Shri Devendra J. Mehta, RAJKOT-GUJARAT V. The Assistant Commr. Income Tax,Circle, GANDHIDHAM

ITA 55/RJT/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0054 (ITAT-RAJKOT)
• Duration Of Justice: 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-10-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 18-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: CHETAN L AGARWAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation; Retrospective amendment; Cost of acquisition; Fair market value
• Section: 50C; 6

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA.NO.55/RJT/2016 ASSTT.YEAR 2011-2012 SHRI DEVENDRA J. MEHTA GAGLANI RACH MAKADIA & CO. KEVAL DHAM 4, AFRICA COLONY 150-FT. RING ROAD RAJKOT 360 007. VS ACIT, CIR. GANDHIDHAM. %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI CHETAN L. AGARWAL, AR REVENUE BY : SHRI YOGESH PANDEY, CIT-DR / DATE OF HEARING : 19/10/2016 / DATE OF PRONOUNCEMENT: 08/12/2016 )*+/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL AGAINST ORDER OF THE LD.CIT(A )-3, RAJKOT DATED 4.1.2016 PASSED FOR THE ASSTT.YEAR 2011-12. 2. THE ASSESSEE HAS RAISED FOUR GROUNDS OF APPEAL, BUT IN BRIEF HIS GRIEVANCE REVOLVES AROUND TWO ISSUES VIZ. (A) THE L D.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.96,29,357/- WHICH WAS MADE BY THE AO WITH THE AID OF SECTION 50C OF THE INCOME TAX ACT, 1961, AND (B) THE LD.CIT(A) HAS ERRED IN CONFIRMING VIEW POINT OF AO FOR TAKING CIR CLE RATE APPLICABLE IN THE ASSTT.YEAR 2011-12 WHEN SALE DEED REGISTERED INSTEA D OF ASSTT.YEAR 2008-09, WHEN ASSESSEE HAS ENTERED INTO AN AGREEMENT FOR SAL E OF LAND. ITA NO.55/RJT/2016 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 26.1.2012 DECLARING TOTAL INCOME AT RS.20 ,58,890/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT A ND NOTICE UNDER SECTION 143(2) DATED 28.9.2012 WAS ISSUED AND SERVED UPON T HE ASSESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT LAND CO MPRISING IN SURVEY NO.2000/40/B WAS SOLD BY THE ASSESSEE FOR A CONSIDE RATION OF RS.50.45 LAKHS VIDE SALE DEED NO.293/2011. THE ASSESSEE HAS DISCL OSED LONG TERM CAPITAL GAIN ON SALE OF LAND. IT CAME TO THE NOTICE OF THE AO T HAT INITIALLY A STAMP DUTY OF RS.2,47,500/- WAS PAID. SUBSEQUENTLY, ADDITIONAL S TAMP DUTY OF RS.21,32,070/- WAS PAID ON THIS TRANSACTION. IN OT HER WORDS, FOR THE PURPOSE OF COMPUTING CAPITAL GAIN, THE ASSESSEE HAS SHOWN S ALE CONSIDERATION OF RS.50.45 LAKHS WHEREAS AS PER STAMP DUTY VALUATION, SALE CONSIDERATION WAS DETERMINED AT RS.4,35,62,500/-. THE LD.AO HAS CONF RONTED THE ASSESSEE AS TO WHY STAMP DUTY VALUATION DONE BY STAMP DUTY VALUATI ON AUTHORITY FOR THE PURPOSE OF REGISTRATION OF SALE DEED SHOULD NOT BE ADOPTED AS FULL SALE CONSIDERATION PROVIDED UNDER SECTION 50C