K.Gangi Chetty , Tirupati V. Dy.Commissioner of Income Tax, Central Circle , Tirupati

ITA 1245/Hyd/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7701 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2007-2008
• Appeal Filed On: 10-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y.V.S.T. SAI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Capital Gains
• Section: 54; 132; 43CA; 143(3); 50C; 54F; 40(a)(ia); 195; 251; 264; 48; 13; 153; 22; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B”: HYDERABAD (THROUGH VIRTUAL CONFERENCE) B EFORE SH RI SA TBEER SING H GODA RA, JU DI CIA L MEM BER AND SHR I L AXMI PR AS A D SAHU , AC COUNT ANT MEMBE R ITA No. 1245/H/2018 Assessment Year: 2007-08 Smt. K. Maha Lakshmi, L/R of late Sri K. Gangi Chetty, Tirupati. PAN – AQEPG 5288 J Vs. Dy. Commissioner of Income-tax, Central Circle, Tirupati (Appellant) (Respondent) Assessee by: Shri E. Phalguna Kumar Revenue by: Shri Y.V.S.T. Sai Date of hearing: 18 /11/2021 Date of pronouncement: 25/11/2021 O R D E R PER L.P. SAHU, A.M.: This appeal filed by the Assessee is directed against CIT(A) - 3, Visakhapatnam’s, order dated 21/03/2018 for AY 2007-08 involving proceedings u/s 143(3) r.w.s. 153C of the Income Tax Act, 1961 ; in short “the Act, on the following grounds of appeal: “1. The Order of the Ld. Commissioner of Income Tax (Appeals), is erroneous and is against the principles of Law. ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 2 -: 2. The Ld. CIT (Appeals) erred in concurring with the Assessing Officer, to hold that date of Transfer of Immovable property is the date of registration of sale deed rather than the date of agreement, date on which the possession is given, evidenced by Bank while the Gains 3. The Ld. CIT (Appeals) 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 of hearing with the kind permission of the Hon'ble Income Tax Appellate Tribunal.” 2. Briefly the facts of the case are that there was a search u/s 132 of the Act in the case of M/s M.G. Brothers ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 3 -: Automobiles Pvt. Ltd. on 25/07/2008, in which documents related to the assessee with reference to the purchase and ale of land was found and seized. The Assessing Officer had issued notice u/s.153C of the Act on 24.09.2009 for the Asst. Year 2007-08. The return of income was filed in response to the notice issued u/s.153C admitting income of Rs.4,87,403/- on long term capital gains. 2.1 The appellant had sold a land admeasuring 5409 sq. yds. in "Santosh Gardens" sale deed executed on 29.01.2007 for Rs.25,25,000/-. The Assessing Officer had noticed that the value of the property as per Section 50C of the Act is Rs.41,91,000/-. The appellant was asked to explain the discrepancy. The appellant contended that Section 5OC came into operation from 01.10.2009 and the agreement of the instant property was entered into on 06.08.2006 and part payment was also received. Hence, Section 50C is not having any application. Further, the value of land as on 24.05.2006 was only Rs.5,00,000/- per acre and it was increased to Rs.8,50,000/- as on 18.10.2006. The property rates have increased due to development done by the purchaser. 2.2 The Assessing Officer had rejected the claim of the appellant stating that there was no agreement as on 06.08.2006 as claimed by the appellant and there is no mention in the sale deed. The property was sold by the ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 4 -: appellant on 29.01.2007. As per Section 2(47), the relevant date of transfer is 29.01.2007. The Assessing Officer is duty bound to adopt the value of SRO of Rs.41,91,000/- and the contention of the appellant that Section 50C came into statute is not correct as it is operational from 01.04.2003 and the contention of the appellant is rejected. Accordingly, the AO took the sale consideration as per section 50C of the Act at Rs. 41,91,000/-. 2.3 Further, the AO observed that the appellant made a claim u/s.54F on account of construction of house worth Rs.16,26,000/- which was valued by the registered valuer. The Assessing Officer after verification had found that the appellant had constructed 3 houses i.e., 2 meant for, his sons and 1 for his wife. The appellant claimed exemption for 3 houses u/s.54F of the Act. He, therefore, 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. ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 5 -: 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 paper book (Pg 11 & 12) 4. The Total Income of the appellant consisted entirely of the capital gains arising on sale of agricultural land at Survey No. 523, Pudipatla Village, Chittoor District with an extent of 1.11 acres. The appellant had offered a sale consideration of Rs 25,25,000 and reduced Rs 4,25,410 towards indexed cost of acquisition and Rs 16,12,187/- towards exemption under Sec 54F. 5. The appellant had entered into an unregistered agreement on 6th August 2006 for sale of his agricultural land to Mis M.G. Brothers Automobiles Private Limited for a consideration of Rs 25,25,0001-. A copy of the Sale agreement is herewith enclosed in the paper book (Pg 13-15). ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 6 -: 6. In pursuance with the above agreement, the appellant received the following amounts in the following manner. A copy of the Bank account of the appellant evidencing the receipt of the consideration is herewith enclosed in the paper book (Pg 16-20). 7. On 29th January 2007, the appellant transferred his land to M/s M.G. Brothers Automobiles Private Limited, vide registered sale deed no. 200/2007 dt 29th January 2007. On the date of the sale deed, the market value of the land was Rs 41,91,000/-. A copy of the sale deed is herewith enclosed in the paper book (Pg 21-29). 8. Out of the above amount received, the appellant had constructed a residential house during August 2006 to March 2007. The same is occupied by the appellant himself and family consisting of his wife, his two sons and their families respectively. The residential house is consisting of three residential blocks. 9. The residential house was constructed at D.No. 4-28, Pudipatla village and panchayat, Tirupati rural, Chittoor District. Valuation for the residential house was carried out and certified by the Village Sarpanch, ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 7 -: 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(Appeals), Vishakapatnam upheld the Order of the Ld. AO and issued his order on 21st March 2018. For Ground No.2: 13. The Ld. AO and the Ld. CIT(Appeals) have erred in adopting the SRO value on the date of Sale deed. They also erred in disregarding the existence of Sale agreement because of the reason that the same was not mentioned in the Sale Deed. Further the Ld. CIT(Appeals) has also erred in stating that the appellant claims that the Sec 50C came into operation from 01/10/2009. ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 8 -: 14. The appellant only claimed that the word "assessable" came into Sec 50C with effect from 1 st October 2009 and not the entire Sec 50C. 15. The Ld. CIT(Appeals) has nowhere refuted the fact that the possession was transferred by the appellant to the seller along with the agreement of sale. Even the Ld. AO never disputed the fact that possession was handed over along with the sale agreement. Without invalidating the above fact, the Ld. AO and the CIT(Appeals) erred in stating that the date for the purpose of Sec 50C is the date of the Sale and not the date of sale agreement. 16. Sec 2(4 7)(v) defines 'Transfer' to include "any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of the "Transfer of Property Act 1882". 17. Thus, if the following conditions of Se 53A of the Transfer of Property Act 1882 are complied, then there is a valid "Transfer" as per Sec 2(4 7)(v). a) There should be an agreement in writing to transfer any immovable property and it should be signed by the transferor. It is not necessary for the agreement to be registered. b) The transferee has in part performance of the contract, taken possession of the property or any part thereof. c) The transferee has performed or willing to perform his part of the contract. d) The terms of the contract constituting the transfer can be ascertained with reasonable certainty. ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 9 -: 18. In several cases some of which are given below, it was held that the capital gains arose on the date on which conditions of Sec 53A of Transfer of Property Act are satisfied ie, on the date of agreement and not on the date of Sale. a) CIT Vs G Saroja 301 ITR 124 (Mad) (2008) b) D. Kasturi Vs CIT 251 ITR 532 (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 transfer of immovable property taking place in ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 10 -: pursuance of an un-registered agreement has been upheld in the following cases. Navneet Kumar Thakkar Vs ITO 298 ITR AT 42 (Jodhpur) Asst CIT Vs Mrs N. Meenakshi 319 ITR AT 262 (Madhas) (2009) 22. Hence the appellant prays the hon'ble Tribunal to delete the addition made under Sec 50C by adopting the SRO value on the date of Sale as sale consideration value under Sec 48 read with section 50C. The appellant prays the hon'ble Tribunal to consider the SRO value on the date of the sale agreement and not on the date of the sale. For Ground No.3: 23. The Ld. AO erred in not referring the matter to the valuation officer when the appellant disputed the adoption of value as per Sec 50C. Further, the Ld. CIT (Appeals), Vishakapatnam also ought to have directed the Ld. AO to refer the matter to the valuation department. However, the Ld. CIT(Appeals) erred in stating that Assessing officer is duty bound to accept the SRO value on the date of registration. 