Shri Ashokbhai Chinubhai Bharwad, Ahmedabad V. Income Tax Officer, Ward-2(2)(1), Ahmedabad

ITA 650/AHD/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7099 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-01-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 14-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation; Cost of acquisition; Fair market value; Tax effect; Set aside; Capital Gains
• Section: 271(1)(c); 43CA; 50C; 234B; 143(2); 48; 13

Judgement Text

- , - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A [CONDUCTED THROUGH VIRTUAL COURT] BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO.650/AHD/2016 / ASSTT.YEAR : 2012-13 SHRI ASHOKBH A I CHINUBHAI BHARWAD 43/4, BHARWAD VAS NR. KIRAN PARK NAVA VADAJ AHMEDABAD 380 013. VS. ITO, WARD - 2(2)(1) AHMEDABAD. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI BANDISH SOPARKAR, AR REVENUE BY : SHRI DILEEP KUMAR, SR.DR / DATE OF HEARING : 03/09/2020 ! / DATE OF PRONOUNCEMENT: 08/09/2020 / O R D E R PER RAJPAL YADAV, VICE-PRESIDENT ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-10, AHMEDABAD DATED 11.1.2016 PASSED FOR THE ASSTT.YEAR 2012- 13. 2. ASSESSEE HAS TAKEN SEVEN GROUNDS OF APPEAL, OUT OF WHICH, GROUND NO.1 TO 4 ARE INTER-CONNECTED WITH EACH OTHER. IN THESE GROUNDS, GRIEVANCE OF THE ASSESSEE RELATES TO DETERMINATION OF SALE CONSIDERATION FOR THE PURPOSE OF SECTION 50C OF THE ACT, WHICH WO ULD LEAD TO COMPUTATION OF LONG TERM CAPITAL GAIN ON SALE OF AG RICULTURE LAND. IN ITA NO.650/AHD/2016 2 BRIEF, GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.50,20,750/- WHILE COM PUTING THE LONG TERM CAPITAL GAIN. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 27.3.2014 ELECTRONICALLY DECLARING TAXABL E INCOME OF RS.2,55,836/-. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSU ED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVE ALED TO THE AO THAT THE ASSESSEE ALONG WITH FIVE MORE CO-OWNERS HAD SOLD TW O PROPERTIES ADMEASURING 3386.28 SQ.METERS SITUATED AT SURVEY NO .237 OF VILLAGE VADAJ. THE ASSESSEE HAS SHOWN HIS SHARE OF SALE CO NSIDERATION AT RS.81.00 LAKHS BEING 25% SHARE. THE AO FURTHER FOU ND THAT SUB- REGISTRAR, AHMEDABAD CITY TALUKA HAD VALUED THE PRO PERTY FOR THE PURPOSE OF STAMP DUTY PAYMENT AT RS.5,24,83,000/- A S AGAINST SALE CONSIDERATION SHOWN BY THE ASSESSEE AT RS.3,24,00,0 00/-. THEREFORE, THE AO ISSUED A SHOW CAUSE NOTICE INVITING EXPLANATION OF THE ASSESSEE AS TO WHY SALE VALUE FOR THE PURPOSE OF COMPUTATION OF CA PITAL GAIN SHOULD NOT BE TAKEN AT RS.5,24,83,000/- I.E. VALUE ADOPTED BY THE SUB-REGISTRAR FOR PAYMENT OF STAMP DUTY IN RESPONSE TO THE QUERY O F THE AO, IT WAS CONTENDED BY THE ASSESSEE THAT HE HAS ENTERED INTO AN AGREEMENT TO SELL ON30.10.2010. A PART PAYMENT EQUIVALENT TO 10% OF TOTAL SALE CONSIDERATION WAS RECEIVED AT RS.32,40,000/- BY THE VENDOR, AND THEREFORE THE VALUE FOR THE PURPOSE OF SECTION 50C IS OUGHT TO BE SEEN ON THE DATE OF AGREEMENT WHICH WERE SUPPORTED BY THE R ECEIPT OF PART SALE CONSIDERATION THROUGH ACCOUNT PAYEE CHEQUE. THE LD .AO DID NOT ACCEPT THIS CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE. HE OBSERVED THAT THE ITA NO.650/AHD/2016 3 SALE DEED WAS EXECUTED ON 31.3.2012, AND THEREFORE, JANTRI VALUE (CIRCLE RATE) FOR THE PURPOSE OF STAMP DUTY ADOPTED BY THE SUB-REGISTRAR ON THE DATE OF SALE I.E. 31.3.2012 IS TO BE ADOPTED FOR CA LCULATING DEEMED SALE CONSIDERATION. HE ACCORDINGLY ADOPTED THE SALE CON SIDERATION AT RS.5,24,83,000/-, AND ACCORDINGLY DETERMINED LONG T ERM CAPITAL GAIN. THE SALE CONSIDERATION FOR THE PURPOSE OF CALCULATI NG LONG TERM CAPITAL GAIN WAS TAKEN AT RS.1,31,20,750/- IN THE HANDS OF THE ASSESSEE AGAINST RS.81,00,000/- BEING 25% SHOWN BY THE ASSESSEE. IN THIS WAY, AN ADDITION OF RS.50,20,750/- HAS BEEN MADE IN THE HAN DS OF THE ASSESSEE. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO TH E ASSESSEE. 4. THE LD.COUNSEL FOR THE ASSESSEE WHILE IMPUGNING ORDER OF THE LD.CIT(A) TOOK US THROUGH COPY OF THE AGREEMENT DAT ED 30.12.2010 AVAILABLE ON PAGE NOS.12 TO 26 OF THE PAPER BOOK. HE FURTHER TOOK US THROUGH DETAILS OF PAYMENTS RECEIVED BY THE VENDOR THROUGH ACCOUNT PAYEE CHEQUE AVAILABLE ON PAGE NO.21 OF THE PAPER B OOK. THUS, HE DEMONSTRATED THAT AGREEMENT TO SELL WAS NOT REGISTE RED, BUT PART PAYMENT WAS RECEIVED THROUGH BANKING CHANNEL. THE RECEIPT OF THIS PAYMENT HAS SUBSEQUENTLY BEEN RECOGNIZED IN THE SALE DEED WHICH IS AVAILABLE ON PAGE NO.66 TO94 OF THE PAPER BOOK, PARTICULARLY, HE TOOK US THROUGH PAGE NO.76 OF THE PAPER BOOK, INTERNAL PAGE NO.11 TO 14 OF THE SALE DEED. ON THE STRENGTH OF THESE DOCUMENTS, HE DEMONSTRATED TH AT PAYMENT RECEIVED BY VIRTUE OF AGREEMENT TO SELL THROUGH BANKING CHAN NEL HAS BEEN RECOGNIZED IN THE SALE DEED ALSO. HE FURTHER RELIE D UPON THE DECISIONS, VIZ. DHARAMSHIBHIA SONANI VS. ACIT, 75 TAXMANN.COM 141 (AHD-TRIB), RAHUL G. PATEL VS. DCIT, 97 TAXMNAN.COM 598 (AHD-TR IB) AND MANILAL DASBHAI MAKWANA VS. ITO, 96 TAXMANN.COM 219 (AHD-TR IB) AND ITA NO.650/AHD/2016 4 SUBMITTED THAT SALE VALUE ON THE DATE OF AGREEMENT OUGHT TO BE TAKEN FOR THE PURPOSE OF SECTION 50C. THE BREAK-UP OF CHEQUE S INCLUDING THEIR NUMBER AND DATE OF PAYMENT ETC. HAS BEEN COMPILED I N ENGLISH TRANSLATION AND PLACED ON PAGE NOS.6 TO 35 OF SECON D PAPER BOOK. HE TOOK US THROUGH ALL THESE DETAILS. 6. THE LD.DR ON THE OTHER HAND RELIED UPON THE ORDE RS OF THE LD.CIT(A). HE CONTENDED THAT SALE DEED WAS REGISTE RED ON 31.3.2012, AND THEREFORE, THE AO HAS RIGHTLY ADOPTED THE JANTRI VALUE FOR THE PURPOSE OF COMPUTING THE LONG TERM CAPITAL GAIN ON THE DATE WHEN SALE DEED WAS REGISTERED. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. ONE OF THE DECISIONS REFERRED BY THE LD.COUNSEL FOR THE ASSESSEE IS IN THE CASE OF RAHUL G. PATEL VS. DCIT, 97 TAXMANN.COM 598 (AHD-TRIB). IT IS AUTHORED BY ONE OF US (VICE-PRES IDENT). IN THAT DECISION THE TRIBUNAL HAS CONSIDERED ALL THESE ASPE CTS, AND THEREFORE WE DEEM IT APPROPRIATE TO TAKE NOTE OF DISCUSSION MADE BY THE TRIBUNAL RAHUL G. PATEL (SUPRA), WHICH READS AS UNDER: 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. SECTION 48 OF THE INCOME TAX ACT PROVIDES MODE OF COMPUTATION OF CAPITAL GAIN. IT CONTEMPLATE S THAT INCOME ARISING UNDER THE HEAD 'CAPITAL GAINS' SHALL BE COM PUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING, AS A RESULT OF THE TRANSFER OF THE CAPITA L ASSETS THE FOLLOWING AMOUNTS, VIZ. (A) EXPENDITURE INCURRED WH OLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER; AND ( B) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROV EMENT THERETO. ITA NO.650/AHD/2016 5 9. SECTION 50C FURTHER PROVIDES THAT WHERE THE CON SIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS L ESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY FOR THE PURPOS E OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALU E SO ADOPTED OR ASSESSED SHALL FOR THE PURPOSES OF SECTION 48, BE D EEMED TO BE THE FULL VALUE OF THE CONSIDERATION. IN OTHER WORDS, FU LL CONSIDERATION MENTIONED IN SECTION 48 IS TO BE REPLACED BY THE CO NSIDERATION ON WHICH VALUE OF THE PROPERTY WAS ADOPTED FOR THE PUR POSE OF PAYMENT OF STAMP DUTY. 10. SUB-SECTION (2) OF SECTION 50C FURTHER CONTEMP LATES THAT IN CASE ASSESSEE ALLEGES THAT STAMP DUTY VALUATION AUT HORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF TH E PROPERTY AS ON THE DATE OF TRANSFER, THEN, THE AO MAY REFER THE VA LUATION OF THE CAPITAL ASSET TO THE VALUATION OFFICER. SUB-CLAUSE (V) OF SECTION 2(47) HAS A DIRECT BEARING ON THE CONTROVERSY. THER EFORE, IT IS PERTINENT TO TAKEN NOTE OF THIS CLAUSE. IT READS AS UNDER: 'SECTION 2 . . . . . . . . . . . . . . . . (47) 'TRANSFER', IN RELATION TO A CAPITAL ASSET, IN CLUDES, (I) TO (IVA) (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE P OSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) ; OR' 11. BEFORE TAKING COGNIZANCE OF ANY ARGUMENT, IT IS PERTINENT TO TAKE NOTE OF REGISTRATION AND OTHER RELATED LAWS, A MENDMENT ACT, 2001 WHICH HAS BROUGHT ABOUT RADICAL CHANGES IN THE RIGHTS FLOWING ON THE BASIS OF THE AGREEMENT EXECUTED IN P ART 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 NOT E OF SECTION 17(1A) AS WELL AS SECTION 49 OF THE REGISTRATION AC T. ITA NO.650/AHD/2016 6 '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 1882) SHALL BE REGISTERED IF THEY HAVE BEEN EXECUTED ON O R AFTER THE COMMENCEMENT OF THE REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001 AND IF SUCH DOCUMENTS ARE NOT REGISTERED ON OR AFTER SUCH COMMENCEMENT, THEN, THE Y SHALL HAVE 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 (A) AFFECT ANY IMMOVABLE PROPERTY COMPRISED THEREIN, OR (B) CONFER ANY POWER TO ADOPT, OR (C) BE RECEIVED AS EVIDENCE OF ANY TRANSACTION AFFECTIN G SUCH PROPERTY OR CONFERRING SUCH POWER, UNLESS IT HAS BEEN 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 RECE IVED AS EVIDENCE OF A CONTRACT IN A SUIT FOR SPECIFIC PERFO RMANCE UNDER CHAPTER II OF THE SPECIFIC RELIEF ACT, 1877 (3 OF 1 877) OR AS EVIDENCE OF ANY COLLATERAL TRANSACTION NOT REQUIRED TO BE EFFECTED BY REGISTERED INSTRUMENT.]' 12. WE ALSO DEEM IT PERTINENT TO TAKE NOTE OF SECT ION 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 WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREO F, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CONTINUES IN POSSESSION IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE ITA NO.650/AHD/2016 7 SOME ACT IN FURTHERANCE OF THE CONTRACT, AND THE TR ANSFEREE HAS PERFORMED OR 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 MANNER PRESCRIBED THEREFOR BY THE LAW FOR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROP ERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSS ESSION, OTHER THAN A RIGHT EXPRESSLY PROVIDED BY THE TERMS OF THE CONTRACT: PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF T HE CONTRACT OR OF THE PART PERFORMANCE THEREOF.' 13. A PERUSAL OF SECTION 53A OF THE TPA WOULD INDI CATE THAT IT PROVIDES A PROTECTION TO TRANSFEREE TO RETAIN HIS P OSSESSION WHICH WAS TAKEN IN PART PERFORMANCE OF THE CONTRACT. HE W AS ABLE TO PROTECT HIS POSSESSION EVEN AFTER EXPIRY OF LIMITAT ION TO BRING A SUIT FOR SPECIFIC PERFORMANCE. BUT AFTER THE AMENDMENT E FFECTED IN THE REGISTRATION AND OTHER RELATED LAWS AMENDMENT ACT, 2001, IT HAS BEEN PROVIDED THAT THOUGH A CONTRACT ACCOMPANIED BY EITHER OF POSSESSION OR EXECUTED IN FAVOUR OF A PERSON IN POS SESSION IS COMPULSORILY REGISTERABLE UNDER SECTION 17(1A) OF T HE REGISTRATION ACT, 1908, IF HE FAILED TO REGISTER SUCH CONTRACT, THEN, HE WOULD NOT BE ABLE TO PROTECT HIS POSSESSION OR ANY BENEFIT CO NFERRED BY SECTION 53A OF THE TPA. PROVISO APPENDED TO SECTION 49 OF THE INDIAN REGISTRATION ACT ONLY POSTULATES THAT SUCH A GREEMENT COULD BE TENDERED IN EVIDENCE IN A SUIT FOR SPECIFIC PERF ORMANCE. IN OTHER WORDS, VALIDITY OF UNREGISTERED AGREEMENT HAS NOT B EEN DENIED FOR THE PURPOSE OF ADDUCING IT AS EVIDENCE FOR OBTAININ G THE BENEFIT FLOWING FROM SUCH CONTRACT. BUT FOR THE PURPOSE OF PROTECTING THE POSSESSION, UN-REGISTERED CONTRACT COULD NOT BE ENF ORCED. THE 'TRANSFER' WITHIN THE MEANING OF SECTION 2(47) OF T HE INCOME TAX ACT WOULD COMPLETE, IF POSSESSION IS PROTECTED. THU S ON EXECUTION OF AN AGREEMENT, IF IT WAS NOT REGISTERED THEN TRAN SFER WITHIN THE MEANING OF SECTION 2(47) WILL NOT HAPPEN. LIKE IN THE PRESENT CASE, AGREEMENT WAS EXECUTED ON 8.2.2010 BUT NOT REGISTER ED. ITA NO.650/AHD/2016 8 THEREFORE, IT IS TO BE CONSTRUED THAT TRANSFER DID NOT TAKE PLACE ON 8.2.2010 RATHER TOOK PLACE ON 5.6.2012 WHEN SALE DE ED WAS EXECUTED AND REGISTERED. THIS MAY BE THE REASON FO R THE ASSESSEE TO OFFER CAPITAL GAIN IN THE ASSTT.YEAR 2013-14 ONL Y. 14. IT IS PERTINENT TO OBSERVE THAT AN AGREEMENT TO SALE WAS EXECUTED BY THE ASSESSEE ON 8.2.2010 WHICH IS FOLLO WED BY PAYMENT THROUGH ACCOUNT PAYEE CHEQUE. DETAILS OF PAYMENTS HAVE BEEN DULY NOTICED BY THE LD.AO AS WELL AS BY THE LD.CIT( A). FIRST CHEQUE WAS RECEIVED ON 1.4.2011 FOR A CONSIDERATION OF RS.10 LAKHS; THEN RS.30 LAKHS ON 23.7.2011; RS.15 LAKHS O N 28.12.2011 AND RS.50 LAKHS ON 26.3.2012. SIMILARLY ON 1.5.201 2 RS.45 LAKHS WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. IT MEAN S THAT SALE CONSIDERATION WERE RECEIVED BY THE ASSESSEE BEFORE THE REGISTRATION OF SALE DEED REGULARLY ON DIFFERENT INTERVALS. AS OBSERVED EARLIER, SECTION 50C PROVIDES THAT WHERE THE CONSIDERATION R ECEIVED OR ACCRUING AS A RESULT OF TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VA LUE ADOPTED OR ASSESSED BY ANY AUTHORITY FOR THE PURPOSE OF PAYMEN T OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOP TED OR ASSESSED SHALL FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION. THE QUESTION BEFORE US IS, W HAT COULD BE THE FULL VALUE OF SALE CONSIDERATION I.E. WHETHER THE V ALUE ON WHICH STAMP DUTY WAS PAID AT THE TIME OF SALE DEED OR THE VALUE DECLARED IN THE SALE AGREEMENT ? IN SUCH A SITUATION WHERE THE ASSESSEE IS NOT SATISFIED WITH ADOPTION OF SALE VALUE ON WHICH STAMP DUTY WAS PAID, THEN SCHEME OF THE ACT PRESCRIBES A MECHANISM UNDER SUB- SECTION (2) OF SECTION 50C FOR MAKING A REFERENCE T O THE DVO TO DETERMINE FAIR MARKET VALUE OF THE PROPERTY. THE R EASONS FOR SUCH A MECHANISM IS THAT STAMP DUTY FEE IS ONLY 4.95% (H EREIN GUJARAT) ON THE TOTAL SALE CONSIDERATION, WHICH IS A SMALL A MOUNT AND CAN BE BORNE BY ANY VENDOR/VENDEE. BUT FOR THE PURPOSE OF INCOME TAX ACT, THE LIABILITY WOULD ENHANCE MULTI FOLD, AN D DUE TO THIS REASON, MECHANISM HAS BEEN PROVIDED IN THE ACT FOR THE ASSESSEE TO DEMONSTRATE THAT THE VALUE RECEIVED BY HIM WAS F AR LESS THAN ONE ADOPTED FOR THE PURPOSE OF STAMP DUTY VALUATION . FOR THIS, HE CAN MAKE A REQUEST TO THE AO UNDER SECTION 50C(2) F OR MAKING A REFERENCE TO THE DVO. IT IS PERTINENT TO OBSERVE T HAT THE ASSESSEE ENTERED INTO AN AGREEMENT TO SELL ON 8.2.2010. THE AO HAS NOT ITA NO.650/AHD/2016 9 DISPUTED THIS AGREEMENT. THE ASSESSEE HAS RECEIVED PAYMENT IN PURSUANCE OF THIS AGREEMENT THROUGH ACCOUNT PAYEE C HEQUE. LET US TAKE A SITUATION WHERE A VENDEE FAILS TO GET THE SALE DEED EXECUTED. THE ASSESSEE BEING VENDOR HAS A REMEDY F OR FILING A SUIT FOR SPECIFIC PERFORMANCE UNDER THE SPECIFIC RELIEF ACT. THE TIME LIMIT TO FILE A SUIT FOR SPECIFIC PERFORMANCE HAS B EEN PROVIDED IN INDIAN LIMITATION ACT, WHICH IS THREE YEARS. IN SU CH SITUATION, WHEN THE VENDOR FILES A SUIT FOR SPECIFIC PERFORMAN CE TO FORCE THE VENDEE TO PURCHASE THE PROPERTY. IN THAT SITUATION, HE WILL NOT PAY ANYTHING OVER AND ABOVE, THE AMOUNT STATED IN THE S ALE AGREEMENT. IN THAT SITUATION, THE ASSESSEE WOULD NOT GET ANYTH ING MORE THAN THE AMOUNT MENTIONED IN THE AGREEMENT, THOUGH SUCH SITUATION MAY ARISE AFTER THREE-FOUR YEARS ON EXECUTION OF THE DE CREE PASSED IN A SUIT FOR SPECIFIC PERFORMANCE. IN BETWEEN THERE MA Y AN APPRECIATION OR DEPRECIATION IN THE SAID PROPERTY. CIRCLE RATE MAY RISE OR REDUCE. IN OTHER WORDS, AT THE TIME OF AN AGREEMENT IN RESPECT OF AN IMMOVABLE PROPERTY, A RIGHT IN PERSON A IS CREATED IN FAVOUR OF THE TRANSFEREE/VENDEE. WHEN SUCH RIGHT I S CREATED IN FAVOUR OF THE VENDEE, THE VENDOR IS RESTRAINED FROM SELLING THE SAID PROPERTY TO SOMEONE ELSE BECAUSE VENDEE IN WHOSE FA VOUR RIGHT IN PERSONA IS CREATED HAS LEGITIMATE RIGHT TO ENFORCE SUCH SPECIFIC PERFORMANCE OF THE AGREEMENT, IF THE VENDOR FOR SOM E REASON IS NOT EXECUTING THE SALE DEED. THUS, BY VIRTUE OF AGREEM ENT TO SELL, SOME RIGHT IS GIVEN TO THE VENDEE BY THE VENDOR. IT IS ENCUMBRANCE ON THE PROPERTY. AT THIS STAGE, WE WOULD LIKE TO MAKE REFERENCE TO NEW PROVISO APPENDED TO SECTION 50C BY WAY OF FINAN CE ACT, 2016 AND THE BACKGROUND, UNDER WHICH SUCH PROVISION HAS BEEN INCORPORATED. IN 2015, GOVERNMENT OF INDIA HAS SET UP INCOME TAX SIMPLICATION COMMITTEE HEADED BY JUSTICE R.V.EA SWAR, FORMER JUDGE OF DELHI HIGH COURT. THE COMMITTEE IN ITS REPORTED OBSERVED AS UNDER: 6.1 RATIONALISATION OF SECTION 50C TO PROVIDE RELIEF WHERE SALE CONSIDERATION FIXED UNDER AGREEMENT TO SELL SECTION 50C MAKES A SPECIAL PROVISION FOR DETERMINI NG THE FULL VALUE OF CONSIDERATION IN CASES OF TRANSFER OF IMMO VABLE PROPERTY. IT 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 ITA NO.650/AHD/2016 10 ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT ( I.E. 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED O R 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 INCOME-TAX ACT. THE SCOPE OF SECTION 50C WAS EXTENDED W.E.F. A.Y. 2 010-11 TO THE TRANSACTION WHICH WERE EXECUTED THROUGH AGREEME NT TO SELL OR POWER OF ATTORNEY BY INSERTING THE WORD 'ASSESSA BLE' ALONGWITH WORDS 'THE VALUE SO ADOPTED OR ASSESSED'. HENCE, SECTION 50C IS NOW ALSO APPLICABLE IN CASE OF SUCH TRANSFERS. THE PRESENT PROVISIONS OF SECTION 50C DO NOT PROVID E ANY RELIEF WHERE THE SELLER HAS ENTERED INTO AN AGREEMENT TO S ELL THE ASSET MUCH BEFORE THE ACTUAL DATE OF TRANSFER OF THE IMMO VABLE PROPERTY AND THE SALE CONSIDERATION HAS BEEN FIXED IN SUCH AGREEMENT. A LATER SIMILAR PROVISION INSERTED BY WA Y OF SECTION 43CA DOES TAKE CARE OF SUCH A SITUATION. 6.2 IT IS THEREFORE PROPOSED TO INSERT THE FOLLOWIN G PROVISIONS IN SECTION 50C: (4) WHERE THE DATE OF AN AGREEMENT FIXING THE VALUE OF CONSIDERATION FOR THE TRANSFER OF THE ASSET AND THE DATE OF REGISTRATION OF THE TRANSFER OF THE ASSET ARE NOT S AME, THE VALUE REFERRED TO IN SUB-SECTION (1) MAY BE TAKEN AS THE VALUE ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT F OR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER ON THE DATE OF THE AGREEMENT. (5) THE PROVISIONS OF SUB-SECTION (4) SHALL APPLY O NLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION OR A PART THEREOF HAS BEEN RECEIVED BY ANY MODE OTHER THAN CASH ON OR BEFORE A DATE OF AGREEMENT FOR TRANSFER OF THE ASSET. 15. TAKING A CLUE FROM THE REPORT, A PROVISO HAS BE EN APPENDED BY WAY OF FINANCE ACT, 2016 TO SECTION 50C AND SUCH PROVISO READS AS UNDER: 'PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXI NG THE AMOUNT OF CONSIDERATION AND THE DATE OF REGISTRATIO N FOR THE ITA NO.650/AHD/2016 11 TRANSFER OF THE CAPITAL ASSET ARE NOT THE SAME, THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALU ATION AUTHORITY ON THE DATE OF AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VALUE OF CONSIDERATION F OR SUCH TRANSFER: PROVIDED FURTHER THAT THE FIRST PROVISO SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION, OR A PART T HEREOF, HAS BEEN RECEIVED BY WAY OF AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR BY USE OF ELECTRONIC CLEARING S YSTEM THROUGH A BANK ACCOUNT, ON OR BEFORE THE DATE OF TH E AGREEMENT FOR TRANSFER.' 16. THIS AMENDMENT WAS EXPLAINED IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BILL 2016. IT READS AS UNDER: RATIONALIZATION OF SECTION 50C IN CASE SALE CONSIDE RATION IS FIXED UNDER AGREEMENT EXECUTED PRIOR TO THE DATE OF REGISTRATION OF IMMOVABLE PROPERTY UNDER THE EXISTING PROVISIONS CONTAINED IN SECTION 50C, IN CASE OF TRANSFER OF A CAPITAL ASSET BEING LAND OR B UILDING ON BOTH, THE VALUE ADOPTED OR ASSESSED BY THE STAMP VA LUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY SHALL BE TAKEN AS THE FULL VALUE OF CONSIDERATION FOR THE PU RPOSES OF COMPUTATION OF CAPITAL GAINS. THE INCOME TAX SIMPLI FICATION COMMITTEE (EASWAR COMMITTEE) HAS IN ITS FIRST REPOR T, POINTED OUT THAT THIS PROVISION DOES NOT PROVIDE ANY RELIEF WHERE THE SELLER HAS ENTERED INTO AN AGREEMENT TO SELL THE PR OPERTY MUCH BEFORE THE ACTUAL DATE OF TRANSFER OF THE IMMOVABLE PROPERTY AND THE SALE CONSIDERATION IS FIXED IN SUCH AGREEME NT, WHEREAS SIMILAR PROVISION EXISTS IN SECTION 43CA OF THE ACT I.E. WHEN AN IMMOVABLE PROPERTY IS SOLD AS A STOCK-IN-TRADE. IT IS PROPOSED TO AMEND THE PROVISIONS OF SECTION 50C SO AS TO PRO VIDE THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AMOUNT O F CONSIDERATION FOR THE TRANSFER OF IMMOVABLE PROPERT Y AND THE DATE OF REGISTRATION ARE NOT THE SAME, THE STAMP DU TY VALUE ON THE DATE OF THE AGREEMENT MAY BE TAKEN FOR THE PURP OSES OF COMPUTING THE FULL VALUE OF CONSIDERATION. IT IS FU RTHER PROPOSED TO PROVIDE THAT THIS PROVISION SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION REFERRED TO THEREIN, OR A PART THEREOF, HAS BEEN PAID BY WAY OF AN ACCOUNT PAYEE ITA NO.650/AHD/2016 12 CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR USE OF ELECTR ONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT, ON OR BEFOR E THE DATE OF THE AGREEMENT FOR THE TRANSFER OF SUCH IMMOVABLE PROPERTY. 30 THESE AMENDMENTS ARE PROPOSED TO BE MADE EFFECTI VE FROM THE 1ST DAY OF APRIL, 2017 AND SHALL ACCORDINGLY AP PLY IN RELATION TO ASSESSMENT YEAR 2017-18 AND SUBSEQUENT YEARS.' 17. IF WE TAKE ALL THESE ASPECTS IN THEIR SETTINGS AS A WHOLE, THEN IT WOULD INDICATE THAT EARLIER WHENEVER AN ASSESSEE DISPUTED ADOPTION OF SALE EQUIVALENT TO THE AMOUNT ON WHICH STAMP DUTY IS PAID, THEN REFERENCE TO THE DVO IS MADE UNDER SECTI ON 50C(2). NORMALLY, AS OBSERVED EARLIER, WHEN A SALE AGREEMEN T WAS EXECUTED, PAYMENT WAS RECEIVED IN PART PERFORMANCE OF THE AGREEMENT, THEN VENDOR WOULD NOT GET ANYTHING MORE THAN THE AMOUNT AGREED IN THE SALE AGREEMENT. THERE MAY BE A TIME GAP BETWEEN EXECUTION OF AGREEMENT TO SELL AND EXECUTIO N OF SALE DEED. IN BETWEEN IF CIRCLE RATE IS BEING ENHANCED, THEN H E WOULD LIKE TO CHALLENGE ADOPTION OF HIGHER SALE VALUE ON THE STRE NGTH OF SALE AGREEMENT. IN THAT SITUATION, UNNECESSARY ENERGY W OULD BE DEVOTED IN ASCERTAINING FAIR MARKET VALUE OF THE PR OPERTY ON THE DATE OF SALE. THE ENCUMBRANCE ON THE PROPERTY BY V IRTUE OF SALE AGREEMENT WOULD ALSO GOAD THE DVO TO DETERMINE THE FAIR MARKET VALUE OF THE PROPERTY ON THE DATE OF SALE AT A LESS ER AMOUNT THAN THE VALUE ADOPTED FOR THE PURPOSE OF PAYMENT OF STA MP DUTY. WE HAVE ALREADY MADE A REFERENCE TO SPECIFIC RELIEF AC T AND HOW A VENDOR OR VENDEE COULD ENFORCE THE SALE AGREEMENT U NDER SPECIFIC RELIEF ACT. UNDER SUCH ENFORCEMENT, THEY WOULD SET TLE THEIR RIGHT ON THE BASIS OF AGREED TERMS IN THE SALE AGREEMENT. THIS PROVISO WOULD ONLY SIMPLIFY THIS EXERCISE I.E. INSTEAD REMI TTING THE MATTER TO THE DVO UNDER SECTION 50C(2), HE WOULD CONDUCT A N INQUIRY AS TO WHAT COULD BE VALUE OF THE PROPERTY ON THE DATE OF EXECUTION OF THE AGREEMENT, AND WHETHER SUCH AGREEMENT HAS CREAT ED ANY ENCUMBRANCE OR NOT. THERE COULD BE A DIFFERENCE IN THE ACTUAL SALE CONSIDERATION THAN THE AMOUNT ON WHICH STAMP D UTY WAS PAID. THIS PROVISO HAS SIMPLIFIED THIS THING. IT CONTEMP LATES THAT STAMP DUTY VALUATION OF THE PROPERTY FOR THE PURPOSE OF S TAMP DUTY PAYMENT ON THE DATE OF AGREEMENT CAN BE DEEMED AS F ULL CONSIDERATION OF THE CAPITAL ASSET. THUS, IN THIS WAY, THE PROVISO CAN BE CONSTRUED AS CLARIFICATORY IN NATURE, AND CA N BE APPLIED ON ITA NO.650/AHD/2016 13 PENDING MATTERS AS ALREADY HELD BY THE ITAT IN THE CASE OF DHARAMSHIBHAI SONANI (SUPRA). 18. IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE HAS CONTENDED THAT CONSIDERATION OF RS.3,00,11,000/- IS MORE THAN THE VALUATION FOR THE PURPOSE OF STAMP DUTY AS ON 8.2.2010. NO W HERE THE ASSESSEE HAS POINTED OUT SPECIFIC RATE ON THE DATE OF AGREEMENT. THEREFORE, WE ALLOW THESE TWO GROUNDS OF APPEAL FOR THE STATISTICAL PURPOSE. WE SET ASIDE THIS ISSUE TO THE FILE OF TH E AO. THE LD.AO SHALL CALL FOR CIRCLE RATE FOR THE PURPOSE OF STAMP DUTY VALUATION OF THIS PROPERTY AS ON 8.2.2010. HE SHALL DETERMINE T HE SALE VALUE OF THE PROPERTY ON THE BASIS OF CIRCLE RATE APPLICABLE ON THIS PROPERTY ON 8.2.2010, AND THEREAFTER COMPUTE LONG TERM CAPIT AL GAIN ASSESSABLE IN THE ASSESSMENT YEAR 2013-14. IN OTHE R WORDS, TRANSFER OF THIS PROPERTY WOULD BE CONSTRUED ON 5.6 .2012, BUT THE FULL VALUE OF CONSIDERATION IS TO BE EQUIVALENT TO THE AMOUNT ON WHICH STAMP DUTY WAS PAYABLE ON 8.2.2010. 8. IN THE LIGHT OF THE ABOVE DISCUSSION, IF WE EXAM INE THE FACTS OF THE PRESENT CASE, THEN IT WOULD REVEAL THAT AN AGREEMEN T ENFORCEABLE IN LAW WAS EXECUTED BY THE ASSESSEE ON 30.12.2010. FOR TH E PURPOSE OF DEMONSTRATING AUTHENTICITY OF THIS AGREEMENT, CORRO BORATIVE EVIDENCE IN THE SHAPE OF RECEIPT OF PART PAYMENT THROUGH BANKIN G CHANNEL HAS BEEN FURNISHED. IN OTHER WORDS, THE ASSESSEE HAS RECEIV ED PART PAYMENT OF THE SALE CONSIDERATION AT THE TIME OF SALE AGREEMENT, A ND THOSE PAYMENTS HAVE ALSO BEEN RECOGNIZED IN THE FINAL SALE DEED. THEREFORE, WE DO NOT HAVE HESITATION IN CONCLUDING THAT AGREEMENT EXECUT ED ON 30.12.2010 HAS BEEN GIVEN EFFECT BY THE PARTIES WHICH RESULTED IN EXECUTION OF THE SALE DEED ROUGHLY AFTER ONE AND HALF YEARS. CIRCLE RATE AT THE TIME OF EXECUTION OF AGREEMENT WAS LESSER THAN ONE ADOPTED BY THE PARTIES AS SALE CONSIDERATION. THEREFORE, THE FACTS IN THE CA SE OF RAHUL G. PATEL (SUPRA) ARE FULLY APPLICABLE ON THE FACTS OF THE PR ESENT CASE, AND FULL SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING LONG TER M CAPITAL GAIN IN THE ITA NO.650/AHD/2016 14 HANDS OF THE ASSESSEE IS TO BE ADOPTED AT RS.81 LAK HS BEING 25% OF SHARE OF RS.3,24,00,000/-. 9. IN GROUND NO.5, THE ASSESSEE HAS PLEADED THAT RE CEIPT OF RS.20,10,000/- SHOULD BE NOT CONSIDERED AS PART OF CONSIDERATION OF RIGHTS AND CHARGEABLE TO CAPITAL GAIN. THE LD.COU NSEL FOR THE ASSESSEE SUBMITTED THAT THIS GROUND WAS CONSEQUENT TO ISSUE RAISED IN THE APPEAL OF THE REVENUE, WHICH HAS ALREADY BEEN DISMISSED ON ACCOUNT OF LOW TAX EFFECT INVOLVED THEREIN. THEREFORE, THE ASSESSEE I S NOT PRESSING THIS GROUND OF APPEAL. 10. IN GROUND NO.6 IS AGAINST CHARGING OF INTEREST UNDER SECTION 234A, 234B & 234C OF THE ACT. THIS IS CONSEQUENTIAL IN N ATURE, AND DISMISSED AS SUCH. 11. IN GROUND NO.7 ASSESSEE IS CHALLENGING INITIATI ON OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE SAME IS PREMATUR E AT THIS STAGE, HENCE DISMISSED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 8 TH SEPTEMBER, 2020 AT AHMEDABAD. S D / - (WASEEM AHMED) ACCOUNTANT MEMBER S D / - (RAJPAL YADAV) VICE-PRESIDENT AHMEDABAD; DATED 9/09/2020