OF THE INC OME TAX ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE, IT WAS CONTENDED BY THE A SSESSEE THAT HE HAD ENTERED INTO AN AGREEMENT FOR SALE OF THIS LAND ON 31.3.200 8. HE HAS RECEIVED THE PAYMENT. THE SALE DEED HAS BEEN REGISTERED ON 10.1 .2011. DURING THE PENDENCY OF AGREEMENT BEFORE REGISTRATION OF SALE D EED, THE GOVERNMENT HAS REVISED CIRCLE RATE FOR THE PURPOSE OF CHARGING STA MP DUTY. BUT THAT HAS NOT AUTHORIZED THE ASSESSEE TO CHARGE HIGHER SALE CONSI DERATION. THEREFORE, THE RATES AVAILABLE IN THE ASSTT.YEAR 2008-09 OUGHT TO BE ADOPTED FOR THE PURPOSE OF CALCULATING VALUE OF THE PROPERTY. THIS CONTENT ION OF THE ASSESSEE WAS REJECTED BY THE LD.AO. HE ADOPTED THE SALE CONSIDE RATION OF RS.4,35,62,500/- AND ACCORDINGLY DETERMINED THE LONG TERM CAPITAL GA IN. ITA NO.55/RJT/2016 3 4. ON FIRST APPEAL, APART FROM REITERATION OF CONTE NTIONS RAISED BEFORE THE AO, THE ASSESSEE CONTENDED THAT THE ISSUE BE REMITT ED TO THE FILE OF THE AO FOR MAKING A REFERENCE TO DVO UNDER SECTION 50C(2) OF T HE ACT FOR FINDING OUT FAIR MARKET VALUE OF THE PROPERTY WHEN THE ASSESSEE HAD ENTERED INTO AGREEMENT FOR THE SALE OF THE PROPERTY. THE LD.CIT (A) HAS REJECTED THIS CONTENTION ALSO AND CONCUR WITH THE AO ON ADOPTION OF SALE CONSIDERATION EQUIVALENT TO THE AMOUNTS ON WHICH STAMP DUTY WAS P AID. 5. WHILE IMPUGNING THE ORDERS OF THE REVENUE AUTHOR ITIES, LD.COUNSEL FOR THE ASSESSEE PUT RELIANCE ON THE JUDGMENT OF THE S MC BENCH OF THE TRIBUNAL IN THE CASE OF DHARMIDEVI KANAIYALAL SUTHAR VS. ITO , ITA NO.1626/AHD/2016 ORDER DATED 22.9.2016. HE CONTEND ED THAT IN THIS CASE, THE TRIBUNAL HAS ACCEPTED THAT RATE IN THE YEAR IN WHIC H AGREEMENT WAS ENTERED WAS REQUIRED TO BE ADOPTED FOR COMPUTATION OF CAPIT AL GAIN. HE PLACED ON RECORD COPY OF THE TRIBUNALS ORDER. HE FURTHER RE LIED UPON IN THE CASE OF DHARAMSHIBHAI SONANI VS. ACIT, ITA NO.1237/AHD/2013 ORDER DATED 30.9.2016. IN THIS CASE, THE TRIBUNAL HAS OBSERVE D THAT PROVISO APPENDED TO SECTION 50C W.E.F. 1.4.2017 SHOULD BE CONSTRUED AS APPLICABLE WITH RETROSPECTIVE EFFECT. APART FROM THESE TWO DECISIO NS HE HAS ALSO PLACED ON RECORD A LARGE NUMBER OF DECISIONS OF ITAT. ON THE STRENGTH OF THESE DECISIONS, HE CONTENDED THAT THE ASSESSEE HAS RELIN QUISHED HIS RIGHT IN THE PROPERTY WHEN HE ENTERED INTO AN AGREEMENT FOR SALE , AND THEREFORE, WHILE DETERMINING FULL SALE CONSIDERATION CONTEMPLATED IN SECTION 50C, THE LD.AO OUGHT TO HAVE TAKEN INTO CONSIDERATION THIS ASPECT. MORE PARTICULARLY, A REFERENCE OUGHT TO HAVE BEEN MADE TO DVO UNDER SECT ION 50(C)(2) OF THE INCOME TAX ACT, 1961. 