TMI Blog2017 (11) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... ept assessee’s arguments in principle. The Assessing Officer is accordingly directed to verify necessary facts as per law for the purpose of adopting the above agreement value in order to compute the consequential capital gains. - Decided in favour of assessee for statistical purposes. - ITA No. 2412/Ahd/2016 - - - Dated:- 31-10-2017 - SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER For The Assessee : Ms. Urvashi Shodhan, A.R. For The Revenue : Shri Mahesh G. Jiwade, CIT. D.R. ORDER PER S. S. GODARA, JUDICIAL MEMBER This assessee s appeal for assessment year 2012-13 arises against the CIT(A)-3, Ahmedabad s order dated 03.08.2016 in case no. CIT(A)- 3/Wd/3(2)(2)/410/15-16, upholding Assessing Officer s action issuing reopening notice dated 25.03.2015 thereby making long term capital gains addition of ₹ 7,20,956/- after invoking Section 50C of the Act; respectively, in proceedings u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short the Act . 2. Ms. Shodhan submits at the outset that the assessee is no more interested in pressing for its former ground challenging legality of the impugned reopening. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f that sale transactions of land and building are often undervalued resulting in leakage of legitimate tax revenues. This Section provides for a presumption, a rebuttable presumption though-something with which I am not concerned for the time being, that the value, for the purpose of computing stamp duty, adopted by the stamp duty valuation authority represents fair indication of the market price of the property sold. Section 50C(1) provides that, 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 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 . The trouble, however, is that while the sale consideration is fixed at the point of time when agreement to sell is entered into, there is someti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. A.Y. 2010-11 to the transaction which were executed through agreement to sell or power of attorney by inserting the word assessable alongwith words the value so adopted or assessed . Hence, section 50C is now also applicable in case of such transfers. The present 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. A later similar provision inserted by way of section 43CA does take care of such a situation. 6.2 It is therefore proposed to insert the following provisions in section 50C: ( 4) Where the date of an agreement fixing the value of consideration for the transfer of the asset and the date of registration of the transfer of the asset are not same, the value referred to in sub-section (1) may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement. ( 5) The provisions of sub-section (4) shall apply only in a case where the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xists in section 43CA of the Act i.e. when an immovable property is sold as a stock-in-trade. It is proposed to amend the provisions of section 50C so as to provide that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of computing the full value of consideration. It is further proposed to provide that this provision shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, on or before the date of the agreement for the transfer of such immovable property. 30 These amendments are proposed to be made effective from the 1st day of April, 2017 and shall accordingly apply in relation to assessment year 2017-18 and subsequent years. [ 7] While the Government has thus recognized the genuine and intended hardship in the cases in which the date of agreement to sell is prior to the date of sale, and introduced welcome amendm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was introduced. In view of these discussions, as also for the detailed reasons set out earlier, we cannot subscribe to the view that it could have been an intended consequence to punish the assessees for non-deduction of tax at source by declining the deduction in respect of related payments, even when the corresponding income is duly brought to tax. That will be going much beyond the obvious intention of the section. Accordingly, we hold that the insertion of second proviso to Section 40(a)(ia) is declaratory and curative, in nature and it has retrospective effect from 1st April, 2005 being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act 2004 [ 8] Their Lordships were pleased to hold that this reasoning and rationale of this decision merits acceptance . The same principle, when applied in the present context, leads to the conclusion that the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant accounting year. The deduction was disallowed under s. 43B which, as stated above, was inserted w.e.f. 1st April, 1984. It is also relevant to note that the first proviso which came into force w.e.f. 1st April, 1988 was not on the statute book when the assessments were made in the case of Allied Motors (P.) Ltd. Etc. (supra). However, the assessee contended that even though the first proviso came to be inserted w.e.f. 1st April, 1988, it was entitled to the benefit of that proviso because it operated retrospectively from 1st April, 1984, when s. 43B stood inserted. This is how the question of retrospectivity arose in Allied Motors (P.) Ltd. Etc. (supra). This Court, in Allied Motors (P.) Ltd. Etc. (supra) held that when a proviso is inserted to remedy unintended consequences and to make the section workable a proviso which supplies an obvious omission in the section and which proviso is required to be read into the section to give the section a reasonable interpretation, it could be read retrospective in operation, particularly to give effect to the section as a whole. Accordingly, this Court, in Allied Motors (P.) Ltd. Etc. (supra), held that the first proviso was curative i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition. I hold the provisos to Section 50C being effective from 1st April 2003. This is precisely what the learned counsel has prayed for. In his detailed written submissions, he has made out of a strong case for the amendment to Section 50C being treated as retrospective and with effect from 1st April 2003. The plea of the assessee is indeed well taken and deserves acceptance. What follows is this. The matter will now go back to the Assessing Officer. In case he finds that a registered agreement to sell, as claimed by the assessee, was actually executed on 29.6.2005 and the partial sale consideration was received through banking channels, the Assessing Officer, so far as computation of capital gains is concerned, will adopt stamp duty valuation, as on 29.6.2005, of the property sold as it existed at that point of time. In case the assessee is not content with this value being adopted under section 50C, he will be at liberty to seek the matter being referred to the DVO for valuation, again as on 29.6.2005, of the said property. As a corollary thereto, the subsequent developments in respect of the property sold (e.g. the conversion of use of land) are to be ignored. It is on this b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Section 50C(1), could have made the legal provision even more unambiguous. 5. We notice in view of all these developments that the assessee has received his earnest money in furtherance to the registered sale agreement dated 02.02.2011 on 10.03.2011. Relevant cheques details already find mention in CIT(A) s order page 9. We observe in these facts that the registered agreement followed by receipt of advance money by banking channel form sufficient reasons to attract the above former proviso to Section 50C of the Act stipulating in very clear terms that where the date of the agreement fixing the amount of consideration and the date of registration regarding transfer of the capital asset in question are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement is to be taken for the purpose of full value of consideration. We therefore accept assessee s arguments in principle. The Assessing Officer is accordingly directed to verify necessary facts as per law for the purpose of adopting the above agreement value in order to compute the consequential capital gains. 6. This assessee s appeal is accepted for statistical ..... X X X X Extracts X X X X X X X X Extracts X X X X
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