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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI JAGADISH
आदेश /O R D E R
PER MAHAVIR SINGH, VICE PRESIDENT:
This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Order No.ITBA/NFAC/S/250/2022- 23/1049363050 (1) dated 02.02.2023. The assessment was framed by the ACIT, Non-Corporate Circle 13(1), Chennai for the - 2 - assessment year 2009-10 u/s.143(3) r.w.s.147 of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 31.03.2015.
At the outset, it is noticed that the appeal of assessee is barred by limitation by 184 days. The relevant facts are that the order of CIT(A) dated 02.02.2023 was claimed to have been received by assessee, as per Form 36 on 02.02.2023 itself. This appeal before Tribunal should have been filed on or before 03.04.2023 but actually, the appeal was filed by assessee only on 04.10.2023, thereby there is a delay of 184 days. The ld.counsel for the assessee before us filed affidavit supported by application for condonation of delay and the relevant reasons mentioned for delay read as under:- “The Kartha, Mr.V.Govind, has been running businesses including firms and companies in which he and his family members are interested. He has been managing the affairs of the said entities and was totally and unavoidable kept pre-occupied with the said businesses without much assistance at the helm. Further the accountant who had been completely in-charge of accounts, his personal tax as well as managing the affairs of the Companies and other compliance matters and who was coordinating for the tax matter with the professionals fell sick and finally left the services on 31.07.2023. This accountant had received the order and had kept it with his papers. His illness and resigning from office resulted in confusion and dislocation. The undersigned was under the honest impression that the accountant would have attended to the tax matters and coordinating with the Authorized Representatives and filed appeal in time. It is submitted that Mrs.V. Nirmala, mother of the Kartha, Mr.V.Govind had been unwell for a long period and had to be admitted in hospital and had to be taken care by him. She was admitted in the hospital on 20.07.2023 and discharged on 25.07.2023. She was admitted again on - 3 - 29.07.2023 and discharged on 19.08.2023. The kartha’s mother has been living with him ever since the demise of her husband in the year 2001.”
When this was confronted to ld. Senior DR, he could not controvert the above fact situation. After hearing rival contentions and going through the reasons stated in condonation of delay, we are of the view that resigning of accountant and illness of assessee’s mother were reason for delay of 184 days. In view of the reasons, we are of the view that there is sufficient cause for delay and hence, we condone the delay and admit the appeal for adjudication.
The ld.counsel for the assessee drew our attention to Ground No.10 raised before ITAT, which reads as under:- “10. The appellant craves leave to refer to the various documents including sale deeds and sale agreements filed during the course of assessment proceedings and requests that may be considered as part and parcel of this appeal.”
The ld.counsel for the assessee also drew our attention to Ground No.9 raised before CIT(A) and the same reads as under:- “9. The petitioner craves leave to refer to the various documents including sale deeds and sale agreement filed during the course of assessment proceedings and requests that they may be considered as part and parcel of this appeal.”
In view of the above, the ld.counsel for the assessee now before us stated that the only issue, if adjudicated, no other ground - 4 - will survive and the issue narrated was that when the sale agreement dated 24.10.2005 was part performed i.e., u/s.53A of the Transfer of Property Act, whereby possession of the property has been handed over to the buyers, the circle rate should have been adopted as on 24.10.2005 and not on the date of sale effected through sale deed dated 05.11.2008. The ld.counsel for the assessee stated that this plea was raised before CIT(A) and even, the assessee has filed its objection before AO also vide letter dated 30.03.2015 whereby the objections raised before AO reads as under:- “The petitioner is a HUF and filed the return of income for the assessment year 2009-10 which included Long Term Capital Loss(LTCL) of Rs. 3,31,464 from the sale of lands jointly owned by the petitioner. The petitioner was one of the joint owners of the property with land measuring 66242 sft. at Mackays Gardens in Pathari Road off Mount Road. During the previous year relevant to the assessment year 2009-10, the said property was sold for a consideration of Rs. 11 crores to 2 companies. There were certain depressing factors affecting the marketability and sale of the impugned property which the learned AO did not consider viz. an agreement holder becoming one of the coowners of the property, the lands being situated interior off Mount Road and not easily accessible due to encroachments, narrow lane, tenements, lands being situated on the coourn river on the rear side and the tenant who had been in the occupation of the property for a long period of time had to be vacated etc.The guideline value of the property was Rs.35,83,69,220 and the AO accordingly re-computed the petitioner's share in the LTCG at Rs.3,19,16,161. In view of the depressing effects on the marketability and sale of the impugned property, as the said property would not have commanded the huge value for sale, the learned AO ought to have referred the property to the Valuation Department for its evaluation as provided under the provisions of Section 50C of the Act. However, the learned AO substituted the Guideline Value in the place of actual consideration
- 5 - received for sale and arrived at the Long-Term Capital Gains without referring to the Valuation Department while applying the provisions of 50C of the Act. The petitioner objects to the adoption of the guideline value in the place of actual consideration. Hence this appeal."
The ld.counsel for the assessee stated the facts that the assessee HUF was one of the Joint Co-owner of the property of land admeasuring 66242 sq.ft. at Mackays Gardens in Pathari Rood off Mount Road, Chennai. The assessee HUF filed its return of income for the relevant assessment year 2009-10 including Long Term Capital Loss of Rs.3,31,464/- from sale of this property. The assessee explained that during previous year 2008-09 relevant to this assessment year 2009-10, the property was sold for a total consideration of Rs.11 crores to two companies. The AO while framing assessment computed the assessee’s share in Long Term Capital Gain at Rs.3,19,16,161/- by taking the guideline value of the property as on 05.11.2008 at Rs.35,83,69,220/-. Thereby, the AO assessed the Long Term Capital Gain at Rs.3,19,16,161/-. The assessee before AO as well as CIT(A) and even now before us contented that as per the first proviso to section 50C of the Act as inserted by Finance Act, 2016 w.e.f. 01.04.2017, the date of agreement fixing the amount of consideration and the date of registration for the transfer of capital asset are not the same, the value so adopted or assessed or assessable by the stamp duty
- 6 - valuation authority on the date of agreement can be taken for the purpose of computing full value of consideration for such transfer. The relevant first proviso to section 50C(1) of the Act 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”
5.1 The ld.counsel for the assessee before us stated that the amendment brought in by the Finance Act, 2016 was curative in nature because the provisions of section 43CA of the Act already had similar provision and in order to cure the discrepancy, the said proviso was introduced extending the benefit of proviso to the assessees. In the present case, the ld.counsel explained that the agreement to sale dated 24.10.2005 passing on consideration and also handing over possession is in part performance of the agreement and in term of section 53A of the Transfer of Property Act, a transaction is complete on the date of agreement. Simpliciter the formality for registration of sale deed which was executed on 05.11.2008 remains and ultimately the document was registered on 05.11.2008. Hence, according to him the circle rate should have been adopted as on 24.10.2005 and not on 05.11.2008. The - 7 - ld.counsel for the assessee also drew our attention to the judgment of Hon’ble Madras High Court in the case of CIT vs. Vummudi Amarendran reported in 120 Taxmann.com 171, wherein it is held as under:- “10. Reading of the above proviso would show that the legislature took note of the fact that there are several occasions where the Agreements are entered into between a willing vendor and willing purchaser on an agreed sale consideration, the Agreement is reduced into writing and in many a cases a substantive portion of the sale consideration is given to the vendor as advance on the date of execution of the Agreement. There are other types of transaction where the vendor executes Power of Attorney in favour of the intending purchaser empowering him to sell the property at any time he proposes to do so. In fact this was also a subject matter of consideration, when the legislature though to introduce the amendment to section 50C of the Act. There may be cases where the sale consideration will be taken as deferred payment subject to certain contingencies. However the case on hand is very straight forward case, where there is an Agreement for Sale, agreeing to sell the property at Rs. 19 Crores and a sum of Rs.6 Crores has been received as advance sale consideration. The proviso to Section 50C(1) of the Act deals with cases where the date of the agreement, fixing the amount of consideration and the date of registration for the transfer of the capital assets 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. Thus an amendment by insertion of proviso seeks to relieve the assessee from undue hardship.”
5.2 Further, the Hon’ble High Court in para 18 held that the provision is retrospective and for that supported on the decision of Hon’ble Supreme Court in the case of CIT vs. Vatika Township P. Ltd., reported in [2009] 314 ITR 338 and held as under:- “18. Mr. T. Ravikumar, learned counsel is right in a submission that the observations made by the Tribunal qua the decision of the Honble Supreme
- 8 - Court in Vatika Township (supra) is incorrect. In fact we find that the Tribunal did not assign any reasons as to why the decision in Vatika Township do not apply to the facts of the case. In fact the decision in Vatika Town Ship should be referred for the purpose as to when a Statute can be treated to be clarificatory and when not?. The legal principle laid down therein ought to have been taken note of by the Tribunal. Therefore, the Tribunal may not be fully right in stating that the judgment in Vatika Township (supra) will not be applicable to the facts as the judgment needs to be looked into to consider the legal principle of retrospectivity, retro activity or prospectivity. In any event, the ultimate conclusion arrived at by the Tribunal confirming the above order passed by the CIT(A) cannot be found faulted with.”
The ld. Senior DR however only contested that this issue was not before the AO and although it is a legal issue and assessee can very much raise this issue but the assessee before AO and CIT(A) has only raised the issue of referring the matter back to the DVO to ascertain the Fair Market Value u/s.50C of the Act. Apart from this, the ld. Senior DR has not argued anything.
We have heard rival contentions and gone through facts and circumstances of the case. Admitted facts are that the assessee has received consideration on the basis of agreement dated 24.10.2005 and handing over possession and therefore, the part performance u/s.53A of the Transfer of Property Act is complete. Only the registration of sale deed was done on 05.11.2008. In our view, as per proviso to section 50C(1) of the Act, as inserted by Finance Act, 2016 w.e.f. 01.04.2017, the same will apply retrospectively in view
- 9 - of the decision of Hon’ble Madras High Court in the case of Vummudi Amarendran, supra, and another fact that the assessee’s co-owner case of Shri Vinay Gandhi Legal Heir of Late Mythri Gandhi in ITA No.948/CHNY/2020, order dated 22.03.2022, we directed the AO to adopt the circle rate or rate fixed by State Authorities for charging stamp duty as on 24.10.2005 and not on the date of registration of sale as on 05.11.2008. In term of the above, we following the decision in co-owners case of Shri Vinay Gandhi, supra, allow the claim of assessee and direct the AO accordingly.
In the result, the appeal filed by the assessee is partly-allowed.
Order pronounced in the open court on 7th June, 2024 at Chennai.