TMI Blog2020 (5) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 50C was not applicable, where the properties were sold otherwise than by registered sale deed. The Hon ble Rajasthan High Court in the case of Satya dev sharma [ 2017 (9) TMI 1161 - RAJASTHAN HIGH COURT] has held insertion of the word assessable by way of Finance Act 2009 with effect from 01/10/2009 as having prospective in nature. In the instant case, if we consider the agreement to sale as genuine, then provisions of section 50C are not applicable and in such circumstances, the deemed sale consideration as per the stamp valuation authorities cannot be invoked in the case of the assessee. In both the situation whether the agreement to sale is genuine or not, deemed sale consideration of ₹ 1.56 crore cannot be invoked and thus finding of the lower authorities on the issue in dispute are accordingly set aside. The ground of the appeal of the assessee is accordingly allowed. Loss on sale of the shares held by the lower authorities as not genuine and not allowing set-off of the same against the long-term capital gains - For the purpose of the computation of the capital gain on transfer of asset, in terms of section 48 of the Act, the cost of acquisition and cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO computing long term capital gain on sale of agricultural land at ₹ 65,43,367/- as against ₹ 17,31,267/- computed by the appellant. 2.1 That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in upholding the action of the AO in adopting the half share of the assessee from sale of agricultural land at ₹ 78,12,100/- as against ₹ 30 lakhs actually received by the appellant vide MOU dated 17.10.2014. 2.2 That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in adopting the sale value of agricultural land as mentioned in SPA dated 6.4.2009 (conveyance deed executed on 23.6.2010) fraudulently got signed from the appellant by the buyer of land namely Shri H.P. Singh, Director, Anushna Estates (P) Ltd. 2.3 That on the facts and in the circumstances of the case the Ld.CIT(A) has erred in adopting the sale consideration of land as mentioned in the SPA dated 6.4.2009 without referring the matter to DVO as envisaged in Sec. 50C of the I.T. Act. 2.4 That in absence of any reference to the DVO the stamp duty valuation adopted for the purpose of computing the long term capital gains is illegal and may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 The facts qua the issue in dispute are that; (i) The assessee in the return of income shown sale of agricultural land at ₹ 4,30,00,000/-and after subtracting the cost of acquisition, cost of construction and other legal cost, the long-term capital gain of ₹ 17,31,266/-has been declared. (ii) During assessment proceeding, on being asked, the assessee filed a copy of the agreement to sale dated 01/04/2009. In the agreement to sale, the assessee has claimed to sale its 50% share in the agriculture land along with remaining 50% owners to M/s Anushna Estate Private Limited for a total sum of ₹ 60,00,000 /-. (₹ 30 lakhs to the assessee and remaining₹ 30 lakh to other owners of the land). According to the Assessing Officer, the said agreement to sale was made on non - judicial stamp paper of ₹ 50 but it was neither registered before any authority nor notarized, so he asked for the sale deed of the property, however, the assessee did not submit the said sale deed. (iii) the Assessing Officer by way of issue of notice under section 133(6) of the Act dated 18/03/2013, gathered a copy of the sale deed from the office of the sub- Registrar an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer, in view of the provisions of section 50C of the Act, the assessee was required to declare the long-term capital gain on the 50% amount of the deemed sale consideration of ₹ 1,56,24,200/- i.e. the amount at which the property was registered for the purpose of the stamp valuation, and therefore also this addition of ₹ 48,12,100/-was justified. 6.4 Before the Ld. CIT(A), the assessee submitted that the other Co-owners of the property and the order of attorney holder had cheated the assessee, therefore, the assessee has pursued legal remedy against all those persons in a court of law. In view of the legal proceedings, those persons have entered into a settlement agreement with the assessee, wherein they have admitted to their crime and considered the harm caused to the assessee. In nutshell, the contention of the assessee was that the property was registered through a special power of attorney dated 06/04/2009, which was fraudulently got signed from the assessee. 6.4 The Ld. CIT(A) admitted the additional evidences filed by the assessee, however, upheld the addition made by the Assessing Officer. 