Shri Jaymin Rameshbhai Patel, Kheda V. The Income Tax Officer, Ward-5, Nadiad

ITA 1753/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1591 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 30-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: S N DIVATIA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Principle of natural justice; Retrospective amendment; Non-deduction of tax
• Section: 43CA; 43B; 143(3); 50C

Judgement Text

ITA NO. 1753/AHD/2016 JAYMIN RAMESHBHAI PATEL VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR, AM AND MS. MADHUMITA ROY, JM] ITA NO.1753/AHD/2016 ASSESSMENT YEAR: 2012-13 JAYMIN RAMESHBHAI PATEL ..................A PPELLANT RAMDASPURA, AT PIJ, TAL. NADIAD, DIST. KHEDA [PAN : AAAAB 0580 D] VS. INCOME TAX OFFICER ...........................RESPONDENT WARD-5, NADIAD APPEARANCES BY: SN DIVATIA, FOR THE APPELLANT LALIT P JAIN, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 04.09.2018 DATE OF PRONOUNCING THE ORDER : 06.09.2018 O R D E R PER PRAMOD KUMAR, AM: 1. BY WAY OF THIS APPEAL, THE ASSESSEE-APPELLANT HA S CHALLENGED CORRECTNESS OF THE ORDER DATED 30 TH MAY, 2016 PASSED BY THE BY THE CIT(A)-2, VADODARA, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE IN COME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2012-13. 2. GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS :- 1.1 THE ORDER PASSED U/S.250 ON 30-5-2016 FOR A. Y.2012-13 BY CIT(A)-2, BARODA UPHOLDING THE ADDITION OF RS.33,59,000/- TOW ARDS SHORT TERM CAPITAL GAINS MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AG AINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED ADDITI ONS. 2.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O N FACTS IN CONFIRMING THE ADDITION OF RS. 33.59 LACS TOWARDS SHORT TERM CAPIT AL GAINS ON SALE OF HOUSE PROPERTY BY INVOKING JANTRI VALUE UNDER SECTION-50C ON THE DATE OF EXECUTION OF SALE DEED AS AGAINST THE DATE OF BANAKHAT CLAIMED B Y THE APPELLANT. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THE ADDITION OF RS. 33.59 LACS TOWARDS SHORT TERM CAPITAL GAINS ON SALE OF HOUSE PROPERTY BY INV OKING UNDER SECTION-50C, THE JANTRI VALUE ON THE DATE OF EXECUTION OF SALE D EED AS AGAINST THE DATE OF BANAKHAT AS CLAIMED BY THE APPELLANT. ITA NO. 1753/AHD/2016 JAYMIN RAMESHBHAI PATEL VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 2 OF 9 3. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, LEA RNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE FACT THAT THE ISSUE IN APPEAL, I.E. WHETHER THE STAMP DUTY VALUATION IS TO BE TAKEN AS ON THE DATE ON WHICH THE AGREEMENT TO SALE HAS BEEN ENTERED INTO OR THE DATE ON WHICH THE ACTU AL SALE TRANSACTION HAS BEEN ENTERED INTO, IS NOW SETTLED IN FAVOUR OF THE ASSES SEE IN PRINCIPLE BY A SMC DECISION IN THE CASE OF DHARAMSHIBHAI SONANI VS. ACIT IN ITA NO.1237/AHD/2013, ORDER DATED 30.09.2016, WHICH HAS BEEN CONSISTENTLY FOLLO WED BY THE DIVISION BENCHES. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT, IN VIEW OF THIS JUDICIAL DEVELOPMENT, THE MATTER MAY BE REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION DE NOVO IN THE LIGHT OF PRINCIPLES LAID DOWN BY THE TRIBUN AL DECISION IN THE CASE OF DHARAMSHIBHAI SONANI (SUPRA). 4. LEARNED DEPARTMENTAL REPRESENTATIVE DOES NOT OPP OSE THE ABOVE SUBMISSION, BUT RELIES ON THE STAND OF THE AUTHORIT IES BELOW NEVERTHELESS. 5. 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. 6. AS LEARNED COUNSEL FOR THE ASSESSEE RIGHTLY POIN TS OUT, THE ISSUE IN APPEAL IS NOW COVERED IN FAVOUR OF THE ASSESSEE IN PRINCIPLE BY A DECISION OF THIS TRIBUNAL IN THE CASE OF DHARAMSHIBHAI SONANI (SUPRA), WHEREIN T HE TRIBUNAL 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 RESULTIN G IN LEAKAGE OF LEGITIMATE TAX REVENUES. THIS SECTION PROVIDES FOR A PRESUMPTI ON, A REBUTTABLE PRESUMPTION THOUGH-SOMETHING WITH WHICH I AM NOT CO NCERNED FOR THE TIME BEING, THAT THE VALUE, FOR THE PURPOSE OF COMPUTING STAMP DUTY, ADOPTED BY THE STAMP DUTY VALUATION AUTHORITY REPRESENTS FAIR INDICATION OF THE MARKET PRICE OF THE PROPERTY SOLD. SECTION 50C(1) PROVIDES THAT, 'WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE 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 THIS SECTION REFERRED TO AS THE 'STAM P VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE SHALL, FOR THE PU RPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RE CEIVED 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 AG REEMENT TO SELL IS ENTERED INTO, THERE IS SOMETIMES CONSIDERABLE GAP IN PARTIE S AGREEING TO A TRANSACTION (I.E. AGREEMENT TO SELL) AND THE ACTUAL EXECUTION O F THE TRANSACTION (I.E. SALE DEED), AND YET, IT IS THE VALUE AS ON THE DATE OF E XECUTION OF SALE DEED WHICH IS RECOGNIZED BY SECTION 50C FOR THE PURPOSE OF COM PUTING THE CAPITAL GAIN BECAUSE THAT IS WHAT IS RELEVANT FOR THE PURPOSE OF COMPUTING STAMP DUTY FOR REGISTRATION OF SALE DEED. THE VERY COMPARISON BETW EEN 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 WHI CH THERE IS SIGNIFICANT DIFFERENCE BETWEEN THE POINT OF TIME WHEN AGREEMENT TO SELL IS EXECUTED AND WHEN THE SALE DEED IS EXECUTED, THEREFORE, SHOULD I DEALLY BE BETWEEN THE SALE CONSIDERATION AS PER REGISTERED SALE DEED, WHICH IS FIXED BY WAY OF THE ITA NO. 1753/AHD/2016 JAYMIN RAMESHBHAI PATEL VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 3 OF 9 AGREEMENT TO SELL, VIS--VIS THE STAMP DUTY VALUATI ON AS AT THE POINT OF TIME WHEN AGREEMENT TO SELL, WHEREBY SALE CONSIDERATION WAS INFACT FIXED, BECAUSE, IF AT ALL ANY SUPPRESSION OF SALE CONSIDER ATION SHOULD BE ASSUMED, IT SHOULD BE ON THE BASIS OF STAMP DUTY VALUATION AS A T THE POINT OF TIME WHEN THE SALE CONSIDERATION WAS FIXED. INCOME TAX SIMPLI FICATION COMMITTEE SET UP IN 2015, HEADED BY JUSTICE R V EASWAR- A FORMER JUD GE OF DELHI HIGH COURT AND ONE OF THE MOST ILLUSTRIOUS FORMER PRESIDENTS O F THIS TRIBUNAL, TOOK NOTE OF THIS INCONGRUITY AND, IN ITS VERY FIRST REPORT (HTTP://TAXSIMPLIFICATION.IN/REPORT.PDF), OBSERVED AS FOLLOWS: 6.1 RATIONALISATION OF SECTION 50C TO PROVIDE RELIE F WHERE SALE CONSIDERATION FIXED UNDER AGREEMENT TO SELL 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 RECEIVE D OR ACCRUING AS A RESULT OF THE TRANSFER OF LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT (I.E. 'STAMP VALUATION AUTHORITY') FOR T HE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE SHALL BE DEEMED T O BE THE FULL VALUE OF THE CONSIDERATION, AND CAPITAL GAINS SHALL BE COMPUTED ON THE BASIS OF SUCH CONSIDERATION UNDER SECTION 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 ALSO 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 TH E ASSET MUCH BEFORE THE ACTUAL DATE OF TRANSFER OF THE IMMOVABLE PROPER TY AND THE SALE CONSIDERATION HAS BEEN FIXED IN SUCH AGREEMENT. A L ATER SIMILAR PROVISION 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 REGIS TRATION 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 O F A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER ON 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 B EEN RECEIVED BY ANY MODE OTHER THAN CASH ON OR BEFORE A DATE OF AGREEME NT FOR TRANSFER OF THE ASSET. [5] TRUE TO THE WORK ETHOS OF THE CURRENT GOVERNMEN T, 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 ITA NO. 1753/AHD/2016 JAYMIN RAMESHBHAI PATEL VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 4 OF 9 WALKED THE TALK BY ENSURING THAT THE SEVERAL STATUT ORY AMENDMENTS, 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 50 C: 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 ASSESS ED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY ON THE DATE OF AGR EEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VALUE OF C ONSIDERATION 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 BAN K DRAFT OR BY USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK AC COUNT, ON OR BEFORE THE DATE OF THE AGREEMENT FOR TRANSFER.' [6] THIS AMENDMENT WAS EXPLAINED, IN THE MEMORANDUM EXPLAINING 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 REGIS TRATION 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 AUTHORIT Y FOR THE PURPOSE OF PAYMENT OF STAMP DUTY SHALL BE TAKEN AS THE FULL VALUE OF CONSIDERATION FOR THE PURPOSES OF COMPUTATION OF CA PITAL GAINS. THE INCOME TAX SIMPLIFICATION COMMITTEE (EASWAR COMMITT EE) HAS IN ITS FIRST REPORT, POINTED OUT THAT THIS PROVISION DOES NOT PROVIDE ANY RELIEF WHERE THE SELLER HAS ENTERED INTO AN AGREEMENT TO S ELL THE PROPERTY MUCH BEFORE THE ACTUAL DATE OF TRANSFER OF THE IMMO VABLE PROPERTY AND THE SALE CONSIDERATION IS FIXED IN SUCH AGREEMENT, WHEREAS SIMILAR PROVISION EXISTS IN SECTION 43CA OF THE ACT I.E. WH EN AN IMMOVABLE PROPERTY IS SOLD AS A STOCK-IN- TRADE. IT IS PROPOS ED TO AMEND THE PROVISIONS OF SECTION 50C SO AS TO PROVIDE THAT WHE RE THE DATE OF THE AGREEMENT FIXING THE AMOUNT OF CONSIDERATION FOR TH E TRANSFER OF IMMOVABLE PROPERTY AND THE DATE OF REGISTRATION ARE NOT THE SAME, THE STAMP DUTY VALUE ON THE DATE OF THE AGREEMENT MAY B E TAKEN FOR THE PURPOSES OF COMPUTING THE FULL VALUE OF CONSIDERATI ON. 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 ACCO UNT PAYEE BANK DRAFT OR USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT, ON OR BEFORE THE DATE OF THE AGREEMENT FOR THE TRANSFER O F SUCH IMMOVABLE PROPERTY. 30 THESE AMENDMENTS ARE PROPOSED TO BE MA DE EFFECTIVE FROM THE 1ST DAY OF APRIL, 2017 AND SHALL ACCORDING LY APPLY IN RELATION TO ASSESSMENT YEAR 2017-18 AND SUBSEQUENT YEARS. ITA NO. 1753/AHD/2016 JAYMIN RAMESHBHAI PATEL VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 5 OF 9 [7] WHILE THE GOVERNMENT HAS THUS RECOGNIZED THE GE NUINE 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 S TATUE TO TAKE THE REMEDIAL MEASURES, THIS BRINGS NO RELIEF TO THE ASS ESSEE BEFORE ME AS THE AMENDMENT IS INTRODUCED ONLY WITH PROSPECTIVE EFFEC T FROM 1ST APRIL 2017. THERE CANNOT BE ANY DISPUTE THAT THIS AMENDMENT IN THE SCHEME OF SECTION 50C HAS BEEN MADE TO REMOVE AN INCONGRUITY, RESULTI NG IN UNDUE HARDSHIP TO THE ASSESSEE, AS IS EVIDENT FROM THE OBSERVATION IN EASWAR COMMITTEE REPORT TO THE EFFECT THAT 'THE (THEN PREVAILING) PROVISION S OF SECTION 50C DO NOT PROVIDE ANY RELIEF WHERE THE SELLER HAS ENTERED INT O AN AGREEMENT TO SELL THE ASSET MUCH BEFORE THE ACTUAL DATE OF TRANSFER OF TH E IMMOVABLE PROPERTY AND THE SALE CONSIDERATION HAS BEEN FIXED IN SUCH AGREE MENT' RECOGNIZING THE INCONGRUITY THAT THE DATE AGREEMENT OF SELL HAS BEE N IGNORED IN THE STATUTE EVEN THOUGH IT WAS CRUCIAL AS IT WAS AT THIS POINT OF TIME THAT THE SALE CONSIDERATION IS FINALIZED. THE INCONGRUITY IN THE STATUTE WAS GLARING AND UNDUE HARDSHIP NOT IN DISPUTE. ONCE IT IS NOT IN DI SPUTE THAT A STATUTORY AMENDMENT IS BEING MADE TO REMOVE AN UNDUE HARDSHIP TO THE ASSESSEE OR TO REMOVE AN APPARENT INCONGRUITY, SUCH AN AMENDMEN T HAS TO BE TREATED AS EFFECTIVE FROM THE DATE ON WHICH THE LAW, CONTAININ G 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 CAS E OF CIT VS ANSAL LANDMARK TOWNSHIP PVT LTD [(2015) 377 ITR 635 (DEL) ], WHEREIN APPROVING THE REASONING ADOPTED AN ORDER AUTHORED BY ME DURIN G MY TENURE AT AGRA BENCH [I..E RAJEEV KUMAR AGARWAL VS ACIT (2014) 149 ITD 363 (AGRA)] WHICH CENTRED ON THE PRINCIPLE THAT WHEN LEGISLATURE IS R EASONABLE AND COMPASSIONATE ENOUGH TO UNDO THE UNDUE HARDSHIP CAU SED BY THE STATUTE 'SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETT LED LEGAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDE D CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT M AY NOT STATE SO SPECIFICALLY'. IN THIS CASE, IT WAS SPECIFICALLY OBSERVED, AND IT WAS THIS OBSERVATION 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 T HE UNINTENDED HARDSHIPS, SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LEGAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN N ATURE EVEN THOUGH IT MAY NOT STATE SO SPECIFICALLY, THE INSERTION OF SEC OND PROVISO MUST BE GIVEN RETROSPECTIVE EFFECT FROM THE POINT OF TIME W HEN THE RELATED LEGAL PROVISION WAS INTRODUCED. IN VIEW OF THESE DISCUSSI ONS, AS ALSO FOR THE DETAILED REASONS SET OUT EARLIER, WE CANNOT SUBSCRI BE TO THE VIEW THAT IT COULD HAVE BEEN AN 'INTENDED CONSEQUENCE' TO PUNISH THE ASSESSEES FOR NON-DEDUCTION OF TAX AT SOURCE BY DECLINING THE DEDUCTION IN RESPECT OF RELATED PAYMENTS, EVEN WHEN THE CORRESPONDING IN COME IS DULY BROUGHT TO TAX. THAT WILL BE GOING MUCH BEYOND THE OBVIOUS INTENTION OF THE SECTION. ACCORDINGLY, WE HOLD THAT THE INSERTIO N OF SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1ST APRIL, 2005, BEING TH E DATE FROM WHICH SUB CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY THE FI NANCE (NO. 2) ACT, 2004' ITA NO. 1753/AHD/2016 JAYMIN RAMESHBHAI PATEL VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 6 OF 9 [8] THEIR LORDSHIPS WERE PLEASED TO HOLD THAT THIS REASONING AND RATIONALE OF THIS DECISION 'MERITS ACCEPTANCE'. THE SAME PRINCIP LE, WHEN APPLIED IN THE PRESENT CONTEXT, LEADS TO THE CONCLUSION THAT THE P RESENT AMENDMENT, BEING AN AMENDMENT TO REMOVE AN APPARENT INCONGRUITY WHIC H RESULTED 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 DAT E RELATED STATUTORY PROVISIONS WAS INTRODUCED. VIEWED THUS, THE PROVISO TO SECTION 50 C SHOULD ALSO BE TREATED AS CURATIVE IN NATURE AND WITH RETR OSPECTIVE EFFECT FROM 1ST APRIL 2003, I.E. THE DATE EFFECTIVE FROM WHICH SECT ION 50C WAS INTRODUCED. WHILE THE GOVERNMENT MUST BE COMPLIMENTED FOR THE U NPARALLELED SWIFTNESS WITH WHICH THE EASWAR COMMITTEE RECOMMENDATIONS, AS ACCEPTED BY THE GOVERNMENT, WERE IMPLEMENTED, I, AS A JUDICIAL OFFI CER, WOULD THINK THIS WAS STILL ONE STEP SHORT OF WHAT OUGHT TO HAVE BEEN DON E INASMUCH AS THE AMENDMENT, IN TUNE WITH THE JUDGE MADE LAW, OUGHT T O HAVE BEEN EFFECTIVE FROM THE DATE ON WHICH THE RELATED LEGAL PROVISIONS WERE INTRODUCED. AS I SAY SO, IN ADDITION TO THE REASONING GIVEN EARLIER IN T HIS ORDER, I MAY ALSO REFER TO THE OBSERVATIONS OF HON'BLE SUPREME COURT, THE CASE OF CIT VS ALOM EXTRUSION LTD [(2009) 319 ITR 306 SC)], TO THE FOLL OWING EFFECT: 'ONCE THIS UNIFORMITY IS BROUGHT ABOUT IN THE FIRST PROVISO, THEN, IN OUR VIEW, THE FINANCE ACT, 2003, WHICH IS MADE APPLICAB LE BY THE PARLIAMENT ONLY W.E.F. 1ST APRIL, 2004, WOULD BECOM E CURATIVE IN NATURE, HENCE, IT WOULD APPLY RETROSPECTIVELY W.E.F. 1ST AP RIL, 1988 (I.E. THE DATE ON WHICH THE RELATED LEGAL PROVISION WAS INTRODUCED ). SECONDLY, IT MAY BE NOTED THAT, IN THE CASE OF ALLIED MOTORS (P) LTD . ETC. VS. CIT (1997) 139 CTR (SC) 364: (1997) 224 ITR 677 (SC), THE SCHE ME OF S. 43B OF THE ACT CAME TO BE EXAMINED. IN THAT CASE, THE QUES TION WHICH AROSE FOR DETERMINATION WAS, WHETHER SALES-TAX COLLECTED BY THE ASSESSEE AND PAID AFTER THE END OF THE RELEVANT PREVIOUS YEA R 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. 19 84-85. THE RELEVANT ACCOUNTING PERIOD ENDED ON 30TH JUNE, 1983. THE ITO DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE WHICH WAS ON ACCO UNT 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 A LSO RELEVANT TO NOTE THAT THE FIRST PROVISO WHICH CAME INTO FORCE W.E.F. 1ST APRIL, 1988 WAS NOT ON THE STATUTE BOOK WHEN THE ASSESSMENTS WERE MADE IN THE CASE OF ALLIED MOTORS (P) LTD. ETC. (SUPRA). HOWEVER, THE A SSESSEE CONTENDED THAT EVEN THOUGH THE FIRST PROVISO CAME TO BE INSER TED W.E.F. 1ST APRIL, 1988, IT WAS ENTITLED TO THE BENEFIT OF THAT PROVIS O BECAUSE IT OPERATED RETROSPECTIVELY FROM 1ST APRIL, 1984, WHEN S. 43B S TOOD INSERTED. THIS IS HOW THE QUESTION 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 INSERTED TO REMEDY UNINTENDED CONSEQUE NCES AND TO MAKE THE SECTION WORKABLE, A PROVISO WHICH SUPPLIES AN O BVIOUS OMISSION IN THE SECTION AND WHICH PROVISO IS REQUIRED TO BE REA D INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTERPRETATION, IT CO ULD BE READ RETROSPECTIVE IN OPERATION, PARTICULARLY TO GIVE EF FECT TO THE SECTION AS A ITA NO. 1753/AHD/2016 JAYMIN RAMESHBHAI PATEL VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 7 OF 9 WHOLE. ACCORDINGLY, THIS COURT, IN ALLIED MOTORS (P ) LTD. ETC. (SUPRA), HELD THAT THE FIRST PROVISO WAS CURATIVE IN NATURE, HENCE, RETROSPECTIVE IN OPERATION W.E.F. 1ST APRIL, 1988. IT IS IMPORTANT T O NOTE ONCE AGAIN THAT, BYFINANCE ACT, 2003, NOT ONLY THE SECOND PROVISO IS DELETED BUT EVEN THE FIRST PROVISO IS SOUGHT TO BE AMENDED BY BRING ING ABOUT AN UNIFORMITY IN TAX, DUTY, CESS AND FEE ON THE ONE HA ND VIS-A-VIS CONTRIBUTIONS TO WELFARE FUNDS OF EMPLOYEE(S) ON TH E OTHER. THIS IS ONE MORE REASON WHY WE HOLD THAT THE FINANCE ACT, 2003, IS RETROSPECTIVE IN OPERATION. MOREOVER, THE JUDGMENT IN ALLIED MOTO RS (P) LTD. ETC. (SUPRA) IS DELIVERED BY A BENCH OF THREE LEARNED JU DGES, WHICH IS BINDING ON US. ACCORDINGLY, WE HOLD THAT FINANCE AC T, 2003, WILL OPERATE RETROSPECTIVELY W.E.F. 1ST APRIL, 1988 (WHEN THE FI RST PROVISO STOOD INSERTED). LASTLY, WE MAY POINT OUT THE HARDSHIP AN D THE INVIDIOUS DISCRIMINATION WHICH WOULD BE CAUSED TO THE ASSESSE E(S) IF THE CONTENTION OF THE DEPARTMENT IS TO BE ACCEPTED THAT FINANCE ACT, 2003, TO THE ABOVE EXTENT, OPERATED PROSPECTIVELY. TAKE A N EXAMPLE--IN THE PRESENT CASE, THE RESPONDENTS HAVE DEPOSITED THE CO NTRIBUTIONS WITH THE R.P.F.C. AFTER 31ST MARCH (END OF ACCOUNTING YE AR) BUT BEFORE FILING OF THE RETURNS UNDER THE IT ACT AND THE DATE OF PAY MENT FALLS AFTER THE DUE DATE UNDER THE EMPLOYEES' PROVIDENT FUND ACT, T HEY WILL BE DENIED DEDUCTION FOR ALL TIMES. IN VIEW OF THE SECOND PROV ISO, WHICH STOOD ON THE STATUTE BOOK AT THE RELEVANT TIME, EACH OF SUCH ASSESSEE(S) WOULD NOT BE ENTITLED TO DEDUCTION UNDER S. 43B OF THE AC T FOR ALL TIMES. THEY WOULD LOSE THE BENEFIT OF DEDUCTION EVEN IN THE YEA R OF ACCOUNT IN WHICH THEY PAY THE CONTRIBUTIONS TO THE WELFARE FUNDS, WH EREAS A DEFAULTER, WHO FAILS TO PAY THE CONTRIBUTION TO THE WELFARE FU ND RIGHT UPTO 1ST APRIL, 2004, AND WHO PAYS THE CONTRIBUTION AFTER 1ST APRIL , 2004, WOULD GET THE BENEFIT OF DEDUCTION UNDER S. 43B OF THE ACT. IN OU R VIEW, THEREFORE, FINANCE ACT, 2003, TO THE EXTENT INDICAT ED ABOVE, SHOULD BE READ AS RETROSPECTIVE. IT WOULD, THEREFORE, OPERATE FROM 1ST APRIL, 1988, WHEN THE FIRST PROVISO WAS INTRODUCED. IT IS TRUE T HAT THE PARLIAMENT HAS EXPLICITLY STATED THAT FINANCE ACT, 2003, WILL OPER ATE W.E.F. 1ST APRIL, 2004. HOWEVER, THE MATTER BEFORE US INVOLVES THE PR INCIPLE OF CONSTRUCTION TO BE PLACED ON THE PROVISIONS OF FINA NCE ACT, 2003. [9] SO FAR AS THE AMENDMENT TO SECTION 50C BEING RE TROSPECTIVE 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. THIS 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 FINDS 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 T HE ASSESSEE IS NOT CONTENT WITH THIS VALUE BEING ADOPTED UNDER SECTION 50C, HE WILL BE AT LIBERTY TO SEEK THE MATTER BEING REFERRED TO THE DVO FOR VALUATION, AGA IN AS ON 29.6.2005, OF THE SAID PROPERTY. AS A COROLLARY THERETO, THE SUBSEQUE NT DEVELOPMENTS IN RESPECT OF THE PROPERTY SOLD (E.G. THE CONVERSION OF USE OF LAND) ARE TO BE IGNORED. IT IS ITA NO. 1753/AHD/2016 JAYMIN RAMESHBHAI PATEL VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 8 OF 9 ON THIS BASIS THAT THE CAPITAL GAINS WILL BE RECOMP UTED. WITH THESE DIRECTIONS, THE MATTER STANDS RESTORED TO THE FILE OF THE ASSES SING OFFICER FOR ADJUDICATION DE NOVO, AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE AND BY WAY OF A SPEAKING ORDER. I ORDER SO. [10] AS I PART WITH THE MATTER, I MAY MAKE ONE MORE OBSERVATION. 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 PROPERTY HAS RISEN BETWEEN THE DATE OF EXECUTION OF AGREEMENT TO SELL AND EXEC UTION OF SALE DEED, AS IS THE NORM RATHER THAN EXCEPTION, BUT THE REAL ESTATE MARKET IS NOW TRAVERSING THROUGH A DIFFICULT PHASE AND THERE CAN BE SITUATIO NS IN WHICH 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 GURGAON (HTTP://WWW.HINDUSTANTIMES.COM/GURGAON/FOR-THE-FIRS T-TIME-CIRCLE-RATES- REDUCED-IN-GURGAON/STORY- CJP6E72TEGS9H5JJIALAGP.HT ML), NEW DELHI (HTTP://WWW.DELHISMARTCITIES.COM/BLOGS/HIGH-CIRCLE- RATES-CAUSING-SLUMP-REALTY- REDUCE-DELHI-GOVERNMENT/), AND EVEN IN DEHRADUN (UT TARAKHAND) (HTTP://WWW.TRIBUNEINDIA.COM/NEWS/UTTARAKHAND/RELI EF-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 SITUATI ON IN THE EVENT OF THE WORD 'MAY' BEING CONSTRUED AS MANDATORY IN APPLICATION, BUT THEN ONE CANNOT BE OBLIVIOUS TO THE FACT THAT THIS PROVISO STATES THAT 'THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHO RITY ON THE DATE OF AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTIN G FULL VALUE OF CONSIDERATION FOR SUCH TRANSFER (EMPHASIS SUPPLIED) ' MAKING IT CLEARLY OPTIONAL TO THE ASSESSEE, AND THAT, IN ANY EVENT, WHAT HAS B EEN BROUGHT BY THE LAWMAKERS AS A MEASURE OF RELIEF TO THE TAXPAYERS C ANNOT BE CONSTRUED AS RESULTING IN A HIGHER TAX BURDEN ON THE TAXPAYERS. OF COURSE, ASSUMING THAT MY UNDERSTANDING OF THIS STATUTORY PROVISION IS IN HARMONY WITH THE LEGISLATIVE INTENTION, INSERTION OF WORDS 'AT THE OPTION OF THE ASSESSEE' BETWEEN 'STAMP VALUATION AUTHORITY ON THE DATE OF AGREEMENT MAY' A ND 'BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VALUE OF CONSIDERATION F OR SUCH TRANSFER', IN FIRST PROVISIO TO SECTION 50C(1), COULD HAVE MADE THE LEG AL PROVISION EVEN MORE UNAMBIGUOUS. 7. IN VIEW OF ABOVE POSITION AND AS FAIRLY AGREED B Y THE LEARNED REPRESENTATIVES, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO TH E FILE OF THE ASSESSING OFFICER FOR ADJUDICATION DE NOVO IN THE LIGHT OF PRINCIPLES LAID DOWN IN THE CASE OF DHARAMSHIBHAI SONANI (SUPRA). WE ORDER ACCORDINGLY. 8. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 6 TH SEPTEMBER, 2018 SD/- SD/- MS. MADHUMITA ROY PRA MOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 6 TH DAY OF SEPTEMBER, 2018 **BT ITA NO. 1753/AHD/2016 JAYMIN RAMESHBHAI PATEL VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 9 OF 9 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: ..................05.09.2018 .... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .. 06.09.2018..... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: .06.09.2018.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: . 06.09.2018.. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : . 06.09.2018. 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER : . 8. DATE OF DESPATCH OF THE ORDER: ......