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TMI Blog2017 (5) TMI 1807X X X X Extracts X X X X X X X X Extracts X X X X ..... ed copies of sale deeds relating to eight properties wherefrom the Assessing Officer observed that the sale consideration shown by the assessee for calculation of capital gain was less than the valuation of Stamp Valuation Authority. In this regard, the Assessing Officer made the following observations from these sale deeds: - In view of the above, the Assessing Officer observed that there was difference of Rs.68,98,200/- between the sale consideration and the valuation of Stamp Valuation Authority and, therefore, provisions u/s 50C of the Income Tax Act are clearly attracted. He, therefore, issued a questionnaire questionnaires u/s 142(1) of the Act dated 23.01.2015 and 04.02.2015 thereby asking the assessee to show cause as to why the difference amount of Rs.68,98,200/- between the market value as per Stamp Valuation Authority within the meaning of section 50C (Rs.1,37,94,000/-) and the sale consideration (Rs.68,95,800/-) for sale of properties should not be added to the income of the assessee. In its reply dated 28.01.2015 the assessee submitted as under :- "A show cause notice dated 23.01.2015 has been issued in the name of the above assessee company for the Assessment Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11-12 when actual sale deed was executed has been increased from Rs.18,33,000/- per hectare to Rs.50,00,000/-. For this reason the stamp duty value had substantially increased in the year of actual registry i.e. A.Y. 2012- 13. Photocopy of Prevailing Guideline Rate for said Land in F.Y. 2010-12-is enclosed for your kind reference. 1.5] The assessee has made an application in the Office of Collector, Dhar to grant it permission for sale of said Industrial Land to the proposed buyers as per the provisions of M.P. Land Revenue Code , 1959 since the said Land was a diverted Land and prior permission from the office of the collector was required before it can sale. 1.6] The Collector of Dhar has however passed the order on 22.03.2012 and granted the permission to the assessee for sale of said Diverted Land to the proposed buyers. Copy of Order as passed by the Ld. Collector Dhar on 22.03.2012 is enclosed for your kind reference. 1.7] That as per the said order the Collector has directed the Dy. Registrar Dhar to do the registry of said Land on Value as per the Prevailing Guideline or Actual Valuation or Transaction value whichever is higher. 1.8] That assessee submits that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed by assessee, many facts come in the picture that in F.Y. 2010-11 transfer did not take place ,as it was not ascertainable and it was not transferred within the meaning of section 2(47) of I.T. Act. First of all page number 280 and 281 of the aforesaid agreement furnished by the assessee are to be examined (scanned copies are as under):- Thus from above pages it becomes clear that transfer did actually took place on F.Y.2011-12 and not in F.Y.2010-11.Major reasons of this conclusion are as below : 1. from page no. 280 of this agreement it is clear that amount of Rs. 54,95,800/- was to be received by assessee in F.Y. 2011-12. This amount is more than 75% of the sale consideration. Thus the major sale consideration was received by assessee in F.Y. 2011- 12 only. 2. Even the language of agreement is very clear from which it can be ascertained that the relevant transfer was subject to the permission of sale by collector. Thus only the agreement does not ascertain the transfer of this property, but permission of collector was a must condition which was to be obtained in order to transfer the property. In all sale deeds it is mentioned that the permission to sale is obtained f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.1: From the material on record it is seen that it is an admitted position that the sale agreement was dated 29.11.2010 and an amount of Rs.1400000/- was received by the appellant as advance towards the sale. The total sale consideration was Rs.6895800/-. AO has not accepted the contentions of the appellant by observing that the sale was not complete as only a small percentage of the total consideration was received and possession was not handed over and that the sale was subject to the permission of the collector as mentioned in the agreement. The appellant has contended that the registry could not be made in the year of agreement as the permission of collector was received only on 22.3.2012 although application for the same was made. Appellant has placed reliance on the decision in the case of ITO Vs Modipon Ltd. 168 TTJ 480 (ITAT Delhi) in support of the contention that the circle rate prevailing on date of registration of agreement to sell and not circle rate as on the date of execution of sale deed should be adopted as sale consideration for computation u/s 50C. 5.2 The contention of the appellant that the circle rate as on the date of agreement should have been adopte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deed could not be executed because of pendency of the litigation between Shri Ranjeet Lal on one hand and the appellants on the other as Shri Ranjeet Lal had challenged the validity of the Will under which the property had devolved upon the appellants. By virtue of an order passed in the suit filed by Shri Ranjeet Lal, the appellants were restrained from dealing with the said residential house and a law-abiding citizen cannot be expected to violate the direction of a court by executing a sale deed in favour of a third party while being restrained from doing so. In the circumstances, for a justifiable reason, which was not within the control of the appellants, they could not execute the sale deed and the sale deed had been registered only on 24th September, 2004, after the suit filed by Shri Ranjeet Lal, challenging the validity of the Will, had been dismissed. In the light of the aforestated facts and in view of the definition of the term "transfer", one can come to a conclusion that some right in respect of the capital asset in question had been transferred in favour of the vendee and therefore, some right which the appellants had, in respect of the capital asset in question, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uation authority and sale consideration shown by the assessee in its computation of income u/s 50C of the Act. The learned DR strongly pointed out that the assessee received only 25% of sale consideration in the assessment year 2011-12 and all other formalities completing the transaction of transfer of property such as handing over possession and execution of registered sale deed was shown in the assessment year 2012-13, therefore, the Assessing Officer was right in taking the stamp valuation authority valuation for calculating the income of the assessee u/s 50C of the Act. 6. The learned DR submitted that the amendment has been brought in section 50C of the Act by Finance Bill, 2016 wherein it has been provided that the date of agreement will be effective from 1.4.2017. The learned DR submitted that in the present case the transfer of land took place before 14.2017, therefore, the Assessing Officer rightly considered the date of registration and determined the value as per stamp valuation authority. The learned D R submitted that the Commissioner of Income Tax (Appeals) was not justified in allowing the appeal of the assessee relying upon the decision of the Hon'ble Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Apex Court in the case of Sanjeev Lal (supra) wherein sitting for the Apex Court of India, their Lordships held that when the agreement to sell in respect of any capital asset is made then obviously some rights had been transferred in favour of the vendee/purchaser and the remaining rights which the appellant-seller had in respect of the capital asset, in question, had been extinguished as after execution of the sale agreement it is not validly permissible to sell the same property to someone else as per the provisions of Transfer of Property Act. 11. So far as the next question posed to us i.e. amendment inserted by way of Finance Act, 2016 w.e.f. 1.4.2017 to the said provision for full valuation of consideration in certain cases u/s 50C of the Act is concerned, the mandate of the legislature is that where the date of agreement fixing the amount of consideration and the date of registration for the transfer of capital asset are not the same, the value adopted or assessable by the stamp valuation authority on the date of agreement may be taken for the purpose of computing the full value of consideration for such transfer. This amendment is applicable w.e.f. 1.4.2017 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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