SHRI PRAMATHA RANJAN BISWAS, KORBA V. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE, KORBA

ITA 218/RPR/2017

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0799 (ITAT-RAIPUR)
• Duration Of Justice: 5 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 12-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Capital Gains
• Section: 50C; 43; 48; 13

Judgement Text

आयकर अपीलीय अधिकरण, रायप ु र न्यायपीठ, रायप ु र IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR श्री रविश स ू द, न्याययक सदस्य एवं श्री अरुण खोड़विया, लेखा सदस्य के समक्ष । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं./ITA No.218/RPR/2017 (नििाारण वर्ा / Assessment Year :2012-2013) Shri Pramatha Ranjan Biswas, B-1193, Krishna Vihar, NTPC Township, Jamnipai, Korba Vs DCIT, Circle-Korba Korba PAN No. : AFKPB 8712 M (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) नििााररती की ओर से /Assessee by : Shri G.S.Agrawal, AR राजस्व की ओर से /Revenue by : Shri G.N.Singh, Sr. DR स ु निाई की तारीख / Date of Hearing : 21/07/2022 घोषणा की तारीख/Date of Pronouncement : 03/08/2022 आदेश / O R D E R Per Arun Khodpia, AM : This appeal is filed by the assessee against the order passed by the CIT(A), Bilaspur, dated 16.12.2016 for the assessment year 2012-2013, on the following grounds :- 1. That under the facts and the law the learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.1,96,18,540/- being Capital Gain on sale of Land, rejecting the explanation. Prayed that the addition of Rs.1,96,18,540/- be deleted. 2. That the Ld. Commissioner of Income Tax (Appeals) further erred in not considering that no capital gain arose during the year as the transfer did not take place during the year which took place on 8 th July, 2010 when agreement to sale was executed and registered. Prayed to delete the addition of Rs.1,96,18,540/- 3. That the Ld. Commissioner of Income Tax (Appeals) further erred in rejecting the registered sale agreement Dt.08.07.2010. Prayed to delete the addition of Rs.1,96,18,540/-. 4. Without prejudice, that the Ld. Commissioner of Income Tax (Appeals) further erred in taking the value of sale at Rs.2,16,08,500/- as against Rs.1,79,01,000/- which is unjustified, the addition of Rs.1,96,18,540/- ITA No.218/RPR/2017 2 5. That the Ld. Commissioner of Income Tax (Appeals) further erred in not considering, without prejudice, that the capital gain was exempt u/s.54F as the sum actually received was invested in the residential house and that it was not possible to invest the amount worked out as per sec 50C as the amount was not received by the appellant. Prayed to delete the addition of Rs.1,96,18,540/- 2. Though the assessee has raised as many as five grounds, however, the only effective ground is with regard to confirming the addition made by the AO of Rs.1,96,189,540/- on account of Capital Gain on sale of land. 3. Brief facts of the case are that the assessee is an individual and filed its return of income on 07.08.2012 declaring total income of Rs.10,03,860/-, which was processed u/s.143(1) of the Act. On issuance of statutory notices by the AO, the assessee appeared and filed his written submissions. Thereafter the AO completed the assessment making addition of Rs.1,96,18,540/- under the head Capital Gain. Against the assessment order, the assessee preferred appeal before the ld. CIT(A) and the ld. CIT(A) has dismissed the appeal of the assessee. 4. Ld. AR before us submitted that both the authorities below have not considered the fact that no capital gain arose during the year as the transfer did not take place during the year which took place on 9 th July, 2010 when agreement to sale was executed and registered. Ld. AR also submitted that sale proceeds from the agricultural land has been used for a new residential house and hence eligible for the deduction u/s.54F of the Act. Ld. AR drew our attention to the page 5 of the paper book and submitted that as per agreement to sale the assessee was supposed to receive 75% of sale consideration, however 100% consideration was paid ITA No.218/RPR/2017 3 to the assessee and the assessee had also given the possession on the same date i.e. on 09.07.2010. To support the contention that 100% payment of the consideration was made the ld. AR drew our attention to page 43, which is copy of bank statement wherein as on 12.07.2010 the amount of Rs, 4,08,000/- was credited by way of clearing the cheque No.538976283 . It was also the submission of ld. AR that by virtue of agreement dated 08.07.2010 aasessee’s rights were extinguished as the possession of land was given to the buyer on 08.07.2010 as is evident from page 4 of the paper book, wherein it is mentioned that: dSfQ;r ,oa lcc~ %& ;g fd mijksDr of.kZr Hkwfe esjs gd HkwfeLokeh LoRo dh Hkwfe gSA ftls jde dh vko”;drk gksus ds dkj.k mijksDr vuqca/kxzfgrk ds ikl ekokts dk 75% izfr”kr izfrQy izkIr dj Hkwfe fcØh dj fn;kA “ks’k 25% izfrQy jkf”k Hkwfe ifjorZu ds i”pkr~ ekuuh; dysDVj egksn; dh vuqefr izkIr djus ds i”pkr~ iath;u ds le; izkIr d:axkA fcØhd`r Hkwfe dk n[ky dCtk vuqca/kxzfgrk dks vkt ls gh lksi fn;k vc mDr Hkwfe ij esjs o esjs fnxj okfjlkuksa dks dksbZ gd oks nkok ugha jgk vkSj u Hkfo’; esa gksxkA 5. Ld. AR further submitted that Section 53A of Transfer of Property Act, applies in the case of assessee as the sale agreement was registered giving complete details of the property and the assessee has received entire sale consideration by cheque. It was further contended by the ld. AR that the capital gain was exempt u/s.54F as the sum actually received along with loan taken and past savings were invested in the residential house and that it is beyond expectation to invest the amount worked out by Ld AO under sec 50C as the amount was actually not received by the assessee. Ld AR further relied on various case laws and referred to the amendment in section 50C(1) by finance Act 2016, which ITA No.218/RPR/2017 4 is retrospective in nature, whereby the consideration to be adopted should be valuation of the land as on the date of agreement to sale taken by the stamp authorities and not as on the dated of registration of sale deed. Therefore, the ld. AR submitted that the addition made by the Ld AO and confirmed by the CIT(A) was bad in law and deserves to be deleted. 6. On the other hand, ld. Sr. DR vehemently supported the orders of the lower authorities and submitted that both the authorities below have rightly applied the provisions of Section 50C of the Act as the provisions of Section 50C of the Act prevails for the capital gain arising from transfer of land or building or both. 7. We have considered the rival submissions and perused the material evidence available on record. On perusal of the record, we found that the assessee transferred and handed over the possession of the land on 09.07.2010 for Rs.4,08,000/- to Vikash Kumar Agrawal as per the agreement to sale of land, copy of which is enclosed at pages 3 to 13 of the paper book, also the payment of consideration was made for entire consideration of Rs.4,08,000/-. During the course of assessment proceedings, the AO noted that in the present case, there was no transfer of land within the meaning of section 2(47) at all before the actual registration of land i.e. on 24/03/2012. It was also noted by the AO that for the transfer of the assets there should be a registered document not a registered agreement as submitted by the assessee. So there was no transfer of land within the meaning of 2(47) of the Act before 24.03.2012 which is the date of actual registration. However, on perusal of the ITA No.218/RPR/2017 5 documents filed before us, it is found that the agreement to sale was made on 09.07.2010 for the sale consideration of Rs.4,08,000/- and the same amount was paid through Cheque No.538976288, which was cleared on 12.07.2010. Copy of bank statement of the assessee maintained with State Bank of India, NTPC Township, Bamnipali Branch has been filed at pages 42 & 43 of the paper book. In view these facts, it is clear that the transfer has been taken place within the meaning of Section 2(47) of the Act. Thereafter part portion of the land was got diverted from agricultural land to non-agricultural land, due to which the market value of the land was very much increased. As per the claim of the assessee, the actual date of registration ought to have been taken by the AO when the registration of Agreement to sale was executed i.e. on 09.07.2010 instead of 24.03.2012 taken by the AO and invoked the provisions of Section 50C of the Act. Now, the question arises before us as to what should be the value of consideration to be adopted as per amended provisions of Section 50C(1) of the Act for calculation of capital gains As per the amendment brought into Section 50C(1) by the Finance Act, 2016 w.e.f. 01.04.2017, by inserting a proviso to the said section, wherein it is stated that: “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 ITA No.218/RPR/2017 6 agreement may be taken for the purposes of computing full value of consideration for such transfer” 8. This amendment is curative and having retrospective effect. When the legislature has introduced the legal amendments in question, in our considered view, the provisions of the third proviso to Section 50C (1), as they stand now, must be held to be effective with effect from 1st April 2003. In this regard, reliance can be placed on the coordinate bench of the Tribunal in the case of Shri Ajay J. Mehta, ITA No.1127/Ahd/2018, wherein the Tribunal has held as under:- 5. With the assistance of the ld. representatives, we have gone through the record carefully. Before we embark upon an enquiry on the facts of the present case, let us take provision of section 48 of the Act, which provides mechanism for computation of capital gain. Section 48 postulates the following conditions: (i) expenditure incurred wholly and exclusively in connection with such transfer, and (ii) the cost of acquisition asset and the cost of any improvement thereto. 6. Further, section 50C of the Act provides that where the consideration received or accruing as a result of transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall for the purposes of section 48, be deemed to be the full value of the consideration. In other words, full consideration mentioned in section 48 is to be replaced by the consideration on which value of the property was adopted for the purpose of payment of stamp duty. 7. There is no dispute with regard to the fact that stamp valuation authority has determined value of the property for charging stamp duty at Rs.5,82,39,975/-, but referring to the fact brought the notice of the ld.Revenue authorities is that the assessee has purchased this property on 17.9.2010 for a consideration of Rs.24 lakhs. Thereafter, it was converted to non-agriculture land. The assessee has sold the same on 28.9.2011. The assessee had entered into an agreement with M/s.Ashwal Infracon P.Ltd. on 23.12.2010 and sale consideration was settled at Rs.80.00 lakhs. The assessee has received part payment through account payee cheque. Stamp duty valuation authority have revised their valuation on 1.4.2011, and thereafter vendee was required to pay additional stamp duty of ITA No.218/RPR/2017 7 Rs.24,58,000/-. Section 50C has been amended by incorporation of the following provisions: Special provision for full value of consideration in certain cases. 50C. (1) ....... 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 agreement may be taken for the purposes of computing 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 [or through such other electronic mode as may be prescribed], on or before the date of the agreement for transfer: ..... ..... ... 8. These provisions have been entered in the section with effect from 1.4.2017. A perusal of these provisions would indicate that if the date of registration for transfer of capital assets, and date of agreement are different, and valuation of the property for the purpose of payment of stamps also differs on these dates, then stamp valuation on the date of agreement is to be deemed as full consideration for the purpose of section 50C of the Act. The only caveat provided in this regard has been contemplated in second provisos that payment or part payment of consideration must be through bank channel because that can avoid manipulation of agreement at the end of the party for avoiding determination of deemed consideration under section 50C of the Act. This aspect has been considered by the ITAT, Ahmedabad Benches in large number cases and the ld.CIT(A) has referred the decision of ITAT in the case of Dharamshibhai Sonani in ITA No.1237/Ahd/2013 in the finding extracted (supra). In the present case, we find that there are two different dates. One is 23.12.2010 when the assessee entered into an agreement for sale of this property and another 29.9.2011 when the sale deed was ultimately registered. At the time of agreement and prior to that the assessee has received part payments through negotiation. Such payments have been received through account payee cheque. He received Rs.25 lakhs on 26.2.2011 and Rs.10.00 lakhs on 13.10.2010. This part payment makes it clear that a valid agreement to sell was executed. Between the date of agreement vis-à-vis ultimate registration of sale deed, the State Government has revised valuation of the property for the purpose of charging stamp duty. This case of the assessee do fall within the first proviso of section 50C of the Act, and this aspect has been dealt with by the ld.CIT(A) elaborately in the finding extracted (supra), therefore, no interference from our side is called in the impugned order on the issue. ITA No.218/RPR/2017 8 9. Further in the case of Himalaya Darshan Developers (Gujarat) (P.) Ltd., [2021] 128 taxmann.com 435 (Ahmedabad-Trib.) has observed that the right of the assessee got extinguished by virtue of agreement to sale with respect to the property in dispute. After entering into the agreement of sale, a right in personam has been created in favour of the buyer and the assessee was bound to execute the conveyance deed as per the direction of the buyer, therefore, the date of such agreement of sale should be treated as the date of transfer of the property. 10. Reliance can also be placed on the decision of ITAT Mumbai Bench of the Tribunal in the case of Maria Fernandes Cheryl, ITA No.4850/Mum/2019, order dated 15.01.2021, wherein the Tribunal has observed as under:- 8. Once legislature very graciously accepts, by introducing the legal amendments in question, that there were lacunas in the provisions of Section 50 C in the sense that even in the cases of genuine variations between the stated consideration and the stamp duty valuation, anti-avoidance provisions under section 50C could be pressed into service, and thus remedied the law, there is no escape from holding that these amendments are effective with effect from the date on which the related provision, i.e., Section 50C, itself was introduced. These amendments are thus held to be retrospective in effect. In our considered view, therefore, the provisions of the third proviso to Section 50C (1), as they stand now, must be held to be effective with effect from 1st April 2003. We order accordingly. Learned Departmental Representative, however, does not give up. Learned Departmental Representative has suggested that we may mention in our order that "relief is being provided as a special case and this decision may not be considered as a precedent". Nothing can be farther from a judicious approach to the process of dispensation of justice, and such an approach, as is prayed for, is an antithesis of the principle of "equality before the law," which is one of our most cherished constitutional values. Our judicial functioning has to be even-handed, transparent, and predictable, and what we decide for one litigant must hold good for all other similarly placed litigants as well. We, therefore, decline to entertain this plea of the assessee. ITA No.218/RPR/2017 9 9. We have noted that as against the stated consideration of Rs 75,00,000, the stamp duty valuation of the property is Rs 79,91,500. The difference is just Rs 4,91,500, which is about 6.55% of the stated sale consideration. As the difference between the stated consideration vis-à-vis the stamp duty valuation is admittedly less than 10% of the stated consideration in this case, and in the light of the above discussions, we are of the considered view that Section 50C will have no application in the matter. The enhancement in capital gain computation, as made by the Assessing Officer, thus stands disapproved. The assessee gets the relief accordingly. 10. As we have decided the appeal on the short issue regarding the retrospective effect of the third proviso to Section 50C(1), as elaborated above, we see no need to deal with other issues raised in the appeal before us. As of now, those issues are infructuous and do not call for any adjudication at this stage. 11. In view of the above judicial pronouncements as well as factual matrix of the case, since the consideration was fixed and paid by the parties at the time of agreement of sale on 09.07.2010 and possession of the land was also given to the buyer, only the registration of the Sale Deed was pending which was done on 24.03.2012 i.e. these two events took place in two different assessment years. In such a situation amended provisions of Section 50C(1) of the Act brought by the Finance Act, 2016 will be applicable in the case of the assessee, which are retrospective. therefore, as per amended provisions of section 50C(1) for computation of Capital Gain in the hands of assessee, the AO should consider the guideline value of the land which the stamp duty authority has adopted for charging of stamp duty on the date of agreement to sale and not on the date of sale deed. We therefore find merit in the contention of the assessee and accordingly decide this issue in favour of the assessee. 12. Apart from our above findings, with regard to the amount of consideration in the present case, it is noted that the assessee has ITA No.218/RPR/2017 10 actually received a consideration of Rs. 4,36,000/- and Rs. 1,00,000/- i.e. in aggregate Rs. 5,36,000/- by way of 2 Sale Deeds for completion of the sale of parcel of land referred to in the Agreement to Sale dated 09.07.2010. Since, the actual consideration received by the Seller / Assessee for Rs.5,36,000/- is higher than the guideline value to be adopted following the judicial pronouncements with reference to the amended provisions of Section 50C(1) which is Rs. 4,08,000/- as discussed in preceding paras, therefore the consideration for calculation of Capital Gains would be higher of these two amounts which is the actual amount received by the assessee i.e. Rs. 5,36,000/-. 13. With regard to deduction u/s.54F of the Act, the AO has rightly and undisputedly already allowed the claim of the assessee for exemption u/s 54F of the Act for purchase of land and construction of house at Raipur for Rs.16,05,000/-, however, the only dispute was regarding the amount of consideration u/s section 50C(1) of the Act, which was taken by AO for Rs.2,16,08,500/, whereas the same should be Rs. 5,36,000/- as decided by us in terms of our observations as above. 14. In the result, the appeal of assessee is allowed. Order pronounced in the open court on 03/08/ 2022. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) न्यानयक सदस्य / JUDICIAL MEMBER लेखा सदस्य / ACCOUNTANT MEMBER रायप ु र/Raipur; ददनाांक Dated 03/08/2022 Prakash Kumar Mishra, Sr.P.S.(on tour) ITA No.218/RPR/2017 11 आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : आदेशाि ु सार/ BY ORDER, (Assistant Registrar) आयकर अपीलीय अधिकरण, रायप ु र/ITAT, Raipur 1. अिीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, रायि ु र/ DR, ITAT, Raipur 6. गार्ड फाईल / Guard file. सत्यावित प्रयत //True Copy//