TMI Blog2022 (6) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... whereas the DVO has estimated the fair market value as on 01.04.1981 at the rate of 114.30 per square meter. We note that the DVO has himself stated in his report that the impugned land was situated at more appropriate location as compared to sale instances considered by him. We also agree with assessee s land is situated in New City Light Area of Surat, which is costly area and prices of the land in the said area is very higher side. Therefore, considering the entirety of the facts and taking a holistic view the fair market value @ 607 per square meter should be adopted to meet the end of justice. Accordingly, the AO is directed to apply rate of ₹ 607 per sq. meter for calculation of indexed cost of acquisition for the purpose of computation of long-term capital gain in the hands of the assessee. - ITA No.104/SRT/2021 - - - Dated:- 20-6-2022 - Shri Pawan Singh, JM And Dr. A.L.Saini, AM For the Assessee : Shri Mehul Shah, C.A For the Respondent : Ms. Anupama Singla Sr.DR ORDER PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee, pertaining to assessment year 2013- 14, is directed against the order passed by the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case is a meritorious one and requires consideration. Assessee s case is squarely covered by the decision of Honorable Tribunal in case of assessee s brother Shri Dharmendra Bhaichand Patel beaeringITANo.55/SRT/2018. If the delay is not condoned, it would cause irreparable loss to the applicant. 4. Apart from this, ld Counsel submits that delay has occurred because of mistake committed by the Authorized Representative of the assessee. Authorized Representative of the assessee could not take the initiative to file the appeal of the assessee on time. Therefore, ld Counsel prays the Bench that in the interest of justice, the delay may be condoned. 5. On the other hand, Ld. Senior Departmental Representative (Sr.DR) for the Revenue has strongly objected the prayer for condonation of delay. She pointed out that appeal was filed by the assessee, after the decision in case of assessee`s brother, Shri Dharmendra Bhaichand Patel, in ITA No.55/SRT/2018 was pronounced by the Tribunal, that is, after knowing the fact that assessee`s brother has won the case, therefore, assessee has filed the appeal to take the advantage of the assessee`s brother case ( Co-owner), hence assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, therefore, the assessee should not be penalized. Reliance is also placed on the decision of I.T.A.T., 'C' Bench, Kolkata in the case of M/s. Garg Bros. Pvt. Ltd. Others vs. DCIT [ITA Nos.2519 to 2521/Kol/2017, order dated 18.04.2018], wherein under similar set of facts and reasons, the Hon'ble Tribunal was pleased to condone the delay of 211 days by holding as under: 3. We have heard both the parties on this preliminary issue. Having regard to the reasons given in the application for condonation of delay, we are of the considered opinion that assessee was under a bona fide belief that the impugned order of Pr. CIT was not appealable before this Tribunal since they were not advised by their Tax Consultants about this legal right. Later on, when a Senior Lawyer advised them to file an appeal, the assessees immediately took steps to file the appeals. Therefore. the delay caused. we note. was because of the wrong advice of the Tax Professional for which assessees cannot be penalized. For the ends of justice, we condone the delay and admit the appeal for hearing. 9. Hon`ble High Court of Madras, in the case of Areva T D India Ltd.[2006] 287 ITR 555 (Madr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal as to the sufficient cause for the alleged delay, we are convinced that the Appellate Tribunal has erred in refusing to exercise the discretion under section 5 of the Limitation Act. We are of the view that the Appellate Tribunal was not correct in dismissing the appeal on account of limitation without giving a finding that there was no sufficient cause for the delay. Hence, we answer the first question of law in favour of the assessee. 10. Therefore, we are of the view that explanation for the delay in the filing of the appeal would stand fully substantiated and therefore, having regard to the reasons given in the petition and arguments made by ld Counsel, we condone the delay and admit the appeal for hearing. 11. Coming to the merits of the case, the brief facts qua the assessee are that assessee before us is an individual and has shown in his return of income, salary income, long term capital gains (LTCG) from sale of immovable property and income from other sources. On verification of the details filed during the course of assessment proceedings, it was noticed by the assessing officer that during the year, the assessee alongwith other co-owners have sold immovabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.2,14,20,000/- Less: Indexed cost, as above Rs.19,44,912/- Taxable long term capital gain Rs.1,94,75,088/- Less: Deduction u/s 54B Rs.74,49,425 Deduction u/s 54F 1,94,75,088 x 18,48,130/2,14,20,00 Rs.16,80,322 Rs.91,29,747/- Taxable long term capital gain Rs.1,03,45,341/- 12. Therefore, assessing officer made the addition of taxable long term capital gain to the tune of Rs,.1.03,45,341/-. 