OM PRAKASH GUPTA,JAIPUR vs. ACIT, JAIPUR

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ITA 358/JPR/2017Status: DisposedITAT Jaipur07 August 2019AY 2013-148 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO erred in adopting the stamp duty value as on the date of registration of the sale deed (April 12, 2012) instead of the stamp duty value as on the date of the agreement to sell (December 17, 2011). The Tribunal found that the assessee had agreed to sell disputed land on December 17, 2011, and received Rs. 2,00,000 by account payee cheque on the same date. The registration of the sale deed was subject to the issuance of a patta, which was obtained on February 14, 2012, followed by registration on April 12, 2012. The Tribunal noted that the sale consideration declared by the assessee (Rs. 33,84,590) was more than the DLC rate as of December 17, 2011 (Rs. 32,11,859). The Tribunal considered the provisos to Section 50C, inserted by the Finance Act, 2016, as clarificatory and applicable retrospectively, indicating the legislature's intent to adopt the DLC rate on the date of the agreement if a part of the consideration is paid by account payee cheque. Similar provisions in Section 43CA and Section 56(2)(vii) were also cited to support this interpretation. Therefore, the addition made by the AO was directed to be deleted. The ratio decidendi is that for the purpose of Section 50C, the stamp duty value on the date of the agreement to sell should be considered if a part of the consideration is paid by account payee cheque on that date, especially when the sale deed registration is delayed due to external factors and the declared sale consideration is not less than the DLC rate on the agreement date.

What were the facts?

The assessee, Shri Om Prakash Gupta, sold a plot of land on April 12, 2012, declaring capital gains of Rs. 14,860. The Assessing Officer (AO) invoked Section 50C of the Income Tax Act, 1961, noting that the stamp duty value adopted by the Registrar was Rs. 40,31,163, while the assessee declared Rs. 33,84,590. This resulted in an addition of Rs. 6,46,573 to the capital gains. The Commissioner of Income Tax (Appeals) confirmed the AO's action. The assessee's appeal before the ITAT concerns the Assessment Year 2013-14. The assessee argued that the land was disputed, with physical possession held by original owners (Kashtkars). An agreement to sell was executed on December 17, 2011, for Rs. 33,84,590, with Rs. 2,00,000 received by account payee cheque. The sale deed registration occurred on April 12, 2012, after the Jaipur Development Authority issued a patta on February 14, 2012.

What were the issues?

1. Whether the stamp duty value as on the date of the agreement to sell (December 17, 2011) should be considered for the purpose of Section 50C, instead of the stamp duty value on the date of registration of the sale deed (April 12, 2012), when a part of the consideration was paid by account payee cheque on the date of the agreement? Assessee's contentions: The assessee argued that the land was disputed, and the agreement to sell was executed on December 17, 2011, with a part payment by account payee cheque. Therefore, the stamp duty value as on December 17, 2011, should be considered. The assessee relied on the intention of the legislature as reflected in the provisos to Section 50C (inserted by Finance Act, 2016, though effective from April 1, 2017, argued as clarificatory and retrospective) and similar provisions in Section 43CA and Section 56(2)(vii), which allow adoption of DLC rates prevailing on the date of agreement if consideration is paid by cheque. The assessee's sale consideration of Rs. 33,84,590 was higher than the calculated DLC rate of Rs. 32,11,859 as of December 17, 2011. Revenue's contentions: The Revenue contended that the AO correctly adopted the sale consideration based on the stamp duty value on the date of registration of the sale deed, invoking Section 50C. The Revenue stated there was no infirmity in the AO's order, especially as it was a search case where an incriminating document was found.

Which sections of the Income-tax Act were involved?

Section 50C,Section 143(3),Section 153B(1)(b),Section 43CA,Section 56(2)(vii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES (SMC

Before: Shri Ramesh C.Sharma

For Appellant: Shri S.R. Sharma, CA
For Respondent: Smt. Anuradha, JCIT-DR
Hearing: 05/08/2019Pronounced: 07/08/2019

ORDER

PER RAMESH C. SHARMA, AM

1.

This is an appeal filed by the assessee against the order of the ld. CIT(A)-4, Jaipur dated 22-03-2017 for the Assessment Year 2013-140, in the matter of section 143(3) r.w.s. 153B(1)(b) of the I.T. Act, 1961. 2.1 In this appeal, the assessee is aggrieved for addition of Rs. 6,46,573/- made by the AO after invoking the provisions of section 50C of the Act. consideration the assessee had sold a plot of land on 12-04-2012 to M/s.

Priyakshi Build Tech Pvt. Ltd on which capital gains of Rs.14,860/-was declared by the assessee. The AO found that the assessee took full value of consideration of Rs. 33,84,590/- as per computation of income for the purpose of Section 50C of the Act. The AO found that stamp duty value adopted by the Registrar was amounting to Rs.40,31,163/-. The AO invoked the provision of section 50C of the Act and thus made the addition of Rs. 6,46,573/- in the declared capital gains.

2.3 By impugned order, the ld. CIT(A) has confirmed the action of the AO against which the assessee is in appeal before this Bench.

2.4 During the course of hearing, the ld.AR of the assessee argued that the open plots of land bearing No. 214 measuing 185.78 sq. meter and 204.51 sq. mtr (466.84 sq. yards) were allotted by the Cooperative Society but no physical possession was handed over to the assessee. The physical possession was with the original owners (Kashtkars) and as such said land was a disputed one. Looking to the above facts, the assessee agreed to sell the said plots on 17-12-2011 to M/s. Priyakshi Build Tech.

Pvt. Ltd for a sum of Rs. 33,84,590/- under an agreement to sell of even dated executed in between above said parties duly attested by a Notrary. received by account payee cheque No 028438 dated 17-12-2011 drawn on Allahabad Bank, Vidhyadhar Nagar Branch, Jaipur. Out of the balance sale consideration, a sum of Rs. 11,67,100/- was payable to the Kashtkars who were holding physical possession and Rs. 20,17,490/- to the assessee. The facts and submissions were verifiable from the agreement to sell filed before the AO. Thus the assessee agreed to sell the said disputed land on 17-12-2011. It was also verifiable from the agreement to sell that registration of the sale deed was subject to issuance of patta/ lease deed from the Jaipur Development Authority. The said patta was issued on 14-02-2012 and the registration of Sale Deed was made on 12-04-2012. As per these facts, it is apparent that the assessee agreed to sell the above said plots of land at the prevailing market rate on 17-12-2011 and as such the stamp duty value of the said property should be considered as on the said date i.e. 17-12-2011. The stamp duty rate on the said date i.e. 17-12-2011 was at Rs. 6880/- per sq. yard. A copy of the DLC rate chart issued by the Rajasthan State Govt. Ssub-Registrar, Amer in support of above facts was filed before the AO. As per said rate the total sale value works out to Rs. 32,11,859/- as against the actual sale consideration of Rs. 33,84,590/- i.e the sale consideration received by the adopted the said value for computation of capital gains. The AO has not controvered these facts submitted by the assessee, hence these are taken as correct facts.

2.4.1 The ld.AR Shri S.R. Sharma, CA further argued that DLC rate on the date of agreement should be adopted if the amount of consideration or a part thereof is paid by an account payee cheque. As per Section 50C first and second proviso by Finance Act, 2016, though the same is stated to be w.e.f. 1-04-2017 but being clarificatory provision applies retrospectively. He further submitted that a similar provisions as that of said proviso to section 50C exits in section 43CA introduced by Finance Act, 2013 w.e.f. 1-4-2014 and in proviso to section 56(2)(vii) inserted by Finance (No. 2) Act, 2009 w.e.f. 1-10-2009 which provisions are also to achieve the same objects as that of Section 50C. Accordingly it was vehemently argued that the intention of legislature is to adopt DLC rate prevailing as on date of agreement subject to compliance of condition that amount of consideration or a part thereof is paid by account payee cheque.

2.5 On the other hand, the ld. DR contended that the AO has correctly adopted the sale consideration on the basis of value adopted for the the provision of section 50C of the Act in place of amount actually received by the assessee. There is no infirmity in the order of the AO, in so far, it was a case of search wherein incriminating document was found to this effect.

2.6 I have heard the rival contentions and gone through the orders of the authorities below and found from record that in the instant case the AO has adopted sale consideration of plot sold at Rs. 40,31,163/- on the basis of value thereof adopted for the purpose of stamp duty on the date of sale by invoking provision of section 50C of the I.T. Act, 1961 instead of Rs. 33,84,590/- actually received by the assessee and thereby made an addition of Rs. 6,46,573/- to the income of the assessee as income from long term capital gain. I also found that the plots were allotted by the Cooperative Society but no physical possession was handed over to the assessee . I found that physical possession was with the owner and as such the land was disputed one . Because of the disputed land, the assessee agreed to sell the said plots on 17-12-2011 for a sum of Rs. 33,84,590/- under agreement to sell. As per agreement to sell, out of total sale consideration, a sum of Rs. 2.00 lacs was received by the assessee by account payee cheque dated17-12-2011. Out of the balance consideration, physical possession and remaining Rs. 20,17,490/- to the assessee. All these facts are verifiable from the agreement to sell filed by the assessee before the AO. Thus the assessee agreed to sell the disputed land on 17- 12-2011. I also found that registration of this land was subject to issuance of Patta/Lease Deed from Jaipur Development Authority. The said patta was issued on 14-02-2012 and that the assessee agreed to sale the above said plots of land at the prevailing market rate on 17-12-2011 and as such the stamp duty value of the said property should be considered as on the said date i.e. 17-12-2011. The stamp duty rate on the said date i.e. 17-12- 2011 was Rs. 6880/- per sq. yard. A copy of the DLC rate chart issued by the Rajasthan State Govt. Sub-Registrar- Amer in support of above facts was filed before AO. As per said rate the total sale value works out to Rs. 32,11,859/- as against the actual sale consideration of Rs. 33,84,590/- i.e. the sale consideration received by the assessee is more than the DLC rate and the assessee correctly adopted the said value for computation of capital gain. The AO has not controverted these facts. The intention of the legislature as brought by proviso to Section 50C by Finance Act, 2016 was clarificatory provisions, according to which legislature intended that DLC rate on the date of agreement should be adopted if the amount of 50C first and second proviso were inserted by Finance Act, 2016, though the amendment is stated to be w.e.f. 01-04-2017 but being clarificatory provision applies retrospectively. I found that similar provisions as that of said proviso to section 50C exits in section 43CA introduced by Finance Act, 2013 w.e.f. 1-4-2014 and in proviso to section 56(2)(vii) inserted by Finance (No. 2) Act, 2009 w.e.f. 1-10-2009 which provisions are also to achieve the same objects as that of Section 50C. Thus it is manifest that the intention of legislature is to adopt DLC rate prevailing as on date of agreement subject to compliance of condition that amount of consideration or a part thereof is paid by account payee cheque. If the DLC rate existed on the date of agreement is adopted, the declared consideration of sale is in accordance with Section 50C.

2.6.1 In the facts and circumstances of the case, it is not in dispute that at the time of entering into agreement to sell on 17-12-2011, the assessee received Rs. 2.00 lacs by account payee cheque dated 17-12-2011 drawn on Allahabd Bank, Vidhyadhar Nagar Branch, Jaipur. Thus I do not find any merit for the value taken by the AO as on registration of the agreement dated 12-04-2012. Accordingly, the AO is directed to delete is allowed.

3.0 In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 07 /08/2019.

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