TaxTMI 
TaxTMI 
2021 (11) TMI 416
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....ed CIT(A) is wrong in law in making the addition amounting to Rs. 2,67,34,750/- under Section 50C of the Act without considering the guideline rate of the vacant agricultural land prevailing as on the date of agreement to sell dated 09.02.2012. 4. The Learned ClT(A) ought to have appreciated that the proviso enacted to Section50C by the Finance Act, 2016 w.e.f. 01.04.2017 is curative in nature and thereforehas to be applied retrospectively in the case of the Appellant for the impugned AY 2013-14. 5. The Learned ClT(A) ought to have considered the provisions entailed under Section43CA(3) and (4) of the Act which would squarely apply in the case of the Appellant. On the strength of the abovementioned grounds and such other grounds that may be submitted before or at the time of hearing of the Appeal, the Hon'ble ITAT may be pleased to set aside the order of the CIT(A) dated 27.09.2017 and thus render justice." 3. Brief facts of the case are that the assessee is an individual filed his return of income for assessment year 2013- 14 on 05.08.2013 admitting total income of Rs. 4,65,94,980/-. During the year under consideration, the assessee had sold a piece of agricul....
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....ed to be received. Hence the market value is deemed to be the full, value of consideration received or accrued as a result of such transaction. Accordingly, taking into considerations of The Stamp Value Authorities who have adopted the value of the above property at Rs. 7,77,34,750/-. (in the Annexure lA, the State Government Authority for Registration purpose has arrived the value of Rs. 7,77,34,750/- by determining the land value as Rs. 7,77,34,750 and Rs. 30,000/- as Building Value of 300 Sq.Ft.) In view of the above, as per the materials available on record and also after discussing the same with the assessee's representative, the assessment is completed by invoking the provisions of section 5CC of the I.T. Act 1961." 4. Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee has challenged recomputation of long term capital gain by invoking provisions of section 50C(1) of the Income Tax Act, 1961 on the ground that as per proviso inserted to section 50C by the Finance Act, 2016 w.e.f 01.04.2017, value of property as per sale agreement should be taken for computing capital ....
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.... the date of the agreement to sell, i.e. 09.02.20 12 was Rs. 1.24 crores whereas the appellant has agreed to sell the property at R.5.10 crores. The guideline value was, however, revised on 01.04.2012 wherein value per acre was abolished and value per sq.ft. was determined at Rs. 7.76 crores. The property was registered through a registered document on 7th May 2012. The Assessing Officer has concluded that the guideline value applicable on the date of the sale deed alone is to be considered which is determined at Rs. 7.76 crores against the sale consideration of Rs. 5. 10 crores applicable on the date of agreement to sell. Accordingly, addition of Rs. 2.67 crores has been made by the Assessing Officer. 5. In the course of appeal, the appellant submitted that the guideline value on the date of the agreement should be considered and not on the date of registration. The appellant further submitted that she had entered into an agreement to sell on 09.02.2012 and had received a consideration of Rs. 1 crore on the same date. Major part of the consideration, i.e. Rs. 3 crores was also received before 31.03.2012. Therefore, according to the appellant the transaction has to be eval....
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....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 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 agreement for transfer. Reference is made to the Memorandum to the Finance Act, 2016 introducing the proviso. The same is reproduced below for ready reference: 29.1 Section 50C of the Income-tax Act provides that in case of transfer of a capital asset being land or building or both, the value adopted or assessed by the stamp valuation authority for the purpose of payment of stamp duly shall be taken as the full value of consideration for the purposes of computation of capital gains. This provision does not provide any relief where the seller has entered into an agreement to sell the properly much before the actual date ....
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....here Kapur, J. Held that the proper function of a proviso was merely to qualify the generality of the main enactment by providing an exception and taking out, as it were, from the main enactment a portion which, but for the proviso, would fall within the main enactment. In Shah Bhojraj Kuerji Oil Mills and Ginning Factory v. Subhash Chandra Yograj Sirtha, Hidayatullah, J., as he then was, very aptly and succinctly indicated the parameters of a proviso thus: As a general rule, a proviso is added to an enactment to qualify or create an exception to what is in the enactment, and ordinarily, a proviso is not interpreted as slating a general rule. 10. Applying these principles to the proviso inserted by the Finance Act of 2016, it is observed that the proviso lays down an exception to the general rule contained in the sub-section (1) of sec. 50C. Section 50C(1) provides that where a capital asset in the nature of land or building is transferred and the value of consideration received by the assessee is less than the value assessed or assessable for the purposes of stamp duty, such value assessed or assessable for stamp duty should be adopted for the purpose of section ....
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....ider whether the insertion of the words or assessable' in section 50C through the Finance Act, 2009, w.e.f 01.10.2009, can have application with respect to earlier periods viz. A.Y. 2005-06. At paragraph 10 the High Court has held that the word 'or assessable' included in section 50C w.e.f. 01.10.2009 is neither a clarification nor an explanation to the already existing provision. The High Court has held that the amendment has the effect of including a new class of transactions within the ambit of section 50C, namely transfer of property without or before registration. Hence, the High Court held that the said amendment could not have retrospective effect. 13. The amendment inserting the proviso to section 50C relied upon by the appellant is also in the same category as the amendment considered by the Madras High Court in the case of R. Sugantha Ravindran (supra). The section as originally enacted was applicable to all sale transactions where the conveyance was executed through registered documents. In all such cases, the stamp duty value was deemed to be the sale consideration. The amendment in 2009 adding the words "or assessable" had the effect of bringing within the amb....
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.... as it brought to tax a new class of transactions, the 2016 amendment also cannot have retrospective effect as it changes the basis of determining the consideration in respect of certain specified category of transactions. 14. For all these reasons, it is held that the proviso cannot have retrospective effect. Respectfully following the principles laid down by the Hon'ble jurisdictional High Court in the case of R. Sugantha Ravindran, it is held that the proviso inserted w.e.f. 01.04.2017 does not have application during the relevant previous year. Absent the proviso, the language of the section is unambiguous and does not permit any alternate interpretation. 15. Further, in this case, as pointed out in para 6, the registered sale deed is between the appellant as vendor and 3 persons as buyers. There is no agreement to sell between the appellant and these 3 persons. So this is a case where there is only a sale deed that has been registered without a corresponding agreement to sell between the same parties. Therefore, the appellant's case does not fall within the proviso. For all these reasons, this ground of appeal is dismissed." 6. The learned A.R for the asse....
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....ed was with another person and thus, benefit of proviso to section 50C(1) cannot be given and hence, there is no error in the reasons given by the learned CIT(A) to sustain additions made by the Assessing Officer and his order should be upheld. 8. We have heard both the parties, perused material available on record and gone through orders of the authorities below. We have also carefully considered case laws cited by both the sides. The undisputed facts are that the assessee has entered into agreement to sell on 09.02.2012 for sale of agricultural property for consideration of Rs. 5,10,00,000/- and had received an advance of Rs. 1.00 crore on 09.02.2012 by cheque. The said sale agreement was given effect by entering into registered sale deed on 07.05.2012 for consideration of Rs. 5,10,00,000/-. As per sale deed, entire sale consideration of Rs. 5,10,00,000/- has been received by cheque. The assessee has computed long term capital gain by adopting sale consideration as shown in sale deed, whereas the Assessing Officer has adopted sale consideration as per guideline value fixed by State Government authorities for payment of stamp duty as on the date of registration of sale deed. Th....
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....d by authorities for payment of stamp duty, then guideline value as on date of registration of the property shall be adopted as full value of consideration. Further, a proviso to section 50C(1) has been enacted by the Finance Act, 2016 w.e.f 01.04.2017, as per which where date of agreement fixing amount of consideration and date of registration for transfer of capital asset are not same, value adopted or assessed or assessable by the stamp duty valuation authorities on date of agreement may be taken for the purpose of computing full value of the consideration for such transfer. The proviso further provided 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 agreement for transfer. Though, the proviso to section 50C(1) was inserted by the Finance Act, 2016 w.e.f 01.04.2017, but various Courts have considered the proviso and held that proviso inserted to section 50C(1) by the Finance Act, 2016 w.e.f 01.04.2017 seeks to relieve assessee from undue hardship and thus, sho....
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....deed with different persons, we are of the considered view that in the present case agreement was with one Mr. Mohamed Zabeer and sale deed was executed in favour of Mrs. Maryam Mahmood and Mrs.Thaika Sithi Aliya, sister and Mother of purchaser of property and hence, it does not in any way take away right of the assessee to get benefit of proviso to section 50C(1) of the Income Tax Act, 1961. Further, insofar as observations of the learned CIT(A) with regard to non-registration of sale agreement, it is very clear from the Registration (Tamil Nadu Amendment) Act, 2012, any instruments of agreement relating to sale of immovable property registration was made mandatory from October, 2012. Therefore, for non-registration of sale agreement, more particularly when the assessee has subsequently acted upon such sale agreement, benefit cannot be denied to the assessee. 11. In this view of the matter and considering facts & circumstances of the case, we are of the considered view that the Assessing Officer as well as learned CIT(A) has erred in recomputing long term capital gain by adopting full value of consideration by invoking provisions of section 50C(1) of the Act and further, adopti....