2019 (5) TMI 1945 - AT - Income Tax

Addition on account of long term capital gain u/s 50C - price determined for Adoption of stamp duty valuation - Scope of amendment to section 50C - as submitted that the sale price determined in the impugned sale agreement was determined on the basis of Jantri Value prevailing on the date of agreement and further that the terms of payment of the sale consideration was also agreed upon in the said same agreement - HELD THAT - The facts of the case are not in dispute and after having perused both the agreement to sale as well as the registered sale deed we do not find any apparent contradictions between the two set of documents in so far as the quantum of consideration is concerned. The registered sale deed makes a mention of the agreement to sell and duly records that an amount of Rs.1,14,00,000/- had already been paid to the seller/assessee at the time of execution of the agreement to sell. We also note that there is no inference by the department that an amount more than the sale consideration as shown in the agreement to sell and/or the sale deed had exchanged hands. Whether the assessee is entitled to the benefit of provisos to section 50C of the Act which as per the Finance Act 2016 was to take effect from 01.04.2017? - Admittedly, the year under consideration is assessment year 2012-13 and if the amendment is held to be coming into force from 01.04.2017 then the assessee will not get the benefit of provisos. However, the Co-ordinate Benches in Ahmedabad in a number of cases have held that this amendment was to be taken as being retrospective in effect with effect 01.04.2003. The lead case in this regard is Dharamshibhai Sonani 2016 (9) TMI 1259 - ITAT AHMEDABAD wherein it has been held that the provisos to section 50C were effective from 01.04.2003. The Department has not produced any judgment or order to the contrary and, therefore we hold that since the amendment to section 50C is retrospective in nature, the assessee will be entitled to relief in the present appeal. Accordingly, we restore the issue to the file of the Assessing Officer with a direction to verify as to whether the registered agreement to sale as claimed by the assessee was actually executed on 06.09.2011 and the partial sale consideration of Rs.1,14,00,000/ was received through banking channels. If these two claims of the assessee stand verified, the Assessing Officer will, thereafter, for the purpose of computation of capital gains, adopt the stamp duty valuation as on 06.09.2011 appeal of the assessee stands partly allowed for statistical purposes.

Summary

Issues:
1. Jurisdiction of Assessing Officer under section 147 of the Income Tax Act.
2. Addition of long term capital gain under section 50C of the Income Tax Act.

Analysis:

Issue 1: Jurisdiction of Assessing Officer under section 147 of the Income Tax Act
The appeal was filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-II, Surat, dated 14.06.2016, for Assessment Year 2012-13. The Assessing Officer initiated proceedings under section 147 of the Income Tax Act as the assessee had not shown capital gains from property transactions in the Return of Income. The assessee contended that the original return filed could be treated as a response to the notice under section 148 of the Act. The Learned Authorised Representative submitted that Ground No.1 challenging the assumption of jurisdiction under section 147 was not pressed and was dismissed accordingly.

Issue 2: Addition of long term capital gain under section 50C of the Income Tax Act
The Assessing Officer computed taxable long term capital gain at Rs.47,16,905 under section 50C of the Act after noticing discrepancies in the valuation of property sold by the assessee. The assessee, in response, argued that the valuation was based on the Jantri Value prevailing at the time of the agreement to sell and that the actual consideration remained Rs.4,13,00,000 as reflected in the Return of Income. The assessee relied on the provisos to section 50C inserted by the Finance Act, 2016, effective from 01.04.2017, which allowed for retrospective application from 01.04.2003. The ITAT Surat, following the decisions of the ITAT Ahmedabad Bench in various cases, held that the amendment to section 50C was retrospective in nature. The matter was restored to the Assessing Officer for verification and computation of capital gains based on stamp duty valuation as on the date of sale agreement.

In conclusion, the appeal of the assessee was partly allowed for statistical purposes, with the issue of addition of long term capital gain under section 50C being restored to the Assessing Officer for further adjudication based on the retrospective application of the relevant provisions.