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TMI Blog2021 (12) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... SOC, stating that the AO is duty bound to adopt the SRO rates, on the date of registration, even when the assessee disputed the SRO value adoption, without referring to valuation officer and ignoring the evidence of valuation given by the assessee. 4. The Ld. CIT (Appeals) erred in disregarding various judicial precedents, which have upheld the law that the proviso to Sec SOC is retrospective in nature, as the same was inserted to provide relief to the assessees from the of Sec SOC. 5. The Ld. CIT (Appeals) has erred in applying the provisions of Sec S4F, by concluding that the appellant has constructed three houses. The CIT (Appeals) erred in not considering the fact that all the houses were constructed in a row to facilitate the living of appellant's sons after the appellant's death and the Ld. CIT (Appeals) erred in not considering the various judicial precedents, which have upheld the law that several units of houses constructed near to each other would constitute a single residential house for the purpose of section 54F. 5. Any other ground, if any, will be submitted at the time of hearing with the kind permission of the Hon'ble Income Tax Appellate Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee preferred an appeal before the CIT(A), the CIT(A) confirmed the order of the AO. 4. Aggrieved by the order of CIT(A), the assessee is in appeal before the ITAT. 5. Before us, the ld. AR reiterated the submissions made before the authorities below and has filed written submissions, which are as under: "1. The appellant Sri K. Gangi Chetty is aged about 87 years and is an Income Tax assessee with PAN: AQEPG5288J. 2. Consequent to the search operations on MIs M.G. Brothers Group, notice under Sec 153C dt 24th September 2009 was issued on the appellant to file his Return of Income for the A Y 2007-08. A copy of the notice is herewith enclosed in the paper book (Pg. 10) 3. The appellant had filed his Return of Income on 30th March 2009 with acknowledgement number 297 with the office of the ACIT, Central Circle, Tirupati. The appellant had filed his Return of Income with a Total Income of Rs. 4,87,403/- and had paid a tax of Rs. 90,686/-. A copy of the Return of Income along with the Statement of Computation of total Income is herewith enclosed in the paper book (Pg 11 & 12) 4. The Total Income of the appellant consisted entirely of the capital gains arising on sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book (Pg 57-61). 10. The Ld. AO, however disagreed with the Computation of the appellant and made the following additions to the returned income. a) Actual Sale consideration received amounting to Rs. 25,25,000/- which was offered as sale consideration under Sec 48, was replaced by the Ld. AO with Rs. 41,91,000/- being the market value of the land as on the date of sale. However, for the purpose of computation the Ld. AO took Rs. 41,41,900/- (by mistake) and made an addition ofRs. 16,16,900/- b) Sec 54F deduction was ignored for two blocks of residential houses and was allowed only on the cost of construction of one block of house. This resulted in an addition of Rs. 11,25,857/-. 11. The Ld. AO completed the assessment on 9th December 2010 with an addition of Rs. 27,42,757/- and raised a demand of Rs. 9,43,630/-. 12. The appellant filed an appeal before the Ld. CIT(Appeals), Vishakapatnam. The Ld. CIT(Appeals), Vishakapatnam upheld the Order of the Ld. AO and issued his order on 21st March 2018. For Ground No.2: 13. The Ld. AO and the Ld. CIT(Appeals) have erred in adopting the SRO value on the date of Sale deed. They also erred in disregarding the existence of Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer cannot be considered as Sec 50C was amended to take the assessable value only prospectively from 01.10.2009 onwards. As there was no "assessed" market value on the date of the agreement, sale consideration can only be Rs. 25,25,000/-. So further addition on account of Sec 50C cannot arise. 20. Even if the market value of the property as on the date of Sale agreement is taken, the same is Rs. 8,50,000/- per acre on 18th October 2006. The same was Rs. 5,00,000/- per acre on 24th May 2006. The appellant has sold his land in acres to the seller. Hence the SRO value to adopted should only be in acres. The documents evidencing the SRO rate during the time of the sale agreement are herewith enclosed in the paper book (Pg 30-56). 21. Also, the issue of Sec 50C cannot be invoked for transfer of immovable property taking place in pursuance of an un-registered agreement has been upheld in the following cases. Navneet Kumar Thakkar Vs ITO 298 ITR AT 42 (Jodhpur) Asst CIT Vs Mrs N. Meenakshi 319 ITR AT 262 (Madhas) (2009) 22. Hence the appellant prays the hon'ble Tribunal to delete the addition made under Sec 50C by adopting the SRO value on the date of Sale as sale cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r before the date of agreement for transfer. " 29. The details of consideration paid to the appellant by the seller and the mode of payment are already given in point no. 6 above. 30. The appellant had received part of the consideration of Rs. 5,50,000/- vide cheque no. 754963 drawn on Andhra Bank and the same is also reflecting in the Bank statement. 31. The Ld. CIT(Appeals) and the Ld. DCIT have not considered the sale agreement itself as the same is not registered. However, as seen from the above text of the proviso, the statute nowhere insists the sale agreement to be registered. 32. Hence, the appellant has fully complied with the first and second proviso to Sec 50C and the appellant is eligible to claim the SRO value on the date of the agreement. 33. Several judicial pronouncements stated that the first and second proviso to Sec 50C are curative in nature and hence have to be applied retrospectively with effect from l " April 2003. Some of the decisions are given below. a) Chalasani Naga Ratna Kumar Vs ITO - ITA No. 639Nizag/2013 b) Dharamshibhai Son ani Vs ACIT 57 ITR 669 (Ahmd Trib) (2017) c) Rahul G Patel Vs DCIT 67 ITR 280 (Ahmd Trib) (2018) d) Amit Bans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be of residential house and 'a' should not be understood to indicate a singular number - That apart, the apartments purchased by the assessee are situated side by side and the builder has effected modifications of the flats to make it as one unit. The fact that the flats were found to be occupied by two different tenants is no ground to hold that the apartment is not one residential unit. 45. In ITO Vs Ms Sushila M Jhaveri 109 TTJ 299 (Mum) (SB) (2007) it was held that where more than one unit are purchased which are adjacent to each other and are converted into one house for the purpose of residence by having common passage, common kitchen etc then it would be a case of investment in one residential house and consequently the assessee would be entitled to exemption. 46. In several judicial pronouncements given below, it was held that Sec 54 or Sec 54F intend to give exemption to various residential blocks constituting one residential house. a) CIT Vs Syed Ali Adil 352 ITR 418 (2013) (AP HC) b) Vittal Krishna Conjeevaram Vs ITO 144 lTD 325 (Hyd IT AT) c) Smt Hansabai Singhji Vs ITO 89 lTD 239 d) K.G. Vyas Vs ITO 16 lTD 195 (Born Trib) e) CIT Vs Kodandas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was made for the sale of property on 06/08/2006 through cheque No. 754963 drawn on Andhra Bank for Rs. 5,50,000/- and paid cash of Rs. 50,000/- also and the subsequent payments received through cheques only. Therefore, the proviso of section 50C(1) will clearly apply here. Therefore, the assessee's net sale consideration shall be considered as Rs. 25,25,000/- for the computation of capital gains as it is immaterial that whether reference of the agreement is included in the sale deed or not because it is evident from the payments received by the assessee by way of cheques, which proves that there was genuine agreement made for the sale/purchase of the property. The said agreement is placed at page no. 13 to 15 of the paper book. In support of our decision, we rely on the judgment of the Hon'ble Madras High Courtin the case of Commissioner of Income Tax, Chennai v. Vummudi Amarendran, [2020] 120 taxmann.com 171 (Madras) wherein the Hon'ble High Court has held as under: "4. We have elaborately heard Mr. T. Ravikumar, learned Senior Standing Counsel for the Revenue. 5. It is the submission of Mr. T. Ravikumar, learned Senior Standing counsel that the amendment to section 50(C) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see sought to take the benefit of the proviso inserted to Section 50C of the Act. It is no doubt true and as clarified by the CBDT vide Circular No. 3 of 2017 dated 20-1-2017 that the amendment to Section 50C would start effect from 1-4-2017 and will accordingly apply from assessment year 2017-18 and subsequent assessment years. However one important factor which needs to be noted is that amendment seeks to relieve the assessee from undue hardship caused on account of the computation of higher rate of capital gains. 7. Before we proceed to consider as to whether proviso inserted in Section 50C of the Act has to be read retrospective or prospective, we need to point out that the Assessing Officer did not doubt the bona fides of the transaction done by the assessee, since the Assessing Officer accepted the fact that the assessee had entered into an Agreement for Sale of the property in question vide Agreement for Sale dated 4-8-2012, wherein agreed sale consideration was Rs. 19 Crores and the assessee had received Rs. 6 Crores by way of account payee cheque on the date of signing the Agreement. This fact was noted by the CIT(A) and held that the Agreement cannot be treated to be an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held to be only a prima facie rate prevailing in the area to ascertain the true or correct market value and it is not the last word on the subject of market value but only a factor to be taken note of. As pointed out earlier, the genuinity of the transaction done by the assessee was not doubted and the receipt of advance was through banking channel by way of a demand draft. 9. Therefore, in our considered view the Assessing Officer could not have based his finding solely relying upon the guideline value especially when the Assessing Officer is not a person who is computing stamp duty under the provisions of Indian Stamp Act on the Deed of conveyance. Having observed so we need to take note of the next issue would be as to whether the proviso to Section 50C could be read to be prospective or retrospective. Section 50C(1) proviso reads as follows: "Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capita asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases of big assesses having substantial turnover and equally huge expenses and necessary cushion to absorb the effect; however a marginal and medium tax payer who work at low gross product rate and when expenditure becomes subject matter of an order under section 40(a)(ia) is substantial, can suffer severe adverse consequence if the amendment made in 2010 is not given retrospective operation i.e., from the date of substitution of the provision. Thus, the amendment made by the Finance Act 2010 being curative in nature was held to be retrospective in operation. In the above decision, the Hon'ble Supreme Court took note of the fact that the statutory amendment was being made to remove undue hardship to the assessee or held to be retrospective. 12. The Honble Supreme Court in Kolkata Export Company took note of the earlier decisions on the same issue in the case of Allied Motors (P.) Ltd. v. CIT [1997] 91 Taxman 205/224 ITR 677, Whirlpool of India Ltd. v. CIT [2000] 245 ITR 3, CIT v. Amrit Banaspati Co. Ltd. [2002] 123 Taxman 74/255 ITR 117 (SC) and CIT v. Alom Enterprises [2009] 185 Taxman 416/319 ITR 306 and held that the new proviso should be given retrospective effect from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration is fixed in such agreement, whereas similar provision exists in section 43CA of the Act i.e. When an immovable property is sold as a stock-in-trade. It is proposed to amend the provisions of section 50C so as to provide that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes of computing the full value of consideration. It is further proposed to provide that this provision shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, on or before the date of the agreement for the transfer of such immovable property. These amendments are proposed to be made effective from the 1st day of April, 2017 and shall accordingly apply in relation to assessment year 2017-18 and subsequent years.'' 15. Taking note of the above Memorandum, it was pointed out that once a statutory amendment is being made to remove an undue har ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and when not?. The legal principle laid down therein ought to have been taken note of by the Tribunal. Therefore, the Tribunal may not be fully right in stating that the judgment in Vatika Township (supra) will not be applicable to the facts as the judgment needs to be looked into to consider the legal principle of retrospectivity, retro activity or prospectivity. In any event, the ultimate conclusion arrived at by the Tribunal confirming the above order passed by the CIT(A) cannot be found faulted with. The above judgment is squarely applicable to the facts of the case in hand and, therefore, following the ratio laid down in the above judgment, we allow the ground Nos. 1 to 4 raised by the assessee on this issue. 7.1 As regards ground No. 5 relating to the assessee's claim of exemption u/s 54F on the construction of new asset, the AO has accepted construction value of Rs. 16,26,000/- for three individual houses, but, had denied for remaining houses the claim of exemption u/s 54F. This issue has been settled by various High Courts and the issue relates to prior to the amendment in the Act. Therefore, the assessee is eligible for claiming exemption u/s 54F for remaining two houses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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