TMI Blog2018 (1) TMI 1507X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 as per provisions of Law for calculating long term capital gains shall have to be considered as executed on September 1966. Thus, the provisions of Section 50C of the I.T. Act which were not applicable in that year could not be invoked against the assessee. It is well settled Law that two conditions need to be satisfied for invoking powers under section 263 by the Commissioner which are (1) the Order of the A.O. sought to be revised is erroneous and (2) it is prejudicial to the interests of the Revenue. At the same time this provision cannot be invoked to correct each and every type of mistake or error committed by the A.O. The order of the A.O. cannot be termed prejudicial simply because A.O. adopted one of the course permissible in Law and it has resulted in loss of Revenue or where two views are possible and A.O. has taken one view with which the Commissioner did not agree. Where two views are possible and A.O. has taken one view and the Commissioner does not agree with the view taken by the A.O, the assessment order cannot be treated as an order erroneous or prejudicial to the interests of the Revenue. Section 50C would not be applicable to the facts and circumstances o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63,98,940/- 4. 228.53 Janki Devi Others 63,98,940/- 5. 208.81 Vinayak Pushp Projects 55,12,584/- 6. 780.34 Vinayak Pushp Projects 2,06,10,976/- 7. 243.30 Murari Lai Agarwal Pawan Kumar Agarwal 68,12,400/- 8. 238.80 Manoj Jaiswal Others 66,86,400/- 9. 94.62 Nazrul Rehman Khan 23,06,400/- 10. 220.54 Rukhsana Begum Khan 61,75,120/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies in the assessment order, therefore, assessment order is erroneous and prejudicial to the interests of the Revenue on the following reasons : 1. The return of the assessee filed on 15th July, 2011 was selected for scrutiny but the A.O. made assessment on the basis of the revised return of income filed on 1st July, 2013. The revised return is not filed as per provisions of Section 139(5) of the IT Act because it was filed after expiry of one year from the end of the relevant assessment year. Therefore, revised return was non-est. Thus, the assessment has been made by the A.O. by taking income returned in as non-est return. 2. Regarding sale of plot measuring 7818 sq. meters to Shri Shanti Bhushan and others, the A.O. has considered the sale consideration at Rs.l lakh as per the Conveyance Deed, whereas, stamp duty has been paid at the value of ₹ 6,67,000 which was ₹ 46,700. Further, in compliance to the letter, the Sub-Registrar, Sadar-1, Allahabad, has intimated that they have worked out the value for the portion sold to Shri Shanti Bhushan and others at ₹ 19,07,79,830 on which an additional stamp duty of ₹ 1,33,07,900 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed return within period of limitation. The A.O. is duty bound to pass correct assessment of the true income of the assessee. The Sub-Registrar has valued the portion sold to Shri Shanthi Bhushan and others at ₹ 19,07,79,830. Therefore, as per provisions of Section 50C, the A.O. should have considered the value of the plot at ₹ 19,07,79,830. Therefore, order of the A.O. is erroneous insofar as prejudicial to the interests of the Revenue. The A.O. did not take into account original return of income. The Ld. CIT also considered the issue of correspondence exchanged between assessee and Shri Shanthi Bhushan to purchase the property in the year 1966 which remain subject matter in Civil Court and ultimately compromise was held in Civil Court in October, 2010 and thereafter, Sale Deed was executed in assessment year under appeal. The assessee claimed that date of Sale Deed should be considered from the date of Agreement to Sale in 1966 which was not acceptable in view of provisions of Section 50C of the I.T. Act. The Ld. CIT was of the view that Sale Deed was executed on 29.11.2010 which fall in assessment year under appeal. Therefore, according to Section 50C of the I.T. Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee that the sale consideration be considered as per agreement instead of date of the Sale Deed. He has also relied upon the order of the ITAT, Mumbai Bench in the case of Westlife Development Ltd. v. Pr. CIT in ITA. No. 688/Mum/2016 of June, 2016, in which the original assessment order under section 143(3) was held to be null and void in the eyes of Law as same was passed upon non-existing entity. It was, therefore, held that CIT could not have jurisdiction under section 263 of the I.T. Act. He has submitted that since the A.O. passed the assessment on a revised return which according to Ld. CIT was non-est, therefore, Ld. CIT, cannot exercise jurisdiction under section 263 of the I.T. Act. Learned Counsel for the Assessee submitted that the view of the A.O. was sustainable in Law and where two views are possible and A.O. has taken one view and the Ld. CIT does not agree with the view taken by the AO, assessment order cannot be treated as an order erroneous or prejudicial to the interests of the Revenue. He has relied upon the decision of the Hon'ble Supreme Court in the case of CIT v. Kwality Steel Suppliers Complex [2017] 395 ITR 1. He has also submitted that since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ushan and B.N.Rama Co. (Stores) with regard to proposal to purchase the property in question for ₹ 1 lakh which have been accepted by the assessee and Shri Shanti Bhushan has paid ₹ 5000 through cheque 064313 dated 1st October, 1966. The assessee thereafter, moved to the Collector, Allahabad seeking permission to transfer the property in question. Thereafter, the matter was taken to the Civil Court in which the matter was settled and as per Decree of the Court, the sale Deed dated 29.11.2010 have been executed by the Assessee-HUF in favour of Shri Shanti Bhushan and others. The Hon'ble Supreme Court in the case of Sanjeev Lal (supra), held as under : One A executed a will bequeathing a life interest in a self-acquired residential house in Chandigarh to his wife and upon her death, absolutely to two sons of his pre-deceased son M and his widow. Upon the death of A, possession of the house was given to his widow and upon her death on August 29, 1993, according to the will, the ownership in respect of the house vested in two sons of his pre-deceased son M and his widow. The appellants (one of the grandchildren and the daughter-in-law of A) entered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifiable reason, which was not within the control of the appellants, they could not execute the sale deed and the sale deed was registered only on September 24, 2004, after the suit challenging the validity of the will, had been dismissed. On the facts and in view of the definition of the term transfer , some right in respect of the capital asset had been transferred in favour of the vendee and, therefore, some right which the appellants had, in respect of the capital asset in question, had been extinguished because after execution of the agreement to sell it was not open to the appellants to sell the property to someone else in accordance with law. A right in personam had been created in favour of the vendee, in whose favour the agreement to sell had been executed and who had also paid ₹ 15 lakhs by way of earnest money. The intention of the Legislature in enacting section 54 is to give the assessee relief in the matter of payment of tax on long-term capital gains. The appellants were entitled to relief under section 54 of the Act in respect of the long term capital gains which they had earned in pursuance of transfer of their residential property and used for purchase of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue adopted or assessed or assessable by Stamp Valuation Authority on the date of the agreement may be taken for the purpose of computing full value of consideration for such transfer. 10.2 The ITAT, Ahmedabad Bench in the case of Dharamshibhai Sonani (supra), considered the proviso to Section 50C of the I.T. Act, being retrospective in effect and is effective from 01.04.2003. The order of the Tribunal in paras 3 to 10 are reproduced as under : ' [3] I have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal position. [4] The fundamental purpose of introducing section 50C was to counter suppression of sale consideration on sale of immovable properties, and this section was introduced in the light of widespread belief 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LISATION OF SECTION 50C TO PROVIDE RELIEF WHERE SALE CONSIDERATION FIXED UNDER AGREEMENT TO SELL Section 50C makes a special provision for determining the full value of consideration in cases of 'transfer of immovable property. It provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (i.e. 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 be deemed to be the full value of the consideration, and capital gains shall be computed on the basis of such consideration under section 48 of the Income-tax Act. The scope of section 50C was extended w.e.f A.Y. 2010-11 to the transaction which were executed through agreement to sell or power of attorney by inserting the word assessable along with 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 relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p://iondiabudget.nic.in/ub2016-17/memo/mem 1 pdf), as follows: Rationalization of Section 50C in case sale consideration is fixed under agreement executed prior to the date of registration of immovable property Under the existing provisions contained in Section 50C, in case of transfer of a capital asset being and or building on both, the value adopted or assessed by the stamp valuation authority for the purpose of payment of stamp duty shall be taken as the full value of consideration for the purposes of computation of capital gains. The Income Tax Simplification Committee (Easwar Committee) has in its first report, pointed out that this provision does not provide any relief where the seller has entered into an agreement to sell the property much before the actual date of transfer of the immovable property and the sale consideration is fixed 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 immova ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasoning adopted an order authored by me during my tenure at Agra bench [i.e Rajeev Kumar Agarwal v. ACIT (2014) 149 ITD 363 (Agra)] which centred on the principle that when legislature is reasonable and compassionate enough to undo the undue hardship caused by the statute such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically . In this case, it was specifically observed, and it was this observation which was reproduced with approval by Their Lordships, as follows: Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment 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 disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld apply retrospectively w.e.f. 1st April 1988 (i.e. the date on which the related legal provision was introduced). Secondly, it may be noted that, in the case of Allied Motors (P.) Ltd. v. CIT (1997) 139 CTR (SC) 364: (1997) 224 ITR 677 (SC), the scheme of s. 43B of the Act came to be examined. In that case, the question which arose for determination was, whether sales-tax collected by the assessee and paid after the end of the relevant previous year but within the time allowed under the relevant sales-tax law should be disallowed under s. 43B of the Act while computing the business income of the previous year? That was a case which related to asst yr. 1984-85. The relevant accounting period ended on 30th June, 1983. The ITO disallowed the deduction claimed by the assessee which was on account of sales-tax collected by the assessee for the last quarter of the relevant 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. (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right upto 1st April, 2004, and who pays the contribution after 1st April, 2004, would get the benefit of deduction under s. 43B of the Act. In our view, therefore. Finance Act, 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from 1st April, 1988, when the first proviso was introduced. It is true that the Parliament has explicitly stated that Finance Act, 2003, will operate w.e.f. 1st April, 2004. However, the matter before us involves the principle of construction to be placed on the provisions of Finance Act, 2003. (9) So far as the amendment to Section 50C being retrospective in effect is concerned, there is no doubt about the legal position. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be oblivious to the fact that this proviso states that 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 (emphasis supplied) making it clearly optional to the assessee, and that, in any event, what has been brought by the lawmakers as a measure of relief to the taxpayers cannot be construed as resulting in a higher tax burden on the taxpayers. Of course, assuming that my understanding of this statutory provision is in harmony with the legislative intention, insertion of words at the option of the assessee between stamp valuation authority on the date of agreement may and be taken for the purposes of computing full value of consideration for such transfer , in first proviso to Section 50C(1), could have made the legal provision even more unambiguous.' 10.3 The above decision would also support the case of the assessee that sale consideration as per Agreement to Sale shall have to be considered, which, in this case was ₹ 1 lakh and was effective in September, 1966. Therefore, the provisions of Section 50C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r did not agree. Where two views are possible and A.O. has taken one view and the Commissioner does not agree with the view taken by the A.O, the assessment order cannot be treated as an order erroneous or prejudicial to the interests of the Revenue. While exercising the revisional jurisdiction, the commissioner has not sit in appeal. We rely upon the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 and Kwality Steel Suppliers Complex's case (supra). In view of the above legal proposition and discussion, it is clear that Section 50C would not be applicable to the facts and circumstances of the case. In assessment year under appeal, because the date of Sale Deed shall have to be reckoned on the date of Agreement to Sale i.e., September, 1966, therefore, the view of the A.O. is sustainable in Law and if the Ld. CIT does not agree with him, such order could not be treated as erroneous and prejudicial to the interests of the Revenue. On minor issue, assessee filed reply but no order have been passed by the Pr. CIT. It is a case where A.O. made enquiry into the matter by calling explanation of assessee and was satisfied wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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