Shri Bhaveshbhai O. Lakhani, Bhavnagar V. The Income Tax Officer, Ward-1(3), Bhavnagar

ITA 1196/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1414 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 15-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Retrospective amendment
• Section: 43CA; 43B; 143(3); 50C; 40(a)(ia)

Judgement Text

ITA NO. 1196/AHD/2017 BHAVESHBHAI O LAKHANI VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR (VICE PRESIDENT), AND MADHUMITA ROY (JUDICIAL MEMBER)] ITA NO.: 1196/AHD/2017 ASSESSMENT YEAR: 2012-13 BHAVESHBHAI O LAKHANI ....AP PELLANT SUMATI APARTMENT, SHASTRI NAGAR, BHAVNAGAR [PAN: ABJPL 8109 P] VS INCOME TAX OFFICER ..........RESPON DENT WARD 1(3), BHAVNAGAR APPEARANCES BY TUSHAR P HEMANI FOR THE APPELLANT SK DEV FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 25.04.2019 DATE OF PRONOUNCEMENT : 10.06.2019 O R D E R PER PRAMOD KUMAR, VP: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT H AS CHALLENGED CORRECTNESS OF LEARNED CIT(A)S ORDER DATED 28 TH FEBRUARY 2017, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2012-13. 2. GRIEVANCE OF THE ASSESSEE, IN SUBSTANCE, IS AGAI NST LEARNED CIT(A)S UPHOLDING THE ADDITION OF RS.58,40,840/- ON ACCOUNT OF SHORT TERM CAPITAL GAIN ON TRANSFER OF LAND. 3. TO ADJUDICATE ON THIS GRIEVANCE, ONLY A FEW MATE RIAL FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE SOLD A PIECE OF AGRICULTURAL LAND ON 13.10.2011, THOUGH THE ASSESSEE HAD ENTERED INTO A REGISTERED AGREEMENT TO SELL THE SAID PROPERTY ON 06.12.2010. WHILE THE ASSESSING OFFICER HAS ADOPTE D JANTRI VALUE AS AT THE POINT OF TIME WHEN SALE ACTUALLY TOOK PLACE AND SUBSTITUTED THE SAME, FOR STATED CONSIDERATION, FOR THE PURPOSE OF COMPUTING CAPITAL GAINS, THE PLEA OF THE ASSESSEE IS THAT IT IS JANTRI VALUE AS ON THE DATE OF ENTERING INTO REGISTERED AGREEMENT TO SELL WHICH MUST BE TAKEN INTO ACCOUNT TO COMPUTE THE CAPITAL G AINS. THE PLEA OF THE ASSESSEE HAS ALSO BEEN REJECTED IN APPEAL BY THE CIT(A). THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. ITA NO. 1196/AHD/2017 BHAVESHBHAI O LAKHANI VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 2 OF 9 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 5. WE FIND THAT THE AFORESAID ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY A DECISION OF THIS TRIBUNAL IN THE CASE OF DHARMSHI BHAI SONANI VS. ACIT [(2016) 57 ITR (TRIB) 669 (AHD)] HAS, INTER ALIA, OBSERVED AS FOLLOWS:- 4. THE FUNDAMENTAL PURPOSE OF INTRODUCING SECTION 50C WAS TO COUNTER SUPPRESSION OF SALE CONSIDERATION ON SALE OF IMMOVA BLE PROPERTIES, AND THIS SECTION WAS INTRODUCED IN THE LIGHT OF WIDESPREAD B ELIEF THAT SALE TRANSACTIONS OF LAND AND BUILDING ARE OFTEN UNDERVALUED RESULTING I N LEAKAGE OF LEGITIMATE TAX REVENUES. THIS SECTION PROVIDES FOR A PRESUMPTION, A REBUTTABLE PRESUMPTION THOUGH-SOMETHING WITH WHICH I AM NOT CONCERNED FOR THE TIME BEING, THAT THE VALUE, FOR THE PURPOSE OF COMPUTING STAMP DUTY, ADO PTED BY THE STAMP DUTY VALUATION AUTHORITY REPRESENTS FAIR INDICATION OF T HE MARKET PRICE OF THE PROPERTY SOLD. SECTION 50C(1) PROVIDES THAT, 'WHERE THE CONS IDERATION 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 OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN T HIS SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAY MENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VA LUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER'. THE TROUBLE, HOWEVER, IS THAT WHILE THE SALE CONSIDERATION IS FIXED AT THE POINT OF TIME WHEN AGREEMENT TO SELL IS ENTERED INTO, THERE IS SOMETIMES CONSIDERABLE GA P IN PARTIES AGREEING TO A TRANSACTION (I.E. AGREEMENT TO SELL) AND THE ACTUAL EXECUTION OF THE TRANSACTION (I.E. SALE DEED), AND YET, IT IS THE VALUE AS ON TH E DATE OF EXECUTION OF SALE DEED WHICH IS RECOGNIZED BY SECTION 50C FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN BECAUSE THAT IS WHAT IS RELEVANT FOR THE PURPO SE OF COMPUTING STAMP DUTY FOR REGISTRATION OF SALE DEED. THE VERY COMPARISON BETWEEN THE VALUE AS PER SALE DEED AND THE VALUE AS PER STAMP DUTY VALUATION, ACC ORDINGLY, CEASES TO BE DEVOID OF A RATIONAL BASIS BECAUSE THESE TWO VALUES REPRESENT THE VALUES AT TWO DIFFERENT POINTS OF TIME. IN A SITUATION IN WHICH T HERE IS SIGNIFICANT DIFFERENCE BETWEEN THE POINT OF TIME WHEN AGREEMENT TO SELL IS EXECUTED AND WHEN THE SALE DEED IS EXECUTED, THEREFORE, SHOULD IDEALLY BE BETW EEN THE SALE CONSIDERATION AS PER REGISTERED SALE DEED, WHICH IS FIXED BY WAY OF THE AGREEMENT TO SELL, VIS--VIS THE STAMP DUTY VALUATION AS AT THE POINT OF TIME WH EN AGREEMENT TO SELL, WHEREBY SALE CONSIDERATION WAS INFACT FIXED, BECAUSE, IF AT ALL ANY SUPPRESSION OF SALE CONSIDERATION SHOULD BE ASSUMED, IT SHOULD BE ON TH E BASIS OF STAMP DUTY VALUATION AS AT THE POINT OF TIME WHEN THE SALE CON SIDERATION WAS FIXED. INCOME TAX SIMPLIFICATION COMMITTEE SET UP IN 2015, HEADED BY JUSTICE R V EASWAR-A FORMER JUDGE OF DELHI HIGH COURT AND ONE OF THE MOS T ILLUSTRIOUS FORMER PRESIDENTS OF THIS TRIBUNAL, TOOK NOTE OF THIS INCO NGRUITY AND, IN ITS VERY FIRST REPORT (HTTP://TAXSIMPLIFICATION.IN/REPORT.PDF), OB SERVED AS FOLLOWS: 6.1 RATIONALISATION OF SECTION 50C TO PROVIDE RELIE F WHERE SALE CONSIDERATION FIXED UNDER AGREEMENT TO SELL ITA NO. 1196/AHD/2017 BHAVESHBHAI O LAKHANI VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 3 OF 9 SECTION 50C MAKES A SPECIAL PROVISION FOR DETERMINI NG THE FULL VALUE OF CONSIDERATION IN CASES OF TRANSFER OF IMMOVABLE PRO PERTY. IT PROVIDES THAT WHERE THE CONSIDERATION DECLARED TO BE RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF LAND OR BUILDING OR BOTH, IS LESS T HAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT (I.E. 