TaxTMI 
TaxTMI 
2017 (9) TMI 1161
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....a capital asset u/s. 2(14) (iii)(b) as it was situated beyond 8 Kms. from the municipal limits on the date of issue of Notification No.9447 dated 06.01.1994 despite the fact that the land was undisputedly situated within 8 Kms from the municipal limit on the date of sale." Following decision was passed on 24.07.2017, in D.B. Income Tax Appeal No.328/2011, Commissioner of Income Tax vs. Shri Sher Singh Sunda by this Court which reads as under:- "1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the tribunal has dismissed the appeal of the department and the C.O. of the assessee is partly allowed. 2. While admitting the appeal, this court on 13.04.2012 framed the following substantial question of law:- "Whether the Hon'ble ITAT was right in law in deleting the addition of Rs. 65.00 lacs made u/s 50C after having held that the transaction was transfer u/s 2(47) of I.T. Act read with Section 50(c) and where the value of the property was assessed for the purpose of Stamp Duty payment and the transaction was covered by explanation 2 to Section 50C of the I.T. Act, 1961?" 3. For the sake of convenience, Section 50(C) Explanation....
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....ntained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed 88[or assessable] by the stamp valuation authority referred to in subsection (1), the value so adopted or assessed 88[or assessable] by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.] "Section 2(47)Transfer-U/s 2(47) of Income-tax Act 1961, the term 'transfer' has been defined as Transfer in relation to a capital asset includes : (i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein; or (iii) the compulsory acquisition thereof under any law; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as stock-in-trade of a business carried on by him, such conversion or treatment; or (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882; or (vi) any transaction (whether by way of becoming a member of, a acquiring shares in, a ....
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....tion before the Stamp Duty authority. 3. The assessee has not transferred any immovable property but has transferred the right of purchase of immovable property. The assessee neither received the possession of property nor has any control been acquired on the property. 4. Section 50C is applicable in respect of transfer of capital asset being land or building or both while in the instant case the assessee has neither transferred any land nor transferred any building. 5. The assessee has not presented the agreement executed in favour of M/s. Rising Build Estate Ltd. for registration before the Stamp Duty Authority to assess or adopt any value of the transaction. Hence, Section 50C is not applicable. 6. Section 50C is a fiction made in the Act for adoption of value in certain specific cases. The fiction cannot be read in wider sense. No value is adopted or accepted by Stamp Duty Authority. Therefore, the provisions of Section 50C is not applicable. It was further argued that capital gain is not chargeable in in case the asset which is transferred has no cost at all." 5. He has taken to us the observations made by the Tribunal in para 2.6 2.8 and 2.9 which are as under:- ....
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...., is less than the value adopted or assessed by an authority of a State Government (stamp valuation authority) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration received or accruing as a result of such transfer for computing capital gain. However, the present scope of the provisions does not include transactions which are not registered with stamp duty authority, and executed through agreement to sell or power of attorney. With a view to preventing the leakage of revenue, it is proposed to amended the Section 50C so as to provide that where the consideration received or accruing as a result of transfer of a capital asset, being land or building or boht is less than the value adopted or assessed or assessable by an authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of the consideration received or accruing as a result of such transfer for computing capital gain. Further, it is proposed to insert a new Explanation so as to clarify the mea....
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....ed. The plots are still to be registered with Stamp Valuation authorities. The Ld. CIT(A) has clearly observed that the word 'assessable' has been inserted in Section 50C of the Income Tax Act by the Finance (No.2) Act, 2009 w.e.f. 01.10.2009. The consideration as adopted by the stamp valuation authority can be taken as full consideration if the value adopted by the stamp valuation authority is assessable w.e.f. 1.10.2009. The assessment year under reference is 2006-07 and therefore, the amended provisions of Section 50C is not applicable. In the memo explaining the provisions of Finance (No.2) Act, 2009, it was mentioned as under for making the amendment in Section 50C of the Income Tax Act. "The existing provisions of Section 50C provide that where the consideration received or accruing as a result of the transfer of a capital asset, being land or building or both, is less than the value adopted or assessed by an authority of a State Government (Stamp valuation authority) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration received or accruing as a result of such transfe....
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....rtly allowed." 6. He contended that the Tribunal has committed serious error in interpreting Section 50(C) and has travelled beyond the observations which are made by the CIT(A) in para 2.3. Same reads thus:- "2.3 I have carefully considered the facts of the case and submissions of Ld. AR. However, on perusal of the relevant material on record, In find that the contentions/ submissions/ arguments of the Ld. AR, raised in support of this ground of appeal, are not fully acceptable. In this regard, the following observations are made. (i) As far as the claim of Ld. AR that the purchase and sale of agricultural land, in question, by the appellant is only in the nature of a finance arrangement, not involving real purchase and sale, is concerned, I find that the said claim of Ld. AR is contrary to the facts on record. In this regard, it is seen that the appellant purchased agricultural land, measuring 1.80 Hectares (located at village Murlipura, Tehsil Sanganer), Jaipur, from Smt. Pushpa Kedia and Smt. Gulab Devi (sellers), for 62,70,975/, and also passed on the sale consideration to the said sellers, as well as, obtained possession of that property. The fact that the appellant had a....
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....ment dated 13.11.2006 (wherein the appellant is a "seller"). Hence, there is substance in the argument of Ld. AR that the provisions of S.50C of the Act were not applicable in such situation, because where the Registering Authority had not determined the value of the sold property, the actual sale amount (as per the sale agreement) cannot be substituted by some other amount. It is observed that the said contention of ld.AR is supported by the decisions of Hon'ble ITAT Jaipur Bench in the case of ITO v/s Sh. Anurag Mishra, ITA No.878/JP/2007, dated 20.06.2008 and of Hon'ble ITAT Jodhpur Bench, in the case of Navneet Kumar Thakkar v/s ITO, 112 TTJ 76. Therefore, it is to be held that Ld. AO was not justified in applying the provisions of S.50 of the I.T. Act in respect of the aforementioned sale of property by the appellant (made vide sale agreement dated 13.11.2006) to M/s Real Build Estates Pvt. Ltd., Jaipur and thereby in substituting the sale value shown at Rs. 70,00,000/- in the sale agreement dated 13.11.2006 by Rs. 1,35,00,000/-." 7. He contended that the Tribunal has committed serious error in holding that the transaction under Section 50(C) was assessable which has now bee....
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....ot disputing about the existence of such circular issued by the Board. If the Board has issued a circular clarifying the applicability of Section 50C in pursuance of the amendment made by Amendment Act 2 of 2009, we fail to understand as to how the Revenue can canvass the same issue in this case which in effect is against the circular issued by the Board. Certainly, the Revenue is bound by the circular issued by the Board. At this juncture, it is pertinent to note that in a decision made in the case of State of Tamil Nadu and another Vs. India Cements Ltd. and another reported in (2011) 40 VST 225 (SC), the Honourable Supreme Court has held that the circulars issued by the Revenue are binding on the Department and therefore, they cannot repudiate that they are inconsistent with the statutory provisions. Relevant paragraphs 21 and 22 are extracted hereunder: "21.It is manifest from the highlighted portion of the circular that as per the clarification issued by the Commissioner of Commercial Taxes, in exercise of the power conferred on him under Section 28A of the TNGST Act, the benefit of the sales tax deferral scheme would be available to a dealer from the date of reaching of BPV....