2017 (11) TMI 1943 - AT - Income Tax

ITAT Orders Fresh Adjudication Considering Stamp Duty Valuation Date in Section 50C Application.

Smt. Kundanben Ambalal Shah Versus Income Tax Officer Ward 10 (2) Ahmedabad

The ITAT remitted the case back to the AO for fresh adjudication, directing the AO to consider the stamp duty valuation as on the date of the agreement to ... Long tern capital gain - applicability of section 50C - Computation of full value of consideration for transfer of asset - HELD THAT:- Issue in appeal is squarely covered by the Tribunal’s decision in the case of Dharamshibhai Sonani [2016 (9) TMI 1259 - ITAT AHMEDABAD], which has been subsequently followed by large number of division bench of this Tribunal. As rightly held by the Tribunal in the case of Dharamshibhai Sonani (supra), the amendment brought about by Finance Act, 2016, providing that “where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital 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 consideration for such transfer”, is retrospective in effect and applies from 1st April 2003. The detailed reasons for coming to this conclusion are already set out in the extract from the Tribunal’s decision quoted earlier in this order. We are of the considered view that the plea of the learned counsel indeed merits acceptance. We, therefore, deem it fit and proper to remit the issue to the file of the Assessing Officer for adjudication de novo in the light of observations above and the legal position set out in Dharamshibhai Sonani (supra) . Thus we remit the matter to the file of the Assessing Officer in this case as well. Assessee appeal is allowed for statistical purposes. Issues Involved:1. Validity of the order passed under section 250 on 14.10.2014.2. Applicability and correctness of Section 50C in determining Long Term Capital Gain.3. Consideration of the sale agreement and actual sale transaction dates in applying Section 50C.Detailed Analysis:1. Validity of the Order Passed Under Section 250:The appellant challenged the correctness of the order dated 14th October 2014 passed by the CIT(A)-XVI, Ahmedabad, arguing that it was erroneous, did not properly consider the facts on record, and was against the principles of justice. The tribunal did not specifically address the validity of the order under section 250 but focused on the application of Section 50C.2. Applicability and Correctness of Section 50C:The appellant contended that the Long Term Capital Gain of Rs. 41,78,564/- was incorrectly considered under Section 50C by taking the value of Rs. 1,48,05,950/- as per the valuation by the registering authority instead of the actual sale consideration of Rs. 1,05,00,000/-. The tribunal noted that the provisions of Section 50C were not properly applied as the relevant date for ascertaining the sale consideration should be the date on which the agreement to sell was entered into, not the date of the transaction.3. Consideration of Sale Agreement and Actual Sale Transaction Dates:The appellant argued that:- The agreement to sell the property was made on 04.07.2007.- 95% of the sale price was received in F.Y.2007-08.- Possession was handed over as per agreement on 30.01.2009.- The sale deed was executed and registered on 24.09.2009.- The valuation report dated 04.06.2007 was not considered.- The Assistant Commissioner of Income Tax did not refer the valuation to the department valuation officer.The tribunal referenced its decision in the case of Amitkumar Ambalal (HUF) vs. ACIT, where it was held that the stamp duty valuation for the purpose of adopting the value of consideration under Section 50C should be as on the date of the agreement to sell and not the date of the transaction. This decision was based on the understanding that the amendment to Section 50C by the Finance Act, 2016, which allowed the value on the date of the agreement to be considered, was curative and retrospective from 1st April 2003.The tribunal also cited the decision of the Ahmedabad SMC bench in Dharamshibhai Sonani vs. ACIT, which supported the view that the date of the agreement should be used for valuation purposes under Section 50C. The tribunal further referenced the Hon’ble Allahabad High Court's decision in CIT vs Shimbhu Mehra, which upheld the same principle.Conclusion:The tribunal concluded that the plea of the appellant was valid and remitted the issue back to the Assessing Officer for a fresh adjudication. The Assessing Officer was directed to consider the stamp duty valuation as on the date of the agreement to sell (04.07.2007) for the purpose of Section 50C and to recompute the capital gains accordingly. The tribunal emphasized that the amendment to Section 50C should be treated as retrospective, effective from 1st April 2003.Result:The appeal was allowed for statistical purposes, and the matter was sent back to the Assessing Officer for a de novo adjudication in light of the tribunal's observations and the legal position set out in previous relevant judgments.