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TMI Blog2017 (11) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... above long term capital gains addition made by both the lower authorities after invoking Section 50C of the Act. The property in question is stated to be situated at block no.13, Village Shilaj, Daskroi Taluk, Ahmedabad, measuring 9004 sq.mtrs. having 22 co-owners. The assessee's share therein reads for 4.76 %. He admittedly executed an agreement to sell dated 02.02.2011 in respect of the said property for Rs. 33,76,500/- alongwith five co-owners. The said document is indeed a registered one forming part of the case records. The consequential sale deed was ultimately executed on 13.07.2011. The state government in the meantime increased jantri price to Rs. 1,58,69,550/-. The assessee/vendor therefore got registered the above sale deed as per the revised jantri price hereinabove from Rs. 500/- to Rs. 2350/- as per para 4 in assessment order dated 26.10.2015. The Assessing Officer initiated reopening in view of all these developments. He thereafter invoked Section 50C of the Act in the impugned reassessment framed on 26.10.2014 to arrive at long term capital gains addition of Rs. 7,20,956/- being made in assessee's hands. The CIT(A) confirms Assessing Officer's action in lower appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale deed which is recognized by Section 50C for the purpose of computing the capital gain because that is what is relevant for the purpose of computing stamp duty for registration of sale deed. The very comparison between the value as per sale deed and the value as per stamp duty valuation, accordingly, ceases to be devoid of a rational basis because these two values represent the values at two different points of time. In a situation in which there is significant difference between the point of time when agreement to sell is executed and when the sale deed is executed, therefore, should ideally be between the sale consideration as per registered sale deed, which is fixed by way of the agreement to sell, visà- vis the stamp duty valuation as at the point of time when agreement to sell, whereby sale consideration was infact fixed, because, if at all any suppression of sale consideration should be assumed, it should be on the basis of stamp duty valuation as at the point of time when the sale consideration was fixed. Income Tax Simplification Committee set up in 2015, headed by Justice R V Easwar-a former judge of Delhi High Court and one of the most illustrious former Presi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tax Simplification Committee being notified, not only the first report of the Committee was submitted, but the Government also walked the talk by ensuring that the several statutory amendments, based on recommendations of this report, were introduced in the Parliament. So far as Section 50 C is concerned, the Finance Act 2016, with effect from 1st April 2017, inserted the following provisos to Section 50C: "Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer: Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer." [6] This amendment was explained, in the Memorandum Explaining the Provisions of Finance Bill 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, resulting in undue hardship to the assessee, as is evident from the observation in Easwar Committee report to the effect that "The (then prevailing) provisions of section 50C do not provide any relief where the seller has entered into an agreement to sell the asset much before the actual date of transfer of the immovable property and the sale consideration has been fixed in such agreement" recognizing the incongruity that the date agreement of sell has been ignored in the statute even though it was crucial as it was at this point of time that the sale consideration is finalized. The incongruity in the statute was glaring and undue hardship not in dispute. Once it is not in dispute that a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. In support of this proposition, I find support from Hon'ble Delhi High Court's judgment in the case of CIT v. Ansal Landmark Township Pvt. Ltd.[(2015) 377 ITR 635 (Del)], wherein approving the reasoning adopted an order authored ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d statutory provisions was introduced. Viewed thus, the proviso to Section 50 C should also be treated as curative in nature and with retrospective effect from 1st April 2003, i.e. the date effective from which Section 50C was introduced. While the Government must be complimented for the unparalleled swiftness with which the Easwar Committee recommendations, as accepted by the Government, were implemented, I, as a judicial officer, would think this was still one step short of what ought to have been done inasmuch as the amendment, in tune with the judge made law, ought to have been effective from the date on which the related legal provisions were introduced. As I say so, in addition to the reasoning given earlier in this order, I may also refer to the observations of Hon'ble Supreme Court, the case of CIT v. Alom Extrusion Ltd. [(2009) 319 ITR 306 SC)], to the following effect: "Once this uniformity is brought about in the first proviso, then, in our view, the Finance Act, 2003, which is made applicable by the Parliament only w.e.f. 1st April, 2004, would become curative in nature, hence, it would apply retrospectively w.e.f. 1st April, 1988 (i.e. the date on which the rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that the Finance Act, 2003, is retrospective in operation. Moreover, the judgment in Allied Motors (P.) Ltd. Etc. (supra) is delivered by a Bench of three learned Judges, which is binding on us. Accordingly, we hold that Finance Act, 2003, will operate retrospectively w.e.f. 1st April, 1988 (when the first proviso stood inserted). Lastly, we may point out the hardship and the invidious discrimination which would be caused to the assessee(s) if the contention of the Department is to be accepted that Finance Act, 2003, to the above extent, operated prospectively. Take an example-in the present case, the respondents have deposited the contributions with the R.P.F.C. after 31st March (end of accounting year) but before filing of the Returns under the IT Act and the date of payment falls after the due date under the Employees' Provident Fund Act, they will be denied deduction for all times. In view of the second proviso, which stood on the statute book at the relevant time, each of such assessee(s) would not be entitled to deduction under s. 43B of the Act for all times. They would lose the benefit of deduction even in the year of account in which they pay the contributions to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a situation in which the stamp duty valuation of a property has risen between the date of execution of agreement to sell and execution of sale deed, as is the norm rather than exception, but the real estate market is now traversing through a difficult phase and there can be situations in which there is a fall in the stamp duty valuation rates with the passage of time. Such a situation has actually arisen in many places in the country, such as in Gurgaon (http://www.hindustantimes.com/gurgaon /for-the-first-time-circle-rates-reduced-in-gurgaon/story-cjp6e72TeGS9H5jJIALAGP. html), New Delhi (http://www.delhismartcities.com/blogs/ high-circle-rates-causingslump- realty-reduce-delhi-government/), and even in Dehradun (Uttarakhand) (http: //www.tribuneindia. com /news/uttarakhand/relief-to-property-buyers-as-circle-rates-cut- 50-pc/247805.html) and some other places. It is therefore possible that, at first sight, first proviso to Section 50C may seem to work to the disadvantage of the assessee in certain situation in the event of the word 'may' being construed as mandatory in application, but then one cannot be oblivious to the fact that this proviso states that "the value adop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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