PUNJABI COOP.HOUSE BUILDING SOC. vs. COMMR. OF INCOME TAX CHD.& ANR.

ITA/270/2013HC Punjab & HaryanaPHHC01105131201331 July 2015Author: MR. JUSTICE SURINDER GUPTA,MR. JUSTICE DR. RAVI RANJAN8 pages
AI SummaryRemanded

What were the facts?

The assessee, Punjabi Cooperative House Building Society, entered into a Joint Development Agreement (JDA) on February 25, 2007, with developers for the development of 21.2 acres of land. The purchase price of the land was contributed by the society's members. The JDA stipulated payments and allotment of built-up property to members in lieu of development rights. For the assessment year 2007-08, the assessee filed a nil return, not offering any amount to tax under the JDA, citing no transfer during the year. The Assessing Officer held that the JDA constituted a 'transfer' under Section 2(47)(v) of the Income Tax Act, 1961, read with Section 53A of the Transfer of Property Act, 1882, and computed capital gains on the entire consideration receivable. The CIT(A) upheld the substantive assessment on consideration for four plots owned by the appellant. The Income Tax Appellate Tribunal (ITAT) also upheld the taxability of the entire consideration as capital gains.

What did the High Court hold?

The High Court, in its judgment, referred to its recent decision in ITA No.200 of 2013 (C.S.Attwal vs. The Commissioner of Income Tax, Ludhiana and another), which dealt with similar issues. The Court concluded that no possession had been given by the transferor to the transferee of the entire land in part performance of the JDA so as to fall within Section 53A of the Transfer of Property Act, 1882. It was held that any possession delivered was as a licensee for development, not as a transferee. Furthermore, due to the non-registration of the JDA executed after September 24, 2001, Section 53A of the 1882 Act did not apply, and consequently, Section 2(47)(v) of the Income Tax Act was not attracted. The Court noted the assessee's submission that capital gains tax had been paid on amounts received, and in view of the cancellation of the JDA, no further amounts were received. The Tribunal and authorities below were held to be incorrect in holding the assessee liable for capital gains tax on the remaining land for which no consideration was received and which stood cancelled. The appeals were allowed, and the matter was remanded to the Tribunal for fresh orders.

What were the issues?

1. Whether the Joint Development Agreement (JDA) dated 25.2.2007, involving the grant and assignment of rights in property and handing over of physical possession, amounts to a 'transfer' under Section 2(47)(v) of the Income Tax Act, 1961, read with Section 53A of the Transfer of Property Act, 1882, for the assessment year 2007-08? Assessee's contention: The assessee argued that the action of the Assessing Officer in bringing to tax the entire consideration receivable under the JDA as capital gains was legally unsustainable. They contended that there was no transfer to THDC during the year and ownership/possession remained with the society. They also relied on the subsequent cancellation of the JDA and non-receipt of further amounts. Revenue's contention: The revenue contended that the JDA constituted a 'transfer' as possession was handed over in part performance of the contract, making it exigible to capital gains tax. They relied on the orders of the Assessing Officer, CIT(A), and the Tribunal.

Which sections of the Income-tax Act were involved?

Section 2(47)(v),Section 53A,Section 2(47)(ii),Section 2(47)(vi),Section 80P,Section 143(3),Section 54F,Section 54

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: July 31, 2015 Punjabi Cooperative House Building Society ……Appellant Vs. The Commissioner of Income Tax, Chandigarh and another …..Respondents CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE FATEH DEEP SINGH Present: Ms.Radhika Suri, Advocate with Ms. Rinku Dahiya, Advocate for the appellant. Ms. Urvashi Dhugga, Advocate for the revenue.

Ajay Kumar Mittal,J.

1.

This order shall dispose of ITA Nos.270 of 2013 and 50 of 2014 as the issue involved in both the appeals is common. However, the facts are being extracted from ITA No.270 of 2013. 2. ITA No.270 of 2013 has been filed by the assessee-appellant under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 29.7.2013, Annexure A.3 passed by the Income Tax GURBAX SINGH 2015.08.18 16:47 I attest to the accuracy and integrity of this document High Court Chandigarh Appellate Tribunal, Chandigarh 'B' Bench Chandigarh (in short, “the Tribunal) in ITA No.556/Chd/2012 for the assessment year 2007-08. 3. Briefly, th

The order continues below.

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