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2019 (2) TMI 280 - AT - Income TaxDistress sale - section 50C applicability - CIT-A adopted fair market value as on the date of agreement instead of taking the value as per collector’s rate for calculation - Held that:- Originally the assessee had entered into an agreement for a small piece of land measuring 884.24 sq. mtr. and later on the area was increased to 2591.12 sq. mtrs. Therefore, it can not be said that the assessee had made the sale as a distress sale as the land area in new agreement is much more than area in original agreement and there is no dispute about the increased area as the dispute remained limited to original area of 884 sq. mtrs. Thus argument of Learned A. R., that the sale of entire property was a distress sale, do not hold force. Invoking amended proviso to section 50C(1) retrospectively and taken the fair market value as on agreement to sell i.e. on 11/10/2011 - Held that:- The amendment to section 50C by the Finance Act 2016 has to be applied retrospectively as the amendment is curative in nature therefore, collector’s rate prevalent at the time of entering agreement has to be taken as deemed consideration. Therefore, ground is dismissed. Excluding the value of land area of 844.24 sq.mtr. for stamp duty valuation as per section 50C in as much as the assessee received an advance of ₹ 10,00,000/- towards the same earlier as per Builder's Agreement - Held that:- In the original agreement dated 10/10/2005, there is mention of ₹ 10,00,000/- which was paid to the assessee but this agreement was not executed and became a matter of dispute and a fresh memorandum of understanding was entered into by the assessee whereby the entire sale consideration was refixed and there is no mention of this amount of ₹ 10,00,000/-. Querist is bound to return to the Builder the sum of ₹ 10 lacs which is stated to have been paid to the Querist by the Builder as advance as per Clause 23 of the Builders Agreement dated 10.10.2005. The said repayment may be made in installments as may be agreed by the parties but since it is the admitted case of the parties that the said amount has neither been adjusted by the Builder nor forfeited by the Querist, the same needs to be repaid by the Querist to the Builder. We further find that clause 43 of the Builder’s Agreement clearly states that the amount of ₹ 10,00,000/- is refundable. Thus the action of the AO in making addition being deemed value of ₹ 10,00,000/- is not correct and CIT(A) has rightly deleted the same holding the same to be liability of the assessee. Section 50C(1) applicability on date of agreement to sell i.e. 11.10.2011 by adopting stamp Duty Valuation as on the date of agreement or the Fair Market Value as there was no distress sale of property - Held that:- As the agreement to sell was entered on 11/10/2011. The stamp duty valuation as on this date was ₹ 4,18,52,923/-, as per the approved value report, placed at pages 142 to 148 of the paper book. The learned CIT(A) has taken ₹ 4,05,00,000/- as the value of sale consideration. However, since we have held that assessee has sold property on principal to principal basis and not as a distress sale after entering memorandum of understanding for a much more area therefore, this amount, which is the deemed value existing at the time of entering agreement, was to be taken into consideration as per the provisions of section 50C. Therefore, the Assessing Officer is directed to take the consideration of ₹ 4,18,52,923/- instead of ₹ 4,05,00,000/- and is accordingly directed to recompute the capital gains
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