ITO, NON CORPORATE WARD - 10(4), CHENNAI vs. P S SETHU RATHINAM, CHENNAI

आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:

2.1 The ld.CIT(A) erred in holding that the guideline value as on the date of Sale Agreement dated 26.11.2006 should be applied to determine the full value of consideration u/s.50C(1) instead of guideline value as on the date of Sale Deed dated 5.4.2010 though the assessee has offered the income from capital gains in FY 2010-11 relevant to AY 2011- 12.

2.2 The learned CIT(A) erred in directing the AO adopt the guideline value as on the date of agreement as per newly inserted first and second proviso to Sec.50C(1) holding that the same has retrospective effect though the provisos are inserted in Finance Act, 2016 applicable with effect from 1.4.2017.

2.3 The learned CIT(A) ought to have seen that the CBDT has issued Circular No.3 of 2017 explaining the provisions of section wherein the Board has stated that first proviso does provide any relief where the seller has entered into an agreement to sell the property much before the actual date of transfer of the immovable property.

2.4 The learned CIT(A) failed to appreciate that having upheld that the capital gain is assessable in AY 2011-12, the provision of Sec.50C should be applied with respect to the date of Sale Deed and not the date of agreement.

3.1 The learned ClT(A) erred in calculating the cost of acquisition by considering the market value of land at Rs.1,00,000/- whereas the Sub-Registrar reported vide his letter dated 5.3.2014 that the guideline value of impugned land as on 1.4.1981 is Rs.40,000/- per ground.

3.2 The learned C1T(A) erred in adopting the value of land at Rs.1,00,000/- has as claimed by the assessee while computing cost of acquisition without of any supporting documents to prove that the market value of the property is Rs.1,00,000/- as on 1.4.1981.

4. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT (A) may be set aside and that of the Assessing Officer be restored.

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The said Shri A.Anjan expired in April, 2006 and the property devolved to his mother Smt.Sethu, Wife Smt.Indu, daughter Smt.Drishya Bhavani and another Son Shri A.Lokamitra equally. The four persons had jointly entered into an agreement for sale of the said land & building for a consideration of Rs.2.05 Crs. with Mr.Selvakumar and Mr.Sarvanan in November, 2006. The Sale Agreement was of the property as is whereas including the tenants. The registration of the said Sale Agreement took place in April, 2010. Thus, each of the co-owners received Rs.51.29 lakhs in November, 2006 and admittedly handed over the possession of the property along with the disputed tenants in 2006 itself. It was a submission that in the course of the assessment, the AO has held that Capital Gains in respect of the sale of the immovable property was assessable in the assessment year 2010-11 as the registration took place in 2010-11 and the assessees had also disclosed the transaction in 2010- 11 in their returns. Further, the AO applied the provisions of Sec.50C and as against the disclosed consideration of Rs.2.05 Crs. and adopted the sale consideration of the property at Rs.4,89,42,755/- which has been disputed by the assessees. Further, the AO did not grant the assessees the benefit of indexation on the ground that the property devolved on the assessee in 2006. It was a submission that on appeal, the Ld.CIT(A) held to 2266/Mds/2017 :- 5 -: that the provisions of the amendment to Sec.50C(1) by the insertion of the two provisos applied and had consequently directed that for the purpose of Sec.50C, the value as disclosed by the assessees were liable to be taken i.e. Rs.2.05 Crs. It was a further submission that the Ld.CIT(A), further, granted the assessees the benefit of indexation of cost of acquisition from 01.04.1981 on the ground that the original owner held the property as on 1981. It was a submission that the Ld.CIT(A) had followed the decision of the Hon’ble Bombay High Court in the case of Manjula J. Shah (2012) 204 taxman 691 (Bom). It was a further submission that for determining the cost of acquisition, the Ld.CIT(A) had directed the AO to adopt Rs.6,74,553/- as on 01.04.1981 as against Rs.1,00,000/- determined by the AO. It was a submission that the order of the Ld.CIT(A) was liable to be reversed and that of the AO restored.

In reply, the Ld.AR submitted that the 1st and 2nd proviso to Sec.50C 6. was liable to be treated as retrospective in operation, in view of the decision of the Co-ordinate Bench of this Tribunal, Hyderabad Bench, in the case of Shri Mohd. Imran Baig & Others in dated 27.11.2015 wherein the Co-ordinate Bench of this Tribunal has followed the principles laid down by the Hon’ble Supreme Court in the case of M/s.Alom Extrusions Ltd., reported in 319 ITR 306 and have held that the amendments are curative in nature and they are effective retrospectively. It was a further submission that the Ld.CIT(A) has extracted the Sale Agreement in Annexure-A to his order wherein the to 2266/Mds/2017 :- 6 -: details of the payment of the sale consideration is entirely by cheque has been disclosed and consequently, the second proviso to Sec.50C(1) was also complied with. It was a further submission that in respect of the index cost of acquisition, the Sale Agreement itself very clearly shows that Shri Anjan was the owner of the property as on 01.04.1981 and the said property devolved on the assessees on his demise. Thus, it was a submission that the decision of the Hon’ble Bombay High Court in the case of Manjula J. Shah squarely applied to the assessees case and the benefit of indexation was liable to be given right from 1981.

Rs.2,05,38,040/-. The Sale Agreement discloses the ownership of the said land & building and how the property devolved on the four assessees as the legal heirs of Shri S.Anjan. The property admittedly, came into possession of Shri S.Anjan also by settlement. This clearly shows that the property has been in the hands of the family right from 1966. This being so, we are of the view that the principles laid down by the Hon’ble Bombay High Court in the case of Manjula J. Shah referred to supra applies which has also been followed by the Ld.CIT(A). Thus, the assessees are entitled to the benefit of indexation right from 1981.

point out any defect in the findings of the Ld.CIT(A) as also taking into consideration the fact that the Ld.CIT(A) has applied the rates arrived at by the DVO in respect of the cost of construction, the findings of the Ld.CIT(A) on this issue stands confirmed.