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Commissioner of Income Tax-II, Agra Versus Sh. Shimbhu Mehra, Sh. Vishnu Saran Mehra, Shri Jagdish Saran Mehra, Shri Suman Mehra, Shri Kesho Mehra, Sh. Shankar Saran Mehra

2015 (10) TMI 1092 - ALLAHABAD HIGH COURT

Applicability of section 50C - profit or gains arising from a transfer of capital asset - Held that:- Explanation 2 to Section 2(47) of the Act was added by Finance Act, 2012 with retrospective effect on 1.4.1962 and, consequently, the said provision would be applicable. The said explanation clearly provides that transfer of an asset includes disposing of or parting with an asset by way of an agreement.

In the light of the aforesaid provision, it is apparently clear that the moment an .....

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Officer was not justified in making the reassessment and computing the capital gains by invoking the provision of Section 50C of the Act, which was clearly not applicable in the assessees' case. - Decided in favour of assessee. - Income Tax Appeal No. 373 of 2010, 365 of 2010, 376 of 2010, 377 of 2010, 439 of 2010, 442 of 2010 - Dated:- 12-10-2015 - Hon'ble Tarun Agarwala And Hon'ble Vinod Kumar Misra, JJ. ORDER ( Per: Tarun Agarwala, J. ) 1. The present appeals relate to the assessment .....

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lite interest. The suit was subsequently transferred to the Debt Recovery Tribunal. During the pendency of the proceedings, One Time Settlement was arrived at, on the basis of which, the assessees negotiated and entered into an agreement on 04.07.2001 with subsequent purchaser to sell the land at ₹ 34,71,750/- per hectare. In furtherance of the said agreement, the assessees received part consideration through which the liabilities of the State Bank of India were cleared and upon receiving .....

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ould not be reopened and why capital gains should not be assessed as per provisions of Section 50C of the Act. The Assessing Officer reopened the proceedings and reassessed the income computing the long term capital gains on the basis of Section 50C of the Act taking the value assessed by the local authority. 3. The assessees, being aggrieved, filed separate appeals, which were allowed by the Ist appellate authority holding that capital gains was not taxable for the assessment year under appeal .....

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tified in confirming the findings of the learned CIT (A) holding that the agreement to sell the land under consideration was made on 04.07.2001, prior to insertion of section 50C of I.T.Act,1961 ignoring the fact that the sale deed was executed in April, 2003, the sale consideration agreed upon was paid in April, 2003 and the possession of the land was handed over to the transferee after execution of Sale Deed?" 4. We have heard S.D.Singh, the learned Senior Counsel assisted by Sri Aditya P .....

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asset, being land or building or both, is less than the value adopted or assessed [or assessable] 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 [or assessable] 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. (2) Without preju .....

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rt or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply i .....

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er law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty.] (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed [or assessable] by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed [or assessable] by such authority shall be taken as the full value of the consideration receive .....

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ing Authority was of the view that since the sale deed was executed in April, 2003, the provision of Section 50C of the Act, which came into effect from 01.04.2003 would be applicable. The Ist Appellate Authority held that the provision of Section 50C of the Act comes into play on the date when the property was transferred. The Ist Appellate Authority found that the transfer took place on 01.07.2001 and, therefore, the provision of Section 50C of the Act, which came into effect from 01.04.2003 w .....

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in existence on the date of the agreement. Therefore the provisions of section 50C are not applicable to the cases of the appellants and therefore, grounds no.6 and 8 are allowed." 9. The Tribunal for a different reason, confirmed the order of the Ist Appellate Authority. 10. Having heard the learned counsel for the parties, we find that Section 45 of the Act provides that any profit or gains arising from a transfer of capital asset would be chargeable to income tax under the head capital g .....

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when the agreement of sale was executed on 04.07.2001. 11. Transfer has been defined under Section 2(47) of the Act, which is extracted hereunder : " "transfer", in relation to a capital asset, includes,- (i) the sale, exchange or relinquishment of the asset ; or (ii) the extinguishment of any rights therein ; or (iii) the compulsory acquisition thereof under any law ; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trad .....

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tion of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. Explanation 1.-For the purposes of sub-clauses (v) and (vi), "immovable property" shall have the same meaning as in clause (d) of section 269UA. Explanation 2.- For the removal of doubts, it is hereby clarified that "transfer" includes and shall be deemed to have always included disposing o .....

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12. Sub-clause (ii) of Section 2(47) of the Act states that the transfer, in relation to a capital asset, includes the extinguishment of any rights therein. In Sanjeev Lal and another Vs. Commissiioner of Income-Tax And Another, (2014) 365 ITR 389(SC), the Supreme Court considered the question as to whether the date on which the agreement for sale was executed could be considered the date on which the property was transferred. The Supreme Court held that when an agreement to sell in respect of i .....

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