2019 (12) TMI 612 - AT - Income Tax

Appellate Tribunal Upholds Decision on Section 50C Retroactivity

The Appellate Tribunal dismissed the Revenue's appeal, ruling that Section 50C of the Income Tax Act could not be applied to transactions before 1st ... Provisions of Section 50C applicability even prior to 1st October, 2009 in respect of transaction which took place prior to 1st October, 2009 - AO was of the opinion that the provisions of Section 50C of the Act should be invoked in the present transactions, accordingly he completed the assessment by adopting guideline value prescribed in the said properties as deemed consideration - HELD THAT:- The provisions of Section 50C of the Act have come into vogue w.e.f. 01.10.2009 and clearly states that the provision will come into effect from 01.10.2009. Further, the CBDT Circular No.5/2010, dated 03.06.2010, has also clearly explained that the provisions of Section 50C of the Act will come into effect from 1st October, 2009 and it is further clarified that the provisions of Section 50C have no application in respect of transaction which are not registered with the registration authorities. The Hon’ble Jurisdictional High Court in the case of CIT vs. R. Sugantha Ravindran [2013 (3) TMI 271 - MADRAS HIGH COURT] held after introduction of the words 'or assessable' after the words 'adopted or assessed', such transfers where the value assessable by the stamp valuation authority are also brought into the ambit of section 50C. Thus, such introduction of new set of class of transfer would certainly have the prospective application only and not otherwise. Hence, the assessee's transfer admittedly made earlier to such amendment cannot be brought under section 50C. Appeal filed by the Revenue stands dismissed. Issues Involved:- Interpretation of provisions of Section 50C of the Income Tax Act- Applicability of Circular 5/2010 issued by CBDT- Validity of invoking Section 50C for transactions prior to 1st October 2009Analysis:Interpretation of Section 50C:The case involved a dispute regarding the application of Section 50C of the Income Tax Act. The Assessing Officer invoked Section 50C to determine the deemed consideration for the sale of land by adopting the guideline value. However, the Appellate Tribunal noted that Section 50C came into effect from 1st October 2009. The Tribunal emphasized that the provision applies to transactions undertaken on or after that date. The Tribunal also highlighted that Section 50C applies to transfers of properties where the value assessable by the stamp valuation authority is considered. The Tribunal concluded that the insertion of the words 'or assessable' post-amendment in 2009 introduced a new class of transactions, indicating prospective application only.Applicability of CBDT Circular 5/2010:The Appellate Tribunal referenced Circular 5/2010 issued by the CBDT, clarifying that the provisions of Section 50C of the Act would be effective from 1st October 2009. The Tribunal highlighted that the circular explicitly stated that the provisions of Section 50C do not apply to transactions not registered with the authorities. The Tribunal emphasized that the circular's clarity regarding the applicability of Section 50C was crucial in determining the case's outcome.Validity of invoking Section 50C for transactions prior to 1st October 2009:The Tribunal relied on legal precedents and emphasized the binding nature of circulars issued by the Revenue. Referring to the Supreme Court's decision, the Tribunal reiterated that Revenue is bound by circulars and cannot challenge them as inconsistent with statutory provisions. The Tribunal concluded that the Revenue's attempt to apply Section 50C to transactions predating 1st October 2009 was not valid. By considering the legal position and the scope of Section 50C, the Tribunal dismissed the Revenue's appeal and upheld the order of the Commissioner of Income Tax (Appeals).In conclusion, the Appellate Tribunal dismissed the Revenue's appeal, holding that the provisions of Section 50C of the Income Tax Act could not be invoked for transactions occurring before 1st October 2009. The Tribunal's decision was based on the legal interpretation of Section 50C, the applicability of CBDT Circular 5/2010, and the binding nature of Revenue circulars, ultimately upholding the order of the Commissioner of Income Tax (Appeals).