6. IN HIS OTHER FOLD OF SUBMISSIONS, HE SUBMITTED T HAT SINCE THE ASSESSEE HAS ENTERED INTO AN AGREEMENT ON 31.3.2008 HE HAS H ANDED OVER THE ITA NO.55/RJT/2016 4 POSSESSION, THEREFORE, TRANSFER HAS TAKEN PLACE IN THAT YEAR AND LONG TERM CAPITAL GAIN OUGHT TO BE COMPUTED IN THE ASSTT.YEAR 2008-09 ONLY. IN RESPONSE TO THE CONTENTION OF THE LD.COUNSEL FOR TH E ASSESSEE, THE LD.CIT-DR HAS FILED WRITTEN SUBMISSIONS APART FROM MAKING ORA L CONTENTIONS. WRITTEN SUBMISSIONS GIVEN BY THE LD.DR READS AS UNDER: 1) ASSESSEE HAS RELIED ON THE DECISION OF HONOURABL E ITAT, AHMEDABAD BENCH(SMC) IN CASE OF DHARAMSHIBHAI SONAN I, ITA 1237/AHD/2013 DATED 30/9/2016. HON'BLE ITAT BENCH H AS HELD THAT THE PROVISOS INSERTED IN SECTION 50C WITH EFFECT FROM 1 ST APRIL, 2007, VIDE THE FINANCE ACT 2016 SHOULD BE TREATED AS RETROSPEC TIVE IN EFFECT. THE PROVISOS IN THE AMENDED SECTION 50C ARE AS UNDER:- ' PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIX ING THE AMOUNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF THE CAPITAL ASSET ARE NOT THE SAME, THE VALUE ADOPTED OR ASSESS ED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY ON THE DATE OF AGREEM ENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VALUE OF CONSIDE RATION FOR SUCH TRANSFER. PROVIDED FURTHER THAT THE FIRST PROVISO S HALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION OR A PART TH EREOF, HAS BEEN RECEIVED BY WAY OF AN ACCOUNT PAYEE CHEQUE OR ACCOU NT PAYEE BANK DRAFT OR BY USE OF ELECTRONIC CLEARING SYSTEM THROU GH A BANK ACCOUNT, ON OR BEFORE THE DATE OF THE AGREEMENT FOR TRANSFER '. 2) ASSESSEE HAS FURTHER RELIED ON THE DECISION OF H ON'BLE ITAT AHMEBAD BENCH (SMC) IN CASE OF DHARMIDEVI KANAIYALA L SUTHAR ITA NO. 1626/AHD/2016 DATED 22/9/2016. IN THIS ORDER, T HE DATE OF TRANSFER HAS BEEN CONSIDERED AS THE DATE OF REGISTRATION AND NOT THE DATE OF AGREEMENT FIXING THE AMOUNT OF CONSIDERATION. HOWEV ER, FOR THE PURPOSE OF DETERMINING THE AMOUNT OF CONSIDERATION, HON'BLE ITAT HAS ADOPTED THE STAMP VALUATION OF THIS PROPERTY ON THE DATE ON WHICH AGREEMENT FIXING THE AMOUNT OF CONSIDERATION WAS MA DE RATHER THAN THE VALUATION ON THE DATE OF REGISTRATION. THIS VIEW HA S BEEN ACCEPTED BY THE DEPARTMENT BY INTRODUCING AN AMENDMENT IN SECTI ON 50C BY WAY OF TWO PROVISOS, AS MENTIONED ABOVE, VIDE FINANCE ACT 2016. MOREOVER, AS MENTIONED ABOVE, ANOTHER DECISION OF SMC BENCH OF T HE SAME TRIBUNAL IN CASE OF DHARAMSHIBHAI SONANI (SUPRA) HAS HELD TH IS AMENDMENT TO BE RETROSPECTIVE. HOWEVER, HON'BLE SMC BENCH OF ITA T-A'BAD IN CASE OF DHARMIDEVI KANAIYALAL SUTHAR (SUPRA) COULD NOT C ONSIDER THIS ITA NO.55/RJT/2016 5 DECISION OF SMC BENCH OF THE SAME TRIBUNAL IN CASE OF DHARAMSHIBHAI SONANI (SUPRA) BECAUSE THIS DECISION WAS PASSED ON A LATER DATE. IN ANY CASE, ASSESSEE IN PRESENT CASE HAS RELIED ON BOTH T HE DECISIONS OF THE SMC BENCHES OF ITAT-A'BAD. 3) THEREFORE, BY COMBINING THE RATIOS OF THE ABOVE TWO DECISION, IT APPEARS THAT THE ASSESSEE HAS FINALLY ACCEPTED HIS STANCE AS REFLECTED IN HIS RETURN OF INCOME THAT THE CAPITAL GAIN SHOULD B E TAXED IN THE ASSESSMENT YEAR 2011-12, WHICH IS THE RELEVANT ASSE SSMENT YEAR WITH RESPECT TO THE DATE OF REGISTRATION OF THE SALE DEE D, AND THE AMOUNT OF CONSIDERATION FOR THE PURPOSE OF COMPUTING CAPITAL GAIN SHOULD TO BE CONSIDERED AS PER THE RETROSPECTIVELY AMENDED SECTI ON OF SECTION 50C VIDE FINANCE ACT 2016. IN PRESENT CASE, THE DATE OF AGREEMENT FIXING THE AMOUNT OF CONSIDERATION WAS 31/3/2008. NO PART OF T HIS CONSIDERATION WAS RECEIVED BY THE ASSESSEE ON OR BEFORE 31/3/2008 . THE ENTIRE CONSIDERATION OF RS. 12,61,250 (25% SHARE OF ASSESS EE IN THE CONSIDERATION OF RS.50,45,500) WAS RECEIVED ON 15/1 2/2008 I.E. AFTER ABOUT 8 TO 9 MONTHS FROM THE DATE OF AGREEMENT. THE REFORE BY VIRTUE OF 2' PROVISO, THE 1ST PROVISO OF THE RETROSPECTIVELY AMENDED SECTION 50C WILL NOT APPLY IN THIS CASE. IN OTHER WORDS, THE ST AMP VALUE OF THE PROPERTY CANNOT BE CONSIDERED ON THE DATE OF AGREEM ENT FOR THE PURPOSE OF DETERMINING THE CONSIDERATION U/S 50C BECAUSE TH E ENTIRE CONSIDERATION WAS PAID 8 TO 9 MONTHS AFTER THIS DAT E OF AGREEMENT. THEREFORE, THE AMOUNT OF CONSIDERATION U/S.50C HAS TO BE CONSIDERED AS THE STAMP VALUATION ON THE DATE OF REGISTRATION, I. E. 18/1/2011. THIS IS PRECISELY WHAT THE ASSESSING OFFICER AND CIT(A) HAV E DONE. THEREFORE, THE APPEAL OF ASSESSEE DESERVES TO BE REJECTED. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. SECTION 48 OF THE INCOME TAX ACT PROVIDES MODE OF COMPUTATION OF CAPITAL GAIN. IT CONTEMPLATES THAT INCOME ARISING UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED BY DEDUC TING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING, AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSETS THE FOLLOWING AMOUNTS, VIZ. ( A) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRAN SFER; AND (B) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMP ROVEMENT THERETO. ITA NO.55/RJT/2016 6 8. SECTION 50C FURTHER PROVIDES THAT WHERE THE CONS IDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE AD OPTED OR ASSESSED BY ANY AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP D UTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHA LL FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE C ONSIDERATION. IN OTHER WORDS, FULL CONSIDERATION MENTIONED IN SECTION 48 I S TO BE REPLACED BY THE CONSIDERATION ON WHICH VALUE OF THE PROPERTY WA S ADOPTED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY. 9. SUB-SECTION (2) OF SECTION 50C FURTHER CONTEMPLA TES THAT IN CASE ASSESSEE ALLEGES THAT STAMP DUTY VALUATION AUTHORIT Y UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY A S ON THE DATE OF TRANSFER, THEN, THE AO MAY REFER THE VALUATION OF T HE CAPITAL ASSET TO THE VALUATION OFFICER. AT THIS STAGE, LET US FIRST DEA L WITH SECOND FOLD OF SUBMISSION MADE BY THE ASSESSEE. SUB-CLAUSE (V) OF SECTION 2(47) HAS A DIRECT BEARING ON THE CONTROVERSY. THEREFORE, IT I S PERTINENT TO TAKEN NOTE OF THIS CLAUSE. IT READS AS UNDER: SECTION 2 (47) 'TRANSFER', IN RELATION TO A CAPITAL ASSET, IN CLUDES, (I) ........ (II) (III) . (IV) . (IVA) . (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE P OSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED I N PART ITA NO.55/RJT/2016 7 PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 ( 4 OF 1882) ; OR 10. THE CASE OF THE ASSESSEE IS THAT HE HAD EXECUTE D AN AGREEMENT TO SELL ON 31.3.2008 AND HANDED OVER THE POSSESSION TO THE VENDEE, THEREFORE, THE TRANSFER WITHIN THE MEANING OF SECTI ON 2(47)(V) WAS COMPLETE, AND ANY GAIN OUGHT TO BE ASSESSED IN THE ASSTT.YEAR 2008-09. THIS ARGUMENT WAS REJECTED BY THE LD.REVENUE AUTHOR ITIES ON THE GROUND THAT ASSESSEE HIMSELF RECOGNISED THE SALE ON 10.1.2 011 AND OFFERED THE GAIN IN ASSTT.YAR 2011-12. BEFORE TAKING COGNIZANC E OF THIS ARGUMENT, IT IS PERTINENT TO TAKE NOTE OF REGISTRATION AND OTHER RELATED LAWS, AMENDMENT ACT, 2001 WHICH HAS BROUGHT ABOUT RADICAL CHANGES IN THE RIGHTS FLOWING ON THE BASIS OF THE AGREEMENT EXECUT ED IN PART PERFORMANCE OF THE CONTRACT UNDER SECTION 53A OF 18 82 ACT. THE AMENDMENTS HAVE BEEN MADE TO SECTIONS 17 AND 49 OF THE INDIAN REGISTRATION ACT, 1908. IT IS PERTINENT TO TAKE NO TE OF SECTION 17(1A) AS WELL AS SECTION 49 OF THE REGISTRATION ACT. 17.(1A) THE DOCUMENTS CONTAINING CONTRACTS TO TRAN SFER FOR CONSIDERATION, ANY IMMOVABLE PROPERTY FOR THE PURPO SE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 188 2) SHALL BE REGISTERED IF THEY HAVE BEEN EXECUTED ON OR AFTER T HE COMMENCEMENT OF THE REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001 AND IF SUCH DOCUMENTS ARE NOT REGISTERED ON OR AFTER SUCH COMMENCEMENT, THEN, THEY SHALL HAV E NO EFFECT FOR THE PURPOSES OF THE SAID SECTION 53A. 49. EFFECT OF NON-REGISTRATION OF DOCUMENTS REQUIRE D TO BE REGISTERED.NO DOCUMENT REQUIRED BY SECTION 17 1[OR BY ANY PROVISION OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882)], TO BE REGISTERED SHALL ITA NO.55/RJT/2016 8 (A) AFFECT ANY IMMOVABLE PROPERTY COMPRISED THEREIN , OR (B) CONFER ANY POWER TO ADOPT, OR (C) BE RECEIVED AS EVIDENCE OF ANY TRANSACTION AFFE CTING SUCH PROPERTY OR CONFERRING SUCH POWER, UNLESS IT HAS BE EN REGISTERED: PROVIDED THAT AN UNREGISTERED DOCUMENT AFFECTING IM MOVABLE PROPERTY AND REQUIRED BY THIS ACT OR THE TRANSFER O F PROPERTY ACT, 1882 (4 OF 1882), TO BE REGISTERED MAY BE RECEIVED AS EVIDENCE OF A CONTRACT IN A SUIT FOR SPECIFIC PERFORMANCE UNDER C HAPTER II OF THE SPECIFIC RELIEF ACT, 1877 (3 OF 1877) OR AS EVIDEN CE OF ANY COLLATERAL TRANSACTION NOT REQUIRED TO BE EFFECTED BY REGISTERED INSTRUMENT.] 11. WE ALSO DEEM IT PERTINENT TO TAKE NOTE OF SECTI ON 53A OF THE TRANSFER OF PROPERTY ACT, 1882. IT READS AS UNDER: 53A. PART PERFORMANCE.WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVEABLE PROPERTY BY WRITIN G SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CER TAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREOF, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CONTINUES IN POSSESSIO N IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT I N FURTHERANCE OF THE CONTRACT, AND THE TRANSFEREE HAS PERFORMED O R IS WILLING TO PERFORM HIS PART OF THE CONTRACT, THEN, NOTWITHSTANDING THAT WHERE THERE IS AN INSTRU MENT OF TRANSFER, THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MAN NER PRESCRIBED THEREFOR BY THE LAW FOR THE TIME BEING IN FORCE, TH E TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL BE DEBARRED FRO M ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMING UNDER H IM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSSESSION, OTHER THAN A RIGHT EXPRESS LY PROVIDED BY THE TERMS OF THE CONTRACT: ITA NO.55/RJT/2016 9 PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF THE CONTRACT OR OF THE PART PERFORMANCE THEREOF. 12. A PERUSAL OF SECTION 53A OF THE TPA WOULD INDIC ATE THAT IT PROVIDES A PROTECTION TO TRANSFEREE TO RETAIN HIS P OSSESSION WHICH WAS TAKEN IN PART PERFORMANCE OF THE CONTRACT. HE WAS ABLE TO PROTECT HIS POSSESSION EVEN AFTER EXPIRY OF LIMITATION TO BRING A SUIT FOR SPECIFIC PERFORMANCE. BUT AFTER THE AMENDMENT EFFECTED IN T HE REGISTRATION AND OTHER RELATED LAWS AMENDMENT ACT, 2001, IT HAS BEEN PROVIDED THAT THOUGH A CONTRACT ACCOMPANIED BY EITHER OF POSSESSI ON OR EXECUTED IN FAVOUR OF A PERSON IN POSSESSION IS COMPULSORILY RE GISTERABLE UNDER SECTION 17(1A) OF THE REGISTRATION ACT, 1908, IF HE FAILED TO REGISTER SUCH CONTRACT, THEN, HE WOULD NOT BE ABLE TO PROTECT HIS POSSESSION OR ANY BENEFIT CONFERRED BY SECTION 53A OF THE TPA. PROVISO APPENDED TO SECTION 49 OF THE INDIAN REGISTRATION ACT ONLY POST ULATES THAT SUCH AGREEMENT COULD BE TENDERED IN EVIDENCE IN A SUIT F OR SPECIFIC PERFORMANCE. IN OTHER WORDS, VALIDITY OF UNREGISTE RED AGREEMENT HAS NOT BEEN DENIED FOR THE PURPOSE OF ADDUCING IT AS EVIDE NCE FOR OBTAINING THE BENEFIT FLOWING FROM SUCH CONTRACT. BUT FOR THE PU RPOSE OF PROTECTING THE POSSESSION, UN-REGISTERED CONTRACT COULD NOT BE ENF ORCED. THE TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE INCOME T AX ACT WOULD COMPLETE, IF POSSESSION IS PROTECTED. THEREFORE, W E DO NOT FIND ANY MERIT IN THE SECOND FOLD OF SUBMISSIONS RAISED BY THE LD. COUNSEL FOR THE ASSESSEE. 13. IT IS ALSO PERTINENT TO OBSERVE THAT IN THE CAS E OF DHARAMSHIBHAI SONANI VS. ACIT, THOUGH THE TRIBUNAL HAS MADE AN OBSERVATI ON THAT PROVISO APPENDED TO SECTION 50C RECOGNIZING THE DATE ON WHI CH AGREEMENT WAS ITA NO.55/RJT/2016 10 ENTERED INTO FOR SALE OF THE LAND OR BUILDING, SUCH DATE ON WHICH VALUE ADOPTED OR ASSESSED FOR THE PURPOSE OF STAMP DUTY VALUATION IS TO BE DEEMED AS SALE CONSIDERATION IS CONCERNED, THE TRIBUNAL HAS OBSERV ED THAT SUCH A DATE WOULD BE RECOGNIZED IF PAYMENT WAS MADE THROUGH ACCOUNT P AYEE AT THE TIME OF AGREEMENT. IT IS A SPECIFIC OBSERVATION OF TRIBUN AL IN PARA-9. IN OTHER WORDS, THE TRIBUNAL HAS OBSERVED THAT PARTIAL SALE CONSIDE RATION WAS RECEIVED THROUGH BANKING CHANNEL. IN THAT BACKGROUND, THE TRIBUNAL HAS MADE OBSERVATION. IN THE PRESENT CASE, AGREEMENT WAS ENTERED INTO ON 31. 3.2008. NOT A SINGLE PAISA WAS PAID ON THAT DATE. IT WAS TRANSFER SOMEWHERE I N THE MONTH OF DECEMBER, 2008. AGREEMENT WAS WITHOUT ANY CONSIDERATION, BUT A PROMISE OF CONSIDERATION WAS THERE. THEREFORE, THE ASSESSEE C ANNOT DRAW BENEFIT FROM THE ORDER OF THE TRIBUNAL IN THE CASE OF DHARAMSHIBHAI SONANI VS. ACIT (SUPRA). AS PLEADED BY THE LD.CIT-DR, THE ASSESSEE HIMSELF H AS RECOGNIZED THE SALE IN THE ASSTT.YEAR 2011-12 WHEN DEED WAS REGISTERED. C ONSIDERING THE CUMULATIVE EFFECT OF THESE FACTORS I.E. NON-PAYMENT OF ANY CONSIDERATION AT THE TIME OF AGREEMENT, NON-REGISTRATION OF AGREEMENT, R ECOGNISATION OF SALE BY THE ASSESSEE HIMSELF IN THE ASSTT.YEAR 2011-12, THE AMD NEMENT IN THE INDIAN REGISTRATION ACT AND OTHER RELATED LAW AMENDMENT AC T, 2001, WE ARE OF THE VIEW THAT THE TRANSFER CANNOT BE RECOGNIZED IN THE ASSTT.YEAR 2008-09. THE CAPITAL GAIN TAX IS TO BE LEVIED UPON THE ASSESSEE IN ASSTT.YEAR 2011-12 ONLY. 14. NEXT FOLD OF DISPUTE IS WHETHER ALTERNATIVE CON TENTION OF THE ASSESSEE FOR REMITTING THE MATTER TO THE DVO UNDER SECTION 5 0C(2) OUGHT TO BE REJECTED BY THE LD.CIT(A), AND THE FULL SALE CONSIDERATION O N WHICH STAMP DUTY WAS PAID COULD ONLY BE ADOPTED FOR THE PURPOSE OF COMPU TING LONG TERM CAPITAL GAIN. AS DISCUSSED EARLIER, SUB-SECTION 2 OF SECTI ON 50C CONTEMPLATES THAT IN CASE THE ASSESSEE HAS ALLEGED THAT VALUE ADOPTED BY STAMP VALUATION AUTHORITY EXCEEDS FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER, THEN THE ITA NO.55/RJT/2016 11 AO MAY REFER VALUATION OF CAPITAL ASSETS TO THE VAL UATION OFFICER. THE REASON FOR SUCH A MECHANISM IS THAT STAMP DUTY EVEN IN THE CASE OF THE ASSESSEE WAS ONLY RS. 21,32,070/-. IT WAS TO BE BORNE BY THE VE NDEE AND NOT BY THE VENDOR. THUS, THERE WAS NO LIABILITY UPON THE ASSESSEE AS S UCH UNDER THE STAMP VALUATION ACT. THIS ASPECT HAS ENHANCED LIABILITY OF THE ASSESSEE MULTI-FOLD UNDER THE