TMI Blog2019 (1) TMI 1523X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee entered into an agreement to sell on 31-05-2002; received part payments; and finally executed registered conveyance deed on 28-07-2010. Having satisfied the mandate of second proviso and further going by the first proviso to section 50C(1), the stamp value for the purpose of computation of capital gain at the time of sale in the year 2010 should be considered with reference to the date of agreement, namely, 31- 05-2002 The sale consideration is one 495 sq.ft. flat in the new building plus monetary consideration of ₹ 51 lakh, the Revenue has considered the value of two flats of 405 sq. ft. and 495 sq ft. plus ₹ 51.00 lac as the full value of consideration. We have seen the entire gamut of the factual panorama above, from which it transpired that Shri Shinde was having some occupancy rights in flat no. 5A of ‘Sai Chhaya’ and eventually his claim was settled by allotting him a 405 sq. ft. flat in the new building. It is in this light of the facts that we need to decide whether the assessee transferred flat no. 5 and 5A in ‘Sai Chhaya’ or only flat no. 5. Whereas the assessee is contending that he transferred only one flat, the Department has opined that he tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M. Joshi For The Respondent : Shri Pankaj Garg ORDER PER R.S.SYAL, VP : This appeal by the assessee emanates from the order passed by the CIT(A) on 07-09-2015 in relation to the assessment year 2011-12. 2. Some detailed and argumentative grounds were raised in the memorandum of appeal. Thereafter, the assessee filed concise and modified grounds, challenging the impugned order on certain issues, which we will espouse for discussion and decision. 3. Succinctly, factual matrix of the case, as recorded in the assessment order, is that the assessee along with his sister and wife executed a Deed of Conveyance on 28-07-2010 with M/s. Jayesh Builders, a partnership firm in respect of property admeasuring 429 sq. mtrs along with the building standing thereon, known as Sai Chhaya at village Villae Parle in Mumbai for a total monetary consideration of ₹ 51 lakh and 2 flats admeasuring 900 sq.ft. in the new building to be constructed on the said plot. One of such flats admeasuring 405 sq.ft. was to be given to Shri Uday Vasant Shinde and his relative, the hitherto occupants and consenting parties, while the second flat admeasuring 495 sq.ft. was to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against which the assessee has approached the Tribunal. 4. We have heard the rival submissions and perused the relevant material on record. Certain facts which are not disputed are that the Smt. Uma Umesh Kumar More, mother of the assessee, entered into a development agreement with M/s. Jayesh Builders on 31-05-2002 transferring development rights in Sai Chhaya , a copy of which is available at page 17 onwards of the paper book. As per Clause (VII) of this Agreement, she was occupying two flats with total carper area of 898 sq.ft. on first floor of Sai Chhaya building. Annexure No. 1 to the Agreement, a copy of which is placed on page 28 of the paper book, shows two flats at Sl.No.5 with the narration Owners occupied having carpet area of 429.50 sq.ft. and 469.43 sq.ft. total 898.48 sq.ft. As per this Development Agreement, the developer agreed to discharge the monetary consideration of ₹ 30 lakh plus two flats in the proposed building to be constructed on the same property having total carpet area admeasuring approximately 900 sq.ft. In the meantime, one Shri Vasanat Shivram Shinde filed a petition in the Hon ble Court contending that flat 5A situated at Sai Chhaya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handed over to M/s Jayesh Builders on 31-05-2002. To support such contention, the ld. AR relied on first two provisos to section 50C of the Income-tax Act, 1961 (hereinafter also called the Act ). 7. Section 48 of the Act deals with computation of income under the head Capital gains . It provides that the income chargeable under this head shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset , the following amounts, namely, (i) expenditure incurred wholly and exclusively in connection with such transfer and (ii) cost of acquisition of the asset and cost of any improvement thereto. Second proviso to this section states that where long term capital gain arises in certain specified situations, the words, cost of acquisition and cost of improvement used in the main part of the provision would be substituted with the words indexed cost of acquisition and indexed cost of improvement . Section 50C is a special provision for full value of consideration in certain cases. For ready reference, we are reproducing sub-section (1) of section 50C, as under : - Where the consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e value adopted or assessed by stamp valuation authority on the date of agreement may be taken for the purpose of computing full value of consideration of such transfer. It can be understood with a simple illustration. If the agreement for transfer of property is executed, say, in year one and actual transfer takes place, say in year three, then for the purpose of computation of capital gain at the time of transfer in year three, full value of consideration in terms of section 50C should be computed with reference to the stamp value of the property on the date of agreement in year one. This proviso has been enacted to rationalize the provisions of section 50C in a case where agreement to sell the property is executed much before the actual date of transfer and the sale consideration or its part is also received pursuant to such an agreement. In such a situation, the stamp value of the property for the purpose of computation of capital gain, should be considered as is relevant on the date of agreement and not the date of execution of registered sale deed. It is quite logical also. Once an agreement is entered into between two parties for transferring a particular property and certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed in such agreement, whereas similar provision exists 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. These amendments are proposed to be made effective from the 1stday of April, 2017 and shall accordingly apply in relation to assessment year 2017-18 and subsequent years. 12. It can be seen from the text of the provision as well as the Memorandum that for the purpose of computation of capital gain in a situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serted along with Chapter XIV-B w.e.f. 01-07-1995. Divergent views surfaced on the question as to whether the rate of 60% is exclusive or inclusive of surcharge. To settle the controversy, the Finance Act, 2002 inserted a proviso to the section, w.e.f. 01-06-2002, providing that the tax chargeable under the section shall be increased by surcharge, if any. After insertion of this proviso, again a pandora box opened on the prospective or retrospective operation of this proviso. The Hon ble Supreme Court in CIT Vs. Suresh N. Gupta (2008) 297 ITR 322 (SC) held that the proviso to section 113 is clarificatory and hence, should be read into block assessment scheme under Chapter XIV-B from retrospective effect. Similar view was reiterated by the Hon ble Supreme Court in CIT Vs. Rajiv Bhatara (2009) 310 ITR 105 (SC) by holding the proviso u/s.113 to be retrospective in nature. Once again, this issue came up for consideration before the Hon ble Supreme Court in CIT Vs. Vatika Township (P) Ltd. (2009) 314 ITR 338 (SC). Unable to concur with the earlier view holding such an amendment to be retrospective, their Lordships referred the matter for consideration by a Larger Bench. It was pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is received at the time of entering into agreement to sell through a banking channel, the stamp value, for the purposes of transfer, should be considered with reference to the date on which the agreement to sell was entered and not a later date on which registered sale deed is made. It is manifest that with insertion of the proviso, the Parliament has toned down the provision contained in sub-section (1) by which stamp value on the date of registration of sale deed is considered as full value of consideration notwithstanding the fact that the agreement to sell was executed much earlier, in which sale consideration was determined and a part of which was also received through banking channel. When we consider the first proviso to section 50C in the light of the ratio decidendi of the Constitution Bench judgment of the Hon ble Summit Court in Vatika Township (supra), it becomes vivid that the proviso to section 50C(1) is retrospective. The benefit which is sought to be conferred through this provision is without inflicting detriment on some other person or on the public generally. It further emerges that the idea behind this proviso is to grant a benefit in the circumstances note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2010. Having satisfied the mandate of second proviso and further going by the first proviso to section 50C(1), the stamp value for the purpose of computation of capital gain at the time of sale in the year 2010 should be considered with reference to the date of agreement, namely, 31- 05-2002. We order accordingly. 19. Having held that the two provisos to section 50C(1) of the Act are retrospectively applicable to the instant case, we need to go back to section 48, which provides for starting the exercise of computation of capital gain by taking the full value of consideration received or accruing as a result of the transfer of the capital asset. It has been noticed supra that only in a case where the stamp value is more than the consideration received that the process of substitution starts. Thus we need to have both the figures of actual sale consideration and stamp value at hand. Controversy in the extant appeal is also on the determination of the sale consideration received by the assessee. Whereas, the case of the assessee is that the sale consideration is one 495 sq.ft. flat in the new building plus monetary consideration of ₹ 51 lakh, the Revenue has considered th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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