2017 (11) TMI 1904 - AT - Income Tax

Capital gain computation - stamp duty valuation for the purpose of adopting value of consideration u/s 50C - date on which the agreement to sale was entered into OR date on which the transactions actually took place - counsel submitted that the relevant date for ascertaining whether or not the sale consideration is suppressed is the date on which an agreement was entered into - HELD THAT - The issue in appeal is squarely covered by the Tribunal s decision in the case of Dharamshibhai Sonani 2016 (9) TMI 1259 - ITAT AHMEDABAD as held the amendment brought about by Finance Act 2016 providing 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 is retrospective in effect and applies from 1st April 2003. The detailed reasons for coming to this conclusion are already set out in the extract from the Tribunal s decision quoted earlier in this order. Plea of the learned counsel indeed merits acceptance. We therefore deem it fit and proper to remit the issue to the file of the Assessing Officer for adjudication de novo in the light of observations above and the legal position set out in Dharamshibhai Sonani (supra). - Assessee appeal is allowed for statistical purposes.

Issues Involved:
1. Validity of the CIT(A)'s order dated 14th October 2014.
2. Applicability of Section 50C of the Income-tax Act, 1961.
3. Determination of the correct date for stamp duty valuation under Section 50C.

Detailed Analysis:

1. Validity of the CIT(A)'s Order:
The assessee appellant challenged the correctness of the CIT(A)-XVI, Ahmedabad's order dated 14th October 2014, regarding the assessment under section 143(3) r.w.s. 147 of the Income-tax Act, 1961, for the assessment year 2009-10. The appellant claimed that the order was erroneous, did not consider the facts properly, and was against the principles of justice, requesting it to be canceled and set aside.

2. Applicability of Section 50C:
The appellant argued that the provisions of Section 50C were not applicable to their case. They contended that the long-term capital gain considered under Section 50C took the valuation by the registering authority instead of the actual sale consideration. The appellant highlighted that the agreement to sell the property was made on 4th July 2007, with 95% of the sale price received in FY 2007-08, and possession handed over on 30th January 2009. The deed of sale was executed and registered on 24th September 2009, with the registration fee based on the actual sale consideration. They also submitted a valuation report from an approved valuer, which was not considered by the Assistant Commissioner of Income Tax, who did not refer the valuation to the department valuation officer, thereby not acting in the spirit of justice.

3. Determination of the Correct Date for Stamp Duty Valuation:
The core issue pursued by the appellant was whether the stamp duty valuation for the purpose of adopting value of consideration under Section 50C should be as on the date of the agreement to sell or the date of the actual transaction. The appellant cited the decision in the case of Dharamshibhai Sonani vs. ACIT, which observed that the relevant date for ascertaining the suppressed sale consideration is the date of the agreement to sell. The Tribunal in Dharamshibhai Sonani's case held that the amendment brought by Finance Act, 2016, which allowed the stamp duty valuation on the date of the agreement to be considered, is retrospective and applies from 1st April 2003.

Tribunal's Decision:
The Tribunal found that the issue was squarely covered by its decision in Dharamshibhai Sonani's case, which has been followed by multiple division benches. The Tribunal agreed that the amendment to Section 50C should be treated as retrospective, effective from 1st April 2003. Consequently, the Tribunal remitted the issue back to the Assessing Officer for de novo adjudication. The Assessing Officer was directed to adopt the stamp duty valuation as on the date of the agreement to sell, provided the agreement was registered and partial sale consideration was received through banking channels. If the assessee was not content with this valuation, they could seek a valuation from the DVO as of the agreement date. The subsequent developments in the property should be ignored for capital gains computation.

Conclusion:
The appeal was allowed for statistical purposes, and the matter was restored to the Assessing Officer for fresh adjudication in light of the Tribunal's observations and the legal position set out in Dharamshibhai Sonani's case. The judgment was pronounced in the open Court on 30th November 2017.

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