TaxTMI 
TaxTMI 
2018 (6) TMI 1651
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....of the Income Tax Act, 1961. 4. The Ld. AO as well as CIT(A) erred in calculating the Capital gain on sale of agricultural/ND land, also undivided and disputed land in the year under consideration, as the Agreement for Sale was done on 27.8.2009 i.e. in the AY 2010-11 & not in AY 2014-15. 5. Without prejudice to the above, the Ld. AO as well as CIT(A) erred in not referring the matter to the Valuation officer, which may please be allowed. 6. Without prejudice to the above, the Ld. AO as well as CIT(A) erred in considering the Market value as per provisions of Sec. 50C in the AY 2014-15, whereas the Agreement for Sale was entered in the AY 2010- 11 & valuation, if at all to be adopted, may be adopted of AY 2010-11 instead of AY 2014-15. 7. Further without prejudice to the above, you are requested to allow the deduction U/s 54 of the Income Tax Act for Purchase of Residential House which was not claimed because of the fact that there was no capital gain on sale of agricultural land. 8. Your Honors are requested to allow the claim of the Appellant accordingly. 9. The Appellant craves leave to add, amend, alter, or delete any of the above ground/s." 2. Briefly state....
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....apital asset under Sec. 2(14) of the I-T Act. However, the CIT(A) observing that as the agricultural land was situated within the jurisdiction of a sub-urban district which had a population of 93,32,481 according to the 2011 census, thus, concluded that the claim of the assessee that the land under consideration was a rural agricultural land was incorrect and did not merit acceptance. Apart there from, it was claimed by the assessee that he was eligible for claim of deduction under Sec.54F. However, the said contention of the assessee was also declined by the appellate authority for three reasons viz. (i) that, the land under consideration could not be termed as agricultural land; (ii) that, the assessee had also not demonstrated that any agricultural land was purchased by him by utilising the proceeds of the sale of the impugned land within a period of 2 years; and (iii) that, the assessee had also not raised any claim of deduction under Sec.54B either in the return of income or during the course of the assessment proceedings. Accordingly, the CIT(A) not finding favour with the contentions advanced by the assessee upheld the order of the A.O and dismissed the appeal. 5. The asse....
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....id facts, it was the claim of the ld. A.R that as the transfer of the property under consideration had taken place in the year 2009, therefore, the reserve price for the purpose of computing the deemed capital gain under Sec. 50C was to be computed in context of that as was available at the time of executing the aforesaid 'agreement to sell', dated 27.08.2009. Apart there from, it was submitted by the ld. A.R that as the assessee had vide an 'agreement', dated 10.07.2013 made an investment towards purchase of a residential property that was to be constructed, therefore, it was entitled for deduction under Sec.54F to the extent of the investment so made. The ld. A.R admitted that the fact that the property under consideration was not a rural agricultural land was accepted by him. It was further submitted by him that the genuineness of the 'agreement to sell', dated 27.08.2009 had not been doubted by the lower authorities. The ld. A.R submitted that the 'Fair Market Value' (for short 'FMV') of the property under consideration was worked out on the basis of a 'Valuation report', dated 18.02.2018 by a registered valuer at Rs. 1,36,32,710/- (Page 25 to 30 of APB). It was submitted by hi....
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....f the counsel for the revenue, submitted, that a reference of the 'agreement to sell', dated 27.08.2009 was clearly made in the 'sale deed', dated 28.06.2013. In order to fortify his aforesaid contention the ld. A.R drew our attention to the relevant extract of the 'sale deed', dated 28.06.2013 at Page 53 of APB. It was further submitted by the ld. A.R, that as was discernible from a perusal of the 'sale deed', dated 28.06.2013 at Page 65 of APB the property under consideration was situated in a no development zone in a village. In order to support his aforesaid contention the ld. A.R drew our attention to the sanction of the revised development plan of municipal corporation of Greater Mumbai, dated 20.04.2013, which revealed that the Village Malvani where the property of the assessee was situated was within the no development zone (Page 99 of APB). 8. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. Admittedly, the property that was sold by the assessee at Village: Malawani, Talluka Borivali, is a non-rural agricultural land. As is discernible from the registered 'sale deed', date....
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....eal before us merits acceptance. 10. We shall first advert to the claim of the assessee that for the purpose of quantification of the LTCG as per the deeming provisions of Sec.50C, the reserve price applicable on the date of execution of the 'agreement to sell', dated 27.08.2009 was to be considered, and not that as was available on the date of execution of the 'sale deed', dated 28.06.2013. As observed by us hereinabove, the assessee in support of his aforesaid claim had relied on the order of the ITAT Ahemdabad, SMC Bench in the case of Dharam Shibhai Sonani Vs. ACIT (ITA No. 1237/Ahd/2013)ITAT, Ahemdabad. As claimed by the assessee, the amount of the sale consideration for the property under consideration was fixed by him with the purchaser i.e M/s Karvir and Rambhiya Properties Pvt. Ltd., as per the 'agreement to sell', dated 27.08.2009 i.e much prior to the execution of the 'sale deed', dated 28.06.2013. 11. We shall for the purpose of answering the controversy before us, therein deliberate on Sec. 50C of the I-T Act. The legislature in all its wisdom, had vide the Finance Act, 2016 w.e.f 01.04.2017 inserted the following two provisos to Sec. 50C : "Provided that where ....
