DEEPENDRA SINGH, MUMBAI V. ITO 12(2)(1), MUMBAI

ITA 7059/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0834 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 05-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H N MONTIWALLA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Retrospective amendment; Non-deduction of tax
• Section: 43CA; 43B; 50C; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.7059/M/2016 ASSESSMENT YEAR: 2011-12 MR. DEEPENDRA SINGH, 503, PUSHPA KUNJ, A ROAD, CHURCHGATE, MUMBAI- 400 020 PAN: AKIPS 3319N VS. ITO-12(2)(1), MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI H.N. MONTIWALLA, A.R. REVENUE BY : SHRI PURUSHOTTAM KUMAR, D.R. DATE OF HEARING : 22.12.2017 DATE OF PRONOUNCEMENT : 24.01.2018 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 27.09.2016 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2011-12. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER: ASSESSEE JOINTLY HELD CERTAIN LAND AT LBS MARG, BH ANDUP (E), MUMBAI ADMEASURING 6321.20 SQ. MTRS. THE SAID LAND WAS INHERITED LAND AND WAS ACQUIRED IN THE YEAR 1965 BY ASSESSEE S FATHER LATE MR. NARENDRA SINGH AND HIS BROTHER LATE MR. BALBIR SING H. ACCORDINGLY, ITA NO.7059/M/2016 MR. DEEPENDRA SINGH 2 THE ASSESSEES FATHERS SHARE IN THE SAID LAND WAS 50% AND THE BALANCE 50% WAS THAT OF THE ASSESSEES UNCLE. THE ASSESSEES PARENTS DIED IN AIR CRASH IN 1990 AND THEREUPON THE 50% SHA RE OF LATE SHRI NARENDRA SINGH DEVOLVED UPON THE ASSESSEE AND HIS B ROTHER SHRI TAPENDRA SINGH IN EQUAL PROPORTIONS. THE ASSESSEE HAD ENTERED INTO DEVELOPMENT AGREEMENT WITH DEVELOPER M/S. HORIZON E NTERPRISES DATED 19.08.06 FOR TRANSFER OF 50% SHARE IN THE SAI D PLOT ALONG WITH HIS BROTHER SHRI TAPENDRA SINGH FOR A CONSIDERATION OF RS.2,04,12,000/- BUT POSSESSION OF THE SAID PLOT WA S NOT HANDED OVER TO THE DEVELOPER. THE ASSESSEE HAD COMMITTED TO TH IS CONSIDERATION IN THE YEAR 2006. THE ASSESSEE RECEIVED AN ON ACCO UNT PAYMENT OF RS.10,00,000/- ON ENTERING INTO THE AGREEMENT. SIN CE THERE WERE DEFECTS IN THE TITLE AND ENCUMBRANCES ON THE SAID P LOT, VARIOUS COVENANTS WERE INCLUDED IN THE DEVELOPMENT AGREEMEN T. THE DEVELOPER WAS SUPPOSED TO NEGOTIATE WITH OTHER CO-O WNERS OF THE SAID PLOT AND SETTLE THE CLAIM. THE AGREEMENT PROVIDED THAT IF NO AGREEMENT PROVIDED THAT IF NO AMICABLE SOLUTION WAS REACHED WITHIN 42 MONTHS OF THE AGREEMENT, THE ASSESSEE WAS REQUIR ED TO REFUND THE ON-ACCOUNT MONEY RECEIVED. THE PLOT WAS IN POSSESS ION OF OTHER FAMILY MEMBERS WHO WERE RUNNING THEIR BUSINESS FROM THE SAID PLOT. BECAUSE OF THIS, THE ASSESSEE COULD NOT HAND OVER V ACANT & PEACEFUL POSSESSION OF THE PLOT TO THE DEVELOPER. THE CONVE YANCE WAS FINALLY ENTERED INTO ON 30TH DECEMBER 2010 I.E. AFTER A GAP OF ALMOST 4 YEARS. THE ASSESSEE OFFERED FOR TAX CAPITAL GAINS O N THE BASIS OF THE ACTUAL SALE CONSIDERATION VIZ. RS.2,04,12,000/- SIN CE THIS WAS THE AMOUNT TO WHICH THE ASSESSEE HAD COMMITTED HIMSELF IN THE YEAR ITA NO.7059/M/2016 MR. DEEPENDRA SINGH 3 2006. THE AO INVOKED THE PROVISIONS OF SECTION 50C AND ADOPTED THE MARKET VALUE OF THE SAID LAND AS ADOPTED BY THE STA MP VALUATION AUTHORITIES AT THE TIME OF REGISTRATION VIZ. IN DEC EMBER 2010. THE STAMP VALUATION AUTHORITIES VALUE PREVAILING IN THE YEAR 2006 (WHICH WAS RS.3,44,95,000/-) WHEN THE DEVELOPMENT A GREEMENT WAS ENTERED INTO AND THE ASSESSEE WAS COMMITTED TO A PARTICULAR CONSIDERATION, SHOULD BE APPLICABLE AND NOT THE SVA VALUE PREVAILING IN THE YEAR 2010 WHEN THE CONVEYANCE WAS EXECUTED/R EGISTERED. THE AO REJECTED THE ASSESSEE'S CONTENTION THAT THE SVA VALUE PREVAILING IN THE YEAR 2006 WAS ADOPTED BY THE AO AND CAPITAL GAIN WAS CHARGED ACCORDINGLY. 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS DISMISSED THE APPEAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. WE FIND THAT IN THE INSTANT CASE THE CAPITAL GAIN SHOU LD BE CHARGED WHEN ASSESSEE HAVING EXECUTED AGREEMENT TO SELL IN RESPE CT OF SAID LAND. FOR CALCULATING THE CAPITAL GAIN THE MARKET VALUE O F CONVEYANCE DEED SHOULD BE TAKEN UNDER SECTION 50C OF THE ACT. WE FI ND THAT IN THIS CASE THE ISSUE UNDER CONSIDERATION WAS THE VALUATIO N OF LAND ON THE DATE OF REGISTRATION I.E. 19.08.2006 AT RS.9,32,38, 000/- ON THE DATE OF DEVELOPMENT AGREEMENT MADE ON RECEIPT OF FURNISHING MONEY OF RS.10,00,000/-. WHEN THERE IS A DIFFERENCE BETWEEN THE MEMBERS FIXED AT THE TIME OF AGREEMENT TO SELL AND ACTUAL E XECUTION OF SALE DEED IS THE DATE OF EXECUTION WHICH IS RECOGNIZED B Y SECTION 50C FOR ITA NO.7059/M/2016 MR. DEEPENDRA SINGH 4 THE PURPOSE OF COMPUTING CAPITAL GAIN BECAUSE IT IS RELEVANT FOR THE PURPOSE OF COMPUTING THE STAMP DUTY OR REGISTRATION OF SALE DEED. THE FUNDAMENTAL PURPOSE OF INTRODUCING SECTION 50C WAS TO COUNTER SUPPRESSION OF SALE CONSIDERATION ON SALE OF IMMOVA BLE PROPERTIES, AND THIS SECTION WAS INTRODUCED IN THE LIGHT OF WID ESPREAD BELIEF THAT SALE TRANSACTIONS OF LAND AND BUILDING ARE OFTEN UN DERVALUED RESULTING IN LEAKAGE OF LEGITIMATE TAX REVENUES. THIS SECTION PROVIDES FOR A PRESUMPTION, A REBUTTABLE PRESUMPTION THOUGH-SOMETH ING WITH WHICH I AM NOT CONCERNED FOR THE TIME BEING, THAT THE VAL UE, FOR THE PURPOSE OF COMPUTING STAMP DUTY, ADOPTED BY THE STAMP DUTY VALUATION AUTHORITY REPRESENTS FAIR INDICATION OF THE MARKET PRICE OF THE PROPERTY SOLD. SECTION 50C(1) PROVIDES THAT, 'WHERE THE CONSI DERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS L ESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO A S THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR A SSESSED OR ASSESSABLE SHALL, FOR THE PURPOSES OF SECTION 48, B E DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF SUCH TRANSFER'. THE TROUBLE, HOWEVER, IS THAT WHILE THE S ALE CONSIDERATION IS FIXED AT THE POINT OF TIME WHEN AGREEMENT TO SELL I S ENTERED INTO, THERE IS SOMETIMES CONSIDERABLE GAP IN PARTIES AGREEING T O A TRANSACTION (I.E. AGREEMENT TO SELL) AND THE ACTUAL EXECUTION O F THE TRANSACTION (I.E. SALE DEED), AND YET, IT IS THE VALUE AS ON TH E DATE OF EXECUTION OF SALE DEED WHICH IS RECOGNIZED BY SECTION 50C FOR TH E PURPOSE OF ITA NO.7059/M/2016 MR. DEEPENDRA SINGH 5 COMPUTING THE CAPITAL GAIN BECAUSE THAT IS WHAT IS RELEVANT FOR THE PURPOSE OF COMPUTING STAMP DUTY FOR REGISTRATION OF SALE DEED. THE VERY COMPARISON BETWEEN THE VALUE AS PER SALE DEED AND THE VALUE AS PER STAMP DUTY VALUATION, ACCORDINGLY, CEASES TO BE DEVOID OF A RATIONAL BASIS BECAUSE THESE TWO VALUES REPRESENT T HE VALUES AT TWO DIFFERENT POINTS OF TIME. IN A SITUATION IN WHICH T HERE IS SIGNIFICANT DIFFERENCE BETWEEN THE POINT OF TIME WHEN AGREEMENT TO SELL IS EXECUTED AND WHEN THE SALE DEED IS EXECUTED, THEREF ORE, SHOULD IDEALLY BE BETWEEN THE SALE CONSIDERATION AS PER RE GISTERED SALE DEED, WHICH IS FIXED BY WAY OF THE AGREEMENT TO SELL, VIS --VIS THE STAMP DUTY VALUATION AS AT THE POINT OF TIME WHEN AGREEME NT TO SELL, WHEREBY SALE CONSIDERATION WAS IN FACT FIXED, BECAU SE, IF AT ALL ANY SUPPRESSION OF SALE CONSIDERATION SHOULD BE ASSUMED , IT SHOULD BE ON THE BASIS OF STAMP DUTY VALUATION AS AT THE POINT O F TIME WHEN THE SALE CONSIDERATION WAS FIXED. [1]. RATIONALISATION OF SECTION 50C TO PROVIDE REL IEF WHERE SALE CONSIDERATION FIXED UNDER AGREEMENT TO SELL SECTION 50C MAKES A SPECIAL PROVISION FOR DETERMININ G THE FULL VALUE OF CONSIDERATION IN CASES OF TRANSFER OF IMMOVABLE PROP ERTY. 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 ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT (I.E. 'STAMP VALUATION AUTHORITY') FOR THE P URPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE V ALUE SO ADOPTED OR ASSESSED OR ASSESSABLE SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION, AND CAPITAL GAINS SHALL BE COMP UTED 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. 201 0-11 TO THE TRANSACTION WHICH WERE EXECUTED THROUGH AGREEMENT TO SELL OR POWER OF ATTORNEY BY INSERTING THE WORD 'ASSESSABLE' ALONGWITH WORDS 'THE VALUE SO ADOPTED OR ASSESSED'. HENCE, SECTION 50C IS NOW ALSO APPLICABLE IN CASE OF SUCH TRANSFERS. ITA NO.7059/M/2016 MR. DEEPENDRA SINGH 6 THE PRESENT PROVISIONS OF SECTION 50C DO NOT PROVIDE A NY RELIEF WHERE THE SELLER HAS ENTERED INTO AN AGREEMENT TO SELL THE ASSE T MUCH BEFORE THE ACTUAL DATE OF TRANSFER OF THE IMMOVABLE PROPERTY AND THE SALE CONSIDERATION HAS BEEN FIXED IN SUCH AGREEMENT. A LA TER SIMILAR PROVISION INSERTED BY WAY OF SECTION 43CA DOES TAKE C ARE OF SUCH A SITUATION. [2]. IT IS THEREFORE PROPOSED TO INSERT THE FOLLOWING PR OVISIONS 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 REGISTRATIO N OF THE TRANSFER OF THE ASSET ARE NOT SAME, THE VALUE REFERRED TO IN SUB- SECTION (1) MAY BE TAKEN AS THE VALUE ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT FOR 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 ON LY 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 AGREEM ENT FOR TRANSFER OF THE ASSET. [3] TRUE TO THE WORK ETHOS OF THE CURRENT GOVERNMENT, IT W AS THE FIRST TIME THAT WITHIN FOUR MONTHS OF THE TAX SIMPLIFICATION COMMI TTEE BEING NOTIFIED, NOT ONLY THE FIRST REPORT OF THE COMMITTEE WAS SUBMITTED, BUT THE GOVERNMENT ALSO WALKED THE TALK BY ENSURING THAT THE SEV ERAL STATUTORY AMENDMENTS, BASED ON RECOMMENDATIONS OF THIS REPORT, WE RE INTRODUCED IN THE PARLIAMENT. SO FAR AS SECTION 50 C IS CONCERNED, THE FINANCE ACT 2016, WITH EFFECT FROM 1ST APRIL 2017, INSERTED THE FOLLOWING PROVISOS TO SECTION 50C: PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AMOUNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSF ER OF THE CAPITAL ASSET ARE NOT THE SAME, THE VALUE ADOPTED OR ASSE SSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY ON THE DATE O F AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VALUE OF CONSIDERATION FOR SUCH TRANSFER: PROVIDED FURTHER THAT THE FIRST PROVISO SHALL APPLY ONLY IN A CASE WHE RE THE AMOUNT OF CONSIDERATION, OR A PART THEREOF, HAS BEE N RECEIVED BY WAY OF AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR BY USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK ACCO UNT, ON OR BEFORE THE DATE OF THE AGREEMENT FOR TRANSFER.' ITA NO.7059/M/2016 MR. DEEPENDRA SINGH 7 [4] THIS AMENDMENT WAS EXPLAINED, IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BILL 2016 (HTTP://INDIABUDGET.N IC.IN/UB2016- 17/MEMO/MEM1.PDF), AS FOLLOWS: RATIONALIZATION OF SECTION 50C IN CASE SALE CONSIDE RATION IS FIXED UNDER AGREEMENT EXECUTED PRIOR TO THE DATE OF REGIS TRATION OF IMMOVABLE PROPERTY UNDER THE EXISTING PROVISIONS CONTAINED IN SECTION 50C , IN CASE OF TRANSFER OF A CAPITAL ASSET BEING LAND OR BUILDING ON BOTH, THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY SHALL BE TAKEN AS THE FULL VAL UE OF CONSIDERATION FOR THE PURPOSES OF COMPUTATION OF CAPI TAL GAINS. THE INCOME TAX SIMPLIFICATION COMMITTEE (EASWAR COMMITTEE) HAS IN ITS FIRST REPORT, POINTED OUT THAT THIS PROVISION DOES NOT PRO VIDE ANY RELIEF WHERE THE SELLER HAS ENTERED INTO AN AGREEMENT TO SELL THE PROPERTY MUCH BEFORE THE ACTUAL DATE OF TRANSFER OF THE IMMOVABLE PROPERTY AND THE SALE CONSIDERATION IS FIXED IN SUCH AGREEMENT, WHEREAS SIMILAR PROVISION EXISTS IN SECTION 43CA OF THE ACT I.E. WHEN A N IMMOVABLE PROPERTY IS SOLD AS A STOCK-IN- TRADE. IT IS PROPOSED TO AMEND THE PROVISIONS OF SECTION 50C SO AS TO PROVIDE THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AMOUNT OF CONSIDERATION FOR THE TRAN SFER OF IMMOVABLE PROPERTY AND THE DATE OF REGISTRATION ARE NO T THE SAME, THE STAMP DUTY VALUE ON THE DATE OF THE AGREEMENT MAY BE TAK EN FOR THE PURPOSES OF COMPUTING THE FULL VALUE OF CONSIDERATIO N. IT IS FURTHER PROPOSED TO PROVIDE THAT THIS PROVISION SHALL APPLY ONL Y IN A CASE WHERE THE AMOUNT OF CONSIDERATION REFERRED TO THEREIN, OR A PART THEREOF, HAS BEEN PAID BY WAY OF AN ACCOUNT PAYEE CHE QUE OR ACCOUNT PAYEE BANK DRAFT OR USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT, ON OR BEFORE THE DATE OF THE AGREEMENT FOR THE TR ANSFER OF SUCH IMMOVABLE PROPERTY. 30 THESE AMENDMENTS ARE PROP OSED TO BE MADE EFFECTIVE FROM THE 1ST DAY OF APRIL, 2017 AND SHALL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 2017-18 AND SUBS EQUENT YEARS. [5] WHILE THE GOVERNMENT HAS THUS RECOGNIZED THE GENUIN E AND INTENDED HARDSHIP IN THE CASES IN WHICH THE DATE OF AGREEMENT TO SELL IS PRIOR TO THE DATE OF SALE, AND INTRODUCED WELCOME AMENDMENTS TO THE STATUE TO TAKE THE REMEDIAL MEASURES, THIS BRINGS NO RELIEF TO THE ASSE SSEE BEFORE ME AS THE AMENDMENT IS INTRODUCED ONLY WITH PROSPECTIVE EFFECT FR OM 1ST APRIL 2017. THERE CANNOT BE ANY DISPUTE THAT THIS AMENDMENT IN THE SC HEME OF SECTION 50C HAS BEEN MADE TO REMOVE AN INCONGRUITY, RESULTING IN UNDUE HARDSHIP TO THE ASSESSEE, AS IS EVIDENT FROM THE OBSERVATION IN E ASWAR COMMITTEE REPORT TO THE EFFECT THAT 'THE (THEN PREVAILING) PROVISIONS O F SECTION 50C DO NOT PROVIDE ANY RELIEF WHERE THE SELLER HAS ENTERED INTO A N AGREEMENT TO SELL THE ASSET MUCH BEFORE THE ACTUAL DATE OF TRANSFER OF THE I MMOVABLE PROPERTY AND ITA NO.7059/M/2016 MR. DEEPENDRA SINGH 8 THE SALE CONSIDERATION HAS BEEN FIXED IN SUCH AGREEM ENT' RECOGNIZING THE INCONGRUITY THAT THE DATE AGREEMENT OF SELL HAS BEEN IGN ORED IN THE STATUTE EVEN THOUGH IT WAS CRUCIAL AS IT WAS AT THIS POINT OF TI ME THAT THE SALE CONSIDERATION IS FINALIZED. THE INCONGRUITY IN THE STA TUTE WAS GLARING AND UNDUE HARDSHIP NOT IN DISPUTE. ONCE IT IS NOT IN DISP UTE THAT A STATUTORY AMENDMENT IS BEING MADE TO REMOVE AN UNDUE HARDSHIP TO THE ASSESSEE OR TO REMOVE AN APPARENT INCONGRUITY, SUCH AN AMENDMENT H AS TO BE TREATED AS EFFECTIVE FROM THE DATE ON WHICH THE LAW, CONTAINING S UCH AN UNDUE HARDSHIP OR INCONGRUITY, WAS INTRODUCED. IN SUPPORT OF THIS PRO POSITION, I FIND SUPPORT FROM HON'BLE DELHI HIGH COURT'S JUDGMENT IN THE CASE O F CIT VS ANSAL LANDMARK TOWNSHIP PVT LTD [(2015) 377 ITR 635 (DEL)], WHEREIN APPROVING THE REASONING ADOPTED AN ORDER AUTHORED BY ME DURING MY TENURE AT AGRA BENCH [I..E RAJEEV KUMAR AGARWAL VS ACIT (2014) 149 ITD 363 (AGRA)] WHICH CENTRED ON THE PRINCIPLE THAT WHEN LEGISLATURE IS REASON ABLE AND COMPASSIONATE ENOUGH TO UNDO THE UNDUE HARDSHIP CAUSED BY THE STATUTE 'SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LEGAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CON SEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY N OT STATE SO SPECIFICALLY'. IN THIS CASE, IT WAS SPECIFICALLY OBSE RVED, AND IT WAS THIS OBSERVATION WHICH WAS REPRODUCED WITH APPROVAL BY THE IR LORDSHIPS, AS FOLLOWS: 'NOW THAT THE LEGISLATURE HAS BEEN COMPASSIONATE ENOUGH TO CURE THESE SHORTCOMINGS OF PROVISION, AND THUS OBVIATE THE UN INTENDED HARDSHIPS, SUCH AN AMENDMENT IN LAW, IN VIEW OF THE W ELL SETTLED LEGAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT STATE SO SPECIFICALLY, THE INSERTION OF SECON D PROVISO MUST BE GIVEN RETROSPECTIVE EFFECT FROM THE POINT OF TIME WH EN THE RELATED LEGAL PROVISION WAS INTRODUCED . IN VIEW OF THESE DISCUSSIONS, AS ALSO FOR THE DETAILED REASONS SET OUT EARLIER, WE CANNOT SUBSCRI BE TO THE VIEW THAT IT COULD HAVE BEEN AN 'INTENDED CONSEQUENCE' TO PUN ISH THE ASSESSEES FOR NON-DEDUCTION OF TAX AT SOURCE BY DECLIN ING THE DEDUCTION IN RESPECT OF RELATED PAYMENTS, EVEN WHEN THE CORRESPONDING INCOME IS DULY BROUGHT TO TAX. THAT WILL BE GOING MUCH BEYOND THE OBVIOUS INTENTION OF THE SECTION. ACCORDINGL Y, WE HOLD THAT THE INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1ST APRIL, 2005, BEING THE DATE FROM WHICH SUB CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO. 2) ACT, 2004 ' [6] THEIR LORDSHIPS WERE PLEASED TO HOLD THAT THIS REAS ONING AND RATIONALE OF THIS DECISION 'MERITS ACCEPTANCE'. THE SAME PRINCIPLE , WHEN APPLIED IN THE PRESENT CONTEXT, LEADS TO THE CONCLUSION THAT THE PRESENT AM ENDMENT, BEING AN AMENDMENT TO REMOVE AN APPARENT INCONGRUITY WHICH R ESULTED IN UNDUE ITA NO.7059/M/2016 MR. DEEPENDRA SINGH 9 HARDSHIPS TO THE TAXPAYERS, SHOULD BE TREATED AS RETROSPE CTIVE IN EFFECT. QUITE CLEARLY THEREFORE, EVEN WHEN THE STATUTE DOES NOT SP ECIFICALLY STATE SO, SUCH AMENDMENTS, IN THE LIGHT OF THE DETAILED DISCUSSI ONS ABOVE, CAN ONLY BE TREATED AS RETROSPECTIVE AND EFFECTIVE FROM THE DATE RELA TED STATUTORY PROVISIONS WAS INTRODUCED. VIEWED THUS, THE PROVISO TO SECTION 50 C SHOULD ALSO BE TREATED AS CURATIVE IN NATURE AND WITH RETROSPEC TIVE EFFECT FROM 1ST APRIL 2003, I.E. THE DATE EFFECTIVE FROM WHICH SECTION 50C WAS INTRODUCED. WHILE THE GOVERNMENT MUST BE COMPLIMENTED FOR THE UNPAR ALLELED SWIFTNESS WITH WHICH THE EASWAR COMMITTEE RECOMMENDATIONS, AS ACCE PTED BY THE GOVERNMENT, WERE IMPLEMENTED, I, AS A JUDICIAL OFFICE R, WOULD THINK THIS WAS STILL ONE STEP SHORT OF WHAT OUGHT TO HAVE BEEN DONE INA SMUCH AS THE AMENDMENT, IN TUNE WITH THE JUDGE MADE LAW, OUGHT TO HAV E BEEN EFFECTIVE FROM THE DATE ON WHICH THE RELATED LEGAL PROVISIONS WE RE INTRODUCED. AS I SAY SO, IN ADDITION TO THE REASONING GIVEN EARLIER IN THIS ORDER, I MAY ALSO REFER TO THE OBSERVATIONS OF HON'BLE SUPREME COURT, THE CASE OF CIT VS ALOM EXTRUSION LTD [(2009) 319 ITR 306 SC)], TO THE FOLLOWI NG EFFECT: 'ONCE THIS UNIFORMITY IS BROUGHT ABOUT IN THE FIRST PRO VISO, THEN, IN OUR VIEW, THE FINANCE ACT , 2003, WHICH IS MADE APPLICABLE BY THE PARLIAMENT ONLY W.E.F. 1ST APRIL, 2004, WOULD BECOME CURATIVE IN NATURE, HENCE, IT WOULD APPLY RETROSPECTIVELY W.E.F. 1 ST APRIL, 1988 (I.E. THE DATE ON WHICH THE RELATED LEGAL PROVISION WAS INTRO DUCED) . SECONDLY, IT MAY BE NOTED THAT, IN THE CASE OF ALLIED MO TORS (P) LTD. ETC. VS. CIT (1997) 139 CTR (SC) 364: (1997) 224 ITR 677 (SC), THE SCHEME OF S. 43B OF THE ACT CAME TO BE EXAMINED. IN THAT CASE, THE QUESTION WHICH AROSE FOR DETERMINATION WAS, WHETHER SA LES-TAX COLLECTED BY THE ASSESSEE AND PAID AFTER THE END OF THE RELEVANT PREVIOUS YEAR BUT WITHIN THE TIME ALLOWED UNDER THE REL EVANT SALES-TAX LAW SHOULD BE DISALLOWED UNDER S. 43B OF THE ACT WHILE COMPUTING THE BUSINESS INCOME OF THE PREVIOUS YEAR? THAT WAS A CASE WHICH RELATED TO ASST. YR. 1984-85. THE RELEVANT ACCOUNTING PERIOD EN DED ON 30TH JUNE, 1983. THE ITO DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE WHICH WAS ON ACCOUNT OF SALES-TAX COLLECTED BY THE ASS ESSEE FOR THE LAST QUARTER OF THE RELEVANT ACCOUNTING YEAR. THE DEDUCTI ON WAS DISALLOWED UNDER S. 43B WHICH, AS STATED ABOVE, WAS INSERTED W.E.F. 1ST APRIL, 1984. IT IS ALSO RELEVANT TO NOTE THAT THE FIRS T PROVISO WHICH CAME INTO FORCE W.E.F. 1ST APRIL, 1988 WAS NOT ON THE S TATUTE BOOK WHEN THE ASSESSMENTS WERE MADE IN THE CASE OF ALLIED M OTORS (P) LTD. ETC. (SUPRA). HOWEVER, THE ASSESSEE CONTENDED THAT EVEN THOUGH THE FIRST PROVISO CAME TO BE INSERTED W.E.F. 1ST APRIL, 19 88, IT WAS ENTITLED TO THE BENEFIT OF THAT PROVISO BECAUSE IT OPERATED RETROSPE CTIVELY FROM 1ST APRIL, 1984, WHEN S. 43B STOOD INSERTED. THIS IS HOW THE QUESTION OF RETROSPECTIVITY AROSE IN ALLIED MOTORS (P) LTD. ETC. ( SUPRA). THIS COURT, IN ALLIED MOTORS (P) LTD. ETC. (SUPRA) HELD THAT W HEN A PROVISO IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE ITA NO.7059/M/2016 MR. DEEPENDRA SINGH 10 SECTION WORKABLE, A PROVISO WHICH SUPPLIES AN OBVIOU S OMISSION IN THE SECTION AND WHICH PROVISO IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTERPRETATION, IT COULD BE READ RETROSPECTIVE IN OPERATION, PARTICULARLY TO GIVE EFFECT TO THE SECTION AS A WHOLE. ACCORDINGLY, THIS COURT, IN ALLIED MOTORS (P) LTD. ETC. (SUPRA), HELD THAT THE FIRST PROVISO WAS CURATIVE IN NATURE, HENCE , RETROSPECTIVE IN OPERATION W.E.F. 1ST APRIL, 1988 . IT IS IMPORTANT TO NOTE ONCE AGAIN THAT, BY FINANCE ACT , 2003, NOT ONLY THE SECOND PROVISO IS DELETED BUT EVEN THE FIRST PROVISO IS SOUGHT TO BE AMENDED BY BRIN GING ABOUT AN UNIFORMITY IN TAX, DUTY, CESS AND FEE ON THE ONE HAND V IS-A-VIS CONTRIBUTIONS TO WELFARE FUNDS OF EMPLOYEE(S) ON THE O THER. THIS IS ONE MORE REASON WHY WE HOLD THAT THE FINANCE ACT , 2003, IS RETROSPECTIVE IN OPERATION. MOREOVER, THE JUDGMENT IN ALLIED MOTORS ( P) LTD. ETC. (SUPRA) IS DELIVERED BY A BENCH OF THREE LEARNED JUD GES, WHICH IS BINDING ON US. ACCORDINGLY, WE HOLD THAT FINANCE ACT , 2003, WILL OPERATE RETROSPECTIVELY W.E.F. 1ST APRIL, 1988 (WHEN TH E FIRST PROVISO STOOD INSERTED). LASTLY, WE MAY POINT OUT THE HARDSHIP A ND THE INVIDIOUS DISCRIMINATION WHICH WOULD BE CAUSED TO THE ASSESSEE(S) IF THE CONTENTION OF THE DEPARTMENT IS TO BE ACCEPTED THAT FINANCE ACT , 2003, TO THE ABOVE EXTENT, OPERATED PROSPECTIVELY. TAKE AN EXAMPLE-- IN THE PRESENT CASE, THE RESPONDENTS HAVE DEPOSITED THE C ONTRIBUTIONS WITH THE R.P.F.C. AFTER 31ST MARCH (END OF ACCOUNTING YE AR) BUT BEFORE FILING OF THE RETURNS UNDER THE IT ACT AND THE DATE OF PAYMENT FALLS AFTER THE DUE DATE UNDER THE EMPLOYEES' PROVIDENT FUND ACT , THEY WILL BE DENIED DEDUCTION FOR ALL TIMES. IN VIEW OF THE SE COND PROVISO, WHICH STOOD ON THE STATUTE BOOK AT THE RELEVANT TIME, EACH OF SU CH ASSESSEE(S) WOULD NOT BE ENTITLED TO DEDUCTION UNDER S. 43B OF THE ACT FOR ALL TIMES. THEY WOULD LOSE THE BENEFIT OF DEDUCTI ON EVEN IN THE YEAR OF ACCOUNT IN WHICH THEY PAY THE CONTRIBUTIONS TO THE WELFARE FUNDS, WHEREAS A DEFAULTER, WHO FAILS TO PAY THE CONTRI BUTION TO THE WELFARE FUND RIGHT UPTO 1ST APRIL, 2004, AND WHO PAYS THE CONTRIBUTION AFTER 1ST APRIL, 2004, WOULD GET THE BENEFIT OF DEDUCTION UNDER S. 43B OF THE ACT. IN OUR VIEW, THEREFORE, FINANCE ACT , 2003, TO THE EXTENT INDICATED ABOVE, SHOULD BE READ AS RETROSPECTIVE. IT W OULD, THEREFORE, OPERATE FROM 1ST APRIL, 1988, WHEN THE FIRST PROVISO WAS INTRODUCED . IT IS TRUE THAT THE PARLIAMENT HAS EXPLICITLY STATED THAT FINANCE ACT , 2003, WILL OPERATE W.E.F. 1ST APRIL, 2004. HOWEVER, THE MATTE R BEFORE US INVOLVES THE PRINCIPLE OF CONSTRUCTION TO BE PLACED ON THE PROVISIONS OF FINANCE ACT , 2003. [7] SO FAR AS THE AMENDMENT TO SECTION 50C BEING RETROSPECTIVE IN EFFECT IS CONCERNED, THERE IS NO DOUBT ABOUT THE LEGAL POSITION. I HOLD THE PROVISOS TO SECTION 50C BEING EFFECTIVE FROM 1ST APRIL 2003. THIS IS PRECISE LY WHAT THE LEARNED COUNSEL HAS PRAYED FOR. IN HIS DETAILED WRI TTEN SUBMISSIONS, HE HAS ITA NO.7059/M/2016 MR. DEEPENDRA SINGH 11 MADE OUT OF A STRONG CASE FOR THE AMENDMENT TO SECTION 50C BEING TREATED AS RETROSPECTIVE AND WITH EFFECT FROM 1 ST APRIL 2003. 5. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBU NAL, WE RESTORE THIS ISSUE BACK TO THE FILE OF AO TO VERIFY WHETHER RS.10,00,000/- WAS RECEIVED BY THE ASSESSEE ON THE DATE OF REGISTRATIO N BY CHEQUE OR NOT. IF THE ASSESSEE PRODUCES THE EVIDENCE THAT HE HAS R ECEIVED THE MONEY BY CHEQUE THEN THE STAMP VALUATION SHOULD BE TAKEN AS ON 19.08.2006. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24.01.2018. SD/- SD/- (N.K. PRADHAN) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 24.01.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.