TMI Blog2019 (6) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is a possibility of increase in the market rate. The assessee had obtained the market value certificate as on 16.11.2010 from the Joint Sub Registrar vide certificate dated 27.05.2015 for the same door No.2-4-34 and it was ₹ 16,000/- per sq.yard as on 16.11.2010. Subsequent to the execution of the sale document also the assessee has obtained the guideline value for the same municipal number of 2-4-34 and the market value as on 18.04.2011 was at ₹ 12,000/- per sq.yard. The District Registrar fixed the market rate at ₹ 26,000/- as against the guide line value of ₹ 12,000/- or ₹ 16,000/- as per their own records without giving reason for deviating the SRO value or the market value fixed as on 16.11.2010 as agreed by both the parties. On 08.06.2017 also, the assessee has obtained the market value certificate from Joint Sub Registrar, Registration and Stamps Department of Govt. of Andhra Pradesh which was certified that the value of the vacant land at Door No.2-4-34 was ₹ 12,000/- as on 28.02.2011. AO brushed aside the evidence produced by the assessee for irrelevant differences in the certificate such as change of locality etc. AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings the AO found that the assessee has sold the of vacant site in Kakinada admeasuring 6,602 sq.yds in Door No.2-4-34 for a consideration of ₹ 10,56,32,000/- vide sale deed dated 28.02.2011 to M/s Chandana Brothers Shopping Mall., Visakhapatnam. Prior to execution of sale deed , the assessee had entered into an agreement with the purchaser on 16.11.2010 for sale consideration of ₹ 10,56,32000/- which was registered before the registering authority and the assessee filed the return of income accordingly, admitting long term capital gains of ₹ 9,80,73,696/- declaring full value of consideration at ₹ 10,56,32,000/-. The Assessing Officer (AO) found from the sale deed dated 28.02.2011 that though the market value of the property was ₹ 10,56,32,000/- accepted by the SRO as on the date of registration of the agreement, subsequently it was revised and refixed at ₹ 17,17,78,000/- u/s 47(A) of the Indian Stamps Act for the purpose of payment of stamp duty vide proceedings No.G2/MV/486/2011 dated 04.03.2011 by District Registrar of Assurances, Kakinada(in short District Registrar) as against the original market value of ₹ 10,56 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-07 by the Hon ble ITAT, Hyderabad, Bench-B, Hyderabad dated 09.11.2012) b) Moole Rami Reddy, Visakhapatnam Vs. ITO, Ward-1(2), Visakhapatnam in ITA No.311/Vizag/2010, Assessment Year 2006-07 by the Hon ble ITAT, Visakhapatnam Bench, Visakhapatnam dated 10.12.2010. 3.1. The AO considered the explanation offered by the assessee but did not find merit in the assessee s request to consider the sale deed value due to the following reasons : (a) It is an undisputed fact that the market value of the property sold was determined at ₹ 17,17,78,000 by the District Registrar Collector u/s 47(A) of the I.S.Act for the purpose of payment of stamp duty vide proceedings No.G2/MV/486/2011 dated 04.03.2011. (b) it is also an undisputed fact that the difference of Stamp Duty of ₹ 46,19,820 was paid by the purchaser of the said property on 04.03.2011. (c) These above mentioned two facts were clearly endorsed on the reverse of the 4thpage of the Registered Sate Deed dated 28.02.2011, a copy of which is available with the assessee from the beginning. In fact, the said copy of the sate deed duly inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains and computed the capital gains and brought to tax the sum of ₹ 16,55,10,331 under the head long term capital gains. 4. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) upheld the order of the AO and dismissed the appeal of the assessee. The Ld.CIT(A) in his order endorsed the view of the AO holding that the sale consideration required to be adopted as per the sale deed, but not as per the sale agreement. 5. Against the order of the CIT(A), the assessee filed appeal before this Tribunal. During the appeal hearing, the Ld.AR made two fold arguments. Firstly the Ld.AR argued that the assessee has transferred the property on 16.11.2010 by way of agreement of sale coupled with possession and has transferred the land and handed over the possession of the land to the vendee. Therefore as per section 2(47) of the Act the transfer was completed on 16.10.2010. The agreement also was registered and the assessee had received the part of the sale consideration of ₹ 5.00crores through Demand Draft bearing No.063001 dated 16.11.2010 drawn on Kotak Mahindra Bank, Visakhapatna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- as on 28.02.2011 even after the date of enhancing the value subsequent to the proceedings of the District Registrar, Kakinada. Therefore, argued that the market value of the property for the purpose of stamp duty as on 28.02.2011 was only ₹ 12,000/- per sq.yard, but not ₹ 26,000/- per sq.yard as fixed by the District Registrar. The valuation made by the District Registrar was arbitrary hence argued that the same should not be adopted for capital gains purpose and it would cause financial injury to the assessee. Though the purchaser has paid the stamp duty the same is in dispute, hence, argued that the market value as on 16.11.2010 as per the sale agreement required to be adopted for the purpose of capital gains, but not the enhanced value of the District Sub Registrar, Kakinada. Accordingly, requested to set aside the order of the Ld.CIT(A) and delete the addition made by the AO. 6. On the other hand, the Ld.DR argued that the assessee had entered into sale agreement on 16.11.2010 and the same was registered for a consideration of ₹ 10,56,32,000/- and the part amount was paid subsequent to sale agreement and the land was registered by sale d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value was determined at ₹ 10,56,32,000/- as endorsed by the sub registrar on 16.11.2010 in page No.4 of the said document. Therefore, for all practical purposes, the market value as on 16.11.2010 was determined by the stamps and registration authorities of state government at ₹ 10,56,32,000/-. The assessee had also received the part consideration and the vendee had agreed to pay the balance consideration at the time of registration of the sale deed. The part payment was also received by crossed cheque. The document was released and there was no evidence placed by the revenue to show that the market value as on 16.11.2010 was disputed by the stamps and registration authority or referred the matter to the District Registrar for determination. Subsequently, the sale deed was presented for registration by adopting the same value of ₹ 10,56,32,000/- on 28.02.2011 which was not accepted by the registration authorities and referred the valuation to the District Registrar for fixing the value as on 28.02.2011, i.e. the date of registration. The District Registrar has conducted spot enquiries and determined the market value of the property at ₹ 26,000/- per square y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41.51 sq.yrds. for sale a consideration of ₹ 1.90 crores and received advance of ₹ 80.00 lakhs through bankers cheque No.756358, dated 14/07/2010. The assessee has to receive the remaining balance of ₹ 1.10 crores on or before 30/08/2010. However, the assessee has received 99.00 lakhs on 04/10/2010, 1.00 lakh on 04/10/2010 and ₹ 10.00 lakhs on 08/10/2010 i.e. on the date of registration of sale deed. Now the question is for the purpose of ascertaining the value as per section 50C, whether the date of agreement has to be considered or date of sale deed has to be considered. According to the assessee on the date of agreement dated 17/07/2010, the SRO value is much lesser than the sale price agreed by the assessee of ₹ 1.90 crores, therefore, the amount agreed on the date of agreement has to be considered and not on subsequent date i.e. date of registration of the sale deed. The case of the Assessing Officer is that the agreement entered by the assessee with the purchaser is unregistered agreement, therefore, there is no validity in the eye of law, hence, as per section 50C the value has to be determined on the date of sale deed. Accordingly, the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of stamp duty in respect of such transfer, the value so adopted or assessed shall for the purposes of section 48, be deemed to be the full value of the consideration. In other words,full consideration mentioned in section 48 is to be replaced by the consideration on which value of the property was adopted for the purpose of payment of stamp duty. 10. Sub-Section (2) of section 50C further contemplates that in case assessee alleges that stamp duty valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer, then, the AO may refer the valuation of the capital asset to the Valuation Officer. Subclause (v) of Section 2(47) has a direct bearing on the controversy. Therefore, it is pertinent to taken note of this clause. It reads asunder: 'Section 2 . . . . . . . . . . . . . . . . (47) transfer , in relation to a capital asset, includes,- (i) to (iva) (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefore by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof. 13. A perusal of section 53A of the TPA would indicate that it provides a protection to transferee to retain his possession which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a capital asset, being land or building or both, is less than the value adopted or assessed by any authority for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall for the purposes of section 48, be deemed to be the full value of the consideration. The question before us is, what could be the full value of sale consideration i.e. whether the value on which stamp duty was paid at the time of sale deed or the value declared in the sale agreement ? In such a situation where the assessee is not satisfied with adoption of sale value on which stamp duty was paid, then scheme of the Act prescribes a mechanism under subsection (2) of section 50C for making a reference to the DVO to determine fair market value of the property. The reasons for such a mechanism is that stamp duty fee is only 4.95% (herein Gujarat) on the total sale consideration, which is a small amount and can be borne by any vendor/vendee. But for the purpose of Income Tax Act, the liability would enhance multi fold, and due to this reason, mechanism has been provided in the Act for the assessee to demonstrate that the value received by him was far less than one adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains. 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-intrade. 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has contended that consideration of ₹ 3,00,11,000/- is more than the valuation for the purpose of stamp duty as on 8.2.2010. Nowhere the assessee has pointed out specific rate on the date of agreement. Therefore, we allow these two grounds of appeal for the statistical purpose. We set aside this issue to the file of the AO. The ld.AO shall call for circle rate for the purpose of stamp duty valuation of this property as on 8.2.2010. He shall determine the sale value of the property on the basis of circle rate applicable on this property on 8.2.2010, and thereafter compute long term capital gain assessable in the assessment year 2013-14. In other words, transfer of this property would be construed on 5.6.2012, but the full value of consideration is to be equivalent to the amount on which stamp duty was payable on 8.2.2010. 11. In the case of M/s. Lahiri Promoters (supra), the ITAT, Visakhapatnam Bench by following the decision of the Hon'ble Supreme Court in the case of Shri K.P. Varghese vs. ITO (131 ITR 597) has held as under:- 12. Thus, by executing the sale deed in June, 2005, the assessee has only completed the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. We find that to decide this appeal we need to quote the relevant portion of section 50C, which reads as under:- 50C. (1) 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 : [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 amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned in the agreement for sale has to be taken into consideration for the purpose of assessment of income for the assessment year when the agreement was entered into and possession was given. 7.2. In the instant case both transactions of agreement and possession was handed over on 16.11.2010 and the part payment was also received by the assessee on 16.11.2010.Therefore respectfully following the view taken by this tribunal in the case of Appana Hari Naga Venkat Rao supra we hold that market value determined by the SRO for registering the document as on 16.11.2010 has to be considered as the full value of consideration but not the value determined in the sale deed. 8. Even otherwise from careful verification of the proceedings of the District Registrar, the market rate as on the date of execution or the sale deed was ₹ 26,000/- i.e. on 28.02.2011, but not as on16.11.2010 Since there was substantial time gap between the sale agreement and the sale deed, there is a possibility of increase in the market rate. In the instant case, the assessee had obtained the market value certificate as on 16.11.2010 from the Joint Sub Registrar vide certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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