Sh. Ramesh Verma, Yamunanagar V. DCIT, Yamunanagar

ITA 394/CHANDI/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8405 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Question of law; Fair market value; Right to appeal; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 50C; 133(6); 55A; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 394/CHD/2015 ASSESSMENT YEAR : 2009-10 SHRI RAMESH VERMA, VS THE DCIT, PROP. M/S JAGDAMBEY ROADLINES, CIRCLE, INDUSTRIAL AREA, YAMUNA NAGAR. YAMUNA NAGAR. PAN: AAKPV8801C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.K.JAIN RESPONDENT BY : SHRI S.K.MITTAL DATE OF HEARING : 28.12.2016 DATE OF PRONOUNCEMENT : 05.01.2017 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) PANCHKULA DATED 13.03.2015 FOR ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS : 1. THE LEARNED CIT (APPEAL) HAS ERRED IN LAW & F ACTS BY IGNORING THE DATE OF AGREEMENT OF TRANSACTION, AS THE TRANSA CTION PERTAINS TO AY 2008-09 INSTEAD OF AY 2009-10. 2 THE LEARNED CIT (APPEALS), ERRED IN LAW AND FACTS BY CONFIRMING THE ADDITION OF RS. 55,03,319/- AS INCOM E FROM CAPITAL GAIN. 2 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT AN AMOUNT OF RS. 31,721/- WAS DECLARED AND CLAIMED BY THE ASSESSEE AS LONG TERM CAPITAL LOSS DURING THE YEAR UNDER CONSIDERATION ON ACCOUNT OF SALE OF PLOT MEASURING 1016.88 SQ.YD. SITUATED IN INDUSTRIAL AREA, YAMUNA NAGAR. THE ASSE SSEE WAS, THEREFORE, REQUIRED TO FURNISH COPY OF THE SAL E DEED OF THE SAID PROPERTY. THE ASSESSEE, IN RESPONSE, SUBMITTED THAT SHRI LAVIT VERMA AND SHRI HIMANSHU VERMA ARE SONS OF LATE SHRI RAJ KUMAR (REAL BROTHER OF THE ASSESSEE). SHRI VINAY VERMA AND SHRI MOHIT VER MA ARE SONS OF SHRI ASHOK VERMA, REAL BROTHER OF THE ASSESSEE AND IN THE VERBAL FAMILY MUTUAL SETTLEMENT , IT HAS BEEN DECIDED THAT THE TOTAL AREA OF THE PLOT MENTIONED ABOVE WILL BE TRANSFERRED IN THE NAMES OF ABOVESAID FOUR NEPHEWS AND THEY WILL PAY RS. 26 LAC S TO THE ASSESSEE. SHRI ASHOK VERMA AND SMT. RAMAN VERMA, WIDOW OF LATE SHRI RAJ KUMAR HAVE GIVEN RS. 13 LACS EACH TO THE ASSESSEE. COPY OF THE ACCOUNT AND COURT ORDER FOR TRANSFER OF THE PLOT WERE BEFORE ASSESSING OFFICER. IT WAS, THEREFORE, SUBMITTED T HAT SALE PRICE OF THE PLOT WAS TAKEN @ RS. 26 LACS. TH E ASSESSING OFFICER, THEREFORE, NOTED THAT NO SALE DE ED HAD BEEN REGISTERED BY THE ASSESSEE IN RESPECT OF T HE ABOVESAID PROPERTY AND VALUE OF THE SALE OF PLOT HA VE BEEN CLAIMED AT RS. 26 LACS AS PER MUTUAL FAMILY SETTLEMENT. THE ASSESSING OFFICER REFERRED TO PROV ISIONS 3 OF SECTION 50C OF THE INCOME TAX ACT FOR THE PURPOS E OF DETERMINING THE LONG TERM CAPITAL GAIN. THE ASSESS ING OFFICER, IN ORDER TO ARRIVE AT THE SALE PRICE OF TH E PROPERTY SOLD, REQUESTED THE TEHSILDAR/REGISTRAR, YAMUNA NAGAR UNDER SECTION 133(6) TO FURNISH COPY O F ANY SALE DEED AND ALSO THE CIRCLE RATE OF THE PROPE RTY GOT REGISTERED IN THE MONTH OF FEBRUARY,2009 AROUND B-9 /1, INDUSTRIAL AREA, YAMUNA NAGAR I.E. THE SAME AREA IN WHICH THE PROPERTY OF THE ASSESSEE WAS SITUATED. TH E SUB REGISTRAR, JAGADHRI VIDE HIS LETTER DATED 31.12 .2013 FURNISHED A COPY OF THE SALE DEED GOT REGISTERED ON 30.03.2009 IN INDUSTRIAL AREA, YAMUNA NAGAR IN WHIC H IT WAS CLEARLY MENTIONED THAT COLLECTOR RATE OF THE PROPERTY IN INDUSTRIAL AREA, YAMUNA NAGAR IN WHICH THE PROPERTY OF THE ASSESSEE WAS SITUATED DURING MARCH,2009 WAS AT RS. 8,000/- PER SQ.YD. THE ASSESSING OFFICER, THEREFORE, WAS OF THE VIEW THAT ASSESSEE HAS NOT REPORTED LONG TERM CAPITAL GAIN AMOUNTING TO RS. 55,03,319/-. THE EXPLANATION OF T HE ASSESSEE WAS CALLED FOR ON THESE FACTS. 3. THE ASSESSING OFFICER AFTER CONSIDERING EXPLANATION OF THE ASSESSEE REJECTED THE EXPLANATIO N BECAUSE THE ASSESSEE HIMSELF HAS STATED IT AS TRANS FER OF PROPERTY, THAT IS WHY LONG TERM CAPITAL LOSS HAS BE EN CLAIMED BY HIM IN THE RETURN OF INCOME. AS PER COU RT DECREE, ONLY OWNERSHIP OF THE PLOT HAS BEEN SETTLED . NOWHERE THE COURT HAS ORDERED/SETTLED THE AMOUNT TO BE 4 PAID TO THE NEPHEWS OF THE ASSESSEE IN LIEU OF TRAN SFER OF PROPERTY. THE COURT HAS NOT DIRECTED NOT TO REGIST ER THE SALE DEED OF THE PROPERTY. THE ASSESSEE HAS RELINQUISHED ALL HIS RIGHTS/INTEREST IN THE PROPERT Y ONCE HE HAS RECEIVED THE PAYMENT OF RS. 26 LACS IN LIEU OF THE SAME. THE ASSESSING OFFICER, THEREFORE, HELD THAT THERE IS TRANSFER OF PROPERTY IN A CASE AND FURTHER REPOR T OF THE TEHSILDAR SHOWS THAT SIMILAR PROPERTY WAS SOLD @ RS. 8000/- PER SQ.YD., THEREFORE, EXPLANATION OF THE AS SESSEE THAT NO CAPITAL GAIN ARISES, WAS REJECTED AND LONG TERM CAPITAL GAIN WAS COMPUTED BY APPLYING THE RATE OF R S. 8,000/- PER SQ.YD. AND LONG TERM CAPITAL GAIN WAS COMPUTED IN A SUM OF RS. 55,03,319/-. 4. THE ASSESSEE CHALLENGED THE FINDINGS OF THE ASSESSING OFFICER AND ADDITION BEFORE LD. CIT(APPEA LS). THE ASSESSEE SUBMITTED THAT PROPERTY WAS TRANSFERRE D AS PER ORAL MUTUAL FAMILY SETTLEMENT WHICH WAS CONFIRM ED BY THE CIVIL COURT. SECTION 50C OF THE ACT IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CA SE AS THE REGISTRATION DEED WAS NOT REGISTERED. THE OWNERSHIP OF THE PROPERTY IS NOT TRANSFERRED, ONLY THE INTER-SE RIGHT OF THE PARTIES INVOLVED WERE SETTLED AND RS. 26 LACS WAS RECEIVED ONLY AS A MUTUAL UNDERSTAN DING BETWEEN THE ASSESSEE AND THE FAMILY MEMBERS. THERE IS, THUS, NO TRANSFER OF PROPERTY, AS SUCH NO CAPITAL G AIN ARISES IN THE CASE OF THE ASSESSEE. THE RATES PROV IDED BY THE SUB REGISTER ARE NOT CORRECT. THE ASSESSEE 5 FURTHER SUBMITTED THAT THERE IS NO ESTOPPEL AGAINST THE LAW. THE ASSESSING OFFICER WAS DUTY BOUND TO ADOPT CORRECT LEGAL POSITION. THE NEPHEW OF THE ASSESSEE WAS IN POSSESSION OF THE PROPERTY IN FINANCIAL YEAR 200 7-08 RELEVANT TO THE ASSESSMENT YEAR 2008-09, THEREFORE, WITHOUT PREJUDICE TO THE SUBMISSIONS OF THE ASSESSE E, IT WAS FURTHER SUBMITTED THAT THERE WAS NO TRANSFER WI THIN THE MEANING OF SECTION 2(47) OF THE ACT IN ASSESSME NT YEAR 2009-10 UNDER APPEAL. 5. THE LD. CIT(APPEALS), HOWEVER, DID NOT ACCEPT CONTENTION OF THE ASSESSEE AND REFERRED TO THE DECI SION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS RASI K LAL MANIK LAL (HUF) 177 ITR 198 IN WHICH IT WAS HEL D THAT A RELINQUISHMENT TAKES PLACE WHEN THE OWNER WITHDRAWS HIMSELF FROM THE PROPERTY AND ABUNDANCE H IS RIGHTS THERETO. THE LD. CIT(APPEALS) ALSO NOTED TH AT TRANSFER OF OWNERSHIP WAS DECIDED BY THE COURT DECR EE DATED 07.03.2009 AND SUITE WAS INSTITUTED IN JULY,2 008 AND LONG TERM CAPITAL GAIN HAVE BEEN DECLARED IN ASSESSMENT YEAR 2009-10 UNDER APPEAL, THEREFORE, CAPITAL GAIN ARISES IN ASSESSMENT YEAR UNDER APPEAL . THE LD. CIT(APPEALS) HELD THAT CONDITIONS OF SECTIO N 50C OF THE ACT ARE APPLICABLE IN THIS CASE AND ACCORDIN GLY, DISMISSED THE APPEAL OF THE ASSESSEE. 6. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE FINDINGS OF AUTHORITIES BEL OW. 6 THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND REFER RED TO BOARDS CIRCULAR AND CERTAIN DECISIONS IN SUPPOR T OF HIS CONTENTION THAT SECTION 50C OF THE ACT WOULD NO T APPLY IN THE CASE OF THE ASSESSEE BECAUSE NO SALE D EED IS REGISTERED AND THAT SECTION 50C OF THE ACT WAS AMENDED W.E.F. 01.10.2009 ADDING THE WORD ASSESSAB LE THEREFORE, THE EXISTING PROVISIONS UNDER SECTION 50 C OF THE ACT WOULD NOT APPLY IN THE CASE OF THE ASSESSEE . HE HAS ALSO SUBMITTED THAT SINCE POSSESSION WAS HANDED OVER TO THE NEPHEWS OF THE ASSESSEE IN JANUARY,2008 THEREFORE, NO CAPITAL GAIN WOULD ARISE IN ASSESSMEN T YEAR 2009-10. HE HAS SUBMITTED THAT EVEN IF ASSESS EE HAS DECLARED LONG TERM CAPITAL LOSS IN THE RETURN O F INCOME BUT PROVISIONS OF SECTION 50C WILL NOT APPLY IN THE CASE OF THE ASSESSEE, THEREFORE, IT IS DUTY OF THE ASSESSING OFFICER TO APPLY CORRECT PROVISIONS OF LA W AND SHOULD NOT HAVE MADE THE ADDITION. ON THE OTHER HAN D, LD. DR RELIED UPON ORDERS OF AUTHORITIES BELOW. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT ASSESSEE DECLARED LONG TERM CAPITAL LO SS IN THE RETURN OF INCOME. THE AUTHORITIES BELOW HAVE M ADE THE ADDITION AND COMPUTED THE LONG TERM CAPITAL GAI N BY APPLYING PROVISIONS OF SECTION 50C OF THE INCOME TA X ACT. THE ASSESSMENT YEAR UNDER APPEAL IS 2009-10 A ND THE RELEVANT PROVISIONS CONTAINED UNDER SECTION 50C OF 7 THE ACT APPLICABLE TO ASSESSMENT YEAR UNDER APPEAL ARE REPRODUCED AS UNDER : SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION I N CERTAIN CASES. 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING L AND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY A UTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO A S THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUT Y IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL, F OR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF TH E CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SEC TION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICE R THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORIT Y UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY A S ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED BY THE STAMP V ALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORI TY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS M ADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF SUB- SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATI ONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFER ENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THAT ACT. EXPLANATION FOR THE PURPOSES OF THIS SECTION, 'VAL UATION OFFICER' SHALL HAVE THE SAME MEANING AS IN CLAUSE (R) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SEC TION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB -SECTION (1), THE VALUE 8 SO ADOPTED OR ASSESSED BY SUCH AUTHORITY SHALL BE T AKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER.] 8. THE ABOVE PROVISIONS UNDER SECTION 50C OF THE AC T WERE LATER ON AMENDED BY INSERTING THE WORD ASSESS ABLE AFTER THE WORD ASSESSED W.E.F. 01.10.2009. THE BO ARDS CIRCULAR DATED 01.10.2009 EXPLAINING THE REASONS FO R INSERTING THE WORD ASSESSABLE HAVE BEEN EXPLAINED IN EXPLANATORY CIRCULAR FOR FINANCE ACT, 2009 AND PARA 23 OF THE CIRCULAR READS AS UNDER : 23. PROVISIONS FOR DEEMED VALUATION IN CERTAIN CASE S OF TRANSFER 23.1 THE EXISTING PROVISIONS OF SECTION 50C PROVID E THAT WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A R ESULT OF THE TRANSFER OF A CAPITAL ASSET, BEING LAND OR BUIL DING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY AN AUTHORITY OF A STATE GOVERNMENT (STAMP VALUATION AU THORITY) FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER , THE VALUE SO ADOPTED OR ASSESSED SHALL B E DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIV ED OR ACCRUING AS A RESULT OF SUCH TRANSFER FOR COMPUTING CAPITAL GAIN. HOWEVER, THE PRESENT SCOPE OF THE PROVISIONS DOES NOT INCLUDE TRANSACTIONS WHICH ARE NOT REGISTERED WITH STAMP DUTY VALUATION AUTHORITY, AND EXECUTED THROUGH AGRE EMENT TO SELL OR POWER OF ATTORNEY. 23.2 WITH A VIEW TO PREVENTING THE LEAKAGE OF REVEN UE, SECTION 50C IS AMENDED , SO AS TO PROVIDE THAT WHER E THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY AN AUTHORITY OF STATE GOVERNMENT FOR THE PURPOSE OF PA YMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE S O 9 ADOPTED OR ASSESSED OR ASSESSABLE SHALL BE DEEMED T O BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF SUCH TRANSFER FOR COMPUTING CAPITAL GAIN. 23.3 FURTHER, EXPLANATION 2 HAS BEEN INSERTED IN TH E SUBSECTION (2) OF THE SECTION 50C, SO AS TO CLARIFY THE MEANING OF THE TERM ASSESSABLE. 23.4 APPLICABILITY- THESE AMENDMENTS HAVE BEEN MADE APPLICABLE WITH EFFECT FROM 1 ST OCTOBER, 2009 AND WILL ACCORDINGLY APPLY IN RELATION TO TRANSACTIONS UNDER TAKEN ON OR AFTER SUCH DATE. 9. HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V R.SUGANTHA RAVINDRAN 352 ITR 488 HAS CONSIDERED THE IDENTICAL QUESTION WITH REFERENCE TO THE AMENDMENT IN SECTION 50C OF THE INCOME TAX ACT IN WHICH THE ASSE SSEE ALONGWITH TWO CO-OWNERS TRANSFERRED THE PROPERTY THROUGH AGREEMENT TO SELL FOR A CONSIDERATION TO TH IRD PARTY. THE AGREEMENT WAS NOT REGISTERED AND POSSES SION OF THE PROPERTY WAS HANDED OVER TO THE BUYER AND TH E ASSESSEE ALSO RECEIVED SALE CONSIDERATION. THE ASSE SSEE WORKED OUT LONG TERM CAPITAL GAIN AND ADMITTED 1/3 RD SHARE THEREIN FOR TAXATION. THE ASSESSING OFFICER REFERRED THE MATTER TO STAMP VALUATION AUTHORITY IN ORDER TO FIND OUT VALUE OF THE PROPERTY FOR PAYMENT OF STAMP DUTY. THE ASSESSING OFFICER, BY INVOKING PROVISIONS OF SECTION 50C OF THE ACT COMPUTED THE L ONG TERM CAPITAL GAIN ADOPTING THE GUIDELINE VALUE AS T HE SALE CONSIDERATION INSTEAD OF CONSIDERATION ADMITTE D BY THE ASSESSEE. THE LD. CIT(APPEALS) ALLOWED THE A PPEAL 10 OF THE ASSESSEE HOLDING THAT SECTION 50C OF THE ACT CAN BE INVOKED ONLY WHEN PROPERTY WAS TRANSFERRED BY WA Y OF REGISTERED SALE DEED AND ASSESSED FOR STAMP VALUATI ON PURPOSES. THE TRIBUNAL ALSO DISMISSED THE APPEAL O F THE DEPARTMENT ON THE SAME REASONING. HON'BLE HIGH COU RT HELD AS UNDER : 5. HEARD THE LEARNED COUNSEL ON EITHER SIDE. 6. THE ISSUE INVOLVED IN THIS CASE IS AS TO WHETHER THE ASSESSING OFFICER IS ENTITLED TO TAKE THE VALUE OF THE PROPERTY ASSESSAB LE BY THE AUTHORITY OF THE STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAM P DUTY IN RESPECT OF SAID TRANSFER OR NOT. ADMITTEDLY, IN THIS CASE , NO REGISTRATION OF SALE DEED HAD TAKEN PLACE. LT IS THE CASE OF THE REVENUE THA T ONLY IN PURSUANCE OF THE AGREEMENT OF SALE, THE ASSESSEE HAD TRANSFERRED THE PROPERTY AND RECEIVED THE SALE CONSIDERATION. IN SUCH CIRCUMSTANCES, WHET HER SECTION 50C OF THE ACT WOULD BE MADE APPLICABLE EVEN IN RESPECT OF CAS ES WHERE THE REGISTRATION HAD NOT TAKEN PLACE, IS THE ONLY ISSUE TO BE DECIDED IN THIS CASE. 7. LEARNED COUNSEL FOR THE ASSESSEE PLACED A CIRCUL AR IN CIRCULAR NO.5/2010/(F.NO.142/13/2010- SO(TPL)) DATED 03.06.2 010 ISSUED BY THE BOARD AND SUBMITTED THAT AS PER THE CIRCULAR, IT IS MADE CLEAR THAT THE AMENDMENT MADE BY THE FINANCE (NO.2) ACT, 2009 IS O NLY PROSPECTIVE IN NATURE AND CANNOT BE APPLIED RETROSPECTIVELY. 8. WE HAVE PERUSED THE ABOVE CIRCULAR. IT IS STATED THEREIN THAT THE SCOPE OF THE PROVISIONS DOES NOT INCLUDE TRANSACTION WHICH A RE NOT REGISTERED WITH STAMP DUTY VALUATION AUTHORITY AND EXECUTED THROUGH AGREEMENT TO SELL OR POWER OF ATTORNEY. CONSEQUENTLY, IT IS MADE CLEAR T HEREIN THAT THE AMENDMENTS HAVE BEEN MADE APPLICABLE WITH EFFECT FR OM 01.10.2009 AND THEREFORE, THEY WILL APPLY ONLY IN RELATION TO TRAN SACTION UNDERTAKEN ON OR AFTER SUCH DATE. THE RELEVANT PORTION OF THE CIRCULAR IS EXTRACTED HEREUNDER: '23.4. APPLICABILITY:- THESE AMENDMENTS HAVE BEEN M ADE APPLICABLE WITH EFFECT FROM 1ST OCTOBER, 2009 AND WILL ACCORDI NGLY, APPLY IN RELATION TO TRANSACTIONS UNDERTAKEN ON OR AFTER SUCH DATE.' 9. LEARNED COUNSEL FOR THE REVENUE IS NOT DISPUTIN G ABOUT THE EXISTENCE OF SUCH CIRCULAR ISSUED BY THE BOARD. IF THE BOARD HAS ISSUED A CIRCULAR 11 CLARIFYING THE APPLICABILITY OF SECTION 50C IN PURS UANCE OF THE AMENDMENT MADE BY AMENDMENT ACT 2 OF 2009, WE FAIL TO UNDERSTAND AS TO HOW THE REVENUE CAN CANVASS THE SAME ISSUE IN TH IS CASE WHICH IN EFFECT IS AGAINST THE CIRCULAR ISSUED BY THE BOARD. CERTAINLY, THE REVENUE IS BOUND BY THE CIRCULAR ISSUED BY THE BOARD. AT THIS JUNCTURE, IT IS PERTINENT TO NOTE THAT IN A DECISION MADE IN THE CASE OF STATE O F TAMIL NADU AND ANOTHER VS. INDIA CEMENTS LTD. AND ANOTHER REPORTED IN (2011) 40 VST 225 (SC), THE HONOURABLE SUPREME COURT HAS HE LD THAT THE CIRCULARS ISSUED BY THE REVENUE ARE BINDING ON THE DEPARTMENT AND THEREFORE, THEY CANNOT REPUDIATE THAT THEY ARE INCONSISTENT WITH TH E STATUTORY PROVISIONS. RELEVANT PARAGRAPHS 21 AND 22 ARE EXTRACTED HEREUND ER: '21. IT IS MANIFEST FROM THE HIGHLIGHTED PORTION OF THE CIRCULAR THAT AS PER THE CLARIFICATION ISSUED BY THE COMMISSIONER OF COM MERCIAL TAXES, IN EXERCISE OF THE POWER CONFERRED ON HIM UNDER SECTIO N 28A OF THE TNGST ACT, THE BENEFIT OF THE SALES TAX DEFERRAL SCHEME W OULD BE AVAILABLE TO A DEALER FROM THE DATE OF REACHING OF BPV OR BSV, WHI CHEVER IS EARLIER, AS IS PLEADED ON BEHALF OF THE FIRST RESPONDENT. IT IS TR ITE LAW THAT CIRCULARS ISSUED BY THE REVENUE ARE BINDING ON THE DEPARTMENTAL AUTH ORITIES AND THEY CANNOT BE PERMITTED TO REPUDIATE THE SAME ON THE PL EA THAT IT IS INCONSISTENT WITH THE STATUTORY PROVISIONS OR IT MI TIGATES THE RIGOUR OF THE LAW. 22. IN PAPER PRODUCTS LTD. VS. COMMISSIONER OF CENT RAL EXCISE ((2001) 247 ITR 128 SC: (1999) 7 SCC 84), WHILE INTERPRETIN G SECTION 37B OF THE CENTRAL EXCISE ACT, 1944, WHICH IS IN PARI MATERIA WITH SECTION 28A OF THE TNGST ACT, THIS COURT HAD HELD THAT THE CIRCULARS I SSUED BY THE CENTRAL BOARD OF EXCISE AND CUSTOMS ARE BINDING ON THE DEPA RTMENT AND THE DEPARTMENT IS PRECLUDED FROM CHALLENGING THE CORREC TNESS OF THE SAID CIRCULARS, EVEN ON THE GROUND OF THE SAME BEING INC ONSISTENT WITH THE STATUTORY PROVISION. IT WAS FURTHER HELD THAT THE D EPARTMENT IS PRECLUDED FROM THE RIGHT TO FILE AN APPEAL AGAINST THE CORREC TNESS OF THE BINDING NATURE OF THE CIRCULARS AND THE DEPARTMENT'S ACTION HAS TO BE CONSISTENT WITH THE CIRCULAR WHICH IS IN FORCE AT THE RELEVANT POINT OF TIME.' 10. EVEN OTHERWISE, WE ARE OF THE FIRM VJEW THAT TH E INSERTION OF WORDS 'OR ASSESSABLE' BY AMENDING SECTION 50C WITH EFFECT FROM 1.10.2009 IS NEITHER A CLARIFICATION NOR AN EXPLANATION TO THE A LREADY EXISTING PROVISION AND IT IS ONLY AN INCLUSION OF NEW CLASS OF TRANSAC TIONS NAMELY THE TRANSFERS OF PROPERTIES WITHOUT OR BEFORE REGISTRATION. BEFORE I NTRODUCING THE SAID AMENDMENT, ONLY THE TRANSFERS OF PROPERTIES WHERE T HE VALUE ADOPTED OR 12 ASSESSED BY THE STAMP VALUATION AUTHORITY WERE SUBJ ECTED TO SECTION 50C APPLICATION. HOWEVER AFTER INTRODUCTION OF THE WORD S 'OR ASSESSABLE' AFTER THE WORDS 'ADOPTED OR ASSESSED', SUCH TRANSFERS WHE RE THE VALUE ASSESSABLE BY THE STAMP VALUATION AUTHORITY ARE ALS O BROUGHT INTO THE AMBIT OF SECTION 50C. THUS SUCH INTRODUCTION OF NEW SET OF CLASS OF TRANSFER WOULD CERTAINLY HAVE THE PROSPECTIVE APPLI CATION ONLY AND NOT OTHERWISE. HENCE THE ASSESSEE'S TRANSFER ADMITTEDLY MADE EARLIER TO SUCH AMENDMENT CANNOT BE BROUGHT UNDER SECTION 50C. APPLYING THE ABOVE SAID DECISION OF THE HONOURABLE APEX COURT TO THE FACTS AND CIRCUMSTANCES OF THE CAS E AS WELL AS BY CONSIDERING THE SCOPE OF SECTION 50C, WE HOLD THAT THE REVENUE IS NOT ENTITLED TO CANVASS THE CORRECTNESS OF THE ORDER PA SSED BY THE TRIBUNAL, MORE PARTICULARLY IN THE LIGHT OF THE CIRCULAR ISSU ED BY THE BOARD. ACCORDINGLY, THE TAX CASE APPEAL IS DISMISSED AND T HE SUBSTANTIAL QUESTION OF LAW IS ANSWERED AGAINST THE REVENUE. NO COSTS. 10. THE ITAT JODHPUR IN THE CASE OF NAVNEET KUMAR THAKKAR VS ITO 110 ITD 525 HELD AS UNDER : SEC. 50C DOES NOT APPLY TO THE CASES IN WHICH THE T RANSFERRED PROPERTY IS NOT THE SUBJECT-MATTER OF REGISTRATION AND THE QUESTION OF VALUATION FOR STAMP DUTY PURPOSES HAS NOT ARISEN; A SSESSEE HAVING TRANSFERRED A PROPERTY BY EXECUTING AN AGREEMENT WH ICH WAS NOT REGISTERED WITH THE REGISTERING AUTHORITY, S. 50C DID NOT APPL Y; REFERENCE MADE TO DVO UNDER S. 55A AND ADDITION, MADE SOLELY ON THE BASIS OF THE REPORT OF THE DVO IS WHOLLY INVALID. 11. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE PROVISIONS CONTAINED UNDER SECTION 50C OF THE ACT, AMENDMENT IN SECTION 50C AS EXPLAINED VIDE BOARDS CIRCULAR AND DECISIONS REFERRED TO ABOVE, IT IS CLE AR THAT IN THE CASE OF THE ASSESSEE, NO SALE DEED HAS BEEN REGISTERED AND THE PROPERTY WAS TAKEN BY THE NEPHEW S OF THE ASSESSEE THROUGH VERBAL FAMILY SETTLEMENT IN TH E MONTH OF JANUARY,2008 WHICH WAS CONFIRMED BY THE JUDGEMENT OF THE CIVIL COURT DATED 07.03.2009. 13 THEREFORE, IN THE CASE OF THE ASSESSEE, NO CONSIDER ATION HAS BEEN ASSESSED BY THE STAMP VALUATION AUTHORITY. SINCE NO SALE DEED OR AGREEMENT HAVE BEEN REGISTERE D IN THE CASE OF THE ASSESSEE, THEREFORE, PROVISIONS OF SECTION 50C OF THE ACT WOULD NOT APPLY IN THE CASE OF THE ASSESSEE. THE WORD ASSESSABLE HAS BEEN INSERTED IN SECTION 50C OF THE INCOME TAX ACT W.E.F. 01.10.2009 THEREFORE, THE AMENDED PROVISIONS WOULD NOT APPLY T O ASSESSMENT YEAR UNDER APPEAL I.E. 2009-10. THE AUTHORITIES BELOW HAVE REJECTED THE EXPLANATION OF THE ASSESSEE, BECAUSE ASSESSEE HAS SHOWN LONG TERM CAPI TAL LOSS IN THE RETURN OF INCOME IN ASSESSMENT YEAR UND ER APPEAL. HON'BLE SUPREME COURT IN THE CASE OF CIT V S MAHALAKSHMI MILLS 160 ITR 920 HELD THAT, DUTY CAST ON ASSESSING OFFICER TO APPLY RELEVANT PROVISIONS OF L AW FOR THE PURPOSE OF DETERMINING THE TRUE FIGURE OF ASSES SEE'S TAXABLE INCOME. THEREFORE, MERELY THE ASSESSEE HAS SHOWN CAPITAL LOSS IN THE RETURN OF INCOME WOULD BE OF NO CONSEQUENCE WHEN SECTION 50C OF THE ACT IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. IN THIS VI EW OF THE MATTER, IT IS CLEAR THAT PROVISIONS OF SECTION 50C OF THE ACT WOULD NOT APPLY IN THE CASE OF THE ASSESSEE , THEREFORE, NO LONG TERM CAPITAL GAIN COULD BE COMPU TED AS IS DONE BY THE AUTHORITIES BELOW IN THE CASE OF THE ASSESSEE. 11(I) IT MAY ALSO BE NOTED HERE THAT THE AUTHORITIE S BELOW HAVE TAKEN INTO CONSIDERATION THE LONG TERM 14 CAPITAL GAIN DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 AND THAT OWNERSH IP HAVE BEEN DECIDED BY DECREE OF THE COURT VIDE JUDGE MENT AND DECREE DATED 07.03.2009, THEREFORE, IT WAS HELD THAT LONG TERM CAPITAL GAIN ARISES IN ASSESSMENT YEAR 20 09- 10 UNDER APPEAL. THE AUTHORITIES BELOW HAVE FAILED TO TAKE NOTE OF THE FACT THAT THE PLAINTIFFS VINAY VER MA ETC. HAVE MENTIONED IN THE PLAINT THAT THE FAMILY SETTLE MENT TAKE PLACE BETWEEN THE PARTIES I.E. THE NEPHEWS OF THE ASSESSEE AND THE ASSESSEE IN THE MONTH OF JANUARY,2 008 AND SINCE THEN, THE PLAINTIFFS ARE IN OWNERSHIP AND IN POSSESSION OF THE PROPERTY. THE CLAIM OF THE PLAIN TIFFS HAVE BEEN ADMITTED BY THE ASSESSEE AS DEFENDANT IN THAT SUIT BY ADMITTING THE CLAIM OF THE PLAINTIFFS AND P RAYED THAT DECREE MAY BE PASSED ACCORDINGLY. THE CIVIL C OURT, ON THE BASIS OF THESE FACTS, ADMITTED THE CLAIMS OF THE PLAINTIFFS AND DECREED THE SUIT FOR DECLARATION VID E JUDGEMENT DATED 07.03.2009 THEREFORE, IT IS CLEAR T HAT THE PROPERTY WAS TRANSFERRED IN THE MONTH OF JANUARY,2008 THROUGH ORAL FAMILY SETTLEMENT, THEREF ORE, ASSESSEE RIGHTLY CONTENDED THAT NO LONG TERM CAPITA L GAIN ARISE IN ASSESSMENT YEAR 2009-10 BECAUSE THIS MAY PERTAIN TO PRECEDING ASSESSMENT YEAR 2008-09. THEREFORE, ON THIS POINT ALSO, THE ADDITION AGAINST THE ASSESSEE IS WHOLLY UNJUSTIFIED. 12. CONSIDERING THE ABOVE DISCUSSION AND IN THE LIG HT OF THE RELEVANT PROVISIONS AND CASE LAW REFERRED TO 15 ABOVE, WE ARE OF THE VIEW NO CAPITAL GAIN ARISE IN THE CASE OF THE ASSESSEE IN ASSESSMENT YEAR UNDER APPEA L. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIE S BELOW AND DELETE THE ENTIRE ADDITION. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH SAINI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 5 TH JANUARY,2017. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD