TMI Blog2019 (2) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case. 2. Under the facts and circumstances of the case, the Ld. CIT(A) erred in law and on facts in deleting the addition of ₹ 1,82,95,925/- by invoking the amended proviso to section 50C(1) of the Act retrospectively adopting the fair market value at ₹ 4,05,00,000/- as on the date of agreement to sell i.e. 11.10.2011 relying upon the judgment of Hon'ble ITAT, Ahmedabad Bench in the case of Dharmshibhai Sonani Vs. ACIT, Surat without appreciating that the Hon'ble ITAT, Ahmedabad in the above case remanded the matter back to the file of the A.O. and after examination adopt the stamp duty valuation as on the date of agreement and moreover, the retrospective application of amended proviso to section 50C(1) is debatable under various courts of law. 3. Under the facts circumstances of the case, the CIT(A) erred in law facts in excluding the value of land area of 844.24 sq.mtr. for stamp duty valuation of ₹ 46,43,320/- as per section 50C of the Act in as much as the assessee received an advance of ₹ 10,00,000/- towards the same earlier as per Builder's Agreement dated 10.10.2005. 4. Under the facts circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee entered into a memorandum of understanding on 10/10/2011 whereby the consideration for the property was fixed at ₹ 4,05,00,000/- and in this respect our attention was invited to copy of memorandum of understanding placed at pages 68 to 73 of the paper book. Learned A. R. submitted that this memorandum of understanding itself notes the fact of having entered into a builder s agreement on 10/10/2005 and also notes that due to disputes this new memorandum of agreement has been entered and therefore, it cannot be said that the sale through this MOU was not made as a distress sale. Learned A. R. submitted that this memorandum of understanding notes that there were various litigations between the parties and to arrive at an amicable settlement, the agreement was entered into and was presented to Hon'ble High Court and therefore, it is wrong on the part of the Revenue to argue that the sale was not a distress sale. Learned A. R. further argued that even if the provisions of section 50C are applied, the circle rate prevalent at the time of entering the agreement has to be taken into account as the provisions of section 50C itself has been amended and its application has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of ₹ 10,00,000/-, stamp value of which was ₹ 46,43,320/-. This fact is apparent from clause 47 of the agreement, which for the purpose of completeness is reproduced below: 47. That the subject matter of this agreement is 844.24 sq. meter of land the valuation of the same @Rs.5,000/- per sq. meter comes to ₹ 42,21,200/-, the land is situated at more than 9 meter wide road hence 10% extra value comes to ₹ 4,22,120/-. Thus, the total value of the land comes to ₹ 46,43,320/- consequently the stamp duty of ₹ 4,64,400/- has been paid. As per this agreement the builder was to construct flats on the property and the proceeds were to be shared between the builder and the assessee to the extent of 65% and 35% respectively. The said agreement could not be executed as there arose certain disputes and the matter became subject of litigation, as is apparent from copy of Writ Petition filed by the builder, placed at pages 100 to 110 of the paper book. In view of the litigations the assessee entered into a fresh memorandum of understanding vide agreement to sell dated 11/10/2011, placed at pages 68 to 73 of the paper book. In this memorandum of unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect from 01/04/2017 whereby it has been held 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 the amount of consideration, or a part of consideration, was paid by an account payee cheque or by use of electronic clearing system, on or before the date of the agreement for transfer. In the present case, we find that memorandum of understanding was entered on 10/10/2011, a copy of which is placed at pages 68 to 73 of the paper book. The sale consideration has been fixed at ₹ 4,05,00,000/- out of which ₹ 15,00,000/- was paid vide cheque no. 177078 on the date of agreement itself which finds mention in the copy of agreement itself. The said advance also finds mention in the sale deed registered on 16/09/2013, placed at pages 7 to 19 of the paper book where in the schedule of payments, placed at page 17, the same cheque dated 11/10/2011 for ₹ 15,00,000/- finds m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 amount of consideration or a part thereof has been received by any mode other than cash on or before a date of agreement for transfer of the asset. 5. True to the work ethos of the current Government, it was the first time that within four months 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 amendments to the statue to take the remedial measures, this brings no relief to the assessee before me as the amendment is introduced only with prospective effect from 1st April 2017. There cannot be any dispute that this amendment in the scheme of Section 50C has been made to remove an incongruity, 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 amendm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptance . The same principle, when applied in the present context, leads to the conclusion that the present amendment, being an amendment to remove an apparent incongruity which resulted in undue hardships to the taxpayers, should be treated as retrospective in effect. Quite clearly therefore, even when the statute does not specifically state so, such amendments, in the light of the detailed discussions above, can only be treated as retrospective and effective from the date related 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court, in Allied Motors (P) Ltd. Etc. (supra), held that the first proviso was curative in nature, hence, retrospective in operation w.e.f. 1st April, 1988. It is important to note once again that, by Finance Act, 2003, not only the second proviso is deleted but even the first proviso is sought to be amended by bringing about an uniformity in tax, duty, cess and fee on the one hand vis-a-vis contributions to welfare funds of employee(s) on the other. This is one more reason why we 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 4.4 We further find that clause 43 of the Builder s Agreement clearly states that the amount of ₹ 10,00,000/- is refundable as is apparent from contents of clause 43, which is reproduced below: 43. That if the second party opts out of this agreement due to defect in the title of the owner, they shall be entitled to the refund of advance deposit of ₹ 10,00,000/- which will be payable without any interest or liability within a period of 90 days. 4.5 In view of the above facts and circumstances, the action of the Assessing Officer in making addition of ₹ 46,43,320/-, being deemed value of ₹ 10,00,000/- is not correct and learned CIT(A) has rightly deleted the same holding the same to be liability of the assessee. 5. Now coming to ground No. 4. We find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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