2019 (8) TMI 1863 - AT - Income Tax

ITAT upholds CIT(A)'s decision on Sec. 50C addition, emphasizing retrospective proviso

The ITAT dismissed the Revenue's appeal, affirming the CIT(A)'s decision to delete the addition under section 50C of the Income Tax Act for A.Y. 2012-13. ... Addition of LTCG u/s 50C - value adopted or assessed or assessable by the stamp valuation authority - AO has adopted the value as per stamp valuation authority as on 06.04.2011 on the ground that sale value determined by the stamp valuation authority was higher than the sale consideration referred in the sale agreement - Whether proviso to sub section (1) of Sec. 50C is not with retrospective effect of it came into effect from 01.04.2017 only? - HELD THAT:- It is clear that in the case of the assessee the Banakhat (Agreement to Sale) was made on 20.11.2010 which was duly notarised on 20.03.2011 and sale consideration was determined at Rs. 76,00,000/- and entire payment has been received by account payee cheque by 31.03.2011 and sale consideration as on date of execution of agreement to sale was higher than the transfer valuation. It is clear from the aforesaid material fact that assessee has received the entire amount of sale consideration by account payee cheque before 31.03.2011 and there was delay of five days in the registration of the document due to shortage of stamp etc. Considering decision of DCIT vs. S. Venkat Reddy [2016 (10) TMI 844 - ITAT HYDERABAD] as referred in the findings of the Ld. CIT(A) and the decision in the case of Dharamshibhai Sonani [2016 (9) TMI 1259 - ITAT AHMEDABAD] the appeal of the Revenue is dismissed. Issues involved:- Appeal against deletion of addition under section 50C of the Income Tax Act, 1961 for A.Y. 2012-13.Analysis:1. The appeal by the Revenue contested the decision of the CIT(A) to delete the addition under section 50C of the Act, arguing that the proviso to sub-section (1) of Sec. 50C was not retrospective. The case involved the sale of a bungalow, where the stamp duty valuation authority valued the property higher than the consideration shown by the assessee.2. The CIT(A) allowed the appeal of the assessee, citing the proviso inserted by the Finance Act, 2016 to Sec. 50C. The CIT(A) emphasized that the value adopted by the stamp valuation authority on the date of the agreement to sale should be considered for computing the full value of consideration, not the value on the date of the sale deed. This decision was based on the timing of the agreement, receipt of consideration, and the delay in registration.3. During the appellate proceedings, the assessee's counsel highlighted the retrospective nature of the proviso inserted by the Finance Act, 2016, referring to a Co-ordinate Bench decision of the ITAT Ahmedabad. The counsel argued that no addition should be made under section 50C due to the retrospective effect of the proviso.4. The ITAT considered the timeline of events, where the agreement to sale was made in November 2010, and the entire consideration was received by March 2011, although the sale deed was executed in April 2011. The ITAT upheld the CIT(A)'s decision, emphasizing the importance of the proviso to Sec. 50C and the retrospective effect of the Finance Act, 2016. The ITAT also referenced a previous decision regarding the retrospective application of the proviso.5. Ultimately, the ITAT dismissed the Revenue's appeal, affirming the decision of the CIT(A) to delete the addition under section 50C. The ITAT concluded that the proviso to Sec. 50C, with retrospective effect, should govern the computation of full value of consideration in such cases, based on the timing of the agreement and receipt of consideration.This detailed analysis covers the issues raised in the legal judgment comprehensively, highlighting the key arguments, decisions, and legal provisions involved in the case.