TaxTMI 
TaxTMI 
2022 (10) TMI 832
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....ties in taxing the addition of Rs.32,19,000/- under the head business income and not under the head capital gains is unjust, illegal, arbitrary, illusory and deserves to be correctly taxed. 4. That the action of lower authorities in not setting off the loss of Rs.24,99,705/- claimed as long term loss against the addition of Rs.32,19,000/- unjust, illegal, arbitrary, illusory and deserves to be set off." 3. Brief facts of the case are that the Assessee being the owner of Flat No.504; 5th Floor, Parvanath Prestige Goutham, Budhnagar U.P., entered into an agreement to sell of immovable property on 17-01-2012 and subsequently executed the Sale Deed and handed over the possession of the property to the purchaser in the month of May 2014. The Assessee has received the entire sale consideration of Rs. 35,30,000/- in following manners:- 1. 17th January 2012 Rs.5,50,000/- 2. 8th February 2012 Rs.4,00,000/- 3. 21st March 2012 Rs.4,00,000/- 4. 29th March 2012 Rs.4,00,000/- 5. 10th May 2012 Rs. 10,00,000/- 6. 12th June 2012 Rs.4,30,000/- 7. 20th July 2012 Rs.50,000/- 8. 27th May 2014 Rs.3.00.000/- Total Rs.35.30.000/- 4. As on the date of agreement t....
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....ing on 17.01.2012 i.e. Rs. 30,000/- per sq. ft. and not the circle value prevailing as on the date of registration of the sale deed and by relying on the Judgment of the jurisdictional High Court, submitted that the proviso to section 50C(1) of the Act is retrospective in nature and the benefit of the same to be extended to the assessee. 8. Per contra, the Ld. DR submitted that the assessee has not furnished the official circle rate as on 17.01.2012 before the authorities and as on the date of passing the order by the lower authorities, the Law as to whether the proviso to Section 50C(1) of the Act is retrospective or not was not settled by the Hon'ble High Court or the Hon'ble Supreme Court. Further the Ld. DR has relied on the order of the lower authorities. 9. We have heard the parties, perused the material on record and gave our thoughtful consideration. It is not in dispute that assessee had entered into an agreement to sell of a residential Flat on 17.01.2012 for a total sale consideration of Rs. 35,30,000/- and received a total sum of Rs. 32,30,000/- as on 20.7.2012. The total value of the sale consideration was agreed and received in accordance with the circle rat....
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....ioner of Income tax, Chennai Vs. Sh. Vummudi Amarendran while dealing with the issue as to whether the proviso to section 50C(1) of the Act is prospective or retrospective in nature, held that the proviso to Section 50C (1) is having retrospective effect. The relevant portions are as under:- " 12. The Honble Supreme Court in Kolkata Export Company took note of the earlier decisions on the same issue in the case of Allied Motors Private Limited Vs. CIT [1997 (224) ITR 677 (SC)], Whirlpool of India Limited Vs. CIT, New Delhi [2000 (245) ITR 3], CIT Vs. Amrid Banaspati Company Limited [2002 (255) ITR 114] and CIT vs. Alom Enterprises [2009 (319) ITR 306] and held that the new proviso should be given retrospective effect from the insertion on the ground that the proviso was added to remedy unintended consequences and supply an obvious omission. The proviso ensured reasonable interpretation and retrospective effect would serve the object behind the enactment. Thus by taking note of the above decisions, we have no hesitation to hold that the proviso to Section 50C(1) of the Act should be taken to be retrospective from the date when the proviso exists. The CIT(A) while allowing the asse....
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.... 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. These amendments are proposed to be made effective from the 1st day of April, 2017 and shall accordingly apply in relation to assessment year 2017-18 and subsequent years.'' 15. Taking note of the above Memorandum, it was pointed out that once a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. The report also referred to the decision in the case of Alom Enterprises [2009 (319) ITR 306]. 16. Reverting back to the decisions relied on by the Revenue, the decision in Bagri Impex (P.) Ltd., supra is distinguishable on facts as the assess....
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....ed by the CIT(A) cannot be found faulted with. 19. For all the above reasons, the appeal filed by the Revenue is dismissed. The Substantial Questions of Law raised in these appeals are answered against the Revenue and in favour of the assessee. No costs." 14. The jurisdictional High Court in the case of CIT vs, Khoobsurat Resorts (P) Ltd., while dealing with the similar issue held as under:- "12. As far as the first question is concerned, this Court notices that with the amendment to the Act, and insertion of Section 50-C, a presumption can be drawn that property was sold for a higher value for determining capital gains, in case of the valuation indicated by the assessee to the stamp authorities, being higher than the consideration disclosed in the sale deed or conveyancing instrument. That provision reads as follows: "50C. Special provision for full value of consideration in certain cases, - (1) Where the consideration received o 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 by any authority of a State Government (hereinafter in this section referred to as the "stamp valua....
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....the assessee claimed before any Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed by the stamp valuation authority under sub-section (i) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (3) , (3), (4), (5) and (6) of section 16A, clause (i) of subsection (1) and sub-sections (6) and (7) of section 23A subsection (5) of section 24, section 34 A A. section 35 and section 37 of the Wealth-tax, Act, 1967 (27 of 1957) shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under subsection (1) of section 16A of that Act. Explanation - For the purposes of this section "Valuation Officer" shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). (4) Su....
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....There is a body of judicial authority on this aspect (Garden Silk Mills Ltd v. Union of India AIR 2000 SC 33; Union of India v. Sampat Raj Dugar AIR 1992 SC 1417). The principle waspropounded pithily by the Supreme Court in Bengal Immunity Co. Ltd. u. State of Bihar AIR 1955 SC 661 as follows: "a legal fiction is to be limited to the purpose for which it was created and should not be extended beyond that legitimate field.." 14. This Court also recollects the decision in K.P. Varghese (supra) where it was held (in the context of amendment to Section 52 and insertion of Subsection (2) that: "...This condition of 15% or more difference is merely intended to be a safeguard against the undue hardship which would be occasioned to the assessee if the inflexible rule of thumb enacted in sub-section (2) were applied in marginal cases and it has nothing to do with the question of burden of proof for, the burden of establishing that there is an understatement of the consideration in respect of the transfer always rests on the revenue. The postulate underlying sub-section (2) is that the difference between one honest valuation and another may range up to 15% and that constitutes the clas....
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....n received for the transfer is understated and since in such cases it is very difficult, if not impossible, to determine and prove the exact quantum of the suppressed consideration, sub-section (2) provides the statutory measure for determining the consideration actually received by the assessee and permits the revenue to take the fair market value of the capital asset as the full value of the consideration received in respect of the transfer." 15. This Court is of the opinion that the express provision of Section 50- C enabling the revenue to treat the value declared by an assessee for payment of stamp duty, ipso facto, cannot be a legitimate ground for concluding that there was undervaluation, in the acquisition of immovable property. If Parliamentary intention was to enable such a finding, a provision akin to Section 50-C would have been included in the statute book, to assess income on the basis of a similar fiction in the case of the assessee who acquires such an asset. No doubt, the declaration of a higher cost for acquisition for stamp duty might be the starting point for an inquiry in that regard; that inquiry might extend to analyzing sale or transfer deeds executed in r....