THE PRINCIPAL COMMISSIONER OF INCOME TAX 3 vs. DIPAK GOVINDBHAI DALWADI

This tax appeal under section 260A of the Income-tax Act, 1961 (“the Act” for short) is at the instance of the revenue and is directed against the order dated 25.03.2022, passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘B’, Ahmedabad in ITA No.2416/Ahd/2017 for A.Y.2013- 2014. 2. Briefly stating facts, the assessee in this case filed his return of income for A.Y.2013-2014 declaring total income of Rs.4,62,980/-. The case of the assessee was selected for scrutiny and in the order under section 143(3) of the Assessing Officer made the additions with the observation that the assessee has sold immovable property for sale consideration of Rs.95,00,000/- on 14.5.2015 and paid stamp duty of Rs.39,35,200/-, however, as per the information available from the office of Sub-Registrar, Ahmedabad-9, Bopal, the market value of the said property is determined at Rs.8,03,09,250/- as against the sale consideration disclosed by the assessee in the sale deed at Rs.95,00,000/-. The Assessing Officer therefore worked out the capital gain under Section 50C of the Act of Rs.7,54,36,257/- and order under Section 143 (3) of the Act was passed on 23.3.2016, assessing the income at Rs.7,59,18,346/- as against the returned income of Rs.4,62,980/-.

Aggrieved by the addition made, the assessee preferred an appeal under section 246 of the Act before the Commissioner of Income-tax (Appeals), (“CIT (A)” for short) Ahmedabad .

The CIT (A) deleted the addition made by the Assessing Officer on the ground that the stated transaction had already been treated as transfer in A.Y.2009-2010 and capital gain earned thereon was brought to tax in hands of the assessee and had been accepted by the assessee also. The CIT (A) also observed that proviso to Section 50C of the Act has been inserted w.e.f. 01.4.2016 and therefore the stamp duty value as on date of entering into agreement to sale/banakath should be treated instead of value on the date of registration of sale deed. CIT (A) thus deleted the addition.

Against the order of CIT (A), the revenue preferred an appeal before the Appellate Tribunal. The Tribunal confirmed the order passed by CIT (A) and dismissed the appeal of the revenue. Against the order of Tribunal dated 25.3.2022, present appeal is filed proposing the following substantial question of law. “[A] Whether the Appellate Tribunal was right in law and on facts in upholding the order of the CIT(A) in deleting the addition of Rs.7,54,36,257/- made u/s. 50C of the Act, by the Assessing Officer, without considering the detailed reasoning given by the Assessing Officer that the impugned land was in the possession of the assessee till 10.05.2012 and hence, the Long Term Capital Gain on sale of this land is required to be charged in the hands of the assessee in AY 2013-14?" [B] Whether the Appellate Tribunal was right in law in holding that First Proviso to Section 50C inserted by the Finance Act, 2016 w.e.f. 01.04.2017 was retrospective in nature?"

Heard learned standing counsel Mr. Karan Sanghani for Mrs. Kalpana Raval, learned senior standing counsel for the appellant. He submitted that the order of Tribunal is erroneous. As per the agreement dated 24.7.2008 (F. Y.2008- 09), the sale consideration was for Rs.95,00,000/-. The registration of the property was required to be done within a period of three months after converting the land into N.A. land. However, the registration took place only on 10.5.2012 (F.Y. 2012-13) i.e. after eight months from the date of converting the land into NA land. As per the sale deed the stamp duty was paid @ of Rs.39,35,200/- and the fair market value adopted by Sub-Registrar for the said land was Rs.8,03,09,250/- and, therefore, the Tribunal is in error in treating the date of transfer in the A.Y. 2009-10 instead of A.Y.2013-14 i.e. the year in which the the deed was registered. He further submitted that as mentioned in the agreement for sale the transfer took place without possession and therefore, also the Tribunal is in error in treating the date of transfer in A.Y. 2009-10. In relation to Question B, he submitted that question involving identical issue has been admitted by this court in Tax Appeal No 155 of 2020. 7. It is noticed that the Tribunal deleted the addition by observing as under: “It is an admitted fact that the impugned transaction had already been treated as transfer in the hands of the assessee in the year in which the agreement to sell was entered into i.e. assessment year 2009-10 and the assessee had accepted the stand of the revenue. Having said so, we find that there is no case at all for taxing the same transaction in the impugned year also as rightly held by the Ld. CIT(A). For this reason alone, the addition made by treating the said transaction as transfer undertaken during the year and substituting the stamp duty value for the sale consideration as per the provisions of Section 50C of the Act is therefore not tenable in law. Even the computation of capital gain made by the AO as reproduced above, reducing the capital again already taxed in A.Y 2009-10 from the total capital gains computed is an implicit admission on the part of the Revenue that the impugned transaction already stands taxed in an earlier year. There is absolutely no scope or reason for taxing a transaction of capital gain earned on account of transfer of capital asset in two separate years as the transfer of the asset can take place in one year only. The Revenue having already treated the impugned asset as transferred in A.Y 2009-10, which has been accepted by the assessee also, the Revenue is precluded from changing its stand now and treating the asset transferred in the impugned year. The order of the Ld.CIT(A) deleting the addition made of Rs.7,54,36,257/-is upheld.”

We could not see any error in the Tribunals findings because undisputedly the issue relating to transfer of land to M/s. Aanya Developers in A.Y.2009-10 had attained finality and against the additions made no appeal has been preferred by the assessee and, therefore, the Tribunal is right in observing that the issue has been examined and taxed in A.Y.2009-10 on the basis of Banakhat (agreement to sale) dated 24.7.2008. The department has also considered the same as transfer in the Assessment order in A.Y.2009-10.Charging capital gain tax on the very same land on the basis of final execution of sale deed amounts to taxing the same twice over, which is not permissible .

Therefore, without entering in the controversy involved in Question B, in facts of this case, we could not find any question of law and resultantly present appeal is dismissed.

It is once again clarified that this Court has not gone into the merits of question B and by keeping the issue involved in question B open this tax appeal is dismissed. No cost. (SONIA GOKANI, J) (MAUNA M. BHATT, J) NAIR SMITA V.