TaxTMI 
TaxTMI 
2016 (12) TMI 1584
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.... and notice under section 143(2) dated 28.9.2012 was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the AO that land comprising in survey No.2000/40/B was sold by the assessee for a consideration of Rs. 50.45 lakhs vide sale deed no.293/2011. The assessee has disclosed long term capital gain on sale of land. It came to the notice of the AO that initially a stamp duty of Rs. 2,47,500/- was paid. Subsequently, additional stamp duty of Rs. 21,32,070/- was paid on this transaction. In other words, for the purpose of computing capital gain, the assessee has shown sale consideration of Rs. 50.45 lakhs whereas as per stamp duty valuation, sale consideration was determined at Rs. 4,35,62,500/-. The ld.AO has confronted the assessee as to why stamp duty valuation done by stamp duty valuation authority for the purpose of registration of sale deed should not be adopted as full sale consideration provided under section 50C of the Income Tax Act. In response to the show cause notice, it was contended by the assessee that he had entered into an agreement for sale of this land on 31.3.2008. He has received the payment. The sale deed has been registered on 10.1.20....
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....as handed over the possession, therefore, transfer has taken place in that year and long term capital gain ought to be computed in the Asstt.Year 2008-09 only. In response to the contention of the ld.counsel for the assessee, the ld.CIT-DR has filed written submissions apart from making oral contentions. Written submissions given by the ld.DR reads as under: "1) Assessee has relied on the decision of Honourable ITAT, Ahmedabad Bench(SMC) in case of Dharamshibhai Sonani, ITA 1237/Ahd/2013 dated 30/9/2016. Hon'ble ITAT bench has held that the provisos inserted in Section 50C with effect from 1st April, 2007, vide the Finance Act 2016 should be treated as retrospective in effect. The provisos in the amended Section 50C are as under:- "Provided 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. Provided further that the first proviso shall apply only in a case where the amount of consi....
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....o, the 1st proviso of the retrospectively amended section 50C will not apply in this case. In other words, the stamp value of the property cannot be considered on the date of agreement for the purpose of determining the consideration u/s 50C because the entire consideration was paid 8 to 9 months after this date of agreement. Therefore, the amount of consideration u/s.50C has to be considered as the stamp valuation on the date of registration, i.e. 18/1/2011. This is precisely what the Assessing Officer and CIT(A) have done. Therefore, the appeal of assessee deserves to be rejected." 7. We have duly considered rival contentions and gone through the record carefully. Section 48 of the Income Tax Act provides mode of computation of capital gain. It contemplates that income arising under the head "capital gains" shall be computed by deducting from the full value of the consideration received or accruing, as a result of the transfer of the capital assets the following amounts, viz. (a) expenditure incurred wholly and exclusively in connection with such transfer; and (b) the cost of acquisition of the asset and the cost of any improvement thereto. 8. Section 50C further provides that ....
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....e of section 17(1A) as well as Section 49 of the Registration Act. "17.(1A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said section 53A. 49. Effect of non-registration of documents required to be registered.-No document required by section 17 1[or by any provision of the Transfer of Property Act, 1882 (4 of 1882)], to be registered shall- (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered: Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific perform....
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.... tendered in evidence in a suit for specific performance. In other words, validity of unregistered agreement has not been denied for the purpose of adducing it as evidence for obtaining the benefit flowing from such contract. But for the purpose of protecting the possession, un-registered contract could not be enforced. The "transfer" within the meaning of section 2(47) of the Income Tax Act would complete, if possession is protected. Therefore, we do not find any merit in the second fold of submissions raised by the ld.counsel for the assessee. 13. It is also pertinent to observe that in the case of Dharamshibhai Sonani Vs. ACIT, though the Tribunal has made an observation that proviso appended to section 50C recognizing the date on which agreement was entered into for sale of the land or building, such date on which value adopted or assessed for the purpose of stamp duty valuation is to be deemed as sale consideration is concerned, the Tribunal has observed that such a date would be recognized if payment was made through account payee at the time of agreement. It is a specific observation of Tribunal in para-9. In other words, the Tribunal has observed that partial sale consider....
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....Specific Relief Act has been provided in the Indian Limitation Act, and this limitation is three years from the date of agreement. In case the vendee refused to get sale deed registered, then assessee can only sue for specific performance, persuading vendee to purchase land. In that situation, the assessee would not get anything more than the amount agreed in the agreement. Similarly, there can be a time gap between the date of agreement vis-à-vis ultimate registration of sale deed. There can be an appreciation or depreciation in the property. In other words, at the time of execution of agreement in respect of an immovable property, the right in persona is created in favour of the transferee/vendee. When such right is created in favour of the vendee, vendor is restrained from selling the said property to someone-else, because vendee in whose favour the right in persona is created has legitimate right to enforce specific performance of the agreement, if vendor for some reason is not executing sale deed. Thus, by virtue of agreement to sell, some right is given to the vendee by the vendor. It is an encumbrance on the property and considering this aspect, the ld.AO should have ....