CHANDRASHEKHAR N. AKOLKAR (HUF),,PUNE vs. INCOME-TAX OFFICER, WARD - 3(2),, PUNE

आदेश / ORDER

PER R.S.SYAL, VP :

These four appeals by related but different assessees

relate to assessment year 2009-10. Since common issue is

raised in these appeals, I am, therefore, proceeding to dispose

them off by this consolidated order for the sake of

convenience.

ITA No.786/PUN/2018 – Jayant N. Akolkar (HUF) :

The assessee filed return declaring sale of 1/10th 2.

undivided interest in land admeasuring about 10444 sq.mtrs at

Survey No.34, Bavdhan Khurd, Taluka Mulshi, Pune. Nil

capital gain was computed by taking full value of

consideration at Rs.43.60 lakh. After deducting indexed cost,

the assessee computed long term capital gain at Rs.41.96 and

exemption was claimed u/s.54EC of the Income-tax Act, 1961

(hereinafter also called `the Act’) for a sum of Rs.42 lakh,

thereby giving Nil income chargeable under the head “Capital

3 ITA Nos. 786 to 788 and 1131/PUN/2018 Jayant N. Akolkar (HUF) and 3 others

gains”. The AO observed that the property transferred by the assessee at 1/10th was held by members of Akolkar and Vaidya

family each having five members with equal share. It was

stated on behalf of the assessee that a MOU was executed on

07-08-2006 between five members each of Akolkar family and

Vaidya family on one hand and S.R. Kulkarni, partnership

firm, a Developer, on the other, for transfer of the land in

question. As per this MOU, the rate of the said developable

land was agreed at Rs.387.83 per sq.ft. by which total

consideration was determined at Rs.10.20 crore. In the MOU,

it was agreed to execute 3 Development Agreements and

Power of Attorneys in favour of the Developer. The first

development agreement was executed on 08-03-2007 and capital gain thereon was disclosed by the assessee at 1/10th

share in his return for the A.Y. 2007-08 by taking full value of

consideration at the rate of Rs.387.83 per sq.ft. The second

development agreement was executed during the previous year

relevant to the assessment year under consideration on 30-04-

2008 wherein the consideration received by all the parties was shown at Rs.4.36 crore, with assessee’s share of 1/10th at

Rs.43.60 lakh. The AO invoked the provisions of section 50C

4 ITA Nos. 786 to 788 and 1131/PUN/2018 Jayant N. Akolkar (HUF) and 3 others

of the Act and found stamp value of the land as on the date of

execution of the second agreement at Rs.8.04 crore. On being

called upon to explain as to why such stamp value of Rs.8.04

crore should not be considered in respect of the second

development agreement, the assessee raised certain objections.

The matter was referred to the DVO, who determined the fair

market value of the property on such date at Rs.4,99,22,320/-.

The AO substituted the assessee’s share in such determined

value with the full value of consideration declared by the

assessee at Rs.43.60 lakh. In this way, the AO computed long

term capital gain at Rs.6,28,662/-. The assessee remained

unsuccessful before the ld. CIT(A), against which the instant

appeal has been preferred before the Tribunal.

material on record. There is no dispute on any aspect of the

matter except the determination of full value of consideration

for the purposes of computing capital gain from the transfer of

the land in question. The undisputed facts are that the assessee

and other nine co-owners of the property entered into MOU

with M/s. S.R. Kulkarni on 07-08-2006, a copy of such

agreement has been placed at page 2 onwards of the paper

5 ITA Nos. 786 to 788 and 1131/PUN/2018 Jayant N. Akolkar (HUF) and 3 others

book. As per this MOU, the total sale consideration was

settled at Rs.10.20 crore in respect of 2,63,002.19 sq.ft. of area

giving rate of Rs.387.83 per sq.ft. Clause 6 of the Agreement

provides that the Developer has, at the time of execution of

this MOU, paid a sum of Rs.75 lakh individually to all the co-

owners by way of 10 separate cheques of Rs.7.50 lakh each.

The total area was to be sold in 3 trenches. First development

agreement was executed on 8-03-2007 in respect of 80,190

sq.ft. A copy of such agreement is available at page 12

onwards of the paper book. The assessee along with other co-

owners computed long term capital gain by adopting full value

of consideration at Rs.387.83 per sq.ft., being, the rate

determined as per the MOU dated 07-08-2006. It is in respect

of the second development agreement executed during the

year in question, for which the assessee adopted the full value

of consideration at Rs.387.83 per sq.ft., being, the same rate

determined as per the MOU dated 7.8.2006. The AO disputed

the adoption of this rate as full value of consideration. He

invoked the provisions of section 50C and referred the matter

to the DVO, who, in turn, computed a higher fair market

6 ITA Nos. 786 to 788 and 1131/PUN/2018 Jayant N. Akolkar (HUF) and 3 others

value at Rs.49.92 lakh as against Rs.43.64 lakh declared by the

assessee.

50C(1) inserted by the Finance Act, 2016 w.e.f. 01-04-2017

should be retrospectively applied with the effect that, if the

date of agreement fixing the amount of consideration and the

actual registration for the transfer of capital asset are not same,

then the value should be considered with reference to the date

of agreement fixing the amount of consideration of an anterior

date and not the stamp value on the date of registration of sale

deed. The other proviso provides that such substitution would

be allowed only if full consideration or part thereof was

received by means of banking channel at the time of execution

of the agreement for transfer.

deserves to be accepted. First proviso to section 50C(1) of the

Act categorically provides that where the date of agreement

fixing the amount of consideration and the date of registration

of the transfer of capital asset are not the same, the value

adopted or assessed or assessable by the Stamp Valuation

7 ITA Nos. 786 to 788 and 1131/PUN/2018 Jayant N. Akolkar (HUF) and 3 others

authority on the date of the original agreement may be taken

for the purpose of computing full value of consideration for

such transfer. Admittedly, the MOU was entered on 07-08-

2006, fixing the price at Rs.387.83 per sq.ft. even though the

actual transfer took place on 30-04-2008. Prescription of the

second proviso is admittedly fulfilled in as much as the

assessee along with other nine co-owners received part

consideration of Rs.75 lakh pertaining to the MOU dated 07-

08-2006 through banking channel. The question as to whether

or not the two provisos to section 50C(1) should be given

retrospective effect, came up for consideration before the Pune

Benches of the Tribunal in Shri Dinar Umeshkumar More Vs.

ITO. Vide order dated 25-01-2019, the Tribunal in ITA

No.1503/PUN/2015 has held that the provisos to section

50C(1) are to be given retrospective effect. Going by the

mandate of the order rendered by the Tribunal in the case of

Shri Dinar Umeshkumar More (supra), it is apparent that the

provisos to section 50C(1), substituting full value of

consideration with the stamp value, can be invoked only by

considering the stamp value as on the date of MOU dated 07-

08-2006 and not when the date of registration for the transfer

8 ITA Nos. 786 to 788 and 1131/PUN/2018 Jayant N. Akolkar (HUF) and 3 others

was actually executed, i.e. on 05-05-2008. Thus the view

taken by the authorities in firstly considering the stamp value

of the property w.r.t. 5.5.2008 and then causing the fair market

value determined from the DVO for such date, cannot be

sustained. The stamp value has to be considered with reference

to the date of the original MOU of 07-08-2006. On a specific

query, it was admitted that the stamp value of the property on

such date is not available. Under these circumstances, I set-

aside the impugned order and remit the matter to the file of

AO for computing the capital gain by taking into consideration

the stamp value u/s.50C(1) as on the date of MOU, namely,

07-08-2006 and not the date of second registered sale deed,

namely, 05-05-2008. If such a value is found to be lower than

the actual sale consideration at the rate of Rs.387.83 per sq.ft.,

then that should be ignored and the capital gain should be

computed by considering the full value of consideration at

Rs.383.73 per sq.ft. and vice–versa. Needless to say, the

assessee will be given a reasonable opportunity of hearing in

such fresh proceedings.

9 ITA Nos. 786 to 788 and 1131/PUN/2018 Jayant N. Akolkar (HUF) and 3 others

ITA No.787/PUN/2018 – Yashwant N. Akolkar (HUF) ITA No.788/PUN/2018 – Chandrashekhar N. Akolkar (HUF) ITA No.1131/PUN/2018 – Makrand N. Akolkar (HUF)

circumstances of the instant three assessees are mutatis

mutandis similar to those of Jayant N. Akolkar (HUF), whose

appeal has been disposed off hereinabove. Following the view

taken in earlier paras, I set aside the impugned orders and

remit the matter to the file of AO for deciding the issue in

conformity with the directions given supra in the case of

Jayant N. Akolkar (HUF).

statistical purposes.

Order pronounced in the Open Court on 21st February, 2019.

Sd/- (R.S.SYAL) उपा�य�/ VICE PRESIDENT उपा�य� उपा�य� उपा�य�

पुणे Pune; �दनांक Dated : 21st February, 2019 सतीश

10 ITA Nos. 786 to 788 and 1131/PUN/2018 Jayant N. Akolkar (HUF) and 3 others

आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत / Copy of the Order is forwarded to : क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत आदेश आदेश आदेश अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / 3. The CIT (Appeals)-3, Pune 4. The Pr. CIT-2, Pune िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / 5. DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. // True copy // 6. आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार आदेशानुसार

// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

Date 1. Draft dictated on 20-02-2019 Sr.PS 2. Draft placed before author 21-02-2019 Sr.PS 3. Draft proposed & placed JM before the second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *