TMI Blog2021 (12) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... .9.2011. The assessee had entered into an agreement with M/s.Ashwal Infracon P.Ltd. on 23.12.2010 and sale consideration was settled at ₹ 80.00 lakhs. The assessee has received part payment through account payee cheque. Stamp duty valuation authority have revised their valuation on 1.4.2011, and thereafter vendee was required to pay additional stamp duty of ₹ 24,58,000/- In the present case, we find that there are two different dates. One is 23.12.2010 when the assessee entered into an agreement for sale of this property and another 29.9.2011 when the sale deed was ultimately registered. At the time of agreement and prior to that the assessee has received part payments through negotiation. Such payments have been received through account payee cheque. He received ₹ 25 lakhs on 26.2.2011 and ₹ 10.00 lakhs on 13.10.2010. This part payment makes it clear that a valid agreement to sell was executed. Between the date of agreement vis- -vis ultimate registration of sale deed, the State Government has revised valuation of the property for the purpose of charging stamp duty. This case of the assessee do fall within the first proviso of section 50C of the Act, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulture land. Thus, he took cost of acquisition at ₹ 30,36,599/-. According to the assessee, short term capital gain comes to ₹ 49,63,401/- i.e. ₹ 80,00,000/- minus ₹ 30,36,599/- (sale value minus cost of property). However, the AO took sale consideration at ₹ 5,82,39,975/- with the aid of section 50C of the Act. 4. Dissatisfied with computation of the capital gain, the assessee carried the matter in appeal. He has challenged reopening of the assessment which has been rejected by the ld.CIT(A). The assessee has also challenged computation of long term capital gain. The ld.CIT(A) accepted contentions of the assessee by recording following finding: 5. Decision: I have carefully gone through the reassessment order, submissions filed by the Appellant; remand report furnished by the Assessing Officer and the Appellant's response to the same. The brief facts of the case are that Appellant has sold immoveable property being nonagricultural land at Block No. 456 in Village: Sankod, TA: Bavia, Sub- Dist: Dholka, for consideration of ₹ 80,00,0007-to M/s. Ashwa Infracon Pvt. Limited. The Sub-Registrar has valued the property at ₹ 5,82,39,97 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable on agreed consideration of ₹ 80,00,000/-which is also prevailing jantri value of the property. This fact is also confirmed from the copy of certificate No.IN-GJ16516924342402J dated 31.03.2011, issued under the seal of Sub- Registrar, Bav!a, Govt. of Gujarat. These facts were also admitted by authorized person of buyer of the property and on this basis, Appellant contended that consideration of above property is ₹ 80,00,000/- and not ₹ 5,82,39,975/-. The delay in registration of sale deed was only on the ground that Appellant was obliged to convert agricultural land into non-agricultural land and such process has taken considerable time. The Appellant has also referred to provisions of Section 2(47) of the Act and contended that transfer of capital asset is before 1st April, 2011 because part performance was already executed with reference to agreement to sell and AO is not justified in making addition adopting jantri value prevailing on the date of execution of final sale deed. The Appellant has mainly relied upon following decisions: (i) Allahabad High Court in the case of Commissioner of Income Tax-11, Agra Versus Sh.ShimbhuMehra, Sh. Vishnu Saran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Assessment Proceedings in current year as well as in A.Y. 2010-11 hence additional evidences should not be admitted. The AO has also contended that agreement to sell with possession submitted by Appellant shows part payment out of total consideration of ₹ 80,00,000/- but Appellant has not submitted such document in Assessment Proceedings and even as per information gathered by her, document was notarized by Kanubhai J. Patel who has made criminal offence for which she has submitted order of Hon'ble Gujarat High Court. In rejoinder Appellant has mainly relied upon written submission filed by him and with regard to authenticity of additional evidence, Appellant has contended that during the course of Assessment Proceedings AO has issued summons to buyer of the property wherein authorized person on behalf of buyer has categorically stated that he has executed agreement with Appellant for transfer of property at ₹ 80,00,000/- hence agreement cannot be treated as afterthought. The Appellant has also drawn attention to the fact that buyer of the property has paid stamp duty of ₹ 3,96,000/- on 31st March, 2011 for above property and has submitted certificate of st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(3) of the Act and no additions have been made in returned income which proves that Appellant has fully complied with details during Assessment Proceedings for A.Y. 2010-11. The Hon'ble Gujarat High Court in the case of CIT V/s Kamlaben Sureshchandra Bhatti [2014] 44 taxmann.com 459 has held as under: Section 251 of the Income Tax Act, 1961, read with Rule 46A of the Income Tax Rules, 1962 - Commissioner (Appeals) - Powers of (Power to admit additional evidence) - In course of assessment, notice of hearing issued by Assessing Officer was received by Assessee on date of hearing itself - Assessee thus could not produce necessary evidence on such date - Subsequently, when Assessee attended office of Assessing Officer with necessary evidence, he learnt that order of assessment was already passed - In such circumstances, Commissioner (Appeals) permitted additional evidence to be produced before him and while doing so, he also called remand report from Assessing Officer- Whether on facts, addition of additional evidence could not be stated to be in breach of requirement of Rule 46A particularly when interest of revenue was safeguarded by calling for remand report and permitting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein Old JANTRI was prevailing. The Jantri Value was revised on 18th April 2011. If appellant has not entered into any agreement to sale, how he would receive such consideration on various dates as claimed. The appellant has also submitted Stamp Duty certificate issued by the Government of Gujarat which is part of sale deed executed with buyer of the property. As per such document, purchasing party i.e. Ashwa InfraconPvt Ltd has paid stamp duty amounting to ₹ 3,96,000/-computed on the basis of the Jantri value on 31st March 2011 which is as per JANTRI value prevailing in the financial year in which agreement to sale was executed. The above document is authentic document and available with Sub registrar who has clearly mentioned that as on 31st March 2011, market value of the above property was ₹ 80,00,000/- and buyer has paid proper stamp duly. It is also observed that in said document, Ashwa Infracon Pvt Ltd is mentioned as buyer of the property and appellant is mentioned as seller of the property. This being independent document clearly supports the contention of appellant that agreement to sale was executed prior to sale deed and due to such agreement only, buyer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed with him. He informed the undersigned that M/s AshwalnfraconPvt Ltd had made agreement with Shri Aiav J Mehta to purchase the impugned immovable property from Aiav J Mehta for a consideration of ₹ 80,00,000/- with condition that he should convert the said land from agricultural to non agriculture and the consideration agreed upon includes the payment required to be made to the government for such conversion. Accordingly Shri Ajay J Mehta made the required payment for conversion the land from agriculture to non agriculture. Accordingly sale deed prepared and purchaser i.e. M/s Ashwalnfracon Pvt Ltd made payment of ₹ 3,96,000/- towards stamp duty charges on 31/03/2011. However the deed could not be registered for some unknown reason. .Subsequently, on 28/09/2011, the sale deed executed earlier, registered with SRO, Bavla, Dist. Ahmedabad. However SRO, Bavla, had valued the property at ₹ 5,82,39,975/-for the purpose of stamp duty charges as the Jantri rates revised with effect from 01/04/2011 and accordingly the purchaser had to make payment of Rs: 24,58,000/- for stamp duty and registered the sale deed for the immovable property in question. The AR of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e curative and having retrospective effect as under 5. We notice in view of all these developments that the assessee has received his earnest money in furtherance to the registered sale agreement dated 02.02.2011 on 10.03.2011. Relevant cheques details already find mention in ClT(A)'s order page 9. We observe in these facts that the registered agreement followed by receipt of advance money by banking channel form sufficient reasons to attract the above former proviso to Section 50C of the Act stipulating in very clear terms that where the date of the agreement fixing the amount of consideration and the date of registration regarding transfer of the capital asset in question are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement is to be taken for the purpose of full value of consideration. We therefore accept assessee's arguments in principle. The Assessing Officer is accordingly directed to verify necessary facts as per law for the purpose of adopting the above agreement value in order to compute the consequential capital gains. Ahmedabad ITAT in case of Dharamshibhai Sonani in ITA No. 1237/Ahd/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuted on 29.6.2005 and the partial sale consideration was received through banking channels, the Assessing Officer, so far as computation of capital gains is concerned, will adopt stamp duty valuation, as on 29.6.2005, of the property sold as it existed at that point of time. In case the assessee is not content with this value being adopted under section 50C, he will be at liberty to seek the matter being referred to the DVO for valuation, again as on 29.6.2005, of the said property. As a corollary thereto, the subsequent developments in respect of the property sold (e.g.the conversion of use of land) are to be ignored.lt is on this basis that the capital gains will be recomputed. With these directions, the matter stands restored to the file of the Assessing Officer 'for adjudication de novo, after giving an opportunity of hearing to the assessee and by way of a speaking order. I order so. [10] I part with the matter, I may make one more observation. The amendment in Section 50C was brought in to provide relief to the assessee in a situation in which the stamp duty valuation of a property has risen between the date of execution of agreement to sell and execution of sale de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of three months. Though the SRO rates had been raised upwards on that date, yet, as observed in the above cited case, the assessees herein have fulfilled a contractual obligation, which they are bound by law to carry out. Since the process of sale has been initiated from the date of sale agreement, we have held in the above cited case that the applicability of provisions of section 50C should be looked at only on the date of sale agreement. In the instant cases, the question of adoption of a higher value by invoking the provisions of section 50C on the date of sale agreement does not arise as the sale value fixed by the assessees was equivalent to the SRO value for stamp duty purposes. ITAT Bangalore in the case of M/s. Bharathi Dev Anandani Versus Asst. Commissioner of Income-tax, Circle 8 (1), Bangalore. (ITA No.882/Bang/2014) Deduction u/s 50C computation - whether the rate prevailing in the year 2005 when the assessee claimed to have entered into agreement for sale or the rate prevailing in the year 2007 when the assessee has finally executed the sale deed and registered are to be adopted as full value consideration u/s 50C - Held that- Once the parties have ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of section 50C as on the date of sale agreements is required to be examined by the AO, we set aside the issue to the file of the AO with a direction to compute the capital gains on sale of impugned properties after applying the provisions of section 50C as on the date of sale agreements. Accordingly, the order of Ld.CIT(A) is reversed. - . Considering the above facts and relying upon various decisions referred (supra), it is my opinion that the AO was. not justified in adopting JANTRI value prevailing as on the date of registering the sale deed as correct market price and re-computing capital gain u/s 50C of the Act. Thus, addition made by AO considering short term capital gain computed by AO for ₹ 5,52,07,376/- is hereby deleted and AO is directed to compute capital gain considering sale value of the property at ₹ 80,00,000/-. Ground No.2 of appeal is allowed. 5. With the assistance of the ld.representatives, we have gone through the record carefully. Before we embark upon an enquiry on the facts of the present case, let us take provision of section 48 of the Act, which provides mechanism for computation of capital gain. Section 48 postulates the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng system through a bank account [or through such other electronic mode as may be prescribed], on or before the date of the agreement for transfer: .. .. 8. These provisions have been entered in the section with effect from 1.4.2017. A perusal of these provisions would indicate that if the date of registration for transfer of capital assets, and date of agreement are different, and valuation of the property for the purpose of payment of stamps also differs on these dates, then stamp valuation on the date of agreement is to be deemed as full consideration for the purpose of section 50C of the Act. The only caveat provided in this regard has been contemplated in second provisos that payment or part payment of consideration must be through bank channel because that can avoid manipulation of agreement at the end of the party for avoiding determination of deemed consideration under section 50C of the Act. This aspect has been considered by the ITAT, Ahmedabad Benches in large number cases and the ld.CIT(A) has referred the decision of ITAT in the case of Dharamshibhai Sonani in ITA No.1237/Ahd/2013 in the finding extracted (supra). In the present case, we find that there are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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