SMT. CHERYL MARIA FERNANDES, Mumbai V. ITO (IT)-2(3)(1), Mumbai

ITA 4850/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8367 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 19-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V IJAYKUMAR G SUBRAMANYAM
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Retrospective amendment; Capital Gains
• Section: 143(3); 50C; 40(a)(ia); 48; 13; 22; 147; 56; 10

Judgement Text

ITA NO. 4850/MUM/2019 A SSES SMENT YEAR: 2 011 - 1 2 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI ' I ' BENCH, MUMBAI [CORAM: PRAMOD KUMAR (VICE PRESIDENT) , AND SAKTIJIT DEY (JUDICIAL MEMBER)] ITA NO . 4850/MUM/2019 ASSESSMENT YEAR : 2011 - 12 M ARIA FERNAN DES CHERYL . APPELLANT FLAT NO. 602, CA S ABLANCA , 6 TH FLOOR, 13 TH ROAD, CHEMBUR , MUMBAI 400 071 [PAN: AAEPF6910E] VS . INCOME TAX OFFICER INTERNATIONAL TAXATION 2 ( 3)(1), MUMBAI RESPONDENT APPEARANCES BY NONE FOR THE APPELLANT VIJAYKUMAR G SUBRAMAN YAM FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JANUARY 1 4 , 2021 DATE OF PRONOUNCEMENT : JANUARY 15 , 202 1 O R D E R PER PRAMOD KUMAR, VP: 1. THIS APPEAL, FILED BY THE A SSESSEE, CALLS INTO QUESTION THE CORRECT NESS OF THE ORDER DATED 28 TH MAY 2019 PASSED BY THE LEARNED CIT(A) I N T HE MATTER OF A SSESSMENT UNDER SEC TION 143(3) READ W ITH SECTION 147 OF THE I N COME TAX ACT, 1961, OR THE ASSESS MENT Y EAR 2011 - 12. 2. ONE O F THE GRIEVANCES RA ISED IN THIS APP EAL IS AS FOLLOWS: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN F ACTS AND IN LAW IN NOT APPRECIATING THAT THE DIFFERENCE BETWEEN SALE CONSIDERATION AND VALUE ADOPTED FOR THE PURPOSE OF STAMP DUTY WAS ONLY 6.55% , AND THEREFORE ADDITION UNDER SECTION 50C OF THE ACT IS NOT JUSTIFIED. 3. WHEN THIS APPE AL WAS CALLED OUT FOR HEAR ING , IT WAS NOTICED THAT THE VARIATION IN THE SALE CONSIDERATION A S DISCLOSED BY THE ASSESSEE VIS - - VIS THE VALUATION ADOPTED BY THE STAMP DUTY VALUATION AUTHORITY IS ONLY 6.55% , AND IT WAS PUT TO THE LEARNED DEPARTMEN TAL REPRESE NTATIV E AS T O WHY THE ASSES SEE NOT BE ALLOWED THE BENEFIT OF THE THIRD PROVISO TO SECTION 50 C (1) AS THE VARIATION IS MUCH LESS THAN THE PRESCRIBED PERMISSI BLE VARIATION OF UP T O 10% . L E ARNED DEPARTMENTAL REPRESENTATI VE PO INTED OUT TO US THAT THE TH IRD PROVI S O TO SECTION ITA NO. 4850/MUM/2019 A SSES SMENT YEAR: 2 011 - 1 2 PAGE 2 OF 9 50 C (1 ) IS APPLICAB L E , BY V IRTUE OF FINANCE ACT 20 18, ON LY WITH EFFE CT FROM 1 ST APRIL 2019, AND, AS FOR THE PERMISSIBLE VARIATION OF 10% AS AGAINST VARIATION OF 5% OR IGINALLY ENACTED THE THIRD PROVISO TO SECTION 50C, THIS ENHANCEMENT IN PERMISSI BLE VARIATION , BY VIRTUE OF FINANCE ACT 20 20, IS EFFECTIVE FROM 1 ST APRIL 2021. IT WAS SUBMITTED THAT THE INSERTION OF THE THIRD PROVISO TO S ECTION 50C COULD NOT BE TREATED AS RETROSPECTIVE IN NATURE, AS THERE IS A SPECIFIC DATE , AS SET O UT IN THE R ELATED AMENDMENT ITSELF , FROM WHICH THE AMEND MENT IN LAW IS EFFECTIVE. WE THEN REQUESTED THE LE ARNED DEPARTMENTAL REPRESENTATI VE T O ADDRESS US ON THE Q UESTION A S TO W H ETHER THE SE AM ENDME NTS BY THE FINANCE ACT, 2018 AND FINANCE ACT, 20 20 COULD BE SAID TO BE RETROSPECTIVE IN EFF ECT AND COULD BE TREAT ED AS RELATING BACK TO THE TIME WHEN THE LEGAL PROVISION , WHICH THIS AMENDMENT SEEK S TO MODIFY, WAS INTRODUCED. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATI VE ON THI S ISSUE A ND HAVE ALSO BENEFITED FROM THE DETAILED SUBMISSION S MADE BY HI M , ON THI S POINT, BY WAY OF A WRITTEN NOTE FILED LATER IN THE DA Y. IT IS IN THIS BACKGROUND THAT WE DEEM IT FIT AND PROPER TO FIRST DEAL WITH THE IMPLICATIONS OF INSERTIONS OF THIRD PROVI SO TO SECTION 50C (1) - AS ALSO AMEN DMENTS THERETO . WE HAV E HEA RD THE LEARNED DEPART MENTAL REPRESENT ATIVE ON THIS POINT, P ERUSED THE MATER IAL ON RECORD , A ND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 4. TO ADJUDICATE ON THIS ISSUE, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE BEFO RE US IS NON - RESIDENT ASSESSEE. DURING THE RELEVANT FINANCIAL PERIOD, SH E S OLD HER FLAT, BEING FLAT NO. 101 I N CASABLANCA BUILDING AT CHEMBUR , FOR A CONSIDERATION OF RS 75,00,000 , EVEN THOUGH THE VALUATION OF THIS P R OPERTY, FOR TH E PURP OSE OF CHARGING STAM P DUTY , WAS RS 79,91,500. THE CAPITAL GAINS WERE THUS COMPUTED BY TREATING THE SALE CONSIDERATION AT RS 75,00,000 , AND , ACCORDINGLY, OFFERED TO TAX. THE ASSESSING OFFICER , HOWEVER, WAS OF THE VIEW THAT IN VIEW OF THE PROVI SIONS OF SECTION 50 C, THE ASSESSE E HAS TO BE ADOPT THE STAMP DUTY VALUATION, WHICH WAS RS 7 9,91,500, FOR THE PURPOSE OF C OMPUTING THE CAPITAL GAINS. THE COMP LETED ASSESSMENT WAS RE OPENED IN THIS BACKDROP , AND THE CAPITAL GAINS WERE COMPUTED ON THE BASIS OF SALE CONSIDERATION BEING ADOPT ED AT RS 79,91,500. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SAT ISFIED AND IS IN F URTHER APPEAL BEF ORE US. 5. IT IS , AT THIS STA GE, IMPORTANT TO TAKE NOTE OF CERTAIN IMPORTANT LEGIS LAT IVE AMEND MENTS BY THE FINAN CE ACT 2018 AND FINANCE 2020. B Y F INANCE ACT, 2018, THE THIRD PROVISO TO SECTION 50 C (1) WAS INSERT ED , AND THIS PROVISO P ROV IDED THAT ' PRO VIDED ALSO THAT WHERE THE VALUE ADOPTED OR ASSESSED OR ASSESS ABLE BY THE STAMP VALUATION AUTHO RITY DOES NOT EXCEED ONE HUNDRED AND FIVE PER CENT OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER, THE CONSIDERATION SO RECEIVED OR AC CRUING AS A RESULT OF THE TRANSFER SHALL, FOR THE PURPOSES OF SECTI ON 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION ' . THI S PROVISO WAS FURTHER AMENDED BY THE F INANCE AC T 2020, INASMUCH AS THE TOLERANCE BAND OF 5% WAS INCREASED TO 10% BY SUBSTITUTING THE WORDS ' DOES NOT EXCEED ONE HUNDRED AND FIVE PER CENT OF THE CONSIDERATION RECEIVED OR ACCRU ING ' WITH ' DOES NOT EXCEED ONE HUNDRED AND TEN PER CENT OF THE CONSIDERATION RECEIVED OR ACCRUING ' . T HE NET RESULT OF THIS AMENDM ENT IS THAT WHERE THE VARIATION IN ACTUAL SALE CONSIDERATION VIS - - VIS THE ITA NO. 4850/MUM/2019 A SSES SMENT YEAR: 2 011 - 1 2 PAGE 3 OF 9 S TAMP DUTY VALUATION DOES NOT EXCEED 10%, THE FICTION OF SECTION 50C WILL NOT COME INTO PLAY , A ND, THEREFORE, CAPITAL GAINS WILL HAVE TO BE COMPUTED WITH REFERENCE TO THE ACTUAL SALE CONSIDERATION ONLY - DISREGARDING THE STAMP DUTY VALUATION. 6 . LEARNED DEPARTMENTA L REPRESENT ATI VE CONTENDS THAT THE A MENDMENTS CAN ONLY BE PROSPECTIVE IN NATURE AS THE LAW STATES SO SPE CIFICALLY. THE RELEVANT SUBMISSIONS , IN HIS WRITTEN NOTE , ARE AS FOLLOWS: THE HONOURABLE MEMBER DIRECTED THE UNDERSIGNED TO SUBMIT A NOTE ON THE LARGER QUESTION O F RETRO SPECTIVE APPLICAB I L ITY OF THIRD PROVISO OF SECTION 50C WHEREBY A VARIATION OF 5% WEF 1.4.2019 [10% WEF 1.4.2021 AS ACT NO. 12 OF 2020] IS PERMISSIBLE IN THE SALE CONSIDERATION VIS - A - VIS VALUATION ADOPTED BY STAMP VALUATION AUTHORITIES. IN THIS REGA RD, IT I S HUMBLY SUBMITTED THAT THE FINANCE ACT 2018 SPECIFICALLY MENTIONS THAT THE THIRD PROVISO WILL COME INTO FORCE PROSPECTIVELY FROM 1.4.2019 AND LIKEWISE THE ACT NO 12 OF 2020 ENHANCING THE VARIATION FROM 5% TO 10% ALSO SPECIFICALLY STATES THAT THE E NHANCED VARIATION WILL BE EFFECTIVE FROM 1.4.2021. THE RELEVANT AMENDMENTS AND EXPLANATORY NOTES ARE REPRODUCED BELOW FOR READY REFERENCE : THE FINANCE ACT 2018 INSERTED SECOND PROVISO TO SECTION 50C AS UNDER : AMENDMENT OF SECTION 50C. 20. IN SECTION 5 0C OF THE INCOME - TAX ACT, IN SUB - SECTION (1), AFTER THE SECOND PROVISO, THE FOLLOWING PROVISO SHALL BE INSERTED WITH EFFECT FROM THE 1ST DAY OF APRIL, 2019, NAMELY: 'PROVIDED ALSO THAT WHERE THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUAT ION AUTHORITY DOES NOT EXC EED ONE HUNDRED AND FIVE PER CENT OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER, THE CONSIDERATION SO RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER SHALL, F OR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONS IDERATION.'. THE AMENDMENT TO SECTION 50C IS EXPLAINED IN CIRCULAR 8 OF 2018 TITLED EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE ACT 2018 AS UNDER : 16. RATIONALIZATION OF SECT ION 43CA, SECTION SOC AND SECTION 56 16.1 BEF ORE AMENDMENT BY THE ACT, FOR COMPUTING INCOME FROM BUSINESS PROFITS (SECTION 43CA), CAPITAL GAINS (SECTION SOC) AND OTHER SOURCES (SECTION 56) ARISING OUT OF TRANSACTIONS IN IMMOVABLE PROPERTY, THE HIGHER OF S ALE CONSIDERATION OR STAMP DUTY VALUE WAS ADOP TED. THE DIFFERENCE WAS TA XED AS INCOME BOTH IN THE HANDS OF THE PURCHASER AND THE SELLER. 16.2 IT HAS BEEN POINTED OUT THAT THE VARIATION BETWEEN STAMP DUTY VALUE AND ACTUAL CONSIDERATION RECEIVED CAN OCCUR I N RESPECT OF SIMILAR PROPERTIES IN THE SAME AR EA BECAUSE OF A VARIETY OF FACTORS, INCLUDING SHAPE OF THE PLOT OR LOCATION. 16.3 IN ORDER TO MINIMIZE HARDSHIP IN CASE OF GENUINE TRANSACTIONS IN THE REAL ESTATE SECTOR, SECTION 43CA, SECTION 50 C AND SECTION 56 OF THE INCOME - TAX ACT HAVE BEEN AMENDED TO PROVIDE THAT NO ADJUSTMENT S SHALL BE MADE IN A CASE ITA NO. 4850/MUM/2019 A SSES SMENT YEAR: 2 011 - 1 2 PAGE 4 OF 9 WHERE THE VARIATION BETWEEN STAMP DUTY VALUE AND THE SALE CONSIDERATION IS NOT MORE THAN FIVE PER CENT OF THE SALE CONSIDERATION. 16.4 APPLICABILITY: THESE A MENDMENTS TAKE EFFECT FROM 1ST APRIL, 2019 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YEAR 2019 - 20 AND SUBSEQUENT ASSESSMENT YEARS EXPLANATORY NOTES TO FINANCE ACT 2020 INCREASE IN SAFE HARBOUR LIMIT OF 5 PER CENT. UNDER SECTION 43CA, 50C AND 56 OF THE ACT TO 10 PER CENT.. SECTION 4 3CA OF THE ACT, INTER ALIA , PROVIDES THAT WHERE THE CONSIDERATION DECLARED TO BE RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSA BLE BY ANY AUTHORITY OF A STATE GOVERNMENT ( I.E. ' STAMP VALUATION AUTH ORITY ' ) FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE SHALL FOR THE PURPOSE OF COMPUTING PROFITS AND GAINS FROM TRA NSFER OF SUCH ASSETS, BE DEEMED TO BE THE FU LL VALUE OF CONSIDERATION. THE SAID SECTION ALSO PROVIDE THAT WHERE THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY DOES NOT EXCEED ONE HUNDRED AND FIVE PER C ENT OF THE CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF THE TRANS FER, THE CONSIDERATION SO RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER SHALL, FOR THE PURPOSES OF COMPUTING PROFITS AND GAINS FROM TRANSFER OF SUCH ASSET, BE DEEMED TO BE THE FULL VA LUE OF THE CONSIDERATION. SECTION 50C OF TH E ACT PROVIDES THAT WHERE THE CONSIDERATION DECLARED TO BE RECEIVED 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 STAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF STA MP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION AND CAPITAL GAINS SHALL BE COMPUTED ON THE BASIS OF SUCH CONSIDERATION UNDER SECTION 48 OF THE ACT. THE SAID SECTI ON ALSO PROVIDES THAT WHER E THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY DOES NOT EXCEED ONE HUNDRED AND FIVE PER CENT OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER, THE CONSIDERATION SO RECEIVED OR A CCRUING AS A RESULT OF THE TRANSFER SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION. CLAUSE (X) OF SUB - SECTION (2) OF SECTION 56 OF THE ACT, INTER ALIA, PROVIDES THAT W HERE ANY PERSON RECEIVES, IN ANY PREVIOUS YE AR, FROM ANY PERSON OR PER SONS ON OR AFTER 1ST APRIL, 2017, ANY IMMOVABLE PROPERTY, FOR A CONSIDERATION WHICH IS LESS THAN THE STAMP DUTY VALUE OF THE PROPERTY BY AN AMOUNT EXCEEDING FIFTY THOUSAND RUPEES, THE ST AMP DUTY VALUE OF SUCH PROPERTY AS EXCEEDS S UCH CONSIDERATION SHALL BE CHARGED TO TAX UNDER THE HEAD ' INCOME FROM OTHER SOURCES ' . IT ALSO PROVIDE THAT WHERE THE ASSESSEE RECEIVES ANY IMMOVABLE PROPERTY FOR A CONSIDERATION AND THE STAMP DUTY VALUE OF SUCH P ROPERTY EXCEEDS FIVE PER CENT OF THE CONSIDE RATION OR FIFTY THOUSAND R UPEES, WHICHEVER IS HIGHER, THE STAMP DUTY VALUE OF SUCH PROPERTY AS EXCEEDS SUCH CONSIDERATION SHALL BE CHARGED TO TAX UNDER THE HEAD ' INCOME FROM OTHER SOURCES ' . ITA NO. 4850/MUM/2019 A SSES SMENT YEAR: 2 011 - 1 2 PAGE 5 OF 9 THUS, THE PRESENT PRO VISIONS OF SECTION 43CA, 50C AND 56 OF THE A CT PROVIDE FOR SAFE HARBOU R OF FIVE PER CENT. REPRESENTATIONS HAVE BEEN RECEIVED IN THIS REGARD REQUESTING THAT THE SAID SAFE HARBOUR OF FIVE PER CENT MAY BE INCREASED. IT IS, THEREFORE, PROPOSED TO INCREASE THE LIMIT TO TEN PER CENT.. THIS AMENDMENT WI LL TAKE EFFECT FROM 1ST AP RIL, 2021 AND WILL, A CCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YEAR 2021 - 22 AND SUBSEQUENT ASSESSMENT YEARS. THUS, THE SAFE HARBOUR LIMIT OF 5% IS APPLICABLE UPTO AY 2020 - 21 AND 10% IS SPECIFICALLY FROM AY 2021 - 22 ONWARDS. IT IS HUMBLY SUBMITTED THAT IN THE PRESENT C ASE THE VARIATION IS 6.55% WHICH IS MORE THAN SPECIFIED SAFE HARBOUR LIMIT OF 5%. IT IS FURTHER HUMBLY SUBMITTED THAT A) THE VALUE DETERMINED BY VALUATION OFFICER IS STATUTORILY REQUIRED TO BE ADOPTED U/S 50C(2) OF ACT AND IN THE P RESENT CASE, THE AO H AS ALREADY REFERRED THE MATTER TO VALUATION OFFICER AND THE SAME IS AWAITED. HENCE, IT IS HUMBLY SUBMITTED THAT DEEMED SALE CONSIDERATION MAY BE TAKEN AS DETERMINED U/S 50C(2) OF THE ACT B) THE THIRD PROVISO IS APPLICABLE PROSPECTIVE LY ESPECIALLY AS RETR OSPECTIVE EFFECT IS NEITHER MENTIONED IN THE PROVIS I ONS OF SECTION 50C NOR IN THE EXPLANATORY NOTES TO FINANCE ACT 2018 ISSUED VIDE CIRCULAR 8/2018 C) THE VARIATION PERMISSIBLE IS ONLY 5% AS ON DATE AND THE ENHANCED VARIATION OF 10% IS APPLICABLE ONLY FROM 1.4.2021. LASTLY IT IS ALSO SUBMITTED THAT IN CA SE THE HONOURABLE TRIBUNAL IS NOT INCLINED TO ACCEPT THE SUBMISSIONS, IT IS REQUESTED THAT IT MAY KINDLY BE MENTIONED THAT RELIEF IS BEING PROVIDED AS A SPE CIAL CASE AND THIS DECISIO N MAY NOT BE CONSIDERED AS A PRECEDENT. 7 . THESE SUBMISSIO NS, HOWEVER, DO NOT IMPRESS US. AS NOTED BY THE C ENTRAL BOARD OF DIRECT TAXES CIRC ULAR # 8 OF 2018, EX PLAINING THE REASON FOR THE I NSERTION OF THE THIRD PROVISO TO SECTION 50C (1), HAS OBSERVED T HA T ' IT HAS BEEN POINTED OUT THAT THE VARIATION BETWEEN STAMP DUTY VALUE AND ACTUAL CONSIDERATION RECEIVED CAN OCCUR I N RESPECT OF SIMILAR PROPERTIES IN THE SAME AREA BECAUSE OF A VARIETY OF FACTORS, INCLUDING TH E SHAPE OF THE PLOT O R LOCATION ' . ONCE T H E CBDT I TSELF A CC EPTS THAT THESE VARIATIONS COULD BE ON ACCOUNT OF A VARIETY OF FACTORS, ESSENTIALLY BO NAFIDE FACTORS, A ND, FOR THIS REASON, SECTION 50C(1) SHOULD NO T COME INT O PLAY , IT WAS AN ' UN IN TENDED CONSEQUENCE ' OF SECTION 50(1) T HAT E VEN IN SUCH BONA FIDE SITUATION S, TH IS PROVISION, WHICH IS INHERENTLY IN THE NATURE OF AN ANTI - AVOIDANCE PROVISION, IS INVOKED. ONCE TH IS SITUATION IS SOUGHT TO BE ADDRESSED, AS IS THE SETTLED LEGAL POSITION - AS WE WILL SEE A LITTLE LATER IN OUR ANALYS IS, THIS SITUATION NEEDS TO BE ADDRESSED IN ENTIRETY FOR THE ENTIR E PERIOD IN WH I CH SUC H LEGAL PROVISIONS HAD EFF ECT , AND NOT FOR A SPECIFIC ITA NO. 4850/MUM/2019 A SSES SMENT YEAR: 2 011 - 1 2 PAGE 6 OF 9 TIME PERIOD ONLY . THERE IS NO GOOD REASON FOR HOLDING THE CURATIVE AM ENDMENT TO BE ONLY A S PRO SPEC TIVE IN EFFECT. D EALI NG WITH A SOMEWHAT MATERIALLY IDENTICAL SITUATION IN THE CASE OF RAJEE V KUMAR AGARWAL VS ACIT [(2014) 45 TAXMNANN.COM 555 (AGRA)] WHE REIN A COOR D INATE BENCH WAS DEALING WITH THE QUESTION WHETHER INSERTION OF A PROVISO TO SECTI ON 40(A)(I) TO CURE INTEN DED CONSEQUENCE COULD HAVE RETROSPECTIVE EFFECT, EVEN THOUGH NOT SPECI FICALLY PROVIDED FOR, AND SPEAKING THROUGH ONE OF US ( I.E. THE VIC E PRESIDENT), THE COORDINATE BE NCH HA D, AFTER A DETAILED ANALYSIS OF THE LEGAL POSITION, OBSERVED THAT, ' NOW THAT THE L EGIS LATURE HAS BEEN COMPASSIONATE ENOUGH TO CURE THESE SHORTCOMINGS OF PROVISION, AND THUS OBVIATE THE UNINTENDED HARDSHIPS, SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LEGAL PO SITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CO NSEQ UENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT STATE SO SPECIFICALLY, THE INSERTION OF SECOND PROVISO MUST BE GIVEN RETROSPECTIVE EFFECT FROM THE POINT OF T IME WHEN THE RELATED LEGAL PROVISION WAS INTRODUCED ' . REFER RING TO T HIS DECISION, AND EXTENSIVELY REPRO DUCING FROM THE SAME, INCLUDING THE P ORTION EX TRACTED ABOVE, HON ' BLE DELHI HIGH COURT , IN THE CAS E OF CIT V S ANSAL LANDMARK TOW NSHIP PVT LTD [(2015 ) 61 TAXMANN.COM 45 (DEL )] , HAS APPROVED THIS APPROACH AND OBSERVED THAT ' ( T ) HE COURT IS OF THE VIEW THAT THE ABO VE REASONING OF THE AGRA BENCH OF ITAT AS REGARDS THE RATIONALE BEHIND THE INSERTION OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT AND IT S CONCLUSION THAT THE SAID PROVISO IS DECLARATORY AND CURATIVE AND HAS RETR OSPECTIVE EFFECT FROM 1ST APRIL 2005 , MERITS ACCEPTANCE ' . THE SAME WAS THE PATH FOLLOWED BY ANOTHER BENCH OF THIS TRIBUNAL IN THE CASE OF DHARMASHIBH AI SONANI VS ACIT [(201 6 ) 161 ITD 627 (AHD) ] WHICH HAS BEEN APPROVED BY H O N ' BLE MADRAS HIGH COURT IN TH E JU DGMENT REPORTED AS CIT VS VUMMUDI AMARENDRA N [(2020) 429 ITR 97 (MAD)] . THE QUESTION THAT WE MUST TAKE A CALL ON , THERE FORE , IS AS TO WH AT IS THE RATIONALE BEHIND THE INSERTION OF THE THIRD PROVISO TO SECTION 50C(1) , AND IF THAT RATIONALE IS T O PROVID E A REMED Y FOR UNINTENDED CONSEQUENCES OF THE MAIN PROVIS ION, WE MUST HOLD THAT THE TH IRD PROVISO TO SECTION 50C(1) COME S INTO FOR CE WITH EFFECT FROM THE SAME DATE ON WH ICH THE MAIN PROVISION , UNINTENDED PROVISIO NS OF WHICH ARE SOUGHT TO BE NULLIFIED, ITS ELF WAS BROUGHT INTO EFFECT . LET US UNDERSTAND WHAT THE NATURE OF THE PROVISIONS OF SECTION 50C IS . IN TERMS OF THIS PROVISION , IF THE PROPERTY IS SOLD BELOW THE STAMP DUTY VALUAT ION RATE, WHICH IS OFTEN CALLED CIRCLE RATE, THIS STAMP DUTY VALUATION REPO RT I S ASSUMED AS SALE CONSIDERATION FOR THE PROPERTY IN QUESTION, AND , ACCO RDINGL Y , C APITAL GAINS TAX IS LEVIED. TH IS DEEMING FICTION TO SUBSTITUTE APPARENT SALE CONSIDERATIONS BY NOTIONAL CONSIDERATION COMPUTED ON THE BASIS OF A STA MP DUTY VALUATION RATE, WAS THUS TO ADDRESS THE ISSUE WITH RESPECT TO P OTENTIAL EVASION OF TAXES BY UNDERSTA TING THE SALE CO NSIDERATION AMOUNT IN A SALE DEED. AS NOTED BY THE CBDT , WHILE EX PLAINING THE J USTIFICATION FOR I NSERTION OF SECTION 50 C, ' ( T) HE FINANCE ACT, 2002, HAS IN SERT ED A NEW SECTION 50C IN THE INCOME - TAX ACT TO MAKE A SPECIAL PROVISION FOR DETERMINING THE FULL VALUE OF CONSIDERATION IN CASES OF TRANSFER OF IMMOVABLE PROPERTY ' . SECTION 50C , THUS , ON A CONCEPTUAL NOTE , IS A PROVISI ON TO ADDRESS CAPITAL GAI NS TAX EV ASIO N ON ACCOUNT OF UNDERSTATEMENT OF THE CONSIDERATION . OF CO URSE, THE LAW PROVIDES, UNDER SECTION 50C(2), THAT WHEREVER AN ASSESSEE CLAIMS THAT THE ACTUAL MARKET RATE IS LESS THAN THE STAM P DUTY VALUATION, HE CAN HAVE THE MATTER REFERRED TO A DEPARTMENTA L VA LUATION OFFICER FOR THE ASCERTAINMENT OF THE MARKET VALUE , BUT THEN IT IS A ITA NO. 4850/MUM/2019 A SSES SMENT YEAR: 2 011 - 1 2 PAGE 7 OF 9 CUMBERSOME PROCEDUR E AND , AT THE END OF THE DAY, EVERY VALUATION , WHETHER BY THE DEPARTMENTAL VALUATION OFFICER OR UNDER THE STAMP DUTY VALUATION NOTIFICATION, IS A N ESTIMATE , AND TH ERE CAN AL WAYS BE BONA FIDE VARIATIONS , THOUGH TO A CERTAIN LIMITED EXTENT, IN THESE ESTIMATION S . UNL ESS, THERE FORE, SOME KIND OF A TOLERANCE BAND OR A SAFE HARBOUR PROVISION , IN RESPECT OF SUCH BONA FIDE VARIATIONS, IS IMPL ICIT IN THE SCHEME OF LAW, T HE A SSESSEES ARE BOUND TO FACE UNDUE HARDSHIPS. THE MEC HANIS M UNDER SECTION 50C PROCEEDS ON THE ASSUMPTION THAT WHEN THE SALE CONSIDERATION IS LESS THAN THE STAMP DUTY VALUATION , THE SALE CO NSIDERATION IS TO BE TREATED AS UNDERSTATED . THIS ASSUMPTION IS , HO W EVER, LAID TO REST WHEN THE VARIATIONS BETWEEN THE STATED CONSIDERATION AND THE STAMP DU TY VA LUATION FI GURE ARE TREATED AS EXPLAINED . THE INSERTION OF THE THI RD PROVISO TO S E CT ION 50C(1) PROVIDES FOR THIS TOLERANCE BAND WITH RESPECT TO A CERTAIN DEGRE E OF VARIATIONS BETWEEN THE STA MP DUTY VALUATION AND THE STATED CONS IDERATION OF AN IMMOVABLE PROPERTY. IN OTHER WORDS, AS LONG AS THE VARIATIONS ARE WITH IN THE PERMISSIBLE LIMITS, THE ANTI - AVOIDANCE PROVISIONS OF SECTION 50C DO N OT COME INTO PLAY. AS WE HAVE NOT ED EAR LIER , THE CBDT ITSELF ACCEPT S THAT THERE COULD BE VARIOUS BONAFIDE REASONS EXPLAINING THE SMALL VARIA TIONS BETWEEN THE SALE CONSIDERATION OF IMMOVABLE PROPERTY AS DISCLOSED BY THE ASSESSEE VIS - - VIS THE STAMP DUTY VALUATION FOR THE SAID IMMO V AB LE PRO PERTY. OBVIOUSLY, THEREFORE, DISTURBING THE ACTUAL SALE CONSIDER ATI ON , FOR THE PURPOSE OF CO MPUTING CAPITAL GAINS , AND ADOPTING A NOTIONAL FIGURE , FOR THAT PURPOSE, WILL NOT BE JUSTIFIED IN SUCH CASES. ON A CONCEP TUAL NOTE, A N ES T IMATION OF MARKET PRICE IS AN ESTIMATION NEVERTHELESS , EVEN IF BY A STATUTORY A UTHORITY LIKE TH E STAMP DUTY VALUATION A UTHORITY , AND SUCH A VALUATION CAN NEVER BE ELEVATED TO THE STATUS OF SUCH A PRECI SE C OM PUTATION WHICH ADMITS NO VARIATIONS. THE RIGOUR OF SE C TION 50 C (1) WAS THUS R ELAXED , AND V ERY THOUGHTFULLY SO, TO TAKE THESE BONA FIDE CASES OF SMALL VARIATIONS BETWEEN THE STATED SALE CONSIDERATION VIS - - VIS STAMP DUTY VALUATION, OUT OF THE SCOPE OF ADJUSTMENTS CO NTEMPLATED IN THE COMPUTATIO N OF CAPITAL GAINS UNDER THIS A NTI - AVOIDANCE PROVISION . IN OUR HUMBLE UNDERSTANDING , I T IS A CASE OF A CURATIVE AMEN DM ENT TO TAKE CARE OF UNINTENDED CONSEQUENCES OF THE SCHEME OF SECTION 50C. IT MA KES PERFECT SENSE , AND TRULY REFLECTS A VERY PRAG MATIC APPROACH FULL OF COMPASSION AND FAIRNESS , THAT JUST BECAU SE THERE IS A SMALL VARIATION BETWEEN THE STATED SALE CONSIDERATION OF A PROPERT Y AND STAMP DUTY VALUATION OF THE SAME PROPERTY, ONE CANNOT PRO CEED TO DRAW AN INFERENCE AGAINST THE ASSESSEE , AND SUBJECT THE ASSESSEE TO PRACTICALLY PROVE HIS BEING TR UTHFUL IN STATING THE SALE CONSIDERATION . CLEARLY, THEREFORE, THIS INSERTION OF THE T HIRD PROVISO TO SECTION 50C(1) IS I N THE NATURE OF A REMEDI AL MEASURE TO ADDRESS A BONA FIDE SITUATION W HERE THERE IS LITTLE JU STIFICATION FOR IN VOKING AN ANTI - AVOIDANCE PROVISION . SIMILAR LY, SO FAR AS ENHANCEMENT OF TOLERANCE BAND TO 10% BY THE FINANCE A C T 2020, IS CONCERNED, AS N OTED IN THE CBDT CIR CUL AR ITSELF, IT WAS DONE I N RESPONSE TO THE REPRESENTATION S OF THE STA KEHOLDER S FOR ENHAN CEMENT IN THE TOLERANCE BAND . ONCE THE GO VERNMENT A CKNO WLEDGED THIS GENUI NE HARDSHIP TO THE TAXPAYER AND ADDRESSED THE ISSUE BY A SUITABLE AM ENDMENT IN LAW, THE NEXT QUESTION WAS WHAT SHOULD BE A FAIR T OLERANCE BAND FOR VARIATIONS IN THESE VALU ES . AS A RESPONSIVE GO VERNMENT , WHICH IS TRUL Y THE H A LLMA RK OF THE PRESEN T GOVERNMENT , EVEN THOUGH THE INITIA L TOLERANCE BAND LEVEL WAS TA KEN AT 5%, IN RESPONSE TO THE REPRESENTATIONS BY THE STAKEHOLDERS, THI S TOLERANCE BAND , OR SAFE HARBOUR PROVISION, WAS INCREASED TO 10%. THERE IS NO PARTICULAR REASON TO JUSTIFY ANY PARTICULAR TIME FRAME FOR I MPLEMENTING THIS ENHANCEME NT ITA NO. 4850/MUM/2019 A SSES SMENT YEAR: 2 011 - 1 2 PAGE 8 OF 9 OF TOLERANCE BAND OR SAFE HARBOUR PROVIS ION . THE REASONS ASSIGNED BY THE CBDT, I.E. , ' THE VARIATION BETWEEN STAMP DUTY VALUE AND ACTUAL CONSIDERATION RECEIVED CAN OCCUR I N RESPECT OF SIMI LAR PROPERTIES IN THE SAME AREA BECAUSE OF A VARIETY OF FACTORS, INCLUDING THE SHAPE OF THE PLOT OR LOCATION , ' WAS AS MUCH VALID IN 2003 AS IT IS IN 202 1 . T HERE IS NO VARIATION IN THE MATERIAL FACTS IN THIS RESPECT IN 2 021 VIS - - VIS THE MATERIAL FACTS IN 2 003. WHAT HOLDS GOOD IN 2021 WAS ALS O GOOD IN 200 3. IF VARIATIONS UP TO 10% NEED TO BE TOLERATED AND NEED NOT BE PRO B ED FURTHER , UNDER SECTION 50C, IN 2021, THERE W ERE NO GOOD REASONS TO PROBE SUCH VARIATIONS , UNDER SECTION 50C, IN THE EARLIER PERIODS AS WEL L. WE ARE, THEREFORE, SAT ISFIED THAT THE AMENDMENT IN THE SCHEME OF SEC TION 50 C(1), BY INSERTING THE THIRD PROVISO THERETO AND BY ENHANCING THE T O L ERANCE BAND FOR VARIATION S BETWEEN THE S TATED SALE CONSIDERATION VIS - - VIS STAMP DUTY VALUATION T O 10%, ARE CURATI VE IN NAT URE , AND, THEREFORE, THESE PROVISIONS , EVEN THOUGH STATED T O BE PROS PECTIVE, MUST BE HELD TO RE LATE BACK T O THE DATE WHEN THE RELATED STATUTORY PROVISION OF SECTION 50C, I.E. 1 ST A PRI L 2003. IN PLAIN WORDS, WHAT IS MEANS IS THAT EVEN IF THE VALUATION OF A P ROPERTY , FOR THE PURPOSE OF STAM P DUTY VALUATION , IS 10% MORE THAN THE STATED SALE CONSIDERATION , TH E ST ATE D SALE CONSIDERATION WILL BE ACCEPTED AT THE FACE VALUE AND THE ANTI - AVOIDANCE PROVISIONS UNDER SECTION 50C WILL NOT BE INVOKE D . 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 SEN SE THAT EVEN IN THE CASES OF GE NUINE VARIATIONS BETWEEN THE STATED CONSIDERATION AND THE STAMP DUTY VALUATION, ANTI - AVOIDANCE PROVISIO NS UNDER SECTION 50C COULD BE PRESSED INTO SERV ICE, AND THUS REMEDIED THE LAW, THERE IS NO ESCAPE FROM HOLDING THAT THESE AM ENDMENT S ARE EFFECTIVE WITH EFF ECT FROM THE DATE O N WHICH THE RELATED PROVISION, I.E. , SECT I ON 50C , IT SELF WAS INTRODUCED. THE SE AMENDMENTS ARE THUS HELD TO BE RETROSPECTIVE IN EF F ECT. IN OUR C ON SIDERED VIEW , THEREF ORE, THE PROVISIONS OF THE TH IRD PROVISO TO SECTI ON 50C (1), AS THEY STAND NOW, MUST BE HELD TO BE EFFECTI VE WITH EFFECT FROM 1 S T APR IL 2003. WE ORDER ACCORDINGLY. LEARNED DEPARTMENTAL REPRESENTATI VE, HOWEVER, DOES NOT GI VE UP. LEARNED DEP ARTMENTAL REPRESENTATIVE HAS SUGGESTED THAT WE MAY MENT ION IN OUR ORDER THAT ' RELIEF IS BEING PROVIDED AS A SPECIAL CASE AND THIS DECISION MAY N OT BE CONSIDERED AS A PRECEDENT ' . NOTHING CAN BE FARTHER FROM A JU DICI OUS APPROACH TO THE PRO CESS OF DISPENS ATION OF JUSTICE , A N D S U C H AN APPROACH, AS IS PRAYED FOR, IS AN ANTI THESIS OF THE PRI NCIPLE OF ' E QUALITY BE FORE THE LAW , ' WHICH IS ONE OF OUR M OST C HERIS HED CONSTITUTIONAL V ALU E S . OUR JUDICIAL FUNCT IONING HAS TO BE EV EN - HANDED, TRANSPARENT , AND PREDICTABLE , AND WHA T WE DECIDE FOR ONE LITIGANT MUST HOLD GOOD FOR ALL OTHER SIMILARLY PLACED LITIGANTS AS WELL . WE , THEREFORE, DECLINE TO ENTER TAIN THIS PLE A OF THE ASSESSEE. 9 . WE HAVE NOTED THAT AS A GAINST THE STATED CONSIDERATION OF RS 75,00,000, TH E STAMP DUTY VALUATION OF THE PROPERTY IS RS 79,91, 500. THE DIFFERENCE IS JUST RS 4,91,500 , WH ICH IS AB OU T 6.55% OF THE STATED SALE CONSIDERATION . A S THE DIFF ERENC E BETWEEN THE STATED CONSIDERATION VIS - - VIS THE STAMP D UT Y VALUATION IS ADMITTEDLY LESS THAN 10% OF THE STATED CONSIDERATION IN THIS CASE, AND IN THE LI GHT OF THE ABOV E DISCUSSIONS, WE ARE OF THE CONSIDERED VIEW THAT SE CTION 50 C WILL HA VE NO APPLIC ATION IN THE MATTER. THE ENHANCEMENT IN CAPITAL GAIN ITA NO. 4850/MUM/2019 A SSES SMENT YEAR: 2 011 - 1 2 PAGE 9 OF 9 COMPUTATION, AS MADE BY THE ASSESSING OFFICER, THUS STANDS DISAPPRO VED. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 10. AS WE HAVE DECIDED THE APPEAL ON THE SHORT I SSUE REGARDING THE RETROSPECTIVE EFFECT OF T H E TH IRD PROVISO TO SECTION 50 C(1) , AS ELABORAT ED ABOV E, 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 STA GE. 11. IN THE RESULT, THE APPEA L IS ALLOWED IN T HE TERMS INDICATED ABOVE. P RON OUNCED IN THE OP EN COURT T ODAY ON THE 15 TH DAY OF JANUA RY 2021. SD/ - S D/ - SAKTIJIT DEY PRAMOD K UMAR ( JUDICIAL MEMBER ) (VICE PRESIDENT) MUMBAI, DATE D THE 15 TH DAY OF JANUARY 2021 COPIE S TO: (1) THE APPELLANT (2) THE RESPONDEN T (3) CIT (4) CIT(A) (5) DR (6) GUARD FIL E BY ORDER ETC. TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI