TMI Blog2021 (11) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... n by invoking provisions of section 50C(1) of the Act and further, adopting guideline value of property as on date of registration of property, even though the assessee has fixed consideration for transfer of property by entering into an agreement to sell. Hence, we direct the AO to adopt sale consideration for transfer of property as agreed between the parties in sale agreement dated 09.02.2012. - Decided in favour of assessee. - I.T.A. No. 2944/Chny/2017 - - - Dated:- 27-10-2021 - Shri V.Durga Rao, Judicial Member And Shri G.Manjunatha, Accountant Member For the Appellant : Mr. R.Sivaraman, Advocate For the Respondent : Ms. R.Anita, Addl.CIT ORDER PER G.MANJUNATHA, AM: This appeal filed by the assessee is directed against the order passed by the learned CIT(A)-1, Chennai dated 27.09.2017 and pertains to assessment year 2013-14. 2. The assessee has raised following grounds of appeal:- 1. The order of Learned CIT(A) dated 27.09.2017 for the Assessment year 2013-l4 is contrary to the facts and circumstances of the case and is opposed to the principles of equity, justice and fair play. 2. The Learned CIT(A) erred in making an addition amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961, and determined long term capital gain by adopting deemed sale consideration at ₹ 7,76,70,000/- and made addition of ₹ 2,67,34,750/- to the total income. The relevant findings of the Assessing Officer are as under:- It is mentioned in the sale deed that the sold property of the land is vacant Agricultural land. However the sold property is not an Agricultural land for the following reasons. (a) As on 01/04/2012, there was a revision in the Guide Line Value on the sold lands. The Guide Line Value per acre was abolished and it was valued in Square Feet only. The rate per Sq.Ft is ₹ 2,100/-. When the lands are valued in Square Feet and not in Acre, then the sold lands was not an Agricultural Land. It is pertinent to note that in the records of Registration Department the land situated in the Survey no. 103/1, New survey no. 103/30 at Kanathur Reddy Kuppam is classified as Residential Class I - Type I, which is reproduced as below: (b) Similarly, the sold lands is situated at Shortium Village,Kanathur Reddy Kuppam, Chengalput District, Kancheepuram has been with in the 8 km distance from the extended corporation of Chennai. Hence, it loos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments of the assessee and upheld additions made by the Assessing Officer for re-computation of long term capital gain from sale of property. The learned CIT(A) has also discussed issue in light of agreement to sale between parties and sale deed for conveyance title of the property and observed that sale agreement by the assessee with different person and sale deed was executed in favour of person other than the person agreed to buy property and thus, it is not a case of the assessee that there was sale agreement between the parties fixing consideration for transfer of property before enhancement of guideline value by the authorities and accordingly, opined that assessee s case does not fall within the provisions of section 50C of the Income Tax Act, 1961. The relevant findings of the learned CIT(A) are as under:- 4. The first issue relates to application of s.50C in respect of the sale of land on which long term capital gain of ₹ 4.10 crores have been disclosed by the appellant in its return of income. The appellant had entered into an agreement for sale on 09.02.2012 with one Mr. Mohamed Jabir for the sale of vacant land situated at Kanathur Radikuppam village for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the appellant and Ms. Mariam Mehmood, Mrs. Thiaka Sithi Aliya and Mr. Mohamed Zabir. Thus the parties with whom the agreement to sell was entered into and the parties between whom the sale deed is entered into are different. For this reason alone the agreement to sell cannot be taken as the basis for the sale because the actual sale is registered in the name of three persons out of which two are not party to the original agreement to sell. 7. Be that as it may, the provisions of section 50C are unambiguous and it specifically provides that the value adopted by any authority for the purpose of payment of stamp duty should be the value of full sale consideration in respect of a transfer of capital asset being land or building or both. Thus, the section does not give any scope for considering any other value other than the value that is assessed for the purpose of stamp duty valuation. In this case, the sale deed clearly discloses the value of the property at ₹ 7,76,70,000/-. In view of the same, there is no scope to consider any other valuation that may have prevailed on the date of agreement to sell. 8. As regards the appellant s reliance upon the proviso ena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property. 29.3 Applicability: This amendment takes effect from 1st of April, 2017 and will, accordingly, apply from assessment year 2017-18 and subsequent assessment years. The appellant, however, seeks to give a retrospective effect to the proviso contrary to the specific mandate of the legislature at the time of enacting the proviso. 9. The true nature of a proviso and the principles applicable for the interpretation of the same have been considered by the Honble Supreme Court in the case of S. Sundaram Pillai Others vs. V.R. Pattabiraman Others (1985) 1 SCC 591. The relevant part is extracted here: 31. In the case of Local Government Board v. South Stonehand Union, Lord Macnaghten made the following observation: I think the proviso is a qualification of the preceding enactment, which is expressed in terms too general to be quite accurate. 32. In Ishverlal Thakorelal Almaula v. Motibhai Nagjibhai it was held that the main object of a proviso is merely to qualify the main enactment. In Madras and Southern Mahratta Railway Co. Ltd. V. Bezwada Municipality, Lord Macmillan observed thus: The proper function of a proviso is to except and deal wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Hon ble Supreme Court in the case of Allied Motors P. Ltd. Vs. CIT 224 ITR 677 had the occasion to consider whether the 1st proviso to section 43B could have retrospective effect. The Hon ble Supreme Court held that the proviso supplies an obvious omission and but for this proviso the ambit of section 43B becomes unduly wide bringing within its scope those payments which were never intended to be disallowed. The Court went on to hold that a proviso which is inserted to remedy unintended consequences and make the provision workable, a proviso which supplies an obvious omission in the section required to be treated as retrospective so that a reasonable interpretation can be given to the section as a whole. In this case, however, sub-section (1) of section 50C is clear and unambiguous and cannot be regarded as unworkable or resulting in unintended consequences. The proviso is also not intended to remove any obvious omission or make the section workable. The proviso constitutes a conscious amendment to carve out an exception to the main rule only when certain conditions are fulfilled. The proviso has the effect of giving an entirely different treatment to the exceptions covered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date when the agreement fixing the sale consideration (agreement to sell) is entered into, and a part of the consideration has been received on the date of such agreement to sell through banking channels. In respect of such transactions, the proviso enacts that the stamp duty value on the date of agreement: to sell will be considered. This is at variance with the main section. Such a transaction would have been subjected to value as on the date of registration, prior to 2016. Now the value to be taken is as on the date of agreement. The proviso no doubt does not bring into the ambit of section 50C any transaction that was not earlier covered by the section. However, the proviso definitely changes the basis of determining the sale consideration under the said section which constitutes a marked departure from the main section. It has application only in those cases that fulfils certain conditions such as receipt of sale consideration through banking channels or by digital mode on or before the date of agreement to sell. Further, it is also possible that the stamp duty valuation on the date of registration may be lower than the valuation prevailing on the date of agreement to sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f non-registration of sale agreement to make additions towards capital gain by adopting guideline value of property as on the date of registration without appreciating fact that registration of document conferring right and title of property was made mandatory by an amendment to the Act with effect from October, 2012 and thus, prior to said date, registration of any document was not necessary. Further, the learned CIT(A) has gone to observe that sale agreement was entered into with different person and sale deed was executed in favour of person other than the agreed person, without appreciating fact that the assessee has agreed to sell property to Mr.Mohamed Zabeer and said property has been registered in the name of his Mother and sister. Therefore, for that reason he cannot said that there is no agreement to sale between the parties. The assessee has entered into sale agreement fixing consideration for sale of property and said agreement was subsequently effected into by registering property in favour of the buyer and thus, consideration fixed as on date of agreement should be considered for the purpose of determination of full value of consideration. 7. The learned D.R., on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputing full value of consideration. 9. We have given our thoughtful consideration to the arguments advanced by the learned A.R for the assessee in light of reasons given by the Assessing Officer and we ourselves do not subscribe to the reasons given by the Assessing Officer as well as learned CIT(A) to adopt guideline value of property fixed by the State Govt. for payment of stamp duty as on date of registration of sale deed for simple reason that when the assessee has entered into sale agreement fixing amount of consideration for transfer of property, guideline value of property fixed by the authorities for payment of stamp duty was less than agreed consideration shown in sale agreement. Further, guideline value of property has been revised w.e.f. 01.04.2012 (subsequent to the date of sale agreement i.e.,09.02.2012), as per which guideline value of property has been revised to ₹ 7,76,70,000/-. Therefore, under these facts, one has to examine, whether the Assessing Officer is right in adopting guideline value fixed by the authorities for payment of stamp duty as on date of registration of property, as against agreed consideration between the parties. The provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inserted in the statute. If you go by said analogy, then, as per the proviso where date of agreement and date of registration for transfer of property are not the same, then value adopted or assessed or assessable by the stamp valuation authority on the date of agreement to be taken for the purpose of computing full value of consideration, provided such consideration or part thereof was paid by cheque or through banking channel. 10. In this case, as per agreement between parties, the assessee had entered into sale agreement with one Mr. Mohamed Zabeer on 09.02.2012 and fixed sale consideration of ₹ 5,10,00,000/- and had also received advance of ₹ 1.00 crore by cheque. The property has been subsequently registered in favour of Mrs. Maryam Mahmood and Mrs. Thaika Sithi Aliya, sister and Mother of Mr. Mohamed Zabeer for a consideration of ₹ 5,10,00,000/-. The guideline value of property as on the date of agreement to sell was less than agreed consideration of ₹ 5,10,00,000/-. Therefore, we are of the considered view that for the purpose of computation of long term capital gain agreed consideration shown in sale agreement between parties should be considered, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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