TMI Blog2020 (9) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... to be adopted at ₹ 81 lakhs being 25% of share of ₹ 3,24,00,000/-. Appeal of the assessee is partly allowed. - ITA No.650/Ahd/2016 - - - Dated:- 8-9-2020 - Shri Rajpal Yadav, Vice-President And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri Bandish Soparkar, AR For the Revenue : Shri Dileep Kumar, Sr.DR ORDER PER RAJPAL YADAV, VICE-PRESIDENT Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-10, Ahmedabad dated 11.1.2016 passed for the Asstt.Year 2012- 13. 2. Assessee has taken seven grounds of appeal, out of which, ground no.1 to 4 are inter-connected with each other. In these grounds, grievance of the assessee relates to determination of sale consideration for the purpose of section 50C of the Act, which would lead to computation of long term capital gain on sale of agriculture land. In brief, grievance of the assessee is that the ld.CIT(A) has erred in confirming the addition of ₹ 50,20,750/- while computing the long term capital gain. 3. Brief facts of the case are that the assessee has filed his return of income on 27.3.2014 electronically declaring taxable income of ₹ 2,55,836/-. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by the vendor through account payee cheque available on page no.21 of the paper book. Thus, he demonstrated that agreement to sell was not registered, but part payment was received through banking channel. The receipt of this payment has subsequently been recognized in the sale deed which is available on page no.66 to94 of the paper book, particularly, he took us through page no.76 of the paper book, internal page no.11 to 14 of the sale deed. On the strength of these documents, he demonstrated that payment received by virtue of agreement to sell through banking channel has been recognized in the sale deed also. He further relied upon the decisions, viz. Dharamshibhia Sonani Vs. ACIT, 75 taxmann.com 141 (Ahd-Trib), Rahul G. Patel Vs. DCIT, 97 taxmnan.com 598 (Ahd-Trib) and Manilal Dasbhai Makwana Vs. Ito, 96 taxmann.com 219 (Ahd-Trib) and submitted that sale value on the date of agreement ought to be taken for the purpose of section 50C. The break-up of cheques including their number and date of payment etc. has been compiled in English translation and placed on page nos.6 to 35 of second paper book. He took us through all these details. 6. The ld.DR on the other hand re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . . . . . . . . . . . . . (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 contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ; or' 11. Before taking cognizance of any argument, it is pertinent to take note of Registration and other related Laws, Amendment Act, 2001 which has brought about radical changes in the rights flowing on the basis of the agreement executed in part performance of the contract under section 53A of 1882 Act. The amendments have been made to sections 17 and 49 of the Indian Registration Act, 1908. It is pertinent to take note of section 17(1A) as well as Section 49 of the Registration Act. 17.(1A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related laws (Amendment) Act, 2001 and if such docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 53A of the TPA would indicate that it provides a protection to transferee to retain his possession which was taken in part performance of the contract. He was able to protect his possession even after expiry of limitation to bring a suit for specific performance. But after the amendment effected in the Registration and Other Related Laws Amendment Act, 2001, it has been provided that though a contract accompanied by either of possession or executed in favour of a person in possession is compulsorily registerable under section 17(1A) of the Registration Act, 1908, if he failed to register such contract, then, he would not be able to protect his possession or any benefit conferred by section 53A of the TPA. Proviso appended to section 49 of the Indian Registration Act only postulates that such agreement could be tendered in evidence in a suit for specific performance. In other words, validity of unregistered agreement has not been denied for the purpose of adducing it as evidence for obtaining the benefit flowing from such contract. But for the purpose of protecting the possession, un-registered contract could not be enforced. The transfer within the meaning of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided in the Act for the assessee to demonstrate that the value received by him was far less than one adopted for the purpose of stamp duty valuation. For this, he can make a request to the AO under section 50C(2) for making a reference to the DVO. It is pertinent to observe that the assessee entered into an agreement to sell on 8.2.2010. The AO has not disputed this agreement. The assessee has received payment in pursuance of this agreement through account payee cheque. Let us take a situation where a vendee fails to get the sale deed executed. The assessee being vendor has a remedy for filing a suit for specific performance under the Specific Relief Act. The time limit to file a suit for specific performance has been provided in Indian Limitation Act, which is three years. In such situation, when the vendor files a suit for specific performance to force the vendee to purchase the property. In that situation, he will not pay anything over and above, the amount stated in the sale agreement. In that situation, the assessee would not get anything more than the amount mentioned in the agreement, though such situation may arise after three-four years on execution of the decree pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble property and the sale consideration has been fixed in such agreement. A later similar provision inserted by way of section 43CA does take care of such a situation. 6.2 It is therefore proposed to insert the following provisions in section 50C: (4) Where the date of an agreement fixing the value of consideration for the transfer of the asset and the date of registration of the transfer of the asset are not same, the value referred to in sub-section (1) may be taken as the value assessable 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. 15. Taking a clue from the report, a proviso has been appended by way of Finance Act, 2016 to section 50C and such proviso reads as under: 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, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 and shall accordingly apply in relation to assessment year 2017-18 and subsequent years. 17. If we take all these aspects in their settings as a whole, then it would indicate that earlier whenever an assessee disputed adoption of sale equivalent to the amount on which stamp duty is paid, then reference to the DVO is made under section 50C(2). Normally, as observed earlier, when a sale agreement was executed, payment was received in part performance of the agreement, then vendor would not get anything more than the amount agreed in the sale agreement. There may be a time gap between execution of agreement to sell and execution of sale deed. In between if circle rate is being enhanced, then he would like to challenge adoption of higher sale value on the strength of sale agreement. In that situation, unnecessary energy would be devoted in ascertaining fair market value of the property on the date of sale. The encumbrance on the property by virtue of sale agreement would also goad the DVO to determine the fair market value of the property on the date of sale at a lesser amount than the value adopted for the purpose of payment of stamp duty. We have already made a refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement, and those payments have also been recognized in the final sale deed. Therefore, we do not have hesitation in concluding that agreement executed on 30.12.2010 has been given effect by the parties which resulted in execution of the sale deed roughly after one and half years. Circle rate at the time of execution of agreement was lesser than one adopted by the parties as sale consideration. Therefore, the facts in the case of Rahul G. Patel (supra) are fully applicable on the facts of the present case, and full sale consideration for the purpose of computing long term capital gain in the hands of the assessee is to be adopted at ₹ 81 lakhs being 25% of share of ₹ 3,24,00,000/-. 9. In ground no.5, the assessee has pleaded that receipt of ₹ 20,10,000/- should be not considered as part of consideration of rights and chargeable to capital gain. The ld.counsel for the assessee submitted that this ground was consequent to issue raised in the appeal of the Revenue, which has already been dismissed on account of low tax effect involved therein. Therefore, the assessee is not pressing this ground of appeal. 10. In ground no.6 is against charging of interest under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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