6.5 Before us, the learned Counsel of the assessee has filed pap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. The learned Counsel also relied on the following judicial pronouncement: i. Commissioner of Income Tax, Jaipur-II Vs.. Satya Dev Sharma [2017] 86 taxmann.com 150 (Rajasthan) ii. Commissioner of Income Tax-I, Coimbatore Vs. R. Sugantha Ravindran [2013] 352 ITR 488 (Madras) iii. Krishna Enterprises Vs. Additional Commissioner of Income Tax [2017] 88 taxmann.com 849 (Mumbai-Trib.) iv. Ramesh Verma Vs. Deputy Commissioner of Income-tax, Circle, Yamuna Nagar [2017] 163 ITD 421 (Chandigarh Trib.) v. Income-tax Officer, Ward 6(l), Jaipur Vs. Tara Chand Jain [2015] 155 ITD 956 (Jaipur-Trib.) vi. Smt. Sowcar Janaki Vs. Income-tax Officer [2013] 27 ITR(T) 226 (Chennai-Trib.) vii. Ran Mal Bhansali Vs. Assistant Commissioner of Income-tax [2012] 25 taxmann.com 149 (Jodhpur-Trib.) viii. Smt. Vijay Laxmi Dhaddha Vs. ITO [2009] 20 DTR (AT) 365 (Jaipur) ix. Without prejudice to above, the income declared in the return is ₹ 25,02,300/-. However, the Ld. AO has wrongly mentioned it as ₹ 27,61,600/- in the assessment order and computed tax on ₹ 27,61,600/- 6.8 The learned DR on the other hand relied on the order of the lower author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settlement, the Vendor doth hereby sell, convey and transfer the said land to the Vendee, who shall hereafter be the absolute owner/bhumidar of the same and shall enjoy all rights of ownership, possession, privileges, easements and appurtenances whatsoever of the said land, unto the Vendee, absolutely and forever. 2. That the actual physical vacant possession of the said land has been delivered by the Vendor to the Vendee, on the spot, at the time of registration of this sale deed. 6.12 So if we read, the entire registered sale deed as a whole, then we cannot import part related to sale consideration only as in view of the other part, sale of the property would be taxable in the hands of the assessee in subsequent assessment year. Thus, we cann t take the sale value shown in registered sale deed as sale consideration while treating the agreement to sale as genuine document. 6.13 The second issue would be the applicability of section 50C on the agreement to sell. Regarding this situation, the relevant provision of section 50C are reproduced as under: Special provision for full value of consideration in certain cases. 50C. (1) Where the consideration rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation 1.-For the purposes of this section, Valuation Officer shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Explanation 2.-For the purposes of this section, the expression assessable means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty. (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed or assessable by the stamp valuation authority referred to in sub-section (1), the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mp valuation authority are also brought into the ambit of section 50C. Thus, such introduction of new set of class of transfer would certainly have the prospective application only and not otherwise. Hence, the assessee's transfer admittedly made earlier to such amendment cannot be brought under section 50C . Thus it is clear that the amended provision of section 50C is not applicable to the transfer which had already taken place prior to the amendment. In the present case the assessee has transferred the capital asset for a consideration of ₹ 74,91,000/- and the document was neither registered nor evaluated for the purpose of stamp duty purposes by the Stamp Valuation Authority at the time of execution of said document . Therefore, there was no evaluation of stamp duty payable on the document. Thus in our view the deeming provision of section 50C do not come in to play thereby replacing the full valuation of consideration of the document with the value calculated by the Stamp Valuation Authority / registering Authority. In the absence of any adoption or assessment by the authority of state government for the purposes of the Stamp duty in respect of subject tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at such a high premium. (ii) No plausible explanation was submitted regarding such sharp decline in the share prices of the company (iii) The assessee and her son were directors of PSJ during relevant period and Smt Anjali jainis wife of director sh Pankaj Jain. (iv) The shares of the PSJ were not listed on any stock exchange and therefore same are not prone to volatility of the sharemarket 7.3 The Ld. CIT(A) upheld the disallowance of short term capital loss holding that networth of PSJ was not such, which might fetch any premium and any prudent man will not invest in shares of such a company, who has never disclosed any dividend in the past. He further observed that it was not demonstrated how the real estate share prices went up and fell down. 7.4 Before us, the learned Counsel of the assessee submitted that the assessee has discharged her onus by way of furnishing the details of purchase, sale and also details of the buyer. He referred to copy of share certificate available on page 58 of the paper-book. He also referred to copy of cheque used for making the parties, which is available on page 69 of the paperbook. Similarly, he referred to the documents of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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