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Income Tax Appellate Tribunal, DELHI BENCH : SMC : NEW DELHI
Before: SHRI R.K. PANDA
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER Assessment Year: 2012-13 Amit Bansal, Vs. ACIT, C/o Vinay Goel, Central Circle, B-2, Purshotam Garden, Karnal. Near Chandrachanchal Banquet Hall, Karnal, Haryana. PAN: AHVPB1399M (Appellant) (Respondent) Assessee by : Shri Ved Jain, Advocate & Shri Ashish Goel, CA Revenue by : Shri D.S. Rawat, Sr.DR Date of Hearing : 09.10.2018 Date of Pronouncement : 22.11.2018 ORDER
PER R.K. PANDA, AM:
This appeal by the assessee is directed against the order dated 28th March, 2018 of the CIT(A)-2, Gurgaon, relating to Assessment Year 2012-13.
The facts of the case, in brief, are that the assessee is an individual and filed his return of income on 30th August, 2012 declaring total income of Rs.10,20,270/-. The assessee derives income from salary, profit on sale and purchase of properties and income from other sources, apart from earning agricultural income to the extent of Rs.3,10,000/-. During the year under consideration, the assessee has shown net profit from sale/purchase of properties under the head ‘Income from other sources’ at Rs.1,33,200/-.
During the course of assessment proceedings, the Assessing Officer asked the assessee to provide the details of sale and purchase of property as well as to justify why the income from sale of property is not to be assessed as ‘Capital gain’ as against the ‘Income from other sources’ treated by the assessee. He also asked the assessee to justify the impact of section 50C on the said transaction. The assessee submitted that he has sold the property held by him jointly with Shri Vikas Bansal on 22nd July, 2011 with net consideration of Rs.42 lakh which was purchased by him on 28th July, 2010 for the sale value of Rs.39,33,600/- and has declared one half share of profit on sale/purchase of property at Rs1,33,200/-. The assessee further submitted that he has entered into an agreement to sell the property on 25th March, 2011 with buyer Smt. Phool Pati and taken a part payment of Rs.10 lac and no possession was taken on that date. Thereafter, the assessee entered into an agreement dated 22nd July, 2011 with buyer Smt. Phool Pati for final sale and gave possession of the property in continuation of earlier agreement dated 25th March, 2011 in which the terms of payment were also specified. It was submitted that there is no registered conveyance deed and the transaction was entered into just to earn profit from this venture of sale/purchase. Alternatively, it was argued that the same may be treated as business income as against ‘Income from other sources’ and not the ‘Capital gains’ in the hands of the assessee. So far as the application of provisions of section 50C is concerned, it was submitted that since the transaction is not in the nature of capital gains, the provisions of section 50C are not applicable. 3.1 However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. He held that since the agreement of purchase as well as sale of plot involve the possession of sale of property to be taken or retained in part performance of a contract of the nature referred to in section 53A of Transfer of Property Act, 1982, therefore, the property is a capital asset as prescribed in section 2(47)(v) of the IT Act, 1961. Therefore, it has to be treated as a capital asset and the asset was a short-term capital asset in the hands of the assessee. The Assessing Officer further noted that the circle rate of the property as on 22nd July, 2011 is Rs.16,000/- per sq. yard as against the circle rate of Rs.11,000/- as on 25th March, 2011. Applying the provisions of section 50C, he determined the full value of consideration at Rs.57,21,600/- as against the actual sale consideration of Rs.42 lakhs. Accordingly, the Assessing Officer determined the short-term capital gain at Rs.17,88,000/-. Considering the short-term capital gain in the hands of the assessee at Rs.8,94,000/- being 50% share in the property, the Assessing Officer made an addition of Rs.7,60,800/- in the hands of the assessee.
In appeal, the ld.CIT(A) confirmed the action of the Assessing Officer in treating the gain arising from the sale consideration as chargeable to tax under the head ‘Income from capital gain.’ He also upheld the action of the Assessing Officer in taking the circle rate of Rs.16,000/- per sq. yard as on 22nd July, 2011. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:-
“1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad, both in the eyes of law and on facts.
2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs.7,60,800/- made by AO as short term capital gain on sale of property invoking provisions of Section 500 of the Income Tax Act.
3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in treating the income from sale of property as capital gain as against the business income treated by the assessee.
4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in not considering the circle rate of Rs. 11,745/- per Square yard as exists on the date of agreement to sell while calculating the sales consideration.
5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that proviso to Section 50C inserted by Finance Act, 2016 is retrospective in nature.
6. The appellant craves leave to add, amend or alter any of the grounds of objection.”
The ld. counsel for the assessee drew the attention of the bench to the provisions of section 50C(1) and submitted that a perusal of the above provision shows 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 and, thus, in the present case, the assessee has correctly adopted the rates applicable on the date of agreement as against the date of actual sale. He submitted that although this issue was specifically argued before the CIT(A), however, the same was rejected on the ground that the proviso to section 50C(1) was inserted by the Finance Act, 2016 w.e.f. 01.04.2017 and, therefore, the proviso is not applicable in the present year, i.e., assessment year 2012-13. He submitted that since the amendment was curative in nature, therefore, this will apply retrospectively. Referring to the decision of the Ahmedabad Bench of the Tribunal in the case of Dharamshibhai Sonani vs. Acit (2017) 57 ITR (Trib) dated 30.09.2016, he submitted that the Tribunal has analysed the applicability of the above said proviso and held that amendment to section 50C introduced by the Finance Act, 2016 for determining the full value of consideration in the case of immovable property is curative in nature and will apply retrospectively. He also relied on the following decisions for the above proposition:- i) Rahul G. Patel vs. DCIT, (ITAT, Ahmedabad); ii) Smt. Chalasani Naga Ratna Kumaris vs. ITO, ITA No.639/Vizag/2013 (ITAT, Vishakhapatnam); and iii) Hansaben Bhaulabhai Prajapati vs. ITO , ITA No.2412/Ahd/2016 (ITAT, Ahmedabad).
The ld. DR, on the other hand, heavily relied on the order of the Assessing Officer and CIT(A).
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 5 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, 2011 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 ld. 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 versus ACIT (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 vs. DCIT, order dated 26th September, 2018 has 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 ld. 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 ld. 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.
In the result, the appeal filed by the assessee is allowed for statistical purposes. The decision was pronounced in the open court on 22.11.2018.