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Income Tax Appellate Tribunal, DELHI BENCH ‘G’: NEW DELHI
ORDER PER SUDHANSHU SRIVASTAVA, JM: This appeal is preferred by the Assessee against order dated 30.12.2016 passed by the Learned Commissioner of Income Tax (Appeals)-10, New Delhi {CIT(A)} for Assessment Year 2013-14.
2.0 The brief facts of the case are that the assessee had filed a return of income declaring an income of Rs.2,00,780/-. The income declared was under the head ‘capital gains’ and ‘income from other sources’. The assessee’s case was selected for scrutiny.
During the course of assessment proceedings, it was noticed that the assessee had 50% share in ownership of residential flat situated at C-758, first Floor, New Friends Colony, which was sold during the year on 26.09.2012 vide agreement to sale. The 50% share of the assessee was Rs.2.25 Crores. The assessee received an amount of Rs.1 Crore as advance against the sale of property on 26.09.2012. On the date of agreement to sale i.e. 26.09.2012, the circle rate for New Friends Colony was Rs.2,15,000/- per sq. meter.
The sale deed was finally registered on 19.12.2013. By that time, the circle rate had been enhanced to Rs.6,45,000/- per sq. meter.
The assessee worked out long term capital gain as under:
Long Term Capital Gain (Taxable) Sale Value of 50% share of Residential Flat 2,25,00,000/- Less: Sale Expenses 2,50,000/- 2,22,50,000/- Less: Land (215715 * 8.52)/2 9,18,946/- Less: Cost of Acquisition Basic Cost in 1999-2000, Rs.2312500/- Indexed Cost 25,32,455/- 1,87,98,599/- Less: Exemption u/s 54EC 10,00,000/- Less: Exemption u/s 54 Cost of Flat 1,42,61,540/- Amount Kept part 33,40,000/- Long Term Capital Gain (offered for taxation) 1,97,059/- 2.1 The Assessing Officer (AO) was of the view that since the circle rate had been enhanced from Rs.2,15,000/- per sq. meter to Rs.6,45,000/-, the assessee was liable to be taxed on long term capital gain by taking the circle rate existing as on the date when the registered sale deed was executed. Meanwhile, the assessee had requested reference of the issue to the District Valuation Officer (DVO) and the reference had been made but the DVO’s report could not be obtained till the time of completion of assessment proceedings. The assessee relied on the agreement to sale and contended that the long term capital gain as computed by the assessee was correct. However, the Assessing Officer was of the view that since the agreement to sale was an unregistered document, the same did not have much evidentiary value. The Assessing Officer proceeded to compute the long term capital gain as under:
Long Term Capital Gain (Taxable) Sale Value of 50% share of Residential Flat 3,68,00,000/- Less: Sale Expenses 2,50,000/- 3,65,50,000/- Less: Land (215715 * 8.52)/2 9,18,946/- Less: Cost of Acquisition Basic Cost in 1999-2000, Rs.2312500/- Indexed Cost 25,32,455/- 3,30,98,599/- Less: Exemption u/s 54EC 10,00,000/- Less: Exemption u/s 54 Cost of Flat 1,42,61,540/- Amount Kept part 33,40,000/- Long Term Capital Gain 1,44,97,059/- 2.2 Aggrieved, the assessee approached the Ld. First Appellate Authority, who partly allowed the assessee’s appeal.
Although, the Ld. CIT(A) upheld the action of the Assessing Officer in applying the provisions of Sec.50C of the Income Tax Act, 1961, since, in the meanwhile, the report from the DVO had been received which estimated the fair market value of the property at Rs.5,26,49,200/- as on 19.12.2012, the Ld. CIT(A) directed that the value of property as per the DVO’s report should be adopted. Thus, the value of assessee share was recomputed at Rs.2,63,24,600/- instead of Rs.3,68,00,000/-.
2.3 Aggrieved, now the assessee has approached this Tribunal challenging the order of the Ld. CIT(A) and has raised the following grounds of appeal:
“1. The learned Commissioner of Income Tax (Appeals)-10, New Delhi erred in law and on facts in assessing the sale value of the property at Rs.5,26,49,200/- instead of Rs.4,50,000/- as declared by the assessee.
The learned Commissioner of Income Tax (Appeals)-10, New Delhi erred in law and on facts in not adopting the correct circle rate as stipulated by the proviso to Section 50C which states that the circle rate on the date of agreement to sell would apply.
The appellant crave leave to add amend or delete any ground of appeal.”
3.0 The Ld. Authorized Representative (AR) submitted that it was only in the case of the assessee that the impugned addition had been made whereas in the case of the other co-owner i.e., Smt.
Neerja Manchanda, no such addition has been made by the Department. The Ld. AR also submitted that even otherwise the assessee,s case was covered by an order of the Delhi Tribunal in the case of Amit Bansal vs. ACIT reported in [2018] 100 taxmann.com 334 (Delhi-Tri.) wherein it had been held that in view of proviso to Sec.50C(1) of the Act, where the date of agreement fixing the amount of consideration and the date of registration regarding transfer of the capital asset in question are not same, the value adopted or assessed or assessable by the stamp valuation authority on date of agreement is to be taken for purpose of full value of consideration.
4.0 Per contra, the Ld. Sr. DR placed reliance on the orders of both the Lower Authorities.
5.0 We have heard the rival submissions and have also perused the material on record. We have given our thoughtful consideration to the issue. It is the submission of the Ld. AR that in view of the proviso to Sec.50C (1) of the Act, 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 and, thus, the assessee has correctly adopted the rates applicable on the date the agreement to sale was executed as against the date when the sale deed was registered. The Ld. AR has drawn support from an order of the Delhi Bench of the Tribunal in the case of Amit Bansal vs. ACIT (supra) and we find that this support has been rightly drawn.
In the case of Amit Bansal vs. ACIT (supra), on an identical issue, the Delhi Bench of ITAT, after examining the proviso to Sec.50C(1) of the Act went on to hold that in view of the proviso to section 50C(1), where the date of agreement fixing amount of consideration and date of registration regarding transfer of capital asset in question are not the same, value adopted or assessed or assessable by Stamp Value Authority on date of agreement is to be taken for the purpose of full value of consideration. The relevant observations of the Tribunal are contained in paragraphs 7 and 8 of the aforesaid order. The same are being reproduced herein under for a ready reference:
“7. I have considered the rival submissions and perused the orders of the authorities below. The undisputed facts in the instant case are that the assessee has purchased the property jointly with Shri Vikas Bansal on 28th July, 2010 for a consideration of Rs.39,33,600/- which was sold on 22nd July, 2011 for a net consideration of Rs.42 lakhs. The assessee had entered into an agreement to sell the property on 25th March, 2011 and taken the part payment of Rs.10 lakhs. It is also an admitted fact that there is no registered conveyance deed. We find the Assessing Officer, relying on the provisions of section 53A and the provisions of section 2(47)(v) of the IT Act, treated the property as a capital asset and treated the profit from sale of such property as short- term capital gain in the hands of the assessee. Further, the Assessing Officer has also invoked the provisions of section 50C and adopted the circle rate of the property as on 22nd July, 2011 at Rs. 16,000/- per sq. yard as against the circle rate of 11,000/- as on 25th March. 201 1 contended by the assessee and calculated the full value of the consideration at Rs.57,21,600/- as against the actual sale consideration of Rs.42 lakhs. Accordingly, the Assessing
Officer made an addition of Rs. 7,60,800/- in the hands of the assessee which has been upheld by the CIT(A). It is the submission of the Id. counsel for the assessee that in view of the proviso to section 50C(1) of the IT Act 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 and, thus, the assessee has correctly adopted the rates applicable on the date of the agreement as against the date of actual sale. We find the proviso to section 50C(1) read as under:
'50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer:
84[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:'
The above proviso was inserted by the Finance Act, 2016 w.e.f. 01.04.2017. Therefore, the question that has to be decided is as to whether the above amendment is prospective in nature i.e., will be applicable from A.Y. 2017- 18 or is retrospective in nature being curative in nature. We find identical issue had come up before the Ahmedabad Bench of the Tribunal in the case of Dharamshibhai Sonani {supra) where it has been held that amendment to section 50C introduced by the Finance Act, 2016 for determining full value of consideration in the case of involved property is curative in nature and will apply retrospectively. We find following the above decision, the Ahmedabad Bench of the Tribunal in the case of Rahul G. Patel {supra) held that the proviso to section 50C(1) introduced by the Finance Act, 2016 can be construed as clarificatory in nature and can be applied on pending matters. The various other decisions
relied on by the Id. counsel for the assessee also support the case of the assessee that where the date of the agreement fixing the amount of consideration and the date of registration regarding the transfer of the capital asset in question are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of the agreement is to be taken for the purpose of full value of consideration. I, therefore, accept the argument of the Id. counsel for the assessee in principle and restore the issue to the file of the Assessing Officer with a direction to verify necessary facts and decide the issue in the light of my above observation directing to adopt the circle rate on the date of agreement to sell in order to compute the consequential capital gain.”
5.1 Accordingly, respectfully following the order of the Co- ordinate Bench as aforementioned, we accept the argument of the Ld. AR in principle and restore this issue to the file of Assessing Officer with a direction to verify the necessary facts and decide the issue in light of the observations regarding adopting the circle rate on the date of agreement to sale in order to compute the consequential capital gain.
6.0 In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced on 23/03/2021.