13. In the light of the above facts, learned counsel for the assessee invited our attention to the order dated 30.06.2021, passed by the Division Bench of this Tribunal in assessee s own case in ITA No.55/SRT/2018 for the Assessment Year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O has taken fair market value (FMV) as on 01/04/1981, at Rs.5,08,750/- @ Rs.114.30 per sq.meter. The Ld Counsel submitted that the AO has erroneously adopted the report of the Valuation Officer though he had relied on the report of the government approved valuer who is an expert for valuation of the agricultural land (Category-11 valuer) and he is the only qualified person for proper valuation of the agricultural property. It was contended that the valuation report by the DVO who appears to be a category-1 valuer is not qualified to give valuation of agricultural land and therefore the valuation report of the government approved valuer who has valued the land as on 01/04/1981 @ Rs.825 per sq.mt. should be taken into consideration. The assessee also submitted that the DVO has not taken proper sales instances into consideration while determining the FMV of the property. Learned Counsel also contends that AO has wrongly made reference to DVO without pointing out any defect in the report of the Registered Valuer Shri PK Desai. It was contended that Registered Valuer was entitled to carry out valuation of agricultural land. He had issued his valuation report in Form O-2 and has given de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition u/s 50C (A-B) 34,70,000/- It is the contention of the Ld.Counsel that assessee has entered into an agreement of sale for land not during A.Y. 2013-14 but during F.Y. 2010-2011 relevant to A.Y. 2011-12 by executing Agreement to Sell made on 29.09.2010. The substantial payment for the said sale of land was received by the assessee in the year FY 2010-11 i.e. approx. 54.20% and the sale deed was executed during A.Y. 2013-2014 i.e. during the year under consideration and the capital gain was computed in the return of income (ROI) considering the Sale consideration at Rs. 1,79,50,000/- as per Sale deed. Although in meanwhile, the jantri rate has increased but the assessee was bound by the previous Agreement to Sell dated 29.09.2010 and hence it is submitted that the Jantri rate of land as on 29.09.2010 should be considered for the purpose of section 50C of the Act. The agreement to sale dated 29.09.2010 is flied by assessee in the Paperbook at Pg No 35 to 40 wherein the sale consideration is fixed at Rs 4,00,00,000/- and the details of the cheque for advance of sale of property of Rs. 50,00,000/- is mentioned in ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the assessee is abide by the law to carry his performance of contract by the terms of Sale Agreement and even as per the Indian Contract Act, 1872. Thus, by executing the Sale Deed, the assessee has only completed the contractual obligation imposed upon it by virtue of the Sale Agreement. Since the process of sale has been initiated from the date of Sale Agreement, the character of the transaction vis-a-vis Section 50C of the Income tax Act should also be determined on the basis of the conditions that prevailed on the date the transaction was initially entered into. Accordingly, the applicability of the provisions of section 50C should be looked at only on the date of Agreement to Sell i.e. 29.09.2010. According to the Jantri rate on that date, the stamp duty valuation is less than the sale consideration under the sale deed and hence no addition u/s 50C is required to be made as per proviso to Section 50C of the Act. Although the said amendment is effective from 01.04.2017, however it is to be noted that the said provisions are amended to remove an undue hardship to the assessee or to remove an apparent incongruity and hence it can be applied even in the pending matters and tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to as the stamp valuation authority ) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer . The trouble, however, is that while the sale consideration is fixed at the point of time when agreement to sell is entered into, there is sometimes considerable gap in parties agreeing to a transaction (i.e. agreement to sell) and the actual execution of the transaction (i.e. sale deed), and yet, it is the value as on the date of execution of sale deed which is recognized by Section 50C for the purpose of computing the capital gain because that is what is relevant for the purpose of computing stamp duty for registration of sale deed. The very comparison between the value as per sale deed and the value as per stamp duty valuation, accordingly, ceases to be devoid of a rational basis because these two values represent the values at two different points of time. In a situation in which there is significant difference between the point of time when agreement to sell is executed and when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. [6] True to the work ethos of the current Government, it was the first time that within four months of the Tax Simplification Committee being notified, not only the first report of the Committee was submitted, but the Government also walked the talk by ensuring that the several statutory amendments, based on recommendations of this report, were introduced in the Parliament. So far as Section 50 C is concerned, the Finance Act 2016, with effect from 1st April 2017, inserted the following provisos to Section 50C: Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30 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. [7] While the Government has thus recognized the genuine and intended hardship in the cases in which the date of agreement to sell is prior to the date of sale, and introduced welcome amendments to the statue to take the remedial measures, this brings no relief to the assessee before me as the amendment is introduced only with prospective effect from 1st April 2017. There cannot be any dispute that this amendment in the scheme of Section 50C has been made to remove an incongruity, resulting in undue hardship to the assessee, as is evident from the observation in Easwar Committee report to the effect that The (then prevailing) provisions of section 50C do not provide any relief where the seller has entered into an agreement to sell the asset much before the actual date of transfer of the immovable property and the sale consideration has been fixed in such agreement recognizing the incongruity that the date agreement of sell has been ignored in the statute even though it was crucial as it was at this poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004. [8]Their Lordships were pleased to hold that this reasoning and rationale of this decision merits acceptance . The same principle, when applied in the present context, leads to the conclusion that the present amendment, being an amendment to remove an apparent incongruity which resulted in undue hardships to the taxpayers, should be treated as retrospective in effect. Quite clearly therefore, even when the statute does not specifically state so, such amendments, in the light of the detailed discussions above, can only be treated as retrospective and effective from the date related statutory provisions was introduced. Viewed thus, the proviso to Section 50 C should also be treated as curative in nature and with retrospective effect from 1st April 2003, i.e. the date effective from which Section 50C was introduced. While the Government must be complimented for the unparalleled swiftness with which the Easwar Committee recommendations, as accepted by the Government, were implemented, I, as a judicial officer, would think this was still one step short of what ought to have been done inasmuch as the amendme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section to give the section a reasonable interpretation, it could be read retrospective in operation, particularly to give effect to the section as a whole. Accordingly, this Court, in Allied Motors (P) Ltd. Etc. (supra), held that the first proviso was curative in nature, hence, retrospective in operation w.e.f. 1st April, 1988. It is important to note once again that, by Finance Act, 2003, not only the second proviso is deleted but even the first proviso is sought to be amended by bringing about an uniformity in tax, duty, cess and fee on the one hand vis-a-vis contributions to welfare funds of employee(s) on the other. This is one more reason why we hold that the Finance Act, 2003, is retrospective in operation. Moreover, the judgment in Allied Motors (P) Ltd. Etc. (supra) is delivered by a Bench of three learned Judges, which is binding on us. Accordingly, we hold that Finance Act, 2003, will operate retrospectively w.e.f. 1st April, 1988 (when the first proviso stood inserted). Lastly, we may point out the hardship and the invidious discrimination which would be caused to the assessee(s) if the contention of the Department is to be accepted that Finance Act, 2003, to the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ek 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. It 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] As 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 deed, as is the norm rather than exception, but the real estate market is now traversing through a difficult phase and there can be situations in which there is a fall in the stamp duty valuation rates with the passage of time. Such a situation has actually arisen in many places in the country, such as in Gurgaon(http://www.hindustantimes.com/gurgaon/for-the-first-time-circle-ratesreduced- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s tabulated as under: Particulars Amount in Rs Indexed Cost of acquisition as considered by the AO: 19,45,130/- Total Value as on 01.04.1981 (as per DVO s valuation) Rs 5,08,750/- Total Indexed Cost of (Rs. 5,08,750*852/100)=Rs 43,34,550/- (assessee s share 44.875% Rs. 19,45,130/-) (A) Indexed Cost as claimed by the assessee : (Rs 16,47,991*852/100) (B) 1,40,40,883/- Addition(A-B) 1,20,95,753/- Learned Counsel submitted that the land for comparable sale instance relied by the DVO in his report were of such land which were far from the assessee's land and the land of the assessee was in much better locational advantage having approach roads from the main road and even the DVO has accepted the said fact. The land is approachable by all the types of surface transport facilities and means of communication facilities. It is further submitted that having approach from the main road on the front side, the growth and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g out any cogent defects in the same. 16. The Ld. Counsel submitted before us that the provisions of Section 55 of the income Act, 1961 gives an option to the assessee to substitute the fair market value as on 01.04.1981 for cost of acquisition. Now section 2(22B) of the Income tax Act,1961 defines Fair Market Value , in relation to a capital asset as the price that the capital asset would ordinarily fetch on sale in the open market on the relevant date In the present case, the DVO as well as the AO has compared some few sale instances which may be construed to be the transaction value at that time which is entirely different from the fair market value required as per law because fair market value is considered from factors like location, utility frontage, future NA potential, surrounding development and prevailing market rate etc. which is not the transaction value. Further, it is submitted that in a well regulated market as present in 2021, the fair market value can be reasonably be near around transaction value in few sale instances because the market is now organized and buyer and the seller both are informed due to penetration of internet and social netw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... everse by calculating a decrease 10%(.09089 correction factor) per year rate applicable for the year 01.04.1981 can be worked out. During 2006 according to sale deed Rs. 2500 comes to one Sq Meter and applying above method Rs. 226.70 per Sq. Mtr as on 01.04.1981 Form the above it is obvious that the Valuation Officer has only relied upon the instances of sale price prevalent in the neighborhood in the near about dates of 01.04.1981. No other factors were considered to determine the value of the asset as on 01.04.1981. While as the registered valuer has examined the following relevant facts, which is important to estimate the market value of the land. (i) The land has close proximity to Ahmedabad City and is within the limits of Ahmedabad Urban Development Authority. (ii) The area is a fast developing area surrounded by various housing societies. (iii) Amenities like roads, water supply, drainage and electricity etc were existing. (iv) The area was well connected with transport facilities. 13. Considering the facts and the circumstances of this case we are of the considered view that the valuation report of the registered valuer is quite reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents for not accepting same. Therefore, we are of the considered opinion that these were not additional evidence under Rule 46A, hence, the ld. CIT (A) ought to have given weightage of Registered Valuer report of B. H. Patel. We find that there are three methods of valuation of land first one relates to sale instances multiplied by 11.94 factors, which is based on Hon`ble Supreme Court and Hon`ble High Court judgements. Second method is to consider increase in agricultural land price per month one percent. Third method is based on reverse method per year reduction of 10% of Jantri rate/Circle rates. The Government Registered Valuer of the assessee has based his valuation report on the average out of these three method for valuation of land, which in our opinion is correct method to be considered, in the case, where no specific sale instances of relevant period are available. The DVO has considered at Rs.600 per sq. meter land price as on 01.04.1981 as against the average of three method at Rs.833 per sq. meter. Therefore, we are of the view that the Registered Valuer has quite considerate in taking rate at 600 per sq. meter as against Rs. 833 being average rate. This view is furthe ..... 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