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TMI Blog2020 (8) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by the assessee and the Sub Registrar Office (SRO in short) value u/s 56(2)(vii)(b) of the Income Tax Act, 1961 (in short 'Act'). During the assessment proceedings, the AO found that the assessee has purchased the immovable property bearing D.No.9-137/3, Srivalli Nagar, Madhurawada, Visakhapatnam from Smt. Simhadri Sunitha and the transaction was registered vide document No.4539/2013 on 28.10.2013 at SRO, Madhurawada for a consideration of Rs. 5 crores, whereas the Govt. value of the said property for registration purpose was fixed at Rs. 12,67,82,500/-. The AO invoked provisions of section 56(2)(vii)(b) of the Act and taxed the difference between the consideration paid and the SRO value as on the date of agreement amounting to Rs. 4,55,11,750/- and completed the assessment. 3. Against which the assessee went on appeal before the CIT(A) and the Ld.CIT(A) allowed the appeal of the assessee taking support from the decision of this Tribunal in the case of M.Siva Parvathi &Ors. reported in 129 TTJ 463. Though the decision in the case of M.Siva Parvathi was rendered in the context of section 50C of the Act, the Ld.CIT(A) viewed that the decision is squarely applicable in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther argued that the assessee had entered into agreement for purchase of the property on 13.08.2012 and registered the property in the F.Y.2013-14 relevant to the A.Y.2014-15 and as on the date of agreement, there was no provision of section 56(2)(vii)(b)(ii) in the Act and thus argued that there is no case for application of 56(2)(vii)(b) in the instant case. The Ld.AR further submitted that though the assessee had entered into agreement for purchase of property on 13.08.2012, the assessee could not get the property registered due to the problems in obtaining the original title deeds which were in the custody of bank due to the loans as evidenced from the order of the Ld.CIT(A). Therefore, submitted that there is sufficient evidence available from the order of the Ld.CIT(A) that there is genuine cause for delay in registration, which is beyond the control of the purchaser. The advance payment was made by cheque and there was an agreement for purchase of the property for Rs. 5 crores, hence, submitted that there is no application of section 56(2)(vii)(b)(ii) of the Act in the instant case. The Ld.AR further submitted that the Ld.CIT(A) has rightly allowed the appeal of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .CIT(A) in 6.3 and 6.4 which reads as under : "6.3. On a careful perusal of the judicial pronouncement cited by the appellant, I find that the facts are almost identical in nature to the facts of the appellant's case. In the said case of M. Siva Parvathi & Drs., (Supra) the decision was rendered in the context of s.SOC of the Act. s.56(2)(vii)(b) is nothing but an extension of the provisions of s.50C of the Act. The provisions of s.SOC are applicable to the vendor and the provisions of s.56(2)(vi)(b) are applicable to the buyer. But for this difference, the provisions are identical in all respects. In the case before the Hon'ble ITAT,Visakhapatnam Bench the agreement was entered into in August, 2001 and the sale took place in October, 2004. In the interim period, the provisions of s.50C were introduced we.f. AY.2003-04. Thus, the agreement was prior to AY.2003-04 and the sale was subsequent to A.Y.2003-04. While addressing the issue whether the provisions of s.50C can be made applicable in such a situation, the ITAT held as under: '8.10. The periods of the impugned fransactions7iive fallen in the transition phase of law, La, the sale agreement was entered before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the appellant and I hereby direct the Assessing Officer to delete the entire addition of Rs. 4,55,11,750/-. Thus, the appeal made by the appellant on this ground stands allowed." 6.1. Hon'ble Supreme Court in the case of K.P.Vargheese observed that the vendor has fulfilled the contractual obligation which was cast up on him by sale agreement. It was held by the Hon'ble Apex court in Nirmal Textiles that the character of the transaction vis-à-vis I.T. Act to be decided on the basis of the law that is prevalent as on the date of transaction which was initially entered into. Final transaction was only the fulfilment of the contractual obligation, thus, this Tribunal viewed that the proviso which was not in existence at the time of entering into the transaction would not apply at the time of completion of the transaction also. As observed from the facts, in this case, agreement was entered on 13.08.2012 for purchase of the property and paid part consideration as discussed above. Hence, the provisions existing as on the date of entering into agreement required to be applied for deciding the taxable income. The provisions u/s 56(2)(vii)(b) which are applicable for the A.Y. 2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision relied upon by the assessee in the case of D.S.N.Malleswara Rao cited supra which is related to the A.Y.2006-07which is prior to the insertion of section 56(2)(vii)(b) and the same has no relevance in the instant case. However in the cited case of D.S.N.Malleswara Rao also the Hon'ble ITAT held that the law as applicable as on the date of agreement required to be applied for taxing the income. The department has not made out any case of application of 56(2)(vii)(b) and since the provisions of section 56(2)(vii)(b)(ii) were not available in the statute as on the date of entering into the agreement, following the reasoning given in the case of M.Siva Parvathi & Others (supra), the same cannot be made applicable to the assessee. The department has not brought any evidence to show that there was extra consideration paid by the assessee over and above the sale agreement or sale deed. No other case law of any high court supporting the contention of the department was brought to our notice by the Ld.DR. Therefore, we hold that the Ld.CIT(A) has rightly applied the decision of this Tribunal in the assessee's case and deleted the addition. Hence, we do not find any infirmity in the ..... 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