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TMI Blog2020 (9) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,836/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee along with five more co-owners had sold two properties admeasuring 3386.28 sq.meters situated at survey no.237 of village Vadaj. The assessee has shown his share of sale consideration at Rs. 81.00 lakhs being 25% share. The AO further found that sub- Registrar, Ahmedabad City Taluka had valued the property for the purpose of stamp duty payment at Rs. 5,24,83,000/- as against sale consideration shown by the assessee at Rs. 3,24,00,000/-. Therefore, the AO issued a show cause notice inviting explanation of the assessee as to why sale value for the purpose of computation of capital gain should not be taken at Rs. 5,24,83,000/- i.e. value adopted by the sub-Registrar for payment of stamp duty In response to the query of the AO, it was contended by the assessee that he has entered into an agreement to sell on30.10.2010. A part payment equivalent to 10% of total sale consideration was received at Rs. 32,40,000/- by the vendor, and therefore the value for the purpose of section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). He contended that sale deed was registered on 31.3.2012, and therefore, the AO has rightly adopted the jantri value for the purpose of computing the long term capital gain on the date when sale deed was registered. 7. We have duly considered rival contentions and gone through the record carefully. One of the decisions referred by the ld.counsel for the assessee is in the case of Rahul G. Patel Vs. DCIT, 97 taxmann.com 598 (Ahd-Trib). It is authored by one of us (Vice-President). In that decision the Tribunal has considered all these aspects, and therefore we deem it appropriate to take note of discussion made by the Tribunal Rahul G. Patel (supra), which reads as under: "8. We have duly considered rival contentions and gone through the record carefully. Section 48 of the Income Tax Act provides mode of computation of capital gain. It contemplates that income arising under the head "capital gains" shall be computed by deducting from the full value of the consideration received or accruing, as a result of the transfer of the capital assets the following amounts, viz. (a) expenditure incurred wholly and exclusively in connection with such transfer; and (b) the cost of acquisitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave no effect for the purposes of the said section 53A. 49. Effect of non-registration of documents required to be registered.-No document required by section 17 1[or by any provision of the Transfer of Property Act, 1882 (4 of 1882)], to be registered shall- (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered: Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877) or as evidence of any collateral transaction not required to be effected by registered instrument.]" 12. We also deem it pertinent to take note of Section 53A of the Transfer of Property Act, 1882. It reads as under: "53A. Part performance.-Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if it was not registered then transfer within the meaning of section 2(47) will not happen. Like in the present case, agreement was executed on 8.2.2010 but not registered. Therefore, it is to be construed that transfer did not take place on 8.2.2010 rather took place on 5.6.2012 when sale deed was executed and registered. This may be the reason for the assessee to offer capital gain in the Asstt.Year 2013-14 only. 14. It is pertinent to observe that an agreement to sale was executed by the assessee on 8.2.2010 which is followed by payment through account payee cheque. Details of payments have been duly noticed by the ld.AO as well as by the ld.CIT(A). First cheque was received on 1.4.2011 for a consideration of Rs. 10 lakhs; then Rs. 30 lakhs on 23.7.2011; Rs. 15 lakhs on 28.12.2011 and Rs. 50 lakhs on 26.3.2012. Similarly on 1.5.2012 Rs. 45 lakhs was received through account payee cheque. It means that sale consideration were received by the assessee before the registration of sale deed regularly on different intervals. As observed earlier, section 50C provides that where the consideration received or accruing as a result of transfer by an assessee of a capital asset, being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reduce. In other words, at the time of an agreement in respect of an immovable property, a right in persona is created in favour of the transferee/vendee. When such right is created in favour of the vendee, the vendor is restrained from selling the said property to someone else because vendee in whose favour right in persona is created has legitimate right to enforce such specific performance of the agreement, if the vendor for some reason is not executing the sale deed. Thus, by virtue of agreement to sell, some right is given to the vendee by the vendor. It is encumbrance on the property. At this stage, we would like to make reference to new proviso appended to section 50C by way of Finance Act, 2016 and the background, under which such provision has been incorporated. In 2015, Government of India has set up Income Tax Simplication Committee headed by Justice R.V.Easwar, former judge of Delhi High Court. The Committee in its reported observed as under: "6.1 RATIONALISATION 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 immo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration for such transfer: Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer." 16. This amendment was explained in the Memorandum explaining the provisions of Finance Bill 2016. It reads as under: 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 land 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 tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f agreed terms in the sale agreement. This proviso would only simplify this exercise i.e. instead remitting the matter to the DVO under section 50C(2), he would conduct an inquiry as to what could be value of the property on the date of execution of the agreement, and whether such agreement has created any encumbrance or not. There could be a difference in the actual sale consideration than the amount on which stamp duty was paid. This proviso has simplified this thing. It contemplates that stamp duty valuation of the property for the purpose of stamp duty payment on the date of agreement can be deemed as full consideration of the capital asset. Thus, in this way, the proviso can be construed as clarificatory in nature, and can be applied on pending matters as already held by the ITAT in the case of Dharamshibhai Sonani (supra). 18. In the present case, we find that the assessee has contended that consideration of Rs. 3,00,11,000/- is more than the valuation for the purpose of stamp duty as on 8.2.2010. No where 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 is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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