24. The appellant vide his letter dt 15th November 2010 clearly stated the reasons for adoption of sale value different from the SRO value. Inspite of the stating the same, the Ld. AO adopted the SRO value without reference to the valuation officer. 25. It has been held in several judicial precedents that Assessing Officer was duty bound to refer the valuation of the asset to the department valuation wing u/s 50C and is duty bound to give an opportunity to the assessee to present its case for valuation of the asset. ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 11 -: A) ACIT Vs Royal Stitches Pvt Ltd ITA NO 977/MDS/2009 b) Sunil Kumar Agarwal Vs CIT 372 ITR 83 (Calcutta) c) ITO VS SMT. Manju Rani Jain 24 SOT 24 (Delhi) (2008) 26. Hence, in view of the above submissions, the action of the Ld. AO and the Ld. CIT(A) in deciding the issue without reference to the DVO is bad in law and the addition needs to be deleted. For Ground No.4: 27. Further the Ld. CIT(Appeals) erred in not considering the case of the appellant under the first and second proviso to sub-section (1) of Sec 50C. 28. The first and second proviso to Sec 50C are herewith reproduced as under. "Provided that where the date of the agreement fixing 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 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. ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 12 -: 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 second proviso to Sec 50C and the appellant is eligible to claim the SRO value on the date of the agreement. 33. Several judicial pronouncements stated that the first and second proviso to Sec 50C are curative in nature and hence have to be applied retrospectively with effect from l " April 2003. Some of the decisions are given below. a) Chalasani Naga Ratna Kumar Vs ITO - ITA No. 639Nizag/2013 b) Dharamshibhai Son ani Vs ACIT 57 ITR 669 (Ahmd Trib) (2017) c) Rahul G Patel Vs DCIT 67 ITR 280 (Ahmd Trib) (2018) d) Amit Bansal Vs ACIT 174 lTD 349 (Delhi Trib) (2018) 34. In view of the above decisions and in view of the compliance made by the appellant, the appellant prays the hon'ble Tribunal to consider the date of agreement as the date for reckoning the SRO value for the purpose of Sec 50C and not the date of registered sale deed. ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 13 -: For Ground No.5: 35. The Ld. CIT(Appeals), Visakhapatam and the Ld. DCIT erred in disallowing the claim of the appellant for 2 residential blocks. 36. The appellant is an aged person and has been bed- ridden for several years. To avoid disputes in the family, the appellant constructed his house into three residential blocks. 37. The Ld. DCIT has grossly erred in establishing certain facts. The Ld. DCIT stated that the appellant has donated two houses to his sons viz Somashekar and Purnachander on page 4 of this Asst. Order. 38. The appellant states that he has written a Registered will on 14th August 2006 in which he had divided his entire assets into three parts and intended to bequeath them to his wife and his two grandsons. A copy of the Will is herewith enclosed in the paperbook (Pg 62-66). 39. The above two persons are the grandchildren of the appellant ie, Mr Somashekar is the son of first son (Mr Rajendra Babu) of the appellant and Mr Pumachander is the son of second son (Mr Bhargava) of the appellant. 40. The Ld. CIT(Appeals), Vishakapatnam has also erred in upholding the above facts. 41. The Ld. CIT(Appeals) and Ld. DCIT have erred in assuming that property can be transferred via Will. The Ld. CIT(Appeals) and Ld. DCIT have not appreciated the fact that any property on a Will passes on to another only after the death of the testator. 42. Hence, there is no truth in the fact that the property is transferred. The appellant prays the hon'ble Tribunal ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 14 -: 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 adjacent to each other and are converted into one house for the purpose of residence by having common passage, common kitchen etc then it would be a case of investment in one residential house and consequently the assessee would be entitled to exemption. 46. In several judicial pronouncements given below, it was held that Sec 54 or Sec 54F intend to give exemption to various residential blocks constituting one residential house. a) CIT Vs Syed Ali Adil 352 ITR 418 (2013) (AP HC) b) Vittal Krishna Conjeevaram Vs ITO 144 lTD 325 (Hyd IT AT) ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 15 -: c) Smt Hansabai Singhji Vs ITO 89 lTD 239 d) K.G. Vyas Vs ITO 16 lTD 195 (Born Trib) e) CIT Vs Kodandas Chanchlomal (1985) 155 ITR 273 (Guj HC) f) Shivnarain Chowdhury Vs CWT (1977) 108 ITR 104 (All HC) d) K.G. Vyas Vs ITO 16 lTD 195 (Born Trib) e) CIT Vs Kodandas Chanchlornal (1985) 155 ITR 273 (Guj HC) t) Shivnarain Chowdhury Vs CWT (1977) 108 ITR 104 (All HC) g) CIT & Anr Vs Srnt. K.G. Rukrniniarnrna 331 ITR 211 (Kar HC) h) Mr. Gulshanbanoo R. Mukhi Vs JCIT 83 lTD 0649 (Born Trib) 47. It is only in view of the above decisions and to provide adequate clarity, the hon'ble Legislature changed the wording from "a" to "one" residential house in Sec 54 and Sec 54F prospectively with effect from I" April 2015. The above submission has been upheld by the hon'ble Madras High Court in CIT Vs V.R. Karpagarn 373 ITR 127. 48. Therefore the appellant prays the hon'ble Tribunal to treat the three residential blocks of the house as one residential house only and allow the claim of the appellant for exemption under Sec 54F for all the three portions. ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 16 -: 49. Therefore the appellant prays the hon'ble Tribunal to delete the additions of Rs 27,42,757/- made by the Ld. AO and upheld by the Ld. CIT(A), Vishakapatnam. 50. Further grounds or submissions, if any, will be urged with the kind permission of the hon'ble Tribunal at the time of hearing.” 6. The ld. DR, on the other hand, relied on the orders of lower authorities and submitted that section 50C is clearly applicable to the case of the assessee because SRO value is to be treated as the net sale consideration received by the assessee and, therefore, section 50C has rightly invoked by the lower authorities. 6.1 In respect of 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 ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 17 -: 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 that whether reference of the agreement is included in the sale deed or not because it is evident from the payments received by the assessee by way of cheques, which proves that there was genuine agreement made for the sale/purchase of the property. The said agreement is placed at page no. 13 to 15 of the paper book. In support of our decision, we rely on the judgment of the Hon’ble Madras High Courtin the case of Commissioner of Income Tax, Chennai v. Vummudi Amarendran, [2020] 120 taxmann.com 171 (Madras) wherein the Hon’ble High Court has held as under: “4. We have elaborately heard Mr. T. Ravikumar, learned Senior Standing Counsel for the Revenue. 5. It is the submission of Mr. T. Ravikumar, learned Senior Standing counsel that the amendment to section 50(C) of the Act introduced by the Finance Act 2016 is effective only from 1-4-2017, prospectively. In this regard, the learned Senior Counsel referred to the legal maxim 'lex prospicit non respicit' which means law look forward and not backwards. The learned Senior Counsel referred to the Circular issued by the Central Board of Direct Taxes ('CBDT') in Circular No. 3/2017 dated 20- ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 18 -: 1-2017 and has drawn the attention of this Court to the paragraph no. 29 which deals with the Rationalization of section 50C in case sale consideration is fixed under agreement executed prior to the date of registration of immovable property. It is submitted that CBDT has clarified that the amendment shall take effect from 1-4- 2017 and would accordingly apply from assessment year 2017-18 and subsequent years. Further it is submitted that the language of the proviso is clear and it does not indicate it is either clarificatory to be held to argue that the proviso would have retrospective effect. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of CIT v. Vatika Township (P.) Ltd. [2014] 49 taxmann.com 249/227 Taxman 121/367 ITR 466 and our attention was drawn to paragraph no. 39 of the judgment, in support of his contention that the Statute has to be held to be prospective from the date fixed by the legislature. 6. Reliance was also placed on the decision of the High Court of Calcutta in the case of Bagri Impex (P.) Ltd. v. Asstt. CIT [2013] 31 taxmann.com 39/214 Taxman 305, in support of his contention that where the date of Sale was registered in the year, 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 ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 19 -: 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 seeks to relieve the assessee from undue hardship caused on account of the computation of higher rate of capital gains. 7. Before we proceed to consider as to whether proviso inserted in Section 50C of the Act has to be read retrospective or prospective, we need to point out that the Assessing Officer did not doubt the bona fides of the transaction done by the assessee, since the Assessing Officer accepted the fact that the assessee had entered into an Agreement for Sale of the property in question vide Agreement for Sale dated 4-8-2012, wherein agreed sale consideration was Rs. 19 Crores and the assessee had received Rs. 6 Crores by way of account payee cheque on the date of signing the Agreement. This fact was noted by the CIT(A) and held that the Agreement cannot be treated to be ante-dated as the assessee had received Rs. 6 crores as advance on the date of Agreement through banking channel. The only reason for the Assessing Officer to adopt higher value is based upon the guideline value fixed by the State Government. The question would be as to what is the effect of the guideline value fixed by the Government and the purpose behind fixing the same. This aspect was clearly explained in the case of J. Jayalalitha. It has been pointed out that the guideline value has relevance only in the context of section 47A of the Indian Stamp Act (as amended by Tamil Nadu Act 24 of 1967) which provides for dealing with instruments of conveyance which are undervalued. The guideline value is a rate fixed by the authorities under the Stamp Act for the purpose of determining the true market value of the property disclosed in an instrument requiring payment of stamp duty. Thus the guideline value fixed is not final but only a prima facie rate prevailing in an area to ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 20 -: ascertain the true or correct market value. It is open to the Registering Authority as well as the person seeking registration to prove the actual market value of the property. The authorities cannot regard the guideline valuation as the last word on the subject of market value but only a factor to be taken note of, if at all available in respect of an area in which the property transferred lies. It was further pointed out that this position is made clear in the explanation to Rule 3 of the Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968; this explanation also will have to be 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. 9. Therefore, in our considered view the Assessing Officer could not have based his finding solely relying upon the guideline value especially when the Assessing Officer is not a person who is computing stamp duty under the provisions of Indian Stamp Act on the Deed of ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 21 -: conveyance. Having observed so we need to take note of the next issue would be as to whether the proviso to Section 50C could be read to be prospective or retrospective. Section 50C(1) proviso reads as follows: "Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capita 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 for such transfer.'' 10. Reading of the above proviso would show that the legislature took note of the fact that there are several occasions where the Agreements are entered into between a willing vendor and willing purchaser on an agreed sale consideration, the Agreement is reduced into writing and in many a cases a substantive portion of the sale consideration is given to the vendor as advance on the date of execution of the Agreement. There are other types of transaction where the vendor executes Power of Attorney in favour of the intending purchaser empowering him to sell the property at any time he proposes to do so. In fact this was also a subject matter of consideration, when the legislature though to introduce the amendment to section 50C of the Act. There may be cases where the sale consideration will be taken as deferred payment subject to certain contingencies. However the case on hand is very straight forward case, where there is an Agreement for Sale, agreeing to sell the property at Rs. 19 Crores and a sum of Rs. 6 Crores has been received as advance sale consideration. The proviso to Section 50C(1) of the Act deals with cases where the date of the agreement, fixing the amount of consideration and the date of registration for the transfer of the capital assets 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 ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 22 -: computing full value of consideration for such transfer. Thus an amendment by insertion of proviso seeks to 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 is not given retrospective operation i.e., from the date of substitution of the provision. Thus, the amendment made by the Finance Act 2010 being curative in nature was held to be retrospective in operation. In the above decision, the Hon'ble Supreme Court took note of the fact that the statutory amendment was being made to remove undue hardship to the assessee or held to be retrospective. 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 (P.) Ltd. v. CIT [1997] 91 Taxman 205/224 ITR 677, Whirlpool of India Ltd. v. CIT [2000] 245 ITR 3, CIT v. Amrit Banaspati Co. Ltd. [2002] 123 Taxman 74/255 ITR 117 (SC) and CIT v. Alom Enterprises [2009] 185 Taxman 416/319 ITR 306 ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 23 -: 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 assessee's appeal vide order dated 25-7-2019, took note of the submissions made by the assessee wherein they placed reliance on the decision of the Ahmadabad Bench of the Tribunal in the case of Dharamshibhai Sonani v. Asstt. CIT [2016] 75 taxmann.com 141/161 ITD 627, order of the Delhi Bench of the ITAT in the case of Income tax Officer v. Modipon Ltd. [2015] 57 taxmann.com 360/154 ITD 369. 13. On a reading of the order passed by the CIT(A), it is interesting to note the report submitted by the 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 ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 24 -: 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 immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement 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. 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 ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 25 -: the decision in the case of Alom Enterprises (supra). 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 assessee therein contended that the date of agreement should be taken as date on which the property was transferred by bringing the same within the ambit of section 2(47) of the Act, which is not the case before us. In Ambattur Clothing Co. Ltd. (supra), the assessee contended that since the buyer wanted the Sale Deed to be released after registration, they had paid stamp duty as per the guideline value which is higher than the sale consideration agreed to be paid on the instruments. This explanation offered by the assessee was found to be factually incorrect and rejected and in the background of the said facts, the Honble 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 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 ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 26 -: 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 the legal principle of retrospectivity, retro activity or prospectivity. In any event, the ultimate conclusion arrived at by the Tribunal confirming the above order passed by the CIT(A) cannot be found faulted with. The above judgment is squarely applicable to the facts of the case in hand and, therefore, following the ratio laid down in the above judgment, we allow the ground Nos. 1 to 4 raised by the assessee on this issue. 7.1 As regards ground No. 5 relating to the assessee’s claim of exemption u/s 54F on the construction of new asset, the AO has accepted construction value of Rs. 16,26,000/- for three individual houses, but, had denied for remaining houses the claim of exemption u/s 54F. This issue has been settled by various High Courts and the issue relates to prior to the amendment in the Act. Therefore, the assessee is eligible for claiming exemption u/s 54F for remaining two houses also. In support of our decision, we rely on the following judgments: 1. CIT Vs. Vittal Krishna Conjeevaram, ITTA No. 588 of 2013, dated 06/12/2013 ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 27 -: 2. Vittal Kirshna Conjeevaram Vs. ITO, 144 ITD 325 (ITAT, Hyd.) 3. CIT Vs. Syed Ali Adil, 352 ITR 418 (AP – HC) 4. CIT Vs. D. Ananda Basappa, 309 ITR 329 5. CIT Vs. Gita Duggal, 357 ITR 153 6. Arun K. Thiagarajan Vs. CIT, 193 DTR 153) 7. CIT Vs. Gumanmal Jain, 394 ITR 666 8. Tilokchand and Sons Vs. ITO, 413 ITR 189 9. K. Jaipal & Others, ITA NO. 1188/Hyd/2015 and others, dated 19/11/2015. 7.2 Respectfully following the above judgements, we allow ground No. 5 raised by the assessee on this issue. 8. In the result, appeal of the assessee is allowed in above terms. Pronounced in the open court on 25 th November, 2021. Sd/- Sd/- (S.S. GODARA) (L. P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 25 th November, 2021. kv ITA No. 1245/Hyd/2018 S m t . K . M a h a L a k s h m i , T i r u p a t i :- 28 -: Copy to : 1 Smt. K. Maha Lakshmi, L/R of late Shri K. Gangi Chetty C/o Dr. E. Phalguna Kumar, CA., D.No. 1-5-599/2, Balaji Colony, Tirupati. 2 DCIT, Central Circle, 3 rd Floor, Aayakar Bhavan, IT Office, KT Road, Tirupati – 517 502 3 CIT(A) - 3, Visakhapatnam 4 Pr. CIT (Central), Visakhapatnam 5 ITAT, DR, Hyderabad. 6 Guard File. S.No. Details Date 1 Draft dictated on 2 Draft placed before author 3 Draft proposed & placed before the Second Member 4 Draft discussed/approved by Second Member 5 Approved Draft comes to the Sr. PS/PS 6 Kept for pronouncement 7 File sent to Bench Clerk 8 Date on which the file goes to Head Clerk 9 Date on which file goes to A.R. 10 Date of Dispatch of order