MANOJ MITTAL,DELHI vs. ACIT, NEW DELHI

PER ANADEE NATH MISSHRA, A.M.:

(A) This appeal filed by the assessee is against impugned appellate order dated 04.07.2016 passed by the Ld. CIT (Appeals)-12, New Delhi for assessment year 2010-11. Following grounds of appeal have been raised :

1) That the learned CIT (Appeals) has erred in sustaining the addition of Rs.18,42,000/- made by the Assessing Officer u/s 2(22)(e) of the Act without appreciating that there were nil accumulated profits in the case of the payer company as at the start of the year. That the addition made u/s 2(22)(e) of the Act is untenable per-se. That the learned CIT(Appeals) has erred in sustaining the 2)

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addition of Rs.50,000/- made by the Assessing Officer u/s 2(22)(e) of the Act without appreciating that there were nil accumulated profits in the case of the payer company either at the beginning of the year or at the end of the year, That the addition made u/s 2(22)(e) of the Act is untenable per-se. 3) That the learned CI T( Appeals) has erred in upholding the action of she Assessing Officer in making a disallow ance of the claim of set off of brought forward capital loss amounting to Rs.3,61,646/- on the ground that the assesses has not filed the return of income for assessment year 2009-10, That the acknowledgment of return filed by the assessee for assessment year 2O09-10 was furnished both before the A.O. as well as the CIT(Appeals) and that the CIT (Appeals) has erred in rejecting the explanation of the assessee only on suspicion. 4) That the learned CIT (Appeals) has erred in upholding the addition of Rs.49,000/- made by the Assessing Officer under the head income from house property”. 5) That the learned CIT (Appeals) has erred in sustaining an addition of Rs.2,15,000/- out of a total addition of Rs.4,60,000/- inade by the Assessing Officer u/s 69 of the Act. 6) That the learned CI T( Appeals) has erred in sustaining an addition of Rs. 1,38,000/- out of total addition of Rs.34,00,000/- mnde by the Assessing Officer u/s 50-C of the Act. 7) That the appellant craves the right to amend, append, delete any or all grounds of appeal.”

(B) Assessment order dated 08.03.2013 was passed by the Assessing Officer wherein, inter alia, the following additions were made (i) addition of Rs. 18,42,000/- on account of deemed dividend u/s 2(22)(e) of Income Tax Act (ii) addition of Rs. 50,000/- on account of deemed dividend u/s 2(22)(e) (iii) disallowance of assessee’s claim of brought

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forward capital loss amounting to Rs. 3,61,616/- iv) addition of Rs. 49,000/- under the head “Income from House Property” (v) addition of Rs. 4,60,000/- u/s 69 of Income Tax Act addition of Rs. 34,00,000/- u/s 50C of Income Tax Act.

(B.1) Relevant portion of the assessment order is reproduced as under for the ease of reference:

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(C) The assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A), vide impugned appellate order dated 04.07.2016 confirmed the aforesaid additions of Rs. 49,000/- (under the head “Income from House property”); Rs. 18,42,000/- (on account of deemed dividend u/s 2(22)(e) of Income Tax Act); Rs. 50,000/- (on account of deemed dividend u/s 2(22)(e) of Income Tax Act); and Rs. 3,61,646/- (on account of disallowance of brought forward capital loss). However, the Ld. CIT(A) allowed partial relief in respect of the aforesaid additions made u/s 69 of Income Tax Act and Section 50C of Income Tax Act. The relevant portion of the order of Ld. CIT(A) is reproduced as under :-

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(D) This present appeal has been filed by the assessee against the aforesaid impugned appellate order dated 04.07.2016 of Ld. CIT(A). In the course of appellate proceedings in Income Tax Appellate Tribunal two paper books containing the following particulars were filed from the assessee side :- S. No. Particulars 1. ITR Ack. For A.Y. 2010-11 with Audited Balance Sheet as at 31.03.2010 of M/s. Mittal Construction and Real Estate Pvt. Ltd. 2. ITR Ack. for A.Y.2010-11 with Audited Balance Sheet as at 31.03.2010 of M/s Alumni Management Company Pvt. Ltd. 3. Assessee’s letter dt. 29.11.2012, through which ITR Ack. for A.Y. 2009-10 bearing no. 1933002301 was filed . 4. ITR Ack. for A.Y.2009-10 bearing no. 1933002301 , showing LTCL of Rs.3,61,646/- to be C/F 5. Self Assessment Tax Challan of Rs. 399/-bearing S.No.00007, BSR code 0290966 (Date of Payment 27.07.2009) for A.Y.2009-10 6. Lease Deed dt.07.01.1993 between Sh. Naresh Mohan Mittal and Sh. Manoj Mittal (assessee) in r/o Unit No. G/F- 4 of Property No. F-18 Kamla Nagar, Delhi 7. Lease Deed dt.07.01.1993 between Sh.Naresh Mohan Mittal and Sh. Manoj Mittal (assessee) in r/o Unit No.

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G/F-5 of Property No. F-18 Kamla Nagar, Delhi Bank Statement of Sidhartha Mittal 8. 9. Bank Statement of Kushi Mittal 10. Copy of CBDT Circular No 19/2017 dated 12.06.2017 11. Copy of Judgement in the case of CIT Vs. Sunil Sethi ITA 569/2009 Delhi High

(D.1) In addition, copy of order of Income Tax Appellate Tribunal, dated 09.08.2019, in the case of Chandra Prakash Jhunjhunwala vs. DCIT for A.Y. 2014-15 ITA No. 2351/Kol/2017 was also filed from the assessee’s side. Further, a synopsis was also filed from the assessee side relevant portion of which is reproduced as under :

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(D.2) At the time of hearing before us, the Ld. Authorised Representative (AR for short) of the assessee took us through the contents of the aforesaid two paper books (mentioned in foregoing paragraph (D) of this order and placed reliance on the submissions made in the aforesaid synopsis (referred to in foregoing paragraph (D.1) of this order). Moreover, for the ground 6 of this appeal, the Ld. Counsel also placed reliance on aforesaid order in the case of Chandra Prakash Jhunjhunwala vs. DCIT (supra). Ld. Senior Departmental Representative (“Ld. Sr.DR”, for short) placed reliance on the impugned appellate order dated 04.07.2016 of the Ld. CIT(A). We have heard both sides patiently. We have perused materials on record carefully. We have considered the precedents referred to in the records or brought to our attention in the course of appellate proceedings in ITAT. We proceed to decide the various grounds of appeal as under.

(E) First ground of appeal is in respect of addition of Rs. 18,42,000/- on account of deemed dividend u/s 2(22)(e) of Income Tax Act. Although it was contended on

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behalf of the assessee that this amount was received by the assessee in the course of regular course of business from M/s. Mittal Construction & Real Estate Pvt. Ltd. don 09.02.2010; the Authorised Representative of the assessee failed to bring any material to our notice to support the contention that transaction of Rs. 18,42,000/- was made in the regular course of business. The assessee has failed to substantiate the claim, that the transaction was made in the normal course of business, not only during the assessment proceedings before the Assessing Officer; but also during appellate proceedings before Ld. CIT(A) and also during the appellate proceedings in ITAT. Therefore we reject this contention of the assessee and hold that Section 2(22)(e) of Income Tax Act is attracted. However, we have considered the alternate contention of the Ld. Counsel for assessee, that the addition be restricted to accumulated profits within the meaning of Section 2(22)(e) of I.T. Act. The Ld. Sr. DR also was in agreement with this alternate contention of the Ld. Counsel for the Assessee. As per Section 2(22)(e) of Income Tax Act, the addition on account of deemed dividend is to be restricted to accumulated profits. As both sides agree to this, we direct the Assessing Officer to compute accumulated profits (possessed by M/s. Mittal Construction & Real Estate Pvt. Ltd.) as per law, and restrict the addition u/s 2(22)(e) on account of deemed dividend to the extent of aforesaid accumulated

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profits. For the limited purpose of computation of aforesaid accumulated profits as per law, this issue is remanded to the file of the Assessing Officer, for fresh order as per law in accordance with aforesaid direction.

(ii) The 2nd ground of appeal is regarding addition of Rs. 50,000/- on account of deemed dividend u/s 2(22)(e) of Income Tax Act on account of loan received from M/s. Alumni Management Co. Pvt. Ltd. On perusal of records it is found that there was no accumulated profit (as per balance sheet as on 31.03.2010) possessed by M/s. Alumni Management Co. Pvt. Ltd. As the addition of deemed dividend u/s 2(22)(e) is to be restricted to accumulated profits, there is no case for any addition, in view of foregoing facts and circumstances, in the hands of the assessee on account of aforesaid transaction of Rs. 50,000/- with M/s. Alumni Management Co. Pvt. Ltd. We direct the Assessing Officer to delete this addition of Rs. 50,000/- made u/s 2(22)(e) of IT Act.

(iii) 3rd Ground of appeal is on account of the action of the Assessing Officer to disallow assessee’s claim of set off of brought forward capital loss amounting to Rs. 3,61,646/- on the ground that the assessee has not filed Return of Income (“ROI”, for short) for assessment year 2009-10. Ld. CIT(A) has confirmed the action on the ground that the date of filing of ROI is not visible on the stamp. However, perusal of records shows that the

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assessee had filed ROI for assessment year 2009-10, bearing acknowledgement no. 1933002301 in the office of ITO, Ward 19(2), New Delhi; wherein claim for long term capital loss of Rs. 3,61,646/- to be carry forward has been made. Therefore, the basis on which the assessee’s claim for brought forward capital loss had been rejected by the Assessing Officer is incorrect. Further, if the date of filing of ROI is not clearly visible in the stamp; it is not the fault of the assessee. The assessee does not bring its own acknowledgement stamp to be fixed on ROI; and the assessee does not himself fix the stamp. It is a stamp of Income Tax Department, and the stamp is fixed by officials of Income Tax Department. If the date of acknowledgement is not clearly visible in the ROI; it is the mistake of Revenue officials. Even when the date of receipt of ROI in Income Tax Department is not clearly visible in the acknowledgement; it is easy for Revenue officials to ascertain date of receipt from reference to records of Income Tax Department. We record our displeasure that no effort was made during appellate proceedings before Ld. CIT(A) to ascertain this date. We direct the Assessing Officer to allow the assessee’s claim for long term capital loss amounting to Rs. 3,61,646/- unless there is evidence in records of Income Tax Department to show that the return for assessment year 2009-10 was not filed by the assessee within prescribed time limit u/s 139(1) of Income Tax Act. For this limited purpose, this issue is remanded to

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the file of the Assessing Officer for fresh order as per law in accordance with our aforesaid direction.

(iv) 4th ground of appeal is in respect of addition of Rs. 49,000/- made by the Assessing Officer under the head “Income from House Property”. The addition was made by the Assessing Officer on the ground that properties at shop no. 4 and 5 at Kamla Nagar; although not occupied by the assessee, was to be deemed to be let out. The assessee submitted before the Ld. CIT(A) that the assessee was not owner of these properties, and had also not got possession of the property and, therefore, there was no basis to add income under the head “Income from House Property”, in the hands of assessee in respect of these properties. However, the Ld. CIT(A) took the view that the assessee was to be treated as owner of the properties u/s 269 UA of Income Tax Act as the assessee had entered into the lease agreement with Sh. N.M. Mittal for a period of 30 years in respect of these properties. On perusal of materials before us, we find that the lease deed between Sh. Naresh Mohan Mittal and the assessee, dated 7th January, 1993 was for a period of 4 years only, and not for 30 years as alleged by the Ld. CIT(A). Therefore, Section 269UA(2)(f) has no application to the facts of the case. Moreover, this is not a case of purchase of the properties by central government under chapter XX-C of I.T.Act; and therefore, in any case, S. 269 UA has no application to

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facts of this case. Thus, the Ld. CIT(A) was in error, both on facts as well as in law, in confirming the aforesaid additions of Rs. 49,000/-. In view of the foregoing, the aforesaid addition of Rs. 49,000/- has no legs to stand, and we accordingly direct the Assessing Officer to delete this addition.

(v) 5th ground of appeal is in respect of addition of Rs. 4,60,000/- made by the Asessing Officer u/s 69 of the Income Tax Act; out of which an addition of Rs. 2,15,000/- was sustained by the Ld. CIT(A) and the remaining amount was deleted. The aforesaid addition of Rs. 2,15,000/- has been sustained by the Ld. CIT(A) on account of cash deposit made in the bank accounts of minor children of the assessee, Master Sidharth Mittal and Miss Khushi Mittal. At the time of hearing before us, it was brought to our notice by the Ld. Authorised Representative of the assessee that the cash deposits in the bank accounts of the aforesaid two minor children of the assessee are of very insignificant and small amounts. He further submitted that the deposits were made out of gifts received by the two minor children on ceremonial occasions, such as birthdays. This contention of the Ld. A.R. was not disputed by the Ld. Departmental Representative at the time of hearing before us. However, she relied on the order of the Ld. CIT(A). We find that very small deposits of insignificant amounts were made in the bank

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accounts of the two minor children of the assessee. The Ld. CIT(A) has rejected the claim made by the assessee that these insignificant amounts were received by the minor children on ceremonial occasion such as birthdays. Having regard to the fact that the amounts are very small and insignificant in nature; and further, that it is customary and common practice in society to make gifts to the children on ceremonial occasions such as birthdays; we direct the Assessing Officer to reconsider the matter; and to treat a reasonable amount out of aforesaid Rs. 2,15,000/- as explained through gifts received by the minor children on ceremonial occasions such as birthdays. For this limited purpose, this issue is remanded to the file of the Assessing Officer for fresh order in accordance with our aforesaid direction. Needless to say, the AO will give due consideration to economic and social status of the assessee; and to the prevailing social customs and usage.

(vi) The last ground of appeal is on account of addition of Rs. 34,00,000/- made by the Assessing Officer u/s 50C of Income Tax Act, out of which an amount of Rs. 1,38,000/- was sustained by the Ld. CIT(A) and the remaining amount was deleted by her. The addition was made in respect of immovable property sold by the Assessee. The sale consideration of the property as per sale deed was Rs. 70,00,000/- whereas valuation as per

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Stamp Valuation Authority was Rs. 1, 04,00,000/-. The difference of Rs. 34,00,000/- was added to the income of the assessee by the Assessing Officer vide impugned appellate order dated 04/07/2016 of the Ld. CIT(A). The Ld. CIT(A) restricted the addition to Rs. 1,83,000/- on the basis of valuation report of DVO in which value of the property was determined at Rs. 71,83,000/- as against aforesaid Rs. 1,04,00,000/-. In the course of Appellate proceedings in ITAT, it is the case of the assessee that the difference of Rs. 1,83,000/- between value determined by the DVO and sale consideration as per sale deed, is less than 5% of the aforesaid sale consideration of Rs. 70,00,000/- (as per sale deed); and it is contended on behalf of the assessee, that the assessee is entitled to benefit under 3rd proviso to Section 50C(1) of Income Tax Act. It was contended by the Ld. AR of the assessee that although 3rd Proviso to Section 50C(1) of Income Tax Act has been inserted by Finance Act, 2018 with effect from 01.04.2019, it is retrospective in application, and the assessee is entitled to its benefit. For this proposition, the Ld. AR of the assessee relied on the order of Income Tax Appellate Tribunal in the case of Chandra Prakash Jhunjhunwala Vs. DCIT, relevant portion of which is reproduced as under :-

“3. Ground No. 1 raised by the assessee relates to addition made by the Assessing Officer of Rs. 12,01,950/- u/s 50C of the Act.

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The assessee was asked in course of hearing to explain as to why the provisions of section 50C of the Act should not be invoked in case of the assessee regarding the sale property at Pretoria Street, Kolkata and why the full value of consideration received as a result of the said transfer should not be taken at Rs. 3,27,01,950/- (market value as per stamp duty authority) in place of Rs. 3,15,00,000/- (sale consideration received as per the assessee).

In response, the assessee furnished his submission dated 20.06.2016. Relevant extract of the said reply is furnished as under:

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" The assessee has sold property during the year vide conveyance dated 14th December, 2013 for a consideration of Rs. 3,15,00,000/- as against the market value of the property at Rs. 3,27,01,950/- and it has been asked to explain as to why the provision of section 50C shall not apply. The assessee is objecting the value of the property for valuation at the market rate at Rs. 3,27,01,950/- for various reasons and therefore the same may be referred to the DVO for fresh valuation."

The submission of the assessee had been perused by Assessing Officer and accordingly a reference had been made on 5.12.2016 to the DVO for determination of fair market value of the said property u/s 55A read with section 50C(2) of the Act. But no report had been received from the DVO within the time sought for. Hence the provision of section 50C of the Act is being invoked in case of the assessee and the value as per stamp duty authority is being adopted as the full value of consideration received for the purpose of computation long term capital gain. Hence, in the case of the assessee, the market value of Rs.3,27,01,950/- (as per stamp duty valuation) was concerned as the full value of consideration received as a result of the transfer / sale of property by the assessee. So, an amount of Rs. 12,01,950/- (difference of Rs. 3,27,01,950/- - Rs. 3,15,00,000/-) was added to the total income of the assessee by invoking section 50C of the Act.

"Section 50C:Special provision for full value of consideration in certain cases. (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

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48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.

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.

The following proviso shall be ins. by Finance Act, 2018 (w.e.f. 1-4- 2019):

Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration.

This amendment, (by way of insertion of third proviso in section 50C of the Act), was explained, in the Memorandum Explaining the Provisions of Finance Bill 2018, as follows:

"At presentwhile taxing income from capital gains (section 50C), business profits (section 43CA) and other sources (section 56) arising out of transactions in immovable property, the sale consideration or stamp duty value, whichever is higher is adopted. The difference is taxed as income both in the hands of the purchaser and the seller. It has been pointed out that this variation can occur in respect of similar properties in the same area because of a variety of factors, including shape of the plot or location. In order to minimize hardship in case of genuine transactions in the real estate sector, it is proposed to provide that no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more that five per cent of the sale consideration. These amendments will take effect from 1st April, 2019, and will, accordingly, apply in relation to the assessment year 2019-20 and the subsequent assessment years."

We note that the fundamental purpose of introducing section 50C was to counter suppression of sale consideration on sale of immovable properties, and this section was introduced in the light of

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widespread belief that sale transactions of land and building are often undervalued resulting in leakage of legitimate tax revenues. We note that the variation between stamp duty value and the sale consideration arises because of many factors, some of them are given below:

(i).Location of property.

(ii).Near by public amenities.

(iii).Forced sale

(iv). Size of land and building

(v). Nearby public highway/Rail facilities

(vi).Shape of the plot or location

We note thatdifference between the value as per sale deed and the value as per stamp duty valuation, arises as a result of many factors, some of them we have explained above.We note that stamp duty value and the sale consideration, that is, these two values represent the values at two different points of time. In a situation in which there is significant difference between the point of time when agreement to sell is executed and when the sale deed is executed, therefore, should ideally be between the sale consideration as per registered sale deed, which is fixed by way of the agreement to sell, vis-à-vis the stamp duty valuation as at the point of time when agreement to sell, whereby sale consideration was in fact fixed, because, if at all any suppression of sale consideration should be assumed, it should be on the basis of stamp duty valuation as at the point of time when the sale consideration was fixed. Section 50C makes a special provision for determining the full value of consideration in cases of transfer of immovable property. It provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (i.e. "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 be deemed to be the full value of the consideration, and capital gains shall be computed on the basis of such consideration under section 48 of the Income-tax Act.

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purchaser and the seller. It has been pointed out that this variation can occur in respect of similar properties in the same area because of a variety of factors, including shape of the plot or location. In order to minimize hardship in case of genuine transactions in the real estate sector, it was proposed by the Finance Act 2018, that no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more that five per cent of the sale consideration. These amendments will take effect from 1st April, 2019, and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent years.While the Government has thus recognized the genuine and intended hardship in the cases in which there is minor variation between stamp duty value and the sale consideration. That is why,the Finance Act 2018 introduced welcome amendments to the statue to take the remedial measures. However, we note that this brings no relief to the assessee as the amendment is introduced only with prospective effect from 1st April 2019. There cannot be any dispute that this amendment in the scheme of Section 50C has been made to remove an incongruity, resulting in undue hardship to the assessee, as is evident from the observation of Memorandum Explaining the Provisions of Finance Bill 2018, as noted above in para No. 8 of this order. The incongruity in the statute was glaring and undue hardship not in dispute. Once it is not in dispute that a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as effective from the date on which the law, containing such an undue hardship or incongruity, was introduced. In support of this proposition, we find support from Hon'ble Delhi High Court's judgment in the case of CIT v. Ansal Landmark Township (P.) Ltd. [2015] 377 ITR 635/234 Taxman 825/61 taxmann.com 45,

10.We note that now the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically. Hence the insertion of third proviso to section 50C must be given retrospective effect from the point of time when the related legal provision was introduced, as this amendment is procedural one to compute the value of property. At the cost of repetition, we again reproduce the third proviso to section 50C as follows:

The following proviso shall be ins. by Finance Act, 2018 (w.e.f. 1-4- 2019):

Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five per cent of the consideration received or accruing as a result of

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the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration.

We note that this third proviso relates to determination of value of property therefore it cannot be a substantive amendment. Normally substantive amendments in law in applicable prospective. In view of these discussions, as also for the detailed reasons set out earlier, it is a procedural amendment in law to help the assessee to determine the value or to compute the value of property hence this amendment is not to punish the assessee just because there is minor variation between stamp duty value and the sale consideration. We note that the statute such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, for that we rely on the judgment of the Hon`ble Supreme Court in the case of Alom Extrusions Ltd 185 Taxman 416 (SC) wherein it was held as follows:

"8. On reading the above provisions, it becomes clear that the assessee(s)-employer(s) would be entitled to deduction only if the contribution stands credited on or before the due date given in the Provident Fund Act. However, the second proviso once again created further difficulties. In many of the companies, financial year ended on 31st March, which did not coincide with the accounting period of R.P.F.C. For example, in many cases, the time to make contribution to R.P.F.C. ended after due date for filing of returns. Therefore, the industry once again made representation to the Ministry of Finance and, taking cognizance of this difficulty, the Parliament inserted one more amendment vide Finance Act, 2003, which, as stated above, came into force with effect from 1-4-2004. In other words, after 1-4-2004, two changes were made, namely, deletion of the second proviso and further amendment in the first proviso, quoted above. By the Finance Act, 2003, the amendment made in the first proviso equated in terms of the benefit of deduction of tax, duty, cess and fee on the one hand with contributions to Employees' Provident Fund, superannuation fund and other welfare funds on the other. However, the Finance Act, 2003, bringing about this uniformity came into force with effect from 1-4-2004. Therefore, the argument of the assessee(s) is that the Finance Act, 2003, was curative in nature, it was not amendatory and, therefore, it applied retrospectively from 1-4-1988, whereas the argument of the Department was that Finance Act, 2003, was amendatory and it applied prospectively, particularly when the Parliament had expressly made the Finance Act, 2003, applicable only with effect from 1- 4-2004. It was also argued on behalf of the Department that even between 1-4-1988 and 1-4-2004, Parliament had maintained a clear dichotomy between payment of tax, duty, cess or fee on one hand and payment of contributions to the welfare funds on the other.

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According to the Department, that dichotomy continued up to 1-4- 2004, hence, looking to this aspect, the Parliament consciously kept that dichotomy alive up to 1-4-2004, by making Finance Act, 2003, come into force only with effect from 1-4-2004. Hence, according to the Department, Finance Act, 2003 should be read as amendatory and not as curative [retrospective] with effect from 1-4-1988.

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assessee which was on account of sales tax collected by the assessee for the last quarter of the relevant accounting year. The deduction was disallowed under section 43B which, as stated above, was inserted with effect from 1-4-1984. It is also relevant to note that the first proviso which came into force with effect from 1-4-1988 was not on the statute book when the assessments were made in the case of Allied Motors (P.) Ltd. (supra). However, the assessee contended that even though the first proviso came to be inserted with effect from 1-4-1988, it was entitled to the benefit of that proviso because it operated retrospectively from 1-4-1984, when section 43B stood inserted. This is how the question of retrospectivity arose in Allied Motors (P.) Ltd.'s case (supra). This Court, in Allied Motors (P.) Ltd.'s case (supra) held that, when a proviso is inserted to remedy unintended consequences and to make the section workable, a proviso which supplies an obvious omission in the section and which proviso is required to be read into the section to give the section a reasonable interpretation, it could be read retrospective in operation, particularly to give effect to the section as a whole. Accordingly, this Court, in Allied Motors (P.) Ltd.'s case (supra), held that the first proviso was curative in nature, hence, retrospective in operation with effect from 1-4-1988. It is important to note once again that, by Finance Act, 2003, not only the second proviso is deleted but even the first proviso is sought to be amended by bringing about an uniformity in tax, duty, cess and fee on the one hand vis-a-vis contributions to welfare funds of employee(s) on the other. This is one more reason why we hold that the Finance Act, 2003, is retrospective in operation. Moreover, the judgment in Allied Motors (P.) Ltd.'s case (supra) is delivered by a Bench of three learned Judges, which is binding on us. Accordingly, we hold that Finance Act, 2003, will operate retrospectively with effect from 1-4-1988 [when the first proviso stood inserted]. Lastly, we may point out the hardship and the invidious discrimination which would be caused to the assessee(s) if the contention of the Department is to be accepted that Finance Act, 2003, to the above extent, operated prospectively. Take an example - in the present case, the respondents have deposited the contributions with the R.P.F.C. after 31st March [end of accounting year] but before filing of the returns under the Income- tax Act and the date of payment falls after the due date under the Employees' Provident Fund Act, they will be denied deduction for all times. In view of the second proviso, which stood on the statute book at the relevant time, each of such assessee(s) would not be entitled to deduction under section 43B of the Act for all times. They would lose the benefit of deduction even in the year of account in which they pay the contributions to the welfare funds, whereas a defaulter, who fails to pay the contribution to the welfare fund right up to 1-4-2004, and who pays the contribution after 1-4-2004, would get the benefit of deduction under section 43B of the Act. In our view, therefore, Finance Act, 2003, to the extent indicated above, should be read as retrospective. It would, therefore, operate from 1-

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4-1988, when the first proviso was introduced. It is true that the Parliament has explicitly stated that Finance Act, 2003, will operate with effect from 1-4-2004. However, the matter before us involves the principle of construction to be placed on the provisions of Finance Act, 2003.

"...We should find out the intention from the language used by the Legislature and if strict literal construction leads to an absurd result, i.e., a result not intended to be subserved by the object of the legislation found in the manner indicated before, then if another construction is possible apart from strict literal construction, then that construction should be preferred to the strict literal construction. Though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction...." (p. 339) For the afore-stated reasons, we hold that Finance Act, 2003, to the extent indicated above, is curative in nature, hence, it is retrospective and it would operate with effect from 1-4-1988 [when the first proviso came to be inserted]. For the above reasons, we find no merit in this batch of civil appeals filed by the Department which are hereby dismissed with no order as to costs."

"A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole.

Accordingly, the sales-tax collected by the assessee collected in the last quarter of the relevant previous year and paid after the end of the previous year but within the time allowed under the relevant sales- tax law could not be disallowed under section 43B, while computing the business income of the said previous year."

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Accordingly, we hold that the insertion of third proviso (noted above) to Section 50C of the Act is declaratory and curative in nature. That is, the third provisoto Section 50C of the Act relates to computation of value of property as explained by us above, hence it is not a substantive amendment, it is only a procedural amendment therefore the Coordinate Benches of the ITAT used to ignore the variation up to 10%, therefore, the said amendment should be retrospective.Quite clearly therefore, even when the statute does not specifically state so, such amendments, in the light of the detailed discussions above, can only be treated as retrospective and effective from the date related statutory provisions was introduced. Viewed thus, the third proviso to Section50C should be treated as curative in nature and with retrospective effect from 1st April 2003, i.e. the date effective from which Section 50C was introduced. We note that Finance Act, 2018, w.e.f. 01.04.2019 provided that no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more than 5% of the sale consideration. In the assessee's case under consideration, the stamp duty valuation is Rs. 3,27,01,950/- and sale consideration is Rs. 3,15,00,000/-. The difference of Rs. 12,01,950/- is not more than 5% of the sale consideration. That is, it is at 3.81% [12,01,950 / 3,15,00,000 x 100] of sale consideration, therefore, we delete the addition of Rs. 12,01,950/-.”

(J) We have respectfully considered the aforesaid order in the case of Chandra Prakash Jhunjhunwala vs. DCIT (supra). However, we find that it has no application to the facts of the case before us. In the case of Chandra Prakash Jhunjhunwala vs. DCIT (supra) the value as per Stamp Valuation Authority was less than 105 percent of the sale consideration as per sale deed. However, in the case before us the value as per Stamp Valuation Authority (Rs. 1,04,00,000/-) is more than 105 percent of the sale consideration as per sale deed (Rs. 70,00,00,000). For the purposes of third proviso to S. 50C(1) of I.T.Act; the valuation of the property by DVO has no relevance; and

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what is material is the valuation by Stamp Valuation Authority. When the value as per Stamp Valuation Authority is more than 105 percent of sale consideration as per sale deed; the assessee is not eligible for benefit under third proviso to S. 50C(1) of I.T.Act, even when valuation by DVO is less than 105 percent of sale consideration as per sale deed. In view of the foregoing, and in the facts and circumstances of the case before us; we find that the order of Ld. CIT(A) is in accordance with law and we decline to interfere with impugned order of the Ld. CIT(A) on this issue. Accordingly, this ground of appeal is dismissed. For Statistical purposes, the appeal is partly allowed.

Order pronounced in the open court on 19/02/2020.

Sd/- Sd/- (AMIT SHUKLA) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: 19/02/2020 *BR* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT, NEW DELHI

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Date of dictation 06/02/2020 Date on which the typed draft is placed before the dictating Member /02/2020 Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr. PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order