TaxTMI 
TaxTMI 
2022 (9) TMI 876
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....ed by the assessee are as follows: "1. The ld.CIT(A) erred in law and on facts in confirming the addition of Rs.25,55,279/- of the I.T.Act 61 without appreciating the law and facts of the case properly. 2. The ld.CIT(A) erred in law and on facts in denying the cost of improvement of Rs.4,04,002/- while computing the capital gain on sale of impugned land without appreciating the law and facts of the case in proper perspective." 3. A reading of the above grounds, we find the issue involved in this appeal is sale of immovable property belonged to nine co-owners and capital gain arising thereon and application of provisions of section 50C and 54F of the Income Tax Act, 1961 ("the Act" for short) and also denial of cost of improvement as claimed by the assessee in all these appeals. 4. Brief facts of the case are that the assessee along with other eight co-owners entered into an sale agreement (banakhat) on 31.12.2010 for a consideration of Rs.1,70,64,489/- which was based on the prevailing stamp duty value of Rs.7000/- per sq.meter at the relevant time i.e. on the date of entering into agreement for sale. An amount of Rs.1,02,000/- was received as a token advance by the co-owners....
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....sallowed claim of deduction under section 54F of the Act at Rs.6,60,282/- and improvement cost of Rs.4,04,002/- and demanded tax thereon. The ld.AO also initiated penalty proceedings under section 271(1)(c) of the Act. Aggrieved against order of the AO, the assessee filed appeal before the ld.CIT(A). 5. Before the ld.CIT(A), the ld.counsel for the assessee submitted that the assessee along with other eight co-owners sold a land situated at survey no.653/a situated at Village Makarba, Tal, Ahmedabad for a total consideration of Rs.1,70,64,489/- to Shri Jagdish L. Acharya by executing Deed of conveyance, which was registered with sub-Registrar, Ahmedabad, Paldi on 31.12.2010 for a consideration of Rs.1.70 crores as agreed by both the parties. They received a token advance of Rs.1,02,000/-, and as per the sale agreement the purchaser had to make balance payment of sale consideration between 31.12.2010 to 1.1.2013, and as per the condition stipulated in the agreement, the sellers i.e. assessee and the eight co-owners were under obligation and mandated to execute the sale deed at a price of Rs.1,70,74,489/- i.e. at the prevailing Government jantri rate of Rs.7000/- per sq.meter Therefo....
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....dering following aspects:- > If sale consideration received by assesses is less than stamp duty value, stamp duty value shall be considered as sale consideration. > Ifassessee claims that stamp duty value is exceeding fair market value and that value is not disputed before stamp authority, assessing officer refers the case to valuation officer. > Valuation officer determines the value, if it exceeds stamp duty value, that value shall be ignored. If that value is less than stamp duty value, this value should be used as fair market value. > This provision will be applicable when agriculture land is held as investment and transferred by assessee. > Transfer of immovable property is effected on the date of execution of Agreement to sell and hence, Jantri value should be considered on that date and not on the date of execution of sale deed: The provisions of section 50C as amended by Finance Act, 2016 are as under: "Special provision for full value of consideration in certain cases: 50C.(1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed ....
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....t may be taken for the purposes of computing the full value of consideration. It is further proposed to provide that this provision shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, on or before the date of the agreement for the transfer of such immovable property." 2.8.2. It is seen from the facts that the deed for sale entered into by assesses vide Registration No. 7111 on 01.12.2012 at Sub Registrar-4 Paldi Office that sale consideration of the said immovable property was at Rs. 1,70,64,4897- and the assessee has shown his 1/9th share whereas the Sub-Registrar has valued (Jantri rate) the said property is at as 4,00,62,000/- for the purpose of payment of stamp duty for registration of said transaction and the buyer has paid stamp duty of Rs. 19,63, 100/-. Share of the assessee in such non-agricultural land @1/9th is calculated at Rs.4,00,62,000/9 = Rs.44,51,333/-. On the basis of this calculation, sale consideration u/s.50C of the Income tax Act,1961 is to be taken at Rs.44,51,333/- whereas t....
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....or the year under consideration on the sale of the said plot. The addition made by the assessing officer is confirmed. The ground of the appellant is dismissed." 6. Aggrieved against the order of the ld.CIT(A), the assessee is now before the Tribunal. The ld.counsel, Mr. Manish J Shah for the assessee submitted that the lower authorities have erred in invoking section 50C of the Act while the agreement to sell dated 31.12.2010 clearly indicated that total sale value of the property will be Rs.1.70 crores based on the prevailing jantri rate at Rs.7,000/- per sq.meter, and the same were being received by the assessee in three instalments, and the AO was not correct in adopting new jantri rate of Rs.16,500/- per sq.meter and thereafter arriving at sale value of the property at Rs.4,00,62,000/-. The ld.AR further submitted that initial token advance of Rs.11,334/- was only paid by cash, and the remaining payments were received by the assessee through cheques. Thus, the CIT(A) was not correct in holding that the amended proviso to section 50C would not be applicable to the assessee as the cash payment has been made. In support of his submissions, the ld.AR relied upon Co-ordinate Bench....
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.... duty bound to execute the Registered Sale Deed at the very same total sales price mentioned above of Rs. 1,70,64,489.00 [Rupees one Crore seventy lacs sixty four thousand four hundred eighty nine only]. The Party of the Second Part Sellers shall not insist for executing the Registered Sale Deed at the increased/decreased Government Jantri price [Index price] of the said land, because the total sales price of the said land has already been affixed between the Party of the First Part Intending Purchaser and the Party of the Second Part Sellers, as mentioned hereinabove, of Rs.1,70,64,489.00 (Rupees one crore seventy lacs sixty four thousand four hundred eighty nine only)." 8.1. It can be seen from the above Agreemnt of Sale that the validity of the agreement was from 31.12.2010 to 1.1.2013. It has been specifically agreed for the sale consideration of Rs.1,70,64,489/- i.e. at the jantri rate of Rs.7,000/- per sq.meter, and that the seller should not insist for increase/decrease in jantri rate on the date of execution of the Sale Deed. Further, in the registered Sale Deed executed as document no.7111 of 2012 in Book No.1 at the office of Sub-Registrar, Ahmedabad-4, Paldi, as per cla....
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....assessee obtained PAN individually after completion of the sale deed, but before filing of the Return of Income for the Asst.Year 2013-14 on 14.03.2015. We do notice that sufficient opportunities were given to the assessee, but the assessee could not file details before the AO, and thereby addition u/s. 50C and rejection of the claim under section 54F of the Act were made by the AO and thus raised a tax demand. Though the assessee before the CIT(A) claimed that amended provision of section 50C of the Act is applicable to the assessee, the same was denied by the CIT(A), since entire payment was not made through account payee cheques or bank drafts or by use of electronic clearing system through a bank account. Further perusal of the Sale Agreement and Sale Deed executed makes it very clear that only an advance amount of Rs.11,334/- has been paid by CASH to all the nine co-owners. Further, it is noticed that the second instalment of Rs.9,01,388/- was paid by cheque on 22.3.2011 drawn on Bank of India, Anand Nagar Branch. Similarly, third and final instalment of Rs.7,33,333/- and Rs. 2,50,000/- were also paid through bank account only. Thus major portion of the sale consideration of R....
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.... by the Finance Act, 2016 stipulates that the amount of consideration or part thereof has been received by way of account payee cheques or by draft or by using electronic clearing system through bank account on or before the date of agreement for transfer, only in such cases this provision will be applicable. 8.6. The Hon'ble Supreme Court in the case of Shri K.P. Varghese Vs. ITO (131 ITR 597) has observed that while interpreting a provision, strictly literal reading of Section should not be adopted if it leads to manifestly unreasonable and absurd consequences. However attempt should be made to discover the intent of the legislature from the language used by it. The Hon'ble Apex Court rendered the said decision in the context of then existing Sec 52(2) of the Act, which provided that where a capital asset is transferred and if in the opinion of the ITO, the fair market value of that asset exceeds the full value of the consideration declared by the assessee by an amount of not less than 15% of the value so declared, then the full value of the consideration shall be taken to be its fair market value on the date of its transfer. The revenue took the stand that in order to i....
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....matical symbols. It is an attempt to discover the intent of the legislature from the language used by it and it must always be remembered that language is at best an imperfect instrument for the expression of human thought and, as pointed out by Lord Denning, it would be idle to expect every statutory provision to be "drafted with divine prescience and perfect clarity", We can do no better than repeat the famous words of judge Learned Hand when he said: ...it is true that the words used, even in their literal sense, are the primary and ordinarily the most reliable source of interpreting the meaning of any writing: be it a statute, a contract or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary: but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning". We must not adopt a strictly literal interpretation of s.52, sub-s. (2), but we must construe its language having regard to the object and purpose which the legislature had in view in enacting that provision and in the context of the setting i....
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....him? It would indeed be most harsh and inequitable to tax the assessee on income, which has neither arisen to him nor is received by him, merely because he has carried out the contractual obligation undertaken by him. It is difficult to conceive of any rational reason why the legislature should have thought it fit to impose liability to tax on an assessee who is bound by law to carry out his contractual obligation to sell the property at the agreed price and honestly carried out such a contractual obligation. It would indeed be strange if obedience to the law should attract the levy of tax on income, which has neither arisen to the assessee nor has been received by him. If we may take another illustration, let us consider a case where A sells his property to B with a stipulation that after some time which may be a couple of years or more, he shall re-sell property to A for the same price. Could it be contended in such a case that when B transfers the property to A for the same price at which he originally purchased it, he should be liable to pay tax on the basis as if he has received the market value of the property as on the date of re-sale, if, in the meanwhile, the market price ....
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....ost of repetition, as the said example contemplated by the Hon'ble Apex Court is squarely applicable to the facts of the present case. "There are many situations where the construction suggested on behalf of the Revenue would lead to a wholly unreasonable result which could never have been intended by the legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement - and it is quite well known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement - the market price shoots up with the result that the market price prevailing on the date of sale exceeds the agreed price, at which the property is sold, by more than 15% of such agreed price. This is not at all an uncommon case in an economy of rising prices and in fact we would fine in a large number of cases where the sale is completed more than a year or two after the date of the agreement that the market price prevailing on the date of the sale is very much more than the price at which the property is sold under the agreement. Can it be contended with any degree of fairness ....