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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI D.KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER
PER D. KARUNAKARA RAO, AM
This appeal is filed by the Assessee against the order of CIT(A)-9, Pune, dated 27-04-2017 for the A.Y. 2009-10.
Grounds raised by the assessee are extracted below :
“1. The Ld.CIT(A)-9 erred in dismissing the appeal against the assessment order by the Ld. AO assessing the total income at Rs.8,13,040/- as against the returned income of Rs.3,07,440/- by incorrect application of provisions sec.50C of the Income Tax Act.
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The Ld. CIT(A)-9 has not considered the amendment as insertion of proviso to sub-section (1) of section 50C of the Income Tax Act, 1961 made by the Finance Act, 2016. 3. The Ld. AO has wrongly applied the provisions of sec 50C of the Income Tax Act and concluded the proceedings on his own without considering the written submission filed by the appellant. 4. The Ld. AO erred in adopting the value of the property sold as per the value of the Stamp Valuation Authority even though the same has been objected during the course of assessment with sufficient reasons. 5. The Ld. AO erred in deciding the issue without following the principal of natural justice. 6. The Appellant prays that the addition of Rs.5,05,600/- made in respect of short term capital gain shall be deleted.”
Briefly stated relevant facts include that the assessee is an
individual and is engaged in the business of trading in plywood in the
name of “Satnam Furniture” in Pimpri area of Pune. Assessee filed the
return of income declaring income of Rs.3,07,440/-. There was survey
action u/s.133A of the Act on the assessee on 04-03-2010. Assessment
was completed u/s.143(3) of the Act determining the total income of
Rs.8,13,040/-. AO made an addition u/s.50C of the Act on account of
short term capital gains in connection with transfer of Flat No.3, jointly
owned by the assessee and his wife and son.
Details regarding this issue include that the assessee is 50%
owner of the flat. Balance 50% is owned wife and son equally. There
was an agreement 10-11-2007 with the purchaser for sale of the flat for
Rs.13 lakhs (Govt. Value Rs.14 lakhs). By the end of March, 2008, the
purchaser paid a sum of Rs.9,95,000/- and the balance amount was
paid in the month of May 2008. Copy of the agreement evidences these
facts. However, there is no registration of this agreement at the Sub
Registrar’s Office till May 2008. By the date of Registration, the Sub
Registrar’s Office value was hiked from the existing Rs.14 lakhs to
Rs.23,11,200/-.
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During the assessment proceedings, AO considered the date of
registration as sacrosanct in matters of computation and taxation of the
capital gains on this flat and invoked the provisions of Section 50C of the
Act. Accordingly, the AO considered the said sum of Rs.23,11,200/-.
50% of the said sum comes to Rs.11,55,600/- and the same is
considered as assessee’s share for the purpose of computing the short
term capital gains. The short term capital gains details of this
transaction are worked out by the AO at Rs.7,41,400/-. During the
assessment proceedings, assessee relied on the amended provisions of
section 50C by the Finance Act, 2016 w.e.f. 01-04-2017 and submitted
that the said provisions has retrospective effect from the date of
introduction of the said section 50C of the Act. This section was
incorporated w.e.f. 01-04-2003. AO rejected the same as per the
discussion in Para No.4 of the assessment order. According to the AO,
the amendment is not retrospective. CIT(A) confirmed the conclusions of
the AO. CIT(A) considered the assessee’s written submissions which are
extracted in Para No.4 of his order. Aggrieved with the same, the
assessee is in appeal before us with the grounds extracted above.
Before us, Ld. Counsel for the assessee explained the above facts
of the case and submitted that the case of the assessee stands covered in
favour of the assessee by the decision of Ahmedabad Bench of the
Tribunal in the case of Dharamshibhai Sonami in ITA
No.1237/Ahd/2013, dated 30-09-2016 where the amended proviso to
section 50C of the Act is applicable from the time the provisions of
section 50C are brought into the statute. He also relied on the decision
of Visakhapatnam Bench of the Tribunal in the case of Chalasani Naga
Vs. ITO reported in 48 CCH 0349 (Visakhapatnam).
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Ld. DR for the Revenue relied heavily on the orders of the AO and
the CIT(A).
On hearing both the parties and on perusal of the said orders of
the Tribunal (supra), we are of the opinion that it is a decided issue that
the amended proviso of the provisions of section 50C have retrospective
application right from the inception of the said section 50C of the Act.
Further, we perused the provisions of the Ist proviso of section 50C of
the Act and find the same reads as under :
“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.
From the above, it is evident that the value to be adopted or
assessable on the date of agreement on the date of agreement may be
taken for the purpose of computing the full value of consideration in
cases where dates of agreement is not the same as that of date of
registration for the transfer of a capital asset. These provisions were
brought into statute by the Finance Act, 2016 w.e.f. 01-04-2017.
However, the same are interpreted to have been effective from
01-04-2003 the date of inception of section 50C of the Act.
In this regard, we perused the operational paras of the order of the
Tribunal in the case of Dharamshibhai Sonami (Supra) and the same
reads as under :
“[9] So far as the amendment to Section 50C being retrospective in effect is concerned, there is no doubt about the legal position. I hold the provisos to Section 50C being effective from 1st April 2003. This is precisely what the learned counsel has prayed for. In his detailed written submissions, he has made out of a strong case for the amendment to Section 50C being treated as retrospective and with effect from 1st April 2003. The plea of the assessee is indeed well taken and deserves
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acceptance. What follows is this. The matter will now go back to the Assessing Officer. In case he finds that a registered agreement to sell, as claimed by the assessee, was actually executed on 29.6.2005 and the partial sale consideration was received through banking channels, the Assessing Officer, so far as computation of capital gains is concerned, will adopt stamp duty valuation, as on 29.6.2005, of the property sold as it existed at that point of time. In case the assessee is not content with this value being adopted under section 50C, he will be at liberty to seek the matter being referred to the DVO for valuation, again as on 29.6.2005, of the said property. As a corollary thereto, the subsequent developments in respect of the property sold (e.g. the conversion of use of land) are to be ignored. It is on this basis that the capital gains will be recomputed. With these directions, the matter stands restored to the file of the Assessing Officer for adjudication de novo, after giving an opportunity of hearing to the assessee and by way of a speaking order. I order so.
Considering the same, we are of the opinion that the issue in controversy stands covered in favour of the assessee. Accordingly, the grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced on 24th day of August, 2018. Sd/- Sd/-
(िवकास अव#थी /VIKAS AWASTHY) (डी. क�णाकरा राव/D. KARUNAKARA RAO) �ाियक सद�/JUDICIAL MEMBER लेखा सद�/ACCOUNTANT MEMBER पुणे / Pune; िदनांक / Dated : 24th August, 2018. Satish
आदेश की +ितिलिप अ-ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��थ� / The Respondent. 2. 3. The CIT (Appeals)-9, Pune 4. The Pr. CIT-5, Pune एक-सद�य सद�य सद�य” ब"च, सद�य िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “एक 5. एक एक पुणे / DR, ITAT, “SMC” Bench, Pune. गाड% फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER,
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune