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Income Tax Appellate Tribunal, ‘ B’ BENCH : CHENNAI
Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN
आदेश / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:
These are appeals of the Revenue and cross objections of the assessees directed against an order dated 10.04.2017 of ld. Commissioner of Income Tax (Appeals)-7, Chennai.
Grounds taken by the Revenue in both the appeals are 2. common and these are reproduced hereunder:-
The order of the learned Commissioner of Income Tax (Appeals) is contrary to the law and facts of the case
2.1The CIT (A) erred in holding that the provision of Section 50C has no application on the impugned transfer, as the date of transfer is 03.03.2008 i.e. before the insertion of the words" or assessable" though w.e.f 01.10.2009 on the statue.
2.2. The CIT (A) failed to consider the judgment of the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. ( 319 ITR 306) for the proposition that where the amendments are curative in nature, they are effective retrospectively.
2.3. The CIT (A) failed to consider the judgment of the Hon'ble Calcutta High Court in the case of M/s. Bagri Impex Pvt. Ltd Vs. ACIT 214 Taxman 305( Cal) took a view that the amendment to the provision of Section 50C of the Act by the Finance Act 2009 w.e.f01.10.2009 was applicable retrospectively.
& 1629/17, :- 3 -: CO123 & 124/2017
2.4. The CIT (A) failed to consider the judgment of Hon'ble ITAT Hyderabad in the case of Mohd Imran Baig vs. ITO wherein it was settled that the SRO value as on the date of agreement of sale has to be considered for the purpose of computation of capital gains. 3.For these and other grounds that may be adduced at the time of hearing it is prayed that the order of the learned Commissioner of Income Tax (Appeals) be set aside and that of the Assessing officer be restored’’.
Assessees who are husband and wife had sold property 3. measuring 11 grounds and 2064 sq.ft of land during the relevant previous year through a sale agreement entered with one M/s. N.M.
Associates for an apparent consideration of �18.16 crores. The ratio of holding of the two assessees in the property were as under:-
(i) Shri. T.A.S. Rammurthy : 6 grounds plus 1368 sq.ft. (ii) Smt. Subhadra Rammurthy : 5 grounds plus 696 sq.ft Assessees had for computing long term capital gains taken the value of the property as on 01.4.1981 at the rate of �5,00,000/- per ground.
Assessees also claimed payment of development expenses as under while computing capital gains.
Financial Year 2005-06 Financial Year 2006-07 T.A.S. Ramamurthy 24,26,510 4,20,167 Subhadhra Ramamurthy 18,89,012 3,27,095 & 1629/17, :- 4 -: CO123 & 124/2017 For adopting value of �5,00,000/- per ground, as on 01.04.1981 assessees had relied on an No Objection Certificate issued on 18.12.2000 by the Appropriate Authority under Section 269UC of the Act, where a likely sale consideration of �2,75,00,000/- was accepted by such authority for a sale proposed in the financial year 2000-2001, which never went through. This amount, when subjected to reverse indexation upto 1980-81, gave a value of �5,42,772/- per ground for the property as on 01.04.1981.
The ld. Assessing Officer did not accept either consideration 4. of �18.16 Crores claimed as received by the assessee on the sale of the property nor did he accept the value as on 01.04.1981 estimated by the assessee at �5,00,000/- per ground for working out the capital gains. He also recomputed the development expenses calculated by the assessee. As per the ld. Assessing Officer market value of the property as on 01.04.1981 had to be adopted as �35,000/- per ground, and for this he relied on an letter from the SRO, Anna Nagar, Chennai. For fixing the sale consideration, ld. Assessing Officer was of the opinion that Sec.50C of the Income Tax Act, 1961 (in short ‘’the Act’’) had to be applied. According to him, the market value of the property, fixed by the SRO came to �11,000/- per sq. ft. This value was derived by the ld. Assessing Officer from the data available in & 1629/17, :- 5 -: CO123 & 124/2017 public domain. Pursuant to the above, long term capital gains arising to the assessee Shri. TAS Ramamurthy was re-computed by the ld. Assessing Officer as under:-
Amount in Amount in � �
Sale consideration as per section 50C 13,88,97,000 12627 sq.ft. X �11,000/-
Less:- Cost 01.04.1981 �35,000 per ground Cost of 5.627 grounds: Adopted at �1,96,945/- i.e. 5.627 X 35000
Less: Indexed cost for the cost of land (196945 X582/100) 11,46,219 11,46,219
Assessee’s share of Development charges as computed by the assessee 2603090/17500 X12627) = 1889012, which was incurred during the year 2005-06.
Development charges (1878240 X 21,99,469 21,99,469 582/497)
Less: Long term capital gain 13,55,51,312 Long term capital gains of the assessee Smt. Subhadra Ramamurthy was computed as under: & 1629/17, :- 6 -: CO123 & 124/2017
Particulars Amount in Amount in � � Sale consideration as admitted by the assessee is �12,50,00,000/-. As per SRO value after invoking section 50C is 13,51,90,000 13,51,90,000 �13,51,90,000/- i.e. 12290 sq,ft X �11,000/- per sq.ft
Less:- Cost 01.04.1981 �35,000 per ground. Cost of 5.29 grounds (12290 sq.ft. adopted at �1,85,150/- i.e. 5.29 X 35000
Less: Indexed cost for the cost of land (185150 X582/100) 10,77,573 10,77,573
Assessee share of Development charges as computed by the assessee 2603090/17500 X12627) = 1889012, which was incurred during the year 2005-06.
Development charges (1889012 X 22,12,082 22,12,082 582/497)
Less: Long term capital gain 13,19,00,345
Aggrieved, assessees moved in appeal before the ld. Commissioner of Income Tax (Appeals). In so far as adoption of value as on 01.04.1981 was concerned, argument of the assessees was that a part of the same land was sold by the assessee Shri.
T.A.S. Ramamurthy during the previous year relevant to assessment year 2005-2006. As per the assessee market value of the very same property as on 01.04.1981, was fixed by the ld. Assessing Officer at �2,36,300/- per ground. In so far as development charges were & 1629/17, :- 7 -: CO123 & 124/2017 concerned, plea of the assessees was to take correct indexed cost of such charges. Main grievance raised by the assessee was on invocation of Section 50C of the Act. As per the assessees by virtue of judgment of Hon’ble Jurisdictional High Court in the case of CIT vs. R. Sugantha Ravindran, 352 ITR 488, when a transfer was effected through an unregistered sale agreement, Section 50C of the Act could not be applied, prior to amendment to Section 50C of the Act which came into effect only on 01.10.2009.
Ld. Commissioner of Income Tax (Appeals) after considering 6. the submissions of the assessees, directed the ld. Assessing Officer to consider FMV per ground of the property as on 01.04.1981 at �2,26,300/-. In so far as issue of development charges was concerned, ld. Commissioner of Income Tax (Appeals) did not interfere with the order of the ld. Assessing Officer except for directing correction of errors in the figures taken. However, with regard to application of Section 50C of the Act, for fixing the fair value as on date of sale, ld. Commissioner of Income Tax (Appeals) held that Section 50C of the Act was not applicable for the impugned assessment year. Reliance was placed by the ld. Commissioner of Income Tax (Appeals) on the judgment of Hon’ble Jurisdictional High Court in the case R. Sugantha Ravindran (supra). & 1629/17, :- 8 -: CO123 & 124/2017
Now before us, ground taken by the Revenue assails the 7. view taken by ld. Commissioner of Income Tax (Appeals) that Section 50C of the Act had no application for the impugned assessment year.
Ld. Counsel for the Revenue submitted that there were amendments to Sec. 50C through Finance Act 2016 and such amendments were prospective in nature. For canvassing this, reliance was placed on the judgment of Apex Court in the case of CIT vs. Alom Extrusions Ltd 319 ITR 306 and that of Hon’ble Calcutta High Court in the case of M/s.
Bagri Impex Pvt. Ltd vs. ACIT 214 Taxman 305. According to the ld. Departmental Representative this position was also clear from the Explanatory note issued by the CBDT, on the amendments made to Section 50C of the Act, through Finance Act, 2016.
Per contra, ld. Authorised Representative supporting the order of the ld. Commissioner of Income Tax (Appeals) submitted that there was a similar addition for assessment year 2010-2011 when a part of the same property was sold by one of the assessees.
According to him Section 50C of the Act was invoked in the said year also. As per the ld. Authorised Representative, assessee Shri. T.A.S.
Ramamurthy had filed an appeal for that assessment year also and ld. Commissioner of Income Tax (Appeals) had called for a remand report from the ld. Assessing Officer. Contention of the ld. Authorised Representative was that in the remand report given by the ld. & 1629/17, :- 9 -: CO123 & 124/2017 Assessing Officer for assessment year 2010-2011, ld. Assessing Officer had accepted guideline value of the very same property as �2,800/-
per sq.ft against �11,000/- per sq.ft. considered now. Thus, according to him, even if Section 50C of the Act was held to be applicable for the impugned assessment year, fair value of the property as on date of sale had to be taken at the rate at �2,800/- per sq.ft.
We have considered the rival contentions and perused the 9. orders of the authorities below. Contention of the ld. Departmental Representative is that amendment to Sub Section (1) to Sec. 50C of the Act brought in through Finance Act, 2016, w.e.f. 01.04.2017 had to be construed retrospectively. For this reliance was placed on the judgment of Apex Court in the case of Alom Extrusions Ltd (supra), among others. On the other hand, ld. Commissioner of Income Tax (Appeals) had considered only the amendment to Sub Section (1) to Sec. 50C of the Act, brought in through Finance (No.2) Act 2009, w.e.f. 01.10.2009. He held such amendment to be prospective in nature relying on the judgment of Jurisdictional High Court in the case of R. Sugantha Ravindran (supra). Ld. Commissioner of Income Tax (Appeals) did not consider the amendments brought in through Finance Act, 2016. What we find is that Hon’ble Jurisdictional High Court considered Sec.50C of the Act as it stood prior to the & 1629/17, :- 10 -: CO123 & 124/2017 amendment to said Section through Finance Act, 2016, while adjudicating the applicability of said section to sales effected through agreements. Prior to the 2016 amendment, said Sub Section read as under:-
‘’(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 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 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’’. Through the amendment done through Finance Act, 2016 w.e.f.
01.04.2017, two provisos were added to Sub Section (1) of Section 50C of the Act. With the additions of these proviso the said Sub Section reads as under:-
‘’(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 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 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. 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 & 1629/17, :- 11 -: CO123 & 124/2017 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’’.
Argument of the Revenue before us is that the two provisos added through Finance Act, 2016 will have retrospective operation and judgment of Hon’ble Jurisdictional High Court in the case of R.
Sugantha Ravindran (supra) has no more applicability. Be that as it may, contention of the ld. Authorised Representative is that guideline value of the subject property was only �2,800/- per sq.ft and this had been accepted by the ld. Assessing Officer in the remand report for assessment year 2010-2011, where also a similar addition was made.
No doubt for the same property there cannot be widely varying guideline values in close proximity of time. Considering the facts and circumstances of the case, we set aside the order of the ld. Commissioner of Income Tax (Appeals) in so far as it relates to adoption of guideline value as on date of sale, for computing long term capital gains and also on the question of applicability of Section 50C of & 1629/17, :- 12 -: CO123 & 124/2017 the Act for the impugned assessment year back to the file of the ld. Assessing Officer for consideration afresh in accordance with law.
Now, we take up Cross Objections of the assessees
Ld. Counsel for the assessees submitted that if the matter is sent back to the ld. Assessing Officer for considering the correct guideline value as on date of sale for computation of long term capital gains, cross objections could be treated as infructuous.
In the result, appeals of the Revenue are allowed for 12. statistical purpose, whereas Cross Objections of the assessees stands dismissed.