TMI Blog2010 (7) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... 50C on the date of sale agreement does not arise as the sale value fixed by the assessees was equivalent to the SRO value for stamp duty purposes. Therefore, we set aside the orders passed by CIT(A) in the hands of these two assessees and direct the AO to delete the addition made in the computation of capital gains in the hands of both the assessees. - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER For the Appellant: Shri G.V.N. Hari, CA For the Respondent: Shri G.S.S. Gopinath, CIT(DR) ORDER Per Shri B. R. BASKARAN, Accountant Member: The appeals filed by the assessees are directed against the orders passed by Ld. CIT(A), Vijayawada and they relate to the assessment year 2006-07. Since identical issue is urged in these two appeals and further the said issue arises out of common set of facts, both the appeals were heard together and are being disposed of by this common order. 2. The solitary issue urged in these two appeals is that Whether the Learned CIT(A) is right in law in confirming the action of the Assessing Officer in invoking the provisions of section 50C in the case of both the assessees. 3. The fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded a similar issue in the case of M/s Lahiri Promoters in ITA No.12/Vizag/2009, vide its order dated 22.06.2010. The relevant portions of the said decision are extracted below:- 8. We have heard the rival contentions and carefully perused the record. The issue agitated before us revolves around section 50C of the Act. For the sake of convenience, we extract the section 50C(1) below: 50C (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the stamp valuation authority ) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. This section provides for adoption of value assessed/determined by the Stamp valuation authority for the purpose of payment of stamp duty ( hereinafter stamp duty value ), if the sale consideration disclosed in the sale deed is less than th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. For the sake of convenience, we extract below the relevant observations of the Hon ble Apex Court on the rule of interpretation and the logical conclusion: 5. Now, on these provisions the question arises as to what is the true interpretation of s.52, sub-s.(2). The argument of the Revenue was, and this argument found favour with the majority judges of the Full Bench, that on a plain and natural construction of the language of s.52, sub-s.(2), the only condition for attracting the applicability of that provision was that the fair market value of the capital asset transferred by the assessee as on the date of the transfer exceeded the full value of the consideration declared by the assessee in respect of the transfer by an amount of not less than 15% of the value so declared. Once the ITO is satisfied that this condition exists, he can proceed to invoke the provision in s.52, subs.( 2), and take the fair market value of the capital asset transferred by the assessee as on the date of the transfer as representing the full value of the consideration for the transfer of the capital asset and compute the capital gains on that basis. No more is necessary to be proved, con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction of s.52, sub-s. (2). 6. The primary objection against the literal construction of s.52, subs,(2), is that it leads to manifestly unreasonable and absurd consequences. It is true that the consequences of a suggested construction cannot alter the meaning of a statutory provision but it can certainly help to fix its meaning. It is a well recognized rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. There are many situations where the construction suggested on behalf of the Revenue would lead to a wholly unreasonable result which could never have been intended by the legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement and it is quite well known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement the market price shoots up with the result that the market price prevailing on the date of sale exceeds the agreed price, at which the property is sold, by more than 15% of such agreed price. This is not at all an uncommon case in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the tyranny of the literal interpretation. It is now a well-settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the legislature, the Court may modify the language used by the legislature or even do some violence to it, so as to achieve the obvious intention of the legislature and produce a rational construction; Vide Luke vs. IRC (1963) AC 557 : (964) 54 ITR 692(HL). The Court may also in such a case read into the statutory provision a condition which, though not expressed, is implicit as constituting the basic assumption underlying the statutory provision. We think that, having regard to this well recognized rule of interpretation, a fair and reasonable construction of s.52, sub-s (2), would be to read into it a condition that it would apply only where the consideration for the transfer is understated or, in other words, the assessee has actually received a larger consideration for the transfer than what is declared in the instrument of transfer and it would have no application in the case of a bonafide transaction where the full value of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion it is pertinent to extract the relevant observations of the Hon ble Supreme Court, at the cost of repetition, as the said example contemplated by the Hon ble Apex Court is squarely applicable to the facts of the present case. There are many situations where the construction suggested on behalf of the Revenue would lead to a wholly unreasonable result which could never have been intended by the legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement and it is quite well known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement the market price shoots up with the result that the market price prevailing on the date of sale exceeds the agreed price, at which the property is sold, by more than 15% of such agreed price. This is not at all an uncommon case in an economy of rising prices and in fact we would fine in a large number of cases where the sale is completed more than a year or two after the date of the agreement that the market price prevailing on the date of the sale is very much more than the price at wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of achieving similar objectives. 11.3 In the instant case also, the assessee herein has fulfilled a contractual obligation on 30-6- 2005, which the assessee is bound by law to carry out as per the sale agreement entered in March, 2003. Now the next question that requires to be addressed is whether there was any under statement of actual consideration at the time when the sale agreements were entered into. The assessee has placed a copy of the certificate dated 16.4.2010 issued by the Jt. Sub Registrar, Visakhapatnam by way of additional evidence. According to the said certificate, the market value of the impugned property located at Allipuram Ward was ₹ 5000/- as on 26.3.2003. According to Ld AR, the sale value agreed to by the parties, as per the sale agreement entered into on 27-03- 2003 was more than the market value fixed by the Jt. Sub Registrar at the time the sale agreement was entered into. Thus according to Ld AR, there is no understatement or suppression of actual consideration. It is also not the case of revenue that there was any understatement of actual consideration. 12. Thus, by executing the sale deed in June, 2005, the assessee has only completed th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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