TaxTMI 
TaxTMI 
2017 (5) TMI 1725
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....Act. For the purpose of adjudicating issues involve in this appeal, we will take up facts of ITA no.1932/Ahd/2013 in the case of Mr. Jitendra R. Patel. 4. Ld.Counsel submitted that assessee is an individual earning income from labour contractor and supervisor. Return of income for A.Y. 2009- 10 filed on 04/11/2009, declaring total income of Rs. 20,89,900/- which included short term capital gain of Rs. 10,47,822/-. Case was selected for scrutiny assessment and notice u/s.143(2) of the Act followed by 142(1) of the Act along with questionnaire was duly served upon assessee. Income assessed at Rs. 5,76,980/- after making addition of Rs. 36,27,081/- which included addition on account of capital gain of Rs. 14,43,334/- by applying provisions of section 50C of the Act. Appeal before Ld.CIT(A) brought partial relief to the assessee. 5. Now the assessee is in appeal before the Tribunal against the sole issue relating to addition confirmed by the Ld.CIT(A) of Rs. 14,43,334/- u/s.50C of the Act. 6. Facts relating to this impugned addition are that the assessee was one third owner of agriculture land at survey no.754 Mouza Vejalpur Taluka, Ahmedabad. This property was purchased for Rs. 44,....
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....ns and perused the material placed before us and gone through the decision relied on by the Ld.Counsel. Sole issue involved in this appeal is to examine that, in case of a transaction of sale of capital asset, being a land or building for which the seller enters into an agreement for sale at certain consideration and sale deed executed after some time, then in such situation whether value to be adopted for the purpose of section 50C of the Act is to be taken on the date of agreement to sale or on the date of executing sale deed. 8.1 We notice that assessee held one third share in the land at vejalpur purchased on 01/08/2007 for Rs. 44,94,276/-. On 10/12/2007 assessee entered into an agreement for sale of this property at a consideration of Rs. 80,00,000/- and received advance of Rs. 12,00,000/- However sale deed was executed on 20/08/2008, after receiving balance consideration from the buyers. After calculating one third share in the sale as well as purchase cost assessee offered Rs. 10,47,823/- as short term capital gain. During the course of assessment proceedings, it was observed by the Ld.AO that valuation of the property as per provisions of section 50C of the Act as on 20/08....
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....f land could finally be executed only on 24.04.2007 since the land was agricultural land, since the buyer was a private limited company, which could have purchased only non-agricultural land, and since land was required to be converted into nonagricultural land before execution of sale deed. The stamp duty valuation as on 24.04.2007 was therefore, according to the assessee, not relevant for ascertaining whether the sale consideration was suppressed which is what is relevant for the purpose of section 50C. This explanation was, however, rejected. What, according to the Assessing Officer, was relevant was the date on which sale deed is executed. The Assessing Officer proceeded to adopt sale consideration, under section 50C, at stamp duty valuation rate. Aggrieved, assessee carried the matter in appeal before the learned CIT(A) but without any success. The assessee is not satisfied and is in further appeal before me. [3] I have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal position. [4] The fundamental purpose of introducing section 50C was to counter suppression of sale consideration on sale of i....
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....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 (http://taxsimplification.in/REPORT.pdf), observed as follows: 6.1 RATIONALISATION OF SECTION 50C TO PROVIDE RELIEF WHERE SALE CONSIDERATION 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 land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (i.e. "stamp valuation authority") 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, and capital gains shall be computed on the basis of such consideration under section 48 of the Incometax Act. The ....
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....r 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 (http://indiabudget.nic.in/ub2016- 17/memo/mem1.pdf), 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. The Income Tax Simplification Committee (Easwar Committee) has in its first report, pointed out that this provision does not provide any relief where the seller has entered into an agreement to sell the property much before the actual date of transfer of the immovable property and the sale consideration is fixed in such agreement, whereas similar provision exists in section 43CA of the Act i.e. when an....
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....d. 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 reproduced with approval by Their Lordships, as follows: "Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, 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....
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....iew, 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 salestax law should be disallowed under s. 43B of the Act while computing the business income of the previous year? That was a case which related to asst. yr. 1984-85. The relevant accounting period ended on 30th June, 1983. The ITO disallowed the deduction claimed by the assessee which was on account of sales-tax collected by the assessee for the last quarter of the relevant accounting year. The deduction was disallowed under s. 43B which, as stated above, was inserted w.e.f. 1st April, 1984. It is also relevant to note that the first pro....
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....elevant 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 before us involves the principle of construction to be placed on the provisions of Finance Act, 2003. [9] So far as the amendment to Section 50C being retrospective in effect is concerned, there is no doubt about the legal position. I hold the provisos to Section 50C being effective from 1st April 2003. This is precisely what the learned counsel has prayed for. In his detailed written submissions, he has mad....
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....e of the assessee in certain situation in the event of the word 'may' being construed as mandatory in application, but then one cannot be oblivious to the fact that this proviso states that "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 (emphasis supplied)" making it clearly optional to the assessee, and that, in any event, what has been brought by the lawmakers as a measure of relief to the taxpayers cannot be construed as resulting in a higher tax burden on the taxpayers. Of course, assuming that my understanding of this statutory provision is in harmony with the legislative intention, insertion of words "at the option of the assessee" between "stamp valuation authority on the date of agreement may" and "be taken for the purposes of computing full value of consideration for such transfer", in first provisio to Section 50C(1), could have made the legal provision even more unambiguous. [11] In the result, the appeal is allowed in the terms indicated above. Pronounced in the open court today on 30th day of September, 2016. 10. In the lig....