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2019 (2) TMI 1650 - AT - Income TaxCapital gain computation - CIT-A adopting the SRO value as on the date of registration i.e., on 08.10.2010 as the deemed sale consideration in terms of S.50C rejecting actual consideration received by the appellant - non referring matter to the DVO for ascertaining the fair market value of the property for purposes of S.50C - whether to ascertain the value of the property as per section 50C it has to be taken on the date of sale agreement dated 17/07/2010 or on the date of sale deed dated 08/10/2010 ? - HELD THAT - We find that the assessee by entering into agreement, he has received substantial amount i.e. ₹ 80 lakhs through banking channels and both the parties bound by the agreement and the purchase have interest on the property i.e. as sale agreement dated 17/07/2010. The assessee has to sell the property to the purchaser as per the sale agreement even though the sale agreement is not a registered. The ld. CIT(A) is not correct in saying that the unregistered sale agreement not valid in the eye of law. So far as lapses committed by the purchaser are concerned, once the assessee accepted the remaining amount subsequent to the date of 30/08/2010, it implies the assessee has acted in accordance with the terms of agreement dated 17/07/2010. Therefore, ld. CIT(A) is not correct in saying that the purchaser failed to fulfil the conditions laid down in the agreement, therefore, the assessee need not sell the property for the same price. As decided in SMT. CHALASANI NAGA RATNA KUMARI VERSUS ITO, WARD-3 (2) , VISAKHAPATNAM 2016 (12) TMI 1406 - ITAT VISAKHAPATNAM Although, stamp duty value of the propety has been changed as on the date of sale deed, for the purpose of determination of deemed consideration u/s 50C of the Act, stamp duty value of the property as on the date of execution of agreement to sale should be adopted, instead of value on the date of execution of sale deed. Therefore, we are of the view that the A.O. was erred in adopting value of the property as on the date of sale deed to determine deemed consideration u/s 50C - we direct the A.O. to adopt value of the property as on the date of agreement to sale for the purpose of computation of capital gain u/s 50C Insofar as SRO value as on the date of agreement i.e. 17/07/2010, the counsel for the assessee has submitted that which is more than the sale consideration agreed by the assessee. This fact is not examined by the Assessing Officer. Therefore, we remit the issue back to the Assessing Officer for the limited purpose to ascertain the SRO value as on the date of agreement i.e. 17/07/2010 and the same is adopted as a sale consideration as per section 50C and complete the assessment as per law. Appeal filed by the assessee is allowed for statistical purposes.
Issues Involved:
1. Validity of the unregistered sale agreement. 2. Applicability of Section 50C of the Income Tax Act. 3. Determination of the date for ascertaining the value of the property under Section 50C. 4. Requirement for referring the matter to the DVO for fair market value determination. Detailed Analysis: 1. Validity of the Unregistered Sale Agreement: The primary contention of the assessee was that the agreement to sell dated 17/07/2010 should be considered for the purpose of determining the sale consideration, despite it being unregistered. The assessee argued that the actual sale consideration was ?1.90 crores, agreed upon in the unregistered sale agreement, and not the higher SRO value of ?2,95,02,500/- as on the date of registration. The Assessing Officer (AO) rejected this argument, emphasizing that the unregistered sale agreement lacked legal sanctity and credibility. The AO noted that the sale agreement did not transfer any interest or rights over the property to the purchaser, and thus, the provisions of Section 50C, which mandate the adoption of the SRO value as deemed consideration, were applicable. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's view, stating that the unregistered sale agreement was not binding and did not create any interest or charge on the property. The CIT(A) further noted that the conditions of the agreement were not fulfilled as the balance consideration was paid after the stipulated date, thereby nullifying the agreement. 2. Applicability of Section 50C of the Income Tax Act: Section 50C mandates that if the consideration received from the transfer of a capital asset is less than the value adopted by the Stamp Valuation Authority, the latter value should be deemed as the full consideration for calculating capital gains. The AO applied Section 50C, adopting the SRO value of ?2,95,02,500/- as the deemed consideration, resulting in a higher taxable capital gain. The CIT(A) concurred, stating that the transfer of the property occurred on the date of the sale deed, and thus, the SRO value as on that date should be used for capital gains computation. 3. Determination of the Date for Ascertaining the Value of the Property under Section 50C: The core issue was whether the date of the unregistered sale agreement (17/07/2010) or the date of the sale deed (08/10/2010) should be considered for determining the property's value under Section 50C. The Tribunal examined the proviso to Section 50C, which allows for the consideration of the SRO value as on the date of the agreement if part of the consideration was received through banking channels before the agreement date. The Tribunal noted that the assessee received ?80 lakhs through a banker's cheque before the agreement date, fulfilling the proviso's conditions. The Tribunal cited the case of Rahul G. Patel vs. DCIT, where it was held that even an unregistered sale agreement could be considered for determining the property value under Section 50C if the consideration was received through banking channels. The Tribunal also referred to its earlier decisions in M/s. Lahiri Promoters and Smt. Chalasani Naga Ratna Kumari, which supported the assessee's contention. 4. Requirement for Referring the Matter to the DVO for Fair Market Value Determination: The assessee argued that the AO should have referred the matter to the District Valuation Officer (DVO) to ascertain the fair market value of the property. The Tribunal acknowledged the necessity of such a reference if there was a dispute regarding the SRO value. The Tribunal directed the AO to ascertain the SRO value as on the date of the agreement (17/07/2010) and adopt it as the sale consideration under Section 50C. The AO was instructed to complete the assessment based on this value, ensuring compliance with the proviso to Section 50C. Conclusion: The Tribunal allowed the assessee's appeal for statistical purposes, emphasizing that the date of the unregistered sale agreement should be considered for determining the property's value under Section 50C, provided the consideration was received through banking channels before the agreement date. The matter was remitted to the AO to verify the SRO value as on the agreement date and complete the assessment accordingly.
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