TaxTMI 
TaxTMI 
2021 (12) TMI 862
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....ppeals) has erred in applying the provisions of Law as per Sec SOC, stating that the AO is duty bound to adopt the SRO rates, on the date of registration, even when the assessee disputed the SRO value adoption, without referring to valuation officer and ignoring the evidence of valuation given by the assessee. 4. The Ld. CIT (Appeals) erred in disregarding various judicial precedents, which have upheld the law that the proviso to Sec SOC is retrospective in nature, as the same was inserted to provide relief to the assessees from the of Sec SOC. 5. The Ld. CIT (Appeals) has erred in applying the provisions of Sec S4F, by concluding that the appellant has constructed three houses. The CIT (Appeals) erred in not considering the fact that all the houses were constructed in a row to facilitate the living of appellant's sons after the appellant's death and the Ld. CIT (Appeals) erred in not considering the various judicial precedents, which have upheld the law that several units of houses constructed near to each other would constitute a single residential house for the purpose of section 54F. 5. Any other ground, if any, will be submitted at the time o....
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....had restricted the exemption to 1/3rd of Rs. 16,26,000/- being Rs. 5,42,000/-. 3. When the assessee preferred an appeal before the CIT(A), the CIT(A) confirmed the order of the AO. 4. Aggrieved by the order of CIT(A), the assessee is in appeal before the ITAT. 5. Before us, the ld. AR reiterated the submissions made before the authorities below and has filed written submissions, which are as under: "1. The appellant Sri K. Gangi Chetty is aged about 87 years and is an Income Tax assessee with PAN: AQEPG5288J. 2. Consequent to the search operations on MIs M.G. Brothers Group, notice under Sec 153C dt 24th September 2009 was issued on the appellant to file his Return of Income for the A Y 2007-08. A copy of the notice is herewith enclosed in the paper book (Pg. 10) 3. The appellant had filed his Return of Income on 30th March 2009 with acknowledgement number 297 with the office of the ACIT, Central Circle, Tirupati. The appellant had filed his Return of Income with a Total Income of Rs. 4,87,403/- and had paid a tax of Rs. 90,686/-. A copy of the Return of Income along with the Statement of Computation of total Income is herewith enclosed in the pa....
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....e residential house was carried out and certified by the Village Sarpanch, Engineer and Panchayat Secretary. The valuation for the house was arrived at Rs. 16,26,000/-. A copy of the valuation report is herewith enclosed in the paper book (Pg 57-61). 10. The Ld. AO, however disagreed with the Computation of the appellant and made the following additions to the returned income. a) Actual Sale consideration received amounting to Rs. 25,25,000/- which was offered as sale consideration under Sec 48, was replaced by the Ld. AO with Rs. 41,91,000/- being the market value of the land as on the date of sale. However, for the purpose of computation the Ld. AO took Rs. 41,41,900/- (by mistake) and made an addition ofRs. 16,16,900/- b) Sec 54F deduction was ignored for two blocks of residential houses and was allowed only on the cost of construction of one block of house. This resulted in an addition of Rs. 11,25,857/-. 11. The Ld. AO completed the assessment on 9th December 2010 with an addition of Rs. 27,42,757/- and raised a demand of Rs. 9,43,630/-. 12. The appellant filed an appeal before the Ld. CIT(Appeals), Vishakapatnam. The Ld. CIT(Appeal....
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....Mad) (2001) c) Assam Vegetables & Oil Products Limited Vs CIT & Anr 264 ITR 47 (Gau HC) d) Chaturbhuj Dwarakadas Kapadia Vs CIT 260 ITR 491 (Born) (2003) 19. In the present case, the capital gains arose on the date of sale agreement ie, on 6th August 2006 and not on 29th January 2007. Also under Sec 50C, the market value of the property on the date of transfer cannot be considered as Sec 50C was amended to take the assessable value only prospectively from 01.10.2009 onwards. As there was no "assessed" market value on the date of the agreement, sale consideration can only be Rs. 25,25,000/-. So further addition on account of Sec 50C cannot arise. 20. Even if the market value of the property as on the date of Sale agreement is taken, the same is Rs. 8,50,000/- per acre on 18th October 2006. The same was Rs. 5,00,000/- per acre on 24th May 2006. The appellant has sold his land in acres to the seller. Hence the SRO value to adopted should only be in acres. The documents evidencing the SRO rate during the time of the sale agreement are herewith enclosed in the paper book (Pg 30-56). 21. Also, the issue of Sec 50C cannot be invoked for transfe....
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....ital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of the agreement may be taken for the purposes of computing the 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 agreement for transfer. " 29. The details of consideration paid to the appellant by the seller and the mode of payment are already given in point no. 6 above. 30. The appellant had received part of the consideration of Rs. 5,50,000/- vide cheque no. 754963 drawn on Andhra Bank and the same is also reflecting in the Bank statement. 31. The Ld. CIT(Appeals) and the Ld. DCIT have not considered the sale agreement itself as the same is not registered. However, as seen from the above text of the proviso, the statute nowhere insists the sale agreement to be registered. 32. Hence, the appellant has fully complied with the first and seco....
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.... is transferred. The appellant prays the hon'ble Tribunal to recognise this fact. The house property stands on the name of the appellant till this date. 43. Also it was held in several decisions that construction of one or more residential blocks at one place constitute one house only. It is true that the house has three door numbers. Yet there is a common passage and common kitchen. So the three residential blocks constitute one house. 44. In Commissioner of Income Tax & Anr Vs D. Anand Basappa 309 ITR 329 (Kar) (2009), it was held that the expression "a residential house" should be understood in a sense that the building should be of residential house and 'a' should not be understood to indicate a singular number - That apart, the apartments purchased by the assessee are situated side by side and the builder has effected modifications of the flats to make it as one unit. The fact that the flats were found to be occupied by two different tenants is no ground to hold that the apartment is not one residential unit. 45. In ITO Vs Ms Sushila M Jhaveri 109 TTJ 299 (Mum) (SB) (2007) it was held that where more than one unit are purchased which are ....
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.... assessee's claim of exemption u/s 54F of the Act, he submitted that it is very clear that the assessee is eligible for claiming exemption for only a house as is clear in the language in the relevant section . 7. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. It is observed that the CIT(A) has considered the net consideration of Rs. 41,41,000/- (which is the value given by SRO) in respect of computation of capital gains and the value mentioned in the sale deed for the transaction of the property is Rs. 25,25,000/-, which has not been disputed by any of the authorities. From the detailed written submissions of the ld. AR of the assessee as cited supra, it is clear that the agreement was made for the sale of property on 06/08/2006 through cheque No. 754963 drawn on Andhra Bank for Rs. 5,50,000/- and paid cash of Rs. 50,000/- also and the subsequent payments received through cheques only. Therefore, the proviso of section 50C(1) will clearly apply here. Therefore, the assessee's net sale consideration shall be considered as Rs. 25,25,000/- for the computation of capital gains as it is immaterial....
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....r, subsequent to the year in which consideration was received, applying section 50(C) of the Act, value assessed by stamp valuation authority in subsequent years should be taken as full value of consideration. Reliance is also placed on the decision of the Hon'ble Division Bench of this Court in Ambattur Clothing Co. Ltd. v. Asstt. CIT [2010] 326 ITR 245 to support the contention that the Assessing Officer was justified in treating the value adopted by the stamp valuation authority as the deemed sale consideration received/accruing as a result of transfer. Reliance was also placed on the decision of the Hon'ble Supreme Court in R. Sai Bharathi v. J. Jayalalitha [2004] 2 SCC 9, with regard to the effect of the guideline value fixed by the Government. As pointed out by us, the assessee sought to take the benefit of the proviso inserted to Section 50C of the Act. It is no doubt true and as clarified by the CBDT vide Circular No. 3 of 2017 dated 20-1-2017 that the amendment to Section 50C would start effect from 1-4-2017 and will accordingly apply from assessment year 2017-18 and subsequent assessment years. However one important factor which needs to be noted is that amendment....
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....e read in conjunction with explanation to section 47(A) of the Indian Stamp Act (as amended by the Tamil Nadu Act 24/1967). It was further pointed out that undue emphasis on the guideline value without referred to the setting in which it is to be viewed will obscure the issue for consideration. Further it was held that in any event, if for the purpose of the Stamp Act, guideline value alone is not a factor to determine the value of the property, its worth will not be any higher in the context of assessing the true market value of the properties in question to ascertain whether the transaction has resulted in any offense so as to give a pecuniary advantage to one party or other. 8. Thus, the Assessing Officer could not have based his conclusion solely based on the guideline value which has been held to be only a prima facie rate prevailing in the area to ascertain the true or correct market value and it is not the last word on the subject of market value but only a factor to be taken note of. As pointed out earlier, the genuinity of the transaction done by the assessee was not doubted and the receipt of advance was through banking channel by way of a demand draft. ....
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....o relieve the assessee from undue hardship. 11. The Hon'ble Supreme Court in CIT v. Calcutta Export Co. [2018] 93 taxmann.com 51/255 Taxman 293/404 ITR 654, considered the question as to whether the amendment made by the Finance Act 2010 to Proviso of Section 40(a)(ia) of the Act is curative in nature and it has to given retrospective operation from the date of insertion of the said proviso i.e., with effect from Assessment Year 2005-06. It was pointed out that the purpose of the amendment made by the Finance Act 2010 is to solve the anomalies with the instrument of section 40(a)(ia) of the Act, caused to the bona fide tax payer. It was further held that the amendment even if not given any operation retrospectively, may not materially to be of consequence to the Revenue when the tax rates are stable and uniform or in cases of big assesses having substantial turnover and equally huge expenses and necessary cushion to absorb the effect; however a marginal and medium tax payer who work at low gross product rate and when expenditure becomes subject matter of an order under section 40(a)(ia) is substantial, can suffer severe adverse consequence if the amendment made in 2010....
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....dum explaining provisions of Finance Bill 2016 which reads 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 immovable property is sold as a stock-in-trade. It is proposed to amend the provisions of section 50C so as to provide that where the date of the agreement fixing the amount of consideration for the transfer of immo....
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.... Rs. 19 crores and Rs. 6 crores was received as advance on the date of entering into the Agreement for Sale. However, the Assessing Officer disbelieved the same and applied the guideline value at Rs. 27 crores on the date when the Sale Deed was executed and registered. Therefore, in our considered view, the decision in Ambattur Clothing Co. Ltd. (supra) cannot be applied with the facts and circumstances of the case on hand." 18. Mr. T. Ravikumar, learned counsel is right in a submission that the observations made by the Tribunal qua the decision of the Honble Supreme Court in Vatika Township (supra) is incorrect. In fact we find that the Tribunal did not assign any reasons as to why the decision in Vatika Township do not apply to the facts of the case. In fact the decision in Vatika Town Ship should be referred for the purpose as to when a Statute can be treated to be clarificatory and when not?. The legal principle laid down therein ought to have been taken note of by the Tribunal. Therefore, the Tribunal may not be fully right in stating that the judgment in Vatika Township (supra) will not be applicable to the facts as the judgment needs to be looked into to consider th....