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION, A ND CAPITAL GAINS SHALL BE COMPUTED ON THE BASIS OF SUCH CONSIDERATION UNDER S ECTION 48 OF THE INCOME-TAX ACT. THE SCOPE OF SECTION 50C WAS EXTENDED W.E.F. A.Y. 2 010-11 TO THE TRANSACTION WHICH WERE EXECUTED THROUGH AGREEMENT T O SELL OR POWER OF ATTORNEY BY INSERTING THE WORD 'ASSESSABLE' ALONGWI TH WORDS 'THE VALUE SO ADOPTED OR ASSESSED'. HENCE, SECTION 50C IS NOW ALS O APPLICABLE IN CASE OF SUCH TRANSFERS. THE PRESENT PROVISIONS OF SECTION 50C DO NOT PROVID E ANY RELIEF WHERE THE SELLER HAS ENTERED INTO AN AGREEMENT TO SELL THE AS SET MUCH BEFORE THE ACTUAL DATE OF TRANSFER OF THE IMMOVABLE PROPERTY A ND THE SALE CONSIDERATION HAS BEEN FIXED IN SUCH AGREEMENT. A LATER SIMILAR P ROVISION INSERTED BY WAY OF SECTION 43CA DOES TAKE CARE OF SUCH A SITUATION. 6.2 IT IS THEREFORE PROPOSED TO INSERT THE FOLLOWIN G PROVISIONS IN SECTION 50C: (4) WHERE THE DATE OF AN AGREEMENT FIXING THE VALUE OF CONSIDERATION FOR THE TRANSFER OF THE ASSET AND THE DATE OF REGISTRATION OF THE TRANSFER OF THE ASSET ARE NOT SAME, THE VALUE REFERRED TO IN SUB-SECTION (1) MAY BE TAKEN AS THE VALUE ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERN MENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER O N THE DATE OF THE AGREEMENT. (5) THE PROVISIONS OF SUB-SECTION (4) SHALL APPLY O NLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION OR A PART THEREOF HAS BEEN RECEIVED BY ANY MODE OTHER THAN CASH ON OR BEFORE A DATE OF AGREEMENT FO R TRANSFER OF THE ASSET. 5. TRUE TO THE WORK ETHOS OF THE CURRENT GOVERNMENT, IT WAS THE FIRST TIME THAT WITHIN FOUR MONTHS OF THE TAX SIMPLIFICATION COMMIT TEE BEING NOTIFIED, NOT ONLY THE FIRST REPORT OF THE COMMITTEE WAS SUBMITTED, BU T THE GOVERNMENT ALSO WALKED THE TALK BY ENSURING THAT THE SEVERAL STATUTORY AME NDMENTS, BASED ON RECOMMENDATIONS OF THIS REPORT, WERE INTRODUCED IN THE PARLIAMENT. SO FAR AS SECTION 50 C IS CONCERNED, THE FINANCE ACT 2016, WI TH EFFECT FROM 1ST APRIL 2017, INSERTED THE FOLLOWING PROVISOS TO SECTION 50C: 'PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXI NG THE AMOUNT OF CONSIDERATION AND THE DATE 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 F OR SUCH TRANSFER: PROVIDED FURTHER THAT THE FIRST PROVISO SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION, OR A PART THEREOF, HAS BEE N RECEIVED BY WAY OF AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR BY USE OF ELECTRONIC ITA NO. 1196/AHD/2017 BHAVESHBHAI O LAKHANI VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 4 OF 9 CLEARING SYSTEM THROUGH A BANK ACCOUNT, ON OR BEFOR E THE DATE OF THE AGREEMENT FOR TRANSFER.' 6. THIS AMENDMENT WAS EXPLAINED, IN THE MEMORANDUM EX PLAINING THE PROVISIONS OF FINANCE BILL 2016 (HTTP://INDIABUDGET .NIC.IN/UB2016- 17/MEMO/MEM1.PDF), AS FOLLOWS: 'RATIONALIZATION OF SECTION 50C IN CASE SALE CONSID ERATION IS FIXED UNDER AGREEMENT EXECUTED PRIOR TO THE DATE OF REGISTRATIO N 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 P URPOSE OF PAYMENT OF STAMP DUTY SHALL BE TAKEN AS THE FULL VALUE OF CONS IDERATION FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAINS. THE INCOME TAX SIM PLIFICATION COMMITTEE (EASWAR COMMITTEE) HAS IN ITS FIRST REPORT, POINTED OUT THAT THIS PROVISION DOES NOT PROVIDE ANY RELIEF WHERE THE SELLER HAS EN TERED 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 SUC H 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 PROPOSE D 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 IMM OVABLE PROPERTY AND THE DATE OF REGISTRATION ARE NOT THE SAME, THE STAMP DU TY VALUE ON THE DATE OF THE AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMP UTING THE FULL VALUE OF CONSIDERATION. IT IS FURTHER PROPOSED TO PROVIDE TH AT THIS PROVISION SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION RE FERRED TO THEREIN, OR A PART THEREOF, HAS BEEN PAID BY WAY OF AN ACCOUNT PA YEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR USE OF ELECTRONIC CLEARING SYST EM THROUGH A BANK ACCOUNT, ON OR BEFORE THE DATE OF THE AGREEMENT FOR THE TRANSFER OF SUCH IMMOVABLE PROPERTY. 30 THESE AMENDMENTS ARE PROPOSE D 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.' 7. WHILE THE GOVERNMENT HAS THUS RECOGNIZED THE GENUI NE AND INTENDED HARDSHIP IN THE CASES IN WHICH THE DATE OF AGREEMEN T TO SELL IS PRIOR TO THE DATE OF SALE, AND INTRODUCED WELCOME AMENDMENTS TO THE STAT UE TO TAKE THE REMEDIAL MEASURES, THIS BRINGS NO RELIEF TO THE ASSESSEE BEF ORE ME AS THE AMENDMENT IS INTRODUCED ONLY WITH PROSPECTIVE EFFECT FROM 1ST AP RIL 2017. THERE CANNOT BE ANY DISPUTE THAT THIS AMENDMENT IN THE SCHEME OF SECTIO N 50C HAS BEEN MADE TO REMOVE AN INCONGRUITY, RESULTING IN UNDUE HARDSHIP TO THE ASSESSEE, AS IS EVIDENT FROM THE OBSERVATION IN EASWAR COMMITTEE RE PORT TO THE EFFECT THAT 'THE (THEN PREVAILING) PROVISIONS OF SECTION 50C DO NOT PROVIDE ANY RELIEF WHERE THE SELLER HAS ENTERED INTO AN AGREEMENT TO SELL THE AS SET MUCH BEFORE THE ACTUAL DATE OF TRANSFER OF THE IMMOVABLE PROPERTY AND THE SALE CONSIDERATION HAS BEEN FIXED IN SUCH AGREEMENT' RECOGNIZING THE INCONGRUIT Y THAT THE DATE AGREEMENT OF SELL HAS BEEN IGNORED IN THE STATUTE EVEN THOUGH IT WAS CRUCIAL AS IT WAS AT THIS POINT OF TIME THAT THE SALE CONSIDERATION IS FINALI ZED. THE INCONGRUITY IN THE STATUTE WAS GLARING AND UNDUE HARDSHIP NOT IN DISPU TE. ONCE IT IS NOT IN DISPUTE THAT 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 ITA NO. 1196/AHD/2017 BHAVESHBHAI O LAKHANI VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 5 OF 9 TREATED AS EFFECTIVE FROM THE DATE ON WHICH THE LAW , CONTAINING SUCH AN UNDUE HARDSHIP OR INCONGRUITY, WAS INTRODUCED. IN SUPPORT OF THIS PROPOSITION, I FIND SUPPORT FROM HON'BLE DELHI HIGH COURT'S JUDGMENT IN THE CASE OF CIT V. ANSAL LANDMARK TOWNSHIP (P.) LTD. [2015] 377 ITR 635/234 TAXMAN 825/61 TAXMANN.COM 45, WHEREIN APPROVING THE REASON ING ADOPTED AN ORDER AUTHORED BY ME DURING MY TENURE AT AGRA BENCH [I.E RAJEEV KUMAR AGARWAL V. ADDL. CIT [2014] 149 ITD 363/45 TAXMANN. COM 555 (AGRA - TRIB.) WHICH CENTRED ON THE PRINCIPLE THAT WHEN LEG ISLATURE IS REASONABLE AND COMPASSIONATE ENOUGH TO UNDO THE UNDUE HARDSHIP CAU SED BY THE STATUTE 'SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LE GAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT STAT E SO SPECIFICALLY'. IN THIS CASE, IT WAS SPECIFICALLY OBSERVED, AND IT WAS THIS OBSER VATION WHICH WAS REPRODUCED WITH APPROVAL BY THEIR LORDSHIPS, AS FOLLOWS: 'NOW THAT THE LEGISLATURE HAS BEEN COMPASSIONATE EN OUGH TO CURE THESE SHORTCOMINGS OF PROVISION, AND THUS OBVIATE THE UNI NTENDED HARDSHIPS, SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LE GAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSE QUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT M AY NOT STATE SO SPECIFICALLY, THE INSERTION OF SECOND PROVISO MUST BE GIVEN RETROSPECTIVE EFFECT FROM THE POINT OF TIME WHEN THE RELATED LEGA L PROVISION WAS INTRODUCED. IN VIEW OF THESE DISCUSSIONS, AS ALSO FOR THE DETAI LED REASONS SET OUT EARLIER, WE CANNOT SUBSCRIBE TO THE VIEW THAT IT COULD HAVE BEEN AN 'INTENDED CONSEQUENCE' TO PUNISH THE ASSESSEES FOR NON-DEDUCT ION OF TAX AT SOURCE BY DECLINING THE DEDUCTION IN RESPECT OF RELATED PAYME NTS, EVEN WHEN THE CORRESPONDING INCOME IS DULY BROUGHT TO TAX. THAT W ILL BE GOING MUCH BEYOND THE OBVIOUS INTENTION OF THE SECTION. ACCORD INGLY WE HOLD THAT THE INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE, IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1ST APRIL, 2005 BEING THE DATE FROM WHICH SUB CLAUSE (IA) OF SECTION 40(A) WAS INS ERTED BY THE FINANCE (NO. 2) ACT 2004' 8. THEIR LORDSHIPS WERE PLEASED TO HOLD THAT THIS REA SONING AND RATIONALE OF THIS DECISION 'MERITS ACCEPTANCE'. THE SAME PRINCIPLE, W HEN APPLIED IN THE PRESENT CONTEXT, LEADS TO THE CONCLUSION THAT THE PRESENT A MENDMENT, BEING AN AMENDMENT TO REMOVE AN APPARENT INCONGRUITY WHICH R ESULTED IN UNDUE HARDSHIPS TO THE TAXPAYERS, SHOULD BE TREATED AS RE TROSPECTIVE IN EFFECT. QUITE CLEARLY THEREFORE, EVEN WHEN THE STATUTE DOES NOT S PECIFICALLY STATE SO, SUCH AMENDMENTS, IN THE LIGHT OF THE DETAILED DISCUSSION S ABOVE, CAN ONLY BE TREATED AS RETROSPECTIVE AND EFFECTIVE FROM THE DATE RELATE D STATUTORY PROVISIONS WAS INTRODUCED. VIEWED THUS, THE PROVISO TO SECTION 50 C SHOULD ALSO BE TREATED AS CURATIVE IN NATURE AND WITH RETROSPECTIVE EFFECT FR OM 1ST APRIL 2003, I.E. THE DATE EFFECTIVE FROM WHICH SECTION 50C WAS INTRODUCED. WH ILE THE GOVERNMENT MUST BE COMPLIMENTED FOR THE UNPARALLELED SWIFTNESS WITH WHICH THE EASWAR COMMITTEE RECOMMENDATIONS, AS ACCEPTED BY THE GOVER NMENT, WERE IMPLEMENTED, I, AS A JUDICIAL OFFICER, WOULD THINK THIS WAS STILL ONE STEP SHORT OF WHAT OUGHT TO HAVE BEEN DONE INASMUCH AS THE AMENDM ENT, IN TUNE WITH THE JUDGE MADE LAW, OUGHT TO HAVE BEEN EFFECTIVE FROM T HE DATE ON WHICH THE RELATED LEGAL PROVISIONS WERE INTRODUCED. AS I SAY SO, IN A DDITION TO THE REASONING GIVEN ITA NO. 1196/AHD/2017 BHAVESHBHAI O LAKHANI VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 6 OF 9 EARLIER IN THIS ORDER, I MAY ALSO REFER TO THE OBSE RVATIONS OF HON'BLE SUPREME COURT, THE CASE OF CIT V. ALOM EXTRUSION LTD. [2009 ] 319 ITR 306/185 TAXMAN 416, TO THE FOLLOWING EFFECT: 'ONCE THIS UNIFORMITY IS BROUGHT ABOUT IN THE FIRST PROVISO, THEN, IN OUR VIEW, THE FINANCE ACT, 2003, WHICH IS MADE APPLICABLE BY THE PARLIAMENT ONLY W.E.F. 1ST APRIL, 2004, WOULD BECOME CURATIVE IN NA TURE, HENCE, IT WOULD APPLY RETROSPECTIVELY W.E.F. 1ST APRIL, 1988 (I.E. THE DATE ON WHICH THE RELATED LEGAL PROVISION WAS INTRODUCED). SECONDLY, IT MAY B E NOTED THAT, IN THE CASE OF ALLIED MOTORS (P.) LTD. ETC. V. CIT (1997) 139 C TR (SC) 364: (1997) 224 ITR 677 (SC), THE SCHEME OF S. 43B OF THE ACT CAME TO BE EXAMINED. IN THAT CASE, THE QUESTION WHICH AROSE FOR DETERMINATION WA S, WHETHER SALES-TAX COLLECTED BY THE ASSESSEE AND PAID AFTER THE END OF THE RELEVANT PREVIOUS YEAR BUT WITHIN THE TIME ALLOWED UNDER THE RELEVANT SALES-TAX LAW SHOULD BE DISALLOWED UNDER S. 43B OF THE ACT WHILE COMPUTING THE BUSINESS INCOME OF THE PREVIOUS YEAR? THAT WAS A CASE WHICH RELATED TO ASST. YR. 1984-85. THE RELEVANT ACCOUNTING PERIOD ENDED ON 30TH JUNE, 1983 . THE ITO DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE WHICH WAS ON ACCOUNT OF SALES-TAX COLLECTED BY THE ASSESSEE FOR THE LAST QUARTER OF T HE RELEVANT ACCOUNTING YEAR. THE DEDUCTION WAS DISALLOWED UNDER S. 43B WHI CH, AS STATED ABOVE, WAS INSERTED W.E.F. 1ST APRIL, 1984. IT IS ALSO REL EVANT TO NOTE THAT THE FIRST PROVISO WHICH CAME INTO FORCE W.E.F. 1ST APRIL, 198 8 WAS NOT ON THE STATUTE BOOK WHEN THE ASSESSMENTS WERE MADE IN THE CASE OF ALLIED MOTORS (P.) LTD. ETC. (SUPRA). HOWEVER, THE ASSESSEE CONTENDED THAT EVEN THOUGH THE FIRST PROVISO CAME TO BE INSERTED W.E.F. 1ST APRIL, 1988, IT WAS ENTITLED TO THE BENEFIT OF THAT PROVISO BECAUSE IT OPERATED RETROSP ECTIVELY FROM 1ST APRIL, 1984, WHEN S. 43B STOOD INSERTED. THIS IS HOW THE Q UESTION OF RETROSPECTIVITY AROSE IN ALLIED MOTORS (P.) LTD. ETC. (SUPRA). THIS COURT, IN ALLIED MOTORS (P.) LTD. ETC. (SUPRA) HELD THAT WHEN A PROVISO IS INSER TED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE SECTION WORKABLE A PRO VISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE SECTION AND WHICH PROVIS O IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE I NTERPRETATION, IT COULD BE READ RETROSPECTIVE IN OPERATION, PARTICULARLY TO GI VE EFFECT TO THE SECTION AS A WHOLE. ACCORDINGLY, THIS COURT, IN ALLIED MOTORS (P .) LTD. ETC. (SUPRA), HELD THAT THE FIRST PROVISO WAS CURATIVE IN NATURE, HENC E, RETROSPECTIVE IN OPERATION W.E.F. 1ST APRIL, 1988. IT IS IMPORTANT TO NOTE ONC E AGAIN THAT, BY FINANCE ACT, 2003, NOT ONLY THE SECOND PROVISO IS DELETED BUT EV EN THE FIRST PROVISO IS SOUGHT TO BE AMENDED BY BRINGING ABOUT AN UNIFORMIT Y IN TAX, DUTY, CESS AND FEE ON THE ONE HAND VIS-A-VIS CONTRIBUTIONS TO WELF ARE FUNDS OF EMPLOYEE(S) ON THE OTHER. THIS IS ONE MORE REASON WHY WE HOLD T HAT THE FINANCE ACT, 2003, IS RETROSPECTIVE IN OPERATION. MOREOVER, THE JUDGMENT IN ALLIED MOTORS (P.) LTD. ETC. (SUPRA) IS DELIVERED BY A BENCH OF T HREE LEARNED JUDGES, WHICH IS BINDING ON US. ACCORDINGLY, WE HOLD THAT FINANCE ACT, 2003, WILL OPERATE RETROSPECTIVELY W.E.F. 1ST APRIL, 1988 (WHEN THE FI RST PROVISO STOOD INSERTED). LASTLY, WE MAY POINT OUT THE HARDSHIP AND THE INVID IOUS DISCRIMINATION WHICH WOULD BE CAUSED TO THE ASSESSEE(S) IF THE CONTENTIO N OF THE DEPARTMENT IS TO BE ACCEPTED THAT FINANCE ACT, 2003, TO THE ABOVE EX TENT, OPERATED PROSPECTIVELY. TAKE AN EXAMPLEIN THE PRESENT CASE, THE RESPONDENTS HAVE DEPOSITED THE CONTRIBUTIONS WITH THE R.P.F.C. AFTER 31ST MARCH (END OF ACCOUNTING YEAR) BUT BEFORE FILING OF THE RETURNS U NDER THE IT ACT AND THE ITA NO. 1196/AHD/2017 BHAVESHBHAI O LAKHANI VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 7 OF 9 DATE OF PAYMENT FALLS AFTER THE DUE DATE UNDER THE EMPLOYEES' PROVIDENT FUND ACT, THEY WILL BE DENIED DEDUCTION FOR ALL TIM ES. IN VIEW OF THE SECOND PROVISO, WHICH STOOD ON THE STATUTE BOOK AT THE REL EVANT TIME, EACH OF SUCH ASSESSEE(S) WOULD NOT BE ENTITLED TO DEDUCTION UNDE R S. 43B OF THE ACT FOR ALL TIMES. THEY WOULD LOSE THE BENEFIT OF DEDUCTION EVE N IN THE YEAR OF ACCOUNT IN WHICH THEY PAY THE CONTRIBUTIONS TO THE WELFARE FUNDS, WHEREAS A DEFAULTER, WHO FAILS TO PAY THE CONTRIBUTION TO THE WELFARE FUND RIGHT UPTO 1ST APRIL, 2004, AND WHO PAYS THE CONTRIBUTION AFTER 1S T APRIL, 2004, WOULD GET THE BENEFIT OF DEDUCTION UNDER S. 43B OF THE ACT. I N OUR VIEW, THEREFORE, FINANCE ACT, 2003, TO THE EXTENT INDICATED ABOVE, S HOULD BE READ AS RETROSPECTIVE. IT WOULD, THEREFORE, OPERATE FROM 1S T APRIL, 1988, WHEN THE FIRST PROVISO WAS INTRODUCED. IT IS TRUE THAT THE PARLIAM ENT HAS EXPLICITLY STATED THAT FINANCE ACT, 2003, WILL OPERATE W.E.F. 1ST APR IL, 2004. HOWEVER, THE MATTER BEFORE US INVOLVES THE PRINCIPLE OF CONSTRUC TION TO BE PLACED ON THE PROVISIONS OF FINANCE ACT, 2003.' 9. SO FAR AS THE AMENDMENT TO SECTION 50C BEING RETRO SPECTIVE IN EFFECT IS CONCERNED, THERE IS NO DOUBT ABOUT THE LEGAL POSITI ON. I HOLD THE PROVISOS TO SECTION 50C BEING EFFECTIVE FROM 1ST APRIL 2003. TH IS IS PRECISELY WHAT THE LEARNED COUNSEL HAS PRAYED FOR. IN HIS DETAILED WRI TTEN SUBMISSIONS, HE HAS MADE OUT OF A STRONG CASE FOR THE AMENDMENT TO SECT ION 50C BEING TREATED AS RETROSPECTIVE AND WITH EFFECT FROM 1ST APRIL 2003. THE PLEA OF THE ASSESSEE IS INDEED WELL TAKEN AND DESERVES ACCEPTANCE. WHAT FOL LOWS IS THIS. THE MATTER WILL NOW GO BACK TO THE ASSESSING OFFICER. IN CASE HE FI NDS THAT A REGISTERED AGREEMENT TO SELL, AS CLAIMED BY THE ASSESSEE, WAS ACTUALLY EXECUTED ON 29.6.2005 AND THE PARTIAL SALE CONSIDERATION WAS RE CEIVED THROUGH BANKING CHANNELS, THE ASSESSING OFFICER, SO FAR AS COMPUTAT ION OF CAPITAL GAINS IS CONCERNED, WILL ADOPT STAMP DUTY VALUATION, AS ON 2 9.6.2005, OF THE PROPERTY SOLD AS IT EXISTED AT THAT POINT OF TIME. IN CASE THE AS SESSEE IS NOT CONTENT WITH THIS VALUE BEING ADOPTED UNDER SECTION 50C, HE WILL BE A T LIBERTY TO SEEK THE MATTER BEING REFERRED TO THE DVO FOR VALUATION, AGAIN AS O N 29.6.2005, OF THE SAID PROPERTY. AS A COROLLARY THERETO, THE SUBSEQUENT DE VELOPMENTS IN RESPECT OF THE PROPERTY SOLD (E.G. THE CONVERSION OF USE OF LAND) ARE TO BE IGNORED. IT IS ON THIS BASIS THAT THE CAPITAL GAINS WILL BE RECOMPUTED. WI TH THESE DIRECTIONS, THE MATTER STANDS RESTORED TO THE FILE OF THE ASSESSING OFFICE R FOR ADJUDICATION DE NOVO, AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE AN D BY WAY OF A SPEAKING ORDER. I ORDER SO. 10. AS I PART WITH THE MATTER, I MAY MAKE ONE MORE OBS ERVATION. THE AMENDMENT IN SECTION 50C WAS BROUGHT IN TO PROVIDE RELIEF TO THE ASSESSEE IN A SITUATION IN WHICH THE STAMP DUTY VALUATION OF A PR OPERTY HAS RISEN BETWEEN THE DATE OF EXECUTION OF AGREEMENT TO SELL AND EXECUTIO N OF SALE DEED, AS IS THE NORM RATHER THAN EXCEPTION, BUT THE REAL ESTATE MAR KET IS NOW TRAVERSING THROUGH A DIFFICULT PHASE AND THERE CAN BE SITUATIONS IN WH ICH THERE IS A FALL IN THE STAMP DUTY VALUATION RATES WITH THE PASSAGE OF TIME. SUCH A SITUATION HAS ACTUALLY ARISEN IN MANY PLACES IN THE COUNTRY, SUCH AS IN GU RGAON (HTTP://WWW.HINDUSTANTIMES.COM/GURGAON/FOR-THE-FIRS T-TIME-CIRCLE-RATES-REDUCED- IN-GURGAON/STORY-CJP6E72TEGS9H5JJIALAGP.HTML), NEW DELHI (HTTP://WWW.DELHISMARTCITIES.COM/BLOGS/HIGH-CIRCLE- RATES-CAUSING-SLUMP-REALTY- REDUCE-DELHI-GOVERNMENT/), AND EVEN IN DEHRADUN (UT TARAKHAND) ITA NO. 1196/AHD/2017 BHAVESHBHAI O LAKHANI VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 8 OF 9 (HTTP://WWW.TRIBUNEINDIA.COM/NEWS/UTTARAKHAND/RELIE F-TO-PROPERTY-BUYERS-AS- CIRCLE-RATES-CUT-50-PC/247805.HTML) AND SOME OTHER PLACES. IT IS THEREFORE POSSIBLE THAT, AT FIRST SIGHT, FIRST PROVISO TO SEC TION 50C MAY SEEM TO WORK TO THE DISADVANTAGE OF THE ASSESSEE IN CERTAIN SITUATION I N THE EVENT OF THE WORD 'MAY' BEING CONSTRUED AS MANDATORY IN APPLICATION, BUT TH EN ONE CANNOT BE OBLIVIOUS TO THE FACT THAT THIS PROVISO STATES THAT 'THE VALUE A DOPTED 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 C ONSIDERATION FOR SUCH TRANSFER (EMPHASIS SUPPLIED)' MAKING IT CLEARLY OPT IONAL TO THE ASSESSEE, AND THAT, IN ANY EVENT, WHAT HAS BEEN BROUGHT BY THE LA WMAKERS AS A MEASURE OF RELIEF TO THE TAXPAYERS CANNOT BE CONSTRUED AS RESU LTING IN A HIGHER TAX BURDEN ON THE TAXPAYERS. OF COURSE, ASSUMING THAT MY UNDERSTA NDING OF THIS STATUTORY PROVISION IS IN HARMONY WITH THE LEGISLATIVE INTENT ION, INSERTION OF WORDS 'AT THE OPTION OF THE ASSESSEE' BETWEEN 'STAMP VALUATION AU THORITY ON THE DATE OF AGREEMENT MAY AND BE TAKEN FOR THE PURPOSES OF COMP UTING FULL VALUE OF CONSIDERATION FOR SUCH TRANSFER, IN FIRST PROVISO T O SECTION 50C(1), COULD HAVE MADE THE LEGAL PROVISION EVEN MORE UNAMBIGUOUS. 6. FOLLOWING THE VIEW SO TAKEN BY THE TRIBUNAL, WE REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION DE NOVO IN THE LIGHT OF ABOVE OBSERVATIONS. WHILE DOING SO, THE ASSESSING OFFICER WILL GIVE A R EASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND DECIDE THE MATTER BY WAY OF A SPEA KING ORDER IN ACCORDANCE WITH THE LAW. AS THE MATTER IS BEING REMITTED TO THE FI LE OF THE ASSESSING OFFICER FOR THE ABOVE REASONS, IT IS NOT REALLY NECESSARY TO DEAL W ITH THE OTHER ISSUES RAISED IN APPEAL WHICH ARE, AS ON NOW, WHOLLY ACADEMIC. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 10 TH DAY OF JUNE, 2019. SD/- SD/- MADHUMITA ROY PRAMOD KUMAR (JUDICIAL MEMBER) (VICE-PR ESIDENT) AHMEDABAD, DATED THE 10 TH DAY OF JUNE, 2019 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD