TMI Blog2017 (5) TMI 1725X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld.AO erred in making addition by applying the provisions of section 50C of the Act, taking the basis of date of sale deed rather than date of agreement to sale. We accordingly, set aside the order of Ld.CIT(A) and allow the assessee s appeal. - ITA No.1932/Ahd/2013, ITA No.1933/Ahd/2013 - - - Dated:- 23-5-2017 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For the Assessee : Shri M.K. Patel, AR For the Revenue : Shri James Kurian, Sr..DR ORDER PER MANISH BORAD, ACCOUNTANT MEMBER: This two appeals by the different Assessee s for Asst. Year 2009- 10 are directed against the separate order of the Learned Commissioner of Income (Appeals)XV, Ahmedabad (in short Ld.CIT (A) ) dated 31/03/2013 arising out of order u/s.143(3) of the income tax 1961 (herein after referred as Act ) framed by DCIT, Circle-9, Ahmedabad. 2. As the issues involve and the facts are common in both the appeals they were heard together and have being disposed of through this common order for the same of convenience. 3. Solitary grievance in both these appeals is against the order of Ld.CIT(A) confirming addition made by the Learned Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Ld.AO has been confirmed by Ld.CIT(A) . 7. Ld.Counsel further relying on the judgment of Co-ordinate Bench, Ahmedabad in ITA No.1237/Ahd/2013 pronounced on 30/09/2016 submitted that amendment brought in by the Finance Act 2016 with effect from 01/04/2017 in the provision of section 50C of the Act were held to be retrospective in nature wherein it has been provided that if the date of agreement fixing amount of consideration and date of registration for the transfer of capital asset are not same, the value adopted or assessed or assessable by the stamp valuation authority on the date of the agreement may be taken for the purpose of computing full value of consideration of such transfer subject to a condition that the amount of consideration or part thereof, has been received by account payee cheque or draft or by electronic transfer on or before the date of agreement for transfer. 7.1 Ld.Counsel submitted that the issue in this appeal is squarely covered by this decision as in the case of assessee and also part of the payment has been received by account payee cheque as verifiable from the copy of agreement of sale placed on page 4 and 5 of paper books. 7. On the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 01/04/2017 is curative in nature and the assessee should not be denied the benefit for the issues prior to the date of amendment. The Co-ordinate Bench allowed the assesee s appeal by observing as follows: [1] By way of this appeal, the assessee appellant has challenged correctness of the order dated 21st January, 2013, passed by the learned CIT(A), in the matter of assessment under section 143(3) r.w.s. 147 of the Income Tax Act 1961, for the assessment year 2008-09. Grievance of the assessee, in substance, is that learned CIT(A) erred in upholding the impugned addition of ₹ 15,60,900 to the sale consideration, for the purpose of computing capital gains, under section 50C of the Act. [2] It is a case of reopened assessment. During the course of reopened assessment proceedings, the Assessing Officer took note of fact that the assessee, along with a co-owner, had sold certain land at Village Behstan, Surat, on 24.04.2007 at stated consideration of ₹ 45,00,000/- whereas on that day, according to the stamp duty valuation authority, this land was valued at ₹ 76,21,800/-. It was in this backdrop that the Assessing Officer sought to add ₹ 15,60,900/- to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sometimes considerable gap in parties agreeing to a transaction (i.e. agreement to sell) and the actual execution of the transaction (i.e. sale deed), and yet, it is the value as on the date of execution of sale deed which is recognized by Section 50C for the purpose of computing the capital gain because that is what is relevant for the purpose of computing stamp duty for registration of sale deed. The very comparison between the value as per sale deed and the value as per stamp duty valuation, accordingly, ceases to be devoid of a rational basis because these two values represent the values at two different points of time. In a situation in which there is significant difference between the point of time when agreement to sell is executed and when the sale deed is executed, therefore, should ideally be between the sale consideration as per registered sale deed, which is fixed by way of the agreement to sell, vis- -v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able 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 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 computi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 amendment is being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciple, 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 earlier in this ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 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 year) but before filing of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of land) are to be ignored. It is on this basis that the capital gains will be recomputed. With these directions, the matter stands restored to the file of the Assessing Officer for adjudication de novo, after giving an opportunity of hearing to the assessee and by way of a speaking order. I order so. [10] As I part with the matter, I may make one more observation. The amendment in Section 50C was brought in to provide relief to the assessee in a situation in which the stamp duty valuation of a property has risen between the date of execution of agreement to sell and execution of sale deed, as is the norm rather than exception, but the real estate market is now traversing through a difficult phase and there can be situations in which there is a fall in the stamp duty valuation rates with the passage of time. Such a situation has actually arisen in many places in the country, such as in Gurgaon (http://www.hindustantimes.com/gurgaon/for-the-first-timecircle- rates-reduced-in-gurgaon/story-cjp6e72TeGS9H5jJIALAGP.html), New Delhi (http://www.delhismartcities.com/blogs/high-circle-rates-causing-slump-realtyreduce- delhi-government/), and even in Dehradun (Uttarakhand) (http://w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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