of the challenge raised, the petitionershave relied on a decision of the Bombay High Court in Godrej& Boyce MFG Co. Ltd v. Deputy Commissioner of Income
Tax; (2010) 43DTR 177(Bombay), the principle in which stoodaffirmed by the Hon’ble Supreme Court in Allied Motors(P)Ltd. Etc v. Commissioner of Income Tax; (1997) 224 ITR0677. Commissioner of Income Tax v. M/s Alom ExtrusionsLimited; 2009 319 ITR 306 (SC) and Commissioner ofIncome Tax v. Essar Teleholdings Ltd.; (2018) 401 ITR445(SC) were also relied on.
8. In support of the challenge raised, the petitionershave relied on a decision of the Bombay High Court in Godrej& Boyce MFG Co. Ltd v. Deputy Commissioner of Income
Tax; (2010) 43DTR 177(Bombay), the principle in which stoodaffirmed by the Hon’ble Supreme Court in Allied Motors(P)Ltd. Etc v. Commissioner of Income Tax; (1997) 224 ITR0677. Commissioner of Income Tax v. M/s Alom ExtrusionsLimited; 2009 319 ITR 306 (SC) and Commissioner ofIncome Tax v. Essar Teleholdings Ltd.; (2018) 401 ITR445(SC) were also relied on.
9.In Godrej & Boyce MFG Co. Ltd (supra), theHigh Court of Bombay upheld both Section 14A and Rule 8Bbrought into the Act and the Rules respectively, but held theRule to apply only prospectively while Section 14A wasintroduced by an amendment to the Finance Act, 2001 withrestrospective effect from 1[st] April, 1962 and sub-sections (2)and (3) were effective from 01.04.2007. Rule 8D, which was themachinery provision for determining the expenditure incurred inrelation to income which does not form part of the total income,was notified in the Official Gazette only from 24[th] March, 2008.The introduction of Section 14A was by reason of the SupremeCourt having held that the Assessing Officer cannot embarkupon an enquiry, whether an expenditure produced or willproduce taxable income and thus disallow the expenditure.Section 14A, brought in with a validation clause, took away the
basis of the judgments of the Hon’ble Supreme Court andpostulated that in computing the total income, no deductionshall be allowed in respect of expenditure incurred by anassessee in relation to income which does not form part of totalincome under the Act. While upholding the constitutionalvalidity of Section 14A, it was held that the machineryprovisions would apply only from the date it was brought intothe rules. However, it was found that even before Rule 8D wasbrought in, the Assessing Officer was obliged to enforce theprovision of sub-section (1) of Section 14A; which has to bedone on a reasonable basis through a method consistent with allthe relevant facts and circumstances, after furnishing areasonable opportunity to the assessee; though not necessarilyby way of the machinery provision brought under Rule 8D.
10. Learned Counsel placed specific emphasis onparagraph-65 of the judgment of the Bombay High Court inGodrej & Boyce MFG Co. Ltd (supra) which is extractedherein below:-
“65 The following principles guide indetermining as to whether an amendment isprospective or retrospective:
(i) In determining as to whether anamendment is to take effect prospectively orwith retrospective effect, the date from
which the amendment is made operativedoes not conclusively decide the question.The Court has to examine the scheme of thestatute prior to the amendment andsubsequent to the amendment to determinewhether an amendment is clarificatory orsubstantive;
(ii) An amendment which is clarificatory isregarded as being retrospective in nature andwould date back to the original statutoryprovision which it seeks to amend. Aclarificatory amendment is an expression ofintent which the legislature has alwaysintended to hold the field. A clarificatoryamendment may be introduced in certaincases to set at rest divergent views expressedin decided cases on the true effect of astatutory provision wherein legislatureclarifies its intent, it is regarded as beingdeclaratory of the law as it always stood andis therefore, construed to be retrospective;
(iii) Where on the other hand, an amendmentseeks to bring about a substantive change inlegal rights and obligations, the Court wouldnot readily accept an interpretation of theamendment that would render it retrospectivein character. Clear words will be necessary inorder to enable the Court to reach to such aconclusion;
(iv) Where the amendment is curative or
(iii) Where on the other hand, an amendmentseeks to bring about a substantive change inlegal rights and obligations, the Court wouldnot readily accept an interpretation of theamendment that would render it retrospectivein character. Clear words will be necessary inorder to enable the Court to reach to such aconclusion;
(iv) Where the amendment is curative or
where it is intended to remedy unintendedconsequences or to render a statutoryprovision workable, the amendment may beconstrued to relate back to the provision inrespect of which it supplies a remedial effect;(v) Where an amendment essentiallyprovides a rule of evidence such as a methodfor the valuation of the property by adoptingone among a set of well-known and wellaccepted methods of valuation with a view toachieve uniformity in valuation and avoidingdisparate valuations resulting from theapplication of different methods in respect ofproperties of a similar nature and character,the Court would place a construction on thestatutory provision, giving the retrospectiveeffect.”
11. Allied Motors(P) Ltd. Etc. (supra)was a case in
which proviso to Section 43B inserted by the Finance Act, 1987,with effect from 01.04.1987, was held to be retrospective. Theintention of bringing Section 43B and the reason for finding it tobe retrospective is found in the succinct declaration of theHon’ble Supreme Court in Paragraph-5 of the aforesaidjudgment, which is extracted herein below :-
“Sec. 43B was, therefore, clearly aimed atcurbing the activities of those taxpayers whodid not discharge their statutory liability of
payment of excise duty, employer'scontribution to provident fund etc. for longperiods of time but claimed deductions inthat regard from their income on the groundthat the liability to pay these amounts hadbeen incurred by them in the relevantprevious year. It was to stop this mischiefthat S.43B was inserted. It was clearly notrealized that the language in which S. 43Bwas worded would cause hardship to thosetaxpayers who had paid sales-tax within thestatutory period prescribed for this payment,although the amount so made by them didnot fall in the relevant previous year. Thiswas because the sale-tax collected pertainedto the last quarter of the relevant accountingyear. It could be paid only in the next quarterwhich fell in the next accounting year.Therefore, even when the sales-tax had infact been paid by the assessee within thestatutory period prescribed for its paymentand prior to the filing of the income-taxreturn, these assessees were unwittinglyprevented from claiming a legitimatededuction in respect of the tax paid by them.This was not intended by S.43B. Hence thefirst proviso was inserted in S.43B. Theamendment which was made by the FinanceAct of 1987 in S.43B by inserting, inter alia,the first proviso, was remedial in nature,
designedtoeliminateunintendedconsequences which may cause unduehardship to the assessee and which made theprovision unworkable or unjust in a specificsituation.
Looking to the curative nature of theamendment made by the Finance Act of 1987it had been submitted before us that theproviso which is inserted by the amendingFinance Act of 1987 should be givenretrospective effect and be read as forming apart of S. 43B from its inception. Thissubmission had taken support from decisionsof a number of High Courts before whomthis question came up for consideration. TheHigh Courts of Calcutta, Gujarat, Karnataka,Orissa, Gauhati, Rajasthan, Andhra Pradesh,Patna and Kerala appear to have taken theview that the proviso must be givenretrospective effect. Some of these HighCourts have held that 'sum payable under S.43B(a) refers only to the sum payable in thesame accounting year, thus excluding sales-
tax payable in the next accounting year from
the ambit of S.43B(a) The Delhi High Court
has taken a contrary view holding that thefirst proviso to S. 43B operates onlyprospectively. We will refer only to some ofthese judgments”.
tax payable in the next accounting year from
the ambit of S.43B(a) The Delhi High Court
has taken a contrary view holding that thefirst proviso to S. 43B operates onlyprospectively. We will refer only to some ofthese judgments”.
12. The purport of the above declarations is that, inexamining the question whether an amendment is prospective orretrospective, the Court should determine whether it isclarificatory or substantive. If it is clarificatory, it is anexpression of intent which the legislature always intended tohold the field and if there is substantive change in legal rightsand obligations, it would not be curative and hence notretrospective.
13. We are concerned with the specific question as towhether by bringing sub-section (5A) under Section 45(5), thelegislature was trying to eliminate an unintended consequence,visiting the assessee with a hardship, which was sought to beremoved; thus making it curative and hence retrospective?Before the amendment, according to the department, as perSection 2(47)(v) any transaction involving transfer ofpossession of immovable property in part performance of acontract, is a transfer of a capital asset and any profits or gainsarising from such transfer effected in the previous year arechargeable to income tax under the head ‘capital gains’, deemedto be the income of the previous year, the computation of whichis to be made under section 48.
14. We extract sub-section (5A) of Section 45, here
under :
(5A) Notwithstanding anything contained insub-section (1), where the capital gain arises toan assessee, being an individual or a Hinduundivided family, from the transfer of a capitalasset, being land or building or both, under aspecified agreement, the capital gains shall bechargeable to income-tax as income of theprevious year in which the certificate ofcompletion for the whole or part of the project isissued by the competent authority; and for thepurposes of section 48, the stamp duty value, onthe date of issue of the said certificate, of hisshare, being land or building or both in theproject, as increased by the considerationreceived in cash, if any, shall be deemed to bethe full value of the consideration received oraccruing as a result of the transfer of the capitalasset:
Provided that the provisions of this sub-sectionshall not apply where the assessee transfers hisshare in the project on or before the date of issueof the said certificate of completion, and thecapital gains shall be deemed to be the incomeof the previous year in which such transfer takesplace and the provisions of this Act, other thanthe provisions of this sub-section, shall apply forthe purpose of determination of full value ofconsideration received or accruing as a result ofsuch transfer.
Explanation.- For the purposes of this sub-section, the expression-
(i) "competent authority" means the authorityempowered to approve the building plan by orunder any law for the time being in force;empowered to approve the building plan by orunder any law for the time being in force;
(ii) "specified agreement" means a registeredagreement in which a person owning land orbuilding or both, agrees to allow another personto develop a real estate project on such land orbuilding or both, in consideration of a share,agreement in which a person owning land orbuilding or both, agrees to allow another personto develop a real estate project on such land orbuilding or both, in consideration of a share,
being land or building or both in such project,whether with or without payment of part of theconsideration in cash;
(iii) "stamp duty value" means the value adoptedor assessed or assessable by any authority of theGovernment for the purpose of payment ofstamp duty in respect of an immovable propertybeing land or building or both.”
(ii) "specified agreement" means a registeredagreement in which a person owning land orbuilding or both, agrees to allow another personto develop a real estate project on such land orbuilding or both, in consideration of a share,agreement in which a person owning land orbuilding or both, agrees to allow another personto develop a real estate project on such land orbuilding or both, in consideration of a share,
being land or building or both in such project,whether with or without payment of part of theconsideration in cash;
(iii) "stamp duty value" means the value adoptedor assessed or assessable by any authority of theGovernment for the purpose of payment ofstamp duty in respect of an immovable propertybeing land or building or both.”
15. The petitioners’ contention essentially is thatSection 45(1) read with Section 2(47)(v) of the Income Tax Actenables inclusion of the capital gains in the total income of theassessee, in the previous year in which possession of animmovable property has been handed over, by the owners to thedeveloper as envisaged under Section 53A of the Transfer ofProperty Act, under a JDA. Then, such income accruing fromthe JDA is deemed to be an income of the owner of the propertyaccrued in the previous year in which the transfer is effected.
16. In Balbir Singh Maini(supra), it was held that byreason of the amendment to the Registration Act, 1908 by the
Amendment Act of 2001, any JDA not registered in accordancewith the Registration Act, will have no effect in law for thepurposes of Section 53A of the Transfer of Property Act. It wasalso held that the object of Section 2(47)(v) was to bring withinthe taxable limit any de facto transfer of any immovable
property even though the title may not be transferred in law; butthere should be, in fact, a transfer of title in substance. Relyingon E.D.Sasson & Co. Ltd. V. Commissioner of Income Tax;(1955) 1 SCR 313, it was held that income would accrue to anasessee only on the actual receipt of the same or when theassessee acquires a right to receive the income, despite theactual receipt being later. Unless there is acquired, a right toreceive the income or that income has accrued to the assessee, itcannot be included in the total income. Hence, when the JDAhad not taken effect, there cannot necessarily be an inclusion ofthe entire consideration, as envisaged under Section 48 in thetotal income of the assessee, was the binding declaration.
17. By the Finance Act, 2017, sub-section (5A) wasinserted under sub-section (5) of Section 45 and the explanationthereto. As per sub-section (5A) with respect to capital gainsarising to an assesse who is an individual or a Hindu undividedfamily from the transfer of capital asset, being land or buildingor both, under a specified agreement shall be chargeable toIncome Tax as income of the previous year in which certificateof completion for the whole or part of the project is issued bythe competent authority. The discrimination alleged by thepetitioners in the batch of writ petitions is that, assessees
entering into a JDA are discriminated only by reason their legalstatus; i.e. individuals and joint Hindu families are given abenefit which is denied to others; like companies. The date ofamendment does not offer an intelligible differentia todiscriminate between similarly situated assessees, who haveentered into a JDA prior to and after the amendment, thuscreating two classes of persons among equally situated, seems tobe the argument.
18. The argument that in the computation of total
entering into a JDA are discriminated only by reason their legalstatus; i.e. individuals and joint Hindu families are given abenefit which is denied to others; like companies. The date ofamendment does not offer an intelligible differentia todiscriminate between similarly situated assessees, who haveentered into a JDA prior to and after the amendment, thuscreating two classes of persons among equally situated, seems tobe the argument.
18. The argument that in the computation of total
income, there cannot be a distinction between a company and anindividual, at the outset has to be rejected. The claim also isonly insofar as the amendment being retrospective and it is notthe contention that the amendment should be made applicable toevery entity entering into a JDA and not confined to anindividual or a joint Hindu family. The amendment, it is urged,was brought in, to mitigate unintended consequences of anassessee being obliged to compute in his total income, thecapital gains on the basis of its accrual, merely for reason of atransfer having been effected as available under Section 53A ofthe Transfer of Property Act.
19. We are unable to countenance the said argumentespecially since the amendment to Section 45 by insertion of a
sub-section was expressly stated to be, with effect from the 1[st]day of April, 2018. There is no question of any discriminationbetween persons who entered into a JDA before and after theamendment, insofar as the JDA entered into by an individual ora Hindu undivided family, prior to 01.04.2018 being governedby the law on the subject as it existed at that point of time, i.e.on a conjoint reading of Section 2(47)(v) read with Sections 45& 48. There is no discrimination among equals since thedifferentiation is made on the basis of date on which the JDAhas been entered into, which is a natural consequence of anamendment brought into the Act by way of an insertionexpressly stated to be prospective from a specific date i.e.,01.04.2018. Further, though there are different class of assesseesunder the Income Tax Act, they cannot be considered to beequal, merely for reason of their being assessed under that Act.
20. We refer to paragraph 65 of Godrej and BoyceManufacturing Company Ltd
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