Universal Power Transformer Pvt ltd , Bangalore V. Deputy Commissioner of Income tax Circle-7(1)(1), Bangalore

ITA 2511/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6955 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 03-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S RAMASUBRAMANIAN C A S MT H L
• Keywords: Sale consideration of property below Jantri Value; Earning of tax free income; Retrospective amendment; Fair market value; TDS; Rule 8D
• Section: 43CA; 50C; 14A; 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH ES : A , BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNTANT MEMBER AND S MT.BEENA PILLAI , JUDICAL MEMBER ITA N O .2511(BANG) /2018 (ASSESSMENT Y E AR : 2012 - 13) M/S UNIVERSAL POWER TRANSFORMER PVT.LTD ., NO.26/A, 2 ND PHA S E, PEENYA INDUSTRIAL AREA, BANGALORE - 560 058 PAN NO.AACCM7268F APP E LLANT VS THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 7(1)(1), BANGALORE RESPONDENT ITA NO. 2 799 (BANG)/ 20 1 8 ( ASSESSMENT Y EAR : 20 12 - 13 ) (BY REVENUE) APPELLANT BY : S HRI S.RAMASUBRAMANIAN , C A RE VENUE BY : S MT. H.L . SOUMYA ACHAR, ADDL.CIT DATE OF HEARING : 2 6 - 0 6 - 2019 DATE OF PRONOUNCEMENT : 31 - 07 - 2019 O R D E R PER BEENA PILLAI, JUDICIAL MEMBER : PRESENT CROSS APPEALS HAS BEEN FILED BY ASSESSEE AS WELL AS REVENUE AGAINST ORDER DATED 25/07/18 PASSED BY LD. CIT (A) - 7, BANGALORE ROUTE FOR ASSESSMENT YEAR 2012 - 13 ON FOLLOWING GROUNDS OF APPEAL: ITA NOS.2511 ( B ) & 2799(B)/2018 2 ITA N O. 2511(B)/2018 ( A SSESSMENT YEAR 2012 - 13) 1. THAT THE ORDER OF THE LD. CIT(A) IS PREJUDICIAL TO THE INTER E ST OF THE APPELLANT , IS BAD AND ERRONEOUS IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE C A SE. 2. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE O F RS.2,18,12,500/ - 3. THAT THE LD. CIT(A) ERRED IN LAW AND ON FA C TS IN A D OPTING THE ST A MP DUTY REGISTRATION V A LUE A S ON 17.11.2011 AND 13.2.2012 EVEN THOUGH THE AGREEMENT TO SAL E WAS E NTERED INTO ON 21.2.2011. 4.TH A T THE LD. CIT(A) OUGHT TO HAVE GELD THAT THE STAMP DUTY REGISTRATION VALU E I S ON 13.2.2011 SHOULD HAVE BEEN ADOPTED. 5. THAT THE LD. CIT(A) THAT THE APPELLANT HAD NOT OBJECTED TO THE VALUATION U/S 50 C AND NO EVIDENCE IN THIS REGARD WAS FURNISHED IS PERVERSE. 6. THAT THE LD.CIT( A) OUGHT TO HAVE HELD THAT ONCE THE APPELLANT HAD OBJECTED TO THE VALUATION U/S 50C OF THE ACT , THE AO OUGHT TO HAVE REFERRED THE MATTER TO THE VALUATION OFFICER. 7. THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN ADOPTING THE STAMP DUTY VALUE IN RESPEC T OF A CONVERTED LAND WHEN THE AGREEMENT WA S FOR SALE OF AGRICULTURAL LAND. 8. THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN NOT CONSIDERING THE FURTHER WRITTEN SUBMISSIONS FILED BY THE APPELLANT ON 16.11.2018. EACH OF THE ABOVE GROUNDS IS WITHOUT PREJU DICE TO ONE ANOTHER AND THE APPELLANT CRAV E S LEAVE OF THE HON' BLE INCOME TAX APPELLATE TRIBUNAL , BANGALORE TO ADD, DELETE, AMEND OR OTHERWISE MODIFY EITHER ALL OR ANY OF THE ABOVE GROUNDS EITHER BEFORE O AT THE TIME OF HEARING OF THIS APPEAL. ITA N O .2799(B)2018 (ASSESSMENT YEAR : 2012 - 13) ITA NOS.2511 ( B ) & 2799(B)/2018 3 1. THE ORDER OF THE LD. CIT(A) IS OPPOSED TO LAW AND FACTS OF THE C A SE. 2. WHETHER THE CIT(A) IS JUSTIFIED IN HOLDING THAT THE DISALLOWANCE MAD BY THE AO U/S 14A OF THE IT ACT, 1961 IS NOT WARRANTED, IGNORING THE FACT THAT THE INTEREST BEARING FUNDS WERE UTILIZED FOR GENERATING EXEMPT INCOME IN THE FORM OF DIVIDEND FOR PAST AS WELL AS FOR THE FUTURE YEARS?. 3. THE CIT(A) ERRED IN NOT CONSIDERING THAT THE CBDT CIRCULAR NO.5/2014 CLARIFIES THAT RULE 8D READ WITH SECTION 14A OF THE IT ACT PROVIDES FOR DISALLOWANCE OF THE EXPENDITURE EVEN WHERE TAXPAYER IN A PARTICULAR YEAR HAS NOT EARNED ANY E XEMPT INCOME. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE OR D ER OF THE CIT(A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE AO MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND OR/DELETE ANY OF THE G R OUNDS MENTIONED ABOVE. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: A SSESSEE FILED ITS RETURN OF INCOME ON 27/09/12 DECLARIN G TOTAL INCOME AT A LOSS OF RS. 5,40,20,596/ - . THE CASE WAS SELE CTED FOR SCRUTINY AND NOTICE UNDER SECTION 143 (2) WAS ISSUED ALONG WITH NOTICE UNDER SECTI ON 142 (1) AND A QUESTIONNAIRE. IN RESPONSE TO STATUTORY NOTICES, REPRESENTATIVES OF ASSESSEE APPEARED BEFORE LD.AO AND FILED REQUISITE DETAILS AS CALLED FOR. 3. LD. AO OBSERVED THAT ASSESSEE IS ENGAGED IN THE MANUFACTURE OF POWER TRANSFORMERS, UPS, SWITCHGEAR AND BATTERIES. HE OBSERVED THAT ASSESSEE HAD CLAIMED SHORT TERM CAPITAL LOSS OF RS.2,49,81,254/ - ON SALE OF AGRICULTURAL LAND. IT WAS SUBMITTED BY ASSESSEE THAT INTENTION WAS TO BY AGRICULTURAL LAND AND GET IT CONVERTED INTO A FACTORY LAND FOR ITA NOS.2511 ( B ) & 2799(B)/2018 4 ITS INDUSTRIAL PURPOSE . A SSESSEE BEING A COMPANY WAS NOT ALLOWED TO OWN AND AGRICULTURAL LAND , PURCHASE WAS EFFECTED THROUGH REGISTERED SALE AGREEMENTS AND REGISTERED POWER OF ATTORNEY THROUGH DIRECTORS . ASSESSEE MADE VARIOUS EFFORTS TO CONVERT LAND FOR INDUSTRIAL PURPOSES UNDER ZONAL REGULATIONS BUT WAS NOT FRUITFUL. IT WAS SUBMITTED THAT ASSESSEE SUBSEQUENTLY DECIDED TO DISPOSE OF THE LAND AND ACCORDINGLY ENTERED INTO A GREEMENT TO SELL DATED 21/02/11 AND 17/11/11 FOR SALE CONSIDERATION OF RS.5,79,87,500/ - . ASSESSEE ALSO ADMITS TO THE FACT THAT AS PER S ALE DEED EXECUTED ON 13/02/12 REGISTRATION CHARGES PAID AMOUNTED TO RS.7,98,000/ - WHICH IS 1% OF SALE CONSIDERATION. LD.A O THUS INITIATED PROVISIONS OF SECTION 50 C OF THE A CT. 4. ASSESSEE SUBMITTED THAT AGREEMENT TO SELL THE LAND WAS ENTERED INTO WI TH THE BUYER ON 21/02/11 AT RS. 4,10,65,000/ - , HOWEVER, SUBSEQUENTLY AT T HE TIME OF ACTUAL SALE DEED, LAND WAS CONVERTED FOR WAR EHOUS E PURPOSES AND THEREFORE VALUATION ADOPTED BY S TAMP DUTY AUTHORITIES, WAS AS PER FAIR MARKET VALUE, WHICH WAS HIGHER THAN VALUE AGREED BETWEEN THE PARTIES AS PER A GREEMENT TO S ELL. LD.AO HOWEVER IGNORED SUBMISSIONS ADVANC ED BY ASSESSEE AND COMPUTED DI FFERENCE BY INVOKING PROVISIONS OF SECTION 50 C AND MADE ADDITION IN THE HANDS O F ASSESSEE TO THE EXTENT OF RS. 2,18,12,500/ - . LD. AO ALSO MADE DISALLOWANCE IN THE HANDS OF ASSESSEE UNDER PROVISIONS OF SECTION 14 A BY COMPUTING DISALLOWANCE AT RS.2,62,46,296 / - UNDER R ULE 8D2 (II) AND (III) OF INCOME TAX RULES 1963. ITA NOS.2511 ( B ) & 2799(B)/2018 5 5. AGGRIEVED BY ADDITIONS IN ASSESSMENT ORDER , ASSESSEE PREFERRED A PPEAL BEFORE LD.CIT(A). LD. CIT (A) PARTLY ALLOWED CL AIM OF ASSESSEE BY DELETING ADDI TION UNDER SECTION 14 A OF THE A CT , HOWEVER , C ONFIRMED VIEW OF LD.AO IN RESPECT OF SALE CONSIDERATION UNDER SECTION 50 C OF THE ACT. 6. AGGRIEVED BY ORDER OF LD.CIT(A) , BOTH ASSESSEE AS WELL AS REVENUE ARE IN APPEAL BEFORE US. 7. ITA N O.2799 (B) /2018 (REVENUES APPEAL) ONLY ISSUE RAISED BY REVENUE IN THEIR APPEAL IS REGARDING DISALLOWANCE BEING DELETED B Y LD.CIT(A) UNDER SECTION 14 A READ WITH R ULE 8D 2 (II) (III) OF INCOME TAX RULES 1963. AT THE OUTSET , IT HAS BEEN SUBMITTED THAT ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING YEAR UNDER CONSIDERATIO N AND INVESTMENTS MADE ARE IN PRIOR YEARS. THE DIVIDEND RECEIVED BY ASSESSEE IS FROM FOREIGN INVESTMENTS WHICH HAS ALREADY BEEN SUBJECTED TO TAX. PLACING RELIANCE UPON DECISION OF ORDERABLE DELHI HIGH COURT IN CASE OF CHEMINVEST , LD. AR SUBMITTED THAT THERE CAN BE NO DISALLOWANCE MA DE UNDER SECTION 14 A IN ABSENCE OF ANY EXEMPT INCOME. 8. LD.S R . DR THOUG H SUPPORTED VIEW ADOPTED BY LD.AO, HOWEVER COULD NOT CONTROVERT THE FACT THAT ASSESSEE HAD NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION. 9. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. ADMITTEDLY , THERE IS A CATEGORICA L FINDING BY LD. CIT(A) THAT ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR A ND THEREFORE WE CONCUR WITH VIEW ADO PTED BY LD.CIT (A) THAT NO DISALLOWANCE COULD BE ITA NOS.2511 ( B ) & 2799(B)/2018 6 MADE IN SUCH CIRCUMSTANCES. WE DRAW OUR SUPPORT FROM THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CHEMINVEST LTD REPORTED IN 378 ITR 33 . RESPECTFULLY FOLLOWING THE SAME WE DISMISS THE GROUNDS RAISED BY REVENUE. IN THE RESULT APPEAL FILED BY REVENUE STANDS DISMISSED. 10. ITA NO. 2511/BANG /2018 ( A SSESSEES APPEAL) O NLY ISSUE THAT ARISES IN THIS APPEAL IS IN RESPECT OF THE ADDITION MADE BY LD. AO BY INVOKING SECTION 50 C OF THE A CT. IT HAS BEEN SUBMITTED BY LD. AR THAT ASSESSEE HAS NOT RECEIV ED ANY THING OVER AND ABOVE VALUE AGREED UPON IN AGREEMENT TO S ELL , BEING CONSIDERATION OF RS.5,78,37,500/ - ENTERED INTO BY ASSESSEE AS ON 21/02/11. HE VEHEMENTLY A RGUED THAT REASON FOR RISE IN MARKET VALUE OF LAND IS DUE TO CONVERSION OF LAND FROM AGRICULTURAL TO INDUSTRIAL USE. AND ACCORDINGLY AS ON THE DATE OF REGISTER ED SALE DEED BEING 13/02/12, STAMP DUTY PAYABLE ON IT WAS AT FAIR MARKET VALUE OF RS.5,79,87,500/ - . IT HAS BEEN SUBMITTED THAT AGREEMENT PLACED AT PAGE 79 - 106 (BEING THE SALE DEED) IS ONLY MERE REPLICATION OF A GREEMENT TO S ELL ENTERED INTO BETWEEN PARTIES DATED 21/02/11 , WHICH IS PLACED AT PAGE 50 - 78 OF PAPER BOOK. A GREEMENT TO SELL WAS ENTERED INTO BY ASSESSEE ON A CONTINGENCY THAT BUYER SHALL CONVERT NA TURE OF LAND FROM AGRICULTURAL USE TO INDUSTRIAL USE , AND UPON FU LFILMENT OF THIS CONDITION SALE D EED WAS ENTERED INTO BETWEEN PART IES . IT WAS FURTHER SUBMITTED BY LD.AR THAT ENTIRE SUM OF RS. 4,10,65,000/ - WAS PAID BY BUYER S MUCH BEFORE 17/11/11 AND SINCE BUYERS COULD NOT COMPLY WITH NECESSARY REQUIREMENT WITHIN STIPULATED TIME , CONTINUATION AGREEMENT TO COMPLETE REQUIREMENT OF CONVERSION OF LAND WAS ITA NOS.2511 ( B ) & 2799(B)/2018 7 ENTERED INTO SUBSEQUENTLY. IT HAS BEEN SUBMITTED THAT LAND WAS CONVERTED IN PIECEMEAL IS ON 19/09/11, 05/11/11, 24/10/11. HE THUS SUBMITTED THAT AS TIME WAS NOT THE ESSENCE OF THIS CONTRACT AND THEREFORE ASSESSING OFFICER WAS WRONG IN ADOPTING 50 C AND MAKING ADDITION OF DIFFERENTIAL VALUE BETWEEN ACTUAL PRICE R ECEIVED BY ASSESSE E AS PER THE A GREEMENT TO S E LL DATED 21/02/11 VIS - A - VIS PRICE ADOPTED BY REG ISTRATION AUTHORITIES AS ON DATE OF REGISTRATION OF SALE DEED ON 13/02/12. HE SUBMITTED THAT NECESSARY INGREDIENT IS, INTENTION OF ASSESSEE TO SELL THE LAND WHICH IS ASCERTAINABLE FROM AGREEMENT TO S ELL DATED 21/02/11. ON THE CONTRARY , LD. S R . DR SUBMITTED THAT ASSESSEE SOLD PROPERTY , BECAUSE IT WAS OF NO USE TO IT BEING AN AGRICULTURAL PLOT. HOWEVER ASSESSEE IN AGREEMENT TO S ELL AGREED TO TRANSFER THE PROPERTY TO BUYERS ONLY ON CONVE RSION OF THE LAND FROM AGRICULTURAL USE TO INDUSTRIAL USE , WHICH ITSELF IS CLEAR THAT INTENTION OF ASSESSEE WAS TO SELL INDUSTRIAL PLOT. HE PLACED HE AVY RELIANCE UPON REVIEW OF LD. CIT (A). 11. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. IT IS OBSERVED THAT LD. CIT (A) CONFIRMED ADDITION FOR THE REASON THAT , ASSESSEE COULD NOT SUBSTANTIATE B Y ANY EVIDENCE REGARDING ACTUAL SALE CONSIDERATION RECEIVED BY ASSESSEE. FROM THE ORDER PASSED BY LD.CIT(A) , IT IS OB SERVED THAT , ASSESSEE DO NOT OBJECT THAT VALUE OF LAND AT THE TIME OF REGISTRATION INCREASED DUE TO CONVERSION. HOWEVER , REVENUE DOES NOT HAVE ANY EVIDENCES TO ESTABLISH THAT ASSESSEE RECEIVED ANY THING OVER AND ABOVE VALUE AGREED UPON BETWEEN PARTIES AS PER CONTINUATION OF AGREEMENT TO SELL DATED 21/02/11 ITA NOS.2511 ( B ) & 2799(B)/2018 8 WHICH WAS EXECUTED ON 17/11/11 (PLACED AT PAGE 73 - 78 OF PAPER BOOK) . 12. ON PERUSAL OF CONTINUATION OF AGREEMENT , IT IS OBSERVE D THAT PRICE AGREED TO BE RECEIVED WAS SUM OF RS.4,80,00,000/ - TOWARDS P ART SALE CONSIDERATION OUT OF RS.5,78,37,500/ - . REFERRING TO C LAUS 5 AT PAGE 76 I T IS OBSERVED THAT ASSESSEE DEM ANDED BALANCE AMOUNT OF RS. 1,16,75,000/ - , WHEREAS P URCHASERS PAID SUM OF RS. 94,37,500/ - AFTER DEDUCTING EXPENDITURE OF RS.4, 00,000/ - INCURRED B Y THEM ON BEHALF OF ASSESSEE TOWARDS PHODI AND OTHER MISCELLANEOUS ACTIVITIES. THUS , TOTAL CONSIDERATION R ECEIVED BY ASSESSEE TOWARDS SALE OF LAND WAS RS. 5,74,37, 500/ - . FOR SAKE OF CONVENIENCE , RELEVAN T CLAUSE WHEREIN BIFURCATIONS OF TOTAL SALE CONSIDERATI ON AND MODE OF PAYMENT IS DETAILED IS REPRODUCED AS UNDER: 1. THE FIRST PARTY/SELLER REPRESENTS THAT THE CONSOLIDATED SALE CONSIDERATION PAYABLE BY THE SECOND PARTY/PURCHASER TO THE FIRST PARTY/SELLER FOR SALE OF 17 ACRES 2 GUNTAS OF LAND AS DESCRIBED IN THE AGREEMENT TO SELL DATED 21.02.2011, IS RS.5,96,75,000/ - (RS.FIV E CRORES NINETY SIX LAKHS SEVENTY FIVE THOUSAND ONLY), WHICH IS DISPUTED BY TH E SECOND PARTY/PURCHASER. 2. THE SECOND PARTY/PURCHASER REPRESENTS THAT THE TOTAL LAND AREA IS REDUCED TO 16 ACRES 21 GUNTAS (16.525 ACRES) AND ACCORDING TO THE SECOND PARTY/PURCHASER, THE CONSOLIDATED SALE CONSIDERATION PAYABLE TO THE FIRST PARTY/SELLER IS RS.5,78,37,500/ - (RS. FIVE CRORES SEVENTY EIGHT LAKHS THIRTY SEVEN THOUSAND AND FIVE HUNDRED ONLY) ITA NOS.2511 ( B ) & 2799(B)/2018 9 3. BOTH PA R TIES ARE AWARE THAT THERE IS A DIFFERENCE OF RS.18,37,500/ - (RS. EIGHTEEN LAKHS THIRTY SEVEN THOUSAND AND FIVE HUNDRED ONLY) BETWEEN THE SALE PRICE CALCULATED BY THE FIRST PARTY/SELLER AND THE SECOND PARTY/PURCHASER. 4. BOTH PARTI ES AFFIRMS AND DECLARE THAT THE SECOND PARTY/PURCHASER HAS SO FAR PAID RS.4,80,00,000/ - (RS.FOUR CRORES EIGHTY LAKHS ONLY) TOWARDS THE SALE CONSIDERATION A CCOUNT, IN THE MANNER DET A ILED A BOVE. 5. ACCORDING TO THE FIRST PARTY /SELLER THE BALANCE SALE PRICE PAYABLE B Y THE SECOND PARTY/PURCHASER IS RS.1,16,75,000/ - (RS. ONE CRORE SIXTEEN LAKHS SEVENTY FIVE THOUSAND ONLY) 6. ACCORDING TO SECOND PARTY/PURCHASER, THE BALANCE SALE PRICE PAYABLE TO THE FIRST P[ARTY/SELLER IS RS.98,37,500/ - (RS.NINETY EIGHT LAKHS TH IRTY SEVEN THOUSAND ONLY) ACCORDING TO THE SECOND PARTY/PURCHASER, HE HAS INCURRED AN EXPENDITURE OF RS.4,00,000/ - TOWARDS PHODI AND OTHER MISCELLANEOUS ACTIVITIES. THE FIRST PARTY/SELLER, HAS DI S PUTED THAT IT HAS AUTHORIZED THE SECOND PARTY/PURCHASER TO INCUR THE ABOVE EXPENDITURE, ON BEHALF OF THE FIRST PARTY/SELLER. 7. THE SECOND PARTY/PURCHASER, HAS TODAY PAID SUM OF RS.94,37,500/ - (RS.NINETY FOUR LAKHS THIRTY SEVEN THOUSAND AND FIVE HUNDRED ONLY) IN THE FOLLOWING MANNER; A. RS.69,37,500/ - (RS.SIXTY NIN E LAKHS THIRTY SEVEN THOUSAND AND FIVE HUNDRED ONLY) PAID BY MEANS OF RS.30,00,000.00 BEARING CHEQUE NO.477563 DATED ITA NOS.2511 ( B ) & 2799(B)/2018 10 17.11.2011 DRAWN CANARA BANK, MAHALAKSHMI LAYOUT BRANCH, BANGALORE AND RS.9,37,500/ - BEARING CHEQUE NO.477564 DATED 18.11.2011 FAVOURING M/ S UNIVERSAL POWER TRANSFORMERS PVT.LTD. B. RS.25,00,000/ - (RS. TWENTY FIVE LAKHS ONLY) PAID BY MEANS OF POST DATED CHEQUE DATED 477565 DATED 16.02.2012 DRAWN ON CANARA BANK, MAHALAKSHMI BRANCH, B A NGALORE, FAVOURING M/S UNIVERSAL POWER TRANSFORMERS PVT.LTD ., NOW WE REFER TO SALE DEED REGISTERED ON 13/02/12, WHEREIN STAMP VALUE ASCERTAINED BY REGISTRAR OF STAMPS WAS RS.7,99,095/ - AND MARKET VALUE OF SCHEDULED PROPERTY HAS BEEN DETERMINED AS ON REGISTRATION DATE WAS APPROXIMATELY RS. 7,89,00,000/ - . 13. BEFORE US , REVENUE ALLEGES THAT AS VALUE OF LAND ASCERTAINED BY STAMP AUTHORITIES AS ON DATE OF REGISTRATION WAS HIGHER THAN VALUE IN AGREEMENT TO SELL, AND THEREFORE DEEMING FICTION IN SECTION 50 C IS TO BE INVOKED. ASSESSEE ALLEGES THAT , IT HAS NOT RECEI VED ANY THING OVER AND ABOVE WHAT HAS BEEN MENTIONED IN AGREEMENT TO SELL AND WHAT ASSESSEE SOLD TO PURCHASERS WAS AGRICULTURAL LAND AND AS ON DATE OF REGISTRATION THE VALUE OF THE SUBJECT LAND HAD IT TO BE AGRICULTURAL IN NATURE WOULD BE LESS THAN WHAT HA S BEEN RECEIVED BY ASSESSEE. 13.1 AS WE ANALYZ E LAW APPLICABLE TO THESE PECULIAR FACTS, IT IS OBSERVED THAT, REVENUE DO NOT HAVE ANY DOCUMENTS/EVIDENCES TO ESTABLISH THAT ASSESSEE RECEIVED ANYTHING OVER AND ABOVE THE PRICE AGREED UPON BETWEEN THE PARTIE S IN AGREEMENT TO SELL DATED 21/11/11 . ASSESSEE AT PA PER BOOK PAGE 40 HAS PLACED A CHART , ITA NOS.2511 ( B ) & 2799(B)/2018 11 WHEREIN PREVAILING MARKET VALUE OF LAND SOLD TO BUYER V IDE AGREEMENT TO SELL DATED 21/11/11 HAS BEEN GIVEN WHICH IS AS UNDER: SL.NO. PARTICULARS RATE PER ACRE AREA SOLD GUIDELINE VALUE 1 LAND ADJACENT TO NATIONAL HIGH WAY, IE.SURVEY NO.99 38 LAKHS 3 ACRES 28 GUNTAS 1,40,60,000 2 LAND ADJACENT TO VILLAGE ROADS, IE. SUVY NO.105 23 LAKHS 6 ACRS 34 GUNTAS 1,57,55,000 3 OTHER LAND IE. SURVEY NO.98 15 LAKHS 7 ACRES 20 GUNTAS 1,12,50,000 TOTAL 17 ACRES 2 GUNTAS 4,10,65,000 IT H AS ALSO BEEN SUBMITTED THAT SAID GUIDELINE VALUE HEREINABOVE IS AS PER THE ESTIMATED GUIDELINE MARKET VALUE OF IMMOVABL E PROPERTIES AND BUILDINGS FO SUB REGISTRARS OFFICE OF BANGALORE (RURAL) DISTRICT W.E.F. 01/03/08. THE SAID GUIDELINE HAS BEE N ENCLOSED IN PAPER BOOK FROM PAGES 41 - 44 OF PAPER BOOK. IT HAS BEEN SUBMITTED THAT THE SAID LAND ACQUIRED BY ASSESSEE THROUGH ITS DIRECTORS WAS AGRICULTURAL L AND , AND NO SALE DEED COU LD BE EXECUTED IN FAVOUR OF BUYER WITHOUT 1 ST CONVERTIN G LAND FOR NON - AGRICULTURAL PURPOSES. AND AS ASSESSEE WAS UNABLE TO CONVERT THE LAND TO BE USED FOR INDUSTRIAL PURPOSES, IT ENTERED INTO AGREEMENT TO SELL ON 21/02/11 WHICH IS A REGISTERED DOCUMENT. IT IS ALSO OBSERVED THAT ASSESSEE HAS RECEIVED ENTIRE PAYMENT ACCORDING TO AGREEMENT TO SELL DATED 21/02/11 PRIOR TO DATE OF CONVERGENCE AND WHAT REMAINED WAS ONLY REGISTRATION OF DOCUMENT, WHICH WAS SUBSEQUENTLY CARRIED OUT ON 13/02 /12. FROM A FORESTATED FACTS , IT IS OBSERVED THAT CONVEYANCE IS EXECUTED BY WAY OF REGISTERED SALE DEED IN FAVOUR OF BUYERS AFTER CONVERSION OF LAND TO INDUSTRIAL USE , WHICH WAS AS PER MANDATE OF LAW ITA NOS.2511 ( B ) & 2799(B)/2018 12 APPLICABLE UNDER KARNATAKA STAMP DUTY ACT. IT IS ALSO FAC T THAT AGREEMENT TO TRANSFER SUBJECT LANDS AND DATE OF REGISTRATION ARE NOT SA ME, THOUGH BOTH ARE REGISTERED DOCUMENTS. IT IS OBSERVED THAT INCOME TAX A CT W.E.F. ASSESSMENT YEAR 2017 - 18 HAS BEEN AMENDED , WHEREIN STAMP DUTY VALUE MAY BE TAKEN AS ON DATE OF AGREEMENT FOR TRANSFER AND NOT AS ON THE DATE OF REGISTRATION OF CONVEYANCE DEED , PROVIDED WHERE , AMOUNT OF CONSIDERATION HAS BEEN RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUE/DRAFT OR BY USE OF ELECTRONIC CLEARANCE THROUGH BANK ON OR BEFORE THE DATE OF REGISTRATION OF CONVEYANCE DEED AND PROVIDED A PART OF OR ENTIRE SALE PROCEEDS IS RECEIVED PRIOR TO THE DATE OF AGREEMENT. 14. WE HAVE ALSO REFERRED TO M EMORANDUM , EXPLAINING PROVISIONS OF F INANCE B ILL 2016 , WHEREIN THIS AMENDMENT HAS BEEN BROUGHT INTO STA TUTE AND HAS OBSERVED AS UNDER: RATIONALIZATION OF SECT I ON 50C IN C ASE SALE CONSIDERATION IS FIXED UNDER AGREEMENT EXECUTED PRIOR TO THE DATE OF REGISTRATION OF IMMOVABLE PROPERTY. UNDER THE EXISTING PROVISIONS CON T AINED IN SECTION 50C, IN CASE OF TRANSFER OF A CAPIT A L ASSERT BEING LAND 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 PURPOSE 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 BEFOR E 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 SOL D AS A STOCK IN - TRADE. IT IS ITA NOS.2511 ( B ) & 2799(B)/2018 13 PROPOSED TO AMEND THE PROVISIONS OF S E CTION 50C SO AS TO PROVIDE THAT WHERE THE DATE OF AGREEMENT FIXING THE AMOUNT O 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 RE F ERRED TO THER E IN, OR A PART THEREOF, HAS BEEN PAID BY WAY OF AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR PA R T 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 TRANS FER OF SUCH IMMOVABLE PROPERTY. THESE AMENDMENTS ARE PROPOSED TO BE MADE EFFECTIVE FROM THE 1 ST DAY OF APRIL, 2017 AND SHALL ACCORDINGLY APPLY IN RELATION TO A SSESSMENT YEAR 2017 - 18 AND SUBSEQUENT YEARS. 14. 1 THOUGH THIS AMENDMENT IS PROSPECTIVE , HOWEV ER WE PLACE RELIANCE UPON DECISION OF HONBLE SUPREME COURT IN CASE OF KP VERGHESE VS ITO REPORTED IN 131 ITR 597 , WHEREIN IT HAS BEEN HELD THAT: IT IS A WELL RECOGNIZ ED RULE OF CONSTRUCTION THAT A STATUTORY PROVISION MUST BE SO CONSTRUCTED, IF POSSIBLE, THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED. THERE ARE MANY SITUATIONS WHERE THE CONSTRUCTION SUGGESTED ON BEHALF OF THE REVENUE WOULD LEAD TO A WHOLLY UNREASONABLE RESULT WHICH COULD NEVER HAVE BEEN INTENDED BY THE LEGISLATURE. ITA NOS.2511 ( B ) & 2799(B)/2018 14 HONBLE DELHI HIGH COURT IN CASE OF ANSALL LANDMARK TOWNSHIP (P) LTD. , REPORTED IN 234 TAXMAN 825 , WHEREIN HON BLE C OURT IN RESPECT OF 2 ND PROVISO TO SECTION 40 (A) (IA) HELD AS UNDER: NOW THAT THE LEGISLATURE HAS BEEN COMPASSIONATE ENOUGH TO CURE THESE SHORTCOMINGS OF PROVISION, AND THUS OBVIATE THE UNINTENDED HARDSHIPS, SUCH N AMENDMENTS 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 NATURE EVEN THOUGH IT MAY NOT STA TE SO SPECIFICALLY, THE INSERTION OF SECOND PROVISO MUST BE GIVEN RETROSPECTIVE EFFECT FROM THE POINT OF TIME WHEN THE RELATED LEGAL PROVISION WAS INTRODUCED. IN VIEW OF THESE DISCUSSIONS, AS ALSO FOR THE DETAILED REA S ONS SET OUT EARLIER, WE CANNOT SUBSC RIBE TO THE VIEW THAT IT COULD HAVE BEEN AN INTENDED CONSEQUENCE TO PUNISH THE ASSESSES FOR NON - DEDUCTION OF TAX AT SOURCE BY DECLINING THE DEDUCTION IN RESPECT OF RELAT E D PAYMENTS, EVEN WHEN THE CORRESPONDING INCOME IS DULY BROUGHT TO TAX. THAT WILL BE GOING MUCH BEYOND THE OBVIOUS INTENTION OF THE SECTION. ACCORDINGLY, WE HOLD THAT THE INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE, IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005 BEING THE DATE FROM WHICH S UB - CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO.2) ACT, 2004. 15. WE THEREFORE , RESPECTFULLY FOLLOWING DECISION OF HONBLE SUPREME COURT IN CASE OF KP VERGHESE (SUPRA) , AND DISCUSSIONS HEREINABOVE , HOLD THAT LD.AO SHALL VERIFY , WHETHER SALE CONSIDERATION RECEIVED BY ASSESSEE RECEIVED THROUGH BANKING CHANNELS IN WHOLE OR IN PART , IS PRIOR TO THE DATE OF S ALE DEED DATED 13/02/2012 . IN THE EVENT IT IS FOUND THAT THE SALE CONSIDERATION HAS BEEN RECEIVED AS CLAIMED BY ASSESSEE BY WAY OF ITA NOS.2511 ( B ) & 2799(B)/2018 15 ACCOUNT PAYEE CHEQUE, BANK DRAFT IN PART OR IN WHOLE, ON OR BEFORE T HE DATE OF SALE DEED DATED 13/02/2012, ASSESSEE DESERVES BENEFIT AS PER LAW . ACCORDI NGLY , GROUNDS RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 16. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES AND APPEAL F ILED BY REVENUE STANDS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 31 - 07 - 2019. SD/ - SD/ - ( A.K.GARODIA ) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 31 ST JULY, 2019. *AM COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5. DR 6. ITO (TDS) 7.GUARD FILE BY ORDER ASSTT.REGISTRAR ITA NOS.2511 ( B ) & 2799(B)/2018 16