TMI Blog2017 (9) TMI 1686X X X X Extracts X X X X X X X X Extracts X X X X ..... decided in favour of the assessee and against the Department. - D.B. Income Tax Appeal No. 172/2012 - - - Dated:- 19-9-2017 - Mr. K. S. Jhaveri And Mr. Vijay Kumar Vyas JJ. For the Appellant(s) : Ms. Parinitoo Jain For the Respondent(s) : Mr. Mahendra Gargieya JUDGMENT 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has partly allowed the appeal of the assessee reversing the order of AO as well as CIT (A). 2. This Court while admitting the appeal framed the following substantial questions of law: (1) Whether the Tribunal was legally justified in reversing the findings of the CIT(A) and deleting the addition of ₹ 1,49,93,459/- made on account of capital gains computed u/s 48 by adopting the full value of consideration as adopted by the Stamp valuation Authority in pursuance of provisions of section 50C(1) 2. Whether the Tribunal was legally justified in reversing the findings of the CIT(A) and taking the full value of consideration for ₹ 20.00 lac without any basis for computing the capital gains u/s 48, instead of the value assessed by the Stamp Valuation Authority whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er book. It is further seen that Local Body as revised circle rates w.e.f. 20.11.2006, a copy of certificate issued by the competent authority is placed at page E-10/107-108 of the paper book. The previous circle rates i.e. before revising the rates w.e.f. 20.11.2006 were @ ₹ 2500/- per yd to ₹ 3000/- of the property in the area where the property of the assessee is situated. A copy of these rates is placed at page E-9/106 of the paper book. The competent authority revised rates w.e.f. 20.11.2006 @ ₹ 4000/- per meter and on these basis, the sale deed is executed. The assessee has sold the property on the basis of circle rate before revising the same i.e. on 20.11.2006, as the property was sold by agreement dated 07.09.2006. The provisions of section 2(47)(v), which have been mentioned in the written submissions at page 5 and have been reproduced somewhere above in this order. The provisions clearly state that any transfer involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882. Under the Income Tax Act, it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in para 26 of the written submissions, which are reproduced somewhere above in this order. 4.1 He relied on the following judgments:- (I) COMMISSIONER OF INCOME TAX, JAIPURII ,JAIPUR Versus Shri Sher Singh Sunda, Anand Nagar, Sikar, DB ITA No. 328/2011. 5. He has taken to us the observations made by the Tribunal in para 2.6 2.8 and 2.9 which are as under:- 2.6 We have heard both the parties. The copy of general power of attorney is available at pages 12 to 14 of paper book filed by the ld. AR. As per this general power of attorney, the assessee was given authority to get different actions executed on behalf of the owner .The genera power of attorney was authorized to apply for approval u/s 90B and was also given authority to look after the land and to get NOC from JDA and to get the patta issued from JDA. It is true that general power was executed on stamp paper of ₹ 500/-. The Sub-Registrar registered this power of attorney at ₹ 1,07,800/- against stamp duty of ₹ 500/-. This general power of attorney has been cancelled vide cancellation deed dated 03.01.2007. The copy of this cancellation is available at pages 15 to 20 of the paper b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than the value adopted or assessed or assessable by an authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of the consideration received or accruing as a result of such transfer for computing capital gain. Further, it is proposed to insert a new Explanation so as to clarify the meaning of the term assessable . This amendment will take effect from 1st October, 2009 and shall accordingly apply in relation to transactions undertaken on or after such date; 2.8 The Jaipur Bench had occasion to consider the applicability of Section 50C in the case of transfer of land which has not registered. The Tribunal vide order dated 08.04.2011 in ITA No.1356/JP/2010 has held that Section 50C will not be applicable when transaction has not been registered with Stamp Duty Authority. It will be useful to reproduce para 2.4 of the Tribunal in the case of ITO Vs. Shri Shailendra Soni. 2.4 We have heard both the parties. During the course of hearing before us, the Ld. AR stated that the issue under reference is covered by the order or the Tribunal in ITA No.42/JP/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that where the consideration received or accruing as a result of the transfer of a capital asset, being land or building or both, is less than the value adopted or assessed by an authority of a State Government (Stamp valuation authority) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration received or accruing as a result of such transfer for computing capital gain. However the present scope of the provisions does not include transactions which are not registered with stamp duty authority, and executed through agreement to sell or power of attorney. With a view to preventing the leakage of revenue, it is proposed to amend the Section 50C so as to provide that where the consideration received or accruing as a result of transfer of a capital asset, being land or building or both is less than the value adopted or assessed or assessable by an authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of the consideration received or accruing as a result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the scope of the provisions does not include transaction which are not registered with stamp duty valuation authority and executed through agreement to sell or power of attorney. Consequently, it is made clear therein that the amendments have been made applicable with effect from 01.10.2009 and therefore, they will apply only in relation to transaction undertaken on or after such date. The relevant portion of the circular is extracted hereunder: 23.4. Applicability:- These amendments have been made applicable with effect from 1st October, 2009 (12 of 13) [ITA-328/2011] and will accordingly, apply in relation to transactions undertaken on or after such date. 9.Learned counsel for the Revenue is not disputing about the existence of such circular issued by the Board. If the Board has issued a circular clarifying the applicability of Section 50C in pursuance of the amendment made by Amendment Act 2 of 2009, we fail to understand as to how the Revenue can canvass the same issue in this case which in effect is against the circular issued by the Board. Certainly, the Revenue is bound by the circular issued by the Board. At this juncture, it is pertinent to note that in a decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 001) 250 ITR 0542 20. In our view, considering the aforesaid decisions and the object of the Act, definition given in the Act is required to be taken into consideration. When the document is executed, the property passes and merely because there is no registration certificate, the State coffers should not suffer. If the view propounded that only on registration, act of transfer will be complete, then in that case, if the document is not registered, though the assessee will be enjoying the property, he will say that he is not liable to pay the tax. But that is not the intention of the Legislature. In our opinion, the word 'transfer' as indicated in the Income-tax Act is required to be considered and not 'sale' as indicated in the Transfer of Property Act. If the intention of the Legislature was different, then there would have been specific reference. Relevant provision of clause (47) of section 2 is as under: Unless context otherwise requires, transfer is to be understood in the simple meaning as it is indicated which includes sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition thereof under any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes of sub-clauses (v) and (vi), 'immovable property' shall have the same meaning as in clause (d) of section 269UA. 22. In case of ownership, there is a transfer of capital assets. This is a case of lease. The transferee was put in possession and was enjoying the property as a lease holder. There cannot be different criteria for transfer of capital asset. For the purpose of tax even if document, i.e., conveyance is not executed but the transferee exercises all the rights of the true owner, one cannot emphasize for the taxation purpose that unless and until the deed of conveyance transferring the rights in property is executed, the transferee is not liable though did everything which is required for acquiring a property. As pointed out, vendor is not permitted in law to dispossess or question the title of the vendee. Under the circumstances, our answer would be that transfer of immovable property of the value exceeding ₹ 100 can be said to have been effected on the date of execution of the document. In view of this answer, it is not necessary to answer further questions. 3. Smt. D. Kasturi vs. Commissioner of Income Tax and Anr. (2010) 323 ITR 0040 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession was already given pursuant to the agreement and that too after receiving the full sale consideration. 4. Navneet Kumar Thakkar vs. Income Tax Officer (1007) 112 TTJ 0076 7. A deeming provision has been enshrined in Section 50C by virtue of which a legal fiction has been created for assuming the value adopted or assessed by any authority of State Government as the full value of sale consideration received in respect of such transfer. A legal fiction has been created only in respect of the cases where the consideration received by the assessee is less than the value adopted or assessed by the stamp valuation authority of the State Government for the purpose of payment of stamp duty in respect of such transfer . It is a trite law that the legal fiction cannot be extended beyond the purpose for which it is enacted. Section 50C embodies the legal fiction by which the value assessed by the stamp duty authorities is considered as the full value of consideration for the property transferred. It does not go beyond the cases in which the subject transferred property has not become the subjectmatter of registration and the question of valuation for stamp duty purposes has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shivakami Co. (P) Ltd. (supra) would come into operation and govern the determination of full value of consideration. 8. Adverting to the facts of the case, it is noticed that the assessee transferred the property in question by executing an agreement which was not registered with the registering authority. In such a case, Section 50C could not have come into operation and the resultant application of Section 55A by which the AO got the property valued and adopted the report of the Valuation Officer as the sole basis for making the impugned addition was wholly invalid. As the AO has not embarked upon making enquiries from the purchaser about the actual sale consideration, and has not brought on record any other material worth the name to show that the sale consideration declared by the assessee was understated, in my considered opinion the addition was wrongly made and sustained. I, therefore, order for the deletion of the addition. 4.2 It is further contended that taking into consideration the actual agreement was prior to 20.11.2006, the view taken by the Tribunal is required to be accepted in favour of the assessee. 5. We heard the learned counsel for the parties. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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