GUPTA CHEMICAL INDUSTRIES,RANCHI vs. DCIT, CIRCLE-1, RANCHI

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ITA 273/RAN/2018Status: DisposedITAT Ranchi21 July 2020AY 2014-153 pages
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What did the Tribunal hold?

The Tribunal held that the first and second provisos to Section 50C(1), inserted by the Finance Act, 2016, have retrospective effect. Following a co-ordinate bench decision, the Tribunal ruled that these provisions were intended to mitigate hardship and thus apply retrospectively.

What were the facts?

The assessee sold a property in the relevant previous year, and the lower authorities invoked Section 50C of the Income Tax Act, 1961, making an addition of ₹20.33 lakhs. The assessee had entered into an agreement to sell in 2007 and executed the sale deed in 2013.

What were the issues?

The key issue was whether the provisos to Section 50C(1), inserted in 2016, applied retrospectively to the assessment year 2014-15. The Tribunal had to decide if the sale consideration could be accepted based on the agreement value.

Which sections of the Income-tax Act were involved?

Section 50C

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Income Tax Appellate Tribunal, RANCHI BENCH “E” Court at KOLKATA

Before: Shri S.S.Godara & Dr. A.L. Saini

आदेश /O R D E R PER BENCH (Oral):- This assessee’s appeal for assessment year 2014-15 arises against the Commissioner of Income Tax (Appeals)-Ranchi’s order dated 26.06.2018, passed in case No. CIT(A), Ranchi/10488/2016-17 involving proceedings u/s 143(3) the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.

2.

We notice during the course of hearing that the assessee’s sole substantive grievance raised in the instant lis seeks to reverse both the lower Gupta Chemical Inds. Vs. DCIT Cir-1, Ran Page 2 authorities’ action invoking sec. 50C addition of ₹20.33 lakhs in the course of assessment and upheld in the lower appellate proceedings. Suffice to say, case file and more particularly the CIT(A)’s lower appellate order in para-5.8 indicate that the assessee / vendor had entered into the corresponding agreement to sell on 18.10.2007, received cheque payment of ₹12 lakh at that time and executed the sale deed on 21.09.2013 i.e. in the relevant previous year. This made both the lower authorities to invoke sec. 50C of the Act.

3.

The issue that requires our apt adjudication in the instant lis as per the above facts is that of application first and second proviso to sec. 50C(1) of the Act inserted by the Finance Act, 2016 w.e.f. 01.04.2017 accepting the sale consideration going by the agreement value in the case the fuller part amount; as the case may be, been received by the approved mode(s). The CIT(A) is of the opinions that the said proviso carriage prospective effect only. Mr.Mohanti also reiterates the same reasoning that the above stated proviso does not apply with retrospective effect. We find no merit in the instant argument since this tribunal’s co-ordinate bench decision in Dharamshibhai Sonani v/s Assistant Commissioner of Income Tax (2016) 161 ITD 627 (Ahd) has already held that foregoing twin provision(s) are in the matter of an attempt by the legislature to mitigate hardships and therefore carries retrospective effect only . We adopt the same reasoning mutatis mutandis and direct the Assessing Officer to delete the impugned addition.

4.

This assessee’s appeal is allowed. Order pronounced in open court at the close of hearing on Tuesday 21st July, 2020 Sd/- Sd/- (लेखा सद"य) ($या%यक सद"य) (Dr. A.L. Saini) (S.S.Godara) (Accountant Member) (Judicial Member) *Dkp Sr.P.S. &दनांकः- 21/07/2020 कोलकाता । Gupta Chemical Inds. Vs. DCIT Cir-1, Ran Page 3

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