DILIP S. ZAVERI, MUMBAI V. ITO 14(2)(3), MUMBAI

ITA 4811/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0070 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-04-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 23-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARZO GARODIASR
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Tax effect
• Section: 50C; 6; 2

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -BBENCH MUMBAI , . . , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./I.T.A./2608/MUM/2009, /ASSESSMENT YEAR: 2003-04 SHRI NALIN P. SHAH 95/B, MEGHDOOT, FLAT NO.5, MARINE DRIVE MUMBAI-400 002. PAN:AAHPS 3860 K VS. ACIT, CIRCLE- 14 (1) 2ND FLOOR, EARNEST HOUSE NARIMAN POINT MUMBAI-400 021. ( /APPELLANT) ( / RESPONDENT) ./I.T.A./2999/MUM/2009, /ASSESSMENT YEAR: 2003-04 DCIT, CIRCLE- 14 (1) NARIMAN POINT, MUMBAI-400 021. VS. SHRI NALIN P. SHAH MARINE DRIVE, MUMBAI-400 002. ( /APPELLANT) ( / RESPONDENT) ./I.T.A./3000/MUM/2009, /ASSESSMENT YEAR: 2003-04 DCIT, CIRCLE- 14 (1) NARIMAN POINT, MUMBAI-400 021. VS. SHRI JAGAT P. SHAH MARINE DRIVE, MUMBAI-400 002. PAN:AAHPS 8272 R ( /APPELLANT) ( / RESPONDENT) ./I.T.A./4811/MUM/2012, /ASSESSMENT YEAR: 2003-04 SHRI DILIP S. ZAVERI 606, ARUN CHAMBERS, TARDEO MAIN ROAD TARDEO, MUMBAI-400 072. PAN:AAAPZ 0498 D VS. INCOME TAX OFFICER-14 (2)(3) EARNEST HOUSE NARIMAN POINT, MUMBAI. ( /APPELLANT) ( / RESPONDENT) ./I.T.A./484/MUM/2010, /ASSESSMENT YEAR: 2003-04 INCOME TAX OFFICER-14 (2)(3) NARIMAN POINT, MUMBAI. VS. SHRI DILIP S. ZAVERI TARDEO, MUMBAI-400 072. ( /APPELLANT) ( / RESPONDENT) / REVENUE BY: SMT. ARZO GARODIA-SR. AR /ASSESSEE BY: S/ SHRI SUNIL MOTI LALA & K. GOPAL / DATE OF HEARING: 18/05/2017 / DATE OF PRONOUNCEMENT: 21/06/2017 , / PER RAJENDRA A.M. - CHALLENGING THE ORDER DATED 20/02/2009 OF THE CIT (A)- XIV,MUMBAI,THE ASSESSEE(NALIN P SHAH)AND THE ASSESSING OFFICER(AO)HAVE FILED CROSS APPEALS FOR THE YEAR UNDER CONSIDERA - TION.EFFECTIVE GROUND OF APPEAL,RAISED BY THE AO, I S ABOUT DELETING THE ADDITION MADE UNDER THE HEAD CAPITAL GAINS.THE AO HAS FILED THE APPEALS IN CASE OF THE TWO OTHER CO-OWNERS OF THE SAME PROPERTY.THUS,THERE ARE FIVE APPEAL/CROSS APPE ALS BEFORE US WHERE THE MAIN ISSUE IS 2608; 2999 & 3000/M/09 (03-04): 4811/12&484/10 NALIN P SHAH& JAGAT P.SHAH& DILIP S. ZAVER I 2 TAXABILITY OF SALE PROCEEDS OF A PLOT OF LAND.THERE ARE CERTAIN OTHER ISSUES IN THE APPEAL/CROSS APPEALS.WE HAVE DECIDED TO DISPOSE ALL THE APPEALS TOGETHER FOR SAKE OF CONVENIENCE. ITA/2999/MUMBAI/2009 -BRIEF FACTS: 2. THE ASSESSEE-AN INDIVIDUAL, IS AN INVESTOR IN SHARE S AND SECURITIES. IT FILED ITS RETURN OF INCOME ON 07/10/2003 DECLARING TOTAL INCOME OF RS.6 5,35,760/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE AO COMPLETED THE ASSESSMENT VIDE O RDER DATED 31/03/2006 DETERMINING THE INCOME OF THE ASSESSEE AT RS.1.84 CRORES. 3. THE AO HAS RAISED 8 GROUNDS OF APPEAL. GROUND NUMBE R 1, 7 AND 8 ARE GENERAL IN NATURE, HENCE ARE NOT BEING ADJUDICATED.REMAINING ALL THE G ROUNDS ARE ABOUT TAXING THE CAPITAL GAINS. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THA T THE ASSESSEE HAD SHOWN A SUM OF RS. 1.60 LAKHS ON ACCOUNT OF SALE OF THE DAHISAR PROPER TY, THAT THE ASSESSEE ALONG WITH OTHER CO- OWNERS OWN A PLOT OF LAND, THAT THEY FORMED AN AOP AND HAD ENTERED INTO AN AGREEMENT TO SELL THE PLOT OF LAND TO PRATIMA ENTERPRISES (PE) F OR A TOTAL CONSIDERATION OF RS. 18.75 LAKHS, THAT THE AOP RECEIVED RS. 8 LAKHS, THAT THE ASSESSE E WAS ENTITLED TO GET 20% (RS. 1.60 LAKHS) OF THE SALE PROCEEDS, THAT IT HAD NOT OFFERED THE A MOUNT IN QUESTION FOR TAXATION. THE AO DIRECTED THE ASSESSEE TO FILE AN EXPLANATION IN THA T REGARD.VIDE HIS LETTER DATED 20/12/2005 THE ASSESSEE STATED THAT TRANSACTION TO SELL THE PROPER TY WAS INCOMPLETE, THAT HE HAS NOT OFFERED THE SALE PROCEEDS FOR CAPITAL GAINS. HOWEVER, THE AO DI D NOT FIND THE EXPLANATION ACCEPTABLE AND HELD THAT THE ASSESSEE HAD RECEIVED THE AMOUNT A RE SULT OF TRANSFER OF ASSETS. REFERRING TO THE PROVISIONS OF SECTION 2 (47) HE HELD THAT THE ASSES SEE HAD GIVEN THE POSSESSION OF THE PROPERTY TO THE PURCHASER, THAT HE HAD RELINQUISHED HIS RIGH TS IN THE PROPERTY,THAT HE HAD RECEIVED SALE CONSIDERATION IN PART, THAT HE HAD TRANSFERRED HIS RIGHTS OR PROPERTY TO THE PURCHASERS. HE FURTHER OBSERVED THAT THE PROPERTY WAS TRANSFERRED DURING THE YEAR UNDER CONSIDERATION, THAT THE AMOUNT RECEIVED BY THE ASSESSEE WAS LIABLE TO B E TAX UNDER THE HEAD CAPITAL GAINS, THAT THE AOP WAS NOT IN EXISTENCE, THAT THE SHARE OF CONSIDE RATION OF THE ASSESSEE HAD TO BE TAXED IN HIS HANDS.THE AO FORMED AN OPINION THAT THE TOTAL C ONSIDERATION OF RS. 18.75 LAKHS, CONSIDERING THE LOCATION OF THE PROPERTY, WAS VERY LOW. THEREFORE,A REFERENCE U/S.55A OF THE ACT WAS MADE TO THE VALUATION OFFICER (VO) TO DETER MINE FAIR MARKET VALUE OF THE PROPERTY. IN HIS LETTER, DATED 9/03/2005, THE VO STATED THAT VAL UATION WAS NOT POSSIBLE AS THE ASSESSEE WAS NOT READY TO COOPERATE. IN THE ABSENCE OF THE VALUA TION REPORT, THE AO BY RELYING UPON THE JUDGMENT OF THE HONBLE HIGH COURT OF CALCUTTA IN T HE CASE OF SANAHAGAR LIGHTS (208 ITR 882) ADOPTED THE FAIR MARKET VALUE OF THE PROPERTY AS PER THE STAMP DUTY READY RECKONER, 2608; 2999 & 3000/M/09 (03-04): 4811/12&484/10 NALIN P SHAH& JAGAT P.SHAH& DILIP S. ZAVER I 3 2002 AND DETERMINING THE TOTAL VALUE AT RS. 6.85 CR ORES.SHARE OF THE ASSESSEE AT 20% WAS WORKED OUT AT RS. 1.37 CRORES AND WAS TAXED UNDER T HE HEAD CAPITAL GAINS. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).HE MADE ELABORATE SUBMISS IONS AND REFERRED TO CERTAIN CASE LAWS IN HIS SUPPORT. HE FILED CERTAIN ADDITIONAL DOCUMEN TS BEFORE THE FAA AND REQUESTED HIM TO ADMIT THE SAME AS PER THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 1962. THE FAA CALLED FOR REMAND REPORT FROM THE AO IN THE LIGHT O F THE SUBMISSIONS OF THE ASSESSEE. HE PROVIDED A COPY OF THE REPORT OF THE AO TO THE ASSE SSEE. AGAIN HE CALLED FOR A REPORT FROM THE AO AND OBTAINED COMMENTS OF THE ASSESSEE BEFORE FIN ALISING THE APPEAL. AFTER CONSIDERING THE AVAILABLE MATERIAL, THE FAA HELD THAT THE ASSESSEE HAD ARGUED THAT AGREEMENT TO SELL THE LAND WAS NOT REGISTERED, THAT HE HAD NOT RECEIVED THE FU LL AMOUNT OF CONSIDERATION, THAT THERE WAS NO TRANSFER IN ACCORDANCE WITH THE PROVISIONS OF SE CTION 2 (47) OF THE ACT, THAT THE LAND IN QUESTION AS PER THE REVENUE RECORD WAS STILL IN THE NAME OF THE ASSESSEE, THAT THERE WAS NO TRANSFER OF THE PLOT AS PER THE PROVISIONS OF SECTI ON 53A OF THE TRANSFER OF PROPERTY ACT. HE HELD THAT THERE WAS AN AGREEMENT FOR SALE ENTERED I NTO BETWEEN THE FIVE CO-OWNERS AS VENDORS INCLUDING THE ASSESSEE WITH PE, THAT AGREEMENT WAS NOT REGISTERED, THAT AS PER THE AGREEMENT TOTAL CONSIDERATION PAYABLE BY THE PURCHASER WAS RS . 18.75 LAKHS, THAT THE PURCHASER DID NOT MAKE THE PAYMENT AS PER THE SCHEDULE PAYMENT FIXED IN THE AGREEMENT FOR SALE, THAT THE PURCHASER BEFORE THE AO HAD CLAIMED THAT PAYMENT OF ENTIRE AMOUNT HAD BEEN MADE ON DIFFERENT DATES AND HAD ALSO SUBMITTED THE DETAILS, THAT NO BANK STATEMENT WAS FURNISHED BEFORE THE AO, THE ASSESSEE HAD RECEIVED RS. 2.35 L AKHS ONLY, THAT REMAINING AMOUNT OF RS. 1.40 LAKHS WERE NOT RECEIVED BY HIM, THAT THE CLAIM MADE BY THE PURCHASER ABOUT MAKING THE FULL PAYMENT AND THE INTEREST WAS NOT SUPPORTED BY BANK STATEMENT, THAT THE CONTENTION OF THE ASSESSEE OF NOT HAVING RECEIVED THE REMAINING PAYME NT WAS ESTABLISHED, THAT BEFORE THE AO THE PURCHASER HAD ADMITTED THAT THE PAYMENTS WERE N OT MADE IN ACCORDANCE WITH THE TERMS OF AGREEMENT, THAT THE PURCHASER HAD FURTHER ADMITTED THAT HE HAD NOT PAID PROPERTY TAX, STAMP DUTY AND THAT THE DEED WAS NOT REGISTERED WITH THE STAMP DUTY AUTHORITIES, THAT THE PURCHASER WAS IN POSSESSION OF THE PROPERTY, THAT AFTER MAKIN G THE PAYMENT OF 1 ST INSTALMENT THE PURCHASER HAD DEFAULTED THE TERMS OF THE AGREEMENT FOR SALE BY NOT MAKING THE REMAINING PAYMENT SCHEDULE TIME, THAT MERE POSSESSION OF LAND BY THE PURCHASER, WITHOUT PERFORMING ITS PART AS PER THE AGREEMENT WOULD NOT TRANSLATE INTO TRANSFER OF PROPERTY, THAT IN THE REVENUE RACKETS THE LAND WAS STILL IN THE NAME OF THE ASSES SEE, THAT THE AO HAD NOT COMMENTED UPON THE DOCUMENTS OF THE REVENUE AUTHORITIES, THAT THE ENTRIES IN THE REVENUE OCCURRED WAS TO BE 2608; 2999 & 3000/M/09 (03-04): 4811/12&484/10 NALIN P SHAH& JAGAT P.SHAH& DILIP S. ZAVER I 4 TREATED AS CORRECT, THAT THERE WAS NO TRANSFER OF P LOT OF LAND, THAT THE ASSESSEE HAD RECEIVED CERTAIN AMOUNT IS A SHARE ON THE BASIS OF AGREEMENT FOR SALE, THAT SAME HAD TO BE TREATED AS FORFEITED AMOUNT IN THE HANDS OF THE ASSESSEE FOR N ON-PERFORMING OF ITS PART BY THE ARCHES, THAT THE AMOUNT IN QUESTION HAD TO BE TAXED IN THE HANDS OF THE ASSESSEE. HE DIRECTED THE AO TO ADVOCATE THE FORFEITED AMOUNT TO THE INCOME OF THE ASSESSEE. HE FURTHER OBSERVED THAT THE AO, WHILE DETERMINING CAPITAL GAINS IN THE HANDS OF THE ASSESSEE, HAD ADOPTED THE SALE CONSIDERA - TION ON THE BASIS OF FAIR MARKET VALUE AS PER THE S TAMP DUTY READY RECKONER, 2002. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HE HELD THAT THE PURCHASER HAD CONFIRMED THE TOTAL CONSIDERATION TO BE AT RS. 18.75 LAKHS ONLY, THAT T HERE HAD NOT BEEN ANY REGISTRATION AND EVALUATION BY THE STAMP DUTY AUTHORITIES, THAT THE PROVISIONS OF SECTION 50C WERE NOT APPLICABLE, THAT THE AO WAS NOT JUSTIFIED IN REFERR ING TO THE READY RECKONER, THERE WAS NO TRANSFER OF PLOT OF LAND WITHIN THE MEANING OF SECT ION 2 (47) READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT, THAT THE QUESTION OF CAPI TAL GAINS WOULD NOT ARISE. HE ALLOWED THE GROUND OF APPEAL, ABOUT APPLICABILITY OF SECTION 50 C, IN FAVOUR OF THE ASSESSEE FOR STATISTICAL PURPOSES. 5 .DURING THE COURSE OF HEARING BEFORE US, THE DEPART MENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE AO AND STATED THAT THERE WAS TRANSFER OF PLOT OF LAND. REFERRING TO THE CASE OF DWARAKADAS CHATURBHUJ, HE ARGUED THAT MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR DETERMINING THE CAPITAL GAINS. THE AUTHORISED R EPRESENTATIVE (AR) CONTENDED THAT THE ASSESSEE HAD RECEIVED ONLY PART PAYMENT, THAT IN TH E REVENUE RECORDS NAME OF THE ASSESSEE WAS APPEARING AS THE OWNER OF THE PLOT OF LAND, THA T DISPUTE WAS GOING ON BEFORE THE CIVIL COURT BETWEEN THE PURCHASER AND THE ASSESSEE, THAT THE PROVISIONS OF SECTION 50C WERE NOT APPLICABLE, THAT VALUATION ADOPTED BY THE AO AS PER THE SAID SECTION WAS AGAINST THE PROVISIONS OF THE ACT, THAT THE AO HAD NOT ALLEGED THAT THE ASSESSEE HAD RECEIVED ON MONEY, THAT NO STAMP DUTY WAS PAID FOR THE TRANSACTION, TH AT REGISTRATION OF THE PLOT OF LAND HAD NOT TAKEN PLACE, THAT REFERENCE WAS MADE BY THE AO TO T HE VALUATION OFFICER U/S.142 (A) OF THE ACT AND NOT U/S.55A AS CLAIMED BY THE AO, THAT THE ASSE SSEE HAD COOPERATED WITH THE VALUATION OFFICER,THAT IF INDEXATION WAS ALLOWED THE ASSESSEE WOULD HAVE NO OBJECTION TO OFFER THE DISPUTED AMOUNT UNDER THE HEAD CAPITAL GAINS.HE REF ERRED TO THE PAGES 25-28, 34, 38,123 AND 125 OF THE PAPER BOOK. HE RELIED UPON THE CASES OF R. SUGANTHA RAVINDRAN (352 ITR 488), RAMESH VERMA (163 ITD 421) AND ARGUED THAT UNLESS T HE PROPERTY TRANSFERRED HAD BEEN REGISTERED BY A SALE DEED AND FOR THAT PURPOSE THE VALUE HAD BEEN ASSESSED AND THE STAMP DUTY HAD BEEN PAID PROVISIONS OF SECTION 50C COULD NOT B E APPLICABLE, THE POSITION EXISTING PRIOR TO 2608; 2999 & 3000/M/09 (03-04): 4811/12&484/10 NALIN P SHAH& JAGAT P.SHAH& DILIP S. ZAVER I 5 SECTION 50C WOULD BE APPLICABLE, THAT THE ONUS WAS ON THE AO TO ESTABLISH THAT SALE CONSIDERATION DECLARED BY THE ASSESSEE WAS UNDER ST AGES, THAT OTHERWISE THE AGREED SALE CONSIDERATION SAID TO BE ACCEPTED AS FULL VALUE CON SIDERATION, THAT THE AMENDMENT TO SECTION 50C WITH EFFECT FROM 01/70/2009, BY INSERTING THE W ORDS OR ASSESSABLE HAD ONLY PROSPECTIVE APPLICATION. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AOP,CONSISTING OF 5 CO-OWNERS, HAD ENTERED INTO AN AGREEMENT WITH PE TO SELL A PLOT OF LAND FOR RS. 18.75 LAKHS, THAT THE AGREEMENT FOR SALE WA S EXECUTED ON A STAMP PAPER OF RS. 20/-, THAT THE PURCHASER PAID SOME MONEY TO THE CO-OWNERS , INCLUDING THE ASSESSEE, THAT THE PURCHASER ITSELF ADMITTED, BEFORE THE AO, THAT FULL PAYMENT AS PER THE SCHEDULE MENTIONED IN THE AGREEMENT OF SALE, WAS NOT MADE, THAT THE ASSES SEE HAD RECEIVED AN AMOUNT OF RS. 3.75 LAKHS, THAT THE AO HAD MADE A REFERENCE TO THE VALU ATION OFFICER, THAT VALUATION OFFICER REPORTED THAT THE ASSESSEE WAS NOT CO-OPERATING, TH AT THE AO REFERRED TO THE READY RECKONER, 2002 AND DETERMINE THE FAIR MARKET VALUE OF THE PLO T OF LAND AT RS. 6.85 CRORES, THAT HE DETERMINED THE SHARE OF THE ASSESSEE AT RS.1.37 CRO RES, THAT THE FAA CALLED FOR TWO REMAND REPORTS FROM THE AO, THAT HE HELD THAT PROVISIONS OF SECTION 50C WERE NOT APPLICABLE, THAT HE HELD THAT AMOUNT RECEIVED BY THE ASSESSEE SHOULD BE TAXED IN HIS HANDS UNDER THE HEAD FORFEITURE OF ADVANCE RECEIVED. THERE IS NO DOUBT THAT AGREEMENT TO SELL THE PLOT O F LAND WAS NOT REGISTERED WITH THE STAMP DUTY AUTHORITIES. EVEN THE BUYER OF THE PLOT ADMITT ED THAT REGISTRATION HAD NOT TAKEN PLACE. SECONDLY,THE BUYER HAD NOT ADHERED TO THE PAYMENT S CHEDULE. IT IS ALSO A FACT THAT AS PER THE REVENUE RECORDS THE ASSESSEE AND THE OTHER CO-OWNER S OF THE OWNER OF THE PLOT OF LAND THOUGH THE POSSESSION OF THE PLOT IS WITH THE BUYER.CONSID ERING THESE PECULIAR FACTS AND CIRCUMSTAN - CES WE ARE OF THE OPINION THAT THERE WAS NO TRANSFE R OF PLOT OF LAND AS ENVISAGED BY THE PROVISIONS OF SECTION 2 (47) OF THE ACT READ WITH S ECTION 53A OF THE TRANSFER OF PROPERTY ACT. AFTER GOING THROUGH THE PAPER BOOK WE FIND THAT THE AO HAD MADE THE REFERENCE TO THE VALUATION OFFICER U/S.142 AND NOT U/S.55A OF THE AC T. CLEARLY, THE REFERENCE WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE LAW. AS FAR A S APPLICABILITY OF SECTION 50C IS CONCERNED IT IS SUFFICIENT TO SAY THAT PROVISION OF THE SAID SECTION WERE NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION. THE HONBLE MADRAS HIGH C OURT IN THE CASE OF R. SUGANTHA RAVINDRAN(SUPRA)HAS DELIBERATED UPON THE FACTS OF T HE CASE AND HAS DECIDED THE ISSUE AT LENGTH.WE ARE REPRODUCING THE RELEVANT PORTION OF T HE JUDGMENT AND READS AS UNDER: 2608; 2999 & 3000/M/09 (03-04): 4811/12&484/10 NALIN P SHAH& JAGAT P.SHAH& DILIP S. ZAVER I 6 6.THE ISSUE INVOLVED IN THIS CASE IS AS TO WHETHER THE ASSESSING OFFICER IS ENTITLED TO TAKE THE VALUE OF THE PROPERTY ASSESSABLE BY THE AUTHORITY O F THE STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SAID TRANSFER O R NOT. ADMITTEDLY, IN THIS CASE, NO REGISTRATION OF SALE DEED HAD TAKEN PLACE. IT IS TH E CASE OF THE REVENUE THAT ONLY IN PURSUANCE OF THE AGREEMENT OF SALE, THE ASSESSEE HAD TRANSFER RED THE PROPERTY AND RECEIVED THE SALE CONSIDERATION. IN SUCH CIRCUMSTANCES, WHETHER SECTI ON 50C OF THE ACT WOULD BE MADE APPLICABLE EVEN IN RESPECT OF CASES W IS HERE THE R EGISTRATION HAD NOT TAKEN PLACE, IS THE ONLY ISSUE TO BE DECIDED IN THIS CASE. 7.LEARNED COUNSEL FOR THE ASSESSEE PLACED A CIRCULA R IN CIRCULAR NO. 5 OF 2010/(F. NO. 142/13/2010-SO(TPL)), DATED JUNE 3, 2010 (SEE [2010 ] 324 ITR (ST.) 293 ), 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 ONLY 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 ARE NOT REGISTERED WI TH STAMP DUTY VALUATION AUTHORITY AND EXECUTED THROUGH AGREEMENT TO SELL OR POWER OF ATTO RNEY. CONSEQUENTLY, IT IS MADE CLEAR THEREIN THAT THE AMENDMENTS HAVE BEEN MADE APPLICAB LE WITH EFFECT FROM OCTOBER 1, 2009, AND,THEREFORE, THEY WILL APPLY ONLY IN RELATION TO TRANSACTION UNDERTAKEN ON OR AFTER SUCH DATE. THE RELEVANT PORTION OF THE CIRCULAR IS EXTRACTED H EREUNDER (PAGE 319 OF 324 ITR) : '23.4. APPLICABILITY.THESE AMENDMENTS HAVE BEEN MA DE APPLI CABLE WITH EFFECT FROM 1ST OCTOBER, 2009, AND WILL ACCORDINGLY, APPLY IN RELAT ION TO TRANSACTIONS UNDERTAKEN ON OR AFTER SUCH DATE.' 9. LEARNED COUNSEL FOR THE REVENUE IS NOT DISPUTING ABOUT THE EXISTENCE OF SUCH CIRCULAR ISSUED BY THE BOARD. IF THE BOARD HAS ISSUED A CIRC ULAR CLARIFYING THE APPLICABILITY OF SECTION 50C IN PURSUANCE OF THE AMENDMENT MADE BY THE AMEND MENT ACT 2 OF 2009, WE FAIL TO UNDERSTAND AS TO HOW THE REVENUE CAN CANVASS THE SA ME ISSUE IN THIS CASE WHICH IN EFFECT IS AGAINST THE CIRCULAR ISSUED BY THE BOARD. CERTAINLY , THE REVENUE IS BOUND BY THE CIRCULAR ISSUED BY THE BOARD. .. XXX THE INSERTION OF THE WORDS OR ASSESSABLE IN SECTI ON 50C OF THE INCOME-TAX ACT, 1961, WITH EFFECT FROM OCTOBER 1, 2009, IS NEITHER A CLARIFICA TION NOR AN EXPLANATION TO THE EXISTING PROVISION AND IT IS ONLY AN INCLUSION OF NEW CLASS OF TRANSACTIONS, NAMELY, THE TRANSFER OF PROPERTIES WITHOUT OR BEFORE REGISTRATION. BEFORE T HE AMENDMENT, ONLY TRANSFER OF PROPERTIES WHERE THE VALUE WAS ADOPTED OR ASSESSED BY THE STAM P VALUATION AUTHORITY WERE SUBJECTED TO SECTION 50C APPLICATION. HOWEVER, AFTER INTRODUCTIO N OF THE WORDS OR ASSESSABLE SUCH TRANSFERS WHERE THE VALUE IS ASSESSABLE BY THE VALU ATION AUTHORITY ARE ALSO BROUGHT INTO THE AMBIT OF SECTION 50C . THUS, SUCH INTRODUCTION OF A NEW SET OF CLASS OF TRANSFER WOULD CERTAINLY HAVE PROSPECTIVE APPLICATION ONLY. IN CIRCULAR NO. 5 OF 2010, DATED JUNE 3, 2010 [2] , ISSUED BY THE BOARD, IT IS MADE CLEAR THAT THE AMENDMENT MADE BY THE FINANCE (NO. 2) ACT, 2009, IS PROSPECTIVE IN NATURE AND CANNOT BE APPLIED RETROSP ECTIVELY. SO IT IS STATED THEREIN THAT THE SCOPE OF THE PROVISIONS DOES NOT INCLUDE TRANSACTIO NS WHICH ARE NOT REGISTERED WITH THE STAMP DUTY VALUATION AUTHORITY AND EXECUTED THROUGH AGREE MENT TO SELL OR POWER OF ATTORNEY. CONSEQUENTLY, THE AMENDMENTS HAVE BEEN MADE APPLICA BLE WITH EFFECT FROM OCTOBER 1, 2009 AND WILL APPLY ONLY IN RELATION TO TRANSACTIONS UND ERTAKEN ON OR AFTER SUCH DATE. CONSIDERING THE ABOVE, WE DECIDE GOA 2,3,5 AND 6 AG AINST THE AO. 7. GROUND NUMBER 4,RAISED BY THE AO AND SECOND GROUND OF THE ASSESSEE ARE IDENTICAL.SO, WHILE DECIDING THE APPEAL FILED BY THE ASSESSEE,WE WOULD DEAL WITH IT. ITA/2608/MUM/2009,(NALIN P SHAH): 8. FIRST GROUND OF APPEAL, FILED BY THE ASSESSEE, IS A BOUT PORTFOLIO MANAGEMENT SERVICES.DURING THE COURSE OF HEARING BEFORE US, THE AR STATED THAT CONSIDERING THE SMALLNESS OF THE TAX EFFECT 2608; 2999 & 3000/M/09 (03-04): 4811/12&484/10 NALIN P SHAH& JAGAT P.SHAH& DILIP S. ZAVER I 7 FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE WAS N OT INTERESTED IN PURSUING THE SAME.HENCE, SAME STANDS DISMISSED AS NOT PRESSED. 9 .SECOND GROUND OF APPEAL IS ABOUT DIRECTION GIVEN B Y THE FCC TO THE VIEW TO IMPROVE THE AMOUNT RECEIVED ON THE BASIS OF AGREEMENT FOR SALE UNDER THE HEAD AMOUNT FORFEITED FOR NON- PERFORMANCE BY THE PURCHASER. IN THE EARLIER PART OF OUR ORDER,WE HAVE MENTIONED THE ASSESSEE HAD AGREED TO PAY TAX UNDER THE HEAD CAPIT AL GAINS FOR THE AMOUNT RECEIVED BY IT, PROVIDED BENEFIT OF INDEXATION IS GIVEN TO HIM. ACC ORDINGLY,WE DIRECT THE AO TO COMPUTE THE CAPITAL GAINS, AFTER AFFORDING A REASONABLE OPPORTU NITY OF HEARING TO THE ASSESSEE. GROUND NUMBER TWO IS ALLOWED IN FAVOUR OF THE ASSESSEE, IN PART. ITA/3000/MUM/2009,( JAGAT P SHAH): 10. THE AO HAS RAISED EIGHT GROUNDS OF APPEAL IN THIS C ASE ALSO, THAT ARE IDENTICAL TO THE GROUNDS RAISED IN THE CASE OF NALIN P SHAH-THE ONLY DIFFERENCE IS OF AMOUNT INVOLVED. THE AR STATED THAT DISPUTED AMOUNT WAS PART OF RS. 3.75 LAKHS ALREADY TAXED, THAT SAME SHOULD NOT BE TAXED TWICE. FOLLOWING OUR ORDER, THE ABOVE REFERRED CASE, WE DE CIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. WE DIRECT THE AO TO ENSURE THAT NO AMOUNT IS TAXED TWO TIMES. ITA/484/MUM/2010 (DILIP JHAVERI): 11. THE AO HAS RAISED IDENTICAL GROUNDS OF APPEAL THAT ARE PART OF APPEALS FILED BY THE ABOVE REFERRED TWO OTHER CO-OWNERS. THE ASSESSEE IS ONE O F THE CO-OWNERS OF THE PLOT OF LAND AND WAS MEMBER OF THE ERSTWHILE AOP. WHILE DECIDING THE APPEALS FILED BY THE AOS IN THE CASES OF NALIN P SHAH AND JAGAT P SHAH, WE HAVE ALREADY H ELD THAT ORDER PASSED BY THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. CONFIRMING HIS ORDER, WE DECIDE THE APPEAL AGAINST THE AO. ITA/4811/MUM/2012, (DILIP JHAVERI): 12. EFFECTIVE GROUND OF APPEAL,FILED BY THE ASSESSEE,IS ABOUT CONFIRMING THE PENALTY OF RS. 50, 400/-LEVIED BY THE AO U/S.271 (1)(C) OF THE ACT. TH E AO HAD LEVIED PENALTY AS HE WAS OF THE OPINION THAT ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME WITH REGARD TO SALE OF PLOT OF LAND. AS WE HAVE DECIDED THE QUANTUM APPEAL AGAINST THE AO, SO, THE PENALTY APPEAL WOULD NOT SURVIVE. 2608; 2999 & 3000/M/09 (03-04): 4811/12&484/10 NALIN P SHAH& JAGAT P.SHAH& DILIP S. ZAVER I 8 AS A RESULT ITA.S NO.2999/M/09 , 3000/M/09 & 484/M/ 10, FILED BY THE AO STANDS DISMISSED. ITA.S NO.2608/M/09 & 4811/M/12 FILED BY THE ASSESSE E ARE PARTLY ALLOWED. ITA.S NO.2999/M/09 , 3000/M/09 & 484/M/10, ITA.S NO.2608/M/09 & 4811/M/12 . ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JUNE, 2017. 21 ST , 2017 SD/- SD/- ( . . / C.N.PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 21.06.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.