THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-5(2),, AHMEDABAD vs. SMT. BIMLADEVI SUBHAKARAN AGARWAL,, AHMEDABAD

PER AMARJIT SINGH - AM:

3. The fact in brief is that return of income declaring income of Rs. 33,61,033/- was filed on 10.07.2012. The case of the assessee was processed u/s. 143(1) of the Act at the income shown in the return of income. Thereafter, a notice u/s. 148 of the Act was issued on 24.11.2014 for the reason that assessee has sold Bunglow situated at Bopal, Ahmedabad for Rs. 76,00,000/- on 06.04.2011 and the value of the aforesaid property according to the stamp duty valuation authority was to the amount of Rs. 1,27,43,877/-, however, the assessee had shown long term capital gain of Rs. 26,74,873/- after taking the full value of consideration at Rs. 76,00,000/- only. As per provision of Sec. 50C the value adopted by the stamp valuation authority is deemed to be the full value of consideration if the consideration received by the assessee is less than the value adopted by the stamp valuation authority. In this regard, the assessee has submitted that she has sold the residential Bunglow in the month of November 2010 at Rs. 76,00,000/- and first payment has been received on 20.11.2010 and complete payment of Rs. 76,00,000/- received before 30.03.2010 in F.Y. 2010-11. The final payment of Rs. 63,00,000/- was delayed due to delay in sanctioning of housing loan and the same was received on 31.03.2011. It was also contended that both the parties had made notarised Banakhat on 23.03.2011 for the said transaction. However, due to delay in preparation of document, large volume of documentation and shortage of stamp etc. the registration of the document was delayed for five days and the same was registered on 06.04.2011. The AO has not accepted the submission of the assessee stating that the date of registration of document in financial year to be taken for the purpose of calculating gain or loss and the assessee herself has shown the long term capital gain in the return of income filed for A.Y. 2012-13. Accordingly, the AO has made addition of Rs. 52,86,630/- on account of long term capital gain in the total income of the assessee.

4. Assessee has preferred appeal before the Ld. CIT(A). Ld. CIT(A) has allowed the appeal of the assessee stating that a proviso has been inserted to sub section (1) of Sec. 50C by the Finance Act, 2016 which provides that where the date of agreement fixing the account of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purpose of computing full value of consideration for such transfer. The relevant part of the decision of the CIT(A) is reproduced as under:-

“Decision: 3.4. In this case the assessee has sold a bungalow for Rs.76 lakhs on 6.4.2011 the AO has noticed that the value of the aforesaid property according to the stamp duty valuation authority comes to Rs. 1,27,43,877/- whereas the assessee had shown long term capital gain of Rs.26,74,873/- taking the full value of consideration oat Rs.76 lakhs only. The AO has applied the provisions of Section 50C of the Act and deemed the value adopted by the stamp valuation authority as the full value of consideration and made addition of Rs.52,86,613/-. 3.5. During the course of appellate proceedings, the appellant has contended that the assessee has entered into agreement of sale of immovable property of Rs.76 lakhs on 20.11.2010 and first banakhat payment was received on 20.11.2010 of Rs.5 lakhs, second payment was received on 11.12.2010 of Rs.5 lakhs, third payment was received on 17.1.2011 of Rs.1 lakh and fourth payment was received on 15.3.2011 of Rs.2 lakhs. It is further contended that the final payment of Rs.63 lakhs was delayed due to delay in sanction of housing loan and same was received on 30.3.2011. It is also contended that both the parties had made notarized banakhat on 23.3.2011 for said transaction. The appellant has submitted that final sale consideration was as per jantri rate prevailing at the time of first payment and the last payment of Rs.63 lakhs. It is further contended that due to delay in preparation of document and large volume of documentation at the year end due to revision in jantri value from 1st April ,2011 and shortage of stamp the assessee could not registered document at the year end and same document has been delayed for 5 days. The appellant has contended that she took Rs.76 lakhs as the consideration and the whole sale consideration was received for F.Y. 2010-11 as per the jantri rate prevailing on that date and possession was given on 30.3.2011. The appellant has relied upon the decision in the case of Dy. CIT Vs. S. Venkat Reddy 32 taxman 324 (2013) (Hyderabad Trib.) wherein it is held that “where transfer was completed in terms of Section 2(47) by giving possession of property on date of sale agreement, but registration was delayed on bonafide reasons and execution of sale deed was only a legal formality, stamp duty value on date of sale agreement was required to be adopted for computing capital gains”. The appellant has also contended that proviso has been inserted to sub-section (1) of Section 50C of the Finance Act, 2016 w.e.f. 1.4.2007 which reads as under:- “Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of 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 where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer.”

3.6. The facts of the case and the submissions are considered. The AO has made addition after applying the provisions of Section 50C of the Act. In the present case notarized agreement to sale was made on 23.3.2011 and total sale consideration was received by the appellant by 30.3.2011. However, sale deed was executed on 6.4.2011 and the AO has adopted the value of sale consideration as adopted by the stamp valuation authority on 6.4.2011. In the case of Venkat Reddy as cited supra, the Hon'ble ITAT, Hyderabad Bench has held that stamp duty value on date of sale agreement was required to be adopted for computing capital gains. In the Act also a proviso has been inserted to subsection (1) of Section 50C by the Finance Act, 2016 which provides that where the date of agreement fixing the amount of consideration and the date of registration for the transfer of the capital assets are not the same, the value adopted or assessed or assessable by the Stamp Valuation Authority on the date of agreement may be taken for the purpose of computing full value of consideration for such transfer. Considering the above, I am of the opinion that the AO is not justified in adopting the value adopted by the Stamp Valuation Authority on the date of sale deed. The AO is directed to adopt the value of the property as adopted by the Stamp Valuation Authority on the date of agreement to sale not as on the date of sale deed. Accordingly the addition made by the AO is deleted. Thus the grounds of appeal are allowed.”

6. On the other hand, the Ld. DR has supported the order of AO.

We have heard both the sides and perused the material on record carefully. It is noticed that in the case of the assessee Banakhar (Agreement of Sale) for the sale of the impugned property was entered on 20.11.2010 and entire amount was received by account payee cheque on 30.03.2011. However, the final sale deed was executed on 06.04.2011. The AO has adopted the value as per stamp valuation authority as on 06.04.2011 on the ground that sale value determined by the stamp valuation authority was higher than the sale consideration referred in the sale agreement. The Ld. CIT(A) has deleted the addition of Rs. 52,86,630/- made by the AO u/s. 50C of the Act after taking into consideration that proviso to sub section (1) to sec. 50C of the Act and referring the decision of Hyderabad ITAT in the case of DCIT vs. S. Venkat Reddy 32 taxman 324 (2013) (Hyderabad Trib.).

During the course of appellate proceedings before us the Ld. Counsel has placed reliance on the decision of Co-ordinate Bench of the ITAT in the case of Dharamshibhai Sonani. We have gone through the proviso to sub section (1) of Sec. 50C of the Finance Act, 2016 with effect from 01.04.2007 which reads as under:-

“Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of 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 where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer.”

Further we have perused the decision of Co-ordinate Bench of ITAT Ahmedabad in the case of Dharamshibhai Sonani where it is held that insertion of proviso to Sec. 50C by the Finance Act, 2016 with effect from 01.04.2017 has retrospective effect. The relevant part of the decision of the Co-ordinate Bench is reproduced as under:-

“9. 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 precisely what the learned counsel has prayed for. In his detailed written submissions, he has made out of a strong case for the amendment to Section 50C being treated as retrospective and with effect from 1st April 2003. The plea of the assessee is indeed well taken and deserves acceptance. What follows is this. The matter will now go back to the Assessing Officer. In case he finds that a registered agreement to sell, as claimed by the assessee, was actually executed on 29.6.2005 and the partial sale consideration was received through banking channels, the Assessing Officer, so far as computation of capital gains is concerned, will adopt stamp duty valuation, as on 29.6.2005, of the property sold as it existed at that point of time. In case the assessee is not content with this value being adopted under section 50C he will be at liberty to seek the matter being referred to the DVO for valuation, again as on 29.6.2005. of the said property. As a corollary thereto, the subsequent developments in respect of the property sold (e.g. the conversion of use of land) are to be ignored. It is on this basis that the capital gains will be recomputed. With these directions, the matter stands restored to the file of the Assessing Officer for adjudication de novo, after giving an opportunity of hearing to the assessee and by way of a speaking order. I order so.”

It is clear that in the case of the assessee the Banakhat (Agreement to Sale) was made on 20.11.2010 which was duly notarised on 20.03.2011 and sale consideration was determined at Rs. 76,00,000/- and entire payment has been received by account payee cheque by 31.03.2011 and sale consideration as on date of execution of agreement to sale was higher than the transfer valuation. It is clear from the aforesaid material fact that assessee has received the entire amount of sale consideration by account payee cheque before 31.03.2011 and there was delay of five days in the registration of the document due to shortage of stamp etc. Considering the above facts and circumstances in the light of the decision of the Co-ordinate Bench in the case of DCIT vs. S. Venkat Reddy 32 taxamn 324 (2013) (Hyderabad Trib.) as referred in the findings of the Ld. CIT(A) and the decision in the case of Dharamshibhai Sonani vs. ACIT 161 ITD 627 (Ahmedabad Trib.), the appeal of the Revenue is dismissed.

This Order pronounced in Open Court on 07/08/2019