INCOME TAX ACT, AND DUE TO THIS REASON A MECHANISM HAS BEEN PROVIDED IN THE ACT FOR THE ASSESSEE TO DEMONSTRATE THAT ACTUAL VALUE RECEIVED BY HIM WAS FAR LESS THAN THE ONE ADOPTED FOR THE PU RPOSE OF STAMP DUTY VALUATION. NOW IN THE PRESENT CASE, IT TO BE SEEN THAT THE ASSESSEE HAS ENTERED INTO AN AGREEMENT TO SELL ON 31.3.2008. THE TIME L IMIT FOR FILING A SUIT FOR SPECIFIC PERFORMANCE UNDER THE SPECIFIC RELIEF ACT HAS BEEN PROVIDED IN THE INDIAN LIMITATION ACT, AND THIS LIMITATION IS THREE YEARS FROM THE DATE OF AGREEMENT. IN CASE THE VENDEE REFUSED TO GET SALE DEED REGISTERED, THEN ASSESSEE CAN ONLY SUE FOR SPECIFIC PERFORMANCE, PER SUADING VENDEE TO PURCHASE LAND. IN THAT SITUATION, THE ASSESSEE WOU LD NOT GET ANYTHING MORE THAN THE AMOUNT AGREED IN THE AGREEMENT. SIMILARLY , THERE CAN BE A TIME GAP BETWEEN THE DATE OF AGREEMENT VIS--VIS ULTIMATE RE GISTRATION OF SALE DEED. THERE CAN BE AN APPRECIATION OR DEPRECIATION IN THE PROPERTY. IN OTHER WORDS, AT THE TIME OF EXECUTION OF AGREEMENT IN RESPECT OF AN IMMOVABLE PROPERTY, THE RIGHT IN PERSONA IS CREATED IN FAVOUR OF THE TRANSFEREE/VENDEE. WH EN SUCH RIGHT IS CREATED IN FAVOUR OF THE VENDEE, VENDOR IS RESTRAINED FROM SELLING THE SAID PROPERTY TO SOMEONE-ELSE, BECAUSE VENDEE IN WH OSE FAVOUR THE RIGHT IN PERSONA IS CREATED HAS LEGITIMATE RIGHT TO ENFORCE SPECIFI C PERFORMANCE OF THE AGREEMENT, IF VENDOR FOR SOME REASON IS NOT EXECUTI NG SALE DEED. THUS, BY VIRTUE OF AGREEMENT TO SELL, SOME RIGHT IS GIVEN TO THE VENDEE BY THE VENDOR. IT IS AN ENCUMBRANCE ON THE PROPERTY AND CONSIDERING T HIS ASPECT, THE LD.AO SHOULD HAVE REMITTED THIS ISSUE TO THE FILE OF DVO FOR DETERMINING FAIR MARKET VALUE ON THE DATE OF TRANSFER OF LAND. THE DVO WIL L HAVE TO KEEP IN MIND THE ITA NO.55/RJT/2016 12 ENCUMBRANCE OVER THE PROPERTY BY VIRTUE OF SALE AGR EEMENT. IT IS ALSO PERTINENT TO NOTE THAT VALIDITY OR GENUINENESS OF T HE AGREEMENT HAS ALSO TO BE DECIDED BECAUSE UNDER THE AGREEMENT, CONSIDERATION WAS PROMISED AND NOT PAID AT THE TIME OF AGREEMENT. IT WAS PAID ON 15.1 2.2008. ALL THESE FACTORS ARE TO BE KEPT IN MIND BY THE DVO WHILE DETERMINING THE FMV OF THE PROPERTY. CONSIDERING THESE ASPECTS, WE DEEM IT AP PROPRIATE TO SET ASIDE THE ISSUE TO FILE OF THE AO FOR RE-ADJUDICATION. THE L D.AO SHALL REFER THE MATTER TO THE DVO AS CONTEMPLATED UNDER SECTION 50C(2) OF THE INCOME TAX ACT, 1961. THE LD.DVO SHALL DETERMINE FAIR MARKET VALUE OF THE PROPERTY ON THE DATE OF SALE DEED, BUT KEEP IN MIND THE ENCUMBRANCE OVER TH E PROPERTY BY VIRTUE OF AGREEMENT. THE LD.AO SHALL DETERMINE THE LONG TERM CAPITAL GAIN THEREAFTER. ACCORDINGLY, APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 8 TH DECEMBER, 2016 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER