TaxTMI 
TaxTMI 
2021 (1) TMI 1218
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....n possession and consequently all the conditions of Sec. 2(47)(v) of IT Act r.w.s.53A of the Transfer of Property Act had been satisfied and the 'transfer' for the purpose of capital gains has occurred in the FY: 2012-13 related to the assessment year 2013-14 and thus the capital gains was assessable only in the AY: 2013-14. 3. Without prejudice, the learned Commissioner (A) ought to have appreciated that the contemplated transfer u/s.2(47)(v) has occurred on the date of execution of MOU i.e., 8.4.2013 and accordingly the registerable value as on 8.4.2013 alone could be considered for computation of capital gains. 4. The learned Commissioner (A) erred in upholding the value as on 24.2.2014 being the date of registered Deed of Exchange for determination of capital gains. 5. The learned Commissioner (A) ought to have appreciated the value fixed for registration in the case of Exchange Deed was only a notional value for registration purposes and cannot be held to be the actual consideration for transfer of property. 6. The learned Commissioner (A) erred in holding that the MOU having not been registered, the valuation was not required to be ....
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....fication. 4. The facts of the case are that the assessee, an individual, for the impugned year, filed his return of income on 30.07.2014 declaring a total income of Rs. 2,02,59,920/-. In the return, he declared income from Capital gains on transfer of land to the tune of Rs. 1,95,75,979/-. The case of the appellant was selected for scrutiny and assessment u/s.143(3) was concluded on 21.7.2016 declining to accept the capital gains declared by the assessee and determined the same at Rs. 8,85,77,941. 5. The assessee along with his family members inherited an immovable property bearing Sy.No.22/2A measuring 2 acres and Sy.No.22/ lE of 1 Acre 22 Guntas by way of Partition Deed dated 01.11.1983. The assessee further purchased land measuring 22 Guntas at Sy.No.33/ 1, situated at Kaikondarahalli Village, Varthurhobli, Bangalore East Taluk, on 17.03.1986. The total extent of land held by the assessee and his family members were 4 acres and 04 guntas. 6. By way of partition deed dated 24/03/2011 the assessee and his son have been allotted 2 Acres of land i.e., 1 Acre each for the assessee and his son situated at Sy. No.22/2A at Kaikondahalli Village, Bangalore. The assessee was also....
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....ark of performance of the agreed contract, the assessee and his son executed a registered Deed of exchange dated 24-02-2014 conveying the Property 'A' in favour of the Developer and in return, the Developer conveyed the Property 'B' to the assessee and his son. Property 'A' and 'B' were exchanged after payment of stamp duty on an assessable value of Rs. 54,00,00,000/-. In accordance with the guideline value for the purpose of stamp duty, the Developer deducted tax at source under Section 194-IA of the Act to the tune of Rs. 54,00,000/- at the rate of 1%. The above narrated facts are not disputed by the AO. 11. The assessee while filing the return of income has computed the capital gains by taking guideline value as on 8.4.2013 being the Date of MOU in respect of Property -A" as sale consideration and determined the capital gains at Rs. 1,95,75,979. 12. The AO during the course of assessment proceedings, issued showcause notice to the assessee asking to show-cause as to why the amount assessed for the purposes of stamp duty be considered as Sale Consideration for the purposes of computation of capital gains under the Act and also why the date of....
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....operty 'B' is to be considered as sale consideration for the purpose of computation of capital gains. 15. The assessing authority has concluded that the guideline value of the property should be taken only on the date of registration of the exchange deed and not on the date of MOU which was not registered. He had referred to several cases to suggest that the JDA executed cannot be considered to be the date of transfer and the capital gains cannot be shifted to AY 2013-14. 16. Aggrieved, the assessee filed appeal before the CIT(Appeals). It was submitted that the capital gains had arisen in 2 years as follows:- Particulars Date of transfer A.Y. Remarks Sale consideration to be adopted 62% of the undivided share out of 1 Acre in Property 'A' offered for Joint Development 1.3.2013 2013- 14 Deemed transfer by virtue of section 2(47)(v) Guidance value of 1 acre out of Property A to the extent of 62% as on 1.3.2013. Appellant's portion of the undivided share in Property 'A' 8.4.2013 2014- 15 Date of MOU will be date of transfer by reason of actual possession. Guidance value of Property 'A' to the extent of assessee's share.....
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....unal. Therefore, the transfer of developer's share in the Property 'A' is made during the AY 2013-14 and is to be taxed accordingly. 23. Further thereto, when the transfer of developer's share has happened in AY 2013-14, the sale consideration is to be adopted considering the guidance value of land as on 01-03-2013 (i.e., the date of JDA) following the decision of the Tribunal referred to supra. 24. Without prejudice to the submissions made above, it is submitted that the date of MOU is to be regarded as date of transfer due to the following reasons:- (i) The Appellant has factually put the Developer in possession of the land attracting the provisions of Section 2(47)(v). (ii) The Appellant has contracted in writing by way of a Memorandum of Understanding dated 08-04-2013 to convey the property to the developer. 25. The AO in his order has not disputed about the Developer being in possession of Property 'A'. He has only stated that the possession given by virtue of JDA is conditional and permissive. Assuming for argument sake, possession was permissive, by execution of MOU, the conditions agreed initially stands vitiated and the co....
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....mance of contract. Such an unregistered sale deed can also be admitted in evidence as an evidence of any collateral transaction not required to be effected by registered document. When an unregistered sale deed is tendered in evidence, not as evidence of a completed sale, but as proof of an oral agreement of sale, the deed can be received in evidence making an endorsement that it is received only as evidence of an oral agreement sale under the proviso to Section 49 of 1908 Act. 12. Recently in the case of K.B. Saha and Sons Private Limited v. Consultant Limited!, this Court noticed the following agreement of Mulla in his Indian Registration Act, 7th Edition, at page 189:- " .... The High Courts of Calcutta, Bombay, Allahabad, Madras, Patna, Lahore, Assam, Nagpur, Pepsu, Rajasthan, Orissa, Rangoon and Jammu Kashmir; the former Chief Court of Oudh; the Judicial Commissioner's Court at Peshawar, Ajmer and Himachal Pradesh and the Supreme Court have held that a document which requires registration under Section 17 and which is not admissible for want of registration to prove a gift or mortgage or sale or lease is nevertheless admissible to prove the character of t....
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....nded to Sec.49 of the Act of 1908. 31. The ITAT Kolkata in ITA No.1356/Kol/2017 has followed the Supreme Court judgment and allowed the appeal of the assessee:- 32. In view thereof, the MOU, which contracted to transfer the property, was an agreement to sell which need not be registered as contemplated by the learned assessing officer under the facts and circumstances of the case. Further, it is not disputed by the AO that the Developer was not in possession of the property. In these circumstances, all the conditions laid down in Section 53-A of the Transfer of property Act stands fulfilled along with the conditions of registration which the Hon'ble court has held it to be procedural. Due to all the legal elucidations made, it was prayed to hold that the transfer of Property 'A' has been effected on the date of MOU i.e., 08-04-2013 and the computation of capital gains is to made accordingly. 33. In fact the very fact that at the time of MOU the assessee has undertaken to absorbed liability of Rs. 19,69,00,000/- payable by the transferee and out of the consideration payable of Rs. 14 crore, Rs. 2.5 crore had already been paid which would go to show that the MOU ....
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.... case of Chalasani Naga Ratna Kumari Vs. ITO vide order dated 23-12-2016 which has upheld the above ratio. The relevant observations of the tribunal are noted below:- "A proviso to Section 50C of the Act has been inserted to resolve genuine hardship, in the case. The said proviso to Section 50C has been examined by the coordinate bench of ITAT, Ahmedabad bench in the case of Dharma Sibai Sonani Vs. DCIT in ITA No. 1237/ Ahd/ 2013 dated 30-09-2016 and held that the proviso to Section 50C of the Act is curative in nature and intended to remove an undue hardship to the assessee and accordingly given retrospective effect from 01-04-2003 i.e., the date effective from which Section 50C was introduced." 37. Especially when the genuineness of the MOU cannot be doubted, in fact the date of exchange it is clearly observed that the execution of the Exchange Deed is in pursuance of the MOU executed by the parties. Thus, the genuineness of the MOU is not challenged by the assessing authority. The mere fact that the said MOU was unregistered was of no consequence to apply the proviso to Sec.50C when there is adequate proof for the performance in pursuance of the MOU. As stated earlie....
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....bsolutely untenable. The consideration was mentioned at Rs. 54 crores. According to the ld. DR, there was no evidence to the effect that the assessee has paid any consideration vide MoU dated 8.4.2013. He relied on the orders of lower authorities. 41. We have heard both the parties and perused the material on record. In this case, the following facts are important for adjudicating the issue:- i. The acquisition of a part of the property was through partition deed dated 01.11.1983 including land at Survey No. 22/1E, 22/2A at Kaikondarahalli Village, Varthur Hobli, Bangalore East Taluk. ii. The assessee further received properties vide partition deed dated 24.03.2011 which include 50% of the land at Survey No. 22/2A at Kaikondarahalli Village, Varthur Hobli, Bangalore East Taluk, measuring about two acres. iii. The assessee purchased on 17,03.1986, 22 guntas of land at Survey No. 33/1 at Kaikondarahalli Village, Varthur Hobli, Bangalore East Taluk. iv. The assessee entered, along with his Son, B J Ravichandra; into the JDA of the properties at Survey No. 22/2A and 33/1 at Kaikondarahalli Village, Varthur Hobli, Bangalore East Taluk (hereinafter ....
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.... consideration. The date of execution of exchange deed has no relevance in respect of schedule A property as deemed transfer of schedule A property has taken place on the date of execution of MoU. 42. Now the contention of the ld. AR is that deemed transfer has taken place on the date of MoU i.e., 8.4.2013 as per section 2(47) of the Act. As such, the guidance value as it stood on the date of MoU i.e. 8.4.2013 has to be considered for determining the sale consideration and the revised guidelines value effected on 12.8.2013 by the State Govt. cannot be considered on the basis of which the JDA was entered. The contention of the ld. DR is that there was no evidence to suggest that the assessee has satisfied the condition laid down in 2nd proviso to section 50C of the Act that there was no payment of any consideration vide MoU dated 8.4.2013, as such it cannot be applied and this came into effect from 1.4.2017 and the assessee's case is relating to AY 2014-15. 43. Now the first issue before us is whether the 1st proviso to section 50C is prospective or retrospective. Section 50C(1) reads as under:- "50C. (1) Where the consideration received or accruing as a result of the....
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....tion 50C(1) of the Act. 46. Proviso to section 50C(1) deals with cases where the date of agreement fixing the amount for consideration and the date of registration for transfer of capital asset are not the same. The value adopted or assessed or assessable by the stamp valuation authority on the date of agreement to be taken for the purposes of computing full value of consideration for such transfer. This amendment by insertion of proviso seeks to relieve the assessee from undue hardship. This was considered by the Madras High Court in CIT v. Vummudi Amarendran, 429 ITR 97 (Mad) wherein it was held as under:- "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 t....
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.... Income-tax Simplification Committee set up in 2015, headed by a Former Judge of the High Court, Delhi. 14. Mr. T. Ravikumar, learned Senior Standing Counsel is right in a submission that this report is not binding or cannot be taken to have a statutory force. Nevertheless Simplification Committee was consisted of experts in the field of taxation and it would be worthwhile and interesting to note as to why they have considered the insertion of the proviso to section 50(C) of the Act should be held to be retrospective; In the report there is an extract of Memorandum 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 (Eas....
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....ation offered by the assessee was found to be factually incorrect and rejected and in the background of the said facts, the Hon'ble Supreme Court observes 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. 17. On going through the facts of the case on hand, we find that no such observation was made by the Assessing Officer. The assessee's consistent case was that the sale consideration agreed to be paid to him by the purchaser was 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 Hon'ble Supreme Court in Vatika Township (supra) is inco....
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.... manner of exchanging Schedule 'A', and 'IT Properties with the liability of the deposit to be refunded in terms of the Lease Deed dated 12/09/2012 and the parties have agreed for the following : WHEREAS the members of the First Party have thus agreed to transfer all their right, title, interest, ownership -and possession in the Schedule 'A' Property to the Second Party free from all encumbrances and in addition thereto pay the Second Party Rs. 14,00,00,000/- (Rupees Fourteen Crores Only) in the form of payment and also undertake the liability of the Second Party to refund to the Lessees under the Lease Deed dated 12/09/2012 the said sum of Rs. 19,69,00,000/- (Rupees Nineteen Crores Sixty Nine Lakhs Only) refundable to them in terms of the said Lease Deed. The Second Party, in consideration of acquiring Schedule 'A' Property in exchange as aforesaid, has agreed to transfer the Property described in Schedule 'B' herein free from all encumbrances with the obligation and liability of Rs. 19,69,00,000/-(Rupees Nineteen Crores Sixty Nine Lakhs Only) being the interest free refundable deposit to be refundable to Lessees under Lease Deed dated ....
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....which would affect their title to the Schedule 'A' Property; e) that there are no easements, quasi-easements, restrictive covenants or other rights or servitudes running with Schedule 'A' Property which will affect the right, title, interest and ownership in Schedule 'A' Property or peaceful enjoyment of the same; f) that the members of First Party have not received any notice of acquisition or requisition from the Government or other authorities including from the Bangalore Development Authority or from any other authorities and the Schedule 'A' Property is not being acquired under the provisions of any act and the Schedule 'A' Property is free from all such proceedings; g) that there are no tenancy claims in respect of the Schedule -A' Property under the Karnataka Land Reforms Act, 1961; h) that the members of First Party do not hold land in excess of the Ceiling limit as prescribed under the Karnataka Land Reforms Act; i) that the Schedule 'A' Property is not a granted land to Schedule Caste and Schedule Tribes and there is no prohibition or bar or impediment for sale of the Schedule....