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....the agreement for the transfer of such immovable property. 30 These amendments are proposed to be made effective from the 1st day of April, 2017 and shall accordingly apply in relation to assessment year 2017-18 and subsequent years." We find that as per the aforesaid amendment to Sec. 50C, which provides that subject to satisfaction of certain conditions therein envisaged, 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 purpose of computing the full value of consideration for such transfer. Further, we are also persuaded to subscribe to the view taken by the ITAT Ahemdabad, SMC Bench, in the case of Dharam Shibhai Sonani Vs. ACIT (ITA No. 1237/Ahd/2013)ITAT, Ahemdabad, that though the aforesaid amendment had been introduced only with prospective effect from 1st April 2017, however, as the same was a curative amendment that was made available on the statute to remove an incongruity resulting in undue hardship to the assesses, therefore, the same was to ....
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....is significant difference between the point of time when agreement to sell is executed and when the sale deed is executed, therefore, should ideally be between the sale consideration as per registered sale deed, which is fixed by way of the agreement to sell, visa- vis the stamp duty valuation as at the point of time when agreement to sell, whereby sale consideration was infact fixed, because, if at all any suppression of sale consideration should be assumed, it should be on the basis of stamp duty valuation as at the point of time when the sale consideration was fixed. Income Tax Simplification Committee set up in 2015, headed by Justice R V Easwar- a former judge of Delhi High Court and one of the most illustrious former Presidents of this Tribunal, took note of this incongruity and, in its very first report, observed as follows: 6.1 RATIONALISATION OF SECTION 50C TO PROVIDE RELIEF WHERE SALE CONSIDERA TION FIXED UNDER AGREEMENT TO SELL Section 50C makes a special provision for determining the full value of consideration in cases of transfer of immovable property. It provides that where the consideration declared to be received or accruing as a result of the transfer of lan....
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....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 consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer. " 6. This amendment was explained, in the Memorandum Explaining the Provisions of Finance Bill 2016, as follows: Rationalization of Section 50C in case sale consideration is fixed under agreement executed prior to the date of registration of immovable property Under the existing provisions contained in Section 50C, in case of transfer of a capital asset being land or building on both, the value adopted or assessed by the stamp valuation authority for the purpose of payment of stamp duty shall be taken as the full value of consideration for the purposes of computation of capital gains. T....
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.... sale consideration is finalized. The incongruity in the statute was glaring and undue hardship not in dispute. Once it is not in dispute that a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. In support of this proposition, I find support from Hon'ble Delhi High Court's judgment in the case of CIT Vs Ansal Landmark Township Pvt Ltd [(2015) 377 ITR 635 (Del)], wherein approving the reasoning adopted an order authored by me during my tenure at Agra bench [i..e Rajeev Kumar Agarwal Vs ACIT (2014) 149 ITD 363 (Agra)] which centred on the principle that when legislature is reasonable and compassionate enough to undo the undue hardship caused by the statute "such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically". In this case, it was specifically observed, and it was this observation which was reproduc....
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....de law, ought to have been effective from the date on which the related legal provisions were introduced. As I say so, in addition to the reasoning given earlier in this order, I may also refer to the observations of Hon'ble Supreme Court, the case of CIT Vs Alom Extrusion Ltd [(2009) 319 ITR 306 SC)], to the following effect: "Once this uniformity is brought about in the first proviso, then, in our view, the Finance Act, 2003, which is made applicable by the Parliament only w.e.f. 1st April, 2004, would become curative in nature, hence, it would apply retrospectively w.e.f. 1st April, 1988 (i.e. the date on which the related legal provision was introduced). Secondly, it may be noted that, in the case of Allied Motors (P) Ltd. Etc. vs. CIT (1997) 139 CTR (SC) 364: (1997) 224 ITR 677 (SC), the scheme of s. 43B of the Act came to be examined. In that case, the question which arose for determination was, whether sales-tax collected by the assessee and paid after the end of the relevant previous year but within the time allowed under the relevant sales-tax law should be disallowed under s. 43B of the Act while computing the business income of the previous year? That was a case which....
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....ly. Take an example-in the present case, the respondents have deposited the contributions with the R.P.F.C. after 31st March (end of accounting year) but before filing of the Returns under the IT Act and the date of payment falls after the due date under the Employees' Provident Fund Act, they will be denied deduction for all times. In view of the second proviso, which stood on the statute book at the relevant time, each of such assessee(s) would not be entitled to deduction under s. 43B of the Act for all times. They would lose the benefit of deduction even in the year of account in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right upto 1st April, 2004, and who pays the contribution after 1st April, 2004, would get the benefit of deduction under s. 43B of the Act. In our view, therefore, Finance Act, 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from 1st April, 1988, when the first proviso was introduced. It is true that the Parliament has explicitly stated that Finance Act, 2003, will operate w.e.f. 1st April, 2004. However, the matter bef....
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....ale consideration as claimed by the assessee was received by the assessee by way of account payee cheques, on and before the date of the agreement for transfer. However, at the same time, we also cannot remain oblivious of the fact that the 'agreement to sell', dated 27.08.2009 was never filed by the assessee in the course of the proceedings before the lower authorities, and was in fact furnished for the very first time before us. Accordingly, in all fairness, we are of the considered view that the matter requires to be restored to the file of the A.O, who shall remain at a liberty to verify the veracity of the 'agreement to sell', dated 27.08.2009, as well as the claim raised by the assessee on the basis of the same to bring its case within the realm of the provisos to Sec. 50C. In case, the A.O is satisfied with the genuineness of the 'agreement to sell', and the claim raised by the assessee on the basis of the same are found to be in order, then, he shall redetermine the LTCG in the hands of the assessee u/s 50C in terms of our aforesaid observations. 13. Also, we find that the assessee had raised a claim towards his entitlement for claim of deduction under Sec. 54F in respect....