Tribunal grants appeal, sets capital gains sale consideration, orders retrospective Section 50C proviso, allows Section 54F exemption.

Smt. K. Maha Lakshmi, L/R of late Sri K. Gangi Chetty, Tirupati. Versus Dy. Commissioner of Income-tax, Central Circle, Tirupati

Smt. K. Maha Lakshmi, L/R of late Sri K. Gangi Chetty, Tirupati. Versus Dy. Commissioner of Income-tax, Central Circle, Tirupati - TMI Issues Involved:
1. Applicability of Section 50C of the Income Tax Act, 1961.
2. Date of Transfer for the purpose of Capital Gains.
3. Reference to Valuation Officer under Section 50C.
4. Retrospective Application of the Proviso to Section 50C.
5. Eligibility for Exemption under Section 54F for Construction of Multiple Residential Units.

Issue-wise Detailed Analysis:

1. Applicability of Section 50C of the Income Tax Act, 1961:
The primary issue was whether the Assessing Officer (AO) was correct in adopting the value determined by the Stamp Valuation Authority (SRO) as the sale consideration under Section 50C. The AO replaced the actual sale consideration of Rs. 25,25,000 with the SRO value of Rs. 41,91,000, leading to an addition of Rs. 16,16,900 to the returned income. The CIT(A) upheld this decision.

2. Date of Transfer for the purpose of Capital Gains:
The appellant argued that the date of transfer should be the date of the agreement (06/08/2006) when part payment was received, not the date of registration (29/01/2007). The AO and CIT(A) considered the date of registration as the date of transfer. The Tribunal referred to Section 2(47) and various judicial precedents, concluding that the date of agreement should be considered for capital gains computation. The Tribunal observed that the proviso to Section 50C(1) applies, making the sale consideration Rs. 25,25,000.

3. Reference to Valuation Officer under Section 50C:
The appellant contended that the AO should have referred the matter to the Valuation Officer when the adoption of the SRO value was disputed. The Tribunal cited judicial precedents, emphasizing the duty of the AO to refer the valuation to the departmental valuation wing under Section 50C when disputed by the assessee. The Tribunal found the AO's action of not referring the matter to the Valuation Officer to be incorrect.

4. Retrospective Application of the Proviso to Section 50C:
The appellant argued that the proviso to Section 50C, which allows the consideration on the date of agreement to be taken if part payment is made by cheque, should apply retrospectively. The Tribunal referenced the judgment of the Hon’ble Madras High Court in Commissioner of Income Tax, Chennai v. Vummudi Amarendran, which held that the proviso to Section 50C(1) should be considered retrospective as it aims to relieve undue hardship. The Tribunal agreed, applying the proviso retrospectively to the appellant's case.

5. Eligibility for Exemption under Section 54F for Construction of Multiple Residential Units:
The AO allowed exemption under Section 54F only for one residential house, disallowing it for the other two constructed for the appellant's sons. The Tribunal noted that various High Courts have settled this issue, allowing exemption for multiple residential units constructed as one house before the amendment in the Act. The Tribunal cited multiple judgments supporting the appellant’s claim and concluded that the appellant is eligible for exemption under Section 54F for all three houses.

Conclusion:
The Tribunal allowed the appeal, holding that:
- The sale consideration for capital gains computation should be Rs. 25,25,000, considering the date of agreement.
- The AO erred in not referring the matter to the Valuation Officer.
- The proviso to Section 50C applies retrospectively.
- The appellant is eligible for exemption under Section 54F for all three residential units constructed.

Result:
The appeal of the assessee was allowed.